David Sanz Bas, Carlos del Rosal, Sergio Luis Náñez Alonso, Miguel Ángel Echarte Fernández
Cryptocurrencies have been developing very rapidly in recent years, and their use is becoming more and more widespread in different areas. The use of digital currencies for legal uses is advancing along with technological development, but, at the same time, criminal activities are also emerging to take advantage of this boom. The aim of this paper has been, first, to analyze the various ways in which individuals and criminal organizations have taken advantage of the phenomenon of cryptocurrencies to carry out fraudulent activities such as laundering money of illicit origin and, second, to provide an overview of the legal tools that have been developed in this regard in Europe and, more specifically, in Spain to combat these activities. Undoubtedly, cryptocurrencies bring great benefits to the economy, but it is also necessary to know the risks and abuses that have been developed to prevent them.
In the ongoing march of industrial evolution there comes along technologies that have the power to transform businesses as we know it. The Internet revolutionized business/marketing in the nineties and today and bockchain has the potential to do the same for commercial transactions. Blockchain is a peer-to-peer model that can speed up processes resulting in robust tracking and reducing costs of transactions. Given the implications of this far-reaching technology, it is essential for marketing students to understand its significance in the conduct of marketing activities. Consequently, it is imperative that faculty comprehend aspects of the technology and its applications in marketing to integrate them in marketing courses. The purpose of the paper is to enlighten marketing faculty on the concept of blockchain in a non-technical manner along with highlighting its applications in marketing that can be imparted through their courses. To do so, the paper is structured around three research questions relating to (a) understanding the idea of blockchain technology; (b) expounding on the importance of the technology in marketing applications; and (c) illustrating how marketing faculty can integrate the concepts and application in marketing courses.
NFT-based art is at the forefront of a new wave of digital ownership that enables creators to retain control of their work and create and sell ownership rights for their digital media. But digital art is just the tip of the iceberg: this same technology can unlock access to any unique physical or digital resource, including products, services, and event access. We call these NFTs - used to access and determine ownership of resources off the blockchain - ‘Smart Collectibles.’ Smart Collectibles have applications that range from digital gaming and media to finance and property. They are also a key enabler of Web 3.0 and the Metaverse, an always-on shared digital universe where people can work, play, and hang out. By creating this document, we aim to inspire and encourage creators, communities, and businesses to continue to innovate in this space. With Smart Collectibles, businesses and artists can enable access to value in a way that is traceable and highly secure and even stack access to multiple forms of value onto the primary non-fungible tokens themselves.
Abstract Stablecoins are a rapidly evolving subcategory of cryptocurrency that aim to reduce the price fluctuations of traditional cryptocurrencies and thus become a common digital payment instrument. This paper aims to assess the material substance of fiat‐backed stablecoins to determine whether fiat‐backed stablecoins could be considered, in accordance with IFRS, as cash or cash equivalents. We chose 11 fiat‐backed stablecoins representing 99.97% of the total market capitalisation of all fiat‐backed stablecoins. Using a three‐step approach, we performed an analysis of the legal and general terms and conditions of the selected stablecoins and of cryptocurrency exchanges, and quantitatively analysed their risk characteristics in comparison with fiat currency pairs, money market indexes and instruments, and traditional cryptocurrencies. The results show that nine of the 11 stablecoins met the objective requirements of cash equivalents according to their material substance and, using an extensive interpretation of IAS 7, could be reported as cash equivalents. This study enhances understanding of the material substance of fiat‐backed stablecoins for their financial reporting and can be used by entities when creating accounting policies under existing IFRS rules and by accounting standard setters as evidence when formulating new rules or officially interpreting existing ones to provide guidance on the financial reporting of fiat‐backed stablecoins.
