Every coin is a six digit unique number.
Every transaction has the following information: The coin being transferred The source (that is, the person spending this coin) The destination (that is, the person receiving this coin) Some information to indicate when the source received this coin from someone (this will be described in more detail later).
For simplicity, we assume every transaction consists of exactly one coin.
A transaction-block consists of a set of transactions. Let tr-count denote the number of transactions per block. 1 The transaction-block will also have additional attributes, which will be discussed below.
A blockchain is an authenticated linked list of transaction-blocks.
Pending transactions and transaction-queue: All the transactions in the transaction-block are processed transactions. Additionally, we have a transaction-queue which contains pending transactions. Every new transaction is first added to the transaction-queue, and later moved to a transaction-block (and thus added to the blockchain).
DSCoin_Honest: A cryptocoin for honest users
Initially, all participants receive a certain number of coins from the moderator. All these are added in (possibly separate) transaction-blocks to the blockchain and there are no pending transactions. After the initial setup, transactions can be processed on demand.
The coin-sender creates a transaction object consisting of the coin ID he/she wishes to spend, the sender's identification, and the reciever's identification and a pointer coin_src that points to the transaction-block in the blockchain where the sender recieved this coin. The sender adds this transaction to the pending transactions queue and also maintains his/her own list of pending transactions in in_process_trans. Once there are sufficiently many transactions in the transaction queue, a miner removes them from this queue and mines a transaction block and adds it to the blockchain. At this point, the sender verifies the presence of initiated transaction in the blockchain and then sends a proof of membership to the reciever before the transaction is finalized by adding the coin ID to the sender's collection.
A transaction block in the blockchain contains tr-count number of transactions stored in an array and on a Merkle Tree built on it. The job of the miner is to create a transaction-block consisting of tr-count valid transactions (that is,none of the transaction should be a double spending). The miner collects tr-count-1 number of valid transactions from the Transaction Queue. The miner also recieves a reward for mining this block, which is also processed as a valid transaction in the same transaction-block, hence making it up to tr-count transactions. After completing the transaction-block, the miner simply adds this to the blockchain.
After a transaction has been included in a transaction-block in the blockchain, the respective sender can send a proof of membership/transaction to the reciever, which can be verified by later. The sender also removes this tranaction from his/her in_process_trans queue and the respective coin is added to the reciever's collection.
DSCoin_Malicious: Handling Malicious Miners
The solution described in the previous section works in the setting where all miners are honest. However, one of the prime advantages of a cryptocurrency is the decentralized aspect, and in this setting, we cannot assume that the miners are honest. Indeed, it is possible that a buyer (source) adds an invalid transaction to the pendingTransactions queue, and then the same buyer mines a block that includes the invalid transaction. The validity of a transaction-block can be checked by verifying the Merkle Tree and other relavent attributes stored in it. In order to handle malicious miners, who add invalid blocks to the blockchain, the structure of the block chain is changed from a simple list into a tree-like structure, where the honest miners add valid transaction blocks at the end of the longest chain of valid blocks. The first few blocks are always valid in our setup, which stores the transactions the processed the initial distribution of coins for the members.