Niclas KannengieĂer, Sebastian Lins, Tobias Dehling, Ali Sunyaev
When developing peer-to-peer applications on distributed ledger technology (DLT), a crucial decision is the selection of a suitable DLT design (e.g., Ethereum), because it is hard to change the underlying DLT design post hoc. To facilitate the selection of suitable DLT designs, we review DLT characteristics and identify trade-offs between them. Furthermore, we assess how DLT designs account for these trade-offs and we develop archetypes for DLT designs that cater to specific requirements of applications on DLT. The main purpose of our article is to introduce scientific and practical audiences to the intricacies of DLT designs and to support development of viable applications on DLT.
Niclas KannengieĂer, Sebastian Lins, Tobias Dehling, Ali Sunyaev
When developing peer-to-peer applications on Distributed Ledger Technology (DLT), a crucial decision is the selection of a suitable DLT design (e.g., Ethereum) because it is hard to change the underlying DLT design post hoc. To facilitate the selection of suitable DLT designs, we review DLT characteristics and identify trade-offs between them. Furthermore, we assess how DLT designs account for these trade-offs and we develop archetypes for DLT designs that cater to specific quality requirements. The main purpose of our article is to introduce scientific and practical audiences to the intricacies of DLT designs and to support development of viable applications on DLT.
Under the phrase âcode is lawâ and based on its âtrustless trustâ, blockchain has emerged as a disrupting technology considered by some as an alternative to the law. Based on a study of real-life blockchain-based decentralised applications (Dapps), this article takes blockchain developers at their word and adopts the point of view of users: can blockchain live up to its promise and enable them to transact with each other without the need for the trust granted by the law? The article particularly highlights that users need to be able to ascertain that a self-advertised Dapp indeed qualifies as one. Blockchain technology may make it possible to do away with trust in third parties, but this is not enough. Users also need to trust that an alleged Dapp genuinely is one, and blockchain alone cannot provide this. Beyond Dapps, it is argued that blockchain needs the complementary role of the law to deliver its promises and especially to authenticate blockchain âvirtuesâ. The EU certification mark is identified as a promising form of co-regulation for that purpose.
This thesis aims to contribute to the understanding of the economics of the cryptocurrency market. In the first chapter, I document the literature on cryptocurrency and the financial applications of blockchain infrastructure. Finance and economics literature on the area of cryptocurrency is relatively new and spans only the last seven years, thus this review intends to serve as a foundation to prompt future work and a deeper understanding of this field. In the second chapter, I develop an equilibrium model of proof-of-work cryptocurrencies. Equilibrium behaviour of miners and users are characterised for exogenous blockchain protocol metrics; I demonstrate that equilibrium between miners and users can be achieved in the long run. High fixed mining rewards are the reason for instability in current cryptocurrency designs. The equilibrium model has two key implications: first, decentralisation and technological improvement in mining are drivers of low transaction fees and low mining costs in a proof-of-work cryptocurrency environment; and second, limited block size and mining difficulty create an incentive mechanism that achieves cryptocurrency sustainability in the long run. In the third chapter, I study the return spillover and systemic risk in the cryptocurrency market in the context of connectedness. The data illustrates that system-wide connectedness in the cryptocurrency market, commonly observed as the level of systemic risk in the literature, changes over time with respect to the adoption rate of cryptocurrencies. Cryptocurrency protocol disputes, malicious activities in the cryptocurrency environment, and negative financial regulations on cryptocurrencies are key sources of increased connectedness over different time periods. Instead, pairwise connectedness between cryptocurrency pairs can be explained by cryptocurrency fundamentals.
