Philipp Schuster, Erik Theissen, Marliese Uhrig‐Homburg
The blockchain technology was first implemented in 2009 as the basis of the cryptocurrency Bitcoin. The technology is said to be a disruptive technology that has the potential to significantly affect many areas of the economy. In this paper we provide a survey of the blockchain technology and its applications in finance. We focus on cryptocurrencies, smart contracts, initial coin offerings, the clearing and settlement of transactions in financial markets, and implications for the governance of exchange-listed firms.
Blockchain is drawing attention as rising technology with the advantages of security, transparency, and immutability by a decentralized network structure. However, blockchain technology is still an immature technology and lacks common standards. The researches on blockchain technology have been mainly focused on the financial sector but rarely applied to the supply chain in industry sectors. Especially, the blockchain technologies developed by technology entrepreneurs are still challenging to apply to an actual business due to a lack of understanding of the possibility of creating value. Therefore, it is necessary to provide technological entrepreneurs with an understanding of the business model and the feasibility of creating value with the new technology like blockchain. To address the issue, this study investigates how blockchain technology is effectively applicable and what value can be achieved from it. The purpose of this study is to analyze a livestock traceability system using blockchain technology and investigate its business model in terms of the value proposition, value delivery, and value creation. This study would provide insights into the business value creation of blockchain technology.
Abstract What is the impact of blockchain technology on electronic markets in the energy sector? In this interview with Electronic Markets, Dr. Tobias Paulun, chief strategy officer of the European Energy Exchange (EEX), explains where the leading European energy exchange recognizes potentials of blockchain technology compared to existing electronic platforms and which blockchain projects EEX is working on. In his view, the impact of blockchain technology depends on the respective market segment and on the availability of solutions for safeguarding guarantees of origin. He expects that established exchange systems and blockchain-based systems will coexist in this strongly regulated and specialized industry.
Rui Torres de Oliveira, Marta Indulska, Tatiana Zalan
In the past two decades, digital technologies have substantially changed the ways in which individuals and firms communicate and transfer knowledge, with wide-ranging implications for organisations and institutions. From an organisational perspective, the emergence of digital technologies has enhanced the materialisation of new business models (Foss and Saebi, 2017; Rachinger et al., 2019), the personalisation of products and services (Cenamor et al., 2017), the relation of trust between market agents and asymmetries of information (Urena et al., 2019), new products and services (Matt et al., 2015) and the pace of product life-cycles (Seetharaman et al., 2018), to name a few. This digital transformation has far-reaching implications for organisations but is particularly important to multinational enterprises (MNEs) as it allows them to reduce the liability of foreignness (Johanson and Vahlne, 2009), enhance knowledge creation and improve knowledge transfer and learning (Gaur et al., 2019), augment trust-building (Monaghan et al., 2020), build agile global value chains (GVCs) (Kano et al., 2020) and improve the speed of internationalisation (Oviatt and McDougall, 1994). All this results in a reduction of uncertainties and thus lowers the risk perception (Clarke and Liesch, 2017), which impels international commitment decisions. An important new technology with potential for significant and wide-ranging impacts is blockchain. With this technology it is now possible to, for example, transfer the ownership of physical assets, such as cars and real estate, stocks, bonds and money over the internet through digital contracts (Andreesen, 2014). The changes that blockchain technology brings about leave academics, businesses and governments grappling with the consequences. Academic research has focussed on the economics of blockchains (Evans, 2014; Davidson et al., 2016) and blockchain use cases, especially in the financial, information and communications technology, and public sectors (Bohme et al., 2015; Friedlmaier et al., 2017; Tapscott and Tapscott, 2016). Because blockchain has multiple barriers to widespread adoption (Iansiti and Lakhani, 2017), researchers have explored regulatory barriers to the adoption of cryptocurrencies and smart contracts (Caytas, 2017; Werbach and Cornell, 2017) as well as technical barriers, such as scalability, interoperability, performance and data privacy (Hileman and Rauchs, 2017; Yli-Huumo et al., 2016). Tapscott and Tapscott (2016) argue that blockchain constitutes an institutional innovation, the “cryptoeconomy” – an economic system not defined by geographic location, political structure or legal system, but which uses cryptographic techniques to