This paper discusses the use of Blockchain technology without tokens to protect information about banking transactions, namely, transfer amounts, card details, names of participants, etc. This topic is relevant, since the digital economy is becoming an integral part of modern life. The processed information passes through the database of banks and payment systems, which potentially makes it available to the attacker. The article analyzes the protection mechanisms of distributed databases, proposes a solution to the problem of maintaining the uniqueness of information in them based on Blockchain technology without tokens and gives recommendations on the introduction of Blockchain technology into modern banking systems.
In the field of cryptoeconomics the Ethereum (Ethereum Foundation) project gave opportunity to create “own” cryptocurrency – new token based on its smart-contract platform to everyone without lowlevel programming skills. Then it became obvious that tokens could be used for crowdfunding as the Ethereum did in 2014. Unregulated and easy to access such scheme became popular among related to the blockchain tech startups. It was named Initial Coin Offering (ICO/or ITO). Despite its name, which is similar to IPO, this scheme is usually used for venture funding of a new project instead of expanding already well-established working business. The authors use machine-learning algorithms to classify ICOs and estimate ROI based on public digital data and web-sources. The goal of the research is to develop sustainable and efficient model, which will predict target profit ROI (profit trends) of ICO startup. Data collection and analysis period: Feb-Mar 2018. The prediction model and the application (service) of ICO startups’ selection are developed as the result of the study. Results. There were over 3000 samples of ICO-startups in the research dataset. After cleaning and elimination of outliers, it contained only 518. The number of samples with positive ROI (which means that these ICOs were profitable) was 234. Cross validation metric was confirmed to be accurate. The model achieved 79 % accuracy (average value). To prove this score separated prediction was executed the metrics: for test dataset AUC is 0.78; for profitable samples Precision: 0.76; Recall: 0.9 for profitable; F1-score: 0.82. Discussions. In order to achieve the objectives of this study, various IT components of the service architecture (applications) were developed to monitor, analyze and predict the risks of ICO startups. An artificial neural network was developed to solve the problem of ROI classification and prediction. The average ROI among profitable ICOS was 47 %. Taking into consideration that the crypto market is highly volatile and that there is a possibility that such investments will not bring any profit, this model of monitoring, analysis and prediction can be very valuable for the purposes of critical selection (exclusion) of a number of ICO projects from potential investment. Conclusion. The developed components can be used as a basis of monitoring service of ICO startups. The risk-forecasting model can be improved, foremost, by using the most complete (and wider) set of data. In this case, individual data collection and processing tasks can be performed manually, which will require additional resources. It should be noted that other types of neural networks can be developed for both text analysis and trading data analysis. This may lead to the logic of using a combination of models, which will potentially help to provide the most accurate predictions.
The cryptocurrency markets have experienced a drastic increase in trading volume and prices since the global realization of blockchain technologies’ potential in the mid-2017. The market capitalization of the cryptocurrency markets increased from only $18 billion on January 1st, 2017 to $565 billion on December 31st, 2017. Thus, it is important to understand the market’s current operating state. \n\nThis research aims to test whether price and volume data from the cryptocurrency markets conform with Benford’s Law and is the first research conducted in this manner. Similar research performed with data from the international financial markets show that price and volume data conform with the Benford’s Law distribution, which is also the expected result of this study. The data is gathered from coinmarketcap.com and includes 30 of the top 100 largest cryptocurrencies determined by market capitalization. \n\nBenford’s Law offers distributions for first, second and first-two occurring digits of numbers in naturally formed data sets. If the distribution deviates from Benford’s Law, it can be caused by an unnatural data formation process, low quality of data or insufficient data. This study also offers theoretical aspects affecting the cryptocurrency markets and its data formation. The authenticity of the use of Benford’s Law as a data analyzation tool is emphasized by the fact that it is frequently used in research and as a fraud detection tool in auditing worldwide. \n\nThree tests are conducted for both entire price- and volume data sets. As a further assessment, each subsample included is tested individually. The results show that when testing entire data sets, they closely conform with Benford’s Law. Interestingly, when testing the subsamples, only two subsamples of the volume data set conform with Benford’s Law at some level. Each price data subsample fails at least one of the three tests. Furthermore, the results show that the volume data conforms far more closely with Benford’s Law than the price data. The results indicate that the majority of the subsamples experience something else than a natural data formation process. This gives direction for further research and assessments.
Марат Рашитович Сафиуллин, Leonid Alekseevich Elshin, A.A. Abdukaeva
The digitalization of business processes significantly changes the wellestablished models for the development of economic systems, forming new factors of socio-economic growth. This article proposes a cryptocurrency market forecasting toolkit based on building a model of autoregressive conditional heteroskedasticity. The paper enables the analysts to determine the most suitable model from the GARCH family for forecasting one of the most common and popular cryptocurrencies in the world - bitcoin. The proposed and tested tools make it possible to plan the development of the cryptocurrency market for the short term. This, in turn, can serve as the basis for monitoring and predicting future market adjustments, which allows coordination of state planning measures in this sector of economic relations.
