To examine whether the recent price patterns and transaction costs of Bitcoin represent a general characteristic of decentralized virtual currencies, we analyze virtual currencies in online games that have been voluntarily managed by individuals since 1990s. We find that matured game currencies have price stability similar to that of small size equities or gold, and their transaction costs are sometimes lower than real currencies. Assuming that virtual currencies with a longer history can provide an estimate for Bitcoin's prospects, we project that Bitcoin will be less influenced by speculative trades and become a low cost alternative to real currencies.
El Bitcoin (BTC) va apareciendo regularmente en los medios de comunicacion por diversos motivos. Desde la quiebra de una conocida casa de cambios en Estados Unidos (Mt. Gox) hasta la constitucion de una sociedad cuyo capital social esta denominado exclusivamente en esta criptomoneda pasando por el anuncio de que algunas tiendas de la Milla de oro de Madrid acepten como medio de pago la moneda virtual no regulado de la que trata este trabajo. Nosotros nos proponemos estudiar, desde el Derecho privado, la configuracion juridica del BTC planteando cuestiones e intentando resolverlas. La conclusion a la que llegamos es que es una moneda virtual que funciona, hoy por hoy, de forma similar a una divisa y que el legislador deberia limitar su intervencion, el dia en que asi lo decida, a permitir su conversion a la moneda fiduciaria de uso legal.
Les cryptomonnaies sont des monnaies numériques, qui se sont développées hors de tout contrôle étatique et qui fonctionnent de manière décentralisée. Bien qu’étant encore à leurs balbutiements, ces cryptomonnaies, à l’instar du Bitcoin, soulèvent de nombreuses questions juridiques. Dans ce mémoire, seront analysées les différentes définitions qui pourraient inclure la cryptomonnaie, avant de nous concentrer sur la définition de la monnaie numérique. Ensuite, seront étudiés, les aspects criminogènes des cryptomonnaies et la volonté des États d’avoir un certain contrôle sur celles-ci. Puis après nous être concentré sur la fiscalité applicable aux monnaies numériques, il sera nécessaire d’examiner l’étendue de la protection des consommateurs, dans leurs rapports aux cryptomonnaies. Pour ce faire nous nous appuierons, entre autre, sur les lois canadiennes, françaises et américaines. Toutefois vous vous en rendrez-compte, les cryptomonnaies n’ont pas encore été totalement englobés dans les systèmes juridiques des trois pays étudiés, et les tribunaux n’ont été saisis que dans très peu d’affaires relatives aux monnaies numériques, ce qui implique que de nombreuses incertitudes juridiques persistent à l’heure actuelle.
COMPANY HISTORY On January 9, 2014 Overstock.com started accepting Bitcoin as payment (Metz, 2014). The initial day indicated that accepting Bitcoins could lead to significant new business for Overstock. The success of the rollout can be seen from the following tweet from the CEO of Overstock.com, Partick M. Byrne: #Bitcoin's first full day on @overstock.com was a huge success: 840 orders, $130,000 in sales. Almost all new customers. #stunned. More than $5,000 in sales occurred within the first thirty minutes of Overstock.com's acceptance of Bitcoins. The first full month brought continued success with over $870,000 in sales stemming from 4,000 orders. (Hill, 2014) Byrne, a rather opinionated libertarian who's unafraid to take his company places others fear to tread, embracing the cryptocurrency is as much a political statement as a business decision. Like so many others, he believes Bitcoin can break the world from the control of big banks and big government. It helps us fight the machine he said (Wired). According to Forbes.com, to further demonstrate his optimism for Bitcoins Byrne recently, cashed in several million dollars worth of gold for the digital currency. In addition, Byrne has publicly stated an interest in paying his vendors as well as his employees in Bitcoins in the future if they so choose. Byrne started Overstock.com in 1999 and the company went public with an IPO in 2002. The company is an online retailer, based out of Salt Lake City, Utah that specializes in selling excess inventory discount prices. With diverse product offerings ranging from clothing, furniture, and fine jewelry to automobiles, the Consumer Usage Report rated