The seminal work of Goldreich and Krawczyk (SIAM Journal on Computing) shows that any constant-round public-coin interactive proof for languages not in <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mrow> <mml:mi mathvariant="sans-serif">B</mml:mi> <mml:mi mathvariant="sans-serif">P</mml:mi> <mml:mi mathvariant="sans-serif">P</mml:mi> </mml:mrow> </mml:mrow> </mml:math> cannot be black-box zero knowledge. Their result says nothing, however, about proofs (or arguments) of knowledge for languages in <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mrow> <mml:mi mathvariant="sans-serif">B</mml:mi> <mml:mi mathvariant="sans-serif">P</mml:mi> <mml:mi mathvariant="sans-serif">P</mml:mi> </mml:mrow> </mml:mrow> </mml:math>. As a special case, their work leaves open the question of whether Schnorr's protocol for proving knowledge of discrete logarithms in cyclic groups is black-box zero knowledge. In this work we focus on the zero knowledge of proofs of knowledge, centering on Schnorr's protocol as a prominent example. We prove two lower bounds, ruling out two different classes of simulators through which Schnorr's protocol can be proven zero knowledge: We prove that if a relation <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>ℛ</mml:mi> </mml:mrow> </mml:math> has a public-coin interactive proof of knowledge that is black-box zero knowledge and this protocol is compatible with the Fiat-Shamir transform in the random oracle model, then <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mi>ℛ</mml:mi> </mml:mrow> </mml:math> must be efficiently searchable. As an immediate corollary, we deduce that Schnorr's protocol cannot be black-box zero knowledge in groups in which discrete log is hard. We define a new class of simulators for Schnorr's protocol, which we call generic simulators. A generic simulator is one that works in any cyclic group, and does not use the representation of the specific group in which Schnorr's protocol is instantiated. We prove that Schnorr's protocol cannot have generic simulators. As an additional contribution, we generalize the original lower bound of Goldreich and Krawczyk, to prove that a language not in <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML"> <mml:mrow> <mml:mrow> <mml:mi mathvariant="sans-serif">B</mml:mi> <mml:mi mathvariant="sans-serif">P</mml:mi> <mml:mi mathvariant="sans-serif">P</mml:mi> </mml:mrow> </mml:mrow> </mml:math> cannot have an interactive proof (not necessarily of knowledge) that is both black-box zero knowledge and compatible with the Fiat-Shamir transform in the random oracle model. In conjunction with recent works, this extends the Goldreich-Krawczyk lower bound to public-coin protocols that are not constant-round but have round-by-round soundness, including the parallel repetition of any public-coin interactive proof.
Michele Orrù, George Kadianakis, Mary Maller, Greg Zaverucha
A fundamental challenge in zero-knowledge proof systems is implementing operations that are “foreign” to the underlying constraint system, in that they are arithmetic operations with a different modulus than the one used by the proof system. The modulus of the constraint system is a large prime, and common examples of foreign operations are Boolean operations, field arithmetic, or public-key cryptography operations. We present novel techniques for efficiently embedding such foreign arithmetic in zero-knowledge, including (i) equality of discrete logarithms across different groups; (ii) scalar multiplication without requiring elliptic curve operations; (iii) proving knowledge of an AES encryption. Our approach combines rejection sampling, sigma protocols, and lookup protocols. We implement and provide concrete benchmarks for our protocols.
Preethi Preethi, Mohammed Mujeer Ulla, R. Sapna, Raghavendra M Devadas
Over the last few years, the conceptualization of Smart Home has received acceptance. The extensive issues regarding a smart home include offloading computational tasks, data security aspects, privacy issues, authentication of Internet of Things (IoT) devices, and so on. Presently, existing smart home automation addresses either of these issues, nevertheless, Smart Home automation that also necessitates decision-making for offloading computational tasks with improved QoS (i.e., latency and throughput) and systematic features apart from being reliable and safe is a definite necessity. To address these gaps in this, work a QoS-improved method called, Blockchain-modeled Swarm Optimized Lyapunov Smart Contract Deep Reinforced Tasks Offloading (BSOLSC-DRTO) in smart home is proposed. The BSOLSC-DRTO method is split into two sections, namely, Offloading Computational Tasks based on the Particle Swarm Optimized Lyapunov model and Temporal Difference Deep Reinforced Secured Offloading. First to solve the offloading issue and therefore improve the QoS, we developed a Particle Swarm Optimized Lyapunov model using a Lyapunov optimization function. This optimization problem aims to minimize latency and improve throughput considerably. Second, to boost the offloading security, we propose a trustworthy access control using the Temporal Difference Deep Reinforced Secured Offloading model that can safeguard devices against illegal offloading. Then to handle the computation management for addressing the offloading decisions in the queue temporal difference function is applied, therefore improving the smart contract accuracy and precision involved in offloading computational tasks. Evaluation results from experiments and numerical simulations exhibit the notable advantages of the proposed BSOLSC-DRTO method over existing methods.•Develop a Particle Swarm Optimized Lyapunov model to minimize latency and significantly improve throughput.•Proposed a Temporal Difference Deep Reinforced Secured Offloading model for trustworthy access control, protecting devices against illegal offloading
The rapid expansion of decentralized finance (DeFi) applications has catalyzed the emergence of new blockchain systems at an unprecedented pace. However, these systems are largely evolving in isolation, hindering the development of a cohesive ecosystem where value and data can flow seamlessly across networks. Blockchain interoperability technologies are introduced to break down these communication barriers and facilitate effective interactions between different blockchain systems. In recent years, numerous approaches and solutions to blockchain interoperability have been proposed. While some reviews have attempted to categorize cross-chain solutions based on blockchain standards and architectures, a more in-depth analysis is warranted. In this work, we investigate mainstream cross-chain solutions from the perspective of their principles, applications, protocols, and performance. To clarify the concept of blockchain interoperability, we propose a conceptual model that characterizes both asset interoperability and data interoperability. Furthermore, we introduce a hierarchical architecture to categorize and analyze representative cross-chain solutions, covering both academic research and industrial implementations. To maximize the utility of this review for a wide audience, we also highlight open challenges and identify future directions in the field of blockchain interoperability, expecting to provide a comprehensive overview of cross-chain solutions.
