The concept of Bitcoin was first introduced by an unknown individual (or a group of people) named Satoshi Nakamoto before it was released as open-source software in 2009. Bitcoin is a peer-to-peer cryptocurrency and a decentralized worldwide payment system for digital currency where transactions take place among users without any intermediary. Bitcoin transactions are performed and verified by network nodes and then registered in a public ledger called blockchain, which is maintained by network entities running Bitcoin software. To date, this cryptocurrency is worth close to U.S. $150 billion and widely traded across the world. However, as Bitcoin's popularity grows, many security concerns are coming to the forefront. Overall, Bitcoin security inevitably depends upon the distributed protocols-based stimulant-compatible proof-of-work that is being run by network entities called miners, who are anticipated to primarily maintain the blockchain (ledger). As a result, many researchers are exploring new threats to the entire system, introducing new countermeasures, and therefore anticipating new security trends. In this survey paper, we conduct an intensive study that explores key security concerns. We first start by presenting a global overview of the Bitcoin protocol as well as its major components. Next, we detail the existing threats and weaknesses of the Bitcoin system and its main technologies including the blockchain protocol. Last, we discuss current existing security studies and solutions and summarize open research challenges and trends for future research in Bitcoin security.
In recent years, Tether issuances (or 'grants') have increased significantly, which correlated broadly with a significant rise in Bitcoin valuation. This paper examines the impact of cryptocurrency issuances on subsequent cryptocurrency returns. It is argued that as Tether is the undisputed 'stable coin', the minting of new Tether acts similarly to monetary expansion in cryptocurrency markets, inflating the prices of Bitcoin. We construct a VAR model and show contrary to investor expectations, Tether issuances do not impact subsequent Bitcoin returns, however, they do impact traded volumes. We also document an increase in Tether trading following a subsequent decrease in Bitcoin returns. This illustrates investor preferences for lower volatility crypto-assets in periods following negative Bitcoin returns.
Abstract In December 2017, both the Chicago Board Options Exchange and the Chicago Mercantile Exchange introduced futures contracts on bitcoin. We investigate to what extent they provide useful information for the price discovery of bitcoin. We rely on the information share methodology of Hasbrouck (1995, J Finance , 50, pp. 1175–1199) and Gonzalo and Granger (1995, J Bus Econ Stat, 13, pp. 27–35) and find that the spot price leads the futures price. We attribute this result to the higher trading volume and the longer trading hours of the globally distributed bitcoin spot market, compared to the relatively restricted access to the US‐based futures markets.
We address the valuation of bitcoins and other blockchain tokens in a new type of production economy: a decentralized financial network (DN). An identifying property of these assets is that contributors to the DN trust (miners) receive units of the same asset used by consumers of DN services. Therefore, the overall production (hashrate) and the bitcoin price are jointly determined. We characterize the demand for bitcoins and the supply of hashrate and show that the equilibrium price is obtained by solving a fixed-point problem and study its determinants. Price-hashrate “spirals” amplify demand and supply shocks.
ABSTRACT We offer a general equilibrium analysis of cryptocurrency pricing. The fundamental value of the cryptocurrency is its stream of net transactional benefits, which depend on its future prices. This implies that, in addition to fundamentals, equilibrium prices reflect sunspots. This in turn implies multiple equilibria and extrinsic volatility, that is, cryptocurrency prices fluctuate even when fundamentals are constant. To match our model to the data, we construct indices measuring the net transactional benefits of Bitcoin. In our calibration, part of the variations in Bitcoin returns reflects changes in net transactional benefits, but a larger share reflects extrinsic volatility.
In a novel model of an endowment economy, we analyze coexistence and competition between traditional fiat money (Dollar) and another intrinsically worthless medium of exchange, not controlled by a central bank, such as Bitcoin. Agents can trade consumption goods in either currency or hold on to currency for speculative purposes. A central bank ensures a Dollar inflation target, while Bitcoin mining is decentralized via proof-of-work. We analyze Bitcoin price evolution and interaction between the Bitcoin price and monetary policy which targets the Dollar. We obtain a fundamental pricing equation, which in its simplest form implies that Bitcoin prices form a martingale. We derive conditions, under which Bitcoin speculation cannot happen, and the fundamental pricing equation must hold. We show that the block rewards are not a tax on Bitcoin holders: they are financed by Dollar taxes imposed by the Dollar central bank. We discuss monetary policy implications and characterize the range of equilibria.
