Smart contracts are contracts essentially in form of Computer Codes, where the terms of the contract are enforced by the logic of the program’s execution. They do not require judgement or skill of any specialist. This allows us to form a vastly strong system of checks-and-balances, in a trust-less and decentralised manner. Smart contracts also gain the benefit of global transferability, without sacrificing any local knowledge. It’s both cost and time effective. Smart Contracts would dramatically reduce the costs of developing, maintain and securing our relationships. It’s very similar to an online Chessboard game, where the players would design the rules of the game before they are willing to play. And once the rules are agreed on, the Contract would act as a board manager, this allows the parties to move freely but within the rules of the game. Although, enforceability is a challenge to proper working of Smart Contracts, many international conventions can be used to govern the working of such contracts. There exists a clear lack of theoretical framework in this respect. This paper tries to draw out such a theoretical framework by identifying the different modes for regulating and enforcing smart contracts in multiple jurisdictions. Establishment of a legal framework regulating Smart Contracts would be a giant leap in the field of Contractual Laws.
General Insurance occupies a strong position in today's market. It has a centralized way of operation, which makes it inefficient, less transparent, with trust problems and creates conflicts of interest between insurance companies and policyholders. Furthermore, it's an industry with relative difficulty in innovation, which contrasts with today's services powered by new technologies. New disruptive technologies have the capacity to compromise the value chain of traditional insurance, creating a big problem in its stability and future. Associated to this new kind of technologies, comes a new way of thinking perpetuated by the new generations based on the new trend of sharing economy. They give priority to new technology based services, which are decentralized, more convenient, more price competitive, transparent, and efficient and they prefer services which put the user more in control instead of the current less personalized options. New business models such as Social Insurance, are being developed and powered by new technologies and this new way of thinking. Social Insurance enables people in need of insurance to connect and pool their money and risks. It offers coverage that is cheaper, more transparent, and more relevant to the customer. Members of this type of insurance are both policyholders and underwriters. All these factors compromise the future of traditional insurance companies and their business model. The main goal is to create a new business model in order to adapt insurance companies to the new trend of shared economy. This new business model is going to be focused on health insurance, based in peer to peer communication and is going to be backed up by a business case and a prototype powered by a blockchain database. Blockchain is a decentralized transaction ledger shared amongst all nodes participating in the system. Every node has an updated copy of the database and cannot update it without the consensus of the network, removing the need for having a central authority or trusted third party to monitor the system. Each Blockchain implementation may have its own consensus mechanism (e.g. Proof-of-Work and Proof-of-Stake) to ensure that one node on its own cannot change the database without being validated by the network. Bitcoin is the world's most well-known Blockchain implementation, a public ledger for all transactions made in with a digital currency. However, Blockchain technology can be applied to multiple use cases and industries using Smart Contracts (a collection of code that runs on the network) to define the rules of the business. It fits the purpose for this business model, because it has peer to peer communication by default and has no central authority, making the service more efficient and transparent.
Transactions between individuals have always been a part and parcel of human society for the division of labour made people interdependent. The medium of transaction has also been evolving along with the evolution of society and human consciousness from barter system to commodity money to fiat currency and now to digital currency or cryptocurrency. But since evolution is a form of error correction, the problem of double spending in digital currency was solved by a distributed ledger system called Blockchain. Since 2008 onwards the blockchain technology has been separated from bitcoins to be injected to many other problems related especially to banking transactions. Blockchain technology enables the creation of decentralized currencies, smart contracts and intelligent assets that can be controlled over the Internet
Cryptocurrencies have left the dark side of the finance universe and become an object of study for asset and portfolio management. Since they have a low liquidity compared to traditional assets, one needs to take into account liquidity issues when one puts them into the same portfolio. We propose use a LIquidity Bounded Risk-return Optimization (LIBRO) approach, which is a combination of the Markowitz framework under the liquidity constraints. The results show that cryptocurrencies add value to a portfolio and the optimization approach is even able to increase the return of a portfolio and lower the volatility risk. The codes used to obtain the results in this paper are available via www.quantlet.de
Mutual Distributed Ledger (MDL, aka blockchain) technology is in an emergent phase. New applications are under development; new uses are being researched; new consortia are being formed to explore MDL applications. Considering appropriate governance structures has had a lower priority so far, but trust in the increasingly popular systems will depend on their incorporating good governance principles. It was the aim of this study to identify those principles, in order to provide a roadmap for developers and users alike.
