An interesting research problem in our age of Big Data is that of determining provenance. Granular evaluation of provenance of physical goods--e.g. tracking ingredients of a pharmaceutical or demonstrating authenticity of luxury goods--has often not been possible with today's items that are produced and transported in complex, inter-organizational, often internationally-spanning supply chains. Recent adoption of Internet of Things and Blockchain technologies give promise at better supply chain provenance. We are particularly interested in the blockchain as many favoured use cases of blockchain are for provenance tracking. We are also interested in applying ontologies as there has been some work done on knowledge provenance, traceability, and food provenance using ontologies. In this paper, we make a case for why ontologies can contribute to blockchain design. To support this case, we analyze a traceability ontology and translate some of its representations to smart contracts that execute a provenance trace and enforce traceability constraints on the Ethereum blockchain platform.
Broadbent Anne, Zhengfeng Ji, Song Fang, Watrous John
Prior work has established that all problems in NP admit classical zero-knowledge proof systems, and under reasonable hardness assumptions for quantum computations, these proof systems can be made secure against quantum attacks. We prove a result representing a further quantum generalization of this fact, which is that every problem in the complexity class QMA has a quantum zero-knowledge proof system. More specifically, assuming the existence of an unconditionally binding and quantum computationally concealing commitment scheme, we prove that every problem in the complexity class QMA has a quantum interactive proof system that is zero-knowledge with respect to efficient quantum computations. Our QMA proof system is sound against arbitrary quantum provers, but only requires an honest prover to perform polynomial-time quantum computations, provided that it holds a quantum witness for a given instance of the QMA problem under consideration. The proof system relies on a new variant of the QMA-complete local Hamiltonian problem in which the local terms are described by Clifford operations and standard basis measurements. We believe that the QMA-completeness of this problem may have other uses in quantum complexity.
As the world's first completely decentralized digital payment system, the emergence of bitcoin represents a revolutionary phenomenon in financial markets. This paper mainly studies the fluctuations of bitcoin price and discusses weather digital currencies represented by bitcoin have the potential to invest. Cointegration analysis and VEC (Vector Error Correction) Model have been performed to demonstrate the relationship between bitcoin price and some variables including stock price index, oil price and daily trading volume of bitcoin. The empirical research indicates that there is long-term equilibrium and short-term dynamic relationship among the four factors. The short run analysis reveals that oil price and bitcoin trading volume have little influence on bitcoin price while stock price index has relatively larger impact on it. In the long run, stock price index and oil price have a negative effect on bitcoin price. On the contrary, the value of bitcoin is positively affected by daily trading volume.
This thesis examines how Distributed Ledger Technologies (DLTs) could be utilized in capital markets in general and in the Nordic capital market in particular. DLTs were introduced with the so called cryptocurrency Bitcoin in 2009 and has in the last few years been of interest to various financial institutions as a means to streamline financial processes. By combining computer scientific concepts such as public-key cryptography and consensus algorithms DLTs make it possible to keep shared databases with limited trust among the participators and without the use of a trusted third party. In this thesis various actors on the Nordic capital market were interviewed and their stance on DLTs were summarized. In addition to this a Proof of Concept of a permissioned DLT application for ownership registration of securities was constructed. It was found that all the interviewees were generally optimistic about DLTs potential to increase the efficiency of capital markets. The technology needs to be adopted to handle the capital markets demand for privacy and large transaction volumes, but there is a general agreement among the interviewees that these issues will be solved. The biggest challenge for an adoption of DLTs seem to lie in that of finding a common industry-wide standard.
Abstract Since the emergence of the virtual currency Bitcoin in 2009, a new, Internet‐based way of recording entitlements and enforcing rights has increasingly captured the interest of businesses and governments. The technology is commonly called ‘blockchain’ and is often associated with a closely related phenomenon, the ‘smart contract’. The market is now exploring ways of using these concepts for financial assets, such as securities, fiat money and derivative contracts. This article develops a conceptual framework for the governance of blockchain‐based networks in financial markets. It constructs a vision of how financial regulation and private law should set the boundaries of this new technology in order to protect market participants and societies at large, while at the same time allowing the necessary room for innovation.
The decentralized digital currency Bitcoin - and its underlying "blockchain" technology - has created much excitement in the technology community, but its potential for building truly empowering social and solidarity-based finance has yet to be tested. This paper provides a primer on the basics of Bitcoin and discusses the existent narratives about the technology´s potential to facilitate remittances, financial inclusion, cooperative structures and even micro-insurance systems. It also flags up potential points of concern and conflict; such as the tech-from-above "solutionism" and conservative libertarian political dynamics of some of the technology start-up community that surrounds Bitcoin. As a way of contrast the paper considers "blockchain 2.0" technologies with more overtly communitarian ideals and their potential for creating "cooperation at scale". It concludes with suggestions for future research.
