Smart contracts are increasingly popular in business and law. Smart contracts are also becoming increasingly complex. Advances in technology allow smart contracts to handle far more intricate transactions than the traditional—and simple— vending machine example. With increased complexity comes increased responsibility. When parties rely on an attorney to review or draft a smart contract, that attorney must understand what he or she is reading or writing. Smart contracts, however, are not written in a language most attorneys can understand, let alone write. While a general description of the contract may be translated into plain English, the contract itself is written in code. If an attorney cannot read the contract itself—and can only read a general description of the contract—can the attorney claim in good faith that he or she possesses the competence necessary to understand the terms of the contract? If the attorney cannot understand the contract, he or she can be held liable for malpractice if the contract leads to results contrary to what the attorney claimed could or would occur. The implementation of smart contracts is likely to give rise to specialized requirements for attorneys drafting and advising on smart contracts. Special requirements are not unheard of in the legal community. For example, to become a patent attorney, one must take and pass the Patent Bar Examination and fulfill other requirements, such as obtaining a bachelor’s degree in specified fields of science or engineering. Similar requirements—either in the form of a smart contract certification or exam—should be developed not only as a measure of attorney competence, but also as a protection against malpractice suits brought forth by clients.
Recently smart contracts become more and more popular in such areas as initial coins offering (ICO), financial sector, international trade and public services. At the same time there is almost no legal regulation of smart contracts. There are unsuccessfull tries to regulate smart contracts bu security legislation. There are continuing discussions over whether a smart contract can be considered a civil contract and whether violated rights of the parties of smart contract could be protected in trail. The purpose of this article is to assess the practice of legal regulation of smart contracts worldwide and in Ukraine and to develop proposals for improvement of legal regulation of smart contracts. An analysis of law regulation of smart contracts in different countries of the world shows the initial state of the law in this area, significant differences between national systems of law and almost complete absence of judicial precedents. Most countries are trying to regulate smart contracts by securities and financial instruments legislation, which neither takes into account the economic nor legal nature of the smart contract. The greatest progress in legal regulation has reached Belarus, which has recognized the smart contract as a type of civil contract and cryptocurrency as the official means of payment. In Ukraine, despite the active implementation of blockchain technology in state registers, there is no legal regulation of smart contracts and cryptocurrency. The Government Concept of the development of digital economy and society for 2018 – 2020 and conclusions of financial regulators on the legal status of cryptocurrencies determine the need to develop legal regulation of the digital economy. In my oppinion, Ukraine should recognize the most widespread cryptocurrencies as official means of payment and issue its own state cryptocurrency. The legal regulation of tokens used in initial coins offering should be similar to the legal regulation of of debt securities. It is necessary to amend the civil legislation in order to recognize a smart contract as a type of civil contract expressed in the form of programming code and automatically executed in a distributed network. To minimize risks of smart contracts it is necessary to state requirements of mandatory identification of parties and to implement mandatory electronic application containing the essential terms of the contract which will have legal force in case of a programming code error and to resolve litigation between the parties.
Christian Rainero, Alessandro Migliavacca, Riccardo Coda
During economic crises, sovereign states and central banks support the general economy and firms with a range of emergency measures, such as the allocation of subsidies to enterprises and citizens. The sudden availability of money without the need for any consideration by the recipient leads the way to inappropriate conduct known as moral hazards, such as diversion or improper use of the financial resources received. The moral hazard arises from the individual tendency to rational behavior when in the presence of information asymmetry, inadequate controls, or favorable contractual positions. To reduce moral hazard, and to preserve the intentionality of the states, information asymmetry must be reduced. Avoiding moral hazard is particularly important in cases such as the COVID-19 pandemic, but also during economic crises and other emergency situations. This paper conceptualizes a relevant topic for the economy and accounting fields of study because information tends to be naturally asymmetrical. Traditional accounting is limited by the fact that some accounting practices or techniques can be used to reduce the effect of the pandemics on the economic performance of organizations. In our study we propose a way to reduce the natural subjectivity in accounting and reporting, using blockchain and smart contracts technologies, as a solution to information asymmetry during crises (such as economic ones or pandemics)
The article deals with constructing an asset accounting process and an algorithm for recognizing an object as an asset. The main approaches to the reflection of cryptocurrency in financial accounting are analyzed. The study showed that International Financial Reporting Standards (IFRS) still lack specific clarifications on the correctness of accounting and recognition of cryptocurrencies. Cryptocurrencies are suggested to be recognized as, intangible assets on the one hand, and as inventories, on the other. The research shows that before starting the process of accounting for any asset, it is necessary to determine, whether such a resource meets the definition of an asset. The article proves that cryptocurrency is an asset. However, attaching cryptocurrency to a certain group of assets turns out to be rather problematic. The main approaches to doing it are analyzed. Speaking formally, cryptocurrency is considered to be cash or cash equivalents. Cash and cryptocurrencies have been compared, and the main distinguishing features of these two assets have been considered. The conclusion is made that cryptocurrency should be evaluated at fair value, indicating the date of evaluation to fix actual market conditions. The measure of cryptocurrency when reflected in the financial reporting is the US dollar or its equivalent in the national currency as at the balance sheet date. The research has shown that depending on the type of the enterprise activity, cryptocurrency should be determined in the financial reporting, or the «balance sheet», as «intangible assets» (line code 1000), and the primary value of such an asset corresponds to line 1001, or inventories (line code 1100). Also, if the company’s accounting policy states that cryptocurrency is a financial investment, it should be reflected in line 1160.
