Blockchain technology is being researched in diverse domains for its ability to provide distributed, decentralized and time-stamped transactions. It is attributed to by its fault-tolerant and zero- downtime characteristics with methods to ensure records of immutable data such that its modification is computationally infeasible. Trust frameworks and reputation models of an online interaction system are responsible for providing enough information (e.g., in the form of trust score) to infer the trustworthiness of interacting entities. The risk of failure or probability of success when interacting with an entity relies on the information provided by the reputation system. Thus, it is crucial to have an accurate, reliable and immutable trust score assigned by the reputation system. The centralized nature of current trust systems, however, leaves the valuable information as such prone to both external and internal attacks. This master's thesis project, therefore, studies the use of blockchain technology as an infrastructure for an online interaction system that can guarantee a reliable and immutable trust score. It proposes a system of smart contracts that specify the logic for interactions and models trust among pseudonymous identities of the system. The contract is deployed on a blockchain network where the trust score of entities are computed, stored and updated. The proposed method and the trust metrics used is evaluated by simulating an interaction graph using an existing dataset. The obtained results then illustrate that the proposed method is resilient against several threat models and distinguishes between honest or malicious participation of entities on the network.
To solve the credibility and supervision lacking problem in the OTC warehouse receipt trading system, a scheme of using smart contract on the blockchain to implement the OTC warehouse receipt trading system is presented. As a distributed ledger, blockchain has the advantages of decentralization, irreversibility and trustworthiness. The warehouse receipt transaction data is recorded on the blockchain, ensuring its safety and credibility. Smart contract is automatically executed code stored on the blockchain, it can directly control the transaction of digital assets. No participant can control and tamper it before the contract is lapsed. In the process of using the Ethereum smart contract to realize warehouse receipt transactions, consensus is reached by the PBFT consensus algorithm, Since the trusted third-party is not needed, the lack of supervision problem is solved. This paper introduces the application of blockchain and smart contract to the OTC warehouse receipt trading system. It includes the design of smart contracts, the verification of smart contracts security. This paper also verifies the feasibility of designing smart contracts by using the instance of listed transactions.
A significant increase in the cash value of Bitcoin in the beginning of 2017 led to growth in people’s interest in cryptocurrency. The uniqueness of this type of money is that the transaction occurs only with the approval of a network of participants, and the funds themselves are beyond the control of any state. At the same time, the Russian government, represented by the Ministry of Finance, did not approve a cryptocurrency until 2018. Despite the large number of studies that reveal the main advantages and disadvantages of cryptocurrency, as well as the motivation of the participants, the issue of building trust in cryptocurrencies remains relevant. The main goal of this study is to identify the mechanisms of trust building among the participants of the cryptocurrency market. The research information base was based on 15 semi-structured interviews with active participants of the cryptocurrency market. Based on collected data, a typology of cryptocurrency users was made, and ways of managing risks in interacting with the market and insight into the role of the state in this market were examined. Cryptocurrency users can be divided into those who use it for consumption of various goods (including those who are prohibited in the territory of the Russian Federation) and those who seek to derive financial benefit from the current market situation. Although both groups exist in the same market, they have different expectations: consumers strive to ensure that the cryptocurrency exchange rate remains stable, whereas the other group hopes for a long period of high exchange-rate volatility to increase their own earnings. The position that the local state should take is an important factor of trust for each of the groups represented. Cryptocurrencies are still at an early stage of development. A large group of people on the market is trying to monetize the weaknesses that exist at the moment. Over time, the situation on the cryptocurrency market stabilizes, and it can then move to a qualitatively different stage of development.
Several years after the inception of the most dominant cryptocurrency, bitcoin, the European Central Bank in 2015 indicated the need for establishing legal clarity by relevant authorities through explaining how the current legal framework applies to cryptocurrencies. Three years later, no meaningful step has been taken by any of the European Union (EU) institutions including the parliament. By examining the EU’s legal framework governing payments services, including the Single Euro Payment Area (SEPA) Regulation, the Electronic Money Directive, the Payment Services Directive and the proposed AML/CTF Directive, this article concludes that (a) because the existing payment services laws apply to payments effected in currencies (legal tenders) and cryptocurrencies are not defined as currencies under the EU law or the laws of member states, they do not cover cryptocurrencies. It also argues that it is impossible to design sui generis payments services law for cryptocurrencies without curbing their essential features, especially decentralization. Lastly, the article proposes centralization and the creation of state cryptocurrency as possible solutions moving forward and examines their strengths and challenges.
