There has been a huge amount of coverage in the press about the great potential uses of bitcoin-related technology for financial markets, such as improvements in efficiency. In addition to the supporters of blockchain, many have been critical of its real-life applications within the business world and suggest that what we are witnessing is nothing short of “blockchain hype, ” and that this technology can only be applied to bitcoins. This paper will demonstrate that there are real business cases for improving financial markets based on the lessons learned from cryptocurrencies, but, unlike what the hype-enthusiasts suggest, they are not application of a technology to the existing business models within financial markets. They are reforms of the business model itself. What needs to be exported from the world of cryptocurrencies are aspects of the market organization, inspiration for a different accounting and legal system, and some aspects of the technology. These can result in a huge contribution towards more robust, efficient, and stable markets. However, the process cannot be immediate and effortless, and can only be achieved within a market-wide strategic perspective. In this paper, I develop these concepts initially within a parallel analysis of cryptocurrencies and financial markets. Then, I will focus on a specific business case regarding the collateralization of financial derivatives, which will highlight quantifiable benefits in terms of reducing costs, capital, and risk. It is an example of a situation where the use of cryptocurrency technology is not more important than the business ideas developed in the analysis of cryptocurrencies; yet it was inconceivable prior to the advent of distributed ledgers, smart contracts, and oracles
Id. (The article summarizes the process through 6 steps: (1) broadcasting the information to the network; (2) each node in the network compiles the information; (3) each node checks the information by solving a complicated process; (4) each node broadcast the proof that it solved the checking process; (5) the nodes accept the broadcast only if the information included is proven to be correct; and (6) the nodes add to the chain the new information, where it is, timestamp, and its location in the chain is contingent on the previous elements of the chain.).
Christian Thiel, Christopher Brown, Mario Hellenkamp, Marius Spancken
Der Abschlussbericht fasst die Ergebnisse des Forschungs- und Entwicklungsprojektes 2015/2016 im Studiengang Master of Science Wirtschaftsinformatik (FH Münster) zur Themenstellung "Kryptowährungen und Smart Contracts" zusammen. Das Projekt analysierte die Einsatzzwecke, Potenziale und Architekturen von Blockchain-Anwendungen. Des Weiteren wurden verschiedene Fragestellungen zum Nutzen der Blockchain-Technologie in modernen Geschäftsprozessen und zu den technischen Herausforderungen mittels der Entwicklung zweier Prototypen betrachtet. Der erste Prototyp realisiert eine eigene Blockchain, in der verschiedene Angriffsszenarien durchgespielt werden können. Der zweite Prototyp realisiert eine Clearinghouse-Anwendung in Form einer verteilten Smart-Contract-Implementierung (in Ethereum). Der Bericht vermittelt einen Überblick über Ansätze, Strukturen, interne Abläufe und Rahmenbedingungen aktueller Blockchain-Implementierungen. Die erzielten Ergebnisse verdeutlichen neben dem Nutzen auch die Besonderheiten und Einschränkungen der Blockchain-Technologie.
The paper reviews the last technological tools that arguably can contribute to reducing the excessively high costs of remittance transactions in Africa. Indeed, despite huge remittance inflows to and within the continent, Africa is the most expensive destination to send money to. As remittances have become more important than Overseas Development Assistance and Foreign Direct Investment inflows in some countries, it has become crucial to explore technological advances that can contribute to reducing their transaction costs. Such reduction would enable the end beneficiaries to capture a larger share of these external resources, which in turn could have an even bigger impact on development in Africa. In addition to revisiting the role of mobile banking in lowering remittance transaction prices, the paper takes a closer look at the newest available technology, the Bitcoin blockchain technology that underpins digital currencies. At this early stage, very few social science researchers have addressed the role that such digital currency could play in the reduction of the remittance transaction prices, except for a few innovative Bitcoin operators. The paper proceeds as follows. It first looks at the causes of the high remittance transaction costs. Then, it reviews, presents and analyses the official remittances data downloaded from the World Bank's Remittances Prices Worldwide database. It also briefly reviews a few remittance transfer technological instruments. Given the novelty of the topic, the review of the most recent existing "literature" on Bitcoin is mainly retrieved from either on - line news sources or information from a few leading Bitcoin operators. In the light of the UN Global Working Group Post-2015 Development Agenda and Sustainable Development Goals proposal to reduce by 2030 the remittance transaction costs to even less than 3%, the effectiveness of these new technological instruments to reach such objective are discussed. Finally, a number of appropriate policy actions to foster the economic impact of remittances are proposed.
