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Bitcoin's Stability and Security: Challenges and Solutions
Author: Catherine
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Bitcoin is not just the most successful cryptographic currency in history but also, a fascinating phenomenon to research. How does it work against all odds? What issues arise from the way it came to be? In 2015, a group of researchers put together all available knowledge on Bitcoin to answer these questions. Today, it is still a valuable source of knowledge on Bitcoin, and we undertook to digest this formative work for a wider audience.

Key Takeaways

The Paper — “SoK: Research perspectives and challenges for Bitcoin and cryptocurrencies”

ieee symposium on privacy and security logo
The Trojan horse — logo of the IEEE Symposium on Privacy and Security

One of the best currently existing formal write-ups on the workings of Bitcoin has been published in a conference proceeding: the 2015 IEEE Symposium on Security and Privacy. “SoK: Research perspectives and challenges for bitcoin and cryptocurrencies” is a result of the work of scholars from Princeton University, the University of Maryland, and Concordia University: Joseph Bonneau, Andrew Miller, Jeremy Clark, Arvid Narayanan, Joshua A. Kroll, and Edward W. Felten. SoK stands for “Systematization of Knowledge”, and next, we will explain how they do this and what are the findings.


The start of the formative work reads, “Bitcoin has emerged as the most successful cryptographic currency in history.” It may seem a subjective statement but the following facts back this claim up. The Bitcoin protocol was designed with twenty years of cryptography research and technology in mind, which for one reason or another did not find wide adoption: for example, b-cash or proof-of-work. Yet the invention combined the experience of previous underappreciated ideas so well that Bitcoin is still regarded as the most successful cryptographic currency.

The research breaks Bitcoin down into three key components: transactions and scripts; consensus and mining; and peer-to-peer communication network. As a result, “SoK: Research perspectives and challenges for Bitcoin and cryptocurrencies” describes all the concepts necessary to know how Bitcoin works. The description is abstract enough to hold valid both at the time of writing, seven years after the genesis block, and today.

nakamoto consensus
Source: Etherplan

In the following paragraphs, the researchers review the titular challenges for Bitcoin: stability of validity rules, consensus, and messaging layer. With the “canonicalism” of the Bitcoin maintainers at the time, the first would not be a critical issue, much like the third challenge. However, the workings of the Nakamoto consensus pose the highest number of challenges for Bitcoin: incentive compatibility, miner compliance, a decline in block rewards, etc.

All of the above poses protocol-side security concerns but there are also client-side security and privacy aspects to consider. In addition to a brief mention of Simplified Payment Verification, in this section authors review the key management tools and methods. Simply put, they outline in formal language what “not your keys, not your coins” really implies.

digital signature pki
How digital signature with private key cryptography works. Source: DocuSign

The second half of the paper proceeds to the titular perspectives and the proposed “promising alternatives”. Rather than being a proposal to change Bitcoin’s codebase, it is a review of existing and potential alternative consensus mechanisms and protocol modifications in altcoins. Interestingly enough, the authors do not fail to mention that the alternative consensus mechanisms do not always account for the full set of factors contributing to Bitcoin’s stability, assuming they carry over.

After the alternative consensus mechanisms, the authors review the privacy-enhancing proposals. The issue with pseudonymity and rather arbitrary privacy protection in Bitcoin was true back then and remains now, to a degree. To make matters worse, Bitcoin nodes leak IP addresses when broadcasting transactions unless there is an anonymity network (e.g. TOR) at play. To remedy the anonymity issues, a few proposals have been made: peer-to-peer mixing, distributed mix networks, and privacy coins.

anonymity issues solutions
Comparative evaluation of anonymity techniques. Source: J. Bonneau, A. Miller, J. Clark, A. Narayanan, J. A. Kroll and E. W. Felten, "SoK: Research Perspectives and Challenges for Bitcoin and Cryptocurrencies," 2015 IEEE Symposium on Security and Privacy, San Jose, CA, USA, 2015, pp. 104-121, doi: 10.1109/SP.2015.14.

Finally, the authors conclude by listing some proposals to extend the Bitcoin protocol beyond a ledger. Blockchain technology like multi-signature signing, atomic swaps, collateral protocols, and audits can help reduce the need for trusted intermediaries. It was also proposed as an immutable global append-only log: for example, for timestamping, digital tokens, and overlay protocols with a completely separate logic but utilizing the underlying consensus.


