Blockchain Papers

Alicia Yukari Lima Akamine, Ulysses Alves de Levy Machado, Cristina Zackseski

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Dr Craig S Wright

No abstract is available for this record.

Aljosha Judmayer, Alexei Zamyatin, Nicholas Stifter, Edgar Weippl

No abstract is available for this record.

Jeffrey Bukhari

The use of the digital currency Bitcoin has spiked dramatically over the last several years. Spurred by interest from investors and those excited about its commercial and banking potential, the value of the cryptocurrency has seen its value greatly increase since its beginning in 2009. This project explains the underlying technology behind Bitcoin, how Bitcoin is and will change commerce, and what potential lies ahead for the digital currency.

Mattias Gleisner, Karoline Edström

Pengar har under en lång tid spelat en central roll i människans samhälle och dagens samhälle präglas av allt mer handel. Utifrån detta har nya betalningsmetoder utvecklats. En förändring i konsumentbeteendet har bidragit till att allt fler individer väljer elektroniska betalningstjänster. En relativt ny innovation är kryptovalutan bitcoin som erbjuder betalning mellan köpare och säljare utan inblandning av en tredje part. Ett flertal studier har gjorts med syftet att fastställa om bitcoin är en valuta eller en tillgång, något som visat sig vara svårt. Något som varit tydligare är att bitcoins värdeförändringar inte tycks vara korrelerad med andra investeringsalternativ. I en studie av Brière et al. (2015) drogs slutsatsen att bitcoin är en intressant tillgång för en investerare tack vare bitcoins låga korrelationskoefficient med andra tillgångar. Denna studie grundar sig i de teoretiska utgångspunkterna om Famas (1970) hypotes om den effektiva marknaden, Markowitz (1952) moderna portföljteori och Rogers (2003) teori om spridning av innovationer. Med detta som utgångspunkt är syftet med denna studie att undersöka hur korrelationskoefficienten mellan bitcoin och traditionella investeringstillgångar som aktier, valutor och råvaror ser ut idag samt hur dessa har förändrats över tid. Med hjälp av Famas (1970) teori om effektiva marknader och Rogers (2003) teori om spridning av innovationer kommer en diskussion om huruvida bitcoins egenskaper som investering i den moderna portföljen har förändrats i takt med att bitcoin blivit mer använd, både som betalningsmedel och investeringsalternativ. För att besvara dessa frågor undersöks korrelationskoefficienterna mellan bitcoin och elva andra tillgångar i kombination med en analys av en deskriptiv statistik. Med en undersökningsperiod som sträcker sig från 18 augusti 2011 till 17 mars 2017. Denna period har även delats upp i mindre tidsperioder för att utifrån detta analysera om det skett några förändringar i korrelationen mellan bitcoin och de traditionella tillgångarna i studien. Resultatet visade att bitcoin inte är korrelerad med andra traditionella tillgångar, oavsett vilken tidsperiod som undersöks. Det visade sig att bitcoin i förhållande till andra tillgångar är en riskfylld investering på grund av bland annat en hög volatilitet. Dock kompenseras detta av bitcoins höga årlig avkastning. Av resultatet framgår det även att volatiliteten för bitcoin har minskat med tiden och att kryptovalutan inte är lika riskfylld idag jämfört med tidigare.

Azizah Aljohani

The rapid advancement in encryption and network computing gave birth to new tools and products that have influenced the local and global economy alike. One recent and notable example is the emergence of virtual currencies, also known as cryptocurrencies or digital currencies. Virtual currencies, such as Bitcoin, introduced a fundamental transformation that affected the way goods, services, and assets are exchanged. As a result of its distributed ledgers based on blockchain, cryptocurrencies not only offer some unique advantages to the economy, investors, and consumers, but also pose considerable risks to users and challenges for regulators when fitting the new technology into the old legal framework. This paper attempts to model the volatility of bitcoin using 5 variants of the GARCH model namely: GARCH(1,1), EGARCH(1,1) IGARCH(1,1) TGARCH(1,1) and GJR-GARCH(1,1). Once the best model is selected, an OLS regression was ran on the volatility series to measure the day of the week the effect. The results indicate that the TGARCH (1,1) model best fits the volatility price for the data. Moreover, Sunday appears as the most significant day in the week. A nontechnical discussion of several aspects and features of virtual currencies and a glimpse at what the future may hold for these decentralized currencies is also presented.

