TY - JOUR T1 - Footprints on a Blockchain: <em>Trading and Information Leakage in Distributed Ledgers</em> JF - The Journal of Trading SP - 5 LP - 13 DO - 10.3905/jot.2017.12.3.005 VL - 12 IS - 3 AU - Rune Tevasvold Aune AU - Adam Krellenstein AU - Maureen O’Hara AU - Ouziel Slama Y1 - 2017/06/30 UR - https://pm-research.com/content/12/3/5.abstract N2 - This article examines information leakage when trading in distributed ledgers. We show how the lack of time priority in the period between the publication of a transaction and its validation by miners or designated participants can expose a transaction’s footprint to the market, resulting in potential front-running and manipulation. We propose a cryptographic approach for solving information leakage problems in distributed ledgers that relies on using a hash (or fingerprint) to secure time priority, followed by a second communication that reveals more features of the underlying market transaction—in effect using a transaction’s fingerprint to hide its footprint. Solving the information leakage problem greatly expands the potential applications of private distributed ledger technology to include trading.TOPICS: Quantitative methods, exchanges/markets/clearinghouses ER -