The Ethereum platform supports the decentralized execution of smart contracts, i.e. computer programs that transfer digital assets between users. The most common language used to develop these contracts is Solidity, a Javascript-like language which compiles into EVM bytecode, the language actually executed by Ethereum nodes. While much research has addressed the formalisation of the semantics of EVM bytecode, relatively little attention has been devoted to that of Solidity. In this paper we propose a minimal calculus for Solidity contracts, which extends an imperative core with a single primitive to transfer currency and invoke contract procedures. We build upon this formalisation to give semantics to the Ethereum blockchain. We show our calculus expressive enough to reason about some typical quirks of Solidity, like e.g. re-entrancy.
To address the large amount of energy wasted by blockchains, we propose a decentralized consensus protocol for blockchains in which the computation can be used to search for good approximate solutions to any optimization problem. Our protocol allows the wasted energy to be used for finding approximate solutions to problems submitted by any nodes~(called clients). Our protocol works in a similar way to proof-of-work, and it makes nodes evaluate a large number of solution candidates to add a new block to the chain. A client provides a search program that implements any search algorithm that finds a good solution by evaluating a large number of solution candidates. The node that finds the best approximate solution is rewarded by the client. Our analysis shows that the probability of a fork and the variance in the block time with our protocol are lower than those in proof-of-work.
In this paper, we describe LUNES-Blockchain, an agent-based simulator of blockchains that is able to exploit Parallel and Distributed Simulation (PADS) techniques to offer a high level of scalability. To assess the preliminary implementation of our simulator, we provide a simplified modelling of the Bitcoin protocol and we study the effect of a security attack on the consensus protocol in which a set of malicious nodes implements a filtering denial of service (i.e. Sybil Attack). The results confirm the viability of the agent-based modelling of blockchains implemented by means of PADS.
Research in the field of blockchain technology and applications is increasing at a fast pace. Although the Bitcoin whitepaper by Nakamoto is already ten years old, the field can still be seen as immature and at an early stage. Current research in this area is lacking a commonly shared knowledge and consensus about terms used to describe the technology and its properties. At the same time this research is challenging fundamental aspects of the Bitcoin core concept. It has to be questioned whether all of these new approaches still adequately could be described as blockchain technology. We propose to use the term Decentralized Consensus Technology as a general category instead. Decentralized Consensus Technology consists of decentralized ledger and non-ledger technologies. Blockchain technology in turn is only one of multiple implementations of the Decentralized Ledger Technology. Furthermore, we identified three main characteristics of Decentralized Consensus Technology: decentralization, trustlessness and ability to eventually reach consensus. Depending on the use case of the specific implementation the following additional properties have to be considered: privacy, participation incentive, irreversibility and immutability, operation purpose, confirmation time, transaction costs, ability to externalize transactions and computations and scalability possibilities.
The article provides an analysis of the standard of proof «reasonable suspicion» in practice of the European Court of Human Rights (further referred to as ECtHR), which is recognized as a source of law in Ukraine next to the European Convention of Human Rights (further referred to as ECHR). It is argued that a concept of standards of proof is relatively new in Ukrainian legislation, where no legal definition of particular standards is provided. National courts face complexities in application of the «reasonable suspicion» standard that leads to systemic violations of fundamental rights and numerous cases before the ECtHR versus Ukraine. Based on systemic analysis of academic literature and practice of the ECtHR regarding «reasonable suspicion» standard, that is applicable while a breach of Article 5 of the ECHR is at stake, the authors have elaborated criteria of the reasonableness of the suspicion in criminal proceedings that can serve a guidance for the national courts. Reasonable suspicion of committing an offence can be defined as an aggregation of facts and information capable to persuade an objective observer that the person may have committed an offence. Despite evidence to satisfy the reasonable suspicion standard shall not be of the same level as required for justification of the criminal charge or the conviction, reasonable suspicion cannot be of purely subjective nature, it shall not be described in abstract terms either. Finally, the standard of proof «reasonable suspicion» is of dynamic nature. The longer the period of fundamental rights limitation is the stronger justifications for such interventions are required. Even while rendering the first decision ordering the detention on remand, national courts shall substantiate not only the persistence of reasonable suspicion, but justify with evidence an existence of «relevant» and «sufficient» reasons for the detention. In this article existence of evidence at the pre-trial stage is consistently demonstrated, that is supported by numerous cases of the ECtHR regarding «reasonable suspicion» standard.