incentivise appropriate behaviour of participants in place of using trusted third parties (Pilkington, 2016). From this perspective, blockchains are platforms for building economic coordination using distributed ledgers augmented with computational features, such as money (cryptocurrencies), programmable contracts (e.g. smart contracts) and organisations made of software (DAOs, or distributed autonomous organisations). Thus, blockchain technology is not only innovative but also is a building block for new forms of economic governance and socio-political order (Davidson et al., 2016). Despite the critical importance of digital technologies, such as blockchain and organisations’ digital transformations, the international business (IB) literature has been slow to unpack the implications for organisations’ internationalisation motivations and processes. Furthermore, and more recently, the emergence of fully digital organisations, such as digital platforms (Uber or Airbnb), social media (Facebook or Twitter), e-commerce (Taobao) or financial services (TransferWise), are still very much a black box to IB literature. With this special issue, we aimed to uncover a small part of the necessary embracement that the IB field needs to achieve to be prepared to perform their societal role of informing managers, entrepreneurs, officials and other agents of change. To do so, we look specifically at the implications of blockchain technology in the IB field. While IB literature is lagging behind in the study of blockchain, MNEs are – and have been for some time – actively exploring blockchain’s potential, particularly in the financial (Bohme et al., 2015), compliance (Anjum et al., 2017), healthcare (Mettler, 2016), data protection (Finck, 2018) and logistics (Hackius and Petersen, 2017) contexts. In China alone, by the end of March 2020, a total of 35 MNEs (including Microsoft, Oracle, Mastercard, Sony, Intel and Walmart) applied for 212 blockchain-related patents (Global Times, 2020). As explained elsewhere (Finextra, 2017), banking and finance now account for some 30% of blockchain use cases, and nearly 70% of central banks are experimenting with blockchain technology. Entrepreneurial start-ups and initial coin offerings – a form of crowd funding made possible because of blockchain (Kastelein, 2017) – have been the drivers behind an unprecedented surge of innovation, ranging from new, competing protocols (e.g. Tezos and EOS) to smart contracts on Ethereum, decentralised applications (e.g. Telegram), and new currencies with unique features (e.g. monero and zcash) (Vereckey, 2018). Thus, and more than ever, we need to push the blockchain agenda and investigate its implications for IB. In the following sub-sections, we outline the key implications of blockchain technology in the context of IB.
Jun 1, 2020·2020 17th International Conference on Electrical Engineering/Electronics, Computer, Telecommunications and Information Technology (ECTI-CON)
Today, the online review system cannot fully support the business since there are fraudulent activities inside. The companies that get low score reviews are induced to raise their score for the market competition capability by paying to the platform for deleting or editing the posted reviews. Moreover, the automatic filtration system of a platform removes some reviews without the awareness of the users. The low transparency platform causes low credibility toward the reviews. Blockchain technology provides exceptionally high transparency since every action can be traced publicly. However, there are some tradeoffs that need to be considered, such as cost and response time. This work tends to find the potential of using Blockchain technology in the online review system by testing four implementation approaches of the Ethereum Smart Contract. The result illustrates that using IPFS to store the data is a practical way of reducing transaction costs. Besides, preventing using Smart Contract states can significantly reduce costs too. The response time for using the Blockchain and IPFS system is slower than the centralized system. However, posting a review does not need a fast response. Thus, it is worthy of trading response time with transparency and cost. In the business view, the review posting with cost causes more difficulty to generate fake reviews. Moreover, there are other advantages over the centralized system, such as the reward system, bogus review voting, and global database. Thus, credibility improvement for a consumer online review system is a potential application of Blockchain technology.
The recent spread of COVID-19, stressed economies and government pumping money into the market has once again ignited the discussion on the need to have decentralised economies, the role of regulatory authorities and if bitcoin represents a true store of value. In this paper, we identify the need to alternate financial structure, discuss how blockchain and cryptocurrencies play a very important role in achieving it. Blockchain applications are heavily dependent on oracles for their interaction with outside world, we have discussed here the functioning of oracles and then finally presented a broad architecture that can be used to implement a majority of financial instruments on blockchain.
