Blockchain Papers

Н.П. Иващенко, Andrey Shastitko, Anastasia Shpakova

No abstract is available for this record.

Rémy Zgraggen

It this paper it has been analyzed whether and under what conditions an insurance company can accept insurance premiums and claims payments in Bitcoins or other crypto currency based on a smart insurance contract. On the one hand the question has been explored with regard to private law, especially insurance contract law; on the other with regard to public law, in particular financial supervisory law. The research for the present paper has been conducted primarily by taking into consideration the relevant legal frameworks in the European Union, Switzerland, UK and Liechtenstein, while referring at the same time to general legal principles of public and private law, which have their validity in most other jurisdictions of common or civil law, such as for example in the US, Hong Kong, Singapore or Japan.

Xavier Foccroulle Ménard

This article aims to summarize the present situation with regards to the use of cryptocurrency as collateral in secured transactions in the United States, Canada, the United Kingdom and France, and offer solutions to issues related to the use of cryptocurrency for this purpose. These proposed solutions are arranged as a framework that could be enacted in Canada, and elsewhere. The article first reviews the concept of a cryptocurrency, with special emphasis on bitcoin, and the concept of secured lending. Then, it discusses the categorization of bitcoin in the United States, Canada (with Ontario and Quebec as examples), United Kingdom and France. At this time, only the United States and Ontario have doctrinal and regulatory guidance when using cryptocurrency specifically for secured lending. Finally, this article proposes a legislative framework to take security interests in cryptocurrency in Canada, including drafts of specific statutory amendments for both Ontario and Quebec legislation. The article concludes by noting how this framework can be replicated elsewhere, notably in the United States, the United Kingdom and France.

Alma Angotti, Adam Klauder, Karina Bjelland

With the global proliferation of virtual currency, regulators continue to analyse the market to determine the optimal framework for regulation. A key issue in this evolving regulatory environment is the outstanding question of how virtual currencies should be classified: as securities, commodities, assets or currency, and which government agency should regulate these products. This paper provides an overview of the current regulatory landscape and provide steps that firms and compliance professionals can take to minimise the potential anti-money laundering (AML) and sanctions risks of participating in the cryptocurrency market. Faced with an uncertain and rapidly changing regulatory landscape, this paper encourages cryptocurrency companies that engage in trading and exchange activity to consider implementing a risk-based compliance programme for addressing financial crime risk that is comparable to what a securities broker-dealer would have, considering the similarities they share with the securities industry.

T.Q. Nguyen, Ananta Kumar Das, L. Tran

Agriculture insurance has developed across emerging economies in South East Asia (SEA). New products are introduced to farmers to lessen financial losses of crops with low commercialised. Drought-based crop insurance has launched in some SEA countries to protect farmers from extreme weather events. The evaluation process for insurance value coverage is costly and lengthy. Farmer participation in crop insurance schemes, hence, remains low. Additionally, while dealing with extreme events, stated-owned irrigation water companies with complex bureaucratic systems delay decisions. This adds a heavy toll on farmers' shoulders when facing drought. To solve these problems, a blockchain-based smart contract linking with oracle services to ensure asymmetric information is proposed to reduce the evaluation costs and lengthy process of evaluating compensation is a. Currently, building smart contract that oracles can push required information to is not used in the case of agricultural insurance. Hence, we proposed a blockchain-based smart contract framework that applies to weather-based index insurance. We selected NEO for our experiment due to its easy access tokens. While developing a smart contract on NEO, we designed 5 functions that can be triggered if certain conditions are met and built a virtual oracles server. This initial experiment promised a scalable and trusted platform that can lessen farmers' potential damages and reduce their vulnerability.

Christopher D. Clack, Ciaran McGonagle

High-value derivatives contracts require substantial legal protection and\noften utilise standardised legal documentation provided by the International\nSwaps and Derivatives Association (ISDA). Smart Derivatives Contracts aim to\nautomate many aspects of high-value contracts, including automation of the\nprovisions of the ISDA legal documentation. Here we investigate how the ISDA\nMaster Agreement may affect the automation of payments and deliveries: we\nprovide a framework for understanding how high-value derivatives contracts are\nstructured at different levels, in terms of both the legal documentation and\nthe workflow; we explain issues relating to how the smart contract code\nprocesses payments-related and deliveries-related events; and we discuss the\nextent to which these are amenable to automation.\n