An analysis of the material collected through desktop research, as well as several discussions with practitioners and stakeholders including a conference and webinar on the subject, has revealed that effective governance in MDL systems relies on people rather than software and rests on three pillars:
Architecture: The role of the governance structure, its composition, remit, powers, responsibilities, and its relationship with users, is a critical component.
Accountability: Effective governance of MDLs enhances trust. Trust is enhanced when a governance structure is accountable to its stakeholders, transparent in its decision-making, and subject to periodic audit and third party review.
Action: The governance structure must develop strategic and risk management plans, which are delivered through effective performance management frameworks. Trust can be further enhanced through the use of the voluntary standards market to independently verify performance metrics and the systems established to compile them.
Along the history, people organised in communities needed payment means in order to exchange goods or deliver services. From beads and feathers to metal and paper money they have always improved the way transactions were made. The invention of the Internet opened new doors in the field of payments, through the quick access to information and the emergence of significant international online communities. The members of these communities became aware of the importance of decentralising the way they acquire goods or services, thus eliminating the middlemen. Cryptocurrencies represent the response of these communities to the old centralised means of payment, controlled by the bankers, politicians and interest groups. Our paper aims to analyse the cryptocurrency phenomenon revealing some of its advantages and disadvantages, to increase the awareness on the topic. We based our research on the existing literature, the relevant international databases, the official positions of the financial and regulatory institutions on the analysed matter.
Robert Norvill, Beltrán Borja Fiz Pontiveros, Radu State, Irfan Awan · 5 authors
Smart contracts have recently attracted interest from diverse fields including law and finance. Ethereum in particular has grown rapidly to accommodate an entire ecosystem of contracts which run using its own crypto-currency. Smart contract developers can opt to verify their contracts so that any user can inspect and audit the code before executing the contract. However, the huge numbers of deployed smart contracts and the lack of supporting tools for the analysis of smart contracts makes it very challenging to get insights into this eco-environment, where code gets executed through transactions performing value transfer of a crypto-currency. We address this problem and report on the use of unsupervised clustering techniques and a seed set of verified contracts, in this work we propose a framework to group together similar contracts within the Ethereum network using only the contracts publicly available compiled code. We report qualitative and quantitative results on a dataset and provide the dataset and project code to the research community.
In the cryptographic currency Bitcoin, all transactions are recorded in the blockchain - a public, global, and immutable ledger. Because transactions are public, Bitcoin and its users employ obfuscation to maintain a degree of financial privacy. Critically, and in contrast to typical uses of obfuscation, in Bitcoin obfuscation is not aimed against the system designer but is instead enabled by design. We map sixteen proposed privacy-preserving techniques for Bitcoin on an obfuscation-vs.-cryptography axis, and find that those that are used in practice tend toward obfuscation. We argue that this has led to a balance between privacy and regulatory acceptance.
This chapter looks beyond the novelty of self-executing ‘smart contracts’ in blockchain networks and explores developments against the background fact that commercial parties have, for centuries, used documentary credit to simulate autonomous performance. Blockchain-based smart contracts and documentary credit share three core functionalities which are essential to any effective autonomous performance, analogue or digital—they both (i) act through internalized media of exchange; (ii) operate as closed systems; and (iii) provide means of securing sufficient resources to guarantee contractual performance. Using these three functionalities as a framework, this chapter conducts a comparative analysis of mechanisms for effecting autonomous contractual performance in a commercial setting. From this comparison, a few hypotheses are drawn regarding the potential areas where smart contract technology is more likely to find fruitful application. In particular, the chapter considers potential limitations to applying smart contracts to scenarios beyond digital asset transfers, how dispute resolution mechanisms should be designed to complement (rather impair) the autonomous nature of contractual performance under smart contracts, and potential capital cost implications which might arise in some cases when parties seek to replace human intermediaries with smart contracts.
Blockchain technology is likely to be a key source of future financial market innovation. It allows for the creation of immutable records of transactions accessible by all participants in a network. A blockchain database is made up of a number of blocks ?chained? together through a reference in each block to the previous block. Each block records one or more transactions, which are essentially changes in the listed owner of assets. New blocks are added to the existing chain through a consensus mechanism in which members of the blockchain network confirm transactions as valid. The technology allows the creation of a network that is ?fully peer to peer, with no trusted third party, ? such as a government agency or financial institution.