It should be recognized that the monetary authorities in all countries of the world were not ready for the emergence and rapid development of digital currencies and their virtual diversity, regardless of the development level of national economy and domestic financial market. Minimization of the threats and risks of crypto-currency spread based only on their smaller issue volume comparing to fiat money is at any rate a shortsighted position. The interpretation of this phenomenon by a central bank has a decisive influence on its policy, which is especially important in the context of financial system globalization. The article provides the analysis of approaches to interpretation of the virtual (digital) currency concepts in central banks of different jurisdictions, as well as a wide range of scientific publications. These data led to the conclusion that it is necessary to develop a common understanding of state regulation in this field at the global level. According to the author, the most reasonable method is the interpretation of digital currencies as an asset, which is due to the inferiority of these financial instruments in terms of money key functions in the classical sense. The author notes the significant progress of central bankers in understanding the nature and capacity of a crypto currency with dominant tendency to strengthen control and supervision over operations with these financial instruments. However, there is also a significant divergence in the development of restrictive, permissive or supportive measures. The article concludes that it is necessary to coordinate the efforts of central banks with governments, other financial bodies and international organizations in this direction in order to adequately and homogeneously react to the development of the crypto currency as a kind of financial innovation without violation of the healthy competition rules in the payment services market and to prevent investors' exposure to excessive risk.
Distributed ledger technologies replace central counterparties with time-consuming consensus protocols to record the transfer of ownership. This settlement latency slows down cross-market trading and exposes arbitrageurs to price risk. We theoretically derive arbitrage bounds induced by settlement latency. Using Bitcoin orderbook and network data, we estimate average arbitrage bounds of 121 basis points, explaining 91% of the cross-market price differences, and demonstrate that asset flows chase arbitrage opportunities. Controlling for inventory holdings as a measure of trust in exchanges does not affect our main results. Blockchain-based settlement without trusted intermediation thus introduces a non-trivial friction that impedes arbitrage activity.
Innovation in distributed ledger technologies-blockchains and smart contracts-has been lauded as a game-changer for environmental governance and transparency. Here we critically consider how problems related to spatial representation and uncertainty complicate the picture, focusing on two cases. The first regards the impact of uncertainty on the transfer of spatial assets, and the second regards its impact on smart contract code that relies on software oracles that report sensor measurements of the physical world. Cryptogovernance of the environment will require substantial research on both these fronts if it is to become a reality.
On an EU level, the topic of electronic health data is a high priority. Many projects have been developed to realise a standard health data format to share information on a regional, national or EU level. All the projects favour and contribute to the development and improvement of the prerequisites for intra- and cross-border patient mobility. This work presents a new approach for the implementation of disruptive logging: an audit mechanism for cross-border exchange of eHealth data on OpenNCP, providing traceability and liability support within the OpenNCP infrastructure. Relevant parties could be legally obliged to keep a log of all privacy-critical operations performed by OpenNCP users.
Although some organizations are contemplating the potential impact of blockchain technology in today’s economy, blockchain, itself, is quickly emerging to be a disruptive force. This is especially true in the circumstance of loyalty programs. Blockchain is a public, digital, and distributed database solution providing decentralized management of transactional data. This technology is transforming society in ways that were previously unimaginable. Whether it be the way individuals use their phones, cars, or the healthcare system, blockchain is applicable for a variety of economic sectors and transactions. Although many may argue that blockchain is in its early development stage, it still possesses the power to revolutionize industries and consumer habits at a global scale. Through implementation of blockchain for loyalty networks, companies eliminate the limitations and inefficiencies while elevating the customer experience with secure and immediate redemption options from a variety of vendors. Despite evolving rapidly, its implementations provide better security, privacy, performance, usability, data integrity, and scalability, to name a few. Hence, blockchain is likely to entice any individual for instantaneous incentives for every purchase.This paper aims to analyze the current, traditional loyalty programs and the challenges associated with them. It highlights how blockchain can resolve these challenges and provide a better experience. This report further explores the various types of loyalty programs that currently exist in the blockchain ecosystem and provides potential future implementations. Finally, the paper analyzes the implementation of coupons in comparison with loyalty points programs, highlighting the vast spread of blockchain implementation.