The main objective of this case study is to illustrate how a limited liability company could be founded fully digitally based on Corda- and Hyperledger Indy-distributed ledger technologies (DLTs). The second objective of the thesis is to analyze the profitability and key risks of introducing this technology through a Monte Carlo-based investment analysis simulation. The results of the simulation are interpreted using summary statistics and visualized by the net present value (NPV), internal rate of return (IRR), and discounted payback period (DPP) distributions. Input-values for the simulation are gathered by interviewing the Project Mercury participants with semi-structured interviews. The third objective of this study is to identify and analyze future opportunities and applications for a digitalized company founding process based on the case study and investment analysis simulation. \n \nThe data for this research is gathered from Project Mercury which carried out a proof-of-concept on the possibility of this technology used in the founding process of an LLC. Project Mercury is a Finnish-based collaboration that consists of organizations from various fields that are currently involved in the founding process of a limited liability company. The development of distributed ledger technologies is in a relatively novel stage, and no evidence of DLT being applied to the founding process of a limited liability company prior to Project Mercury has been found. \n \nDistributed ledger technologies are inspired by blockchain technologies such as Bitcoin and Ethereum, but possess different features compared to blockchains, most notably, are not fully public networks as blockchains are. As an important part of the company's digitalization process, a new kind of decentralized self-sovereign digital identity (SSI) is generated for the newly founded company based on the distributed ledger technology. This new digital identity enables, for example, the company to digitally assign representation rights for its stakeholders. In addition to that, the digital identity and the data related to it is fully owned and controlled by the company.\t\t \n \nAt the beginning of the study, a review of key technologies was made, and key concepts, blockchain, and distributed ledger technology were defined since there are no established definitions for these technologies. In the literature review previous DLT applications are introduced since this was the first time DLT was applied in the founding process of an LLC. Methodology and data chapters form the following chapters four and five. The digitalized founding process of a limited liability company using DLT and self-sovereign identity is illustrated empirically in chapter six. The results of the simulation-based investment analysis are presented in chapter seven, and the value propositions of Project Mercury for different stakeholders are discussed at the end of the chapter. \n \nThe benefits of this digitalized founding process for different stakeholders are abundant. Founders and company stakeholders are able to found the company digitally by using their bank services without any manual paper-work. Digitalized representation rights can be given to company stakeholders to represent the company on various occasions. Organizations involved in the DLT based business network can securely share and receive information related to the company and its stakeholders in real-time. Financial institutions that are part of the business network acquire cost savings, time benefits, and new business opportunities. The most important business opportunity is to digitalize and tokenize the shares of unlisted companies. In Finland alone, this could turn approximately 200 billion worth of wealth into a more liquid form. \n \nThe Monte Carlo simulation indicates that Project Mercury as an investment will be profitable on average, but the distribution between the different scenarios is wide, which indicates the riskiness of the investment and the difficulty of accurately predicting the future cash flows associated with this investment. Investments in this technology were seen more as a research and development activity. It is essential to stay updated within the field, in order to remain competitive in the future.
Economic and Technological Systems Analysis
Advanced Research in Systems and Signal Processing
This article explores four critical groups of systematic risk embedded in smart contract employment using the analytic hierarchy process (AHP). The four principal risk analysis groups include: 1) transparency in the light of corporate governance 2) IT security 3) contract management automation and 4) legality. The AHP assists both decision-makers and stakeholders alike in the evaluation process essential for identifying potential technological constraints posed within a permissioned blockchain environment using peer-to-peer format in the absence of digital currency. Based upon critical assessment, the AHP methodology enables pairwise comparisons among different features and consequently increases the knowledge regarding these attributes in light of the software’s risk assessment.
The block chain technology is changing rapidly. The block chain guarantees the integrity of the book through a specific consensus of the participants. In the past, the block chain technology had a limited range of applications. However, the use of block chain technology is gradually expanding as smart contracts that can formulate general business logic are mentioned. Already studied the components of smart contracts in other studies and proposed the possibility of extending them on the basis of ontology. And research on securing traceability of smart contract based on ontology has been carried out. However, research on various transactions constituting smart contracts is lacking. In this paper, the constituent elements of smart contract are analyzed and expressed by ontology. And the process of negotiating the components is represented by each transaction. Finally, we construct the component represented by the ontology as XML by including the state information in the transaction. In this way, the smart contract is represented in a formal language that contains state information. It also laid the foundation for a smart contract that can be reused and verified.
The comparative characteristic of consensus algorithms in distributed ledgers based on different technologies such as blockchain and directed acyclic graph is given in the article. Advantages and disadvantages of GHOST, Tangle and Hashgraph consensus algorithms are given, as well as recommendations of optimal variant selection.
Abstract The article studies the architectures of the modern systems of decentralized data storage and processing, applicability of the blockchain technology in these systems, existing security threats in comparison with the decentralized systems, and methods of security assurance allowing avoidance of these threats.
