Currently, in the world there is a growing interest in the digital economy including the blockchain technology. Decentralized Finance (DeFi) is one of the leading current blockchain technology-related trends. The paper aims to provide an overview of the opportunities, advantages and shortcomings of this technology, as well as to summarize information on 12 most popular DeFi applications, using Total Value Locked indicators for the period of 34 months.
Johannes Rude Jensen, Victor von Wachter, Omri Ross
We document an ongoing research process towards the implementation and integration of a digital artefact, executing the lifecycle of a leveraged trade with permissionless blockchain technology. By employing core functions of the 'Dai Stablecoin system' deployed on the Ethereum blockchain, we produce the equivalent exposure of a leveraged position while deterministically automating the monitoring and liquidation processes. We demonstrate the implementation and early integration of the artefact into a hardened exchange environment through a microservice utilizing standardized API calls. The early results presented in this paper were produced in collaboration with a team of stakeholders at a hosting organization, a multi-national online brokerage and cryptocurrency exchange. We utilize the design science research methodology (DSR) guiding the design, development, and evaluation of the artefact. Our findings indicate that, while it is feasible to implement the lifecycle of a leveraged trade on the blockchain, the integration of the artefact into a traditional exchange environment involves multiple compromises and drawback. Generalizing the tentative findings presented in this paper, we introduce three propositions on the implementation, integration, and implications of executing key business processes with permissionless blockchain technologies. By conducting computational design science research, we contribute to the information systems discourse on the applied utility of permissionless blockchain technologies in finance and beyond.
Abstract Initial coin offerings have recently become one of the most important funding resources for ventures in the blockchain area. However, often ventures do not rely solely on initial coin offerings as funding source but receive also investments from more established investors prior or during their initial coin offering. In particular, blockchain related ventures have drawn the attention of (corporate) venture capitalists but only less is known on the interplay of these different funding sources and their influence on initial coin offerings as well as on venturesâ further development. Based on the signaling theory as well as the resource-based-view our empirical study find that venture capital investors as well as corporate venture capital investors have a significantly positive effect on initial coin offerings. Further, we find that the reputation, the time of treatment as well as the specialization of investors have a positive influence on the initial coin offering. Finally, our results indicate that the positive effect of venture capital investors as well as the specialization of an investor continues to influence blockchain based venturesâ success in the mid-term.
New cryptocurrencies are emerging daily, providing alternatives to traditional forms of payments and enabling new mediums of exchange such as cash. These currencies span Bitcoin, Litecoin and Etherium. In less than a decade, bitcoin has gone from being an obscure curiosity to a household name. In recent times, bitcoin has risen â with ups and downs â from a few cents per coin to over $4,000. In the meantime, hundreds of other cryptocurrencies â equalling bitcoin in market value â have emerged (Graph 1, left-hand panel). While it seems unlikely that bitcoin or its sisters will displace sovereign currencies, they have demonstrated the viability of the underlying blockchain or distributed ledger technology (DLT).
Venture capitalists and financial institutions are investing heavily in DLT projects that seek to provide new financial services and deliver old ones more efficiently. Bloggers, central bankers, and academics predict transformative or disruptive implications for payments, banks, and the financial system at large.
Findings from Andolfatto (2015, 2016), Broadbent (2016), Raskin and Yermack (2016) and Skingsley (2016) attest to this sea-change in mediums of exchange as consumers. Transformative implications for economies, financial systems and consumer investment behaviour is already changing, reflecting a macroeconomic backdrop characterised by ultra-accommodative interest rates, low economic growth and a dearth of investment opportunities with over 20% of global debt yielding negative returns.
The transformative changes likely embedded in the increased use and &adoption of cryptocurrencies across economies suggest a need to understand the nature of cryptocurrencies better.