Cryptocurrencies such as Bitcoin are establishing themselves as an investment asset and are often named the New Gold. This study, however, shows that the two assets could barely be more di?erent. Firstly, we analyze and compare conditional variance properties of Bitcoin and Gold as well as other assets and ?nd di?erences in their structure. Secondly, we implement a BEKK-GARCH model to estimate time-varying conditional correlations. Gold plays an important role in ?nancial markets with ?ight-to-quality in times of market distress. Our results show that Bitcoin behaves as the exact opposite and it positively correlates with downward markets. Lastly, we analyze the properties of Bitcoin as portfolio component and ?nd no evidence for hedging capabilities. We conclude that Bitcoin and Gold feature fundamentally di?erent properties as assets and linkages to equity markets. Our results hold for the broad cryptocurrency index CRIX. As of now, Bitcoin does not re?ect any distinctive properties of Gold other than asymmetric response in variance.
ABSTRACT This paper investigates whether Tether, a digital currency pegged to the U.S. dollar, influenced Bitcoin and other cryptocurrency prices during the 2017 boom. Using algorithms to analyze blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. The flow is attributable to one entity, clusters below round prices, induces asymmetric autocorrelations in Bitcoin, and suggests insufficient Tether reserves before month‐ends. Rather than demand from cash investors, these patterns are most consistent with the supply‐based hypothesis of unbacked digital money inflating cryptocurrency prices.
Michel Rauchs, Andrew Glidden, Brian Gordon, Gina Pieters · 8 authors
The DLT ecosystem is plagued with the use of incomplete and inconsistent definitions and a lack of standardised terminology, creating a needlessly complicated landscape for everyone from experienced policymakers and developers to individuals venturing into the field for the first time. This study sets out to contribute to international discussions to create a shared, common language around DLT systems to clarify terminology and concepts.
Open access
2 source records
Open Source Software Innovations
Transportation and Mobility Innovations
Innovative Approaches in Technology and Social Development
The amount of computational power devoted to anonymous, decentralized blockchains such as Bitcoin’s must simultaneously satisfy two conditions in equilibrium: (1) a zero-profit condition among miners, who engage in a rent-seeking competition for the prize associated with adding the next block to the chain; and (2) an incentive compatibility condition on the system’s vulnerability to a “majority attack”, namely that the computational costs of such an attack must exceed the benefits. Together, these two equations imply that (3) the recurring, “flow”, payments to miners for running the blockchain must be large relative to the one-off, “stock”, benefits of attacking it. This is very expensive! The constraint is softer (i.e., stock versus stock) if both (i) the mining technology used to run the blockchain is both scarce and non-repurposable, and (ii) any majority attack is a “sabotage” in that it causes a collapse in the economic value of the blockchain; however, reliance on non-repurposable technology for security and vulnerability to sabotage each raise their own concerns, and point to specific collapse scenarios. In particular, the model suggests that Bitcoin would be majority attacked if it became sufficiently economically important — e.g., if it became a “store of value” akin to gold— which suggests that there are intrinsic economic limits to how economically important it can become in the first place.
Blockchain (BC), the technology behind the Bitcoin crypto-currency system, is considered to be both alluring and critical for ensuring enhanced security and (in some implementations, non-traceable) privacy for diverse applications in many other domains - including in the Internet of Things (IoT) eco-system. Intensive research is currently being conducted in both academia and industry applying the Blockchain technology in multifarious applications. Proof-of-Work (PoW), a cryptographic puzzle, plays a vital rôle in ensuring BC security by maintaining a digital ledger of transactions, which is considered to be incorruptible. Furthermore, BC uses a changeable Public Key (PK) to record the users’ identity, which provides an extra layer of privacy. Not only in cryptocurrency has the successful adoption of BC been implemented but also in multifaceted non-monetary systems such as in: distributed storage systems, proof-of-location, healthcare, decentralized voting and so forth. Recent research articles and projects/applications were surveyed to assess the implementation of BC for enhanced security, to identify associated challenges and to propose solutions for BC enabled enhanced security systems.
The paradigm of Internet of Things (IoT) is paving the way for a world, where many of our daily objects will be interconnected and will interact with their environment in order to collect information and automate certain tasks. Such a vision requires, among other things, seamless authentication, data privacy, security, robustness against attacks, easy deployment, and self-maintenance. Such features can be brought by blockchain, a technology born with a cryptocurrency called Bitcoin. In this paper, a thorough review on how to adapt blockchain to the specific needs of IoT in order to develop Blockchain-based IoT (BIoT) applications is presented. After describing the basics of blockchain, the most relevant BIoT applications are described with the objective of emphasizing how blockchain can impact traditional cloud-centered IoT applications. Then, the current challenges and possible optimizations are detailed regarding many aspects that affect the design, development, and deployment of a BIoT application. Finally, some recommendations are enumerated with the aim of guiding future BIoT researchers and developers on some of the issues that will have to be tackled before deploying the next generation of BIoT applications.
