This paper describes a study to understand what differentiates organization adopters of Bitcoin from nonadopters by comparing their IT-readiness, innovativeness and social media presence. The craze over cryptocurrency such as Bitcoin has been likened to a modern-day gold rush, yet academic research has not caught up. Governments are struggling with the very idea of cryptocurrency systems. After the price of Bitcoin fell from $1,200 to $300 in 2014, consumer interest flagged, leaving the future of Bitcoin adoption uncertain despite a slow and steady increase of organization adopters. Organization adoption is more important than consumer, because consumers canât use cryptocurrency if organizations donât accept them as payment. This research serves as a basis for future research on Bitcoins and Bitcoin adoption by highlighting some important hurdles to its adoption as a new innovation, in the hope that such endeavors move us ever closer to the vision of a true âpeopleâs currency.â
Bitcoin has become the de facto 'gold' standard among cryptocurrencies as it is the most widely accepted in commerce, has the largest mining network, and greatest volume of transactions. Because of this, miners of other SHA-256 cryptocurrencies will tend to convert those altcoins into bitcoin in order to transact in a meaningful way with the real economy. The result is that bitcoin mining regulates that of all other SHA-256 blockchains. Specifically, what matters is the expected number of bitcoins produced per day given a unit of hashing (mining) power, whatever the equivalence in the coin being mined. If mining for a different coin would yield a greater return in bitcoins at the margin (per day) for a miner, an apparent arbitrage opportunity will exist to direct mining effort at that cryptocurrency and subsequently exchange those for bitcoin. These opportunities, once taken, quickly eliminate the profitable arbitrage and appear to operate in a fairly efficient and predictable manner. A model is developed in this paper to formalize this process where cryptocurrency miners seeking to maximize production in terms of bitcoins earned in a day will exploit any such opportunities. If no such opportunities exist, they will simply revert to mining bitcoins directly. There are some important implications to this process, such as a tendency for cryptocurrencies to fall in price relative to bitcoin over time, and for changes in bitcoin mining difficulty to indirectly influence the market prices of altcoins. Finally, it seems that those undertaking this process of miners' arbitrage do so at the expense of speculators and noise traders who make decisions regarding buy and sell trades without the use of fundamental data. These participants generally have poor timing, follow trends, and over-react to good and bad news. Altcoins are produced by miners and subsequently offered for sale in the market in order to obtain bitcoins; meanwhile noise traders serve as the only bid-side to the market, on average.
This paper aims to identify the likely source(s) of value that cryptocurrencies exhibit in the marketplace using cross sectional empirical data examining 66 of the most used such 'coins'. A regression model was estimated that points to three main drivers of cryptocurrency value: the aggregate computational power employed in mining for units of the cryptocurrency; the rate of unit production; and the cryptologic algorithm used for the protocol. Bitcoin-denominated relative prices were used, avoiding much of the price volatility associated with the dollar price of Bitcoin. The resulting model can be used so better understand the drivers of value observed in cryptocurrencies. These findings may also have implications in understanding other assets such as commodity forms of money.
Digital currencies, virtual currencies, in-game currencies, etc., have gathered a lot of attention, despite the difficulties of definition, from all corners of society for many years. Cryptocurrency has gained unprecedented attention since the birth of Bitcoin in 2009. Bitcoin is an online system of making and receiving payments in bitcoins. The system distinguishes itself by providing an open-source, cryptographically secure, confidentiality-preserving platform for transactions and/or making payments. The number of transactions as well as the number of accounts (held by individuals and businesses) is steadily increasing. A whole industry of service-providers has sprung up alongside. We consider the development of Bitcoin and its sister currencies as an important disruptive financial innovation which is here to stay unless throttled by ill-considered legislative or regulatory actions. Potential problems are analyzed and solutions offered. The overall assessment is that cryptocurrencies and variants of virtual currencies are a welcome development, they will offer competition to the existing modalities of money and governmental regulation, they will provide alternative means to economic agents for their transactions, and their innovative existence should be encouraged so that their beneficial features outperform any deleterious ones.