This paper compares Initial Public Offerings (IPOs) and equity crowdfunding with Initial Coin Offerings (ICOs) and explores the corresponding risks and limitations of these different fundraising practices, with a view to analysing the extent to which the latter should be subject to the same regulatory framework as the former. After assessing the underlying principles and current regulatory framework for IPOs and equity crowdfunding, with a focus on Europe and the US, we investigate the possibility of applying existing financial regulations to ICOs. Drawing from the notion of âfunctional equivalenceâ, we contend that many ICOs share a sufficient number of similarities with traditional IPOs and equity crowdfunding, to be regulated in a similar manner. However, given the various attempts by token issuers to escape from the scope of securities laws by assigning a different function to their ICOs tokens, we argue that principle-based regulation based on an in-depth risk-analysis could be an effective way of addressing the regulation of ICOs, thereby moving from âfunctional equivalenceâ to ârisk equivalenceâ. Finally, we explore the use of blockchain technology as a regulatory technology, incorporating specific rules and constraints into the technological fabric of an ICO, in order to ensure compliance with the fundamental principles of financial regulation.
istributed ledger technology (DLT) and blockchain, and their headline-catching applications in cryptoassets and initial coin offerings (ICOs), have attracted extraordinary global attention. Alongside Bitcoin's spectacular rise and fall in the past few years, there has been an explosion of ICOs, a tokenization of assets, and fund-raising projects utilizing digital tokens issued and operated on blockchains.
The graduation certificate forgery has become a major problem in now a days and the lack of effective anti-forge mechanism, In order to solve the problem of counterfeiting certificates, the digital certificate system based on blockchain technology would be introduced. The system generate the electronic file of a paper certificate accompanying other related data into the database and calculates its hash value. It then store the hash value into the block in the chain system. The system will create a related QR-code and inquiry string code to affix to the paper certificate, this will verify the authenticity of the paper certificate through mobile phone scanning or website inquiries. By integrating the features of blockchain, the system improves the efficiency operations at each stage.
Esther SalmerĂłn-Manzano, Francisco ManzanoâAgugliaro
The advent and development of digital technologies has had a significant impact on the establishment of contracts. Smart contracts are designed as computer code containing instructions for executing user agreements, offering a technologically secure solution with numerous advantages and applications. However, smart contracts are not without their problems when we try to fit them into the traditional system of contract law, and their presumed benefits can become shortcomings. Bibliometric studies can help to assess the current state of science in a specific subject and support decision making and research direction. Here, this bibliometric study is used to analyze global trend research in relation to this novel contractual methodology, the smart contract, which seems to have experienced exponential growth since 2014. Specially, this analysis was focused on the main countries involved and the institutions that lead this research worldwide. On the other hand, the indexations of these works are analyzed according to major scientific areas and the keywords of all the works, to detect the subjects to which they are grouped. Community detection has been used to establish the relationship between countries researching in this area, and six clusters have been identified, around which all the work related to this topic is grouped. This work shows the temporal evolution of research related to smart contracts, highlighting that there are two trendsâe-commerce and smart power grids. From the perspective of driving sustainability, smart contracts could provide a contribution in the near future.
This article aims to provide a conceptual framework for small and medium-sized enterprises (SMEs) to evaluate the appropriation of blockchain technology for their business needs and challenges. This conceptual framework aims to respond to the problem of increasing speculations surrounding the blockchain that is considered to be an absolute and innovative solution to many business-related problems. However, this argument might not be realistic for SMEs despite this assumption. The main argument of the article is that SMEs should be skeptical while evaluating the appropriation of this technology for their business needs and they should follow a tailored approach whilst adopting it. Otherwise, the likelihood is high that a short-term and unstructured knowledge management process to adopt blockchain will end up with a waste of resources. The present paper conceptualizes an appropriation framework within nine factors namely, reduction of costs, internalization, digital representation of assets, unalterable data recording, network size, transparent and synchronized ledger, scalability, fair trade, and financing. Given the fieldâs infancy state of development, the paper relies on a qualitative document analysis involving SME literature and extant literature and white papers of blockchain applications.
The advent of Blockchain and Distributed Ledger Technologies enable IoT and smart city application developers to conceive new types of applications and solutions for identity management, trust, and data monetization. However, architecting blockchain-based IoT applications remain challenging due to the heterogeneous nature of blockchain platforms and lack of guidelines on how to interface existing components in the IoT ecosystem with the emerging Blockchain technology. This article explains the characteristics of blockchain and IoT technologies and presents a general reference architecture that can be used to develop many blockchain-based peer-to-peer IoT applications.