Ana Fernández Vilas, Rebeca P. Dı́az Redondo, Anton Lorenzo Garcia
There is a consensus about the good sensing characteristics of Twitter to mine and uncover knowledge in financial markets, being considered a relevant feeder for taking decisions about buying or holding stock shares and even for detecting stock manipulation. Although Twitter hashtags allow to aggregate topic-related content, a specific mechanism for financial information also exists: Cashtag (consisting of the company ticker preceded by $) is a supporting mechanism to track financial tweets referring to a company listed in a stock market. However, according to our experiments and due to the lack of conventions in cashtags usage, the irruption of cryptocurrencies has resulted in a significant degradation on the cashtag-based aggregation of posts. Unfortunately, Twitter' users may use homonym tickers to refer to cryptocurrencies and to companies in stock markets, which means that filtering by cashtag may result on both posts referring to stock companies and cryptocurrencies. This research proposes automated classifiers to distinguish conflicting cashtags and, so, their container tweets by analyzing the distinctive features of tweets referring to stock companies and cryptocurrencies. As experiment, this paper analyses the interference between cryptocurrencies and company tickers in the London Stock Exchange (LSE), specifically, companies in the main and alternative market indices FTSE-100 and AIM-100. Heuristic-based as well as supervised classifiers are proposed and their advantages and drawbacks, including their ability to self-adapt to Twitter usage changes, are discussed. The experiment confirms a significant distortion in collected data when colliding or homonym cashtags exist, i.e., the same $ acronym to refer to company tickers and cryptocurrencies. According to our results, the distinctive features of posts including cryptocurrencies or company tickers support accurate classification of colliding tweets (homonym cashtags) and Independent Models, as the most detached classifiers from training data, have the potential to be trans-applicability (in different stock markets) while retaining performance.
H. M. N. Dilum Bandara, Shiping Chen, Mark Staples, Xiwei Xu · 10 authors
Data from our modified Geth client used with http://ethviewer.live. Contains block, uncles, transactions (1st arrival to transaction pool and in blocks), addresses, and smart contracts data from public Ethereum network. Data between blocks 4,728,040 (2017-12-13) to 10,859,203 (2020-09-14). There are periods of missing data due to node failures and Geth client updates.
With smart contracts, a wide range of applications can be implemented on blockchains. Ethereum stores smart contract byte code with the smart contract ad-dress so, the Ethereum Virtual Machine (EVM) can read and execute transactions correctly. All executed transactions (both successful and failed transactions) are stored on the platform permanently. Failed transactions are thrown by the EVM due to runtime errors and result in monetary waste. The waste from these transactions add up to around 2 million Ethers or $634.2 million. In this thesis, we propose Evitar, a warning algorithm for reducing Ethereum smart contract runtime errors, which has two mechanisms. First, Evitar proposes that users send transactions with the maximum gas allowed to avoid Out of Gas errors. However, this results in an extremely high transaction fee when transactions fail. Second, Evitar analyzes transactions called to each method in smart contracts and marks a method as a method with a high failure rate if the number of failed transactions reaches Evitar’s threshold. This mechanism prevents users from sending and paying for transactions that are likely to fail. We run experiments to evaluate the performance of Evitar by replaying transactions in a private network. The results show that Evitar can reduce failed transactions up to 99.52% compared to sending under default behaviour in exchange for a reduction in successful transactions by 1.78%. The amount of gas used by Evitar is only one-tenth compared to sending under default behaviour. Sending transactions with the maximum gas in Evitar reduces Out of Gas errors by 99.25%. In addition, Evitar can save up to 15.04 GB (82.32%) of storage in the Geth default node and 50.09 GB (50.09%) in the Parity full archive node.