Electricity generation is decentralising quickly. Simultaneously, final energy use for residential customers electrifies in order to reduce carbon dioxide emissions. Together with ubiquitous digitalisation, this decentralisation and flexibility at the demand side paves the way towards local energy communities and – in its most distributed version – to peer-to-peer energy trading, where customers buy and sell electricity among each other. Although peer-to-peer energy trading is not yet legal everywhere, ‘citizen energy communities’ have been introduced as cornerstones of the energy transition by the European Commission in their ‘Clean Energy for All Europeans’ programme. This paper firstly discusses this digitalisation and decentralisation of the power infrastructure. These trends are supported by distributed information technologies, including peer-to-peer control paradigms. Distributed ledger technologies, such as blockchains, might be one such piece of the puzzle. The second part of the paper investigates whether blockchain technologies, and their associated smart contracts, offer advantages for larger-scale peer-to-peer energy-trading applications over a classic, centralised approach. Different blockchain implementations are investigated and qualitatively evaluated from a scalability, efficiency and trust perspective. The conclusion indicates that in the current state of the art, a trade-off between decentralised and more classical (hierarchically centralised) solutions suits larger-scale peer-to-peer energy-trading applications best.
Smart contracts, which were once theorised, are now somewhat realised, thanks to recent developments in distributed ledger technology. Yet, these self-executing agreements written in code are not a panacea to businesses’ and individuals’ contracting woes. It is argued that smart contracts worsen existing power asymmetries between contracting parties, thus, fallbacks must be provided for.
Future 6G scenarios in 2030 envision society that will be data-driven, enabled by near-instant and unlimited wireless connectivity to intelligence. This calls for a multidisciplinary approach and a re-imagining of how we create, deliver and consume network resources, data and services. This development will change the traditional business models and ecosystem roles, as well as open the market for new stakeholders like micro-operators, edge cloud operators and resource brokers. This paper discusses unprecedented challenges of enabling and stimulating multiple stakeholders to have a more active participation in the future 6G ecosystem and gives a brief outline of key implications of blockchain technologies for related business model transformations. The research extends the existing archetypes of closed and supply focused mobile broadband business models and proposes the novel open ecosystem-focused scenario in which value configuration is leveraging distributed ledger technologies. This expands the architecture from centralized innovation and transaction platforms towards decentralization without a focal resource-orchestrating entity. Results showed that blockchain enabled 6G business can be built on novel business opportunities, value generation and competitive advantage that have positive strategic consequences on scalability, replicability and sustainability.
On top of distributed computing, Bitcoin was implemented as cryptocurrency. Bitcoin originally came with blockchain technology to protect coins from misuse. Blockchain provided a distributed ledger of cryptocurrency transactions in an immutable form to protect data from malicious attacks. Thus blockchain complemented the security aspect of Bitcoin. In the later stages, blockchain evolved as a distributed ledger technology that is used in different domains like healthcare. There are different issues associated with different domains. For instance, in the insurance domain, there are issues related to false claims and the claims that are manipulated by competent authority illegally. This problem addressed in this paper by implementing an insurance application with blockchain technology. The consensus is used to ensure that the claim process of the insurance company will be carried out with integrity, accountability, and non-repudiation. Especially, every transaction is cryptographically signed and stored as a collection of blocks in the blockchain. This approach safeguards claim transactions and prevent any fraudulent attempts. A prototype application is built using the IBM blockchain platform and its underlying components. Experimental results showed that the proposed implementation prevents fraud claims in the insurance industry.
Blockchain Technology Applications and Security
FinTech, Crowdfunding, Digital Finance
Advanced Steganography and Watermarking Techniques
A companion paper defined the notion of digital social contracts, presented a design for a social-contracts programming language, and demonstrated its potential utility via example social contracts. The envisioned setup consists of people with genuine identifiers, which are unique and singular cryptographic key pairs, that operate software agents thus identified on their mobile device. The abstract model of digital social contracts consists of a transition system specifying concurrent, non-deterministic asynchronous agents that operate on a shared ledger by performing digital speech acts, which are cryptographically-signed sequentially-indexed digital actions. Here, we address the distributed-ledger implementation of digital social contracts in the presence of faulty agents: we present a design of a fault-tolerant distributed-ledger transition system and show that it implements the abstract shared-ledger model of digital social contracts, and discuss its resilience to faulty agents. The result is a novel ledger architecture that is distributed with a blockchain-per-person (as opposed to centralized with one blockchain for all), partially-ordered (as opposed to totally-ordered), locally-replicated (as opposed to globally-replicated), asynchronous (as opposed to globally-synchronized), peer-to-peer with each agent being both an actor and a validator (as opposed to having dedicated miners, validators, and clients), environmentally-friendly (as opposed to the environmentally-harmful Proof-of-Work), self-sufficient (as opposed to the energy-hogging Proof-of-Work or capital-hogging Proof-of-Stake) and egalitarian (as opposed to the plutocratic Proof-of-Work and Proof-of-Stake).