The article looks at the proving process in mathematics from a didactic perspective. The study seeks to identify what metamathematics knowledge is at stake when mathematicians produce proof of implications with universal quantifiers. For this reason, we propose a modelling of the proof process – from the manipulation of examples to the finished product – based on dialogic logic tools. This modelling leads us to a characterization of the enunciative position which is needed to elaborate proofs. The results are derived from two cases: one in arithmetic integers, another in plane geometry. Their comparison allows us to discuss the limits of a transversal approach to this meta-mathematical knowledge without taking into account the specificity of mathematical fields.
The aim of this article is to assess the importance of user charges as a source of revenues in state and local government and factors that impact a volume of these revenues. In order to carry out the research it has been assumed that volume of revenues from fees and user charges are dependent on fi scal decentralization, are positively affected public expenditure and depend on the wealth of a society. Two models-for the whole public sector and for state and local government has been designed. Using a panel of 26 selected OECD countries in period 1995-2016 it has been proved that decentralization is a signifi cant factor only in case of fees and user charges in whole public sector but not signifi cant in decentralized model. As expected fees and user charges positively depend on volume of expenditures in both models and additionally negatively depends on tax burden.
Development of information technologies, cryptocurrencies and technology of distributed networks has caused the appearance of smart con- tracts as new types of civil contract. They have been widely used in recent years in such areas as initial coins offering (ICO), financial sector, inter- national trade and public services. At the same time the legal status and legal regulation of smart contracts are uncertain. These uncertainties cause many legal risks of smart-contractsutilization. The purpose of this article is to find out the conception of smart contract as a form of civil contract, to research its legal status and legal regula- tion issues and to develop proposals for the improvement of legal regulation of smart contracts and cryptocurrencies in Ukraine. By its legal nature a smart contract is a digital form of a civil contract realized in programming code automatically executed in a distributed network. Like a civil contract, smart contract has such elements as parties, subject and essential terms of the contract. The legal force of a smart contract depends on whether it includes the fundamental features of a civil contact, such as evidence that parties have intention to create legal relations, understandabil- ity of contract conditions and possibility to perform the terms of the contract under duress. The main advantages of a smart contract are its ability to significantly accelerate and reduce costs of the transaction and guarantee the fulfillment of contract terms regardless of the contractual parties' and third parties' will. The main risks of a smart contract are uncertainty of legal status of a smart contract and cryptocurrencies as a means of payment, complexity of expressing the contact terms in a mathematical algorithm, risk of software bugs and hacking attack. To solve the problems of legal regulation of smart contracts in Ukraine it is necessary to change the legislation in order to settle the legal status of cryptocurrencies and recognize a smart contract as a form of a civil contract. It is necessary to identify parties of the smart contract, confirm their agreement on the terms of the smart contract by using digital electronic signature. A smart contract should be supplemented by text application containing the es- sential terms of the contract which will have legal force in trail. It is necessary to implement blockchain technology in the state registers and pro- vide legal ability to make adjustments in the registers automatically for the performance of smartcontracts.
With all the terms and evolving definitions of distributed ledger technology, blockchain, cryptocurrency, and digital currency, it is no wonder they have caused disruption and confusion to the current state of economic sanctions. Sanctioned individuals and countries may actively seek to evade the regulatory oversight of transactions that are completed in the United States dollar using cryptocurrency. The United States and the United Nations have used economic sanctions as a tool of encouragement, and punishment, for decades in the traditional banking and financial services space. Cryptocurrency has not easily fallen under this regulatory environment due to its decentralized nature, and bad actors have taken advantage of the lack of oversight. Financial institutions and money service businesses have been actively involved through regulations in sanctions evasion prevention, anti-money laundering, and the prevention of terrorist financing for decades. Governments have not been quick to adopt these same regulations for cryptocurrency exchanges. This paper focuses on the Democratic People’s Republic of Korea, their sanctions, and how the country has entered the cryptocurrency space. In addition, it explores how the United States has used economic sanctions in the past, how it has tackled regulation of cryptocurrency and sanctions, and how certain countries have responded.