Barnaby Craggs

The Internet pervades modern life, offering up opportunities to connect, inform and be informed. As the range and number of sources for information online explode, how people select and interpret information has become a pertinent area for study, not least in light of the prevalence of fake-news. People are well known to act upon information they believe to be trustworthy and where the decision to act incurs risk, an inability to accurately select and assess the credibility of information presents a challenge. Bitcoin, the nascent crypto-currency, presents a domain within which profound financial risk abounds. Even for those armed with experience and knowledge there are numerous challenges to assessing risk, especially as sources of Bitcoin information can be observed to be partisan and of questionable accuracy. Within the domain of bitcoin speculation, this thesis asks the central research question of: are people able to select and correctly evaluate information they might rely upon to make decisions? In addressing this research question, this thesis offers - through the application of a psychological model of informational trust to bitcoin speculators - two fundamental contributions: Firstly, that these users are able to identify relevant news without a reliance upon confirmation bias. Secondly, that a notable percentage of users are not evaluating the credibility of online news by expertly interpreting the fundamentals of information but, rather deferring their trust to either the source news website or a more broad trust of information on the Internet. For these users, chance or luck may mean that they are basing their decisions upon factually accurate news. But this is a position which makes them particularly vulnerable to fake-news where it is spread via sources which they might trust. This position of susceptibility provides evidence to support further security research of both the prevalence of, and counter-measures for fake-news.

Natalia G. Vovchenko, Еvgeniy N. Tishchenko, Tatiana V. Epifanova, Mark B. Gontmacher

The article reveals the essential characteristic of virtual currencies. The estimate is given to the development of risks and threats to national security, combating laundering of criminal money and terrorism financing, which are formed under the conditions of the growing interest in virtual currencies, including Bitcoin. It is suggested to minimize negative effect arising in this relation. Methods are proposed to adapt the management center in the virtual currency infrastructure.

Adam Österström, Erik Einarsson

Syftet med studien är att undersöka bitcoins kapacitet som hedge gentemot den svenska aktiemarknaden. För att identifiera om korrelation existerar mellan avkastningen i bitcoin och SIX30RX (OMXS30 med utdelning) och således besvara forskningsfrågan studeras associationen. Tidsperioden som studeras är 2012-01-02 till 2016-10-21. Associationen undersöks med hjälp av regressionsmodeller. Resultatet visar att bitcoin inte är korrelerat med avkastningen för SIX30RX under den studerade tidsperioden. Bitcoin kan således klassificeras som en hedge gentemot den svenska aktiemarknaden.

Tina Ehrke-Rabel, Iris Eisenberger, Elisabeth Hödl, Lily Zechner

Distribuierte Systeme, wie die Bitcoin-Blockchain, stellen das Recht vor neue Herausforderungen. Das disruptive Potential liegt unter anderem im Fehlen einer zentralen, verantwortlichen Kontrollinstanz, an die das Recht traditionell anknupft, und im Verschwimmen der Rollen von „ProduzentInnen“ und „KonsumentInnen“ innerhalb des Systems. Die Erzeugung von Kryptowahrungen, wie Bitcoin, mittels „Proof of Work“ und die gleichzeitige Validierung von Transaktionen zwischen NetzwerknutzerInnen (sog „Mining“) ist ein Beispiel dafur, dass die rechtlich etablierten Kategorien heute fur eine effiziente Rechtsdurchsetzung unzureichend sind. „Mining“ kann rechtlich zwar als Glucksspiel iSd osterreichischen GSpG eingeordnet werden. Konsequenz dieser Einordnung sind allerdings Probleme beim Vollzug des folglich anwendbaren Ordnungs-, Abgaben- und Strafrechts. Daraus wird geschlossen, dass die Regulierung von „Peer to Peer“-Systemen neue Losungsansatze erfordert, sodass dem Staat seine rechtliche Steuerungsfunktion erhalten bleibt.

Thomas Linder, S. S. Meyer

Kryptowährungen wie Bitcoin verbreiten sich mit rasanter Geschwindigkeit. Der vorliegende Fachartikel zeigt auf, wie die Bitcoin-Thematik im Steuer- und Rechnungslegungsrecht einzuordnen ist und welche Fragen nach wie vor offen sind.