Kalliopi N. Kypriotaki, Efpraxia D. Zamani, George M. Giaglis
Inspired by the new technological advancements and the groundbreaking technology at the foundation of cryptocurrencies, organizational structures are expected to evolve and new corporate structures to emerge, based on full decentralization. We posit that the blockchain, i.e., the technology, system and protocol behind and beyond the most popular digital crypto-currencies, will introduce decentralization in many manifestations of our everyday life, especially in cases where an independent trusted third party is needed to ensure and verify operations and transactions. This paper builds upon the blockchain technology and discusses how it could enable fully decentralized forms of business structures to emerge; decentralized autonomous corporations (DACs) are business entities totally based on code; running on the cloud, providing certain services and creating value for their customers. Thus, we argue that DACs could prove a means of decentralizing and automating decision making in organizations.
Gareth W. Peters, Efstathios Panayi, Ariane Chapelle
The internet era has generated a requirement for low cost, anonymous and rapidly verifiable transactions to be used for online barter, and fast settling money have emerged as a consequence. For the most part, e-money has fulfilled this role, but the last few years have seen two new types of money emerge. Centralised virtual currencies, usually for the purpose of transacting in social and gaming economies, and crypto-currencies, which aim to eliminate the need for financial intermediaries by offering direct peer-to-peer online payments. We describe the historical context which led to the development of these currencies and some modern and recent trends in their uptake, in terms of both usage in the real economy and as investment products. As these currencies are purely digital constructs, with no government or local authority backing, we then discuss them in the context of monetary theory, in order to determine how they may be have value under each. Finally, we provide an overview of the state of regulatory readiness in terms of dealing with transactions in these currencies in various regions of the world.
Feng Mai, Qing Bai, Zhe Shan, Xin Wang ¡ 5 authors
Bitcoinâs emergence has the potential to pave the way for a technological revolution in financial markets. What determines its valuation is an important open question with far-reaching business and policy implications. Building on Information Systems and Finance literature, we examine the dynamic interactions between social media and the monetary value of Bitcoin using textual analysis and vector error correction models. We show that more bullish forum posts are associated with higher future Bitcoin values. Interestingly, social mediaâs effects on Bitcoin are driven primarily by the silent majority, the 95% of users who are less active and whose contributions amount to less than 40% of total messages. In addition, messages on an Internet forum, relative to tweets, have a stronger impact on future Bitcoin value. Overall, our findings reveal that social media sentiment is an important predictor in determining Bitcoinâs valuation, but not all social media messages are of equal impact. This study offers new insights into the digital currency market and the economic impact of social media.
Journal of Anthropology and Archaeology is a peer-reviewed international journal, which publishes original papers promoting theoretical, methodological and empirical developments in the discipline of socio-cultural anthropology.
The buzz surrounding Bitcoin has reached a fever pitch. Yet in academic legal discussions, disproportionate emphasis is placed on bitcoins (that is, virtual currency), and little mention is made of blockchain technologyâthe true innovation behind the Bitcoin protocol. Simply, blockchain technology solves an elusive networking problem by enabling âtrustlessâ transactions: value exchanges over computer networks that can be verified, monitored, and enforced without central institutions (for example, banks). This has broad implications for how we transact over electronic networks. This Note integrates current research from leading computer scientists and cryptographers to elevate the legal communityâs understanding of blockchain technology and, ultimately, to inform policymakers and practitioners as they consider different regulatory schemes. An examination of the economic properties of a blockchain-based currency suggests the technologyâs true value lies in its potential to facilitate more efficient digital-asset transfers. For example, applications of special interest to the legal community include more efficient document and authorship verification, title transfers, and contract enforcement. Though a regulatory patchwork around virtual currencies has begun to form, its careful analysis reveals much uncertainty with respect to these alternative applications.
In this paper, I propose a new concept for understanding the role of algorithms in daily life: algorithmic authority. Algorithmic authority is the legitimate power of algorithms to direct human action and to impact which information is considered true. I use this concept to examine the culture of users of Bitcoin, a crypto-currency and payment platform. Through Bitcoin, I explore what it means to trust in algorithmic authority. My study of the Bitcoin community utilizes interview and survey data. I found that Bitcoin users prefer algorithmic authority to the authority of conventional institutions which they see as untrustworthy. However, I argue that Bitcoin users do not have blind faith in algorithms; rather, they acknowledge the need for mediating algorithmic authority with human judgment. I examine the tension between members of the Bitcoin community who would prefer to integrate Bitcoin with existing institutions and those who would prefer to resist integration.