Minlibe LAMBONI, Eyouléki Tcheyi Gnadi Palanga, Kossi TEPE
The management of smart grids requires enhanced transparency and efficient optimization of energy transactions. While blockchain technology is widely used to ensure traceability and decentralization, existing solutions primarily focus on commercial aspects, often overlooking detailed monitoring of energy flows. This study proposes a hybrid blockchain model combining Ethereum and Hyperledger Fabric to integrate secure transaction execution with real-time energy flow tracking. The adopted approach involves identifying key components of decentralized energy management, conducting a comparative analysis of blockchain architectures, and performing experimental simulations to evaluate their performance in terms of latency, security, and scalability. Specific metrics, such as transaction throughput, block validation time, and energy data granularity, were utilized to assess the efficiency of the proposed model. The results demonstrate that Hyperledger Fabric excels in energy flow monitoring and auditability, whereas Ethereum optimizes transaction execution through its consensus mechanism and broad adoption. The integration of both technologies enables optimal complementarity, ensuring effective interoperability and significantly improving overall system transparency and efficiency. The proposed hybrid model establishes a scalable and resilient architecture that enhances coordination among network participants and optimizes energy governance. It fosters trust among stakeholders by ensuring the integrity and immutability of exchanges while enhancing the management of distributed energy resources. By integrating Ethereum and Hyperledger Fabric, this solution provides an innovative and applicable framework for decentralized energy infrastructures, optimizing transaction management, improving energy flow traceability, and reinforcing the resilience of smart grids against increasing demands for flexibility and sustainability.
Smart contracts are a secure and trustworthy application that plays a vital role in decentralized applications in various fields such as insurance,the internet, and gaming. However, in recent years, smart contract security breaches have occurred frequently, and due to their financial properties, they have caused huge economic losses, such as the most famous security incident "The DAO" which caused a loss of over $60 million in Ethereum. This has drawn a lot of attention from all sides. Writing a secure smart contract is now a critical issue. This paper focuses on Ether smart contracts and explains the main components of Ether, smart contract architecture and mechanism. The environment used in this paper is the Ethernet environment, using remix online compilation platform and Solidity language, according to the four security events of American Chain, The DAO, Parity and KotET, the principles of integer overflow attack, reentrant attack, access control attack and denial of service attack are studied and analyzed accordingly, and the scenarios of these vulnerabilities are reproduced, and the measures to prevent them are given. Finally, preventive measures are given. In addition, the principles of short address attack, early transaction attack and privileged function exposure attack are also introduced in detail, and security measures are proposed. As vulnerabilities continue to emerge, their classification will also evolve. The analysis and research of the current vulnerabilities are also to lay a solid foundation for avoiding more vulnerabilities.
The rise of digital finance has led to a surge in fraudulent activities, particularly in credit card transactions and cryptocurrency ecosystems. With financial crimes becoming more sophisticated, traditional fraud detection methods often fail to identify complex fraudulent patterns. This research explores the application of machine learning (ML) and artificial intelligence (AI) techniques to enhance the security of digital finance by detecting fraudulent activities in credit card transactions and cryptocurrency wallets within the USA. The study utilizes large-scale transaction datasets containing key financial indicators such as transaction frequency, spending patterns, anomaly scores, and network behaviors. To develop an AI-driven fraud detection framework, we implement and compare six machine learning models: XGBoost, RLightGBM, Decision Trees, K-Nearest Neighbors (KNN), Convolutional Neural Networks (CNNs), and Autoencoders. The models are trained on both structured financial data (e.g., credit card transaction logs) and unstructured blockchain transaction records (e.g., Bitcoin wallet addresses and transaction flows). To address data imbalance, the study applies the Synthetic Minority Over-sampling Technique (SMOTE), ensuring fair representation of fraudulent transactions. Model performance is evaluated using Precision, Recall, F1-score, and ROC-AUC metrics to determine the most effective fraud detection approach. Additionally, the research emphasizes data privacy and security, incorporating anonymization techniques and regulatory compliance measures to safeguard sensitive financial information. This study contributes to the ongoing fight against financial fraud by demonstrating how AI-based solutions can enhance the security and resilience of digital finance systems in the USA.