Emilios Avgouleas, Aggelos Kiayias

Weaknesses in investor control over their investments and in warehousing systemic risk in modern Financial Market Infrastructure (FMI) are the result of a combination of market failures and of structural flaws deeply ingrained in modern financial markets. Yet the utility of complex FMI comprising long custodial chains and large global Central Counterparties (CCPs) for the operation of modern markets is not seriously disputed. The change in the technology paradigm with the introduction of DLT systems for securities and derivatives FMI can increase investor control, the efficiency of risk management and, to some extent, augment the distribution of systemic risk. It can thus create a more diverse and resilient financial ecosystem. This cross-disciplinary paper identifies a multitude of reasons that favour a paradigm shift in FMI technology. It also sketches a comprehensive blockchain-based framework for the development of permission-based platforms for derivatives clearing and settlement and the handling of liquidity shortages within DLT systems. Arguably, the impact of technological change should lead to a reduction of industry rents for the benefit of end investors and of the end users of finance (entrepreneurs and businesses) enhancing market welfare. Therefore, the use of blockchain technology in FMI can transform the structure and future direction of the financial services industry as a whole.

Sté́phane Ducasse, Henrique Rocha, Santiago Bragagnolo, Marcus Denker · 5 authors

Smart contracts are new computational units with special properties: they act as classes with aspectual concerns; their memory structure is more complex than mere objects; they are obscure in the sense that once deployed it is difficult to access their internal state; they reside in an append-only chain.There is a need to support the building of new generation tools to help developers.Such support should tackle several important aspects: (1) the static structure of the contract, (2) the object nature of published contracts, and (3) the overall data chain composed of blocks and transactions.In this chapter, we present SmartAnvil an open platform to build software analysis tools around smart contracts.We illustrate the general components and we focus on three important aspects: support for static analysis of Solidity smart contracts, deployed smart contract binary analysis through inspection, and blockchain 1 Accepted to appear in "Blockchain and Web 3.0:

Kiju Park

No abstract is available for this record.

Mingyu Ma

No abstract is available for this record.

Francesco Di Ciommo

The term “smart contract”, coined essentially by technologists, has also entered the vocabulary of jurists a few years ago. Recently, even the Italian legislator has given a very first definition of “smart contract” within the art. 8-ter, d.lgs. 12.14.2018, n. n. 135, conv. l. 2.11.2019, n. 12. But what is meant by this expression and what sense does it make for a jurist to reason about this new conceptual category? This essay, in attempting to answer two fundamental questions, concludes in the sense that: 1) “smart contracts” are not agreements; notwithstanding in the wide spectrum of situations covered by “smart contract” there are, of course, also agreements concluded through algorithms, however, most of them are not contracts, but mere activities for the performance of obligations or, in any case, of already defined contractual provisions; 2) we must not confuse “smart contract” and blockchain; 3) the legal problems raised by the “smart contract” phenomenon require an analytical approach strongly conditioned by the technological ecosystem of reference and that must be calibrated in this case; 4) also for this reason, the category in question - as such, that is to say intended as a category - has substantially no legal relevance; 5) in any case, in consideration of the aforementioned technological conditioning, every attempt made by jurists to understand, and regulate the phenomena in question is, at present, likely to be obsolete at the moment in which it is carried out, which requires the lawyer to adopt an even more prudent and informed approach; 6) besides, the questions concerning the effectiveness of the c.d. smart contract, or those related to the consequent possible responsibilities, in practice, for many years, are normally managed by the IT systems involved without any recourse to the institutions and to the rules of the legal system, which, instead, when operating, are concentrated, for the more, in an attempt to avoid market distortions. The assumptions just summarized are confirmed by the observation of what happens in the financial markets, where the Algorithmic trading (AT) and the high frequency trading (HFT) are, from the end of the Nineties of the last century, a consolidated and constantly expanding reality.

Yin Yifeng, Zhang Tingjun, Chaofei Hu, Yong Gan

Smart contracts are the most important feature in block chain applications, and they are also the main reason why blockchains are called disruptive technology. Traditional intelligent contracts with receipts are generated by SHA-256A UXTO (unexpended transaction output), and increasing the number of receipts slows down the speed. This paper introduces the operation of receipts in smart contracts and proposes to generate contract receipts with the VIF virtual iteration function. VIF takes advantage of the excellent features of the Hash function and the unreadable nature of the self-compiled system, so that different contract parameters generate unique and non-repudiation receipts through the virtual iterative function, providing a secure and reliable credential for smart contracts. Finally, the speeds at which the VIF receipt and traditional UXTO receipt are generated are compared.