On March 16, 2013, Cyprus announced that it would accept a bailout that required imposing a one-time levy on bank deposits. It has been argued that, by making traditional deposit accounts seem less secure, the bailout announcement prompted some to consider â or reconsider â using the cryptocurrency bitcoin. Relying on rank data for a subset of apps, existing studies maintain that interest in bitcoin increased following the announcement, especially in countries with troubled banks. We argue that (1) focusing on a subset of apps does not allow one to distinguish a general increase in the demand for bitcoin apps from a substitution between bitcoin apps and (2) changes in rank data are a poor predictor of changes in the number of downloads. In order to address these concerns, we collect rank data for all fifteen bitcoin apps available at the time and use an established technique to estimate an index of downloads for each country considered. We find that, while downloads of bitcoin apps increased following the announcement, the observed effect was not especially pronounced in countries thought to have had troubled banking systems at the time.
In this chapter we provide an overview of the concept of blockchain technology and its potential to disrupt the world of banking through facilitating global money remittance, smart contracts, automated banking ledgers and digital assets. In this regard, we first provide a brief overview of the core aspects of this technology, as well as the second-generation contract-based developments. From there we discuss key issues that must be considered in developing such ledger based technologies in a banking context.
La versione italiana di questo documento è disponibile al seguente link: http://ssrn.com/abstract=2731132 The core technology of Bitcoin, the blockchain, has recently emerged as a disruptive innovation with a wide range of applications, potentially able to redesign our interactions in business, politics and society at large. Although scholarly interest in this subject is growing, a comprehensive analysis of blockchain applications from a political perspective is severely lacking to date. This paper aims to fill this gap and it discusses the key points of blockchain-based decentralized governance, which challenges to varying degrees the traditional mechanisms of State authority, citizenship and democracy. In particular, the paper verifies to which extent blockchain and decentralized platforms can be considered as hyper-political tools, capable to manage social interactions on large scale and dismiss traditional central authorities. The analysis highlights risks related to a dominant position of private powers in distributed ecosystems, which may lead to a general disempowerment of citizens and to the emergence of a stateless global society. While technological utopians urge the demise of any centralized institution, this paper advocates the role of the State as a necessary central point of coordination in society, showing that decentralization through algorithm-based consensus is an organizational theory, not a stand-alone political theory.
Blockchains represent a novel application of cryptography and information technology to ag-eold problems of financial record-keeping, and they may lead to far-reaching changes in corporate governance. Many major players in the financial industry have began to invest in this new technology, and stock exchanges have proposed using blockchains as a new method for trading corporate equities and tracking their ownership. This essay evaluates the potential implications of these changes for managers, institutional investors, small shareholders, auditors, and other parties involved in corporate governance. The lower cost, greater liquidity, more accurate recordkeeping, and transparency of ownership offered by blockchains may significantly upend the balance of power among these cohorts.
Chain Of A Lifetime: How Blockchain Technology Might Transform Personal Insurance is the outcome of a research project conducted between August and December 2014 which explored how blockchain technology might transform personal insurance and in particular interactions among individuals and insurance companies over time.
Blockchain technology's main innovation is an electronic public transaction record of integrity without central authority. Beside cryptocurrencies and distributed payment systems, blockchain applications could include areas of finance where a central, trusted third party has traditionally been used, trade reporting, depository receipts, escrow accounts or trade finance. Blockchains can contain set of documents, record assets and help to manage interconnected devices. Emerging applications, such as smart contracts and decentralised autonomous organisations, might in future also permit blockchains to act as automated agents.
The report concludes that blockchain technology could transform the way people manage identities and personal information; blur even further the divide between global and local; influence consumer perception of time; drive honesty and transparency; and, influence consumer perceptions of risk that could change the way insurers support mutualisation. The report highlights how, at the time of writing, most insurance companies do not yet seem ready to experiment with blockchain technology. They find it difficult enough to understand Bitcoin or cryptocurrencies. Non-insurers are more likely to be the first to create insurance or insurance-related applications. Blockchain applications in insurance are likely to start with digital identity systems and management of personal data.
