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Anne Haubo Dyhrberg, Sean Foley, JiĹĂ Ĺ vec, Benjamin M. Cole
No abstract is available for this record.
Violeta TodoroviÄ, Nenad TomiÄ
The success of various cryptocurrencies' systems has triggered a great interest in their functioning. The fluctuation of their values is very unpredictable, so the periods of growth are often abruptly interrupted by stagnation or a pronounced decline. Nevertheless, a large number of investors have been involved in the processes of mining and trading cryptocurrencies in recent years. When it comes to the negative aspects of cryptocurrencies, the focus is primarily on various forms of cybercrime. The number of hacker attacks using the blackmail software - ransomware, is on the increase. In such cases, cryptocurrencies are often used as a means of paying ransom. However, the energy efficiency of certain types of cryptocurrencies is a less common topic. The Proof-of-Work (PoW) algorithm used for mining in some systems is an energetically intensive and really expensive process, which after economic analysis no longer seems as profitable as it first appeared to be. Cryptocurrency trading could bring a great income to the investors, but also great losses, because it essentially represents a zero-sum game. The sudden increase in the number of miners led to the disturbance on the computer components market, causing the price increase and even the complete disappearance of certain graphics card models. Everything previously mentioned indicates that cryptocurrencies have brought many negative aspects and disturbances. The subject of this paper is the economic aspect of cryptocurrencies based on the PoW algorithm. The aim of the paper is to indicate the economic unsustainability of their current concept, due to the high costs borne directly by participants in the mining process and indirectly by participants in the computer components market.
Jesse Bryan Crawford
Cryptocurrencies are gaining significant attention and financial investment. Among the wave of new cryptocurrencies, the first cryptocurrency introduced, Bitcoin, remains the most notable and most heavily used.\nWhile Bitcoin is often perceived as an anonymous system, it is in fact only pseudonymous and a variety of methods are known to reidentify the holders of Bitcoin wallets. As a result, services have emerged which ``anonymize" Bitcoin by making it difficult to trace the origin of Bitcoin funds. These services are referred to as ``mixers" or ``tumblers," but are more generally methods of laundering Bitcoin funds.\nIn the United States, a system of anti-money-laundering (AML) regulations developed since the 1970s requires financial services organizations to take positive steps to identify their customers, prevent use of their services for money laundering, and detect and report customers which appear to be engaged in money laundering.\nThese AML regulations have been interpreted by the primary regulator, FinCEN, as fully applicable to Bitcoin. This creates a clear conflict with laundering services which are directly intended to prevent organizations identifying the possessor of funds.\nThis thesis explores the advancing state of both Bitcoin laundering services and Bitcoin anti-laundering services intended to assist in compliance with AML regulations. The current state of the art in both laundering and anti-laundering services is explored. Later, current research and avenues for improvement in these services are discussed.\nUltimately, the way forward for Bitcoin AML regulation is discussed. The current regulatory approach to Bitcoin is insufficient to mitigate laundering with Bitcoin and should be refocused.
Vandana Beessoo, Aaynab Foondun
No abstract is available for this record.
Usman W. Chohan
No abstract is available for this record.
Crystal A. Evans, Abigail B. Schneider
In recent years, cryptocurrencies, digital assets used as mediums of exchange that use cryptography to secure the creation and exchange of the currency, have gained in popularity. One cryptocurrency in particular, Bitcoin, has received a considerable amount of attention in the media. As the general publicâs awareness of Bitcoin increases, one must consider the impact that aligning a nonprofit with such a currency could have. The present research uses three studies to examine the impact that advertising the nonprofitsâ alignment with Bitcoin has on perceived effectiveness as well as potential donorsâ attitudes toward investing nonprofitsâ assets in the currency. Results suggest that while accepting Bitcoin may enhance potential donors' perceptions of the organization, going so far as to actually invest in the cryptocurrency may be considered a poor choice. Implications for how nonprofit managers may want to handle involvement with this novel and potentially lucrative but risky currency are discussed.
Yiting Li, Chien-Chiang Wang
We study cryptocurrency in a monetary economy with imperfect information. The network imperfection provides traders opportunities to engage in double spending fraud, but the trackability of transaction messages allows us to impose proof-of-work (PoW), proof-of-stake (PoS), and currency exclusion to mitigate fraud incentives. However, PoW consumes energy, and PoS requires extra cryptocurrency to be held as deposits, so deterring fraud may not be optimal. We find that forks can serve as signals to detect double spending fraud and to trigger punishments. If the probability is high that forks appear under double spending, imposing PoW and PoS to deter fraud is optimal; otherwise, it is optimal to save the cost but allow for double spending. Finally, by endogenizing the incentives to double spend and the size of PoW and PoS, we show that cryptocurrency economy can achieve efficient allocation as the imperfectness of the internet is sufficiently low.
