Cybercriminals use cryptocurrency Bitcoin since it come to existence. It is an ideal, anonymous platform for global money transfer. Bitcoin does not have authority or central issuer, so there is no way to steal it from its holder. It is therefore used by the criminal groups around the world. This article aims to increase the reader’s knowledge on new technologies of money transfer. This knowledge will help the reader to improve the quality of personal security on the Internet. In effect it will reduce the potential risk of various types of frauds and other cybercrimes.
Equitable distribution is the process of dividing marital property fairly upon divorce.The confusion surrounding the categorization of Bitcoin, a type of virtual currency that can be obtained and transferred anonymously, frustrates courts' ability to properly value divorcing parties' assets and determine a fair distribution of marital property.This Recent Development argues that North Carolina should clearly define Bitcoin as a security.First, a clear categorization of Bitcoin will notify parties that Bitcoin is a reportable asset for equitable distribution proceedings.Second, recognizing Bitcoin as a security may subject Bitcoin to increased securities regulations.Increased regulation allows for better reporting of Bitcoin transactions, which will help courts and divorcing parties discover and value bitcoins.Courts that correctly understand the value of each party's assets will be better able to determine a truly equitable distribution of property.
The underlying values inherent in the creation of bitcoins are those of decentralization and accessibility. The horizontal power structure is an integral part of bitcoins’ architecture – this paper seeks to find a feasible alternative to status quo in order to preserve these characteristics. First, we look at the harms of monopolies and how the concentration of bitcoins is exceptionally harmful to its continued existence. Second, we expose the inadequacies of the existing regulatory frameworks, and discuss how status quo militates against the foundational ideology of bitcoin as a non-institutional cryptocurrency. Third, we undertake a comparative study of the existing regulatory regimes to identify legal and regulatory issues surrounding bitcoins. Finally, we propose a solution to the concern of centralization by discussing the relationship between law, code and the market, and discussing existing coded solutions that may be further improved upon to prevent such monopoly
[NOTE: This paper was written in late 2014 and early 2015. It is relevant given the continued movement of Bitcoin toward the mainstream, exemplified by El Salvador's adoption of Bitcoin as legal tender in June 2021.] After a slow beginning in 2009, the digital currency Bitcoin has edged closer to the mainstream, and regulators are scrambling to determine what to do with it. So far, they have focused on harms that its use creates, such as easy money laundering and sales of illicit goods. But Bitcoin’s ability to grease the wheels of crime is not the only risk we should worry about. Rather, due to its status as decentralized, open-source software, Bitcoin poses a risk that money has not historically been subject to – the risk that the money will just stop working one day due to a technology or basic governance problem. Illuminating the importance of reliable money to our society, this paper unpacks the operational risks generated by Bitcoin’s very structure, such as the inherent vulnerabilities of software to bugs and attacks, the governance problems spawned by its decentralized structure and open-source nature, and the lack of monetary expertise of the coders who run the currency. Explicitly considering how each operational risk impacts Bitcoin’s status as money, I conclude that the aggregation of Bitcoin’s operational risks means that it is simply not durable enough to serve as money – even if it becomes widely accepted and achieves a stable value. With hundreds of millions of dollars in investments now pouring into Bitcoin and the larger virtual currency ecosystem, and with more and more prominent individuals jumping daily on the Bitcoin bandwagon, this paper urges regulators and policy-makers to specifically address Bitcoin’s critical operational risks as they design the soon-to-come regulations for virtual currencies.
This paper explores the legal character of the Bitcoin and other emerging "virtual currencies," and the legal and policy implications of Bitcoin trading. It observes that these "cryptocurrencies" exhibit different legal characteristics depending on the context in which they are examinedwhether transactional law, tax law, or criminal law, for example. The paper argues that the appropriate legal analogue for classifying Bitcoins should be investment and commercial notes, since this characterisation would lead to the application of an appropriate and effective body of transactional and regulatory law to Bitcoins.
A purely anti-node non-peer-to-peer version of electronic money would allow online payments to be sent directly from one person to another without going through a financial institution and node promoters such as digital and gold-miners. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using an anti-node non-peer-to-peer network which is not only distributed but encrypted to the core of the gene. The network timestamps transactions by hashing them into an ongoing chain of hash-based genesis-concept combined with military grade chain-reinforced-encryption using AES, SHA, RSA and custom algos, forming a record that cannot be changed without redoing the genesis-concept. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcasted on a best effort basis, and nodes can leave and re-join the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone. However, in the proposed model, the central authority server itself acts as the node and represents the network transport layer by itself which enables it to not to be dependent on individual nodes, and the crypto-formulation continuous at server level. By this process, the dependency on nodes are ruled out and the server (the executioner, in this case) gets all the bits combined in one platform from the beginning to the end using enhanced salting layer, providing the facility of de-centralized defacto standard e-payments within nano seconds or less i.e., account to account transfer using one central block processing schema.