Juliandson Estanislau Ferreira, Filipe Gutemberg Costa Pinto, Simone C. dos Santos
Blockchain é uma tecnologia de gerenciamento de dados cujo funcionamento consiste em transações descentralizadas, sendo desenvolvida para a criptomoeda Bitcoin no contexto de pagamento digital. O interesse na tecnologia blockchain tem aumentado desde que a ideia foi cunhada em 2008. As razões para o interesse na tecnologia blockchain são seus atributos centrais que fornecem segurança, anonimato e integridade de dados sem qualquer interferência de terceiros no controle das transações. Até agora, o blockchain tem atraído bastante atenção da indústria de serviços financeiros, mas a tecnologia pode ser adaptada para qualquer indústria onde seja necessário registrar, confirmar e transferir qualquer tipo de contrato ou propriedade. Nesta pesquisa, realizamos um mapeamento sistemático para estudar como essa tecnologia tem sido utilizada pelas corporações. O objetivo é compreender os principais recursos do blockchain , as novas aplicações que surgiram, impactos, vantagens e desafios. Foram extraídos 21 artigos primários de bases de dados científicas. Os resultados mostram potencial disruptivo da tecnologia, como ela vai mudar a nossa economia e como ela foi adaptada para muitas indústrias. DOI: http://dx.doi.org/10.21714/1679-18272017v15Ed.p108-117
As in 2009 the first encrypted electronic currency Bitcoin is introduced, the block chain technology has received attention. Bitcoin is a currency issued without a trusted third party, in peer-to-peer (Peer-to-Peer) network and gives a guarantee of the reliability of money transactions, ensures the integrity of transactions. There is a back end-technique called block-chain that guarantees these without trusted third party. Block chain is a public ledger that all nodes to verify transactions and maintain integrity with the same ledger. Block chain technology applies not only electronic currency but also in various industries such as contract document integrity, cloud storage service, internet of thigns, supply chain for transaction integrity. However, there are problems to be solved if the bitcoin block chain consensus rule is applied to these industry. First, there is problem of low transaction throughput and block generation rate by an inefficient consensus rule. Second, There is problem of tampered block broadcast with non-dependency (internet of things data, food history data) transactions when applying the block chain consensus rule, which is proof-of-work of bitcoin's competitive system.
Saghrane Mohamed Yassine, Alaoui Lalla Latifa, Benayache Sarah
Bitcoin is a technology operating without a central authority. The management of the transaction and the creation of bitcoins constitute an assumption of responsibility collectively by the network. Bitcoin is free and open. Its design is public, nobody has nor controls this type of currency and any individual can purchase it. Thanks to several of its single properties, Bitcoin entails promising uses, which are not presently covered by the systems of classic payments. The digital currency bitcoin primarily relies on a type of technology referred to as blockchain and has several implications for the economy and corporations. Bitcoins are used everywhere in the world and can serve as a tool of decentralization and freedom. There is a significant number of companies and individuals who use Bitcoin, with certain organizations currently accepting it as a method of payment. Although Bitcoin remains a relatively new phenomenon, it has experienced a rapid growth. At the end of August 2017, the value of all the bitcoins in circulation exceeded 16.5 million bitcoin with millions of dollars exchanged daily in bitcoins (market cap 77 billion dollar). This paper will provide a brief outline of this subject, along with essential information on Blockchain and bitcoin. After providing a definition of the latter two, we will present their impact on the financial industry, and finally we will evaluate the function of the stock of value on the calculation of the volatility of the bitcoin by reporting it to gold and the EUR/USD parity.
ÄlĂĄnek pomocĂ simulace provedenĂŠ v programu Minsky zkoumĂĄ efekty pĹeddefinovanĂŠ a nemÄnnĂŠ monetĂĄrnĂ politiky podle vzoru fungovĂĄnĂ kryptomÄny Bitcoin a porovnĂĄvĂĄ je s vĂ˝sledky souÄasnĂŠho mÄnovĂŠho systĂŠmu kreditnĂ fiat mÄny. Minsky je specializovanĂ˝ software pro tvorbu SFC ekonomickĂ˝ch modelĹŻ. Pracuje ve spojitĂŠm Äase. Bitcoin je na rozdĂl od eura aktivnĂ mÄna, kterĂĄ nenĂ vytvĂĄĹenĂĄ ĂşÄetnÄ proti dluhu a neumoĹžĹuje fiduciĂĄrnĂ emisi. Studie zkoumĂĄ komplexnÄ ekonomiku EU se zamÄĹenĂm na jejĂ mÄnovĂ˝ systĂŠm, a to za pouĹžitĂ dat poskytovanĂ˝ch Eurostatem. NĂĄslednÄ mÄnĂ pravidla systĂŠmu tak, aby odpovĂdala pravidlĹŻm protokolu Bitcoinu. ProvedenĂŠ simulace ukazujĂ po Äase odliĹĄnĂŠ dopady tÄchto systĂŠmovĂ˝ch nastavenĂ na rozdÄlenĂ bohatstvĂ mezi jednotlivĂŠ skupiny ekonomickĂ˝ch agentĹŻ a na stabilitu ekonomiky jako celku.