Daniel Ferreira, Jin Li, Radoslawa Nikolowa
Abstract We develop a theory of blockchain governance. In our model, the proof-of-work system, the most common set of rules for validating transactions in blockchains, creates an industrial ecosystem with specialized suppliers of goods and services. We analyze the interactions between blockchain governance and the market structure of the industries in the blockchain ecosystem. We show that the proof-of-work system may lead to a situation in which some large firms in the blockchain industrial ecosystemâblockchain conglomeratesâcapture the governance of the blockchain. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
Valentina Covolo
Abstract Combatting criminal misuse of cryptocurrencies was at the core of the fatf agenda under the US Presidency, culminating in June 2019 with the thorough extension of international standards against money laundering over virtual assetsâ markets. This echoed the first legislative measure regulating virtual currencies adopted by the EU a year before. Directive 2018/843, better known as the 5 th Anti-Money Laundering Directive, fails however to address key technological breakthroughs and new business models, which continuously make the ever-growing and fast-paced crypto economy evolve. Against this background, the present contribution investigates shortfalls and challenges that lay ahead in the light of the new fatf Recommendations. It ultimately argues that the preventive anti-money laundering measures cannot dispense with the establishment of a cross-border integrated supervisory and enforcement system.
Niranjan Sapkota, Klaus Grobys
This paper explores whether asset market equilibria in cryptocurrency markets do exist. In doing so, it distinguishes between privacy and non-privacy coins. Most recently, privacy coins have attracted increasing attention in the public debate as non-privacy cryptocurrencies, such as Bitcoin, do not satisfy some usersâ demands for anonymity. Analyzing ten cryptocurrencies with the highest market capitalization in each submarket in the 2016â2018 periods, we find that privacy coins exhibit a distinct market equilibrium. Contributing to the current debate on the market efficiency of cryptocurrency markets, our findings provide evidence of market inefficiency. Moreover, the asset market equilibrium of privacy coins appears to originate from non-privacy coins with highest market capitalizations. We argue that the reason for this finding could be that non-privacy coins may be the first choice for criminals who might prefer cryptocurrencies exhibiting both a high level of anonymity and liquidity.
Usman W. Chohan
No abstract is available for this record.
John Taskinsoy
US President Donald J. Trump says he is not âa fan of Bitcoin and other cryptocurrenciesâ, and he does not have to be, but using this premature reason (like a bully) to rage a war against Bitcoin and Libra is ludicrous. Will Trump (or the United States government) try to destroy everything that he dislikes or is not a fan of? Satoshi Nakamoto (pseudonym) designed Bitcoin as public good in mind, but the US dollar serves totally the opposite as it has been increasingly used as a weapon of mass economic destruction. The real issue is, President Trump feels agitated and concerned because Bitcoin and Libra create an undesired situation of diminishing US power. The anonymity aspect of Bitcoin limits Trumpâs (the US governmentâs) role as the global policeman (i.e. succeeded the UK in 1945). Just to curb Bitcoinâs popularity, politicians produce lies, make short-sighted assertions, and publicly share ill-advised thoughts; regardless, Bitcoin mania is nothing like the tulip mania or the dot.com mania, it is with us now and it will continue to forge ahead unabated in spite of doubters, pessimists, doomsayers, skeptics, and disbelievers. At the backdrop of US-China trade war and the regulatory backlash to force Facebook to halt its Libra project, one is compelled to wonder till when the United States will exploit the worldâs scarce resources and how many more lives will be perished for petrodollar so that the U.S. can continue enjoying the âexorbitant privilegeâ of dollar hegemony.
Domenico Di Prisco
Disorientation and instability characterize the globalized context in which the relations of corporate governance are carried out today. Suffocated by the huge numerical and qualitative dimension of data to be analysed, companies need organizational systems and tools that allow them to interface with this reality. Through the creation of decentralized and more efficient systems able to process information at a higher speed than any human, Blockchain and artificial intelligence are the answer to these renewal requests. This paper aims to analyse the possible implications of the adoption of these technologies within the corporate governance relations, supporting how they can constitute effective and necessary support to the current organizational systems and, at the same time, how they are not yet able to replace them completely. Such a hypothesis would lead to the constitution of information oligarchies, would expose the shareholders to AIâs errors or manipulations by removing any management responsibility and, ultimately, to the creation of autonomous markets driven exclusively by economic purposes of the IT protocols that constitute them
Usman W. Chohan
No abstract is available for this record.
Dirk G. Baur, Josua Oll
No abstract is available for this record.
John Taskinsoy
No abstract is available for this record.
Usman W. Chohan
No abstract is available for this record.
Fabian Teichmann, Marie-Christin Falker
Bitcoin, the worldâs first cryptocurrency, was first introduced in 2009, by Satoshi Nakamoto. While many believe the name is a pseudonym, and the true identity of the creator(s) is unknown, it is an undisputed fact that cryptocurrencies have introduced an indelible change to monies worldwide. Consequently, cryptocurrencies have also introduced a plethora of new opportunities for money laundering activity.\nWhile cryptocurrencies follow the same three-step laundering process of placement, layering, and integration, the activity can be more difficult to detect due to the anonymous nature of cryptocurrencies. Moreover, while traditional schemes such as smurfing or gambling at a casino are still used as laundering techniques, more advanced methods such using mixers and tumblers or utilizing unscrupulous cryptocurrency exchanges are also being used to mask the flow of funds. Finally, the rapid increase in initial coin offerings (ICOâs) provides yet another outlet for cryptocurrency money laundering to occur.\nFortunately, advancements are being made on a variety of fronts to address the increase in illicit activity. First, the largest cryptocurrency exchange, Coinbase, has implemented a robust know-your-customer (KYC) program, as evidenced by my own experience of opening an account with the exchange. Secondly, researchers are finding new ways to extract information about certain cryptocurrency transactions which were previously thought to be unidentifiable. Finally, both law enforcement and government agencies, including the SEC and the Financial Crimes Enforcement Network, are using innovative, aggressive, and even clandestine techniques to combat cryptocurrency money laundering activity.