Sadaf Azimi, Ali Golzari, Naghmeh Ivaki, Nuno Laranjeiro
Abstract Smart contracts have accelerated the adoption of blockchain technology across various domains by enabling coded agreements between transaction participants. However, increased software defects and vulnerabilities in smart contracts, driven by developer inexperience with languages like Solidity and a lack of effective detection tools, pose significant risks. Given the high value of assets managed on blockchain (e.g., cryptocurrencies), these vulnerabilities can lead to severe consequences. Researchers and practitioners have proposed numerous smart contract design patterns to mitigate certain faults or vulnerabilities. Despite these efforts, it remains unclear which types of defects these patterns target and how effectively they address the wide range of existing smart contract security vulnerabilities. In this paper, we review the state of the art in smart contract design patterns, categorizing them and analyzing their effectiveness in mitigating known security vulnerabilities. Our findings reveal that only five patterns directly aim to prevent security vulnerabilities, collectively addressing just 6 out of 94 security issues identified by OpenSCV (a state-of-the-art vulnerability taxonomy), highlighting the need for further research on smart contract security design patterns.
This paper investigates the impact of cross-chain deployment on the market performance of decentralized applications (Dapps) within the evolving multichain Web3 ecosystem. While cross-chain Dapps benefit from broader user reach, improved scalability, and enhanced resilience, they also face significant challenges, including technical complexities, security risks, and fragmented liquidity. This paper analyses how Dapps' transaction distribution across multiple blockchains influences their market performance. Preliminary findings reveal that Dapps operating on multiple chains tend to underperform in terms of market capitalization, token price, and transaction volume compared to those concentrated on a single or few chains. These results highlight critical concerns about the effectiveness of cross-chain strategies.
Justin A. Drake, Dmitry Khovratovich, Mikhail Kudinov, Benedikt Wagner
With the threat posed by quantum computers on the horizon, systems like Ethereum must transition to cryptographic primitives resistant to quantum attacks. One of the most critical of these primitives is the non-interactive multi-signature scheme used in Ethereum's proof-of-stake consensus, currently implemented with BLS signatures. This primitive enables validators to independently sign blocks, with their signatures then publicly aggregated into a compact aggregate signature. In this work, we introduce a family of hash-based signature schemes as post-quantum alternatives to BLS. We consider the folklore method of aggregating signatures via (hash-based) succinct arguments, and our work is focused on instantiating the underlying signature scheme. The proposed schemes are variants of the XMSS signature scheme, analyzed within a novel and unified framework. While being generic, this framework is designed to minimize security loss, facilitating efficient parameter selection. A key feature of our work is the avoidance of random oracles in the security proof. Instead, we define explicit standard model requirements for the underlying hash functions. This eliminates the paradox of simultaneously treating hash functions as random oracles and as explicit circuits for aggregation. Furthermore, this provides cryptanalysts with clearly defined targets for evaluating the security of hash functions. Finally, we provide recommendations for practical instantiations of hash functions and concrete parameter settings, supported by known and novel heuristic bounds on the standard model properties.
José Juan de León, Cenchuan Zhang, Christos - Spyridon Koulouris, Francesca Medda · 5 authors
The growing interest in decentralized finance (DeFi), driven by advancements in blockchain technologies such as Ethereum, highlights the crucial role of smart contracts. However, the inherent openness of blockchains creates an extensive attack surface, exposing participants’ funds to undetected security flaws. In this work we investigated the use of deep reinforcement learning techniques, specifically Deep Q-Network (DQN) and Proximal Policy Optimization (PPO), for detecting and classifying vulnerabilities in smart contracts. This approach utilizes control flow graphs (CFGs) generated through EtherSolve to capture the semantic features of contract bytecode, enabling the reinforcement learning models to recognize patterns and make more accurate predictions. Experimental results from extensive public datasets of smart contracts revealed that the PPO model performs better than DQN and demonstrates effectiveness in identifying unchecked-call vulnerability. The PPO model exhibits more stable and consistent learning patterns and achieves higher overall rewards. This research introduces a machine learning method for enhancing smart contract security, reducing financial risks for users, and contributing to future developments in reinforcement learning applications.
Context: Smart contract vulnerabilities pose significant security risks for the Ethereum ecosystem, driving the development of automated tools for detection and mitigation. Smart contracts are written in Solidity, a programming language that is rapidly evolving to add features and improvements to enhance smart contract security. New versions of Solidity change the compilation process, potentially affecting how tools interpret and analyze smart contract code. Objective: In such a continuously evolving landscape, we aim to investigate the compatibility of detection tools with Solidity versions. More specifically, we present a plan to study detection tools by empirically assessing (i) their compatibility with the Solidity pragma directives, (ii) their detection effectiveness, and (iii) their execution time across different versions of Solidity. Method: We will conduct an exploratory study by running several tools and collecting a large number of real-world smart contracts to create a balanced dataset. We will track and analyze the tool execution through SmartBugs, a framework that facilitates the tool execution and allows the integration of new tools.
Blockchain solutions typically assume a synchronous network to ensure consistency and achieve consensus. In contrast, offline transaction systems aim to enable users to agree on and execute transactions without assuming bounded communication delays when interacting with the blockchain. Most existing offline payment schemes depend on trusted hardware wallets that are assumed to be secure and tamper-proof. While this work introduces Overdraft, a novel offline payment system that shifts the reliance from hardware to users themselves. Overdraft allows potential payment receivers to assess the likelihood of being paid, allowing them to accept transactions with confidence or deny them. Overdraft achieves this by maintaining a loan network that is weighted by online reputation. This loan network contains time-limited agreements where users pledge to cover another user's payment if necessary. For example, when a payer lacks sufficient funds at the moment of commitment. Offline users rely on the last known view of the loan network -- which they had access to when last online -- to determine whether to participate in an offline transaction. This view is used to estimate the probability of eventual payment, possibly using multiple loans. Once online again, users commit their transactions to the blockchain with any conflicts being resolved deterministically. Overdraft incorporates incentives for users and is designed to be resilient against Sybil attacks. As a proof of concept, we implemented Overdraft as an Ethereum Solidity smart contract and deployed it on the Sepolia testnet to evaluate its performance.
