Abstract The rise of digital currencies challenges practices of monetary sovereignty and impacts the international monetary order. Drawing on recent IPE debates about the public‐private nature of money, the critique of the “impossible trinity” and “territorial currencies,” this article explores the competition between China and the United States over and within the international monetary system. The two largest economies display strikingly divergent regulatory approaches to cryptocurrencies and Central Bank Digital Currency (CBDC). China completely banned cryptocurrencies but became a front‐runner in developing a CBDC. It aims to expand the RMB's global role without giving up its monetary control. U.S. administrations have instead reluctantly considered regulating cryptocurrencies. Discussions on a potential digital U.S. dollar (USD) only began in 2020. Washington aims at preserving the existing cross‐border financial mechanisms and offshore infrastructure for USD‐denominated transactions and credit creation. It focuses on financial crime and maintaining the innovation dynamic of its private sector to preserve its “exorbitant privilege.” Emerging financial infrastructures and standards for digital currencies are the new technological arena for U.S.–China monetary competition.
Gibran Gómez, Pedro Moreno-Sánchez, Juan Antonio Caballero-Hernández
Cybercriminals often leverage Bitcoin for their illicit activities. In this work, we propose back-and-forth exploration, a novel automated Bitcoin transaction tracing technique to identify cybercrime financial relationships. Given seed addresses belonging to a cybercrime campaign, it outputs a transaction graph, and identifies paths corresponding to relationships between the campaign under study and external services and other cybercrime campaigns. Back-and-forth exploration provides two key contributions. First, it explores both forward and backwards, instead of only forward as done by prior work, enabling the discovery of relationships that cannot be found by only exploring forward (e.g., deposits from clients of a mixer). Second, it prevents graph explosion by combining a tagging database with a machine learning classifier for identifying addresses belonging to exchanges. We evaluate back-and-forth exploration on 30 malware families. We build oracles for 4 families using Bitcoin for C&C and use them to demonstrate that back-and-forth exploration identifies 13 C&C signaling addresses missed by prior work, 8 of which are fundamentally missed by forward-only explorations. Our approach uncovers a wealth of services used by the malware including 44 exchanges, 11 gambling sites, 5 payment service providers, 4 underground markets, 4 mining pools, and 2 mixers. In 4 families, the relations include new attribution points missed by forward-only explorations. It also identifies relationships between the malware families and other cybercrime campaigns, highlighting how some malware operators participate in a variety of cybercriminal activities.
El Salvador has adopted Bitcoin as legal tender. This article provides a critical evaluation of the country’s Bitcoin initiative and its economic and social impacts.
Peter Fratrič, Giovanni Sileno, S. Klous, Tom van Engers
Fraudulent actions of a trader or a group of traders can cause substantial disturbance to the market, both directly influencing the price of an asset or indirectly by misinforming other market participants. Such behavior can be a source of systemic risk and increasing distrust for the market participants, consequences that call for viable countermeasures. Building on the foundations provided by the extant literature, this study aims to design an agent-based market model capable of reproducing the behavior of the Bitcoin market during the time of an alleged Bitcoin price manipulation that occurred between 2017 and early 2018. The model includes the mechanisms of a limit order book market and several agents associated with different trading strategies, including a fraudulent agent, initialized from empirical data and who performs market manipulation. The model is validated with respect to the Bitcoin price as well as the amount of Bitcoins obtained by the fraudulent agent and the traded volume. Simulation results provide a satisfactory fit to historical data. Several price dips and volume anomalies are explained by the actions of the fraudulent trader, completing the known body of evidence extracted from blockchain activity. The model suggests that the presence of the fraudulent agent was essential to obtain Bitcoin price development in the given time period; without this agent, it would have been very unlikely that the price had reached the heights as it did in late 2017. The insights gained from the model, especially the connection between liquidity and manipulation efficiency, unfold a discussion on how to prevent illicit behavior.