Floriane Bruneau

Following a trend of digitalization and happening after the subprime crisis, the Bitcoin event introduced the world to new possibilities regarding payment, data management and more importantly, the concept of decentralization: the possibility of building an organization without a central authority and managed by its users. \nBitcoin presents multiple innovative facets: the concept of cryptocurrency that is not submitted to any regulating authority, allowing free variations in value according to the market rule of supply and demand. The possibility of a new payment system suppressing all intermediaries, with the advantage of being faster, cheaper and more secure. But bitcoin, by being unregulated, consists of a very volatile currency and faces difficulty to inspire trust because of security matters, the bad image of an underground currency used for illegal purposes and finally the lack of recognition and trust that the financial institutions accord to it, making it a hazardous business. \nOn the other hand, blockchain benefits from a good reputation of fast, cheap and secure transactions, as well as a good potential for concrete businesses applications. But as Bitcoin, it faces trust matters and has the disadvantage of being too complex and costly to become a new norm in real economy transactions. \nIf both of these technologies have good principles, few are applicable to our system as it is now, but the principles that can be applied can change the face of our economy in the coming years; because of these two technologies, but also all the movement they generated around them in terms of innovation and inspiration for change

Lene Standal, Julie H. Hageløkken

Bitcoin er en virtuell og desentralisert valuta som for første gang muliggjør betalinger direkte fra person til person, uten at betalingen må verifiseres av noen sentral, finansiell institusjon. Siden Bitcoin ble introdusert i 2008 har valutaen opplevd en betydelig økning i handelsvolum og vekslingskurs. Ingen tradisjonelle valutaer hadde en sterkere prisstigning enn Bitcoin i 2016, og antall kjøpte og solgte Bitcoin økte fra 40 milliarder euro i 2015 til 370 milliarder euro i 2016. I denne utredningen analyserer vi Bitcoins implikasjoner, og gjør rede for hvordan Bitcoin utfordrer skattemyndighetenes oppgaver. Utredningen viser at Bitcoins desentraliserte struktur på den ene side gir en rekke positive implikasjoner som gjør valutaen revolusjonerende; høyere grad av anonymitet i transaksjoner, lavere transaksjonskostnader, samt bidrar i kampen for å redusere fattigdom og politisk regulering. På den andre siden byr desentralisering og økt anonymitet på utfordringer som kan påvirke Bitcoins fremtid; vekslingskursen har hatt særdeles store svingninger, valutaen har blitt koblet til kriminalitet og bitcoinaktører har vært utsatt for sikkerhetsbrudd der Bitcoins er blitt stjålet. Videre viser vi hvordan Bitcoin og dens underliggende teknologi utfordrer skattemyndighetene, der utfordringene generelt er knyttet til at teknologien og Bitcoins egenskaper er relativt ukjent, og derfor kan synes å ligge et skritt foran skattemyndighetene. Avslutningsvis foreslår vi hvordan skattereglene for Bitcoin må tolkes, og utredningen gir dermed et i bidrag i avklaringen av en rekke skattemessige problemstillinger for bitcoinaktører og skattemyndigheter. Vår analyse av teori om etterlevelse og drøfting av Bitcoins egenskaper, tilsier at etterlevelsen av skattereglene må antas å være lav i bitcoinøkonomien. For å øke etterlevelsen bør noen av skattebestemmelsene for Bitcoin endres, og skattemyndighetene bør øke sin kunnskap om virtuelle valuta som Bitcoin. Dette er nødvendig for å kartlegge bedre kontrollmuligheter, gi bedre veiledning ut til skattytere og dermed forenkle skattleggingen av Bitcoin. Vi konkluderer med at Bitcoin har viktige implikasjoner som er revolusjonerende i utviklingen av ny og bedre betalingsteknologi. Det er likevel utfordringer som må løses for at Bitcoin skal anerkjennes av de store masser. I relasjon til skatt konkluderer vi med at omsetning av Bitcoin bør fritas fra merverdiavgift, ettersom merverdiavgiftsplikten har en rekke uheldige konsekvenser for norske bitcoinaktører og potensielt kan hindre videre utvikling av denne type teknologi.

Ilkka Kuronen

The purpose of this thesis was to provide information on whether the currency Bitcoin is viable and beneficial for businesses as a payment method or a business model. Interview, customer questionnaire and analysis of Bitcoin services, products and legislation were used to create a better understanding of viability of the currency.\n\nTheoretical part of the thesis explains how Bitcoin and its markets function. Later parts of the theoretical part lays out different services and products that can be built around Bitcoin. The objective of the theoretical part is to give better understanding of the general idea of Bitcoin for readers who are unfamiliar with the subject as it is a new concept.\n\nThe empirical research part of the thesis was conducted with both qualitative and quantitative methods. Methods used were a qualitative theme interview and a quanti-tative customer questionnaire. The theme interview was conducted with a brick and mortar store, which had previously used Bitcoin as a payment method. The interview was conducted over the phone and a planned theme structure was used. The ques-tionnaire was conducted in two different Bitcoin related communities and it was used to find out their previous and planned Bitcoin payment method usage.\n\nTrough empirical research it turned out that Bitcoin retail payment method is not very popular and that it has many problems and disadvantages in its current form. Online payment methods appeared to be more popular among users.\n\nFrom the research it was concluded that Bitcoin online payment methods using mer-chant solution services are viable, when transaction fees and times are at their normal level. Online payment methods involve less investment and risk compared to retail Bitcoin payment methods, which don’t have much demand, require staff training and purchasing and maintaining of separate payment devices. Online payment methods appeared to have some advantages compared to traditional payment methods as well as normally they involve smaller transaction fees when using a Bitcoin merchant ser-vice as opposed to using credit or debit card company payment services. It should be noted that at the end of the research Bitcoin transaction feeds and transaction con-firmation times rose significantly, which temporarily made the business use of the currency mostly untenable.