A. Seetharaman, A. Saravanan, Nitin Patwa, Jigar Mehta
In an era of technology advancement when the entire world is talking about the “Internet of Things” whereby we are expected to have connectivity between anything and everything, Currency cannot be left behind. Paper currency is bound to be a thing of past, as virtual currencies will start taking over and Bitcoin is well poised to achieve this feat. Not only it will revolutionize the way payments are made, but also have potential to impact the future of world currencies like USD, which is already facing challenges from EURO or Chinese Yuan Renminbi (CNY). The rise of crypto-currencies will add a new dimension to this challenge for US Dollar (USD)The focus of this study is to understand multiple factors which are translating Bitcoin (BTC) that is gaining momentum in various fields of global finance and how disruptive it can be, including replacing main fiat currencies in the financial system impacting mainly USD. The key variables studied are Regulation or lack of it around Bitcoin, Bitcoin Technology, Bitcoin Economy and the usage of Bitcoin as a Currency. This research used the latest statistical tool ADANCO 1.1.1 by Henseler and Dijkstra (2015) to analyze the data collected by building a partial least squares structural equation model (PLS-SEM). The observations of this study will help understand the future of global finance from multiple standpoints, especially Regulation, Cryptocurrencies and the fiat currencies.
The trend of digital currencies is catching fire these days, more and more people want to use digital currency. When we talk about digital currencies then how can we forget taking the name of Cryptocurrencies like Bitcoin. These currencies because of their P2P nature have won lot of hearts. You must have heard that "Every Rose has a thorn", similar type of thing is with Cryptocurrencies too. Because of the reason these currencies are P2P nature and there is no 3rd party who controls these cryptocurrencies, these are being used for illegal drugsarms dealing and for purchasing weapons online which are used in the terror attacks. We have found out a solution in order to put an end to it and the solution is Freezing of Assets. In this the owner will have the liberty to freeze any account whichever seem fishy and the freezed accounts will have their money intact, just the difference will be that they won't be able to transfer the money.
Abeer ElBahrawy, Laura Alessandretti, Anne Kandler, Romualdo Pastor‐Satorras · 5 authors
The cryptocurrency market surpassed the barrier of \$100 billion market capitalization in June 2017, after months of steady growth. Despite its increasing relevance in the financial world, however, a comprehensive analysis of the whole system is still lacking, as most studies have focused exclusively on the behaviour of one (Bitcoin) or few cryptocurrencies. Here, we consider the history of the entire market and analyse the behaviour of 1,469 cryptocurrencies introduced between April 2013 and June 2017. We reveal that, while new cryptocurrencies appear and disappear continuously and their market capitalization is increasing (super-)exponentially, several statistical properties of the market have been stable for years. These include the number of active cryptocurrencies, the market share distribution and the turnover of cryptocurrencies. Adopting an ecological perspective, we show that the so-called neutral model of evolution is able to reproduce a number of key empirical observations, despite its simplicity and the assumption of no selective advantage of one cryptocurrency over another. Our results shed light on the properties of the cryptocurrency market and establish a first formal link between ecological modelling and the study of this growing system. We anticipate they will spark further research in this direction.
Bitcoin is a cryptocurrency which has received increasing interest over the last five years. Built upon a decentralized peer to peer system, it supports transparent, fast, cost effective, and irreversible transactions, without the need for trusting third party financial institutions. We know however little about people's motivation and experience with bitcoin currency. This paper reports on interviews with 20 bitcoin users in Malaysia about their experience and trust challenges. Findings show that bitcoins are used more as store of value for speculative investment or savings' protection. The paper advances the HCI theories on trust by identifying main bitcoin characteristics and their impact on trust, such as decentralization, unregulation, embedded expertise, and reputation, as well as transactions' transparency, low cost, and easiness to complete. We discuss insecure transactions, the risk of dishonest traders and its mitigating strategies. The paper concludes with design implications including support for the transparency of two-way transactions, tools for materializing trust, and tools for supporting reversible transactions.
Blockchain is the technology at the core of what could become the "Fintech" transformation of capital markets. It can potentially facilitate cheaper, more efficient and secure operations. The mechanism behind it is introduced in this paper, as are its uses and suggested areas for future academic research. The paper critically reviews the promise that blockchain and distributed ledgers will speed up financial settlements and transactions. In it we recommend financial institutions evaluate the adoption of blockchain and/or adapt their existing legacy systems to allow for digital clearing over the internet.