A construction contract facilitates payments through the supply chain by integrating people, activities, and events throughout the project period through obligations, permissions, and prohibitions in its terms and conditions. The management of payments is a manual process and is more difficult in the case of construction projects as different stakeholders at different levels of the project organizational structure are bound by different contracts. Moreover, payments are strongly affected by the lack of clarity in the definitions of the obligations, responsibilities, and liabilities of various stakeholders in construction contracts. This intensifies disputes and causes delays in construction payments leading to additional expenditure, cash flow problems, and lack of trust. Therefore, to address these problems, we propose a methodology to automate construction payments by formalizing them into smart contracts and executing on a decentralized blockchain based framework. We formalize the payment logic that binds the prohibitions and liabilities associated with financial commitments, such as interim payments on completion of tasks in a construction project, and convert it into a computer-executable code. A framework based on blockchain is used to host this smart contract and to automate actions such as the triggering of payments after achieving consensus among the relevant project stakeholders. This framework also address the conditions required for the security of information in construction projects, such as confidentiality and information integrity in a multi-party environment. The proposed framework is demonstrated through a case-based scenario. Š 2019 International Association for Automation and Robotics in Construction I.A.A.R.C. All rights reserved.
Abstract We apply a vector autoregression (VAR) model to investigate the market cycles of Initial Coin Offerings (ICOs) as well as their relationships with bitcoin and ether. Our sample covers 104 weekly observations between January 2017 and December 2018. Our results show that ICO market cycles exist and that shocks to the growth rates of ICO volumes are persistent. In addition, shocks in cryptocurrency returns have a substantial and positive effect on ICO volumes. In contrast, the volatility of cryptocurrency returns does not significantly affect ICO volumes. Our results are robust to using (i) the number of successfully completed ICO campaigns instead of ICO volumes and (ii) ICO data from a different data source. Our study has implications for financial practice, in particular for cryptocurrency investors and entrepreneurial firms conducting ICOs.
About a decade ago the fundamental operating principle of the Blockchain was introduced. It took several years before the technology gained widespread recognition in industry and academic communities outside of the computer science sphere. Since then many academic communities have taken up the topic, but so far no well-defined research agenda has emerged: research topics are scattered and rigorous approaches are scarce. More often than not, use cases implemented by industry apply a trial and error approach and there exists a dearth of theory-based academic papers on the topic following robust methodologies. Being a nascent research topic, case studies on Blockchain applications are a suitable approach to systematically transfer industry experience into research agendas which benefit both theory development and testing as well as design science research. In this paper I offer guidelines and suggestions on how to design and structure Blockchain case studies to create value for academia and the industry. More specifically, I describe Blockchain characteristics and challenges, present existing Blockchain case studies, and discuss various types of case study research and how they can be useful for industry and academic research. I conclude with a framework and a checklist for Blockchain case study research.
Afiya Ayman, Amna Aziz, Mohammad Amin Alipour, Ăron LĂĄszka
Blockchain based platforms are emerging as a transformative technology that can provide reliability, integrity, and auditability without trusted entities. One of the key features of these platforms is the trustworthy decentralized execution of general-purpose computation in the form of smart contracts, which are envisioned to have a wide range of applications from finance to the Internet of Things. As a result, a rapidly growing and active community of smart contract developers has emerged in recent years. A number of research efforts have investigated the technological challenges that smart contract developers face. However, very little is known about the community itself, about the developers, and about the issues that they discuss and care about. To address this gap, we study the online community of smart contract developers on Stack Overflow. We provide insight into the topics that they discuss, their technological and demographic background, and their awareness of security issues and tools. Our results show that the community of smart contract developers is very active and growing rapidly, in comparison with the general user population. However, a large fraction of smart contract related questions remain unanswered, which can pose a real threat to the viability of a sustainable community and may indicate gaps in community knowledge. Further, we observe very limited discussion of security related topics, which is concerning since smart contracts in practice are plagued by security issues.