W artykule zwrócono uwagę na wybrane zagrożenia związane z internetowym systemem płatności za pomocą kryptowaluty bitcoin. Poruszone zostały zagadnienia związane z anoniowością w sieci Bitcoin, pozyskiwaniem bitcoinów, prawdopodobieństwem podwójnego wydania środków (ang. double spending), ryzykiem inwestycji w kryptowalutę oraz ryzykiem AML.
There is yet any official guidance on the financial reporting of Bitcoin transaction from the standard setters as the crypto-currency become increasingly popular and tax accounting guidance begin to appear in 2014. Designed as a decentralized currency, Bitcoin will not become a reporting currency and will instead complement fiat money. We argue that the accounting principle of faithful representation requires interpreting the economic substance for financial reporting that varies with reporting entity: trading firms recognize Bitcoin like a foreign currency and measure the revenue, or expense, at the equivalent amount of the reporting currency; digital currency exchanges recognize Bitcoin as goods in line with tax accounting treatment. An Economica paper by Radford (1945) describing cigarette being used as commodity money in a POW camp has alluded to this economic basis. This paper applies accounting principle to a practical issue and contributes to the thinking process which may help standard setter issue an interpretation.
This paper analyzes Bitcoin and associated mining pools. Participants may decide to join a mining pool as an income smoothing device. Such participants are risk averse whereas other Bitcoin participants are risk taking.
Jason M. Gordon, Jennifer E. Chapman, Benjamin W. Akins
Bitcoin is rapidly increasing in use throughout the world. Instrumental to the Bitcoin system, the process for introducing new bitcoin into the system is known as “mining.” Mining involves the use of powerful computer systems and complex, computational algorithms to verify or validate prior bitcoin transactions. The reward for successfully undertaking this process is the creation and award of new bitcoin to the miner. Bitcoin mining has become a tedious and difficult process. The race to verify transactions, and thereby earn bitcoin, necessitates more sophisticated processes for verification and greater computational power. Many bitcoin miners band together in groups called “pools” to create a powerful mining platform. Some miners invest time and effort to build or maintain a suitable computer system, while others passively provide money or other resources toward the creation of the mining system. Many such mining pools have grown to allow individuals to collectively contribute effort to the transaction verification process in exchange for an interest in the proceeds from the mining activity. The bitcoin mining pool has largely escaped regulation. This paper argues that the mining pool should be regulated under the existing federal securities regulation regime.
Artykuł porusza problem identyfikacji (w oparciu o rozkład Benforda) nietypowych transakcji w sieci Bitcoin. Dla przykładowo wybranych adresów portfeli Bitcoin porównano rozkład Benforda z rozkładem częstotliwości występowania poszczególnych cyfr na pierwszej najbardziej znaczącej pozycji w kwotach transakcji związanych z tymi adresami. Rozkłady te nie były zgodne z rozkładem Benforda. Zwrócono uwagę na konieczność zachowania dużej ostrożności przy analizowaniu transakcji za pomocą narzędzi statystycznych takich jak rozkład Benforda. Brak zgodności z rozkładem Benforda w żadnym wypadku nie jest równoznaczny z prowadzeniem działalności niezgodnej z prawem. Z drugiej strony, zgodność z rozkładem Benforda nie stanowi gwarancji tego, że nie występują nieprawidłowości.
It is argued that a Bitcoin-style money-like informational commodity may constitute an effective instrument for the further development of Islamic Finance. The argument involves the following elements: (i) an application of circulation theory to Bitcoin with the objective to establish the implausibility of interest payment in connection with Bitcoin, (ii) viewing a Bitcoin-like system as a money-like exclusively informational commodity with the implication that such a system need not support debt, (iii) the idea that Islamic Finance imposes different requirements compared to conventional financial policies on a money concerning its use as a tool for achieving social and economic objectives, and (iv) identification of two aspects of mining, gambling and lack of trust, that may both be considered problematic from the perspective of compliance with the rules of Islamic Finance and a corresponding proposal to modify the architecture of mining in order to improve compliance with these rules.
Recent years have seen the emergence of a new class of currencies, called\ncryptocurrencies. These currencies use cryptography to provide security\nand peer-to-peer networking to provide a decentralized system. Bitcoin is\nthe most popular of these currencies. It uses a two-pass\nSHA-256 hash at its core. Producing new bitcoins is done through a process\nreferred to as "mining", which involves a brute-force search for a hash with\na specific value. This process requires large amounts of computing power.\n\nCurrent-generation hardware for bitcoin mining includes highly-optimized\nASIC chips which provide huge amounts of performance. However, designers of\nsuch chips are having problems with delivering enough power and cooling\nto the chips. To alleviate this problem, this thesis looks at the possibilities\nof using heterogeneous computing to reduce power consumption and produce a more\nenergy-efficient mining solution.\n\nA SHA-256 accelerator and a DMA module is developed and integrated into a tile for\nthe Single-ISA Heterogeneous MAny-core Computer, SHMAC, and a system with\nmultiple cores is used to exploit the thread-level parallelism provided by\nthe platform. The system is tested using a benchmark to find out what performance\nand energy efficiency can be expected when using the system for bitcoin mining.\n\nThe results show a maximum performance of 175,7 kH/s when running the benchmark\napplication on 14 cores using the SHA-256 accelerator and the DMA module. The best\nenergy efficiency was obtained when running on 14 cores without the DMA enabled,\nat 163,2 kH/J. The results does not compare well to specialized FPGA-based\nbitcoin miners, but demonstrates the SHMAC platform's large degree of thread-level parallelism\nwhich can be better exploited in other applications.