Since its creation in 2009, the electronic currency Bitcoin has generated volumes of online debate in the business press. While there have been plenty of economic arguments situating it as a financial bubble about to collapse including from Nobel Prize winning economists, its price value has proven to be more durable than many have predicted. To explain this durability, Karpik’s conception of market singularities is used to understand the Bitcoin phenomenon by outlining the beliefs that maintain Bitcoin’s status as a volatile financial asset. Market singularities are markets for particular kinds of goods and services that are of uncertain and incommensurable value. Singularities markets have communities of followers and a distinctive belief system that ascribes value to a particular product, service, or asset. Developing Karpik’s conception, the paper explores the libertarian political belief system that surrounds Bitcoin’s status as a financial asset. I also outline some political tensions within the electronic currency community concerning governance and centralisation.
Jan Mendling, Ingo Weber, Wil M. P. van der Aalst, Jan vom Brocke · 32 authors
Blockchain technology offers a sizable promise to rethink the way interorganizational business processes are managed because of its potential to realize execution without a central party serving as a single point of trust (and failure). To stimulate research on this promise and the limits thereof, in this article, we outline the challenges and opportunities of blockchain for business process management (BPM). We first reflect how blockchains could be used in the context of the established BPM lifecycle and second how they might become relevant beyond. We conclude our discourse with a summary of seven research directions for investigating the application of blockchain technology in the context of BPM.
Digital currency platforms such as Bitcoin, Ethereum, and Ripple are slowly but surely revolutionizing trade and commerce alongside their potential to impact people's economic lifestyles immensely. Digital currencies present a unique medium for humanitarian, mission, and more notoriosly arms and terrorism transactions around the globe. Various factors like security, legislature, and infrastructure affect the viability of adopting digital currencies in developing countries such as Zimbabwe. The research study assesses whether this technology's shortcomings outweigh the conventional means of exchange: hard cash, gold, and checks. Therefore, aiding stakeholders in making informed decisions concerning interfacing technology with economics in the developing world.
Blockchain or distributed ledger technology is the key innovation inside Bitcoin, the virtual currency, or distributed database commodity. Regulators in different states and nations have viewed and now regulate Bitcoin variously. For example, Bitcoin is property (IRS), a virtual currency (New York State Department of Financial Services and its BitLicense), and an unregulated technology (California, Texas). This regulatory divergence has not prevented the emergence of an $18 billion Bitcoin global market. It has however led some of its early enthusiasts to prison for crossing the line from trusted blockchain anonymity to money laundering. Distributed ledger applications are presently in experimental and early commercial use in applications and for industry sectors now extending far beyond Bitcoin, and far beyond fintech (financial technology.)
This paper evaluates blockchain technology and the role of regulators and policymakers in shaping the evolution and commercialization of this disruptive innovation particularly for the Internet of Things. As blockchain is increasingly used to establish a secure trust relationship and permanent record in a wide array of networked markets, will the diverse regulatory treatments of –essentially the same – innovation create new policy barriers to its wide application? Are there information policy measures, which can help industry and users, avoid the inevitable pitfalls of a novel technology? If so, is there a new alignment of distribution of authority among regulators, which these innovations will spark? Presently for example, the Securities and Exchange Commission, IRS, and This original research will be among the first to deconstruct blockchain for a wide array of industrial sectors and Internet of Things markets. Most prior work has focused on blockchain applications for financial markets, and specifically the cybercurrency Bitcoin, and in particular its cryptographically driven consensus process to establish and maintain trust. While it is important to understand how blockchain technology utilization can increase technical efficiency and reduce transaction costs with an immutable, auditable record of all transactions, that only explains why this technology innovation has sparked such interest. Most important is the ability of blockchain to combine trust and privacy with transparency in new way.
The research methods for evaluation of blockchaining the Internet of Things include socio-technical field tests and multi-method pilot studies currently being planned. Preliminary results and insights from industry and policymaker interviews and will be shared in this paper. Suggestions for further blockchain Internet of Things policy research will conclude the paper.
