LocalCoin: An Ad-hoc Payment Scheme for Areas with High Connectivity
This work addresses the challenge of enabling cryptocurrency payments on mobile devices in areas with high connectivity, though it appears incremental as it builds upon existing blockchain concepts with modifications for mobile use.
The authors tackled the problem of high computational resource requirements in existing cryptocurrencies like Bitcoin by proposing LocalCoin, an alternative cryptocurrency designed for mobile devices that uses social hardness and a lightweight proof-of-work scheme, resulting in a probability of double spending close to zero in simulations.
The popularity of digital currencies, especially cryptocurrencies, has been continuously growing since the appearance of Bitcoin. Bitcoin's security lies in a proof-of-work scheme, which requires high computational resources at the miners. Despite advances in mobile technology, existing cryptocurrencies cannot be maintained by mobile devices due to their low processing capabilities. Mobile devices can only accommodate mobile applications (wallets) that allow users to exchange credits of cryptocurrencies. In this work, we propose LocalCoin, an alternative cryptocurrency that requires minimal computational resources, produces low data traffic and works with off-the-shelf mobile devices. LocalCoin replaces the computational hardness that is at the root of Bitcoin's security with the social hardness of ensuring that all witnesses to a transaction are colluders. Localcoin features (i) a lightweight proof-of-work scheme and (ii) a distributed blockchain. We analyze LocalCoin for double spending for passive and active attacks and prove that under the assumption of sufficient number of users and properly selected tuning parameters the probability of double spending is close to zero. Extensive simulations on real mobility traces, realistic urban settings, and random geometric graphs show that the probability of success of one transaction converges to 1 and the probability of the success of a double spending attempt converges to 0.