Bei der Kryptokunst handelt es sich nicht um klassische Kunstwerke zum Anfassen, sondern um digitale. Bisher standen diese nicht auf derselben Stufe wie analoge, die teils für enorme Beträge verkauft werden. Wer ein physisches Kunstwerk erworben hat, kann es beispielsweise sicher im Safe verstauen. Kryptokunst dagegen kann meist grenzen- und kostenlos heruntergeladen, vervielfältigt oder geteilt werden. Wie kann also das Eigentum an einem digitalen Kunstwerk nachgewiesen werden? Beim Erwerb von Kryptokunst spielen NFTs (non-fungible tokens) eine große Rolle. Das sind nicht ersetzbare Zeichen, die als digitale Besitzurkunde bzw. Echtheitszertifikat fungieren. Gearbeitet wird dabei mit der Blockchain-Technologie (vgl. stichwort der merz 2018/03), welche die Basis für Kryptowährungen bildet. In dieser fälschungssicheren Datensatzliste wird eingeschrieben, wer das Objekt gekauft hat. Wer das NFT besitzt, besitzt damit das ‚Original‘ der Datei. In der Regel bleibt das Werk dennoch für alle verfügbar. Dieses Jahr wurde Kryptokunst erstmalig beim Aktionshaus Christie’s als NFT versteigert. Die digitale Bildcollage ‚Everydays: The First 5000 Days‘ aus 5.000 Einzelbildern des Künstlers Beeple erreichte 69 Millionen US-Dollar. Digitale Kunstwerke können auch auf Internetplattformen wie Nifty Gateway erworben werden. Bisher wurden NFTs in den verschiedensten Bereichen verkauft: Beispielsweise das bekannte Meme ‚Disaster Girl‘, das GIF ‚Nyan Cat‘, Musik sowie virtuelles Land in Games. Das besondere bei NFTs: Die Künstler*innen können bei jedem neuen Verkauf mitverdienen und ihre Werke weltweit direkt anbieten. Allerdings ist Kryptokunst stark an den Wert von Kryptowährungen gekoppelt und der CO2-Verbrauch beim Erstellen und durch den enormen Rechenaufwand beim Handeln der Werke ist hoch. Ob der Markt für Kryptokunst zukunftsfähig ist, ist bisher nicht absehbar.
Matthieu Nadini, Laura Alessandretti, Flavio Di Giacinto, Mauro Martino · 6 authors
Non Fungible Tokens (NFTs) are digital assets that represent objects like art, collectible, and in-game items. They are traded online, often with cryptocurrency, and are generally encoded within smart contracts on a blockchain. Public attention towards NFTs has exploded in 2021, when their market has experienced record sales, but little is known about the overall structure and evolution of its market. Here, we analyse data concerning 6.1 million trades of 4.7 million NFTs between June 23, 2017 and April 27, 2021, obtained primarily from Ethereum and WAX blockchains. First, we characterize statistical properties of the market. Second, we build the network of interactions, show that traders typically specialize on NFTs associated with similar objects and form tight clusters with other traders that exchange the same kind of objects. Third, we cluster objects associated to NFTs according to their visual features and show that collections contain visually homogeneous objects. Finally, we investigate the predictability of NFT sales using simple machine learning algorithms and find that sale history and, secondarily, visual features are good predictors for price. We anticipate that these findings will stimulate further research on NFT production, adoption, and trading in different contexts.
Xiao Fan Liu, Huanhuan Ren, Si-Hao Liu, Xian-Jian Jiang
Abstract The cryptocurrency economy provides a comprehensive digital trace of human economic behavior: almost all cryptocurrency users’ activities are faithfully recorded in transactions on public blockchains. However, the user identifiers in the transaction records, i.e., blockchain addresses, are anonymous. That is, they cannot be associated with any real “off-chain” identify of actual users. Nonetheless, identifying the economic roles of the addresses from their past behaviors is still feasible. This paper analyzes Ethereum token transactions, characterizes key economic agents’ behavior from their transaction patterns, and explores their identifiability through interpretable machine learning models. Specifically, six types of most active economic agents are considered, including centralized cryptocurrency exchanges, decentralized exchanges, cryptocurrency wallets, token issuers, airdrop services, and gaming services. Transaction patterns such as trading volume, transaction tempo, and structural properties of transaction networks are defined for individual blockchain addresses. The results showed that cryptocurrency exchanges and online wallets have signature behavior patterns and hence can be accurately distinguished from other agents. Token issuers, airdrop services, and gaming services can sometimes be confused. Moreover, transaction networks’ features provide the richest information in the economic agent’s identification.
The current popularity of non-fungible token (NFT) markets is one of the most notable public successes of blockchain technology. NFTs are blockchain-traded rights to any digital asset; including images, videos, music, even the parts of virtual worlds. As a first study of NFT pricing, we explore the pricing of parcels of virtual real estate in the largest blockchain virtual world, Decentraland; an NFT simply termed LAND. We show a LAND price series characterised by both inefficiency and a steady rise in value.