Within two years of its quiet launch in 2009, Bit coin grew to comprise billions of dollars of economic value
despite only [a] cursory analysis of the system's design.

Even for all its ingenuity, the actual research into Bitcoin’s key components remained fragmented until a group of scientists came together for the 2015 IEEE Symposium on Security and Privacy to summarize the scattered body of knowledge on Bitcoin. The conference proceeding is nothing short of influential, being cited in hundreds of other scholarly works.

The issue was further complicated by the lack of comprehensive write-ups on the Bitcoin software. The 2009 whitepaper provides only a high-level design description and a lot of the facts there were outdated by 2015. The bitcoind specification was a better tool to gauge the state of Bitcoin but it lacks a formal and comprehensive description. As such, this proceeding is one of the fullest write-ups on Bitcoin to this day.

bitcoin history timeline
Pictorial History of Bitcoin (Timeline of blockchain technology development). Source: Leemoon, Brian. (2017). Bitcoin Valuation Framework Pub. 10.13140/RG.2.2.26771.99366.

At the time, the Bitcoin blockchain has been up and running for almost seven years. For all intents and purposes, it is ample time to both evaluate the degree of the protocol’s success and demonstrate the future challenges for Bitcoin. Even though the opening sentence clearly indicates what angle the researchers assumed, they did not fail to mention the darker side of the coin. Even eight years ago, the criminal use of cryptocurrencies was not a secret.

The third section of the paper concerns itself with the evaluation framework for the stability of Bitcoin, i.e. whether the protocol can proceed without running into any potential issues. The research results came out at the time before the Bitcoin Cash and subsequent hard forks. By the language used in “SoK: research perspectives and challenges for Bitcoin and cryptocurrencies”, these developments would surely be characterized as a hit to the stability of Bitcoin’s blockchain. Nevertheless, we all know now how it panned out.

Questions Raised

The name and the conference at which the proceeding was presented prime the reader for the focus of the research: security and privacy. Scalability is mentioned as well but in the context of these two aspects and given less attention overall.

In our summary of “SoK: Research perspectives and challenges for Bitcoin and cryptocurrencies” we have already briefly gone over the questions and issues highlighted by the authors. Firstly, how robust and resistant to external and internal factors the Bitcoin blockchain is in the long term? Secondly, how feasible and effective are the alternatives to the most successful cryptographic currency? Thirdly, how can privacy in Bitcoin be improved?

Once again, the publication was supposed to summarize the growing literature body and knowledge of Bitcoin from non-academic sources. Its goal was not to provide ready answers but to overview existing solutions and give comparative analyses. The authors still give an answer to the first and second questions:

Yet for basic stability and efficiency, it remains unclear if it is possible to design an alternate decentralized
consensus system which can improve on Bitcoin. The literature does not even provide adequate tools to assess under
which economic and social assumptions Bitcoin itself will remain stable.

In other words, the future stability is anyone’s guess. As for the answer to the second question, it is also arguable. Some protocols mentioned in the research are doing well these days still (Litecoin, Dogecoin) and some are barely relevant (Peercoin, Freicoin). Not to mention that the crypto landscape past 2015 is completely different from the one reviewed by the scholars. Namely, Ethereum alone changed it so much that a lot of conclusions could be challenged.

The third question remained without a definitive answer but saw quite a few solutions offered. Bitcoin P2P mixing protocols still see some use even today, and the privacy protocols mentioned in the paper found use in independent cryptocurrencies (Monero, Zcash). Nonetheless, neither of those finds enough use to overshadow Bitcoin as it is.

How Does the Research Stand the Test of Time?

bitcoin history timeline
Source: KPMG

Today, it has been longer since this conference than the time from Bitcoin’s creation until the conference. The vibrant open-source community of Bitcoin has deployed numerous modifications to the codebase even before the fact and since then the history of Bitcoin’s development has been further complicated by hard forks, community schisms, and previously unthinkable proposals. If it’s been so long, is the research even worth paying attention to now?

Technically [forking the Bitcoin blockchain] would function exactly like a hard fork, only without the claim
that the fork is the legitimate Bitcoin blockchain. Interestingly, this approach seems not to have been
attempted seriously.