Cryptocurrencies represent an alternative method of managing todays financial world. Operating in the block chain network, these alternative methods of finance provide disintermediation in a digital world where all users are anonymous. The existence of cryptocurrencies has been a threat to current financial institutions, and governments are trying to figure out how to manage their usability in everyday life. \n \nThe author has decided to pursue this topic to answer the question; What is the viability of cryptocurrency in relation to the response of financial institutions and governments? Research into the response of The United States, European Union, Switzerland, China, and South Korea provides sufficient information due to their status as leading regions in investment and daily trading of cryptocurrencies. The basis for answering the question will be supported by expert analysis and economic theory. Data of historical price, value, and other statistics will show the effect that the large stakeholders have had on the cryptocurrency markets. \n \nThe analysis provided will utilize the SWOT and PESTLE methodology in order to provide a well-rounded conclusion. The response that governments and financial institutions have made indicate that cryptocurrencies need to be supervised and controlled by authorities due to their nature as an anonymous peer-to-peer network method of making transactions. \n \nWhat the author concluded from research and analysis is that cryptocurrencies are viable in today as a source of investment when classified as an asset, commodity, or service. They will remain viable if governments have regulated it according to their guidelines. What the response of financial institutions have shown is that cryptocurrencies cannot challenge the current legal tenders and therefore cannot become new standard for currencies. Lastly, the author finds that cryptocurrencies will have to concede central aspects of their core identity such as anonymity to be implemented into legal framework.
Bitcoin and blockchain are two new and innovative technologies that may be confusing. This purpose of this paper is to differentiate these two new technologies and explain their functionalities. The concept of Bitcoin “mining” will be addressed, as well as the impact it has had on the hardware market. Finally, the benefits and concerns of implementing blockchain and Bitcoin will be provided. Despite the concerns, both blockchain and Bitcoin provide a plethora of possible new technological advanced, both in the terms of digital currencies as well as other avenues.
Open access
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Blockchain Technology Applications and Security
Advanced Steganography and Watermarking Techniques
Transaction volume of crypto currencies, which is generally known by Bitcoin, has reached a significant size worldwide, today. Though they are not recognized by law in common, yet; the crypto currencies attract firms due to their higher revenue rates, transferable skills and lower transaction costs. Today the firms can pay and collect their receivables by the crypto currencies also they invest in crypto currencies to benefit from exchange rates. The aim of the study is evaluating the accounting of Bitcoin in Turkey by presenting the process and features of crypto currencies, especially Bitcoin.
This paper examines the market for initial coin offerings (ICOs). ICOs are smart contracts based on blockchain technology that are designed for entrepreneurs to raise external finance by issuing tokens without an intermediary. Unlike existing mechanisms for early-stage finance, tokens potentially provide investors with rapid opportunities thanks to liquid trading platforms. The marketability of tokens offers novel insights into entrepreneurial finance, which I explore in this paper. First, I document that investors earn on average 8.2% on the first day of trading. However, about 40% of all ICOs destroy investor value on the first day of trading. Second, I explore the determinants of market outcomes and find that management quality and the ICO profile are positively correlated with the funding amount and returns, whereas highly visionary projects have a negative effect. Among the 21% of all tokens that get delisted from a major exchange platform, highly visionary projects are more likely to fail, which investors anticipate. Third, I explore the sensitivity of the ICO market to adverse industry events such as China's ban of ICOs, the hack of leading ledgers, and the marketing ban on FaceBook. I find that the ICO market is highly susceptible to such environmental shocks, resulting in substantial welfare losses for investors.
Land registries are successful when trust is ensured between all involved parties. In this paper we introduce the idea of improving the quality of land registries by using blockchain technology. With blockchain we can overcome the limitations (e.g. centralization) of the existing land registries and offer a trusted service that provides significant benefits to the participants. This paper also highlights the functionality of a blockchain land registry solution that can be adopted by the Republic of Cyprus and it suggests the implementation of a small pilot that can be used as proof of concept.
Abstract This chapter considers the regulatory regime for cryptocurrencies and other value data (defined as assets which are both excludable and rivalrous, recorded by a trusted technology rather than booked by a qualified intermediary). It begins with a discussion of changes in selected monetary assets and manifestations — namely banknotes and central bank reserve balances — that have occurred over time. It then describes three modes of money creation and their effect on the substance of an asset: money created on a temporary basis; outright money created with no connected reversal event; and by issue of helicopter money. It also analyses the different forms in which cryptocurrencies manifest themselves and their consequences for the rules governing title, transfer and protection of commercial dealings. Finally, it explores the excludable and rivalrous nature of value data and the manifestation of such data by entry in a register kept by a trusted technology.