A companion paper defined the notion of digital social contracts, presented a design for a social-contracts programming language, and demonstrated its potential utility via example social contracts. The envisioned setup consists of people with genuine identifiers, which are unique and singular cryptographic key pairs, that operate software agents thus identified on their mobile device. The abstract model of digital social contracts consists of a transition system specifying concurrent, non-deterministic asynchronous agents that operate on a shared ledger by performing digital speech acts, which are cryptographically-signed sequentially-indexed digital actions. Here, we address the distributed-ledger implementation of digital social contracts in the presence of faulty agents: we present a design of a fault-tolerant distributed-ledger transition system and show that it implements the abstract shared-ledger model of digital social contracts, and discuss its resilience to faulty agents. The result is a novel ledger architecture that is distributed with a blockchain-per-person (as opposed to centralized with one blockchain for all), partially-ordered (as opposed to totally-ordered), locally-replicated (as opposed to globally-replicated), asynchronous (as opposed to globally-synchronized), peer-to-peer with each agent being both an actor and a validator (as opposed to having dedicated miners, validators, and clients), environmentally-friendly (as opposed to the environmentally-harmful Proof-of-Work), self-sufficient (as opposed to the energy-hogging Proof-of-Work or capital-hogging Proof-of-Stake) and egalitarian (as opposed to the plutocratic Proof-of-Work and Proof-of-Stake).
Islamic finance ecosystem could leverage from blockchain technology in order to improve business processes and streamline operations. The characteristics and conditions of blockchain are in alignment with the principles of Islamic Law as it creates the possibility of coordinating institutions' transactional activities within a strong mechanism of trust and transparency. Blockchain technology allows businesses to build decentralized models and opens new horizons for them to conduct transactions and make agreements. And one of the technologies that is proposing an alternative to the traditional model is smart contract. Smart contracts are closer to Islamic contracts with an undiluted focus on avoidance of any kind of uncertainty regarding settlement of the contracts. One would witness a sharp reduction in the element of gharar with contracting between unknown parties that meet on the internet, when Islamic contracts take the form of self-executing digital or smart contracts, with "electronically coded" terms of executions. The contractual terms will execute only if the pre-configured conditions are met. This will automate the entire contractual process for Islamic institutions. The Islamic contracts will now be easy to verify, immutable and secure, mitigating gharar in the form of operational risks arising from settlement, as well counterparty risks. The adoption of Smart contracts by the Islamic finance industry is the most natural thing to do, not just to gain a strong foothold in this technological revolution, but also to be able to fully comply with the Shari'ah in a transparent way. The Shari'ah laws can form the conditions of a smart contract. Honesty, transparency and trustworthiness are qualities that should make a financial transaction in the Islamic finance industry, and smart contracts are inherently all of these. In the era of faster globalization, risk management is of essential importance for banks. As credit risk being the most significant risk in Islamic Finance Institutions' (IFIs), we stressed our attention in this paper on it and as per our opinion we believe that the new ledger technology will add value for IFIs in terms of reducing it. Blockchain and particular Smart contracts would help reducing credit losses; provide more transparent and accurate credit ratings for capital allocation, which could lead to minimization of the required capital allocation for credit loss, as well better and cheaper administration and facilitation of collaterals. All the above will improve IFI's profitability and shareholders value. Not only the Islamic banks will abide fully with Shari'ah rules, but they could gain more international customers seen as the more reliable choice. The purpose of the study consists of analyzing the role of blockchain and smart contracts as a tool for risk management. We used AlInma bank as a case study to show the impact of using new FINTECH in Islamic finance. The main findings of the paper show that using blockchain and smart contracts as a tool of risk management reduces costs for IFIs considerably. The paper is organized as follows: section one will present the introduction and literature review. Section two describes Blockchain technology and Smart contracts and finally we focus on how risk management could benefit from these technologies in Islamic financing. The rest of the sections will present and discuss the use of blockchain in risk management.
