Bitcoin has been one of the most interesting financial innovations in the last ten years. In this essay, we set out to discover why it has not spread as a medium of payment and how it has become a high-risk form of investment instead. We examine the operational mechanisms of bitcoin technology and explain the ideological background for the popularity of bitcoin. We conclude that, in its present form, bitcoin is not suitable to become a generally accepted medium of payment.
Liudmila Zavolokina, Rafael Ziolkowski, Ingrid Bauer
In recent years, an increasing number of blockchain consortia have emerged. However, little is known about how these consortia are developed and what tensions emerge in such collaborations. We describe the evolution of the cardossier blockchain consortium in Switzerland, which is building a system for managing car data and seeking to improve collaboration between players in the car-related ecosystem. From our involvement with the cardossier project, we have gained insights that will be valuable to enterprises considering whether to join a blockchain consortium.
Abstract The electoral process has suffered from deep political instability following the post-colonial independence of most African nations. Moreover, the electoral process in many countries is characterized by massive rigging, high cost of electoral materials, and declaration of false results. In this paper, we will present a review of the blockchain Technology and some of the potential roles to play in conducting a transparent election. This paper opines that with the emergence of the blockchain technology, African Nations should tap from it and build a reliable, secure, and convenient electoral voting system. It further suggests that a blockchain electoral voting system will eliminate most of the challenges faced by African nations in conducting a free, fair and transparent election with low cost and total security. The issue of election rigging is almost completely eradicated with this technology (if properly installed). An attempt to alter/manipulate records (votes) in the system’s database can be spotted easily, because of its rigorous consensus rules, such an attempt is considered void and denied permission to access, alter, or destroy any of the previously saved votes. However, the paper argues that there are institutional challenges to implementing this technology within the continent. Specifically, there is a need to educate the masses as well as create robust policies that can accommodate this technology within the continent. Failure to acknowledge these challenges may well prevent the application of blockchain technology in African electoral process in the foreseeable future.
Abstract There is a wealth of information, hype around, and research into blockchain’s ‘disruptive’ and ‘transformative’ potential concerning every industry. However, there is an absence of scholarly attention given to identifying and analyzing the political premises and consequences of blockchain projects. Through digital ethnography and participatory action research, this article shows how blockchain experiments personify ‘prefigurative politics’ by design: they embody the politics and power structures which they want to enable in society. By showing how these prefigurative embodiments are informed and determined by the underlying political imaginaries, the article proposes a basic typology of blockchain projects. Furthermore, it outlines a frame to question, cluster, and analyze the expressions of political imaginaries intrinsic to the design and operationalization of blockchain projects on three analytic levels: users, intermediaries, and institutions.
Ludwig Trotter, Mike Harding, Chris Elsden, Nigel Davies · 5 authors
We demonstrate Smart Donations, a blockchain powered mobile platform and application that facilitates a novel model for real-time, condition-based donations using smart contracts. By leveraging the benefits of blockchain technology, Smart Donations empower donors to (i) attach conditions dependent on real-world phenomena to a donation, (ii) store funds in a secure, transparent and decentralised escrow, and (iii) automatically release funds to charitable organisations or particular projects once the donor's conditions have been met. We believe this mobile prototype demonstrates a compelling new approach to charitable giving that leverages dynamic pledge controls and considers new trust relationships between donors and NGOs.
The achievements of west and central Africa in producing more than 60% of the world's cocoa, and sub-Saharan Africa's achievement in producing 13% of the world's cotton, hide child labor. These significant levels of production often involve child exposure to issues such as a lack of education; pesticides; dangerous farming tools; work accidents; human trafficking; etc. Blockchain offers an immutable register that allows for digital transactions, smart contract creation, as well as end-to-end product traceability. The main aim of this article is to provide an intelligent contract framework that protects child labor in farming while further enlightening understandings of adoption-related challenges. This framework considers conditions that farmer associations need to satisfy and gives them a tool to improve children's welfare. A research model for the adoption of this tool has been proposed and validated through surveys in the cotton and cacao sectors.