This paper has four chapters. The first chapter serves as an introduction. The second chapter studies the transaction fees in the bitcoin system. The transaction fees and transaction volume in the bitcoin system increase whenever the network is congested and results from a simple VAR show that it is indeed the case. To account for the empirical findings, we build a model where users and miners together determine the transaction fee and transaction volume endogenously. Even though the fluctuating transaction fee mechanism in bitcoin introduces the extra cost of uncertainty to users, a back-of-envelope calculation shows that the cost of using the bitcoin network for transactions is still smaller than the cost of using the current conventional payment system with a fix transaction fee rate. The second chapter studies the time-varying price dispersion among different bitcoin exchanges. We identify the sources of price dispersion using a standard time-varying vector autoregression model with stochastic volatility. The results show that shocks to transaction fees and bitcoin price growth explain on average 20%, and sometimes more than 60%, of the variation of price dispersion. The third chapter studies the relationship between connections and returns in the bitcoin investor network. Using transaction data from the bitcoin blockchain, we reach three conclusions. First, on average, the annualized returns of connected addresses in the network are 20.75% above those of their unconnected peers. Second, returns also differ among those connected addresses. By dividing the connected ad- dresses into ten deciles based on their centrality, we find that addresses in the two most-connected deciles earn higher returns than the other connected addresses. Third, eigenvector centrality is more related than degree centrality to higher returns, implying that quality of connections matters.
Markets for unique digital property—digital equivalents of rare artworks, collectible trading cards, and other assets that gain value from scarcity—have exploded in the past few years. At root is the next iteration of blockchain technology, unique digital assets called non-fungible tokens. Unlike bitcoin, where one coin is the same as another, NFTs are unique, each with different attributes. An NFT that represented ownership of Boardwalk would be quite different from one that represented Baltic Avenue.\nNFTs have grown from a few early breakout successes to a rapidly developing market for unique digital treasures. The attraction to buyers is that, unlike digital assets like e-books or licensed movies, NFTs can be bought, sold, displayed, gifted, or even destroyed just like personal property. Yet law has not kept pace with demand for unique digital property. In particular, the rules designed for the 2000s internet focused on expanding intellectual property licenses and online contracts to the point that consumers are mere users, not owners, of digital assets. This “end of ownership” legal structure stands in stark contrast to the expectations of those who create, buy, sell, and invest in NFTs.\nThis article proposes a clear path for the evolution of the legal underpinnings of NFTs. It argues that NFTs are personal property, not contracts (despite the “smart contracts” popular nomenclature) or pure intellectual property licenses (despite the currently governing law of digital assets like e-books). Because transactions in NFTs are in the form of a sale, the law of sales of personal property should apply. And finally, the article notes that NFTs will serve as a powerful, grounding example of digital personal property, a legal form of ownership that is both sorely needed and has not yet been clearly established online. That example will ground others, and permit law to again characterize those who buy scarce and valuable digital assets as true owners rather than mere users.
Ferdinand Thies, Sören Wallbach, Michael Wessel, Markus Besler · 5 authors
Abstract Initial coin offerings (ICOs) have recently emerged as a new financing instrument for entrepreneurial ventures, spurring economic and academic interest. Nevertheless, the impact of exogenous and endogenous signals on the performance of ICOs as well as the effects of the cryptocurrency hype and subsequent downfall of Bitcoin between 2016 and 2019 remain underexplored. We applied ordinary least squares (OLS) regressions based on a dataset containing 1597 ICOs that covers almost 2.5 years. The results show that exogenous and endogenous signals have a significant effect on the funds raised in ICOs. We also find that the Bitcoin price heavily drives the performance of ICOs. However, this hype effect is moderated, as high-quality ICOs are not pegged to these price developments. Revealing the interplay between hypes and signals in the ICO’s asset class should broaden the discussion of this emerging digital phenomenon.
In addition to the exhibition, collection, research, and educational functions of the museum, the development of a future museum includes the trend of leisure and sightseeing. Although the museum is a non-profit organization, if it can provide digital exhibits and collections under the premises of “intellectual property rights” and “cultural assets protection”, and licensing and adding value in various fields, it can generate revenue from digital licensing and handle the expenses of museum operations. This will be a new trend in the sustainable development of museum operations. Especially since the outbreak of COVID-19 at the beginning of this year (2020), the American Alliance of Museums (AAM) recently stated that nearly a third of the museums in the United States may be permanently closed since museum operations are facing “extreme financial difficulties.” This research is aimed at museums using the business model of “digital authorization”. It proposes an authorization mechanism based on blockchain technology protecting the museums’ digital rights in the business model and the application of cryptography. The signature and time stamp mechanism achieve non-repudiation and timeless mechanism, which combines blockchain and smart contracts to achieve verifiability, un-forgery, decentralization, and traceability, as well as the non-repudiation of the issue of cash flow with signatures and digital certificates, for the digital rights of museums in business. The business model proposes achievable sustainable development. Museums not only achieve the goal of promoting social education, but also solve their financial problems.