Christof Ferreira Torres, Mathis Baden, Robert Norvill, Hugo Jonker

CCS '19: 2019 ACM SIGSAC Conference on Computer and Communications Security, London, United Kingdom — November 11 - 15, 2019

Robert Byggmästar

Distributed ledger technology is one of the latest fintech innovations that could increase the efficiency of securities markets. The technology represents a new paradigm how the need of trusted third parties can be eliminated and how transaction cost can be lowered. The technology can be used as a platform for so-called smart contracts. The implementation of DLT and smart contracts is however not risk free, the technology is also at an early stage and it is still unsure whether it will overcome all hurdles.
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\nBefore the innovations can be utilized on a full scale, potential risk such as the uncertainty regarding the legal validity and enforcement of smart contracts needs to be eliminated, so that the technology can be implemented and used with a high level of predictability and trust. The research sets out to solve the research question from the view point of Finnish securities law, limiting the research to smart contracts in securities markets. General principles are deconstructed using international, European and Finnish sources to solve the legal problem.
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\nSmart contracts can be divided into blockchain smart contracts in crypto markets and smart contracts in securities markets, the research focuses on the latter. Smart contracts can also be divided into smart contract code and smart legal contracts. Smart contracts are defined in the research as agreements automatable by computer and enforceable by either legal enforcement of rights and obligations or by execution of code. Technology neutrality is set out as a central principle in regulating fintech. The research question is reframed as whether a contract concluded in code is valid and enforceable. By analysing electronic contracts, enforcement of code, the example of the vending machine and by teleologically interpreting the law, it is established that smart contracts concluded in code can be both legally valid and enforceable.
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\nValidity and enforceability from the perspective of securities law can also be seen as the execution of rights and the issuance of securities. Securities and securities markets also have special characteristics, such as being fungible, collective and anonymous. Securities markets are also already to a high degree automated, using electronic trading systems, where many securities exist only in electronic form, programming languages are also already used to express securities and their functions. Existing securities law, which is technology neutral, can therefore be applied on smart contracts in securities markets, without the need of any regulatory changes. The growing digitalisation and automation of securities markets raise however broader questions such as the elasticity of the law and its implications on the stability of the financial system.

Wesley Dingman, Aviel Cohen, Nick Ferrara, Adam Lynch · 7 authors

Rising to popularity in the last decade, blockchain technology has become the preferred platform for the transfer of digital currency.Unfortunately, many of these environments are rife with vulnerabilities exploited by financially motivated attackers.Worse yet, is that a structured analysis and classification of these vulnerabilities is lacking.In this paper, we present the first formal classifications of these vulnerabilities using National Institute of Standards and Technologies Bugs (NIST'S) Framework and propose two new classes: distributed system protocol (DSP) and distributed system resource management (DRM).

Samudaya Nanayakkara, Srinath Perera, Sepani Senaratne

The construction industry produces one of the most complex and substantially large structures such as buildings, bridges, dams and tunnels using lengthy, network structured and dynamic supply chains with multiple internal and external suppliers. Long and complex supply chains make it difficult to monitor compliance, provide ultimate assurance of the final product and often lead to increased cost with payment delays. The technology that underpins cryptocurrencies is known as blockchain. However, the capabilities of blockchain can be extended far beyond cryptocurrencies. It enables existing applications to be improved and new applications such as blockchain-powered election, healthcare, identity management, power grids, supply chain, property, smart contracts and so on. This paper aims to compute the stakeholders’ perspective on blockchain and smart contracts in the construction industry. As the primary data collection methodology, an industry engagement workshop in the form of round-table discussions was conducted. Each round-table comprised of both academics and industry participants with different context from the construction industry. The table composition was four industry practitioners and two academics with the responsibility of moderating the discussion for all six groups. There were 57 responses, and 18 unique perspectives were identified. A word cloud was generated by using the frequency of responses to identify the density of each perspective. The key findings of the data analysis highlighted efficiency, trust, fair, security, transparent, accountability, compliance and standardisation were highlighted as the stakeholders’ primary perspective on blockchain and smart contracts based solutions for the construction supply chain. Moreover, meantime highlighted construction industry requirements and drivers of blockchain and smart contracts are reconciled. So, the findings will help in implementing better blockchain solutions to the construction industry in future.<b> </b>

Vikram Saraph, Maurice Herlihy

We use historical data to estimate the potential benefit of speculative techniques for executing Ethereum smart contracts in parallel. We replay transaction traces of sampled blocks from the Ethereum blockchain over time, using a simple speculative execution engine. In this engine, miners attempt to execute all transactions in a block in parallel, rolling back those that cause data conflicts. Aborted transactions are then executed sequentially. Validators execute the same schedule as miners.&#13;\nWe find that our speculative technique yields estimated speed-ups starting at about 8-fold in 2016, declining to about 2-fold at the end of 2017, where speed-up is measured using either gas costs or instruction counts. We also observe that a small set of contracts are responsible for many data conflicts resulting from speculative concurrent execution.