Andrea Romaoli Garcia, Pedro Henrique Romaoli Garcia
This research aims to analyse the social event that is modifying the traditional financial system since the blockchain technology and cryptocurrencies came up. Taxation in international scenario were examined by the ideal from governments in a democratic system as an instrument that materialises human rights. The social observation approaches the legacy of Emile Durkheim philosophy who established a power relationship between social fact and coercion. Taxation has been the focal point in smart economy to juridical scientists and everyone involved in the digital economy. This research conducted tests and researches from historical and social method, seeking for laws, doctrine, jurisprudence and concrete case analysis in front of the philosophical school of logical-semantic constructivism as a suitable means to verify the possibility of constructing a matrix rule of tax incidence. This research was enough to show that the blockchain technology and cryptocurrencies fulfils its humanitarian role in the smart economy.
Альона Ільдусівна Гнатовська, А. І. Гнатовська, Алена Ильдусовна Гнатовская, Alona I. Hnatovska · 16 authors
The article deals with the problems of determining the place of the cryptocurrency in the system of financial instruments and the study of its legal status in Ukraine and in the world. The problems of influence of cryptocurrencies on the economy of Ukraine and other countries across the world, potential threats posed by the cryptocurrency system for users of such systems and ways of legal regulation of cryptocurrency transactions are considered. The terminology that is widely used in the cryptocurrency field is analyzed, the main types of cryptocurrencies and the technologies on which they function are considered. Their characteristic features, positive and innovative concepts, which were introduced with their appearance, are identified. The legal status of cryptocurrencies and their prevalence has been investigated. The modern concepts of regulation of the cryptocurrency market in Ukraine and in the world are characterized. In the course of researching the subject of the article, the authors conclude that it is necessary to establish state control over the regulation of the legal status of cryptocurrency and prevent its possible negative impact on the country's economy. It was also concluded that a draft law would be considered that would address the issue of regulation and control of cryptocurrency transactions.
This study assessed the volatility and the Value at Risk (VaR) of daily returns of Bitcoins by conducting a comparative study in the forecast performance of symmetric and asymmetric GARCH models based on three different error distributions. The models employed are the SGARCH and TGARCH which were validated based on AIC, MAE and MSE measures. The results indicated that the SGARCHGED (1,1) with generalised error distribution term was identified as the best fitted GARCH model. Though, this best fitted model based on information loss (AIC) did not provide the best out-of-sample forecast, the differences was insignificant. Thus, the study clearly demonstrates that it is reliable to use the best fitted model for volatility forecasting. Also, to further validate the performance of the best fitted model, it was subjected to a historical back-test using Value at Risk (VaR). Though, it was evident from the study that no model was superior, it was indicated that an average loss of 1.2% is expected to be exceeded only 1% of the time. Moreover, volatility forecast from the back testing was relatively high during the first quarter of 2018 but begun decreasing steadily with time.
Jan 1, 2019·Proceedings of the 1st International Scientific Conference "Modern Management Trends and the Digital Economy: from Regional Development to Global Economic Growth" (MTDE 2019)
In recent years, cryptocurrencies, digital assets used as mediums of exchange that use cryptography to secure the creation and exchange of the currency, have gained in popularity. One cryptocurrency in particular, Bitcoin, has received a considerable amount of attention in the media. As the general public’s awareness of Bitcoin increases, one must consider the impact that aligning a nonprofit with such a currency could have. The present research uses three studies to examine the impact that advertising the nonprofits’ alignment with Bitcoin has on perceived effectiveness as well as potential donors’ attitudes toward investing nonprofits’ assets in the currency. Results suggest that while accepting Bitcoin may enhance potential donors' perceptions of the organization, going so far as to actually invest in the cryptocurrency may be considered a poor choice. Implications for how nonprofit managers may want to handle involvement with this novel and potentially lucrative but risky currency are discussed.
It is widely assumed that the selection process in a blockchain is based on proportional winning probabilities. The reliability and security of any blockchain is based upon this assumption. However, making an analogy between the Bitcoin protocol and the classical statistical urn problem, we argue that, at least on a theoretical level, the selection process in several blockchains is based on nonproportional winning probabilities. This reveals a misconception regarding the incentive structure of many blockchain protocols. We develop an empirical approach to testing for nonproportional winning probabilities in any blockchain, and offer a solution to this problem.