Technological advancements in the provision of financial services are transforming the economic landscape by providing opportunities for financial institutions, corporate sector, and consumers. Financial technologies (fintech) offer broader economic development and inclusive growth and facilitate international payments and remittances. Fintech applications, such as mobile wallets and crowdfunding that are hugely successful, especially in developing countries such as India, are examples of how simple technologies can enhance financial inclusion through the decentralized provision of payments, borrowings, and risk management. However, these innovations also create challenges for regulators. The emerging fintech models raise concerns on investor protection, adequacy of existing regulations and potential threats to financial stability, leading to questions on the policies and institutional framework required to tap into the benefits of these technologies securely. In this paper, we look at the landscape of fintech companies and their suitability for financing sustainable development. The paper also examines the policy and institutional frameworks required for the effective utilization of fintech for sustainable development. Fintech has the potential to involve the private sector to finance sustainable development and hence the paper would be of interest to policymakers, particularly in developing countries, as many struggles to bridge gaps in financing their sustainable development goals (SDGs)
Data sharing techniques have progressively drawn increasing attention as a means of significantly reducing repetitive work. However, in the process of data sharing, the challenges regarding formation of mutual-trust relationships and increasing the level of user participation are yet to be solved. The existing solution is to use a third party as a trust organization for data sharing, but there is no dynamic incentive mechanism for data sharing with a large number of users. Blockchain 2.0 with smart contract has the natural advantage of being able to enable trust and automated transactions between a large number of users. This paper proposes a data sharing incentive model based on evolutionary game theory using blockchain with smart contract. The smart contract mechanism can dynamically control the excitation parameters and continuously encourages users to participate in data sharing.
Lewis Gudgeon, Daniel Pérez, Dominik Harz, Benjamin Livshits · 5 authors
The Global Financial Crisis of 2008, caused by the accumulation of excessive financial risk, inspired Satoshi Nakamoto to create Bitcoin. Now, more than ten years later, Decentralized Finance (DeFi), a peer-to-peer financial paradigm which leverages blockchain-based smart contracts to ensure its integrity and security, contains over 702m USD of capital as of April 15th, 2020. As this ecosystem develops, it is at risk of the very sort of financial meltdown it is supposed to be preventing. In this paper we explore how design weaknesses and price fluctuations in DeFi protocols could lead to a DeFi crisis. We focus on DeFi lending protocols as they currently constitute most of the DeFi ecosystem with a 76% market share by capital as of April 15th, 2020. First, we demonstrate the feasibility of attacking Maker's governance design to take full control of the protocol, the largest DeFi protocol by market share, which would have allowed the theft of 0.5bn USD of collateral and the minting of an unlimited supply of DAI tokens. In doing so, we present a novel strategy utilizing so-called flash loans that would have in principle allowed the execution of the governance attack in just two transactions and without the need to lock any assets. Approximately two weeks after we disclosed the attack details, Maker modified the governance parameters mitigating the attack vectors. Second, we turn to a central component of financial risk in DeFi lending protocols. Inspired by stress-testing as performed by central banks, we develop a stress-testing framework for a stylized DeFi lending protocol, focusing our attention on the impact of a drying-up of liquidity on protocol solvency. Based on our parameters, we find that with sufficiently illiquidity a lending protocol with a total debt of 400m USD could become undercollateralized within 19 days.
The suitability of assets-backed money has been the subject of considerable debate, although hampered in part by lack of theoretical and empirical evidence. Therefore, the motivation of this research is to investigate the perceptions of Shari’ah scholars and financial experts on the concepts and salient features of Shari’ah-compliant precious metal backed crypto-currency (PMC). To achieve this, this study adopted a qualitative method using semi-structured interview based on saturation technique. The results from Shari’ah advisors and financial experts indicated that the informants have differences of views on the assets-backed money, but they agreed that it ensures stability of money and adding the cryptocurrency technology is found to be desirable and recommendable. It is also found that PMC would be subjected to financial regulation challenges and using blockchain technology will increase the transparency. The informants agreed that PMC is closer to Maqāsid al-Shari’ah and there is some form of justice and equality compared to the current interest-based financial system. Therefore, the informants recommended the implementation of PMC.