The intersection of finance and technology, known as fintech, has resulted in the dramatic growth of innovations and has changed the entire financial landscape. While fintech has a critical role to play in democratizing credit access to the unbanked and thin-file consumers around the globe, those consumers who are currently well served also turn to fintech for faster services and greater transparency. Fintech, particularly the blockchain, has the potential to be disruptive to financial systems and intermediation. Our aim in this paper is to provide a comprehensive fintech literature survey with relevant research studies and policy discussion around the various aspects of fintech. The topics include marketplace and peer-to-peer lending; credit scoring; alternative data; distributed ledger technologies; blockchain; smart contracts; cryptocurrencies and initial coin offerings; central bank digital currency; robo-advising; quantitative investment and trading strategies; cybersecurity; identity theft; cloud computing; use of big data, artificial intelligence. and machine learning; identity and fraud detection; anti-money laundering; Know Your Customers; natural language processing; regtech; insuretech; sandboxes; and fintech regulations.
Traditionally, the contractual transactions between untrusted parties were generally carried out in a centralized form, requiring a trusted third party to act as a witness, and make them legally binding, enforceable and trustful. However, the process of involving a third party is associated with high expenses and delays. The Blockchain technology has been developed to address these issues, by allowing parties to enter into contractual agreements without involvement of third parties. The contract allows conducting of trusted agreements and transactions between unknown parties without the need of having an enforcement mechanism, trusted third party or legal system. In the construction sector, the smart contracts would help eliminate the slow, expensive and brittle transactions, associated with integrity and transparency issues due to potential records manipulation of the traditional contracts. This study focused on designing a blockchain smart contract adoption model and understanding stakeholders' needs for using blockchain-based smart contracts in construction industry. The study proposed the extended Technology Acceptance Model, which illustrates the constructs around the adoption and use of the blockchain smart contracts in Thailand construction sector. The model suggests that factor such as perceived financial costs, facilitating conditions, trust and readiness has influence on the construct of perceived usefulness (PU) and perceived ease of use (PEOU), which affects the behavioral intention to use the blockchain smart contracts in construction industry of Thailand.
The current open cryptocurrency markets pose varied challenges on a prospective investor (PI), such as pseudoanonymity of cryptocurrency transactions, selection criteria for investments in crowdfunding schemes (CF), modus-operandi for these schemes, non-transparency of money generation and distribution among peers, and untraceable scams. PIs are susceptible to monetary losses in the open market due to the aforementioned issues. The fraudsters could be both internal (operator of the scheme) and external (financial institutions (FI), such as banks, money-lenders, and insurance companies). The centrality of trust among stakeholders like PI, CF, and FI is a prime concern. Motivated from these facts, this paper proposes a decentralized framework, KaRuNa, A Blockchain-based Sentiment analysis framework for Fraud Cryptocurrency schemes. KaRuNa operates on public blockchain three phases of trust modeling among stakeholders. In the first phase, transactions are performed on the blockchain that offers trust, auditability, and transparency among stakeholders. In the second phase, sentiment analysis (SA) of cryptocurrencies is proposed based on a novel algorithm of hash addresses to generate classification scores (CS). Parameters like social trends, rise/fall in cryptocurrency price, measured standard deviation, peak and low are selected to fed to proposed novel Long-short term memory (LSTM) classifier to generate recommendations based on CS. An accuracy of 98.99% is achieved using LSTM over generated CS to evaluate risks in the investment. Results demonstrate that KaRuNa achieves more scalability compared to conventional approaches.
The formation of IT companies and even of entire new technological ecosystems depends heavily on external financing. Consequently, the IS community has intensely studied various financing sources such as venture capital, initial public offerings or debt. Blockchain technology has led to the emergence of a system of decentralized finance (DeFi) which includes decentralized versions of equity and debt financing. In particular, equity-like fundraisings referred to as initial coin offerings (ICO) have received serious traction. In this paper, we investigate the role of user-generated content (UGC) for ICO success. Specifically, we leverage signaling theory to analyze how the activity on blogs and discussion forums is related to the amount of capital raised and the valuation in ICOs. We analyze data of 216 ICOs and provide first results indicating the importance of discussion forum activity for ICO success. Furthermore, we find that blogs seem less relevant than in traditional finance.
