Cryptocurrency exchanges, i.e. online platforms where customers exchange their cryptocurrencies for other cryptocurrencies or fiat currencies, are routinely targeted by hackers, which often result in a massive drain of cryptocurrencies. The heists can be large enough to bring down the exchanges to their knees. The customers of an exchange who have entrusted it with cryptocurrencies would have a contractual right to claim their return. If the exchange is wound up, however, personal claims (such as a contractual claim) brought in bankruptcy proceedings would not yield to them a full recovery. It is, therefore, practically important to examine whether the cryptocurrencies entrusted to an exchange are shielded from the bankruptcy of the exchange provider, so that the customers can obtain a full recovery. Under most, if not all, legal systems, the answer to this question would be unclear because cryptocurrencies are a novel asset and because the legal relationships between an exchange provider and its customers have not been sufficiently scrutinised. This article will seek to improve legal clarity by presenting an analytical framework, identifying issues, and pointing to possible solutions.
It will begin by examining the law of Japan, possibly the only country in the world where the matter has been litigated. Following a hacking attack, Mt Gox, the world’s biggest operator of a Bitcoin exchange at that time, became insolvent. After the opening of bankruptcy proceedings, one of its former customers filed a suit against the bankruptcy trustee in Japan, seeking a full recovery of the Bitcoins he had entrusted to the exchange. Rather than relying on a personal claim, the plaintiff asserted ownership over what he saw as “his Bitcoins”. His claim was, however, dismissed by the Tokyo District Court for reasons to be examined in this article. More recently, other customers filed a suit in Japan by trying another legal avenue to obtain a full recovery. They are arguing that their Bitcoins had been held by the exchange on trust for them.
After presenting an analysis under Japanese law, this article will explore its relevance to other legal systems. Since Japanese law belongs to the family of civil law systems, the analysis concerning the ownership of cryptocurrencies would have direct relevance to other civil law systems in the context of rei vindicatio (vindication of property). It would also inform the debate whether cryptocurrencies are “property” in terms of the tort of conversion in common law systems. The analysis concerning whether an exchange holds cryptocurrencies on trust for its customers would be useful to all the common law systems of which the law of trusts forms an integral part as well as any civil law systems which, like Japanese law, have introduced the concept of trusts.
Cryptocurrencies – a new, but quickly developing concept within the sphere of finance. Opinions regarding it still differ, not only on a personal level, but also when it comes to governments. Overall the legal regulation regarding cryptocurrencies in the world is still in the formation stage. Currently the legal norms that do exist, are primarily directed towards the minimization of existing risks, especially in the field of money laundering. Though there is already no reason to doubt, that during the coming years the regulation will become stricter. In some countries cryptocurrencies are outright forbidden. For example, in China, in February 2018 additions to the legislation were issues, that broadened the cryptocurrencies ban. In other countries cryptocurrencies shall be strictly regulated. For example, in Estonia, a member of EU, cryptocurrencies are fully legal. Estonia can be reviewed as a country that independently developed its own regulation in this field. Though there is no guarantee that the legislators will keep up with the quickly developing technologies. One way or another cryptocurrencies exist and are not going anywhere. The legislation that regulates them shall be developed further and they shall become a important part of the modern financial system. The level of their influence is hard to predict, things are changing too quickly, but their existence is a fact. It is necessary to remember, that that cryptocurrencies are not a magical solution or means of profit. It is a financial instrument, new, in many ways unique, with its own special drawbacks and benefits. It is important to know and understand them, also to keep an eye on the developing technologies.
Nowadays people rely on many things in order to do daily activity. As time goes by, global economy has changed and has had significant growth. The form of money has also changed, from only being available in the physical form, such as coins and banknotes, now we have the digital form of money, otherwise known as virtual currency. This paper discusses about the legal status of Bitcoin as virtual currency in Indonesia according to Law Number 7 of 2011 regarding Currency Law. The author examines the problem by using normative legal research methods with descriptive approach. The data was collected from secondary and primary data and is used as supportive research data. The collected data is analysed using qualitative method. The result of this research is the legal status of Bitcoin as virtual currency in Indonesia according to Law Number 7 of 2011 regarding Currency Law has not been regulated yet. Therefore, the government of Indonesia needs to make a specific regulation to regulate Bitcoin in Indonesia.