The Bitcoin cryptocurrency relies heavily on a variety of cryptographic functions and operations, which are currently assumed to be secure, but will inevitably be broken in the future. As Bitcoin tries to compete against traditional currencies, it remains to be seen how the Bitcoin protocol will need to change in response to weakened cryptography. To this end, this study systematically evaluates the effects of broken cryptographic primitives on the operation of the Bitcoin network, and the changes to the Bitcoin protocol that will be necessary in response. We conclude that a broken hash function only requires switching over to a new hash function, without the need to re-write the blockchain, and is well serviced by the “checkpoint” mechanisms already built into Bitcoin. However, a vulnerability of the signature scheme cannot be dealt with in the same manner without side-e.ects, as it may lead to lost or stolen coins, even if the process is gradual and is conducted before the cryptographic primitive is broken. We conclude that solving this problem either requires some degree of centralization, or the use of Zero-Knowledge Proofs along or on top of Bitcoin.
The role of Bitcoin -open source virtual peer-to-peer money -in finance has become more important with the increasing acceptance by service providers. Nevertheless several financial institutes and governments explain their revulsion against Bitcoin, due to the unknown financial risks behind it which could have an impact on the global financial world. In this paper we examine the relationship between BTC/USD exchange rate and the network properties of the underlying transactional graph. The main goal of our research is to get a deeper understanding on the behavior of Bitcoin and ground further researches on exploring the financial risk. To characterize the transactional graph network analysis techniques, while to examine the relationship data mining and time series analysis techniques were used.
Bitcoin is a virtual currency transaction protocol.It also is a type of virtual currency.One of Bitcoin's unique features is that it is decentralized; it is not created or issued by a single person or entity.Rather, it is "mined" by miners that are issued bitcoins in exchange for solving complex math problems with special software.Bitcoins may be converted to governmentissued legal tender (commonly referred to as fiat currency) or other types of virtual currency through an exchange, or they may be used to purchase goods and services from any of the tens of thousands of merchants who accept bitcoins for payment.The Bitcoin protocol enables the transfer of bitcoins and also can be used for other purposes, such as providing the infrastructure for smart contracts, escrow systems, smart property/title systems, and much more.Many other virtual currencies exist.Some are centralized virtual currencies that are created and issued by a single entity.Some of these virtual currencies may be converted to fiat currency, but others may not.Many are "closed loop" virtual currencies that may only be used to obtain goods and services of the issuer.
In this thesis there will be an attempt to model the market price of cryptocurrencies. Since 2010 cryptocurrencies have gone from being fairly unknown to being familiar amongst the general public which increases the need for knowledge on what affects the market price of cryptocurrencies. These connections will be found by statistical analysis and be applied on cryptocurrency data from January 2012 to January 2015. The data will be modeled by linear regression and implemented in R after the data have been formating in Excel. The results suggest that the price of cryptocurrencies depends heavily on the search traffic on the specific cryptocurrency name on Google’s search engine.
Please find the English version of this paper at http://ssrn.com/abstract=2729548 . Italian Abstract: Nel 2008 il protocollo Bitcoin ha introdotto una nuovo modo di trasferire diritti: il modello di Blockchain, uno schema matematico che combina una serie di algoritmi per procedere all'incorporazione di determinati diritti in una stringa digitale trasferibile. Una delle evoluzioni di quel protocollo è rappresentata dagli smart contract, un modello ancora da definire a nei dettagli tecnici e giuridici in cui alcune clausole del contratto vengono tradotte in codice informatico per l'esecuzione automatica in una blockchain derivata dal protocollo Bitcoin. Questo paper propone una prima valutazione dell'argomento basata sulla ricognizione dello stato dell'arte. English Abstract: In 2008 the Bitcoin protocol has introduced a new way to transfer rights: the blockchain model, a method combining mathematical algorithms in order to secure rights in transferrable digital string. One of the implementations of that system is represented by smart contracts, a model that is still to be defined in technical and legal details. The scheme turns specific contractual provisions in executable digital codes, designed for self execution in a Bitcoin derived blockchain system. This paper proposes a preliminary evaluation based on the state of the art.
Derivatives are financial instruments whose value depend on the values of other, more basic underlying variables. One of the most common and simple derivatives is a futures contract. This manuscript introduces the new kind of futures contracts called non-linear inverse futures contracts (inverse futures in short) firstly introduced by ICBIT trading platform specifically for Bitcoin trading and later picked up by major bitcoin trading platforms.