Digital Chain Of Custody Management Using Blockchain — Complete Documentation & Simulation

Overview & System Context

Digital Chain Of Custody Management Using Blockchain: Comprehensive Web-Sourced Technical Investigation Exhaustive Research Dossier · Pure Web-Scraped Content: ~1923 Words · Real Software Screenshots: 3 1. Executive Overview & Technical Background Bitcoin is a cryptocurrency, a digital asset that uses cryptography to control its creation and management rather than relying on central authorities. Originally designed as a medium of exchange, Bitcoin is now primarily regarded as a store of value. The history of bitcoin started with its invention and implementation by Satoshi Nakamoto, who integrated many existing ideas from the cryptography community. Over the course of bitcoin's history, it has undergone rapid growth to become a significant store of value both on- and offline. From the mid-2010s, some businesses began accepting bitcoin in addition to traditional currencies.

"Satoshi Nakamoto" is presumed to be a pseudonym for the person or people who designed the original bitcoin protocol in 2007 then released the whitepaper in 2008 and finally launched the network in 2009. Nakamoto was responsible for creating the majority of the official bitcoin software and was active in making modifications and posting technical information on the bitcoin forum. There has been much speculation as to the identity of Satoshi Nakamoto and their real identity remains a matter of dispute.

2. System Architecture & Core Working Principles The first notable retail transaction involving physical goods took place on 22 May 2010. Laszlo Hanyecz, a programmer in Jacksonville, Florida, posted on the Bitcointalk forum offering 10,000 of his mined bitcoins in exchange for two pizzas. A 19-year-old in California named Jeremy Sturdivant accepted the offer and ordered two Papa John's pizzas for delivery to Hanyecz's home, receiving the 10,000 BTC in exchange. At the time, the bitcoins were worth around $41. The date is commemorated annually as "Bitcoin Pizza Day". On 6 August 2010, a major vulnerability in the bitcoin protocol was spotted.

While the protocol did verify that a transaction's outputs never exceeded its inputs, a transaction whose outputs summed to more than 2 64 {\displaystyle 2^{64}} would overflow, permitting the transaction author to create arbitrary amounts of bitcoin. On 15 August, the vulnerability was exploited; a single transaction spent 0.5 bitcoin to send just over 92 billion bitcoins ( 2 63 {\displaystyle 2^{63}} satoshis) to each of two different addresses on the network. Within hours, the transaction was spotted, the bug was fixed, and the blockchain was forked by miners using an updated version of the bitcoin protocol. Since the blockchain was forked below the problematic transaction, the transaction no longer appears in the blockchain used by the current Bitcoin network.

On 22 January 2018, South Korea brought in a regulation that requires all the bitcoin traders to reveal their identity, thus putting a ban on anonymous trading of bitcoins. On 24 January 2018, the online payment firm Stripe announced that it would phase out its support for bitcoin payments by late April 2018, citing declining demand, rising fees and longer transaction times as the reasons. On 25 January 2018, George Soros referred to bitcoin as a bubble. In May 2018, the United States Department of Justice investigated bitcoin traders for possible price manipulation, focusing on practices like spoofing and wash trades. The investigation, which involved key exchanges like Bitstamp, Coinbase, and Kraken, led to subpoenas from the Commodity Futures Trading Commission after these exchanges failed to comply with information requests. In October 2018, Nelson Saiers installed a 9-foot inflatable rat covered with bitcoin references and code in front of the Federal Reserve as a homage to Satoshi Nakamoto and protests in New York City.

3. Software Implementation, Frameworks & Protocols From February 2021, the Swiss canton of Zug allows for tax payments in bitcoin and other cryptocurrencies. Bitcoin achieved price equivalence with one kilogram of gold. On 1 June 2021, El Salvador President Nayib Bukele announced his plans to adopt bitcoin as legal tender; this would render El Salvador the world's first country to do so. On June 7, 2021, United States Justice Department recovered $2.3 million worth of bitcoin paid by Colonial Pipeline to a criminal cyber group in cyber-security ransom. On 8 June 2021, at the initiative of the president, pro-government deputies in the Legislative Assembly of El Salvador voted legislation—Ley Bitcoin or the Bitcoin Law—to make Bitcoin legal tender in the country alongside the US Dollar.