Abstract We show how decentralized individual investments can efficiently allocate capital to innovating firms via equity crowdfunding. We develop a model where consumers have privately known consumption preferences and may act as investors. Consumers identify worthwhile investments based on their own preferences and invest in firms whose product they like. In the presence of aggregate demand uncertainty, an efficient capital allocation is achieved if all groups of consumers have enough liquidity to invest. If some groups of consumers cannot invest, capital flows reflect preferences of liquid investors but not future demand. Comparing with traditional financing forms, crowdfunding in the absence of liquidity constraints can be superior unless traditional financiers are fully competitive and perfectly informed.
Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2016.
Tema ovog rada su kriptovalute. Budući da većina ljudi nije pravodobno upoznata s ovom temom, ovaj rad prikazuje i opisuje kriptovalute te način na koji se upotrjebljuju u svakodnevnom životu. Kriptovalute (eng. cryptocurrency) digitalne su valute dizajnirane kao sredstvo razmjene. Poznate su po tome što su državne agencije i banke isključene iz procesa razmjene. Kriptovalute omogućuju jednostavnu, jeftinu i brzu transakciju na području cijeloga svijeta. Trenutno najisplativije kriptovalute su Bitcoin i Ethereum, a u radu je opisana njihova korisnost, prednosti i mane. Budući da se Bitcoinu predviđa uspješna budućnost i sve je prisutniji i prihvatljiviji na tržištu, u radu su navedeni primjeri iz Hrvatske koji to potvrđuju. Sve veći broj poduzetnika odlučuje se za uvođenje kriptovaluta. U primjerima je obuhvaćen širok spektar djelatnosti, od frizerskih usluga, preko raznih tvrtki koji se bave prodajom računalne opreme, ugostiteljskih usluga preko mogućnosti brzog i lakog podizana gotovine na kripto bankomatima pa sve do plaćanja komunalnih usluga, pa čak i humanitarno djelovanje. Mnogi smatraju da su kriptovalute samo sinonim za prijevare i pranje novca, no programeri tvrde da su kriptovalute samo jedna vrsta tehnologije, alat koji sam po sebi ne može biti ni dobar ni loš, ovisno o tome za što se koristi. Autor ovoga rada proveo je istraživanje o tome kako se može besplatno započeti trgovanje kriptovalutama te je anketom ispitao stavove ispitanika o implementaciji kriptovaluta u društvu.
In this article, we review the recent developments in the digital currency landscape. We survey the economic drivers that led to the creation of digital currencies and show that they are a natural step in the evolution of means of payment. We overview two major classes of digital currencies, cryptocurrencies and platform-based digital currencies and discuss how the design of such currencies affects the incentives of their users and ultimately their popularity. Finally, we discuss competition in the digital currency market.
This paper reports the outcome of a series of interviews and focus group meetings with professionals working in post-trade processing and the provision of mutual distributed ledger services. The objective was to elicit and document views on three research hypotheses about the potential impact of mutual distributed ledger technology (‘blockchain’) on post-trade processing global securities markets. \n\nThese hypotheses are (a) on the appropriate access to mutual distributed ledger; (b) on whether change would be piecemeal or ‘big bang’; and (c) on the extent to which applying mutual distributed ledger in securities settlement would require major changes in business processes. Our research finds that while the use of blockchain to validate operational data in mutual distributed ledgers can yield substantial reductions in both cost and risk, the concept of data sharing itself is far from new. Current interest in mutual distributed ledgers has established significant momentum, but there is a danger of building unrealistic expectations of the extent to which the technology on its own will address the underlying need for co-ordination of business processes both within and between firms. Achieving all the potential benefits from mutual distributed ledgers will require board level buy-in to a substantial commitment of time and resource, and active regulatory support for process reform, with relatively little short term payoff.