Blockchain technologies (BC) are immutable distributed systems of digital ledgers (i.e., without central repository) and, as rule, without central authority. Currently, there is a lot of excitement around the use of BC technology, although the technology itself, on the one hand, is still not quite clear to many ones, and on the other (and this is the main thing) is not new. Superficial understanding of the BC as a phenomenon with «magical properties» leads to numerous predictions about the possibility of revolutionary transformations based on its application to entire sectors of the economy and, above all, in the credit and financial sphere. In this regard, this article presents a systematized analysis, the history of the BC emergence, leading from the international standards ISO 7498-2 of 1989 and ITU-T X.800 of 1991, as well as a brief informal definition of BC and considered are the basic principles and components of this technology, including cryptographic one-way functions (hashes), transactions, addresses and their retrieval, «digital wallets», ledgers, blocks, blockchain in operations. Representation of the BC as a sequence of blocks bounded base on known mechanisms of the data integrity with using asymmetric cryptography allows us to conclude that only its evolutionary development is possible, although at a rapid pace in real time. This is a characteristic feature of establishing modern stage of and all other IT types. In conclusion, attention is drawn to the need for additional research to assess the security and reliability of the BC in terms of assessing the prospects for its use in specific business applications and critical information infrastructure systems.
Over the past 30 years financial markets have moved from a highly centralized to a globalized system that includes all the world's stock exchanges and other financial institutions. The global stock architecture has united the world market. Traditionally, trading in financial instruments took place between stock brokers and traders who made personal transactions on trading platforms. At that time, stock brokers were monopolists of the market, only their information, their recommendations were the only source of information for investors. This was before the dotcom revolution, when communication became simple and accessible to everyone. Trade has been transformed from physical to electronic form, today you can buy securities, currencies and any derivatives in any quantity, at any time and from anywhere in the world. Development of blockchain technologies is integrated into financial transactions. Financial intermediaries are forced to follow the market and actively introduce new technologies in their processes. This article will consider the possibility of using the technology of the distributed ledger by institutions of custodian infrastructure. Today, a number of Russian financial institutions are developing their own projects using blockchain.
The paper analyzes the advantages of using the blockchain technology in the supply chain management. It is determined that the blockchain will simplify the procedure of the government control over the supply chain and contribute to the implementation of the state policy aiming to reduce the level of counterfeit products and improve the quality of goods entering the retail network, which will have a direct impact on the socio-economic development of the regions. The subject of research is the organizational and technological mechanism of the interaction between business entities in the process of introduction and application of the blockchain technology for supply chain management. The purpose of the paper was to find out how to use the blockchain in logistics in the most effective way. The paper presents the summary of works of Russian and foreign economists and identifies the main areas of existing and prospective blockchain studies, formulates the principles for the promotion of the blockchain technology in logistics and identifies factors that impede the active use of the blockchaining by Russian and foreign businessmen. The necessity of the DLT/blockchain legalization in economic activities and determining the responsibility for including incomplete and/or unreliable information in a distributed ledger is substantiated.
I. D. Buldin, Mikhail Gorodnichev, S. S. Makhrov, Elena Denisova
The article presents a study in the field of development of next generation industrial blockchain-based wireless sensor networks. These sensor networks allow you to transfer and store data in accordance with the concept of the blockchain, ensuring the immutability of data and the use of smart contracts. A model of blockchain capable of working in the networks of the Internet of things, part of which are wireless sensor networks, has been developed.
Economic and Technological Systems Analysis
Digital Transformation in Law
Digitalization and Economic Development in Agriculture
The paper covers the issues of development of a mechanism for ensuring reliable and secure interaction among participants in regional innovation systems based on the establishment of smart contracts in the blockchain. The technology allows to reduce the possibility of fraud by dishonest participants, as well as to exclude the need for a third party by transferring its functions to a smart contract. This mechanism is important for ensuring confidential and transparent relations between participants in innovative projects, as well as with all interested stakeholders in regional economic system.
Economic and Technological Systems Analysis
Digitalization and Economic Development in Agriculture
This paper describes the development of a road tax payment application using the Ethereum platform. The web solution was developed using the ReactJS platform. The smart contract was developed using Remix.
M. Dorofeyev, M. Ksov, Vadim V. Ponkratov, A. Masterov · 6 authors
M. Vasyunina6 The main aim of this article is to analyze the prerequisites for the development and the promotion of cryptocurrencies, covering the period from the emergence of the first forms of money to recent period. The paper focuses on findings of comparative analysis of consumer value of precious metals, cash and non-cash money and cryptocurrencies as different forms of money. The authors provide comprehensive descriptions and expert quantitative estimates for each of the listed forms of money, as well as determine the place of cryptocurrency in the modern financial system as a means of payment. The research presents a detailed analysis of the advantages and disadvantages of new technologies. The paper defines the status of cryptocurrencies in various countries of the world and names promising development trends. The authors determine the main obstacles hindering the circulation of cryptocurrencies in certain markets and assess the risks and prospects associated with the introduction and use of cryptocurrencies as a new form of money which aims at full/partial replacement of fiat money in the modern financial system. As a conclusion it is noted that weak integration into the financial system is the main obstacle to major distribution of cryptocurrencies as a means of payment.