Researchers from Florida Atlantic University and the University of Mississippi have conducted a study that suggests blockchains with “full” blocks, particularly when there is a transaction queue, provide an additional layer of protection against malicious actors, money launderers, and potential fraudsters. The research, titled “Bitcoin Blocksize, Custodial Security, and Price,” delves into the Mt. Gox crash and other instances of cryptocurrency theft from exchanges.
The study is based on the premise that individuals engaging in illicit activities aim to complete their money laundering transactions as quickly as possible. The researchers state in their paper, “This investigation is driven by the following intuition: the closer the blocksize is to the limit, the more likely the next transaction will be published on a later block and not the most current one. When these cybercriminals breach a crypto exchange, or ‘close’ a fraudulently operated one, they want to launder the stolen bitcoin quickly.”
To test their hypothesis, the researchers analyzed historical Bitcoin blockchain data and a report on crypto exchange scams. They assigned a “fullness” score to blocks in order to evaluate the data. The team then examined two specific metrics: the impact of block fullness on the price of Bitcoin (BTC) and its effectiveness as a deterrent for malicious actors.
According to the paper, the evaluation confirmed the researchers’ hypothesis that “full Bitcoin blocks act as a deterrent to hackers and scammers because they signal congestion.” They also concluded that full blocks “also signal a rise in network security that is captured in price,” thus supporting their second hypothesis that block fullness affects the price of Bitcoin.
The findings of the study indicate that block fullness is approximately 20% lower on an “average day” when a cryptocurrency breach or fraud occurs.
This research provides valuable insights into the potential benefits of full blocks in enhancing the security and integrity of blockchain networks. By understanding the relationship between block fullness, network security, and price, stakeholders in the cryptocurrency industry can better protect against fraudulent activities and ensure the stability of the market.
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