Decentralized Finance (DeFi) has presented itself as the next building block in a market-based crypto economy. While the jury is still out on its (potential) benefits for society at large, it has become apparent that DeFi is qualitatively different from earlier blockchain applications because of its governance model based on Decentralized Autonomous Organizations (DAOs). This decentralized governance model has enabled the evolution from peer-to-peer to peer-to-network applications, allowing more sophisticated financial transactions to take place on permissionless blockchains. This paper analyzes the political economy of decentralized governance, the means by which the law attempts to govern DeFi, and alternative roles that the law could occupy in the governance of DeFi. It is found that as applications grow more complex, the need for politicized decision-making increases, but that enforcing regulatory perimeters becomes even more challenging. It is therefore suggested that the law could occupy a more facilitative, incentive-based role in the governance of DeFi as opposed to an enforcement-oriented role. By way of illustration, a state-organized DAO serving as forum to reach rough consensus on network-to-network matters is proposed. It is concluded that rethinking the rule and role of law in DeFi serves purpose as it provides state actors with additional tools and policy options in a transnational environment hostile to formal state intervention.
The financial property of Ethereum makes smart contract attacks frequently bring about tremendous economic loss. Method for effective detection of vulnerabilities in contracts imperative. Existing efforts for contract security analysis heavily rely on rigid rules defined by experts, which are labor-intensive and non-scalable. There is still a lack of effort that considers combining expert-defined security patterns with deep learning. This paper proposes EtherGIS, a vulnerability detection framework that utilizes graph neural networks (GNN) and expert knowledge to extract the graph feature from smart contract control flow graphs (CFG). To gain multi-dimensional contract information and reinforce the attention of vulnerability-related graph features, sensitive EVM instruction corpora are constructed by analyzing EVM underlying logic and diverse vulnerability triggering mechanisms. The characteristic of nodes and edges in a CFG is initially confirmed according to the corpora, generating the corresponding attribute graph. GNN is adopted to aggregate the whole graph's attribute and structure information, bridging the semantic gap between low-level graph features and high-level contract features. The feature representation of the graph is finally input into the graph classification model for vulnerability detection. Furthermore, automated machine learning (AutoML) is adopted to automate the entire deep learning process. Data for this research was collected from Ethereum to build up a dataset of six vulnerabilities for evaluation. Experimental results demonstrate that EtherGIS can productively detect vulnerabilities in Ethereum smart contracts in terms of accuracy, precision, recall, and F1-score. All aspects outperform the existing work.
George Kappos, Haaroon Yousaf, Rainer Stütz, S. Rollet · 6 authors
One of the defining features of Bitcoin and the thousands of cryptocurrencies that have been derived from it is a globally visible transaction ledger. While Bitcoin uses pseudonyms as a way to hide the identity of its participants, a long line of research has demonstrated that Bitcoin is not anonymous. This has been perhaps best exemplified by the development of clustering heuristics, which have in turn given rise to the ability to track the flow of bitcoins as they are sent from one entity to another. In this paper, we design a new heuristic that is designed to track a certain type of flow, called a peel chain, that represents many transactions performed by the same entity; in doing this, we implicitly cluster these transactions and their associated pseudonyms together. We then use this heuristic to both validate and expand the results of existing clustering heuristics. We also develop a machine learning-based validation method and, using a ground-truth dataset, evaluate all our approaches and compare them with the state of the art. Ultimately, our goal is to not only enable more powerful tracking techniques but also call attention to the limits of anonymity in these systems.
The disruptive impact of blockchain technologies can be felt across numerous industries as it threatens to disrupt existing business models and economic structures. To better understand this impact, academic researchers regularly apply well-established theories and methods. The vast majority of these approaches are based on multivariate methods that rely on average behavior and treat extreme cases as outliers. However, as recent history has shown, current developments in blockchain and cryptocurrencies are frequently characterized by aberrant behavior and unexpected events that shape individuals’ perceptions, market behavior, and public policymaking. In this paper, I apply various scenario tools to identify such extreme scenarios and illustrate their underlying structure as bundles of interdependent factors. Using the case of Bitcoin, I illustrate that the identification of extreme positive and negative scenarios is complex and heavily depends on underlying economic assumptions. I present three scenarios in which Bitcoin is characterized as a financial savior, as a severe threat to economic stability, or as a substitute to overcome several shortcomings of the existing financial system. The research questions that can be derived from these scenarios bridge behavioral and design science research and provide a fertile ground for impactful future research.
