License: Creative Commons Attribution 3.0 Unported license (CC BY 3.0)
When quoting this document, please refer to the following
DOI: 10.4230/OASIcs.Tokenomics.2019.7
URN: urn:nbn:de:0030-drops-119715
URL: http://dagstuhl.sunsite.rwth-aachen.de/volltexte/2020/11971/
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Karakostas, Dimitris ; Kiayias, Aggelos ; Nasikas, Christos ; Zindros, Dionysis

Cryptocurrency Egalitarianism: A Quantitative Approach

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OASIcs-Tokenomics-2019-7.pdf (0.8 MB)

Abstract

Since the invention of Bitcoin one decade ago, numerous cryptocurrencies have sprung into existence. Among these, proof-of-work is the most common mechanism for achieving consensus, whilst a number of coins have adopted "ASIC-resistance" as a desirable property, claiming to be more "egalitarian," where egalitarianism refers to the power of each coin to participate in the creation of new coins. While proof-of-work consensus dominates the space, several new cryptocurrencies employ alternative consensus, such as proof-of-stake in which block minting opportunities are based on monetary ownership. A core criticism of proof-of-stake revolves around it being less egalitarian by making the rich richer, as opposed to proof-of-work in which everyone can contribute equally according to their computational power. In this paper, we give the first quantitative definition of a cryptocurrency’s egalitarianism. Based on our definition, we measure the egalitarianism of popular cryptocurrencies that (may or may not) employ ASIC-resistance, among them Bitcoin, Ethereum, Litecoin, and Monero. Our simulations show, as expected, that ASIC-resistance increases a cryptocurrency’s egalitarianism. We also measure the egalitarianism of a stake-based protocol, Ouroboros, and a hybrid proof-of-stake/proof-of-work cryptocurrency, Decred. We show that stake-based cryptocurrencies, under correctly selected parameters, can be perfectly egalitarian, perhaps contradicting folklore belief.

BibTeX - Entry

@InProceedings{karakostas_et_al:OASIcs:2020:11971,
  author =	{Dimitris Karakostas and Aggelos Kiayias and Christos Nasikas and Dionysis Zindros},
  title =	{{Cryptocurrency Egalitarianism: A Quantitative Approach}},
  booktitle =	{International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2019)},
  pages =	{7:1--7:21},
  series =	{OpenAccess Series in Informatics (OASIcs)},
  ISBN =	{978-3-95977-108-5},
  ISSN =	{2190-6807},
  year =	{2020},
  volume =	{71},
  editor =	{Vincent Danos and Maurice Herlihy and Maria Potop-Butucaru and Julien Prat and Sara Tucci-Piergiovanni},
  publisher =	{Schloss Dagstuhl--Leibniz-Zentrum fuer Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/opus/volltexte/2020/11971},
  URN =		{urn:nbn:de:0030-drops-119715},
  doi =		{10.4230/OASIcs.Tokenomics.2019.7},
  annote =	{Keywords: blockchain, egalitarianism, cryptocurrency, economics, proof-of-work, proof-of-stake}
}

Keywords: blockchain, egalitarianism, cryptocurrency, economics, proof-of-work, proof-of-stake
Collection: International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2019)
Issue Date: 2020
Date of publication: 17.03.2020

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