Blockchain systems, such as Ethereum, are increasingly adopting layer-2 scaling solutions to improve transaction throughput and reduce fees. One popular layer-2 approach is the Optimistic Rollup, which relies on a mechanism known as a dispute game for block proposals. In these systems, validators can challenge blocks that they believe contain errors, and a successful challenge results in the transfer of a portion of the proposer's deposit as a reward. In this paper, we reveal a structural vulnerability in the mechanism: validators may not be awarded a proper profit despite winning a dispute challenge. We develop a formal game-theoretic model of the dispute game and analyze several scenarios, including cases where the proposer controls some validators and cases where a secondary auction mechanism is deployed to induce additional participation. Our analysis demonstrates that under current designs, the competitive pressure from validators may be insufficient to deter malicious behavior. We find that increased validator competition, paradoxically driven by higher rewards or participation, can allow a malicious proposer to significantly lower their net loss by capturing value through mechanisms like auctions. To address this, we propose countermeasures such as an escrowed reward mechanism and a commit-reveal protocol. Our findings provide critical insights into enhancing the economic security of layer-2 scaling solutions in blockchain networks.
Muhammad Rio Kristiawan, Emma Lilianti, Andri Eko Putra
ABSTRACT This study aims to examine the effect of cryptocurrency prices, total cryptocurrencies, number of cryptocurrency transactions on cryptocurrency asset investment decisions. This study is a quantitative study that has the aim of testing data and presenting answers to various problem formulations regarding the effect of cryptocurrency prices, total cryptocurrencies, the number of cryptocurrency transactions on cryptocurrency asset investment decisions. The sample used in this research is 56 time-series data with a period of one last year, obtained by purposive sampling method. The data used is secondary data obtained through the website https://www.coinmarketcap.com and the data is processed using a software called E-views with data analysis techniques using the Ordinary Least Squarer (OLS) and Error Correction Model (ECM) procedures. The results of this study show that the cryptocurrency price variable, total cryptocurrency, the number of cryptocurrency transactions are significantly positive on cryptocurrency asset investment decisions. Keywords: Aset cryptocurrency, Ethereum, Cryptocurrency. ABSTRAK Penelitian ini bertujuan untuk menguji pengaruh harga cryptocurrency, total cryptocurrency, dan jumlah transaksi cryptocurrency terhadap keputusan investasi pada aset crypto. Penelitian ini merupakan studi kuantitatif yang bertujuan untuk menguji data dan memberikan jawaban atas berbagai pertanyaan mengenai dampak harga cryptocurrency, total cryptocurrency, dan jumlah transaksi cryptocurrency terhadap keputusan investasi pada aset crypto. Sampel yang digunakan dalam penelitian ini terdiri dari data, 56 data time series selama satu tahun yang diperoleh dengan metode sampling bertarget. Data yang digunakan adalah data sekunder yang diperoleh dari website https://www.coinmarketcap.com, data dianalisis menggunakan software bernama E-Views dan Ordinary Least Squares (OLS) Teknik analisis data menggunakan metode dan model koreksi kesalahan (ECM) digunakan telah diproses. Hasil penelitian ini menunjukkan bahwa variabel harga cryptocurrency, total cryptocurrency, dan jumlah transaksi cryptocurrency berpengaruh positif signifikan terhadap keputusan investasi pada aset cryptocurrency. Kata kunci: Cryptocurrency Aset, Ethereum, Cryptocurrency.
This research underscores the critical role of supply chain management in the globalized economy and the challenges posed by traditional financing models, such as information asymmetry and low capital turnover efficiency. The paper examines how blockchain's decentralized and immutable nature addresses these issues, enhancing transparency, security, and efficiency in supply chain data sharing. Blockchain has potential to reduce transaction costs, improve transparency, and secure supply chain financing. The research also employs case study analysis, scrutinizing the integration of blockchain in three distinct industries: Walmart's food safety initiative, Maersk and IBM's TradeLens platform, and Everledger's diamond supply chain tracking. These cases illustrate the practical application and benefits of blockchain in enhancing financing efficiency and traceability. While blockchain offers significant advantages, such as improved capital turnover and reduced transaction costs, it also faces limitations related to technological maturity, legal regulations, and market acceptance. It advocates for further research, policy support, and technological innovation to harness blockchain's full potential in supply chain financing.