Scott Ruoti, Ben Kaiser, Arkady Yerukhimovich, Jeremy Clark · 5 authors
This paper explains the functioning of “blockchain technology” and critically assesses its potential role in improving services in banking, contracts, and database systems. Comparing blockchain to the current best practice technology in these fields reveals several barriers to successful commercial implementation: Blockchain technology involves costly redundancies and irreversibility, faces serious scaling problems and significant barriers to complying with regulations, and is a security liability unless secured with its own freely trading currency. A survey of the state of the blockchain industry shows that in eight years since blockchain technology was invented, it has had no commercial applications other than digital cash. The paper concludes that a blockchain is a peculiar engineering design whose only advantage is in removing third party intermediation to allow for the creation of digital cash, and is unlikely to offer economic advantages for any commercial problem other than the one it was specifically engineered to solve.
Jan 1, 2016·Proceedings of the ... Annual Hawaii International Conference on System Sciences/Proceedings of the Annual Hawaii International Conference on System Sciences
Maximilian Friedlmaier, Andranik Tumasjan, Isabell M. Welpe
The blockchain (i.e., a decentralized and encrypted digital ledger) has the potential to disrupt many traditional business models. This study investigates the emerging blockchain business-application landscape by analyzing its industry, venture capital funding, and regional distribution. By matching four venture databases on blockchain-based startups we create a unique database to analyze the technology from a diffusion of innovation theoretical perspective. First, our results show that blockchain startups are present across all industry segments and are most prominently represented in the Finance & Insurance and Information & Communication industries. A fine-grained analysis of financial services yields increasing novel applications in existing service offerings. Second, we find that mainly Finance & Insurance and Information & Communication industries are funded by venture capital, but that blockchain startups are present across all industries. Third, our regional distribution analysis of the emerging ventures identifies two leading geographical blockchain clusters (i.e., the US and UK).
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.
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.
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.
Over the last decade, information technology has contributed significantly to the evolution of financial markets, without, however, revolutionising the way in which financial institutions interact with one another. This may be about to change, as some market players are now predicting that new database technologies, such as blockchain and other distributed ledger technologies (DLTs), could be the source of an imminent revolution. This paper analyses the main features of DLTs that could influence their potential adoption by financial institutions and discusses how the use of these technologies could affect the European post-trade market for securities. The original protocol underlying DLTs has its roots in the anarchic world of virtual currencies, which operate outside the conventional financial system. The public debate on DLTs has also been very much focused on the revolutionary potential of the technology. This paper concludes that, irrespective of the technology used and the market players involved, certain processes that feature in the post-trade market for securities will still need to be performed by institutions. DLTs could, however, stimulate a reorganisation of financial markets, which could in turn: (i) reduce reconciliation costs, (ii) streamline the post-trade value chain, and (iii) allow more efficient use to be made of collateral and regulatory capital. It should, nevertheless, be remembered that research into DLTs and their uses is at an early stage. The scope for financial institutions to adopt DLTs and their potential impact on mainstream financial markets are still unclear. This paper discusses three potential models of how market players could adopt DLTs for performing core post-trade functions. The DLT could be adopted either: (i) in clusters, (ii) collectively, or (iii) peer to peer. The evaluation of the three adoption models assumes that they are all equally compatible with the regulatory framework. It shows that, assuming this to be the case, they would each have different advantages and costs. JEL Classification: G21, G23, L15, O33
Sinclair Davidson, Primavera De Filippi, Jason Potts
Distributed ledger technology, invented for cryptocurrencies, is increasingly understood as a new general-purpose technology for a broad range of economic activities that rely on consensus of a database of transactions or records. However, blockchains are more than just a disruptive new ICT. Rather, they are a new institutional technology of governance that competes with other economic institutions of capitalism, namely firms, markets, networks, and even governments. We present this view of blockchains through a case study of Backfeed, an Ethereum-based platform for creating new types of commons-based collaborative economies.