The existing crowdfunding platforms still operate using centralized system. While centralized system can operate well, it requires a third party intermediary in order to operate and thus does not completely provide data security and transparency of crowdfunding activities. In addition, the existence of a third party intermediary in a crowdfunding activity also causes the existing processing costs to be expensive. Therefore, the crowdfunding system needs to be built in a decentralized manner so that it eliminates the need for third parties as intermediaries in the crowdfunding process. This study proposes a prototype of decentralized crowdfunding system using Ethereum blockchain and smart contract technology. The result of system functionality test using black box testing method shows that all functionality of the crowdfunding system can run properly while operate in decentralized architecture.
Rohan Bennett, Todd Miller, Mark E Pickering, Al-Karim Kara
The emergence of âblockchainâ technology as an alternative data management technique has spawned a myriad of conceptual and logical design work across multiple industries and sectors. It is also argued to enable operationalisation of the earlier âsmart contractâ concept. The domain of land administration has actively investigated these opportunities, albeit also largely at the conceptual level, and usually with a whole-of-sector or âbig bangâ industry transformation perspective. Less reporting of applied case applications is evident, particularly those undertaken in collaboration with practicing land sector actors. That said, pilots and test cases continue to act as a basis for understanding the relative merits, drawbacks, and implementation challenges of the smart contract concept in land administration. In this vein, this paper extends upon and further refines the existing discourse on smart contracts within the land sector, by giving an updated, if not more nuanced, view of example applications, opportunities, and barriers. In contrast to the earlier works, a hybrid solution that mixes smart contract use with existing technology infrastructureâenabling preservation of the role of a land registry agency as the ultimate arbiter of valid claimsâis proposed. This is hypothesised to minimise disruptions, whilst maximising the benefits. Examination of proof-of-concept work on smart contract and blockchain applications in Sweden, Australia (State of New South Wales), and Canada (Province of British Columbia) is undertaken. Comparative analysis is undertaken using several frameworks including: (i) business requirements adherence, (ii) technology readiness and maturity assessment, and (iii) strategic grid analysis. Results show that the hybrid approach enables adherence to land dealing business requirements and that the proofs-of-concept are a necessary step in the development trajectory. Furthering the uptake will likely depend on again taking a whole-of-sector perspective, and attending to remaining issues around business models, stakeholder acceptance, partnerships and trust building, and legal issues linked to data decentralisation and security.
Smart contracts have been plagued by security incidents, which resulted in substantial financial losses. Given numerous research efforts in addressing the security issues of smart contracts, we wondered how software practitioners build security into smart contracts in practice. We performed a mixture of qualitative and quantitative studies with 13 interviewees and 156 survey respondents from 35 countries across six continents to understand practitioners' perceptions and practices on smart contract security. Our study uncovers practitioners' motivations and deterrents of smart contract security, as well as how security efforts and strategies fit into the development lifecycle. We also find that blockchain platforms have a statistically significant impact on practitioners' security perceptions and practices of smart contract development. Based on our findings, we highlight future research directions and provide recommendations for practitioners.
The focus on cryptocurrencies in the finance and banking sectors is gaining momentum. In this paper, we investigate the role of cryptocurrencies in modern finance. We apply a narrative literature review method to synthesize prior research and draw insights into the opportunities and challenges of leveraging cryptocurrencies. The results indicate that cryptocurrencies offer businesses and individualsâ lower transaction costs, higher efficiencies, increased security and privacy, meaningful diversification benefits, alternative financing solutions, and financial inclusion.Challenges exist related to the integration of cryptocurrencies in modern finance. These include the lack of regulatory standards, the risk of criminal activity, high energy and environmental costs, regulatory bans and usage restrictions, security and privacy concerns, and the high volatility of cryptocurrencies.The current review is useful for scholars and managers, including those seeking to have a more balanced understanding of these emerging financial instruments.JEL Classification: E42, F30, F65, G21, G23How to Cite:Rejeb, A., Rejeb, K., & Keogh, J. G. (2021). Cryptocurrencies in Modern Finance: a Literature Review. Etikonomi, 20(1), 93 â 118. https://doi.org/10.15408/etk.v20i1.16911.