Land serves as a crucial repository of resource elements, and enhancing the green use efficiency of urban land (GUEUL) is essential for attaining sustainable development. Based on 296 cities in China from 2006 to 2022, this study explored the relationship between land system innovation and GUEUL by integrating multi-source data, ArcGIS analysis, the EBM-DEA model, and the DID model, and elucidating the temporal trend and spatial utilization characteristics of GUEUL in China. Based on the natural experimental scenario of the pilot reform of China’s urban construction land use approval system, this study finds through in-depth analysis of the double-difference model that the vertical transfer of land approval authority has fundamentally optimized the development pattern of GUEUL, and that this positive impact is mainly reflected in two dimensions: on the one hand, it reduces the systematic transaction costs, and on the other hand, it enhances the density of industrial spatial agglomeration. Second, the lower the initial level of infrastructure and the lower the degree of dependence on land finance, the more significant the decentralization of land approval power in the promotion of GUEUL. Currently, China is undergoing a swift phase of urbanization and industrialization, and this study provides policy support for improving the comprehensive efficiency of green land use and promoting high-quality and sustainable development of the region.
Blockchain-driven financial innovation in Hong Kong from 2018 to 2024 has transformed cross-border payment systems through strategic regulatory frameworks and public-private collaboration. Key developments include the e-HKD Pilot Programme, integration with China's digital yuan, and pioneering CBDC initiatives like Project mBridge. This review analyzes technological implementations (Layer-2 solutions, zero-knowledge proofs), regulatory evolution across three distinct phases, and economic impacts including 38\% cost reduction in SME transactions. We examine Hong Kong's unique position bridging China's financial infrastructure with global markets while navigating geopolitical tensions and compliance challenges. The study provides quantitative metrics from 50+ corporate disclosures and regulatory documents, establishing a model for hybrid governance systems in financial technology adoption.
Introduction. The modern world is undergoing a transformation that encompasses all aspects of the economy, technology, and social life, and the financial sector is no exception. Financial technologies are becoming the driving force of this evolution, changing approaches to money management, investments, lending, and financial services in general. Thanks to the integration of artificial intelligence, blockchain, big data, and other innovations, financial services are becoming more accessible, personalized, and efficient, opening up new horizons for business and society. At the same time, this industry faces a number of challenges, such as the need to adapt to the regulatory environment, the growth of cyber threats, and ensuring financial inclusion for broad segments of the population. The development of financial technologies is taking on unique features in different regions of the world, from innovative platforms in the United States and Europe to revolutionary changes in financial services in Asia, Africa, and Ukraine. This multifaceted nature emphasizes the importance of global cooperation, technological progress, and a strategic approach to shaping the financial ecosystem of the future, which will be not only stable but also adapted to the needs of modern society. The purpose of the research is to deepen theoretical and methodological approaches to the management of financial services and innovative technologies aimed at optimizing, simplifying and reducing the cost of financial processes. Research methods. In the process of implementing the established goal of the scientific research, both general scientific and specific research methods were used, namely: generalization, induction and deduction, financial analysis and synthesis when establishing the influence of technological and innovative factors. The results. It was found that the future of financial technologies is promising. The main areas of development will be artificial intelligence, blockchain, open banking and decentralized finance (DeFi). It is expected that financial services will become even more personalized thanks to data analytics and customer behavior prediction. It was established that the development of supervisory (SupTech) and regulatory (RegTech) technologies will allow for more effective market monitoring, risk identification and transparency in the financial sector. Innovations in the field of cybersecurity will also become a priority, as users increasingly trust digital platforms with their financial data. The role of financial inclusion is identified, which will develop through the creation of accessible mobile platforms that provide services to people even in the most remote regions. Special emphasis will be placed on the development of financial literacy so that users can effectively use new tools. It is predicted that financial technologies will create new business models and stimulate their economic growth through innovation, which will have a significant impact not only in the financial sector, but also in people’s daily lives, changing the way they interact with their finances. The future of financial technologies is a digital transformation that will make financial services more accessible, efficient and secure for everyone. Prospects. Further research should be aimed at: creating and implementing a regulatory ‟sandbox” for rapid testing of innovations in the financial sector; increasing the level of financial literacy and involvement among the population and business; forming an educational base focused on implementing the concept of open banking; developing innovations in supervision and regulation technologies that ensure financial market stability, increase process efficiency, contribute to expanding the client base, as well as identifying and minimizing risks.
Cryptocurrencies have attracted significant attention due to their high risk, extreme volatility, regulatory controversies, and scandals. Investors and policymakers are drawn to them for their potential to enhance diversification and deliver high returns. This study examines the impact of incorporating cryptocurrencies into investment portfolios, focusing on their ability to improve risk-adjusted returns and diversification. A rolling asset allocation strategy employing the maximum Sharpe Ratio within a Markowitz framework was applied to weekly data from 2018 to April 2024. The analysis compares two unconstrained portfolios and two constrained portfolios, which impose a concentration limit on cryptocurrency investments. Results reveal that in 70% of the rolling periods examined, portfolios with cryptocurrency allocations outperformed non-cryptocurrency portfolios in terms of Sharpe Ratios. However, the heightened volatility of cryptocurrencies significantly increased portfolio risk, with annualized weekly standard deviations ranging from 18% to 25%, compared to 12% to 15% for portfolios without cryptocurrency exposure. These findings illustrate the dual nature of cryptocurrencies: they can act as both a source of instability and an opportunity for diversification. The study underscores the necessity of a cautious and strategic approach to incorporating cryptocurrencies into investment plans, given their inherent risks and unpredictable behavior.