The stakeholders of complex industrial-financial ecosystems and supply chains are interconnected in many ways, at many organisational and technical levels. Even in order to deliver a product or exchange various materials, various Information and Operational Technology solutions are required, etching the way towards the Industrial Internet of Things. Moreover, integrating the necessary legal and financial co-operations in the big picture is similarly important, where blockchains and Smart Contracts aim to provide the means. Nevertheless, new solutions should thrive not to disrupt current economic landscapes, but slowly transform and enhance instead. This article discusses solutions for supply chain trade use cases with over-the-counter derivatives, and argues the same in a world where Central Bank Digital Currency (CBDC) governs financial markets. It also provisions Arrowhead framework and Smart Contract based solutions for the issues there, such as matching bids, handling counterparty risks or physical settlements.
Decentralized finance (DeFi) in Ethereum is a financial ecosystem built on the blockchain that has locked over 200 billion USD until April 2022. All transaction information is transparent and open when transacting through the DeFi protocol, which has led to a series of attacks. Several studies have attempted to optimize it from both economic and technical perspectives. However, few works analyze the vulnerabilities and optimizations of the entire DeFi system. In this paper, we first systematically analyze vulnerabilities related to DeFi in Ethereum at several levels, then we investigate real-world attacks. Finally, we summarize the achievements of DeFi optimization and provide some future directions.
Boutaina Jebari, Khalil Ibrahimi, Mohammed Jouhari, Mounir Ghogho
Selfish mining is an attack on blockchain networks, where a minority mining pool deviates from the original mining protocol and keeps some blocks private. The goal of the attacking pool is to waste the computational power of the other miners and increase their revenue. In this paper, we use a new approach to analyze the profitability of such attacks. Using game theory, we model the interactions between pools to derive the utility of mining strategies. We simulate the game for a Bitcoin blockchain and analyze the profitability of an attack, in terms of the monetary award instead of the relative revenue. We express the utility to include the cost of a strategy and revisit existing selfish mining strategies to discuss possible outcomes of the game. Depending on the game parameterization, we highlight scenarios where the system could be compromised. To the best of our knowledge, this is the first work that models the selfish mining attack as a stochastic game.
As the popularity of Bitcoin among finance communities continues, research on the relationship between Bitcoin and conventional commodities is becoming increasingly important. However, to date the literature has not yet found clear evidence of the dynamics of informational linkages between Bitcoin and the crude oil markets. This paper considers both static and time-varying information transmission of volatility, skewness and kurtosis, between two popular Bitcoin markets, Bitstamp and ItBit, and two major crude oil markets, WTI and Brent crude oil. A two-state regime-switching model is employed to estimate higher order moments and Legendre polynomials are applied to specify the time variations of spillovers. In addition, the latent impacts of the recent US–China trade war on spillovers are also explored. We conclude that crude oil is an information transmitter while Bitcoin is an information receiver in terms of the static and time-varying between-market transmission of three types of risk. The effect is affected by the occurrence of the trade war such that the information content of Bitcoin is enhanced once it begins. Moreover, Bitcoin is a diversifier for oil risk and this effect becomes more pronounced in the post-trade war period.
Currency dominance has been the symbol of national power, influence, and dominance. After the Second World War, the Dollar has maintained its unrivaled influence as a currency reserve by central banks and as a global transaction currency. Recently, cryptocurrency and the distributed ledger system were seen as a challenge. However, due to the challenge it poses to the sovereignty of nation-states, central banks have resorted to developing the central bank digital currencies (CBDCs). China is the only major economy to have tested a CBDC, a symbol of its increasing economic power and innovation. Contrary to Mearsheimer’s theory of offensive realism, developments show that China can use its offensive economic capabilities to build a regional order through the belt and road initiative (BRI). With the recent release of its Central Bank Electronic Payment and the Blockchain-based Network System, China can seek to regionalize the use of its renminbi (RMB) and rival the power of the Dollar.