On the one hand, a lot of information in the SoK is indeed outdated. On the other hand, the high-level descriptions of the protocol and the systematizations proposed remain accurate and valid to this day — simply because the numerous proposed modifications have not changed the protocol to the degree as to invalidate it. Their breakdown of the Bitcoin protocol into three components and the five properties of a stable blockchain technology are still helpful and insightful.

blockchain stability criteria
Visual representation of the Blockchain Trilemma in relation to the PREStO framework. The PREStO framework is chronologically more recent but is built with the basis of this research. Source: Leonardos, Stefanos & Reijsbergen, Daniel & Piliouras, Georgios. (2019). PREStO: A Systematic Framework for Blockchain Consensus Protocols.

If this is your first time encountering the classification, let us recap it briefly. The five properties that comprise a stable blockchain are:

Things to Consider

As the title “SoK: Research perspectives and challenges for Bitcoin and cryptocurrencies” implies, there are several unresolved challenges for Bitcoin that are worth looking into.

One of the issues raised in the paper is the potential transaction censorship by miners. In the scenario they reviewed, they assumed a majority miner (in a consensus/51% attack) could arbitrarily censor transactions for their benefit. However, they may not have anticipated that some miners would do it for compliance reasons: one of the precedents was set by Marathon Digital. The U.S.-based mining company announced they would exclude blacklisted transactions from the blocks they find but had to reverse the decision due to backlash.

Yet another still present problem with bit coin’s design, according to the researchers, is with its security and anonymity. Their conclusion at the time was that the proposed promising alternatives were superior in this regard. Chain sleuthing was not mentioned in the research even in passing, although the possibility was certainly acknowledged. The inferred conclusion is that users prioritizing anonymity would use the privacy-protecting protocols over Bitcoin as is, and it indeed turned out to be the case today.

mev sandwhich attack
Sandwich attack. Source: Riley's Substack

If we look beyond Bitcoin, especially considering that after 2015 this space in crypto could not be more different, we will see even more stability and security challenges. For instance, it is hard to imagine that the researchers could have anticipated things like Miner Extracted Value, which combines technical quirks of the consensus mechanisms with economic factors. However, it actually is a very interesting manifestation of the consensus-related challenges described in this very paper. Therefore, it remains a valuable resource to consider when improving the Bitcoin blockchain’s stability.


It is worth remembering that “SoK: Research perspectives and challenges for Bitcoin and cryptocurrencies” is not the only source of knowledge on Bitcoin, especially given its age. The research has a high barrier to entry, so it is hard to recommend this source for beginners. Nevertheless, it is a valuable read for anyone willing to engage with formal academic writing and seeking to have a better understanding of the most successful cryptographic currency to date.

We hope you enjoyed this article! In the ChangeHero blog, you will find even more content that is as educational but more beginner-friendly. Subscribe to us on social media to stay tuned to the updates: we’re on Twitter, Facebook, Reddit, and Telegram.

Frequently Asked Questions

What are the issues with Bitcoin?

SoK: Research perspectives and challenges for Bitcoin and cryptocurrencies” describes a few characteristics of Bitcoin as quirks or outright flaws. The Nakamoto consensus works in practice but, in theory, can run into a wide variety of consensus attacks by non-compliant miners. As the research was presented at the 2015 IEEE Symposium on Security and Privacy, Bitcoin’s anonymity issues received a lot of attention from the authors as well.

Who oversees the Bitcoin transactions?

Being a disintermediated protocol, as the “SoK: Research perspectives and challenges for Bitcoin and cryptocurrencies” calls it, Bitcoin works without authorities or trusted intermediaries. The transactions are regulated on the consensus and partially, broadcast level. The consensus layer is comprised of miners who solve computational puzzles and add transactions to the ledger. The broadcast level is a peer-to-peer network of full nodes that communicate with each other on the state of Bitcoin.

What is the overview of Bitcoin technology?

The Bitcoin protocol consists of three key components: transaction validity rules, consensus protocol, and peer-to-peer communication network. Firstly, transactions comprise the ledger on the Bitcoin blockchain, which are in turn comprised of inputs, outputs, and cryptographic signatures. Secondly, the consensus layer is comprised of miners who solve computational puzzles and add transactions to the ledger. Thirdly, the broadcast level is a peer-to-peer network of full nodes that communicate with each other on the state of Bitcoin.