Smart government is an important means of optimizing government management, improving the government decision-making capacity, and pushing forward the public service. When the smart government process applies, the dire straits of collaborative governance among the different participants could not be ignored usually caused by maximizing their profits. Based on the current research, this paper introduces the blockchain technology into the smart government system and establishes a smart government platform architecture. Meanwhile, to analyse the evolutionary and stable strategies of the three parties under the blockchain technology, the evolutionary game model including functional departments, local governments, and end users as the main players is established on account of the bounded rationality. By examining the âblockchain + government serviceâ in Beijing with the systemic dynamics theory, this paper changes the influencing factors simulated by changing the parameter assignment, to determine the evolutionary stable equilibrium under different external conditions. The results show that local government supervision plays a leading role in the process of collaborative governance of smart government based on blockchain technology; meanwhile, effective cost control is a key factor affecting the evolutionary stability strategy (ESS). Besides, the âdecentralizedâ structure, âdistrustâ architecture, and âprecisionâ mechanism of the blockchain are verified for the effect of the evolution process. Among them, precision service and flat management improve the possibility of collaborative governance, but the impact of the trust mechanism is not obvious. Therefore, the collaborative governance model of smart government based on blockchain technology is loaded with far-reaching significance for promoting the modernization of Chinaâs governance capacity and governance system.
The European Union Emissions Trading System (EU ETS) is a major pillar of the European energy policy to reduce greenhouse gas emissions. However, the reportedly pervasive frauds in this market are constraining the beneficial role of the EU ETS. In this conceptual paper, we propose to digitalize the EU ETS by distributed ledger technology (DLT), enabling the verification of authenticity and provenance, proof of ownership, and lifecycle traceability of carbon certificates and assets. Our platform allows verifiable credentials to validate emission allowances, real-time tracking of trading participantsâ emissions, and the audit trail reporting of the decentralized trading records. Furthermore, we complement the DLT application concept with a structured interdisciplinary evaluation framework. Our framework and analysis aim to stimulate further interdisciplinary research in this area to support regulators, such as the European Commission, in designing effective digital emissions trading systems.
Blockchain technology is an emerging solution to various financial applications that require a secure and tamper-proof transactions system. One such application is the land registry. Management of transactions for land registration is a tedious task. It is highly insecure and subject to forgery land records, Issues in verification, mediators, etc. This article presents a scalable and novel property/land registration framework based on blockchain technology. The transparent and immutable nature of blockchain technology makes it reliable for intrusive and fraudulent land registration activities. The framework uses the InterPlanetary File System (IPFS), a Peer-to-Peer (P2P) swarm network. It allows the sharing and storing of data in an efficient, decentralized, and transparent manner. This article also proposes a Trusted Node Consensus Algorithm (TNCA) based on the miners' trust value that minimizes the computational overhead of broadcasting the new block. The proposed approach - trusted node consensus algorithm requires lesser time to add the block into the blockchain, and message exchange per consensus is 58.94% lesser than the traditional Proof-of-Work (PoW) approach and 26.44% lesser time than the existing load-balanced method.
A contract generally only binds its parties. Security agreements, which create a security interest in specific personal property, stand out as a glaring exception to this rule. Under certain conditions, security interests not only bind the creditor and debtor, but also third-party creditors seeking to lend against the same collateral. To receive this extraordinary benefit, creditors must put the world on notice, usually by filing a financing statement with the state in which the debtor is located. Unfortunately, the Uniform Commercial Code (U.C.C.) Article 9 filing system fails to provide actual notice to interested parties and introduces risk of heavy financial losses. To solve this problem, this Article introduces a smart-contract-based U.C.C.-1 form built using Lexon, an innovative new programming language that enables the development of smart contracts in English. The proposed âLexon U.C.C. Financing Statementâ does much more than merely replicate the financing statement in digital form; it also performs several U.C.C. rules so that, for the first time, the filing system works as intended. In demonstrating that such a system remains compatible with existing law, the Lexon U.C.C. Financing Statement also reveals important lessons about the interaction of technology and commercial law. This Article brings cryptolaw to the U.C.C. in three parts. Part I examines the failure of the U.C.C. Article 9 filing system to achieve actual notice and argues that blockchain technology and smart contracts can help the system function as intended. Part II introduces the Lexon U.C.C. Financing Statement, demonstrating how the computer code implements U.C.C. provisions. Part II also examines the goals that influenced the design of the Lexon U.C.C. Financing Statement, discusses the new programming language used to build it, and argues that the prototype could be used now, under existing law. Part III proposes five innovations for the Article 9 filing system enabled by the Lexon U.C.C. Financing Statement. Part III then considers the broader implications of the project for commercial law, legal research around smart contracts, and the interplay between technology-neutral law and a lawyerâs increasingly important duty of technological competence. Ultimately, by providing the computer code needed to build the Lexon U.C.C. Financing Statement, this Article demonstrates not only that crypto-legal structures are possible, but that they can simplify the law and make it more accessible.