On March 30, 2024, a chunk of Highway 1 outside of Big Sur, California collapsed into the ocean stranding as many as two thousand people in the Big Sur area.1 Since its inception in the late 1910s, the cliff-perched highway has become an iconic feature of the American West, providing tourists with scenic views of the California coastline. More importantly, it has become an essential route for Californians. In some cases, it provides the only road between many of California’s coastal towns. With even the partial closure of Highway 1, many of California’s small coastal communities are severely impacted financially and physically with no tourists to drive business and no way to commute to other towns. The road collapse in 2024 was a minor incident in a long history of road collapses and landslides along Highway 1. Significantly, the January 2021 collapse left behind a 150-foot gap, and the March 2017 landslide covered twelve miles of the highway with more than a million pounds of debris.2 Most of the highway runs on top or alongside of the San Andreas Fault, which makes up the Circum-Pacific belt or the “Ring of Fire” where more than 80 percent of the world’s earthquakes occur—making the California coastline one of the most seismically active regions in the world. It is no wonder that each year tourists flock to the coast only to find parts of it closed, destroyed, or under construction. As part of the “Ring of Fire,” the California coastline is subject to constant change and geological shift, only made more unstable as the effects of climate change cause sea levels to rise, cliffs to erode, and temperatures to climb. The boundary between land and sea is moving farther inland, taking with it those lines and demarcations that are used to illustrate where California ends and the ocean begins. Undoubtedly, the future of California’s coastline will become a series of ghost stories of places long-gone, eroded and swept out to sea. The narratives, images, and maps representing California’s coast will no longer allow one to, as Don Quixote would have it, “stroll all over the world just by perusing a map” (Cervantes 588). Instead, those narratives, images, and maps will stand in for the remnants of coastlines sitting beneath the waves. The future looming over the coast forces us to consider what we will lose to the sea—what stories and artifacts will be lost to climate change? This essay takes up this question as a way of thinking with erosion, not as a devastating loss but as an opportunity to embrace change—to gnaw at the histories of colonial, racial, gendered, and environmental violence that make up the bedrock of America culture. To do so, it takes the history and continued effects of Sir Francis Drake’s supposed 1579 landing in Northern California as its case study to explore the violence of reconstructing and maintaining eroding narratives. It analyzes the narrative of Drake’s landing with erosion thinking, a bodily and geological practice of “gnawing” or “wearing away” (erode, v. 1.a and 2.a) at histories and narratives that continue to perpetuate violence upon bodies—human and nonhuman alike. This essay will move through time by adopting the methodology outlined by Frances E. Dolan in Digging the Past, whereby unearthing the past “is always in the service of the future.” To attend to an uncertain future, one must “hold different time frames in tension and face in multiple directions, moving forward in part by turning back” (2). This essay takes Dolan’s Janus-faced approach by first presenting the mythology of Drake and his landing. It will then oscillate between the early-twentieth century and the late-sixteenth century to illustrate the attempts to reconstruct and maintain the Drake mythology. Finally, it reflects on California’s coastal futures and the stories we tell about them. Erosion thinking affords us the opportunity to confront narratives and histories, whether explicitly violent or not, and decide whether they are worth maintaining, or whether they should, like the sands they were built upon, be swept out to sea. In December 1577, English privateer and sailor Francis Drake set sail on what would become the first successful circumnavigation of the world.3 When he returned to London in September 1580, he was lauded as a hero and knighted six months later aboard his ship, the Golden Hinde. The records of the actions that provoked Drake’s sailing and the events that followed are well-documented. What is less well-documented—and the subject of this essay—is the actual exploration that occurred during those three years. As England was in a decades-long conflict with Spain over control of the oceans and the wealth from overseas colonies, Drake’s voyage sought to legitimize England in the “New World” and, more importantly, find the speculative “Northwest Passage” that would allow England to reach the Pacific without passing through Spanish territories. Secretly, however, Drake was chosen for this mission due to his infamy among Spanish sailors, who referred to him as El Draque or “The Dragon.”4 Working covertly for the English Crown, Drake’s naval expertise established him as not only a successful captain but also one of the most dangerous pirates in the world.5 Though disguised as an exploratory voyage, Drake’s circumnavigation returned, at a low estimate, £500,000 in Spanish gold, “gems, and other precious items” (Bawlf 191).6 Adjusted for inflation, Drake returned with more than £100,000,000 in stolen Spanish goods, making him one of the wealthiest men in England.7 For his efforts against Spain, Drake was knighted in 1581 on orders of Queen Elizabeth by the French ambassador, the Seigneur de Marchaumont. This move was strategic, signaling to “King Philip [of Spain] the potential for a new alliance between England and France” (Bawlf 196). In choosing the French ambassador to knight Drake, Elizabeth indicated to Spain that France, despite aligning religiously with Spain, would condone piracy in service of the English Crown. After his knighthood, Drake requested to return to the sea, but he was ordered to remain in England for fear that further piracy might provoke Spain into war.8 Additionally, the specific details of Drake’s circumnavigation were kept secret due to the threat of such a war. During the voyage, Drake kept extensive journals and produced detailed maps of his route and the places where he anchored. These documents, however, were seen only by the crew of the Golden Hinde and the Queen following his return. Accounts of the voyage were spread by word of mouth, but while there were “books, pictures, and ballads [that] appeared in praise of Drake,” none revealed information about his actual journey (Bawlf 194). The details of where Drake sailed were a closely guarded secret and have remained so to this day. Drake’s first-hand account of the voyage has since been lost, with most historians agreeing that the journals and maps were either destroyed in the 1698 fire that razed Whitehall Palace or hidden and subsequently forgotten.9 Most surviving records come from second-hand accounts, notably Richard Hakluyt’s Principal Navigations (1589) and The World Encompassed (1628), compiled by Drake’s nephew, also named Francis