@article {Aune5, author = {Rune Tevasvold Aune and Adam Krellenstein and Maureen O{\textquoteright}Hara and Ouziel Slama}, title = {Footprints on a Blockchain: Trading and Information Leakage in Distributed Ledgers}, volume = {12}, number = {3}, pages = {5--13}, year = {2017}, doi = {10.3905/jot.2017.12.3.005}, publisher = {Institutional Investor Journals Umbrella}, abstract = {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{\textquoteright}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{\textemdash}in effect using a transaction{\textquoteright}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}, issn = {1559-3967}, URL = {https://jot.pm-research.com/content/12/3/5}, eprint = {https://jot.pm-research.com/content/12/3/5.full.pdf}, journal = {The Journal of Trading (Retired)} }