Silvia Valero, Francisco Climent, Rafael José Esteban de la Rosa
The banking sector has begun a process of digital transformation that is changing the way financial products and services are sold. This transformation is a consequence of the growing demand for digital channels by some sectors of the population, the progress of new technologies and the banks’ need to improve efficiency after the economic crisis. The emergence of innovative financial technology (fintech) startups in the banking sector has been the lever initiating this digital transformation. Technology companies are challenging established banking business models and promoting the democratisation of finance in a more efficient and transparent financial ecosystem. Increasing investment in these technology companies has also attracted the interest of various regulators, and the future suggests a scenario of collaboration between these new players and traditional companies, with a consequently difficult task for the regulators of guaranteeing the same conditions of competition for new entrants and incumbents. However, technology companies with vast experience in the gathering and use of data from millions of users (such as Amazon, Google or Facebook) are considered a threat. Moreover, some types of evolving fintechs, such as neobanks with bank licences, may also become competitors. Distributed ledger technology (DLT) or blockchain, a fintech technology that is evolving constantly, has already awoken the interest of all financial sector participants because it could trigger real disruption and produce a new era of value.
Jørgen Svennevik Notland, Jakob Svennevik Notland, Donn Morrison
Corruption is a major global financial problem with billions of dollars rendered lost or unaccountable annually. Corruption through contract fraud is often conducted by withholding and/or altering financial information. When such scandals are investigated by authorities, financial and legal documents are usually altered to conceal the paper trail. Smart contracts have emerged in recent years and appear promising for applications such as legal contracts where transparency is critical and of public interest. Transparency and auditability are inherent because smart contracts execute operations on the blockchain, a distributed public ledger. In this paper, we propose the Minimum Hybrid Contract (MHC), with the aim of introducing 1) auditability, 2) transparency, and 3) immutability to the contract's financial transactions. The MHC comprises an online smart contract and an offline traditional legal contract. where the two are immutably linked. Secure peer-to-peer financial transactions, transparency, and cost accounting are automated by the smart contract, and legal issues or disputes are carried out by civil courts. The reliance on established legal processes facilitates an appropriate adoption of smart contracts in traditional contracts.
Our current banking system is based on a central server where every branch is connected to each other. If the server made any changes to the data of a branch then other branches get affected. In this system, Corruption can be easily occurred because of unauthorized access which is totally insecure in transaction systems. But, Blockchain is a secure system where the transactional history regarding crypto-currency cannot be modified or destructed. Since 2008, Blockchain has gained immense interest due to exclusion of third-party organization participation in monitoring of the transactions. Ethereum is a protocol which is based on Blockchain technology and has several benefits over other crypto-currency based system and is best suited for creating a secure lending system. Every Ethereum based system runs on 'Smart-Contracts' which are lines of code and makes the system automated. As the system gets automated, proper algorithms can make the system reliable and secure as each and every step of the system is maintained and executed by the algorithm inside the Smart-Contracts. Blockchain systems work with peer-to-peer networks and also uses a consensus algorithm that's why there is no possibility of data modification.
With a view to overcome the shortcomings of traditional Electronic Health Record (EHR) system so as to assure the interoperability by providing open access to sensitive health data, while still preserving personal data privacy, anonymity and avoiding data misuse, Decentralized Electronic Health Record System was developed. The aforementioned issue concerning traditional EHR system can be addressed by implication of emerging technology of the era namely Block chain, together with Inter Planetary File System (IPFS) which enables data sharing in decentralized and transactional fashion, thereby maintaining delicate balance between privacy and accessibility of electronic health records. A block chain based EHR system has been built for secure, efficient and interoperable access to medical records by both patients and doctors while preserving privacy of the sensitive patient’s information. Patients can easily and comprehensively access to their medical records across providers and treatment sites using unique properties of block chain and decentralized storage. A separate portal for both the patients and doctors has been built enabling the smart contracts to handle further interaction between doctors and patients. So, in this system, it is demonstrated how principles of decentralization and block chain architectures could contribute to EHR system using Ethereum smart contracts and IPFS to orchestrate a suitable system governing the medical record access while providing patients with comprehensive record review along with consideration for audit ability and data sharing.
