TY - JOUR T1 - Footprints on a Blockchain: <em>Trading and Information Leakage in Distributed Ledgers</em> JF - The Journal of Trading SP - 49 LP - 57 DO - 10.3905/jot.2018.13.4.049 VL - 13 IS - 4 AU - Rune Tevasvold Aune AU - Adam Krellenstein AU - Maureen O’Hara AU - Ouziel Slama Y1 - 2018/10/31 UR - https://pm-research.com/content/13/4/49.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, legal/regulatory/public policy ER -