[full article and abstract in Lithuanian; abstract in English] The main feature of the twenty-first century could be named as permanent transformation that covers all areas. Payments and money are developing and changing especially fast. Technological evolution and development have led to the emergence of new transactional techniques on the Internet, mobile phones, and credit cards. Various systems of payment / money transfer have considerably expanded payment options and possibilities. And such conditions have created opportunities for the emergence of a cryptocurrency. The purpose of the study is to investigate the cryptocurrency, its concept, advantages and disadvantages. Analysis of the scientific literature, systematization, comparison, interpretation and generalization of information research methods were used for the study. Evaluation of the reasons for the emergence of cryptocurrency let to generalise, that the process was mostly influenced by technological progress and the aspiration to find faster, cheaper and more confidential settlement tools. Cryptocurrency may be defined as digital money or property in electronical form. This currency may be characterized by properties of decentralization, uncontrollability and higher risk management. The most important advantages of using a cryptocurrency may be: the speed of settlements; cheaper financial services; additional investment opportunities. Disadvantages - unpredictable, fluctuating value; possible fraud cases; possibility to use cryptocurrency for illegal activities.
Panagiotis Chatzigiannis, Foteini Baldimtsi, Igor Griva, Jiasun Li
Abstract Mining is a central operation of all proof-of-work (PoW)-based cryptocurrencies. The vast majority of miners today participate in âmining poolsâ instead of âsolo miningâ in order to lower risk and achieve a more steady income. However, this rise of participation in mining pools negatively affects the decentralization levels of most cryptocurrencies. In this work, we look into mining pools from the point of view of a miner: We present an analytical model and implement a computational tool that allows miners to optimally distribute their computational power over multiple pools and PoW cryptocurrencies (i.e. build a mining portfolio), taking into account their risk aversion levels. Our tool allows miners to maximize their risk-adjusted earnings by diversifying across multiple mining pools. Our underlying techniques are drawn from both the areas of financial economy and computer science since we use computer science-based approaches (i.e. optimization techniques) to experimentally prove how parties (and in particular miners) interact with cryptocurrencies in a way of increasing their Sharpe ratio. To showcase our model, we run an experiment in Bitcoin historical data and demonstrate that a miner diversifying over multiple pools, as instructed by our model/tool, receives a higher overall Sharpe ratio (i.e. average excess reward over its standard deviation/volatility).
The proliferation of peer-to-peer virtual alternatives to traditional banknotes has raised concerns among policymakers about the future of traditional means of making payments and how it might affect monetary policy implementation and its effectiveness. This study provides a brief overview of the existing research in this area. It compares positions taken in the literature by authors on some of the key policy issues relevant for central banks when thinking about the issuance of digitalized legal tenders. We examine the implications of government issued digital alternatives to traditional currencies for monetary policy effectiveness, payments and settlements, and financial market stability. We also discuss recent advances in financial technology to improve the making of payments and settlements, which might help contribute to financial inclusion. At the same time, new technologies represent challenges for regulatory authorities, for instance related to efforts to contain anti-money laundering and prevent financing of terrorism. A number of authors argue that government issued digital currency is necessary to address the flaws in private crypto currencies, and to improve monetary policy effectiveness. Central banks have begun to analyze possible features of digitalized legal tenders, to better understand the policy considerations involved and effects these could have for interest rate transmission and financial markets, but there is no clear consensus on key modalities associated with digitalized legal tenders. Moreover, many central banks do not regard privately issued virtual currencies as a serious threat to traditional currencies. Given the ongoing debate, it is difficult to make firm predictions about the impact of central bank issued digital currencies on monetary policy transmission and financial markets at this point.
Emilija Stojmenova Duh, Andrej Duh, Uroť Droftina, Tim Kos ¡ 7 authors
Scholarly communication is today immersed in publish-or-perish culture that propels non-cooperative behavior in the sense of strategic games played by researchers. Here we introduce and describe a blockchain based platform for decentralized scholarly communication. The design of the platform rests on community driven publishing reviewing processes and implements cryptoeconomic incentives that promote cooperative user behavior. The key to achieve cooperation in blockchain based scholarly communication is to transform todayâs static research paper into a modifiable research paper under continuous peer review process. We introduce and discuss the implementation of a modifiable research paper as a smart contract on the blockchain.