Drake. These are, purportedly, true accounts of the voyage relayed by Drake or his Chaplain, Francis Fletcher, and published widely for the English public, but without Drake’s first-hand account, the validity of these texts is dubious at best. Both narratives provide details of Drake’s voyage, the lands he anchored on, and the that he along the The details of Drake’s are notably in narratives in of presenting a “New World” for English and of the of these accounts was to England as a set to Spain in its In this the Hakluyt’s Principal in presenting an England that was and to The of Drake’s first-hand narrative a in to Drake’s accounts relayed to and he sailed farther than Hakluyt’s of Principal Navigations that Drake sailed as from to him as as and as as in Drake’s account, Drake made it the which places Drake as as the de from by that in the of on the and his was in the of on the coast of Drake anchored at the or The of where Drake made with is and be no as to where Drake on the Pacific coast of the Drake’s Drake’s landing in there are, in so many for Drake’s landing that there is a from Northern to with through and the was has eroded and the remnants have been and to and for more than detailed Drake’s his Pacific for to his Sir Francis Drake was a sailor for his Sir an English naval captain for in the with Drake the for out his the of and the Crown, which were more than to on Drake’s naval in the that he would return from his overseas with In the of Drake from a sailor to one of the and most men in in would later become a for that was on the that Drake was a on the of The of Drake as a against an Spain with during the of the century as they to in California against the long history of and later and For many the of Drake as a of a of was an from which they a new for for to California have since Drake’s The true history of his Pacific sailing has been by with many of these narratives and religiously In the question of Drake’s we must his for an Pacific coast was not by but by the men who In the of a narrative has histories of and who have long the Pacific The of this essay some of these narratives and in the mythology of Drake’s Pacific In of a was on the San he a and a and a the was a of that be used to his so he it for months it to his than by with the would later be as the of from Drake’s voyage California to Queen Elizabeth by Richard in his Principal Navigations and by Francis Drake in The World Encompassed that long It its way to of and of the at the of long been on the for this specific so with it, his was this the only the accounts of Drake’s and Richard The was for by the of California and as an of California what and other either to that the of they so in a by the of and history who would to it been by in and the would not be a the it was first With the of and which was only the as Drake’s This in English since actual over California lands and The of the is that it was or even have in the of the of since the actual be The not and there were multiple of for since the to be that the was not in the English are to since the three of on the are the only of a it is that the were not as with the was but the was later by more Additionally, Queen Elizabeth is referred to as Queen Elizabeth of despite by the of Queen of France, and of the the more and widely used for the also the the English was with no there were of that are from the For was more was more and as out in a year the was is that the of the and it all such a Drake the in his and on to that is that the of the was so successful in the of such as and and up over the word and left out a in a of the it and always has that it is a The in the was a series of of the in that the to The who the at and at that the was most a of the late or century not a of Drake’s Pacific coast of of the at the of by and to more between the and the and to the out its the has always it is not a but its as a was no for the that As the it was a widely secret among the in history that the was and a the was not it was but behind just was and that there was a it, no one its validity for The established through Hakluyt’s and Drake’s more than three the was as history to a The of that the of the of on the of Hakluyt’s and Drake’s accounts of Sir Francis Drake’s voyage, in on who to those accounts by the Hakluyt’s and Drake’s the of on there a narrative that was by a The history of the Pacific from the San to and the that sought to and those coastlines has always on as the that sought to the to legitimize the of what Drake that attend to later in this Hakluyt’s and Drake’s of Sir Francis Drake’s In accounts, they such as and and that just as to of the landing also the of that to the to Queen Hakluyt’s account set a of as also of and to the a a was the and of with the of the and people into with and in a of of English the where was also the of Francis Drake’s account we from to be set a of as also of and and to that a of to a and is and the and of and of the of the and by the and into with and in a of English by a made of through the was the of These accounts to have been relayed by the with the of The World that the account is to Sir Francis are Drake’s is more these Drake’s the for the of The account that the must be with of and the and of of the and by the and into and a where of these accounts do not in the used by Drake to up a of they do provide information that one to a What that narrative like on who is the The the that to Queen Elizabeth and for two the to with the account in The World Encompassed to the and as in the land and history to the as a of English that of Drake’s account of has been lost to and eroded and swept out to sea, the second-hand accounts by and Drake’s to reconstruct a narrative that or not be in to an The of built upon those narrative to further on the Pacific these narratives one about the and by these narratives have been for the that in that have become The to the Pacific as an of is into the narrative of the Drake by and Drake’s Both narratives an of Drake as a who is as a the he Hakluyt’s account that Drake on to they supposed to be and would not be to the the which they were and of the of is as a to Drake as a The makes Drake as a to the that Drake and his men This of is a in the of an Pacific The between and is and it to the The of Drake as a a future in which are to English as the and of the land and the communities that The that have Drake’s all future part of and of Hakluyt’s account what the from and the lands that they on the has made it that the future of those and the land is a English In and the account the that the Pacific has always been English and will continue to be English in the to When Drake and his men to the Pacific the narrative that by Drake the This the of the the and the in its to those this not just the to Drake but also the of the people as they Drake’s and as a The people make and they are they and they Drake with the which the account is a of This the of that frames the people as not just but also as upon Drake’s in is to these and the and of the lands into his As Drake is a subject of the English Crown, the narrative a in the that he his as a The account that he his as a he not to he not what and it might be to The account Drake as a