Bitcoin telah menarik investor di seluruh dunia karena menyajikan pilihan yang menarik untuk sistem moneter saat ini. Ini adalah mata uang virtual yang dapat berpotensi menggantikan mata uang moneter yang ada karena menawarkan konsep baru pembayaran dikenal sebagai reksa persetujuan tanpa bergantung pada kepercayaan untuk setiap bank atau desentralisasi. Bitcoin sebagai mata uang telah diberlakukan di beberapa negara, meskipun tanggapan telah kecurigaan dan memperingatkan.Makalah ini akan memeriksa bitcoin isu-isu terkait menggunakan pendekatan normatif-yuridis dan kritis dalam konteks hukum yang berlaku di Indonesia, Undang-Undang Nomor 11 Tahun 2008 tentang Informasi dan Transaksi Elektronik. Sejauh ini, undang-undang serupa telah diberlakukan oleh California, Uni Eropa dan Singapura untuk menangani masalah-masalah mata uang virtual. Tujuan dari makalah ini adalah untuk menggambarkan bitcoin, mengapa mata uang dan bagaimana kerangka perlindungan hukum untuk Bitcoin investor di Indonesia.Berdasarkan luas-tersebar adopsi bitcoin dan sisi gelap dari kasus bitcoin membentuk sikap pemerintah tentang bitcoin di Amerika Serikat, makalah ini mengeksplorasi bagaimana memberikan peraturan yang tepat untuk melindungi bitcoin investor di Indonesia.
Distributed ledger technology, a method of storing and maintaining the integrity of multiple copies of critical data using a massively redundant network of participating machines, has found a “killer application” in blockchain, a type of distributed ledger. A blockchain consists of sequential blocks that may never be modified or reordered, leaving a public, auditable record that is consistent and highly resistant to tampering and deletion. These qualities make blockchain eminently suitable for its most common use, cryptocurrency, and its occasional variants in the form of cryptocurrency tokens, used to represent ownership or some other right to virtual or physical goods and capabilities. Blockchain also enables smart contracts, discrete bodies of software written to serve both as the memorial and the means of execution of an agreement between parties. Smart contracts can have all the elements of a traditional contract, and as jurisdictions legislate or jurists rule on the fine points of enforceability and the acceptability of smart contracts as traditional contracts, applications in nearly every area of commerce have emerged. Digital lawyers may not need to become software developers, but deepening their understanding of the capabilities and limitations of the technology, developing a keen awareness of the issues at the intersection between code and the law, as well as the law’s readiness in this area, will be of great advantage to them and their clients in this rapidly evolving area at the intersection of technology, commerce and law.
Emanuele Di Pascale, Jasmina McMenamy, Irene Macaluso, Linda Doyle
The disruptive power of blockchain technologies represents a great opportunity to re-imagine standard practices of telecommunication networks and to identify critical areas that can benefit from brand new approaches. As a starting point for this debate, we look at the current limits of infrastructure sharing, and specifically at the Small-Cell-as-a-Service trend, asking ourselves how we could push it to its natural extreme: a scenario in which any individual home or business user can become a service provider for mobile network operators, freed from all the scalability and legal constraints that are inherent to the current modus operandi. We propose the adoption of smart contracts to implement simple but effective Service Level Agreements (SLAs) between small cell providers and mobile operators, and present an example contract template based on the Ethereum blockchain.
Fintech is a term given to financial technology in the digital age. At its core sit the twin concepts of blockchain and distributed ledgers. These technology solutions bring with them the promise of faster, cheaper, more secure and transparent financial transactions over the internet. In a more widely used context, Fintech is conceived and even defined as enabling disruptive innovation in financial markets and financial services. This briefing explains what Fintech is and investigates whether the promise of Fintech is hype or reality. It also highlights the resultant policy implications that are generated by the phenomena and what issues lawmakers should be cognisant of.
We introduce blockchains and distributed ledgers and describe their potential applications to money and banking. The analysis compares public and private ledgers and outlines the suitability of various types of ledgers for different purposes. Furthermore, a few historical prototypes of blockchains and distributed ledgers are presented, and results of their hard forking are illustrated. Next, some potential applications of distributed ledgers to trading, clearing and settlement, payments, trade finance, etc. are outlined. Monetary circuits are argued to be natural applications for blockchains. Finally, the role of digital currencies in modern society is articulated and various forms of digital cash, such as central bank issued electronic cash, bank money, bitcoin and P2P money, are compared and contrasted. Keywords: blockchains, distributed ledgers, digital currencies, modern monetary circuit; credit creation banking; interconnected banking network.