Seiring perkembangan zaman yang berdampak pada perkembangan teknologi di mana dunia saat ini sudah mengenal apa yang disebut internet, sistem pembayaran pun menemukan arah baru. Ada yang menginginkan digitalisasi sistem pembayaran namun tetap menggunakan instrumen konvensional, maka muncullah uang elektronik. Namun ada juga yang menginginkan digitalisasi sistem pembayaran dengan menggunakan instrumen digital juga, maka muncullah uang digital atau dikenal dengan cryptocurrency. Di Indonesia otoritas keuangan Sentral baru menerbitkan izin untuk uang elektronik begitu juga dengan Dewan Syariah Nasional Majelis Ulama Indonesia yang mengeluarkan fatwa tentang kebolehan uang elektronik. Pada kenyataannya masyarakat Indonesia selain telah menggunakan uang elektronik mereka juga telah menggunakan uang digital.
Victoria L. Lemieux, Darra Hofman, Hoda Hamouda, Danielle Alves Batista · 11 authors
This paper reports on end users' perspectives on the use of a blockchain solution for private and secure individual âomicsâ health data management and sharing. This solution is one output of a multidisciplinary project investigating the social, data, and technical issues surrounding application of blockchain technology in the context of personalized healthcare research. The project studies potential ethical, legal, social, and cognitive constraints of self-sovereign healthcare data management and sharing, and whether such constraints can be addressed through careful design of a blockchain solution.
Blockchain technology and distributed ledger technologies (DLTs) present complex yet revolutionary frameworks for secure, transparent, and decentralized data management. This detailed inspection delves into the intricacies of blockchain, exploring its core components such as cryptographic hashing, consensus mechanisms, and smart contracts. Blockchain's immutable and transparent nature ensures data integrity and security, making it a powerful tool for various applications, from cryptocurrencies to supply chain management. The inspection also addresses the challenges inherent in blockchain and DLTs, including scalability issues, energy consumption, and regulatory hurdles. Scalability remains a significant concern, as the demand for higher transaction throughput grows. Energy consumption, particularly in proof-of-work systems, poses environmental and economic challenges. Moreover, the evolving regulatory landscape necessitates adaptive compliance strategies to harness the full potential of these technologies. By examining these complexities, the abstract highlights the need for ongoing research and innovation to overcome barriers and optimize blockchain and DLTs for widespread adoption across diverse sectors, ultimately enhancing efficiency, security, and trust in digital transactions.
The advancing technology and industrial revolution have taken the automotive industry by storm in recent times. The auto sectorâs constantly growing demand has paved the way for the automobile sector to embrace new technologies and disruptive innovations. The multi-trillion dollar, complex auto insurance sector is still stuck in the regulations of the past. Most of the customers still contact the insurance company by phone to buy new policies and process existing insurance claims. The customers still face the risk of fraudulent online brokers, as policies are mostly signed and processed on papers which often require human supervision, with a risk of error. The insurance sector faces a threat of failure due to losing and misconception of policies and information. We present a decentralized IPFS and blockchain-based framework for the auto insurance sector that regulates the activities in terms of insurance claims for automobiles and automates payments. This article also discusses how blockchain technologyâs features can be useful for the decentralized autonomous vehicleâs ecosystem.