who not for his he the lands and its people for his at future is for them. This is built on the that the will the lands and and in this the makes it so that they the of landing and the land as the future where England and the Pacific The of the Pacific as on and the of a The narrative that Drake the and that for two the one in of the and which the and the it might some with in which was so The is in Drake’s landing as it a past to a not just it time in to the they are established as it is the land of in of of the of to the were of and by a for Hakluyt’s Principal Navigations is to as they to a between England and its Additionally, texts that praise the of English and It is for to not only a time in but also a as Drake’s taking up of the lands a future on the Pacific As the narrative is of a history and a of the of and cliffs in the In the was an as it of landing on As was first part of seen and later by in his the of In the Pacific coastline Drake is at a of a in of and and the of a that into the past and the The land and of are as new to the English and The of not just an English history but also a The a it is as it to a time the were one The that history into the future they are one with all the and lands from from the word or also the Pacific coastline to the of its English the as a to the maps the account and the a and the Pacific coastlines are as always been and while also Hakluyt’s the by Drake as a for the English and the land to between and the Pacific coastline. This narrative of its so into the Pacific coastline that it is to to consider those coastal without Drake. The Pacific and its demarcations on a in a narrative history from the that those narratives. the narrative is upon that Drake sailed along the Pacific coast and lands as as the and as as the and that he was the lands and the that be from those to to from In the of as the and the erode, the from and history has been to to the that and that to of Drake’s coastal landing. of as this essay what the is of the to the on is most in service to the the of Drake’s and and for one of the most the of the The with narratives, like Drake’s Pacific is to and this essay to through erosion as a of the on narrative that the coastal that they erosion also as it to the and artifacts that those narrative from the As one with this as part of the and is with the of artifacts and that the is and to the it have to in The to and make the question of what narratives one that expertise and and what is in that As the American Pacific coastline as a by climate it more to the of to specific coastal Both Hakluyt’s and Drake’s accounts of of the land and The accounts and which the with the only of the land that it is with and The people are to in the and from the of the of set and at the like on the of a which with no to and are It is to the of the upon specific Pacific despite attempts the to do the of the in the to a of a the account of these through Drake’s the and the actions of the his The account be outside of this and is by In the of specific the and cliffs have become a of all Pacific coastal For Drake and and American the of this has the opportunity to in the as is for and Most the lines of so by Drake have not just the Pacific coast and its demarcations but also the of the American Significantly, the of for England to to of that to set up a in Drake’s The of the of in English and of “is the and on the that Drake to of that and as his Pacific landing as would the of that that Drake established the America as used Hakluyt’s in his of which to the of overseas for the for the of coast and for the of to the Drake that “New England is that part of America in the to in the by the most Sir Francis Drake in his voyage about the In this is in the The was to Drake’s Pacific landing and to the English in the “New Drake’s landing on the Pacific coast the English over a not only of that coast but also over its The of and England was a for continued his established English over the America with the of hidden to be The from the to the Drake’s Northern and of by to illustrate that some of the land in the world. that “is also as as in the of which is as and as as other in the The first by Drake and then by for the English on the that lands at that been for the of such as and as from it, is the most part of the of the and the most of the and which is the part of which the Spanish in the time no with and then the The then the to in those as the the to and for a of of England moving from England to to and that that long World” The of the of and other artifacts and along the Pacific as of the Drake they have been and America making it to to consider these lands without Drake. In of has become and the land and coastlines that the and have come to into Hakluyt’s and Drake’s accounts at the of but the following have seen that to and Drake’s Pacific sailing has eroded The remnants one are not of history but of and attempts that are to What might it to have an America without the of Sir Francis What might it to gnaw at the question of Drake’s landing in of erosion, of narratives to but not to to not the lands that they have so As this essay has it has to California as not just an of but as a for the of many of the American the of the Drake in the Pacific has become a of The to to this like the Drake in continue to the that Drake in and the as as Drake’s as a only to a in the to of the to Drake and his landing. the narrative eroding with the lands that it was built upon, it of The to the only as to the of the the coastal that have been by its Northern California are to the As in his of in with the and as and The of the Drake with and the of climate with these making a of environmental and The over and coastal erosion reflects a fear of a future without future from a The future of California as a of its past through and and to only one future that the as it its as in California the more than one way to with but of what the coast be has the of what the past to the future has left for the with the coast as it is has been to reconstruct coastal to the of narratives to the Pacific even as this the of as in constant change and of the Drake eroding with the it has been The to and reconstruct the coast as an to environmental of a future of and This in many and are come to what coastal The potential future, just as it was for Drake, and all the that has for one must with change and the potential for environmental one also must not lose of the coast and the other potential futures that in the face of climate the with the coast is not about control or about the past and it with the It is about to change with the that erosion is and affords one the opportunity to gnaw at the continued histories of violence against and nonhuman by those histories to, and into the sea. Erosion thinking, as one to with the of and and such loss to of the coast and its narratives as they are and and and to those As erosion thinking is as it forces one to consider what is through the to the and for the coast and its narratives to the histories of the and who have the This essay for erosion, not as but as of with the coast of against it and with the histories and futures that one one
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