Primavera De Filippi, Aaron Wright

No abstract is available for this record.

Dan M. Marcotte, Linda Tissaoui, Joyling Liu

No abstract is available for this record.

Parwat Singh Anjana, Sweta Kumari, Sathya Peri, Sachin Rathor · 5 authors

No abstract is available for this record.

Dan Awrey

Derivatives are the “bad boys” of modern finance: exciting, dangerous, and fundamentally misunderstood. These misunderstandings stem from the failure of scholars and policymakers to fully appreciate the unique legal and economic structure of derivative contracts, along with the important differences between these contracts and conventional equity and debt securities. This Article seeks to correct these misunderstandings by splitting derivative contracts open, identifying their constituent elements, and observing how these elements interact with one another. These elements include some of the world’s most sophisticated state-contingent contracting, the allocation of property and decision-making rights, and relational mechanisms such as reputation and the expectation of future dealings. The resulting hybridity essentially splits every derivative into two separate contracts: one that governs under normal market conditions, and another that governs under conditions of fundamental uncertainty. In good times, derivative contracts contemplate the almost automatic determination and performance of each counterparty’s obligations. In bad times, these contracts include various mechanisms designed to provide counterparties with the flexibility to incorporate new information, fill contractual gaps, and promote efficient renegotiation.\nThe process of splitting derivative contracts open yields a number of important policy insights. First, the bundling of contract, property, decision-making rights, and relational mechanisms makes derivatives look far more like commercial loans than publicly traded shares or bonds. The regulatory treatment of derivatives as “securities”—and the resulting emphasis on market transparency—is thus somewhat misguided and serves to distract attention from the significant prudential risks posed by the widespread use of derivatives. Second, the flexibility associated with the relational mechanisms embedded within many derivative contracts can play a useful role in promoting both institutional and broader financial stability. This has important implications in terms of the desirability of the recent push toward mandatory central clearing of derivative contracts. It also exposes the potential perils of recent proposals to use distributed ledger technology and smart contracts to execute, clear, and settle these contracts. By the same token, the widespread breakdown of these relational mechanisms can be a source of financial instability. This provides a compelling rationale for authorizing central banks to act as “dealers of last resort” during periods of fundamental uncertainty.

Mustapha Mekki

International audience

Jim Mason, Hollie Escott

Smart contracts and blockchain technology are at the forefront of technological advancement in the financial services industry. The basic premise involves the creation of an automated contract capable of satisfying common conditions and reducing the need for intermediaries in the process. The blockchain is a means by which the transactions can be recorded on a distributed ledger. &#13;\nThe enquiry carried out in this paper discusses whether these technologies are capable of being transposed into the United Kingdom’s (UK) construction industry and whether this is a desirable outcome. Technological progression is much slower in construction than in other industries as evidenced by the slow take up of UK government-backed initiatives such as the introduction of Building Information Modelling (BIM) and collaborative working agendas. &#13;\nA survey questionnaire was designed and distributed to investigate attitudes towards technology and collaborative working. A variety of professions across various organisations including clients, main contractors, consultants and law firms returned 117 responses mainly from senior management or commercial staff. There were divisions between participants believing technology and innovation are important, exciting and the future and those who believe automation is an impossible task in such a complex industry as construction. &#13;\nKey findings reveal a fear of the unknown and the overwhelming doubt from participants that full automation is possible. There was an acknowledgement that the technology could benefit simple supply-type contracts and that it would be beneficial to reduce the amount of paperwork involved in contract administration. There is a view throughout the industry that disputes cannot be solved with a computer. Opinions were further split along the lines of whether human interaction and relationships are key and technology would detract from or enhance the position.

Siti Rohaya Mat Rahim, Zam Zuriyati Mohamad, Juliana Abu Bakar, Farhana Hanim Mohsin · 5 authors

This study examines the two important aspect of latest technology issues in Islamic finance that related to artificial intelligence (AI) and smart contract. AI refers to the ability of machines to understand, think, and learn in a similar way to human beings, indicating the possibility of using computers to simulate human intelligence. Smart contract is a computer code running on top of a block-chain containing a set of rules under which the parties to that smart contract agree to interact with each other. The main objectives of this article are to evaluate the operations of AI and smart contract, to make comparison between the operations of AI and smart contract. This article concludes that AI and smart contract will have a huge impact in future for Islamic Finance industry.