Overstock.com as one of the five most visited mass merchandiser websites. Overstock prides itself on its high level of customer service, with the NRF/Foundation/American Express Customer Choice Awards ranking Overstock.com in the Top 10 in customer service among all U.S. retailers. The company currently has nearly 1,300 employees and offers nearly one million products at prices that have saved Overstock customers millions of dollars. In the most recent year, Overstock reported more than $1 billion in revenue, up from $1.1 million at the company's inception. Byrne feels that the decision of Overstock.com to accept Bitcoin could help Overstock.com compete against other online retailers such as Amazon, in the $60 billion (Murphy, 2014) Yes, I actually think that this forces the hand of Amazon and some other big players. They have to follow suit. You will see them follow suit. I'll be stunned if you don't, because they can't just cede that part of the market to us, if we're the only main, large retail site taking Bitcoin, Either they have to start taking it, or they're just giving away a piece of the market. Forbes (Phillips, 2014). In addition, the strategic decision appears to be attracting a different clientele to Overstock.com, which could ultimately increase market share. A recent list of the top 25 products customers have bought with Bitcoins differs greatly from the top 25 products purchased by all Overstock.com customers during the same time period. For example, sheets were the most prevalent purchase for customers paying with Bitcoins, while area rugs were the most common purchase for all Overstock.com customers. Only a few products made both lists. The most common products purchased with Bitcoins includes: cell phone accessories, A/V accessories, appliances, computer accessories, computers, men's shoes, hard drives, bedroom furniture, keyboards & mice, and men's watches. Byrne describes his rationale for Overstock.com's acceptance of Bitcoins. He states, We are on a crazy strategy with our central bank. It's good to have alternative ecosystems. It's not that the dollar will go away, but we need other options if it crashes or wildly inflates. Former U.S. Congressman and Presidential Candidate, Ron Paul has a stronger opinion, telling CNNMoney, There will alternatives to the dollar, and this might be one of them. …
Notice of Violation of IEEE Publication Principles"Bitcoin for Smart Trading in Smart Grid"by M.T. Alam, H. Li, and A. Patidarin the Proceedings of the 21st IEEE International Workshop on Local and Metropolitan Area Networks, April 2015After careful and considered review of the content and authorship of this paper by a duly constituted expert committee, this paper has been found to be in violation of IEEE's Publication Principles.This paper duplicates original text from the papers cited below. The original text was copied with insufficient attribution (including appropriate references to the original author(s) and/or paper title) and without permission."Privacy-friendly Tasking and Trading of Energy in Smart Grids"by Tassos Dimitriou and Ghassan Karamein the Proceedings of the 28th Annual ACM Symposium on Applied Computing, March 2013"NRGcoin: Virtual Currency for Trading of Renewable Energy in Smart Grids,"by M. Mihaylov, S. Jurado, N. Avellana, K. Van Moffaert, I. M. de Abril and A. Nowein the Proceedings of the 11th International Conference on the European Energy Market, May 2014Privacy aware anonymous trading for smart grid using digital currency has received very low attention so far. In this paper, we analyze the possibility of Bitcoin serving as the user friendly and effective privacy aware trading currency to facilitate energy exchange for smart grid.
In dieser Thesis wird ein Marktindex konstruiert, wobei neu entwickelte Methoden für solch eine Aufgabe verwendet werden. Die Entscheidung über die Anzahl der Indexteilnehmer wird mithilfe des AIC und BIC Kriteriums getroffen und die Liquiditätsregel wird auf Grundlage der BIS Umfrage ermittelt. Dieser neu entwickelte Index, CRIX, wird dann benutzt, um den Kryptowährungsmarkt gegen Bitcoins und andere Märkte zu vergleichen. Es wurde herausgefunden, dass dieser Markt wesentlich risikoreicher ist als andere Märkte. Es wird außerdem ein Minimum Varianz CRIX und ein optimales Vorhersagemodel für den Index entwickelt, wobei Daten aus sozialen Netzwerken verwendet werden.