Bitcoin, a virtual currency created in 2009, has resulted in the unlikely pairing of the underworld criminals with the Harvard educated Winklevoss brothers. The online currency can be obtained by âminingâ through solving complex equations, and can be bought and sold on Bitcoin Exchanges. It is primarily utilized for investment in Bitcoin financial products as well as speculating on the value of the currency. It is also used as a method of payment for legal and illegal goods and services. This comment addresses the regulatory issues Bitcoin faces, namely the regulation and taxation of financial products. After providing a fundamental definition of Bitcoin and how it operates, this Comment explores issues stemming from anonymity, price volatility, and use in criminal activity. It then provides an analysis of classifying and regulating Bitcoin as currency and examines how FinCEN and Treasury Regulations issued by the IRS will reduce criminal activity stemming from anonymity. Next, it discusses how SEC and CFTC regulations could stabilize Bitcoinâs volatile market value, and explains why the IRS was incorrect to classify Bitcoin as property. It concludes by addressing the policy implications of classifying Bitcoin as currency under various regulatory laws.
This Article investigates an increasingly important yet under-developed body of law: regulation of virtual currency. At its peak in March of 2014, the daily volume of Bitcoin transactions in United States dollars exceeded $575,000,000. The growing mainstream acceptance of Bitcoin, however, is best illustrated by the growing number of leading merchants that have decided to accept Bitcoin payments. While Bitcoinâs rise as an alternative payment method is well-chronicled, Bitcoinâs impact extends further due to its use as an investment vehicle and its ability to spur the growth of an industry of Bitcoin-based businesses. Despite increasingly widespread use, Bitcoin (and other virtual currencies) have largely operated without the burden of regulation. Why? Like the potentially transformative innovations that preceded Bitcoin, virtual currency raises unique challenges for which existing legal models may be unprepared. As policymakers struggle to catch-up, the effort to develop an appropriate regulatory regime for virtual currency is at a critical juncture.The response in the United States has thus far involved regulatory bodies acting independently to clarify the treatment of virtual currency under a variety of different laws designed to regulate traditional payment systems, financial services, and investments. This Article argues, contrary to this approach, that a narrow focus on the technical application and extension of existing law creates a deficient regulatory regime. Instead, we suggest that policymakers should: (1) engage the various agency stakeholders to promote cross-communication; (2) think more globally about the wide spectrum of issues arising from virtual currency; and (3) embrace the unique and distinct characteristics of virtual currency. In support of this proposition, we show that refocusing on the collection of policy goals advanced by existing law offers policymakers an additional tool to aid in the development of a comprehensive, cohesive, and appropriately-scaled virtual currency regulatory model.
2008 yilinda bir makale ile ortaya cikan, 2009 yilinda ilk islemini gerceklestiren bilgisayar algoritmalariyla tasarlanmis Bitcoin, son iki yilda onemli kullanici kitlesi yakalayarak, talebini artirmis, piyasa degerini hizla yukseltmis online bir satin alma birimi ya da sanal para olarak tanimlanabilir. Isminin gercekligi bile supheli anonim bir kisi tarafindan aktif hale getirilen sistemde bir devlet, merkez bankasi gibi klasik para birimlerinin sahip olduklari otoriteler ve garantorler yer almadigi gibi denetim de soz konusu degildir. Islemler network uzerinde direkt olarak iki taraf arasinda herhangi bir araci kurum olmaksizin gerceklestirildiginden maliyeti yok denecek kadar azdir. Sozkonusu durum herhangi bir devlet otoritesinin kontrol ve sorumlulugunun olmamasindan dogabilecek handikaplari da icinde barindirmaktadir. Bununla birlikte sistemin bircok disiplini bir araya getirerek calisan bir yapiya sahip olmasi disiplinlerarasi isbirligi ile ne gibi yeniliklerin ortaya cikabileceginin gorulmesi acisindan oneme sahiptir. Bu calismada; Bitcoinâin dogusu, ozellikleri, Dunyaâda ve Turkiyeâdeki gelisimi ve ekonomisi icindeki yeri, isleyis yontemi arastirilmis, yeni sanal para birimi ile ilgili mevcut durum analizi yapilmistir.
Pavel Ciaian, Miroslava RajÄĂĄniovĂĄ, dâArtis Kancs
This is the first article that studies BitCoin price formation by considering both the traditional determinants of currency price, e.g., market forces of supply and demand, and digital currencies specific factors, e.g., BitCoin attractiveness for investors and users. The conceptual framework is based on the Barro (1979) model, from which we derive testable hypotheses. Using daily data for five years (2009â2015) and applying time-series analytical mechanisms, we find that market forces and BitCoin attractiveness for investors and users have a significant impact on BitCoin price but with variation over time. Our estimates do not support previous findings that macro-financial developments are driving BitCoin price in the long run.