We analyze how network effects affect competition in the nascent cryptocurrency market. We do so by examining early dynamics of exchange rates among different cryptocurrencies. While Bitcoin essentially dominates this market, our data suggest no evidence of a winner-take-all effect early in the market. Indeed, for a relatively long period, a few other cryptocurrencies competing with Bitcoin (the early industry leader) appreciated much more quickly than Bitcoin. The data in this period are consistent with the use of cryptocurrencies as financial assets (popularized by Bitcoin), and not consistent with winner-take-all dynamics. Toward the end of our sample, however, things change dramatically. Bitcoin appreciates against the USD, while other currencies depreciate against the USD. The data in this period are consistent with strong network effects and winner-take-all dynamics. This trend continues at the time of writing.
Cryptocurrencies became popular with the emergence of Bitcoin and have shown an unprecedented growth over the last few years. As of November 2016, more than 720 cryptocurrencies exist, with Bitcoin still being the most popular one. We provide both a statistical analysis as well as an extreme value analysis of the returns of the most important cryptocurrencies. A particular focus is on the tail risk characteristics and we will provide an in-depth univariate and multivariate extreme value analysis. The tail dependence of cryptocurrencies is investigated (using both empirical and Gaussian copulas). For investors—especially institutional ones—as well as regulators, an understanding of the risk and tail characteristics are of utmost importance. For cryptocurrencies to become a mainstream investable asset class, studying these properties is necessary. Our findings show that cryptocurrencies exhibit strong non-normal characteristics, large tail dependencies, depending on the particular cryptocurrencies and heavy tails. Statistical similarities can be observed for cryptocurrencies that share the same underlying technology. This has implications for risk management, financial engineering (such as derivatives on cryptocurrencies)—both from an investor’s as well as from a regulator’s point of view. To our knowledge, this is the first detailed study looking at the extreme value behaviour of cryptocurrencies, their correlations and tail dependencies as well as their statistical properties.
"A New York Times technology and business reporter charts the dramatic rise of Bitcoin and the fascinating personalities who are striving to create a new global money for the Internet age.Digital Gold is New York Times reporter Nathaniel Popper's brilliant and engrossing history of Bitcoin, the landmark digital money and financial technology that has spawned a global social movement.The notion of a new currency, maintained by the computers of users around the world, has been the butt of many jokes, but that has not stopped it from growing into a technology worth billions of dollars, supported by the hordes of followers who have come to view it as the most important new idea since the creation of the Internet. Believers from Beijing to Buenos Aires see the potential for a financial system free from banks and governments. More than just a tech industry fad, Bitcoin has threatened to decentralize some of society's most basic institutions.An unusual tale of group invention, Digital Gold charts the rise of the Bitcoin technology through the eyes of the movement's colorful central characters, including a British anarchist, an Argentinian millionaire, a Chinese entrepreneur, Tyler and Cameron Winklevoss, and Bitcoin's elusive creator, Satoshi Nakamoto. Already, Bitcoin has led to untold riches for some, and prison terms for others.Digital Gold includes 16 pages of black-and-white photos"..
The new technology Bitcoin has got a lot of attention since it was presented in late 2008 and implemented early 2009. However, the main attention has been to the currency and not so much the underlying blockchain technology. This paper argues that we need to look beyond the currency and investigate the potential use of the blockchain technology to enable smarter governments by utilizing the secure, distributed, open, and inexpensive database technology. The technology is discussed in the perspective of an information infrastructure to investigate its full potential. After a literature review of Bitcoin publications, with a special emphasis on eGovernment literature, the paper presents a relevant use case highlighting the innovation potential of the new technology. The literature review shows that Bitcoin is absent from the e-Government literature. The use case presented shows that Bitcoin could be a promising technology for validating many types of persistent documents in public sector.
We document systematic differences in bitcoin prices across 11 different markets representing 26% of global bitcoin trade volume. These differences must -due to the identical nature of all bitcoin -result from characteristics of markets themselves. We examine differences across the markets and find that those which do not require customer identification for establishing an account are more likely to deviate from representative market prices than those which do. This implies that standard financial regulations, specifically know-your-customer regulations, can have a non-negligible impact on the bitcoin market.
At the World Economic Forum more than 800 executive and technology experts were asked when they thought a particular “tipping point” would be reached – when would we see a government collect tax with blockchain? The agreed date was 2023 (on average). A full 73% of the respondents however, expected the tipping point to have been reached by 2025. This paper argues that the EU VAT will be an early adopter, if not the earliest adopter of blockchain. There are a number of reasons why. Blockchain will bring substantial efficiencies to VAT collection. It will reduce costs, and build critical inter-governmental trust relationships. Most importantly, blockchain will immediately end revenue losses well in excess of €50 to €60 billion per year in missing trader intra-community fraud (MTIC). Blockchain will also be essential for making the EU Commission’s April 2016 Action Plan on VAT work. Blockchain should be a critical part of the detailed legislative proposal (expected in 2017). This plan will bring in a “definitive VAT system” dealing with intra-EU cross-border trade, which will be based on taxation in the country of destination. This paper predicts that the EU will bring in the “definitive system” on the back of blockchain technology. Blockchain is a revolutionary improvement on any centralized data system. Tax administrations are inherently based upon centralized repositories of taxpayer data. They are prime candidates for the kinds of efficiency improvements that come through blockchain. This is particularly the case for transaction taxes, and even more so for a VAT fraud prevention application, like the Digital Invoice Customs Exchange (DICE), which relies on a real-time exchange of encrypted data.