The emerging digital cryptocurrency Bitcoin has made waves in mainstream media across the globe, as have the numerous extreme events that have rocked it. One such event, the bankruptcy of a prominent Bitcoin exchange called Mt.Gox, particularly shocked the emerging sociotechnical field. However, it is not clear how the numerous entrepreneurial firms operating in this field survived this shock. \\ \\ Studies of resilience in the face of extreme events have typically examined mature firms, characterised by formal structures and some slack resources. In such studies, the resilience, adaptability and trans-formability of the firm come into view. A new firm in an emergent field, however, is equally driven to survive â but must do so with far more limited resources, without a formal structure and little in the way of organisational learning. In our study, we find that such entrepreneurial firms rely on their col-lective identity in forming resilient responses. Furthermore, one outcome of this shock was a call for regulations and oversight â despite earlier dogmatic rejections of such formal control. \\ \\ Keywords: Bitcoin, Entrepreneurship, Resilience, Extreme Event, Qualitative Study \\
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.
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.
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.
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.
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.
In this paper, we concern ourselves with cryptocurrency and how cryptocurrency affects the cryptocurrency market as well as the fiat currency market. The whole topic will be sepreted into two sections: competition among different currencies, as well as competition among exchanges[2]. We aim at figuring out the current circumstance of cryptocurrency which as a casual visitor in the market, and additionaly we will also look at the prospect of cryptocurrency and the currency market. Cryptocurrency with many new features has an uneasy development after entering into the financial market, although it is not yet powerful to compete with fiat currency, the effects of cryptocurrency and cryptocurrency exchange in financial market will still be full of meaning.
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.
The role-based access control (RBAC) is a natural and versatile model of the access control principle. In the real world, it is common that an organization provides a service to a user who owns a certain role that was issued by a different organization. However, such a trans-organizational RBAC is not common in a computer network because it is difficult to establish both the security that prohibits malicious impersonation of roles and the flexibility that allows small organizations/individual users to fully control their own roles. This study proposes a system that makes use of Bitcoin technology to realize a trans-organizational RBAC mechanism. Bitcoin, the first decentralized digital currency, is a payment network that has become a platform for innovative ideas. Bitcoin’s technology, including its protocol, cryptography, and open-source nature, has built a good reputation and has been applied in other applications, such as trusted timestamping. The proposed system uses Bitcoin technology as a versatile infrastructure to represent the trust and endorsement relationship that are essential in RBAC and to realize a challenge-response authentication protocol that verifies a user's ownership of roles.
Bitcoin is a decentralized peer-to-peer payment system that has the potential to disrupt the financial industry. In order for the Bitcoin network to function properly, people within the network need to follow the protocol and contribute computing power. However, selfish strategies can be used to disproportionately increase one’s payoff relative to their computational power. Three approaches are used to analyze selfish mining strategies in the Bitcoin network in order to determine when this strategy will dominate.
Divya Rana, Syed Md Faisal Ali Khan, Arvind Arahant, Jitender Kumar Chaudhary
This study investigates the concept of green cryptocurrencies as a potential solution to mitigate the ecological footprint associated with traditional cryptocurrencies. It explores their viability as a sustainable alternative to traditional currencies. The rising popularity of cryptocurrencies has brought about concerns regarding their environmental impact, particularly due to the energy-intensive nature of mining and transactions.In conclusion, the importance of exploring sustainable alternatives to traditional cryptocurrencies emphasizes the potential of green cryptocurrencies to address environmental concerns.It discusses the growing awareness within the cryptocurrency community and the general public regarding the urgent need to address these issues. Green cryptocurrencies employ alternative consensus mechanisms, such as Proof-of-Stake (PoS) or energy-efficient algorithms, and utilize renewable energy sources for mining and transactions.