In recent years, a new form of cyber-extortion called ransomware is baffling the world with the speculation of connection to terrorist activities. Since cybercriminals usually demand their ransom using Bitcoin, Bitcoin has also become a part of this speculation. Unfortunately, however, all of the stories are based on anecdotal evidence. Therefore, the current study explores the dynamic properties of ransomware attacks, Bitcoin prices, and terrorist activities by connecting two opportunity-based theory frameworks: The Routine Activity Theory (RAT) and Cyber-Routine Activity Theory (Cyber-RAT). The findings of the study indicated unidirectional ties between the prevalence of ransomware and Bitcoin as well as ties between the prevalence of ransomware and terrorist activities. Several policies and prevention strategies from the overall findings of interrelated relations among three events are also presented.
This essay examines Bitcoin enthusiasts’ abstract and material arguments about the viability of bitcoin in El Salvador through historical and political-economic frameworks. In June 2021, with legislators in tow, President Nayib Bukele declared that the adoption of Bitcoin would encourage flows of capital into El Salvador’s crisis-addled economy—flows that would lift all boats. In a sense, riding on Bitcoin’s success or failure in El Salvador is a test case for Bit-coin’s claim to be the future of money and for other such “technical fixes” of capitalism’s shortfalls in the developing world. By comparing Bukele’s move with El Salvador’s push to dollarize in 2001, this essay traces a comparable strategy of El Salvador’s economic and political elites where the swap of currencies becomes a vehicle for massive accumulation at the top, while popular classes suffer. Consequently, this essay argues that Bukele’s “technical fix” on his nation’s economy is a mere pretext. By leveraging the assets of the broader populace, he pursues the class interests of El Salvador’s new oligarchy.
Torgin Mackinga, Tejaswi Nadahalli, Roger Wattenhofer
Blockchain "on-chain" oracles are critical to the functioning of many Decentralized Finance (DeFi) protocols. We analyze these oracles for manipulation resistance. Specifically, we analyze the cost of manipulating on-chain time-weighted average price (TWAP) oracles that use the arithmetic mean. It has been assumed that manipulating a TWAP oracle with the well-known multi-block attack is expensive and scales linearly with the length of the TWAP. We question this assumption with two novel results. First, we describe a single-block attack that works under the same setting as the multi-block attack but costs less to execute. Second, we describe a multi-block MEV (MMEV) style attack where the attacker colludes with a miner/proposer who can mine/propose two blocks in a row. This MMEV style attack makes oracle manipulation orders of magnitude cheaper than previously known attacks. In the proof-of-work setting, MMEV can be done by selfish mining even with very low shares of hashpower.
O artigo tem como elemento central o estudo dos reflexos da adoção de smart contracts nas relações privadas. O trabalho concentra sua abordagem na possibilidade de esvaziamento das formas de jurisdição tradicionais, pela característica da auto executoriedade das cláusulas contratuais, como consequência da utilização da tecnologia blockchain. A tecnologia blockchain vem se tornando um dos maiores protagonistas na transformação das tecnologias digitais e isso se deve a sua peculiar característica de gestão descentralizada das informações, além de sua confiabilidade. A análise parte da identificação dos elementos intrínsecos dos smart contracts, demonstrando, de maneira dedutiva, suas especificidades e seus pontos de intersecção com a teoria contratual tradicional. Com a ampliação da utilização dos smart contracts para regular cada vez mais situações da vida privada, estabeleceu-se a necessidade de incorporar um elemento exógeno ao sistema, que é a figura do oráculo, cuja função é alimentar com dados externos a blockchain. Tem-se, portanto, um elo entre o mundo fenomênico e o mundo puramente virtual, através da tecnologia blockchain. Desse modo, a partir da concepção do oráculo, abre-se a possibilidade de ligação entre a jurisdição e os smart contracts.