Contents 10.1 Introduction .............................................................................................214 10.2 Virtual Currencies: A Background ........................................................... 215 10.3 The Case of Bitcoins: Legal Tender in the Making ...................................218
III. International Response Until recently, there was a major concern that the United States was lagging behind other countries in addressing the Bitcoin phenomenon. (183) Fortunately, an early February report from the Law Library of Congress quelled these concerns. The comprehensive study examined the regulatory responses of forty nations to Bitcoin and concluded that only a few countries had officially addressed the currency from a regulatory standpoint. (184) Following the publication, several members of Congress hastily renewed discussion of the subject in the hopes that the United States could establish itself as an international leader on the matter of virtual currencies. (185) While the regulatory debate continues to take place at the Capitol, other world powers like Canada, China, and Germany have already implemented some form of a government-wide regulatory strategy. It is paramount that Congress and other high-ranking government officials closely monitor these countries' policies when designing the United States' regulatory strategy on virtual currencies. A. China The evolution of the Chinese government's reaction to Bitcoin offers an insightful analysis into the difficulties countries face when developing a regulatory framework for a cryptocurrency. Initially, it appeared that China was going to establish itself as the largest supporter of Bitcoin by allowing it to exist unburdened by regulation. In May 2013, the government unofficially gave its blessing to the currency when the Chinese government sponsored a documentary that aired on the state owned television broadcaster, CCTV, to inform the public of Bitcoin. (186) After this unprecedented public showing of government support, Bitcoin experienced a huge boost in popularity within the country; in fact, more Bitcoin clients were downloaded in China over the last seven months of 2013 than in any other country. (187) The Bitcoin economy in China is different than most other countries due to the fact that the relatively successful consumer market has been overshadowed by the massive investment and mining markets. (188) The immense size of the Chinese Bitcoin investment market is best demonstrated by the historic rise of over 500% in global value Bitcoin experienced solely in the month of November 2013. (189) This unprecedented rapid rise in value has been attributed to a large number of high net-worth individuals who invested millions of dollars into Bitcoin because they viewed Bitcoin as a more profitable venture than either the oversaturated property market or the stagnant stock market. (190) Out of fear that Bitcoin could disrupt currency controls, the Chinese government concluded that a regulatory strategy needed to be implemented. (191) In early December, the Peoples' Bank of China released a report discussing the regulatory framework that was necessary concerning Bitcoin. (192) The major takeaways from the report were that China would not officially endorse the currency as a legitimate form of payment and banks along with payment companies were prohibited from accepting the virtual currency. (193) In addition, the Chinese government announced that online Bitcoin exchanges were now required to file trading records, as well as adopt measures that would actively mitigate money-laundering risks associated with the virtual currency. (194) The government made it clear that citizens could still buy and sell Bitcoin, but the shockwave from this announcement resulted in Bitcoin's value plummeting nearly twenty percent in a single day. (195) As expected, many Chinese companies that had previously accepted Bitcoin announced they would no longer accept the currency as a means of payment. (196) In early January, the Chinese government's anti-Bitcoin stance finally reached the Bitcoin miners when China's largest online marketplace, Taobao, announced it was no longer selling any hardware, software, or tutorials that could be used in the mining of cryptocurrencies. …
Trusted timestamping is a process for proving that certain information existed at a given point in time. This paper presents a trusted timestamping concept and its implementation in form of a web-based service that uses the decentralized Bitcoin block chain to store anonymous, tamper-proof timestamps for digital content. The service allows users to hash files, such as text, photos or videos, and store the created hashes in the Bitcoin block chain. Users can then retrieve and verify the timestamps that have been committed to the block chain. The non-commercial service enables anyone, e.g., researchers, authors, journalists, students, or artists, to prove that they were in possession of certain information at a given point in time. Common use cases include proving that a contract has been signed, a photo taken, a video recorded, or a task completed prior to a certain date. All procedures maintain complete privacy of the user's data.
Bitcoin extreme deflationary price instability has hampered its usability, making it impractical for spot transactions and unserviceable for deferred payments. Ametrano (2014) has proposed as Hayek Money a cryptocurrency price stability paradigm of elastic non-discretionary monetary policy. An implementation using a dual asset ledger for stable coins and seigniorage shares is presented here. A DeCentralized Reserve Bank (as Decentralized Autonomous Organization) is introduced as active market agent using bitcoin as reserve asset to preserve price parity. The socially inefficient over-investment of seigniorage revenues in transaction verification can be avoided using proof-of-payment.This schema frees coins from any speculative value, thus favoring money velocity and increasing the number of transactions. Seigniorage shares are effectively to be considered as a participation in a distributed central bank: as such the owners are entitled to seigniorage revenues in exchange for being subjected to the losses associated to coin price stability defense, obliged to validation task duties, and in charge of price index observation.