Sustainability is a topic of increasing interest. The United Nations has released a list of 17 goals for sustainable development for the global community. Blockchain is a recent technological innovation that shows great promise in changing industries. In this paper, we look specifically at smart grids and supply chain management systems as areas where sustainable technological innovation can happen. To identify software engineering aspects of blockchain in smart grids and supply chain management, we start upon online libraries focusing on engineering and information technology, and we opted for the methodology of systematic mapping studies in software engineering. The search strategy identified 535 papers, of which 60 were identified as main studies for our mapping. To the best of the authors' knowledge, no previous similar studies exist. Results of the study show that the research connecting blockchain technology to smart grids and supply chain management systems is still young. None of the techniques or systems have yet been implemented in a real life setting. As such, more work has to be done before we can look at the actual implications of putting such technologies into use. Software engineering practices could prove to be very useful in the process of development. We propose that future studies can focus on bringing the technologies closer to real life implementations, as well as how to involve the end users in the development of the blockchain-based systems.
Among different concepts associated with the term blockchain, smart contracts have been a prominent one, especially popularized by the Ethereum platform. In this study, we unpack this concept within the framework of Transaction Cost Economics (TCE). This institutional economics theory emphasizes the role of distinctive (private and public) contract law regimes in shaping firm boundaries. We propose that widespread adoption of the smart contract concept creates a new option in public contracting, which may give rise to a smart-contract-augmented contract law regime. We discuss tradeoffs involved in the attractiveness of the smart contract concept for firms and the resulting potential for change in firm boundaries. Based on our new conceptualization, we discuss potential roles the three branches of government â judicial, executive, and legislative â in enabling and using this new contract law regime. We conclude the paper by pointing out limitations of the TCE perspective and suggesting future research directions.
Chris Elsden, Tom Feltwell, Shaun Lawson, John Vines
This paper presents a qualitative study of the recent integration of a UK-based, digital-first mobile banking app - Monzo - with the web automation service IFTTT (If This Then That). Through analysis of 113 unique IFTTT 'recipes' shared by Monzo users on public community forums, we illustrate the potentially diverse functions of these recipes, and how they are achieved through different kinds of automation. Beyond achieving more convenient and efficient financial management, we note many playful and expressive applications of conditionality and automation that far extend traditional functions of banking applications and infrastructure. We use these findings to map opportunities, challenges and areas of future research in the development of 'programmable money' and related financial technologies. Specifically, we present design implications for the extension of native digital banking applications; novel uses of banking data; the applicability of blockchains and smart contracts; and future forms of financial autonomy.
Blockchain is probably the most disruptive and revolutionary technology since the advent of the World Wide Web in the 1990s. Blockchain became known, above all, as the technology behind the bitcoin cryptocurrency. However, its potential still remains largely unexploited and according to experts, opportunities are almost âendlessâ, both in financial and non-financial sectors. Challenges and opportunities in this field vary greatly from person to person depending notably if they are researchers, practitioners or regulators. After a short introduction in order to place the analysis in its context, this chapter will focus on three selected opportunities, namely blockchain as a new payment method (cryptocurrency), as a new method for funding innovation (ICO/TGE) and as a new organizational structure (DAO); it will then focus on three selected challenges, namely regulatory, environmental and governance. The author then questions in a forward-looking manner whether blockchain may be seen as a gateway from the third to the fourth industrial/digital revolution.
Background: The use of bitcoin in South Africa is fairly new, but has increased as several online retailers now accept bitcoin as a means of payment. The South African Revenue Service has released a media statement regarding the normal tax treatment of cryptocurrencies (such as bitcoin), but policy regarding the value-added tax (VAT) treatment of cryptocurrencies is still pending.Aim: The objective of the study is to determine the output tax consequences for a South African VAT vendor who receives bitcoins in exchange for the supply of goods or services that are subject to VAT, and when the same South African VAT vendor exchanges the bitcoins for South African rand at a local exchange platform.Setting: This article examines existing literature in a South African VAT environment.Method: A non-empirical study based on existing literature is performed.Results: It is found that when interpreting the (current) VAT Act No. 89 of 1991, the receiving of bitcoin in exchange for the supply of goods or services, as well as the exchange of bitcoin for South African rand, is subject to output tax at the standard rate of 14%, which will lead to âdouble taxationâ.Conclusion: It was shown through this study that the proposed treatment as explained in the previous section would impose âdouble taxationâ.