S. K. UmaMaheswaran, Dipesh Uike, K. K. Ramachandran, A Tharangini · 6 authors
The universal blockchain consensus mechanism was then examined, consists of a review of its features, highlighting benefits and drawbacks. Following that, we offered a taxonomic taxonomy as well as a detailed evaluation of previous approaches and approaches that employ machine learning (ML) approaches to address common security issues and abnormal behaviours in Bitcoin systems and cryptocurrencies. Furthermore, researchers discussed several unanswered research questions and potential research areas, as well as some closing thoughts. This paper evaluates the present degree of awareness on the many types of cryptocurrency crime that persist today or may occur in the future, as well as full explanations of the scams found. It is unknown how useful cryptocurrencies will be in the long term as terrorist techniques and cryptocurrencies evolve. Unfortunately, some recent advancements in cryptocurrency will make it easier for the most skilled terrorist groups to utilise them to attack Developed democracies, and cryptocurrencies will be incredibly beneficial for people who currently participate in overseas fundraising and illegal operations. Machine learning mechanism is developed for detecting raising threats in cryptocurrency. The suggested approach comprises of a detection technique that is integrated into many Bitcoin entities. Prior to creating the initial analysers, the suggested method employs a capture mechanism to extract an antigen symbol from the activity. To collect data, survey or primary quantitative data is conducted.
In India, as per records, it has been observed that with each succeeding year, criminal activities are surging. Crime is an act executed against the law of constitution and is a menace to our society. Thus, crime and criminals need to be monitored conveniently. Unlike USA or other countries, in India, criminal records are not public, which means neither private organizations nor common people can access criminal records for employee verification. A centralized system, which gives access to criminal data, would be a feasible solution to this problem. This study aims to develop a Flutter-based blockchain-enabled permissionless system that would help in the remote access of criminal records. The system would be developed using Ethereum, which offers vivid features such as truffle for enabling Ethereum virtual environment, Ganache for personal testing of smart contracts, InterPlanetary file system for encrypted storage of data and easy tracking of files, and MetaMask, which acts as a digital wallet.
Abstract In last decade the oil and gas industry gradually adopted new innovative technologies and began shifting towards intelligence and digitalization. Emerging Technologies such as the autonomous car, Blockchain and the Internet of Things are playing a more vital role in improving efficiency and effectiveness in many businesses around the globe. Presently blockchain technology applications are more focused around financial and data security sectors. There exists a tremendous opportunity to leverage blockchain technology and explore possible applications in oil and gas. This paper focuses on blockchain technology and answers three basic questions (why, what and how) related to application of blockchain technology and use of distributed ledgers to leverage safety management systems. The novel methodology mentioned in this paper could be used extensively to develop consistent company best practices thereby improving health and safety performance in oil and gas and other related sectors. In addition to the increased efficiency, the Safety Management System section provides a company with an effective tool for designing, developing and implementing a safety management program that helps to be in compliance with regulation. Additionally, it will provide a basis for safe process operation, production and facility equipment reliabality.
Harikumar Pallathadka, Korakod Tongkachok, Prashant Subhash Arbune, Samrat Ray
Rapid expansion of the world's population has been facilitated by technology, which has made knowledge and business readily available to its users at the touch of a button. New technologies like the internet have disrupted the traditional methods of communication and information exchange for ideas, money, or commerce. As a result, the internet is seen as a disruptive technology that has shook the world to its core. Using e-commerce platforms, we can order meals, groceries, and other necessities without leaving our homes or offices. Aside from using our debit or credit cards, we also use alternative wallets like PayTM. Additionally, a huge section of the globe transacts money using virtual currencies, often known as cryptocurrencies. As a safety measure, these tokens and coins have been encrypted for usage on the internet. They're a means of exchange that relies on encryption to verify the legitimacy of new currencies. These virtual currencies are kept in E-Wallets and sent safely and anonymously via the internet on a peer-to-peer basis within seconds. This article performs an analytical study of various cryptocurrencies. It also discusses opportunities and challenges in the vibrant field of cryptocurrencies.