Full Blockchain Blocks Enhance Security and Impact Bitcoin Price, Study Reveals
Summary:
A recent study by researchers from Florida Atlantic University and the University of Mississippi suggests that "full" blocks in blockchain systems offer an extra layer of protection against potential fraudsters and money launderers. The research analyses cryptocurrency thefts at exchanges and argues that those involved in illicit activities prefer to execute launder transactions rapidly. The study utilized a "fullness" score for blocks from 2010-2021 data and found the occurrence of block fullness increased Bitcoin's price and acted as a deterrent against illegal activities.
A research study conducted by academics at Florida Atlantic University and the University of Mississippi illustrates that blockchain systems that have "full" blocks, particularly with a pending transaction queue, possess an extra defense against unscrupulous characters, perpetrators of money laundering, and potential fraudsters. In their research paper termed "Bitcoin Blocksize, Custodial Security, and Price", the team scrutinizes the Mt.Gox failure and other instances of cryptocurrency theft from digital currency exchanges. The study is based on the understanding that those engaging in illegal activities desire to finish laundering transactions immediately. According to the study: "Our inquiry is inspired by the following concept: the closer a block size is to its limit, the higher the chances the ensuing transaction will be recorded in a later block rather than the current one. Cybercriminals who infiltrate a digital currency exchange or shut down a deceitfully operated one wish to clean the pilfered bitcoin speedily." To validate their theory, the researchers leverage historical Bitcoin blockchain data and a crypto exchange "fraud report." Using data from the period 2010 to 2021, they establish a "fullness" score for blocks to assess the data. After setting up a standard of comparison, the researchers analyzed historical data for two specific parameters: the contribution of block fullness to Bitcoin's price, and its effectiveness as a deterrent for wrongdoers. According to their research paper, their evaluation affirmed their theory that "Bitcoin blocks that are full serve to discourage hackers and scammers, as they indicate congestion." They also deduced that full blocks "signal an enhancement in network security, a factor that's reflected in the price." This meets their second theory that the fullness of blocks affects bitcoin's price. As per their findings, block fullness is reported to be 20% lower on a "typical day" when a cryptocurrency breach or fraud occurs.
Published At
10/27/2023 5:40:59 PM
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