Currently, SLAs assurance forms one of the major challenges for Cloud Computing (CC) in order to guarantee Quality of Service (QoS) in real-time and control SLA violations. Autonomous and flexible agents and Multi-agent systems (MASs) are suitable tools for self-detection of failures and self-monitoring of cloud operations and services, QoS negotiation and SLA management. They're designed to operate in a dynamically changing environment. MASs offer new features such as autonomy, pro-activity, communication, cooperation, and negotiation, which can help cloud computing platforms to offer solutions that aren't available in current cloud infrastructures. Our main motivation to integrating MASs is their ability to make clouds smarter in their interactions. This paper introduces a Trusted third party (TTP) based on Multi-agent systems in order to control the quality of service contract and guarantee transparency and symmetry with respect to the SLA contract between prospective signatories. This TTP will use MASs to apply an advanced penalty model that guarantees the performance and the reliability of the Cloud.
Ashley S. Harrison, M. Scott Niederjohn, J. R. Clark
Economists define money as anything that is generally accepted in payment for goods and services or in the repayment of debts.1 Paper money and coins clearly fit this definition, but deposits in checking accounts are so widely accepted that they are also considered in the narrowest definition of money used by the Federal Reserve, called “M1.” M1 is the sum of all currency, checkable deposits, and travelers checks. How about savings accounts? These amounts are so quickly convertible into M1 that many economists consider them money too, part of a larger total called M2 that includes all of M1 plus all small denomination time deposits (bank CDs), savings accounts, and money market account balances. M2 then represents a form of money that is less “liquid” (less easily converted and spent) than M1. In addition to this definition, money is expected to satisfy three functions: serve as a medium of exchange, a store of value, and a unit of account. In this article, we will explore what Bitcoin is and why it has been so prevalent in the news of late. Further, we will apply the three functions of money to Bitcoin and discuss whether it should be considered a form of money. Some of the benefits and problems associated with Bitcoin will be discussed along with its future potential.
MAKER OF bitcoin-mining hardware Cointerra has filed for bankruptcy in the US in the latest of a series of collapses and problems that have beset the ecosystem around the cryptocurrency. After the value of bitcoin peaked at $1,151 on the 4 December 2013, it had fallen - in a series of selling waves following the closure of the failed bitcoin exchange Mt Gox - to a little over $200 by mid-February this year. This, in turn, has hit the operations of bitcoin miners. Although miners collect transaction fees, their primary source of revenue lies in the bitcoins they collect when they successfully add a block to the ever-growing bitcoin blockchain that records every transaction involving the currency.
Confidence in bitcoin's value is sliding after a less than ideal 2014, but money may not be its legacy. Now the aim is to secure users' funds and reduce the risk of double spending' with the introduction of the blockchain.
Bitcoin is most radical innovation in monetary space for a very long time. It is an entirely private monetary system that runs itself and does not depend on trust in any central authority to honor its promises. Instead, it relies on trust in Bitcoin community or network that verifies transactions and maintains integrity of system. This system of distributed trust creates bitcoins and produces an automatic, tamper-proof bitcoin money supply process. (1) As such, it avoids dangers of discretionary monetary policy--namely, quantitative easing, manipulated interest rates, and need to rely on wise men or women to withstand political pressure or successfully forecast future. Indeed, under Bitcoin there is no monetary policy at all. There is just an automatic monetary rule dictated by Bitcoin protocol designed in 2009 by an anonymous programmer using alias Satoshi Nakamoto. Bitcoin has been widely hailed as a success and has won a substantial following. Unfortunately, underlying economics of Bitcoin mean that it is unsustainable and in all likelihood will be remembered as a failed experiment--at best a pointer to some superior successor. A first-pass intuition into Bitcoin can be obtained from a comparison with stone money in Milton Friedman's (1992) case study, Island of Stone Money. In this story, people of island of Yap in Micronesia used as money large round limestone disks transported from nearby island of Palau. These were too heavy to conveniently move around, so they were placed in prominent places. When ownership was to be transferred (e.g., as part of a dowry, inheritance, or ransom payment), current owner would publicly announce change in ownership but stone would typically remain where it was and islanders would maintain a collective memory of ownership history of stones. This collective memory ensured that there was no dispute over who owned which stones. Similarly, in