Information systems and technology has changed the world in every aspect. One of them is how a contract is made. Smart contract technology has offered a new, efficient, and secure way to automatically execute the terms of the agreement with no third-party to perform such contracts. The objective of this paper is to conduct a systematic overview of how the smart contract can bring opportunities and also challenges to Indonesia. We propose this paper due to the benefits Indonesian businesses will have by implementing smart contracts. Apart from the benefits, in Indonesia, there are still very few journals discussing smart contracts implementation. In this paper, there will be our findings of how smart contracts are utilized currently in industries, the challenges, and the current smart contract in Indonesia. The result will be used as guidance when considering, planning, and applicating smart contracts in Indonesia.
Digitalization in finance is an irreversible process, which manifests itself in many different dimensions. Blockchain is an innovative technology that can significantly increase the operational effectiveness of key processes in the financial services industry by reducing costs, enhancing the security and transparency of transactions, and speeding up the settlement process. The idea of smart contracts’ implementation in blockchain is suitable for financial transactions, where a link between fulfilling contractual terms and performing actual transactions is established. The ‘’blockchain - smart contract’’ combination forces the execution of all transactions in accordance with the contract terms and leaves a door, wide open for the automation of key processes. What makes using a ‘smart contract’ beneficial is its ability to eliminate mediation from third parties, such as agents or trustees. The invasion of digital technology is expected to bring dramatic changes in the nature of financial intermediation. This research paper is focused on assessing the expected degree of blockchain penetration and its impact on selected key segments of the financial industry (e.g. global payments, trade finance, capital market trading, syndicated lending, insurance and compliance). Barriers and challenges to the new application’s wide spreading are also analyzed. Based on this research, conclusions about the expected degree of applicability of blockchain in the financial sphere are drawn, and proposals for the initial steps in this direction are made.
Antonio López Vivar, Alberto Turégano Castedo, Ana Lucila Sandoval Orozco, Luis Javier García Villalba
Smart contracts have gained a lot of popularity in recent times as they are a very powerful tool for the development of decentralised and automatic applications in many fields without the need for intermediaries or trusted third parties. However, due to the decentralised nature of the blockchain on which they are based, a series of challenges have emerged related to vulnerabilities in their programming that, given their particularities, could have (and have already had) a very high economic impact. This article provides a holistic view of security challenges associated with smart contracts, as well as the state of the art of available public domain tools.
Christian Sillaber, Bernhard Waltl, Horst Treiblmaier, Ulrich Gallersdörfer · 5 authors
Abstract Smart contracts are seen as the major building blocks for future autonomous blockchain- and Distributed Ledger Technology (DLT)-based applications. Engineering such contracts for trustless, append-only, and decentralized digital ledgers allows mutually distrustful parties to transform legal requirements into immutable and formalized rules. Previous experience shows this to be a challenging task due to demanding socio-technical ecosystems and the specificities of decentralized ledger technology. In this paper, we therefore develop an integrated process model for engineering DLT-based smart contracts that accounts for the specificities of DLT. This model was iteratively refined with the support of industry experts. The model explicitly accounts for the immutability of the trustless, append-only, and decentralized DLT ecosystem, and thereby overcomes certain limitations of traditional software engineering process models. More specifically, it consists of five successive and closely intertwined phases: conceptualization, implementation, approval, execution, and finalization. For each phase, the respective activities, roles, and artifacts are identified and discussed in detail. Applying such a model when engineering smart contracts will help software engineers and developers to better understand and streamline the engineering process of DLTs in general and blockchain in particular. Furthermore, this model serves as a generic framework which will support application development in all fields in which DLT can be applied.