2020 saw a surge in the price of cryptocurrencies, but also increased consciousness about the impact that investing in cryptocurrencies can have on the environment, society, and the governance of firms (ESG investing). Martin Walker analyses whether the two trends are compatible.
Muneeb Ul Hassan, Mubashir Husain Rehmani, Jinjun Chen
Traditional smart grid energy auctions cannot directly be integrated in blockchain due to its decentralized nature. Therefore, research works are being carried out to propose efficient decentralized auctions for energy trading. Since, blockchain is a novel paradigm which ensures trust, but it also comes up with a curse of high computation and communication complexity which eventually causes resource scarcity. Therefore, there is a need to develop and encourage development of greener and computational-friendly auctions to carry out decentralized energy trading. In this paper, we first provide a thorough motivation of decentralized auctions over traditional auctions. Afterwards, we provide in-depth design requirements that can be taken into consideration while developing such auctions. After that, we analyze technical works that have developed blockchain based energy auctions from green perspective. Finally, we summarize the article by providing challenges and possible future research directions of blockchain based energy auction from green viewpoint.
Cryptocurrencies redefined how money can be stored and transferred among\nusers. However, independent of the amount being sent, public blockchain-based\ncryptocurrencies suffer from high transaction waiting times and fees. These\ndrawbacks hinder the wide use of cryptocurrencies by masses. To address these\nchallenges, payment channel network concept is touted as the most viable\nsolution to be used for micro-payments. The idea is exchanging the ownership of\nmoney by keeping the state of the accounts locally. The users inform the\nblockchain rarely, which decreases the load on the blockchain. Specifically,\npayment channel networks can provide transaction approvals in seconds by\ncharging a nominal fee proportional to the payment amount. Such attraction on\npayment channel networks inspired many recent studies which focus on how to\ndesign them and allocate channels such that the transactions will be secure and\nefficient. However, as payment channel networks are emerging and reaching large\nnumber of users, privacy issues are becoming more relevant that raise concerns\nabout exposing not only individual habits but also businesses' revenues. In\nthis paper, we first propose a categorization of the existing payment networks\nformed on top of blockchain-backed cryptocurrencies. After discussing several\nemerging attacks on user/business privacy in these payment channel networks, we\nqualitatively evaluate them based on a number of privacy metrics that relate to\nour case. Based on the discussions on the strengths and weaknesses of the\napproaches, we offer possible directions for research for the future of privacy\nbased payment channel networks.\n
Cryptocurrencies redefined how money can be stored and transferred among users. However, independent of the amount being sent, public blockchain-based cryptocurrencies suffer from high transaction waiting times and fees. These drawbacks hinder the wide use of cryptocurrencies by masses. To address these challenges, payment channel network concept is touted as the most viable solution to be used for micro-payments. The idea is exchanging the ownership of money by keeping the state of the accounts locally. The users inform the blockchain rarely, which decreases the load on the blockchain. Specifically, payment channel networks can provide transaction approvals in seconds by charging a nominal fee proportional to the payment amount. Such attraction on payment channel networks inspired many recent studies which focus on how to design them and allocate channels such that the transactions will be secure and efficient. However, as payment channel networks are emerging and reaching large number of users, privacy issues are becoming more relevant that raise concerns about exposing not only individual habits but also businesses' revenues. In this paper, we first propose a categorization of the existing payment networks formed on top of blockchain-backed cryptocurrencies. After discussing several emerging attacks on user/business privacy in these payment channel networks, we qualitatively evaluate them based on a number of privacy metrics that relate to our case. Based on the discussions on the strengths and weaknesses of the approaches, we offer possible directions for research for the future of privacy based payment channel networks.
The advent of distributed ledger technology has challenged the legal community to learn how technology will change law, finance, and commerce in coming years. Blockchain technology, a method for storing data in cryptographically secure distributed ledgers, has spread all over the world and into nearly every vertical as global commerce searches for secure tools that support ecosystem-wide growth. The World Economic Forum estimates that by 2026, 10% of global commerce will be conducted on blockchain systems. 1 Blockchain technology promises to bring more legal relationships into the realm of data and code, so there is a clear need for legal minds to help guide this development.