Blockchain is a term that is used for a family of distributed ledger technologies (DLT). Although there is one virtual ledger, every participant in the network has a copy, allowing for local control of data and transparency while ensuring all ledgers remain in sync. This summary of Professor Kevin Werbach's B-School for Public Policy Seminar, discusses how blockchain platforms and more traditional legal mechanisms can be made to work together.
Modern patent systems are slow, inefficient, expensive, and may result in outcomes that actively harm technological progress. This paper proposes a substantive re-think of these systems and lays a foundation upon which practical solutions can be built. Many solutions proposed in the past, such as prior-art bounties, outsourced examination, and dynamic fee setting, have gone unheeded due to the cost of administering them and the rigidity of the patent system. We explore how distributed ledger technologies (DLTs) enable these major changes by altering the way stakeholders are able to interact with the patent records system. We find that transitioning to a DLT-based patent records system can enable many previously suggested improvements to current patent systems in a flexible, scalable, and transparent manner. The case for such a transition is strengthened when jointly considering the complex but common roots of problems facing modern patent systems, rather than a balkanised set of technical solutions to address each issue independently. Noting that a DLT-based system is not a panacea, we also provide comment on the political, legal, and organisational challenges that must be overcome for such changes to be implemented at scale.
In recent years, the scalability issue of blockchain protocols has received huge attention. Sharding is one of the most promising solutions to scale blockchain. The basic idea behind sharding is to divide the blockchain network into multiple committees where each committee processes a separate set of transactions. In this paper, we propose a mathematical model to analyze the security of sharding-based blockchain protocols. Moreover, we analyze well-known sharding protocols including RapidChain, OmniLedger, and Zilliga to validate our model. The key contribution of our paper is to bound the failure probability for one committee and so for each epoch using probability bounds for sums of upper-bounded hypergeometric and binomial distributions. In addition, this paper contribution answers the following fundamental question: “how to keep the failure probability, for a given sharding protocol, smaller than a predefined threshold?”. Three probability bounds are used: Chebyshev, Hoeffding, and Chvátal. To illustrate the effectiveness of our proposed model, we conduct a numerical and comparative analysis of the proposed bounds.
The traditional food supervision system has problems such as lack of industry chain and data fragmentation, which has caused the phenomenon of field regulation to be uncomprehensive in the existing regulatory system and the disposal of response lag. Combining the characteristics of blockchain such as distribution, transparent, and collegiality with the actual needs of regional autonomy, we propose the hierarchical multi-domain blockchain (HMDBC) network structure and the secondary-check mechanism, which can support timely correction and replacement of the malicious supervision nodes by regional nodes co-governance, auxiliary verification of supervision nodes, and arbitration of superior regions. In order to optimize the supervision nodes election, we proposed fuzzy comprehensive evaluation model of credibility, which can be used to objectively and fairly evaluate the comprehensive reputation of each node in that region by considering various influencing factors of node performance indicators. Furthermore, we designed the data block structure model, which can support the supervisor node replacement. Our system can perform automatic food quality detection and warning of substandard food in the entire industrial chain, with the use of smart contracts combined with the food industry standards. Finally, comparing the complexity of the traditional blockchain system with PBFT consortium, our system is more secure, with lower broadcast complexity.
Given the ubiquity of digital technologies, and increased use of autonomous algorithms, it is likely that many of today’s social and organizational processes will one day include autonomous elements. The Bitcoin blockchain is likely the first case of an increasingly generative and autonomous way of organizing, and the specific properties of blockchain infrastructures—distribution of control, openness to manipulation, and generativity of the underlying source code—make it an ideal case to study patterns of self-organizing. This paper investigates the phenomenon of self-organizing through a study of forking in the Bitcoin blockchain infrastructure between 2010 and 2016. It adds to the emerging body of research on digital infrastructures, and particularly blockchain infrastructures, by conceptualizing forking as a pattern of self-organizing in blockchain infrastructures that specifically involves the underlying infrastructure, the scale of code changes, individual objectives, and collective adoption, whether specific or general. Thus, this paper demonstrates how forking in blockchain infrastructures mediates between divergent organizing objectives and existing capabilities, on the one hand, and generates self-organizing on the other hand. In this paper, we further contextualize our findings in extant work on digital infrastructures, offer a guide for designers of blockchain infrastructures, and propose the concept of “generative mirroring” as a pattern through which blockchain infrastructures and organizing adaptively coevolve.