The contract is the sovereign tool employed to manage agreements between entities in today’s society. It plays a crucial role in a variety of different fields, ranging from politics to finance. This fact implies the efficiency of these applications is determined in part by the efficiency of the contracts they rely on. Despite their important role, contracts have changed relatively little in the last few centuries and remain based on an outdated technology of bureaucracy and procedures done by hand. Such systems are full of unnecessary complications, are incredibly wasteful in terms of time, money and resources, and are susceptible to human failure. In the last few years, a type of contract represented by a computer program has appeared. This concept, known as a smart contract, is based on the emerging blockchain technology. Blockchain is a type of distributed system which assures the immutability of data via the use of mathematically secure cryptographic techniques and that, as will be discussed, is well-suited for the implementation of smart contract systems. Transitioning contracts into the digital era would not only allow them to catch up to the technological pace of society but also would be advantageous from a safety and efficiency standpoint. This body of work will test the feasibility of using blockchain-based smart contracts to facilitate the first steps of this evolution. This thesis assembles a proof of concept platform that supports the specification and execution of smart contracts on a blockchain network. This proof of concept will in particular target the use case of opening a bank account, aiming to create an efficient, permanent, reliable and safe process. To achieve this, we constructed a Hyperledger Fabric network. We present herein the system developed and discuss the nuances pertaining to deploying a codebase on a blockchain, the evaluation of our system, and finally some visions for further development of this and related use cases.
The copyright of data is a key point that needs to be solved in spatial data infrastructure for data sharing. In this paper, we propose a decentralized digital rights management model of spatial data, which can provide a novel way of solving the existing copyright management problem or other problems in spatial data infrastructure for data sharing. An Ethereum smart contract is used in this model to realize spatial data digital rights management function. The InterPlanetary File System is utilized as external data storage for storing spatial data in the decentralized file system to avoid data destruction that is caused by a single point of failure. There is no central server in the model architecture, which has a completely decentralized nature and it makes spatial data rights management not dependent on third-party trust institutions. We designed three spatial data copyright management algorithms, developed a prototype system to implement and test the model, used the smart contract security verification tool to check code vulnerabilities, and, finally, discussed the usability, scalability, efficiency, performance, and security of the proposed model. The result indicates that the proposed model not only has diversified functions of copyright management compared with previous studies on the blockchain-based digital rights management, but it can also solve the existing problems in traditional spatial data infrastructure for data sharing due to its characteristics of complete decentralization, mass orientation, immediacy, and high security.
Open access
Blockchain Technology Applications and Security
FinTech, Crowdfunding, Digital Finance
Advanced Steganography and Watermarking Techniques
Management of public finance and economic development is the art by which a nation improves the economic, political and social well-being of its people. The research paper starts from the reality that finance plays an important role in each economy. Nowadays, finance has to manage and adapt to Digital Era. The purpose of this paper is an attempt to identify and encourage managing financial statements through artificial intelligence using XBRL and Blockchain. In many countries, financial and tax authorities encourage the adoption of eXtensible Business Reporting Language (XBRL) and Blockchain. XBRL enable business to generate their required reporting information directly from their financial data. Blockchain technology continues to grow and it is being used in more and more business sectors. Finance, accounting and auditing has been identified as areas that could greatly benefit the distributed registry and other features of Blockchain. The main benefits generated by these innovative tools include reducing the risk of error (especially human error); low risk of fraud; system automation, big data analysis, huge cost savings (by increasing the efficiency and decreasing in errors), increased reliability in financial reports, and reduced workflow. The research paper comes to present how artificial intelligence combine financial information with tech capabilities, accelerate digital transformation of finance and accounting, and may create a more safety business and economic environment, reducing human error. We have to manage our work and time differently. We are living in a digital and intelligent era, where machines take over repetitive, time-consuming and redundant tasks, giving finance professionals more time to approach higher level and more lucrative analysis and research.
Stefan Tönnissen, Jan Heinrich Beinke, Frank Teuteberg
Abstract Start-ups in the blockchain context generate millions by means of initial coin offerings (ICOs). Many of these crowdfunding endeavours are very successful, others are not. However, despite the increasing investments in ICOs, there is still neither sufficient theoretical knowledge nor a comprehensive understanding of the different types of business models and the implications for these token-based ecosystems. Scientific research equally lacks a thorough understanding of the different business model forms and their influence on collaboration in token-based economies. We bridge this gap by presenting a taxonomy of real-world blockchain-based start-ups. For this taxonomy, we used 195 start-ups and performed a cluster-analysis in order to identify three different archetypes and thus gain a deeper understanding. Our taxonomy and the archetypes can equally be seen as strategic guidance for practitioners as well as a starting point for future research concerning the token-based business models.