Among the factors which may have contributed to this rise were the European sovereign-debt crisis – particularly the 2012–2013 Cypriot financial crisis – statements by FinCEN improving the currency's legal standing, and rising media and Internet interest. Until 2013, almost all market with bitcoins were in United States dollars (US$). As the market valuation of the total stock of bitcoins approached US$1 billion, some commentators called bitcoin prices a bubble. In early April 2013, the price per bitcoin dropped from $266 to around $50 and then rose to around $100. Over two weeks starting late June 2013 the price dropped steadily to $70. The price began to recover, peaking once again on 1 October at $140. On 2 October, The Silk Road was seized by the FBI. This seizure caused a flash crash to $110. The price quickly rebounded, returning to $200 several weeks later. The latest run went from $200 on 3 November to $900 on 18 November. Bitcoin passed US$1,000 on 28 November 2013 at Mt. Gox.

4. Practical Deployment, Analysis & Case Studies A fork, referring to a blockchain, is defined variously as a blockchain split into two paths forward, or as a change of protocol rules. Accidental forks on the bitcoin network regularly occur as part of the mining process. They happen when two miners find a block at a similar point in time. As a result, the network briefly forks. This fork is subsequently resolved by the software which automatically chooses the longest chain, thereby orphaning the extra blocks added to the shorter chain (that were dropped by the longer chain).

A bitcoin faucet was a website or software app that dispensed rewards in the form of bitcoin for visitors to claim in exchange for completing a captcha or task as described by the website. There have also been faucets that dispense other cryptocurrencies. The first example was called "The Bitcoin Faucet" and was developed by Gavin Andresen in 2010. It originally gave out five bitcoins per person. The rewards were dispensed at regular time intervals as rewards for completing simple tasks such as captcha completion, or as prizes from simple games. The amount of bitcoin would typically fluctuate according to the cash value of bitcoin. Some faucets also had random larger rewards. To reduce mining fees, faucets saved up these small individual payments in their own ledgers, which would be dispersed as larger payment to a user's bitcoin address. Because bitcoin transactions are irreversible and there have been many faucets, they have been targets for hackers interested in acquiring bitcoins through theft or exploitation. Advertisements were the main income source of bitcoin faucets, with the potential reward in cryptocurrency intended to incentivize traffic. Some ad networks have also paid directly in bitcoin.

Faucets typically have a low profit margin. Some faucets have also made money by mining cryptocurrencies in the background, using the user's CPU. 5. Performance Evaluation & Extended Technical Observations Coinbase Global, Inc. is an American cryptocurrency exchange. It was founded in 2012 by Brian Armstrong and Fred Ehrsam.

Coinbase has over 100 million users, and is the largest U.S. based cryptocurrency exchange as well as the world's biggest bitcoin custodian, as of 2024. The company operates in more than 100 countries and holds nearly US$516 billion in assets, including nearly 12 percent of all bitcoin in existence and 11 percent of all staked Ether. Described as a conservative and law-abiding cryptocurrency exchange, Coinbase offers cryptocurrency products and services. As of 2025, the company operates as a remote-first company with no physical headquarters.

On July 22, 2022, a former Coinbase product manager, Ishan Wahi, along with Nikhil Wahi (Ishan's brother) and Sameer Ramani (a friend), was charged in the first-ever insider trading case in cryptocurrency by prosecutors for the Southern District of New York and the Securities and Exchange Commission. According to the complaint filed in SEC v. Wahi, Ishan Wahi allegedly shared information that certain tokens were about to be listed by Coinbase with Nikhil Wahi and Ramani, who then allegedly acted upon that information to make trades for an alleged illicit profit over US$1.5 million. According to federal prosecutors, Ishan Wahi purchased a one-way ticket to India upon being summoned by Coinbase to the company's Seattle office for a meeting. Wahi was subsequently intercepted by law enforcement from boarding a May 16 flight to India.

Coinbase's chief security officer, Philip Martin, noted that the company provided prosecutors with information from an internal investigation. On January 10, 2023, Nikhil Wahi was sentenced to ten months in prison after he admitted to making trades based on confidential information from Coinbase. U.S. District Judge Loretta Preska said Wahi's crime was "not an isolated error in judgment". Ishan Wahi originally pleaded not guilty but entered a guilty plea on February 7, 2023. On May 9, 2023, Ishan Wahi was sentenced to two years in prison and ordered to forfeit various crypto assets that he received in connection with the scheme. Ramani remains at large.

Figure 1: Software Chain of Custody | Solution Briefs | Digital.ai Figure 2: Blockchain of Custody | Devpost Figure 3: Blockchain of Custody | Devpost Harvested Online Documentation & Reference Sources • https://en.wikipedia.org/wiki/History%20of%20bitcoin • https://en.wikipedia.org/wiki/Coinbase • https://en.wikipedia.org/wiki/Binance