Bitcoin represents one of the most interesting technological breakthroughs and socio-economic experiments of the last decades. In this paper, we examine the role of speculative bubbles in the process of Bitcoin's technological adoption by analyzing its social dynamics. We trace Bitcoin's genesis and dissect the nature of its techno-economic innovation. In particular, we present an analysis of the techno-economic feedback loops that drive Bitcoin's price and network effects. Based on our analysis of Bitcoin, we test and further refine the Social Bubble Hypothesis, which holds that bubbles constitute an essential component in the process of technological innovation. We argue that a hierarchy of repeating and exponentially increasing series of bubbles and hype cycles, which has occurred over the past decade since its inception, has bootstrapped Bitcoin into existence.
Alexander Bechtel, Agata Ferreira, Jonas Groß, Philipp Sandner
Distributed ledger technology (DLT) hasDistributed ledger technologies (DLTs) the potential to address long-standing industrial challenges, remove frictions, build trust, and unlock new value across businesses and industries. It enables decentralization, the immutability of data, transparency, and the automation of business processes. Thereby, it creates a multitude of use cases ranging from energy and manufacturing to mobility and logistics. However, a digitized economy based on DLT can flourish only if it does not merely enable the exchange of assets, goods, and services but also the exchange of money. In other words, there is a need for a payment solution that is compatible with DLT-based decentralized networks and enables transactions denominated in euro. This is particulary relevant in the currently evolving geopolitical environment.
The growth of electronic healthcare (e-health) systems is promoted by the evolution of Internet of Things (IoT) technology, as this new environment provides a variety of alternatives for medical data collection. Traditional authentication models in e-health systems cannot be applied directly to scenarios requiring low-latency, real-time services. Providing a variety of means for data transmission is considered an important method to achieve effective control in e-health systems. However, this new approach also leads to security and privacy concerns as increasingly flexible communication services are introduced. Achieving effective authentication of medical data for different users while providing security guarantees in e-health systems is an interesting problem. In this paper, we present a permissioned blockchain-based identity management and user authentication (PBBIMUA) scheme for the e-health environment. Our scheme satisfies the extensive security requirements of medical data. An evaluation and security analysis show that performance, in terms of lightweight construction and lower network latency with high security standards, is improved in comparison to known methods. The experimental results show that the system has good efficiency.
Showkat Ahmad Bhat, Ishfaq Bashir Sofi, Chong‐Yung Chi
The internet is progressing towards a new technology archetype grounded on smart systems, heavily relying on artificial intelligence (AI), machine learning (ML), blockchain platforms, edge computing, and the internet of things (IoT). The merging of IoT, edge computing, and blockchain will be the most important factor of empowering new automatic service and commercial models with various desirable properties, such as self-verifying, self-executing, immutability, data reliability, and confidentiality provided by the advancement in blockchain smart contracts and containers. Motivated by the potential paradigm shift and the security features brought by blockchain from the traditional centralized model to a more robust and resilient decentralized model, this tutorial article proposes a multi-tier integrated blockchain and edge computing architecture for 5G and beyond for solving some security issues faced by resource-constrained edge devices. We begin with a comprehensive overview of different edge computing paradigms and their research challenges. Next, we present the classification of security threats and current defense mechanisms. Then, we present an overview of blockchain and its potential solutions to the main security issues in edge computing. Furthermore, we present the classification of facilitating developers of different architectures to select an appropriate platform for particular applications and offer insights for potential research directions. Finally, we provide key convergence features of the blockchain and edge computing, followed by some conclusions.