John Taskinsoy
No abstract is available for this record.
Klaus Grobys
A total of 1.1 million bitcoins were stolen in the 2013â2017 period. Noting that the average price for a Bitcoin in 2018 was $7572 the corresponding monetary equivalent of losses is $8.9 billion highlighting the societal impact of this criminal activity. Investigating the response of the uncertainty of Bitcoin returns when hacking incidents occur, the results of this study point toward two different responses. After experiencing a contemporaneous effect at day t=0, the volatility increases significantly again at day t+5. Hacking incidents that occur in the Bitcoin market also affect the uncertainty in the Ethereum market with a time delay of five days. Notably, neither Bitcoin nor Ethereum appear to exhibit asymmetric responses to negative innovations.
Guglielmo Maria Caporale, Woo-Young Kang, Fabio Spagnolo, Nicola Spagnolo
This paper uses a Markov-switching non-linear specification to analyse the effects of cyber attacks on returns in the case of four cryptocurrencies (Bitcoin, Ethernam, Litecoin and Stellar) over the period 8/8/2015â2/28/2019. The analysis considers both cyber attacks in general and those targeting cryptocurrencies in particular, and also uses cumulative measures capturing persistence. On the whole, the results suggest the existence of significant negative effects of cyber attacks on the probability for cryptocurrencies to stay in the low volatility regime. This is an interesting finding, that confirms the importance of gaining a deeper understanding of this form of crime and of the tools used by cybercriminals in order to prevent possibly severe disruptions to markets.
Usman W. Chohan
No abstract is available for this record.
Christian Rueckert
Cryptocurrencies,1 like bitcoin, raise new legal questions due to their innovative technological concepts. While academic research covers nearly all areas of the technological concepts of those currencies, legal studies focus only on a few topics. The papers that have been published so far discuss mainly economic law, tax law, and financial regulations. At the same time, governments are starting to explicitly regulate cryptocurrencies in terms of anti-money-laundering (AML) and to clarify or strengthen the legal basis for prosecuting crimes in the context of cryptocurrencies. Furthermore, criminal investigation in the context of cryptocurrencies is intensifying with the rising number of cryptocurrency-related crimes. Moreover, governments should also start to consider crime prevention in the context of cryptocurrencies. AML regulation, crime prevention, and prosecution have to take heed of the fundamental rights of the citizens affected. To date, legal research has not discussed the relationship between AML regulation (regarding cryptocurrencies), crime prevention (in conjunction with cryptocurrencies), the prosecution of crimes involving cryptocurrencies and fundamental rights. Many future regulatory concepts will collide with the fundamental right to property of the owners of cryptocurrency units and the freedom to pursue a trade or profession of owners and operators of exchange platforms, mining pools, etc. In cryptocurrencies organized as peer-to-peer systems, the freedom of association also has to be mentioned. With particular regard to prosecution, law enforcement agencies restrict the freedom of telecommunication, data privacy (including the right to informational self-determination), freedom of expression, and the freedom of information. Whenever some of these fundamental rights are impinged upon, regulation concepts and investigation or prosecution approaches must be provided for by law and must fulfill the criterion of necessity. Further interdisciplinary research is needed to develop efficient and legit prevention as well as criminal investigation concepts.
Seunghyeon Lee, Changhoon Yoon, Heedo Kang, Yeonkeun Kim ¡ 8 authors
The Dark Web is notorious for being a major distribution channel of harmful content as well as unlawful goods.Perpetrators have also used cryptocurrencies to conduct illicit financial transactions while hiding their identities.The limited coverage and outdated data of the Dark Web in previous studies motivated us to conduct an in-depth investigative study to understand how perpetrators abuse cryptocurrencies in the Dark Web.We designed and implemented MFScope, a new framework which collects Dark Web data, extracts cryptocurrency information, and analyzes their usage characteristics on the Dark Web.Specifically, MFScope collected more than 27 million dark webpages and extracted around 10 million unique cryptocurrency addresses for Bitcoin, Ethereum, and Monero.It then classified their usages to identify trades of illicit goods and traced cryptocurrency money flows, to reveal black money operations on the Dark Web.In total, using MFScope we discovered that more than 80% of Bitcoin addresses on the Dark Web were used with malicious intent; their monetary volume was around 180 million USD, and they sent a large sum of their money to several popular cryptocurrency services (e.g., exchange services).Furthermore, we present two real-world unlawful services and demonstrate their Bitcoin transaction traces, which helps in understanding their marketing strategy as well as black money operations.