This paper proposes a self-governing cryptocurrency, dubbed Autonocoin. Cryptocurrency owners play formal tacit coordination games by making investments recorded on the blockchain. Such investments represent bets about the focal point resolution of normative issues, such as whether a proposed change to Autonocoin should occur. The game produces a result that resolves the issue. With a typical cryptocurrency, the client software establishes conventions that ultimately lead to the identification of the authoritative blockchain. Autonocoin completes a circle by making transactions on the blockchain that in turn define those conventions and the expected software behavior. The distributed consensus mechanism embodied by formal tacit coordination games, meanwhile, can make other types of decisions, including which of competing blockchains is authoritative and whether new Autonocoins should be rewarded to benefit those who have taken actions to benefit Autonocoin. This establishes a unique funding model for a cryptocurrency, and it addresses objections to cryptocurrencies issued predominantly to the initial founders, as well as to those that encourage wasteful mining activities.
An open distributed system can be secured by requiring participants to present proof of work and rewarding them for participation. The Bitcoin digital currency introduced this mechanism, which is adopted by almost all contemporary digital currencies and related services. A natural process leads participants of such systems to form pools, where members aggregate their power and share the rewards. Experience with Bitcoin shows that the largest pools are often open, allowing anyone to join. It has long been known that a member can sabotage an open pool by seemingly joining it but never sharing its proofs of work. The pool shares its revenue with the attacker, and so each of its participants earns less. We define and analyze a game where pools use some of their participants to infiltrate other pools and perform such an attack. With any number of pools, no-pool-attacks is not a Nash equilibrium. We study the special cases where either two pools or any number of identical pools play the game and the rest of the participants are uninvolved. In both of these cases there exists an equilibrium that constitutes a “tragedy of the commons” where the participating pools attack one another and earn less than they would have if none had attacked. For two pools, the decision whether or not to attack is the miner’s dilemma, an instance of the iterative prisoner’s dilemma. The game is played daily by the active Bitcoin pools, which apparently choose not to attack. If this balance breaks, the revenue of open pools might diminish, making them unattractive to participants.
Bitcoins and their use are a very actual issue, especially with high popularity and high cost of Bitcoins. Number of Bitcoin’s transactions increasing day to day. But many individuals and business owners do not understand what is Bitcoin, how it works and how could it be used in business. This article discusses the nature of Bitcoin, a decentralized, anonymous and largely unregulated virtual currency, its legal status and use in business. The article includes examination of both advantages and disadvantages of Bitcoin and international regulation of legal status and taxation of this currency.
This paper focuses on the evolution of cryptocurrencies. It traces the history of early cryptography, the ‘cypherpunk’ movement, and how the work of some cyber libertarians and cryptographers enabled the emergence of popular cryptocurrencies. The paper then focuses on Bitcoin. It delves into the technology behind the Bitcoin architecture and shows how exactly this technology works. The paper then does an analysis of security and regulatory considerations that affect the growth of Bitcoin-based businesses. The paper concludes with some suggestions for future work in the area.
Nicolas T. Courtois, Pinar Emirdag, Zhouyixing Wang
In this paper we study the question of centralisation in bitcoin digital currency. In theory bitcoin has been designed to be a totally decentralized distributed system. Satoshi Nakamoto has very clearly postulated that each node should be collecting recent transactions and trying to create new blocks (Satoshi08). In bitcoin transactions are aggregated in block in order to authenticate them and form an official ledger and history of bitcoin transactions. In practice as soon as expensive ASIC bitcoin miners have replaced general-purpose hardware, production of bitcoins and the validation of transactions has concentrated in the hands of a smaller group of people. Then at some moment in early 2012 an important decision was taken: the Stratum protocol was designed (Palatinus12) which took a deliberate decision to move the power of selecting which transactions are included in blocks from miners to pool managers. The growing difficulty of mining and large standard deviation in this process (Rosenfeld13; CourtoisBahack14) made that majority of miners naturally shifted to pooled mining. At this moment bitcoin ceased being a decentralized democratic system. In this paper we survey the question of a 51% attacks and show that there is a large variety of plausible attack scenarios. In particular we study one particularly subversive attack scenario which depends on non-trivial internal details of the bitcoin hashing process. How does it compare with the current mining practices? We have study the Stratum protocol in four popular real-life mining configurations. Our analysis shows that pools could very easily cheat the majority of people. However the most subversive versions of the attack are NOT facilitated and could potentially be detected.