Jin Wang, Wencheng Chen, Lei Wang, R. Simon Sherratt · 6 authors
As the number of sensor network application scenarios continues to grow, the security problems inherent in this approach have become obstacles that hinder its wide application. However, it has attracted increasing attention from industry and academia. The blockchain is based on a distributed network and has the characteristics of nontampering and traceability of block data. It is thus naturally able to solve the security problems of the sensor networks. Accordingly, this paper first analyzes the security risks associated with data storage in the sensor networks, then proposes using blockchain technology to ensure that data storage in the sensor networks is secure. In the traditional blockchain, the data layer uses a Merkle hash tree to store data; however, the Merkle hash tree cannot provide non-member proof, which makes it unable to resist the attacks of malicious nodes in networks. To solve this problem, this paper utilizes a cryptographic accumulator rather than a Merkle hash tree to provide both member proof and nonmember proof. Moreover, the number of elements in the existing accumulator is limited and unable to meet the blockchain’s expansion requirements. This paper therefore proposes a new type of unbounded accumulator and provides its definition and security model. Finally, this paper constructs an unbounded accumulator scheme using bilinear pairs and analyzes its performance.
Blockchain technology has been developed with the vision to enable trusted collaboration between untrusted parties, without the need for a central authority. Despite its many promising applications, the technology suffers from a scalability problem. In order to increase transaction throughput and decrease transaction confirmation latency, payment channel networks have been proposed. Payment channel networks introduce a layer on top of the main chain, in which transactions can happen in a safe manner between only the transacting parties without burdening the entire network. In this article, we present and highlight the many interesting research aspects this new type of network introduces. We first provide background on the mechanics of the operation of payment channel networks, and then proceed to present a plethora of research problems of networking and/or economics flavor arising in this context, including routing, scheduling, rebalancing, network design and topology analysis, and fee optimization. This work is within the scope of both the networking and network economics communities.
Kentaroh Toyoda, Jun Zhao, Allan N. Zhang, P. Takis Mathiopoulos
Federated learning (FL) is a promising decentralized deep learning technique that allows users to collaboratively update models without sharing their own data. However, due to its decentralized nature, no one can monitor workers' behavior, and they may thus deviate protocols (e.g., participating without updating any models). To solve this problem, many researchers have proposed blockchain-enabled FL to reward workers (or users) with cryptocurrencies to encourage workers to follow the protocols. However, there is a lack of theoretical discussions concerning how such rewards impact workers' behavior and how much should be given to workers. In this article, we propose a mechanism-design-oriented FL protocol on a public blockchain network. Mechanism design (MD) is often used to make a rule intended to achieve a specific goal. With MD in mind, we introduce the concept of competition into blockchain-based FL so that only workers who have contributed well can obtain rewards, which naturally prevents workers from deviating from the protocol. We then mathematically answer the following questions with contest theory, a novel field of study in economics: i) What behavior will workers take?; ii) how much effort should workers exert to maximize their profits?; iii) how many workers should be rewarded?; and iv) what is the best proportion for reward distribution?
Under the guiding concept of a thinking skin, the research project examines the transferability of cyber-physical systems to the application field of façades. It thereby opens up potential increases in the performance of automated and adaptive façade systems and provides a conceptual framework for further research and development of intelligent building envelopes in the current age of digital transformation. The project is characterized by the influence of digital architectural design methods and the associated computational processing of information in the design process. The possible establishment of relationships and dependencies in an architecture understood as a system, in particular, are the starting point for the conducted investigation. With the available automation technologies, the possibility of movable building constructions, and existing computer-based control systems, the technical preconditions for the realisation of complex and active buildings exist today. Against this background, dynamic and responsive constructions that allow adaptations in the operation of the building are a current topic in architecture. In the application field of the building envelope, the need for such designs is evident, particularly with regards to the concrete field of adaptive façades. In its mediating role, the façade is confronted with the dynamic influences of the external microclimate of a building and the changing comfort demands of the indoor climate. The objective in the application of adaptive façades is to increase building efficiency by balancing dynamic influencing factors and requirements. Façade features are diverse and with the increasing integration of building services, both the scope of fulfilled façade functions and the complexity of today’s façades increase. One challenge is the coordination of adaptive functions to ensure effective reactions of the façade as a complete