Distributed Ledger Technology (DLT) and Artificial Intelligence (AI) represent two potential disruptive technologies at the top of their hype cycle. Subsequently, questions arise what impact these technologies can have on future business models, especially for service-driven industries like the financial sector. While various assumptions in practice indicate a complementary usage of both DLT and AI to generate new value creation potentials, current literature and research remains scarce. To understand possible synergies for financial services, a segregated perspective on DLT or AI alone is not enough. Therefore, the main objective of this paper is to gain first insights how specific elements of these technologies can be mutually implemented and combined for a potential technological convergence on basis of an end-to-end lending reference process. Building upon the existing body of knowledge and based on Design Science Research, an instantiation of the re-designed process has been created in three iterative cycles. The process prototype demonstrates that DLT and AI are complementary technologies and mostly do not compete against each other with a focus on subsequent synergies. Finally, a comparative overview of the impact on the respective sub-processes has been elaborated to conduct principles for the design and development of future distributed-ledger-based AI applications.
Ghiath Shabsigh, Tanai Khiaonarong, Harry Leinonen
Major transformations in payment and settlements have occurred in generations. The first generation was paper-based. Delivery times for payment instruments took several days domestically and weeks internationally. The second generation involved computerization with batch processing. Links between payment systems were made through manual or file-based interfaces. The change-over period between technologies was long and still some paper-based instruments like checks and cash remain in use. The third generation, which has been emerging, involves electronic and mobile payment schemes that enable integrated, immediate, and end-to-end payment and settlement transfers. For example, real-time gross settlement systems have been available in almost all countries. DLT has been viewed as a potential platform for the next generation of payment systems, enhancing the integration and the reconciliation of settlement accounts and their ledgers. So far, experiments with DLT experimentations point to the potential for financial infrastructures to move towards real-time settlement, flatter structures, continuous operations, and global reach. Testing in large-value payments and securities settlement systems have partly demonstrated the technical feasibility of DLT for this new environment. The projects examined analyzed issues associated with operational capacity, resiliency, liquidity savings, settlement finality, and privacy. DLT-based solutions can also facilitate delivery versus payment of securities, payment versus payment of foreign exchange transactions, and efficient cross-border payments.
This article analyses the main legal requirements in the California Consumer Protection Act (CCPA), general data protection regulation (GDPR) and the intersections between privacy laws, genomic data and smart contracts (such as fungible and non-fungible tokens (NFTs). The CCPA and GDPR laws impose several restrictions on the storing, accessing, processing and transferring of personal data. This has generated some challenges for lawyers, data processors and business enterprises engaged in blockchain offerings, especially as they pertain to high-risk data sets such as genomic data. The technical features of NFT, distributed storage and wallets to trace and govern genomic (DNA) data sets will allow data donors to establish digital ownership and control in line with privacy laws using ‘programmable privacy smart contracts’. To be legally compliant, the design of blockchain value propositions should include privacy-by-design capabilities in the smart contract coding language itself. This article describes three domains (privacy laws, genomics and NFTs) and begins to explore how data engineers can address the challenges of coding privacy laws, the legal requirements into smart contracts. This current approach focuses on NFTs and genomic data requirements which include the selection of genetic metadata borrowing from developing ERC specifications and their programming logic. Programmable privacy is a unique way to write and design computer code, which can automatically check the legal compliance of the smart contract in a trust-less and decentralised way. We exemplify the approach by describing the conceptual value proposition of Genobank.io, a privacy-preserving genomic data platform.
Sherine Devi, Bitra Sainadh, T Hemanth, K Hariharan
To ensure transparency, Blockchain technology is being implemented in the development of software applications along all the verticals like Banking and Finance, Healthcare, Governance, Education, Agriculture etc. Blockchain is an evolving and a very promising technology, as it is used to eliminate fraud, mitigate risk, makes falsification very hard, brings out transparency and authenticity for various uses. A Blockchain is also termed as Distributed Ledger Technology (DLT). The paper surveys various strategies and algorithms used in Blockchain based applications that were published in renowned journals. The survey also focuses on identifying the merits and demerits of Blockchain technology in almost every possible aspect and provides room for future development.