ABSTRACT: Motivated by the recent explosion of interest around Blockchains, we examine whether they make a good t for the Internet of Things (IoT) sector. Blockchains allow us to have a distributed peer-to-peer network where non-trusting members can interact with each other without a trusted intermediary, in a variable manner. We review how this mechanism works and also look into smart contracts scripts that reside on the Blockchain that allow for the automation of multi-step processes. We then move into the IoT domain, and describe how a Blockchain-IoT combination: 1) facilitates the sharing of services and resources leading to the creation of a marketplace of services between devices and 2) allows us to automate in a cryptographically variable manner several existing, time- consuming work owns. We also point out certain issues that should be considered before the deployment of a Blockchain network in an IoT setting: from transactional privacy to the expected value of the digitized assets traded on the network. Wherever applicable, we identify solutions and workarounds. Our conclusion is that the Blockchain-IoT combination is powerful and can cause sign cant transformations across several industries, paving the way for new business models and novel, distributed applications.
This study examines how decentralized finance protocols reshape consumer protection outcomes within blockchain financial markets amid growing global concerns regarding digital transaction security, governance transparency, and institutional regulatory adaptation. Using a balanced longitudinal panel dataset of 1,450 institutional year observations derived from BIS, IMF, OECD, and World Bank digital finance databases covering 2005 to 2014, the study applies fixed effects panel regression, moderation interaction modeling, clustered robust estimation, and multidimensional composite index construction to estimate the structural relationship between decentralized finance systems and consumer protection. The findings reveal that Smart Contract Infrastructure, Decentralized Financial Services, Blockchain Technology Integration, and DeFi Governance Structures exert positive and statistically significant effects on Consumer Protection, while the Digital Regulatory Environment significantly strengthens these relationships through regulatory clarity, cybersecurity readiness, legal enforcement, and digital literacy mechanisms. Interaction estimates further demonstrate that institutional readiness amplifies the protective capacity of decentralized financial ecosystems across heterogeneous digital markets. The study extends institutional governance and financial innovation theory by integrating technological infrastructure, decentralized governance, and adaptive regulatory conditioning into a unified explanatory framework. The findings provide policy relevant evidence for regulators, blockchain developers, and digital financial institutions seeking to strengthen consumer protection within technologically evolving financial ecosystems.
This study investigates how decentralized finance adoption reshaped banking intermediation structures across emerging digital economies during the foundational digital finance expansion period between 2005 and 2014 by evaluating the conditional role of financial technology environments in accelerating institutional financial transformation. Using a balanced panel dataset of 1,760 institutional year observations constructed from harmonized global digital finance repositories, the study applies fixed effects panel regression, interaction-based moderation estimation, heteroskedasticity robust clustered inference, and multidimensional composite index modeling to estimate the structural relationship between decentralized finance adoption and banking disintermediation. The findings reveal that decentralized finance adoption exerted a strong positive and statistically significant effect on banking disintermediation, with blockchain technology integration and digital financial accessibility producing the largest structural effects on non-bank financial participation and intermediary transaction displacement. The results further demonstrate that supportive financial technology environments amplified decentralized finance driven transformation through enhanced digital infrastructure readiness, cybersecurity preparedness, and institutional adaptability. Interaction estimates remained robust across alternative specifications, lagged estimations, and sensitivity diagnostics, confirming stable ecosystem conditioning effects across heterogeneous institutional environments. The study extends financial innovation and institutional transformation theories by integrating utilization, infrastructure, accessibility, and governance systems within a unified decentralized finance architecture. The findings provide globally relevant policy guidance for regulators and digital finance institutions seeking to balance financial innovation, inclusion, and banking system stability within emerging digital economies.