system. The ThinkingSkins research project identifies cyber-physical systems as a possible solution to this challenge. This involves the close integration of physical systems with their digital control. Important features are the decentralized organization of individual system constituents and their cooperation via an exchange of information. Developments in recent decades, such as the miniaturisation of computer technology and the availability of the Internet, have established the technical basis required for these developments. Cyber-physical systems are already employed in many fields of application. Examples are decentralized energy supply, or transportation systems with autonomous vehicles. The influence is particularly evident in the transformation of the industrial sector to Industry 4.0, where formerly mechatronic production plants are networked into intelligent technical systems with the aim of achieving higher and more flexible productivity. In the ThinkingSkins research project it is assumed that the implementation of cyber-physical systems based on the role model of cooperating production plants in IIndustry 4.0 can contribute to an increase in the performance of façades. Accordingly, the research work investigates a possible transfer of cyber-physical systems to the application field of building envelopes along the research question: How can cyber-physical systems be applied to façades, in order to enable coordinated adaptations of networked individual façade functions? To answer this question, four partial studies are carried out, which build upon each other. The first study is based on a literature review, in which the understanding and the state-of-the-art development of intelligent façade systems is examined in comparison to the exemplary field of application of cyber-physical systems in the manufacturing industry. In the following partial study, a second literature search identifies façade functions that can be considered as components of a cyber-physical façade due to their adaptive feasibility and their effect on the façade performance. For the evaluation of the adaptive capabilities, characteristics of their automated and adaptive implementation are assigned to the identified façade functions. The resulting superposition matrix serves as an organizational tool for the third investigation of the actual conditions in construction practice. In a multiple case study, realized façade projects in Germany are examined with regard to their degree of automation and adaptivity. The investigation includes interviews with experts involved in the projects as well as field studies on site. Finally, an experimental examination of the technical feasibility of cyber-physical façade systems is carried out through the development of a prototype. In the sense of an internet of façade functions, the automated adaptive façade functions ventilation, sun protection as well as heating and cooling are implemented in decentrally organized modules. They are connected to a digital twin and can exchange data with each other via a communication protocol. The research project shows that the application field of façades has not yet been exploited for the implementation of cyber-physical systems. With the automation technologies used in building practice, however, many technical preconditions for the development of cyber-physical façade systems already exist. Many features of such a system are successfully implemented within the study by the development of a prototype. The research project therefore comes to the conclusion that the application of cyber-physical systems to the façade is possible and offers a promising potential for the effective use of automation technologies. Due to the lack of artificial intelligence and machine learning strategies, the project does not achieve the goal of developing a façade in the sense of a true ThinkingSkin as the title indicates. A milestone is achieved by the close integration of the physical façade system with a decentralized and integrated control system. In this sense, the researched cyber-physical implementation of façades represents a conceptual framework for the realisation of corresponding systems in building practice, and a pioneer for further research of ThinkingSkins.
We present a modification to RingCT protocol with stealth addresses that makes it compatible with Delegated Proof of Stake based consensus mechanisms called Delegated RingCT.
Our scheme has two building blocks: a customised version of an Integrated Signature and Encryption scheme composed of a public key encryption scheme and two signature schemes (a digital signature and a linkable ring signature); and non-interactive zero knowledge proofs. We give a description of the scheme, security proofs and a prototype implementation whose benchmarking is discussed.
Although Delegated RingCT doesn't have the same degree of anonymity as other RingCT constructions, we argue that the benefits that the compatibility with DPoS consensus mechanisms brings constitutes a reasonable trade-off for being able to develop an anonymous decentralised cryptocurrency that is faster and more scalable than existing ones.
Tezos is a smart-contract blockchain. Tezos smart contracts are written in a low-level stack-based language called Michelson. This article gives an overview of efforts using the Coq proof assistant to have stronger guarantees on Michelson smart contracts: the Mi-Cho-Coq framework, a Coq library defining formal semantics of Michelson, as well as an interpreter, a simple optimiser and a weakest-precondition calculus to reason about Michelson smart contracts; Albert, an intermediate language that abstracts Michelson stacks with a compiler written in Coq that targets Mi-Cho-Coq.
СМАРТ-КОНТРАКТ В УСЛОВИЯХ ФОРМИРОВАНИЯ НОРМАТИВНОЙ ПЛАТФОРМЫ ЭКОСИСТЕМЫ ЦИФРОВОЙ ЭКОНОМИКИ РОССИЙСКОЙ ФЕДЕРАЦИИИсследование выполнено при финансовой поддержке