Dr Craig S Wright

We demonstrate that the Bitcoin Script language allows not only for primitive recursion, but in the deployment of an Ackerman function and hence the ability to simply recurse in Bitcoin script, we show that the script system is Turing complete. From this, we introduce a new class of Turing Machine, the PTTM or probabilistic Total Turing machine and note that Bitcoin acts as a decider or Total Turing Machine which allows us to find a NIZKPoK that can act as a TM based verifier to a Non-Interactive Proof that is run on an external and non-associated TM as a proof system. Bitcoin can extend to securely offer contracts such as best fit solutions to common logistic systems and optimisation problems including the Travelling Salesman class of problems and to the optimisation of systems. This can be offered as an open or time bound contract that guarantees payment and can be solved which allowing Pseudonymity of the bidder.

Carina-Elena Stegăroiu

In the knowledge society, a new economy is emerging, New Economy, which also encompasses the Internet economy in the form of e-bussines, which is why the economy is the economy of information society and knowledge. So, in a knowledge-based technology, a new digital coin was also needed in the field of electronic payments, thus creating the virtual currency BITCOIN (BTC), which in a moto translation is the bit of the bit (the unit of measure of the amount of information). It is a decentralized electronic payment system and a digital encrypted opensurce created in 2009 by Satoshi Nakamoto. The need to create Bitcoin (BTC) was to ensure investment protection and free business finance, without resorting to financial institutions and beyond any constraints and regulations. The Bitcoin name also refers to the opensource program for using these coins, as well as the peer-to-peer (peer-to peer) network it forms. Currently, even if he has many opponents and has gone through several difficult times, Bitcoin seems to survive and offer new technology with revolutionary use possibilities. The concept of the digital coin fits perfectly with the ever-changing world, dominated by mobile and omnipresent technology. Compared to Bitcoin or another digital coin, any visit to the bank seems like a trip to another century, an era of time lost at the counter completing dozens of unnecessary papers.

Mikaela Sylven

Background: It is written much about the virtual currency in the media. Bitcoin is a virtual currency that is beginning to be used as payment for the purchase of goods and services. There are risks associated with virtual currencies just like traditional payments are, in some ways, these risks are similar, while they aredifferent in other ways. Purpose: The purpose of this study is to identify the risks that may arise when Bitcoin are used to make payments and to analyze how these risks can be managed. I will also analyze how Bitcoin works as payment. Method: Inthis study I has assumed an abductive method. The research approach has been made by triangulation where the aim is answered on the basis of a quantitative and qualitative approach. I have collect empirical data through a literature study, a survey and semi-structured interviews. Conclusion: Bitcoin is still in development stage, because of that I cannot make any conclusion on whether it will exist in the future. Bitcoin as payment is connected with a lot of possibilities in terms of businesses to gain a competitive advantage by offering Bitcoin as payment and financial institutions have a tougher competition. Other benefits of Bitcoin is that transaction costs are low and users' privacy is protected. Some disadvantages of Bitcoin is that it is in a legal gray area, high volatility, high entry barriers and low range of products and services. Keywords: Bitcoin, business, virtual currencies, risks, opportunities, benefits, crypto currency.

Usman W. Chohan

No abstract is available for this record.

Oleksandr Brechko

The approach to understanding electronic money and their types on the basis of cryptographic technologies and data encryption protocols is disclosed in the article. Electronic money is becoming more popular among Internet users, as payment transactions and additional revenues. This determines the formation of new economic categories and characteristics, which gradually enter the system of modern development of society. Among them we can point out crypto technology, cryptosystems, and crypto economy, trade and money relations. They are based on bitcoin and alternative crypto assets. Modern approaches to understanding crypto currencies and their classification features are analysed. Characteristics that show the advantages over fiat money are given. The directions for the development of the crypto currency market and its surrogates are outlined.