Bitcoin, record of all transactions, blockchain, is also public knowledge and is regarded as die definitive record of who owns which bitcoins. Both stone money and Bitcoin share a critical feature that is highly unusual for a monetary system: both systems operate via a decentralized collective memory. On February 11, 2009, Nakamoto gave an explanation of thinking behind Bitcoin in an e-mail announcing its launch: root problem with conventional currency is all trust that is required to make it work. The central bank must be trusted not to debase currency, but history of fiat currencies is full of breaches of that trust.... With e-currency based on cryptographic proof, without die need to trust a third-party middleman, money can be secure and transactions complete. Cryptocurrencies, however, face problem of As Nakamoto notes, owner could try to re-spend an already spent coin by [digitally] signing it again to another owner. The usual solution is for a trusted company with a central database to check for double-spending, but that just gets back to trust model.... Bitcoin's solution is to use a peer-to-peer network to check for double-spending. Consequently, the result is a distributed system with no single point of failure. (2) Kevin Dowd is Professor of Finance and Economics at Durham University in United Kingdom and a partner at Cobden Partners. Martin Hutchinson is a journalist and author of Bear's Lair column (www.tbwns.com/category/the-bears-lair). The authors thank Ferdinando Ametrano, Gavin Andresen, Raadhiyah Anees, Steve Baker MP, Roger Brown, Dave Campbell, Akin Fernandez, Dominic Frisby, Jim Harper, Doug Jackson, Gordon Kerr, Jim Rapp, Eric Samieski, Lawrence H. White and Basil Zafiriou for much helpful feedback. We note that several of our readers have expressed serious reservations about our analysis and conclusions. Any remaining mistakes are authors' own. …
Cryptocurrencies such as Bitcoin are a hot topic in the financial industry. Looking specifically at the purpose of cryptocurrencies for making payments, this paper aims to illustrate (1) the key challenges that cryptocurrencies must overcome to achieve widespread customer adoption, (2) the major risks regarding cryptocurrencies, when and how cryptocurrencies and their service providers will be regulated, (3) in their current state, what are the killer apps for cryptocurrencies, and (4) the more fundamental issues cryptocurrencies must address. In conclusion, while Bitcoin may not replace traditional and new payment methods to become a dominant alternative in the short term, banks should look at its underlying technology as a potential generic new way to transfer ownership of value in the longer term.
Zoran Čekerevac, Zdeněk Dvořák, Ludmila Prigoda, Petar Čekerevac
Bitcoin, digital money got into focus after the Mt Gox crash. It uses P2P interaction where an owner transfers the electronic coin to the next owner signing and adding a hash of the previous transaction and the public key of the next owner. Payment verification is accomplished by notifying the entire network about the transaction. This prevents double-spending and generation of non-existent money. Among the users, there is uncertainty about the safety on the theft and fraud. Among the authorities, there are dilemmas about present and future risks related to the Bitcoin implementation. The article deals with the benefits and risks of Bitcoin use.
Jan Henrik Ziegeldorf, Fred Grossmann, Martin Henze, Nicolas Inden · 5 authors
Bitcoin is a digital currency that uses anonymous cryptographic identities to achieve financial privacy. However, Bitcoin's promise of anonymity is broken as recent work shows how Bitcoin's blockchain exposes users to reidentification and linking attacks. In consequence, different mixing services have emerged which promise to randomly mix a user's Bitcoins with other users' coins to provide anonymity based on the unlinkability of the mixing. However, proposed approaches suffer either from weak security guarantees and single points of failure, or small anonymity sets and missing deniability. In this paper, we propose CoinParty a novel, decentralized mixing service for Bitcoin based on a combination of decryption mixnets with threshold signatures. CoinParty is secure against malicious adversaries and the evaluation of our prototype shows that it scales easily to a large number of participants in real-world network settings. By the application of threshold signatures to Bitcoin mixing, CoinParty achieves anonymity by orders of magnitude higher than related work as we quantify by analyzing transactions in the actual Bitcoin blockchain and is first among related approaches to provide plausible deniability.
The Bitcoin system (https://bitcoin.org) is a pseudo-anonymous currency that can dissociate a user from any real-world identity. In that context, a successful breach of the virtual and physical divide represents a signficant aw in the Bit-coin system [1]. In this project we demonstrate how to glean information about the real-world users behind Bitcoin transactions. We analyze publicly available data about the cryptocurrency. In particular, we focus on determining information about a Bitcoin user's physical location by examining that user's spending habits.