Open access
Blockchain Technology Applications and Security
Advanced Steganography and Watermarking Techniques
While the benefits of open-source innovations such as the availability of developers with diverse skill sets and accelerated innovation are well-documented, such open boundaries also facilitate copying (forking) the codebase and creating new substitutes, which may compete with the parents for developer attention. Given that the movement of developers across projects is made easier due to lower friction in open innovation models, we study how substitutes created by copying the codebase of a product impact developers’ attention and subsequent innovation using the context of cryptocurrencies. Using a data set on 23 cryptocurrencies from which 17 forked products were created between 2011 and 2018, we find that in spite of lower friction in this setting, such events have a positive attention spillover effect, which attracts new developers and increases participation among the existing developers. Our study provides managerial insights for firms assessing open models for product development.
Distributed Ledger Technologie (DLT) hält auch im internationalen Kunstmarkt Einzug, sei es zur Speicherung der Provenienz von Kunstwerken oder bei der Transaktionsabwicklung. Um Anteile an Kunstfonds in der Form von Registerwertrechten (Art. 973d ff. OR) ausgeben und diese mit Kryptowährungen bezahlen zu können, wären im schweizerischen Recht jedoch verschiedene Anpassungen notwendig. Der Autor zeigt deshalb Lösungsmöglichkeiten auf, wie schweizerische kollektive Kapitalanlagen und Tokens kompatibel gemacht werden könnten.
Cryptocurrencies claim to be the future of money and payments, the lifelines of any business. An informed evaluation requires understanding both the economics and the computer science behind the technology. Designed for an MBA elective on money and banking, this technical note guides students through the building blocks of cryptocurrencies using the one that launched them all: Bitcoin. To provide a logically consistent framework for interpreting future innovations, the technical note digs deeper into the technological ingredients of Bitcoin than is typical in economics, while also connecting the technology back to a core set of economic principles, all in an accessible way. Excerpt UVA-GEM-0190 Rev. Jan. 26, 2022 The Economics of Cryptocurrency May 2021 was a rough month for cryptocurrencies. In a matter of weeks, Bitcoin—the oldest and largest cryptocurrency by market capitalization—lost over one-third of its value relative to the US dollar. The next-largest cryptocurrency, Ether, fell nearly 40%, while Litecoin, colloquially known as the silver to Bitcoin's gold, lost over half of its value. The optimist may point out that Bitcoin was still worth more than it had been at the beginning of the year (Exhibit 1), but that would be small comfort to anyone who had traded USdollars for Bitcoins just prior to the crash. Volatility has long been a hallmark of the cryptocurrency market. Exhibit 2 compares volatility in the USdollar price of Bitcoin to volatility in the US dollar prices of gold, the euro, and the Brazilian real, and volatility in the S&P 500 Index. Gold is a commodity, the euro and the real are currencies, and the S&P 500 is a common target for index investing. Bitcoin is far and away the most volatile. Billionaire investor Warren Buffett has vowed never to own any cryptocurrencies and Bank of England Governor Andrew Bailey recently quipped, “Buy them only if you're prepared to lose all your money.” Perhaps the surprise isn't that Bitcoin dropped so precipitously in May 2021, but rather that it still has a market capitalization above USD500 billion. To make sense of where we've been, where we are, and where we might be going, we need to take a deep dive into the economics of cryptocurrencies. . . .
This paper contributes to the literature on cryptocurrencies by examining performance of nave (1/N) and individual cryptocurrency portfolio of ten largest cryptocurrencies. We employ daily data and two time durations for each type of portfolio. For the investing in individual cryptocurrency portfolio, the first time duration is the full time duration from the earliest day in our data sample. The second time duration is after Covid-19. (after 1st of January 2020). For the nave portfolio, the first time duration is the same as individual cryptocurrency portfolio. However, the second time duration is when all ten cryptocurrencies are available. (after November 10th 2018) Our result shows that investing in single cryptocurrency portfolio outperforms than nave portfolio in both time duration. Further research could add the better performing cryptocurrency portfolio to the traditional assets portfolio and examine the performance of the combining portfolio in different time duration.
The ‘financialisation’ of art has transformed art from an object of aesthetic expression to an instrument of increasing wealth, in turn increasing the likelihood of forgery. Art fraud harms artists, purchasers, museums, and society at large. Ultimately, the integrity of the art industry is at stake. The culture of secrecy and questionable auction practices widen the information asymmetry contributing to market failure in the art market. Multiple approaches are needed to address these challenges. The criminalisation of art fraud faces evidential difficulties of proof beyond reasonable doubt. The more accessible threshold of proving misleading conduct under s 18 of the Australian Consumer Law has been successfully invoked by artists against the forger, a purchaser against an auction house, and the Australian Competition and Consumer Commission obtaining pecuniary penalties and restraint orders against art offenders. Besides imposing presumptive liability on auction houses, authentication boards and a Code of Conduct for Art Merchants will promote transparency in the art market.