Leopoldo Catania, Stefano Grassi

No abstract is available for this record.

Hatim Hussain

Nearly twenty-five years ago, the internet disrupted the world and started a new era of technological supremacy. Today, with the rise of cryptocurrencies and its underlying technology we stand at the helm of another such revolution. Cryptocurrencies like bitcoin are peer-to-peer decentralized systems of digital currencies which operate without the need for a third-party intermediary like RBI. Coupled with lack of regulatory guidance, its unique technical aspects create huge complications in its taxation. While much ignorance still prevails in respect of cryptocurrencies, countries around the world have finally started taking notice and act upon it. This paper overviews the complete landscape of taxation of bitcoin-like cryptocurrencies. In this paper, an attempt is made to explain the indirect as well as direct tax structure concern cryptocurrencies, particularly after the implementation of Goods and Service Tax Act, 2017. The paper explains what bitcoins are, why are they important and whether it is necessary for the Government to regulate it. In addition, it discusses the prevailing regulatory structure as well as issues concerning evasionary practices in digital currencies. The findings help assess regulatory aspects in light of technological, economic, social and financial forces and establishes a set framework for taxation of cryptocurrencies.

Nir Kshetri, Jeffrey Voas

Incidents of ransomware have been escalating, which could be fueled in part by the diffusion of crypto-currencies. Without crypto-currencies, the creation of ransomware is less desirable because other forms of payment are more traceable. The risk from ransomware can be considerable, and some companies hold supplies of bitcoins in reserve to pay extortionists if necessary. Here, the authors examine crypto-currencies’ effects on ransomware and look at what might influence a victim’s decision to pay.

Jonas Hedin

Trading securities is a process that requires multiple trusted intermediaries to ensure that the trade is done correctly. The securities industry is therefore very slow and expensive; the central securities depository (CSD) being one of the main contributors to the disruption. In an effort to fix this, financial institutions has recently started looking into the blockchain technology; the innovation behind the cryptocurrency Bitcoin. Bitcoin is a digital currency that can be traded peer-to-peer without the need for a trusted intermediary. If this concept could be used when trading securities it would simplify the process, making the settlement-time near instant. In addition to the speedup, it would also save the industry a lot of money since many processes could be automated. The purpose of this paper is to provide an overview of the blockchain technology and its applications in the finance industry. The focus is on how a blockchain could be used to reduce the responsibility of the central securities depository as much as possible, and especially on how corporate actions could be automated. The goal is to answer these questions: Is blockchain a suitable platform for a decentralized corporate actions solution? Whatare the benefits and drawbacks of using a blockchain versus a traditional centralized solution? The aim is to provide an evaluation of the usage of blockchains in finance, with extra focus on the CSD and corporate actions

Rafael Pass, Elaine Shi

Consensus, or state machine replication is a foundational building block of distributed systems and modern cryptography. Consensus in the classical, "permissioned" setting has been extensively studied in the 30 years of distributed systems literature. Recent developments in Bitcoin and other decentralized cryptocurrencies popularized a new form of consensus in a "permissionless" setting, where anyone can join and leave dynamically, and there is no a-priori knowledge of the number of consensus nodes. So far, however, all known permissionless consensus protocols assume network synchrony, i.e., the protocol must know an upper bound of the network's delay, and transactions confirm slower than this a-priori upper bound. We initiate the study of the feasibilities and infeasibilities of achieving responsiveness in permissionless consensus. In a responsive protocol, the transaction confirmation time depends only on the actual network delay, but not on any a-priori known upper bound such as a synchronous round. Classical protocols in the partial synchronous and asynchronous models naturally achieve responsiveness, since the protocol does not even know any delay upper bound. Unfortunately, we show that in the permissionless setting, consensus is impossible in the asynchronous or partially synchronous models. On the positive side, we construct a protocol called Hybrid Consensus by combining classical-style and blockchain-style consensus. Hybrid Consensus shows that responsiveness is nonetheless possible to achieve in permissionless consensus (assuming proof-of-work) when 1) the protocol knows an upper bound on the network delay; 2) we allow a non-responsive warmup period after which transaction confirmation can become responsive; 3) honesty has some stickiness, i.e., it takes a short while for an adversary to corrupt a node or put it to sleep; and 4) less than 1/3 of the nodes are corrupt. We show that all these conditions are in fact necessary - if only one of them is violated, responsiveness would have been impossible. Our work makes a step forward in our understanding of the permissionless model and its differences and relations to classical consensus.