Kripto paralar günümüzde sıklıkla karşımıza çıkan para teriminden biridir. Ülkelerarasında ticaret sınırının kalkması ile birlikte ulusal paralara alternatif para birimi olan kripto para, mal ve hizmet ticaretinde kullanılabildiği gibi, aksi durumlarda da kullanımı yıllar geçtikçe artmaktadır. Kripto kelime anlamıyla cyripto ve currency kelimelerinin bir araya getirilmesi ile oluşmuş, ana teması şifre olan kelimedir. Şifreleme yöntemi ile alışveriş ve alım-satımlar gerçekleştirilmektedir. Bu şifreleme sisteminin güvenilirliği konusunda her ne kadar tartışma olsa da, kullanım alanı gün geçtikçe yaygınlaşma göstermektedir. Çalışmada kripto paranın en yaygın kullanım şekli olan bitcoin incelenmiş, ortaya çıkışı ve sistemi hakkında bilgi verilmiştir. Türkiye ve diğer ülkelerdeki kullanımı her ne kadar sınırlayıcı olsa da muhatap bir kurum olmadığı sürece kullanım alanının genişleyeceği aşikârdır.
Carlos Molina-Jiménez, Ioannis Sfyrakis, Ellis Solaiman, Irene C. L. Ng · 7 authors
Decentralised (on-blockchain) and centralised (off–blockchain) platforms are available for the implementation of smart contracts. However, none of the two alternatives can individually provide the services and quality of services (QoS) imposed on smart contracts involved in a large class of applications. The reason is that blockchain platforms suffer from scalability, performance, transaction costs and other limitations. Likewise, off–blockchain platforms are afflicted by drawbacks emerging from their dependence on single trusted third parties. We argue that in several applications, hybrid platforms composed from the integration of on and off–blockchain platforms are more adequate. Developers that informatively choose between the three alternatives are likely to implement smart contracts that deliver the expected QoS. Hybrid architectures are largely unexplored. To help cover the gap and as a proof of concept, in this paper we discuss the implementation of smart contracts on hybrid architectures. We show how a smart contract can be split and executed partially on an off–blockchain contract compliance checker and partially on the rinkeby ethereum network. To test the solution, we expose it to sequences of contractual operations generated mechanically by a contract validator tool.
We propose Parsec, a web-scale State channel for the Internet of Value to exterminate the consensus bottleneck in Blockchain by leveraging a network of state channels which enable to robustly transfer value off-chain. It acts as an infrastructure layer developed on top of Ethereum Blockchain, as a network protocol which allows coherent routing and interlocking channel transfers for trade-off between parties. A web-scale solution for state channels is implemented to enable a layer of value transfer to the internet. Existing network protocol on State Channels include Raiden for Ethereum and Lightning Network for Bitcoin. However, we intend to leverage existing web-scale technologies used by large Internet companies such as Uber, LinkedIn or Netflix. We use Apache Kafka to scale the global payment operation to trillions of operations per day enabling near-instant, low-fee, scalable, and privacy-sustainable payments. Our architecture follows Event Sourcing pattern which solves current issues of payment solutions such as scaling, transfer, interoperability, low-fees, micropayments and to name a few. To the best of knowledge, our proposed model achieve better performance than state-of-the-art lightning network on the Ethereum based (fork) cryptocoins.
David Mödinger, Henning Kopp, Frank Kargl, Franz J. Hauck
For preserving privacy, blockchains can be equipped with dedicated mechanisms to anonymize participants. However, these mechanism often take only the abstraction layer of blockchains into account whereas observations of the underlying network traffic can reveal the originator of a transaction request. Previous solutions either provide topological privacy that can be broken by attackers controlling a large number of nodes, or offer strong and cryptographic privacy but are inefficient up to practical unusability. Further, there is no flexible way to trade privacy against efficiency to adjust to practical needs. We propose a novel approach that combines existing mechanisms to have quantifiable and adjustable cryptographic privacy which is further improved by augmented statistical measures that prevent frequent attacks with lower resources. This approach achieves flexibility for privacy and efficency requirements of different blockchain use cases.
Recent developments in the field of electronic documents have given signs that the use of paper will completely eliminated after a period of time in all business processes. As a result of the developments in information systems, the use of electronic documents has become widespread and even become mandatory in some areas. Foreign trade financing is one of the areas where electronic documents are useful. But use of electronic documents has not yet become widespread in this area. The continuation of paper-based processes shows that this area needs radical and comprehensive changes such as infrastructure, legal compliance, innovative products and investments. Foreign trade requires the creation of common platforms that bring together all parties involved in the transaction so that paper documents can be completely removed. In this case, legal integration from one country to another is required in many areas from electronic signature to foreign trade. The emergence of blockchain technology, which has the ability to provide document integrity without the need for a third party to act as a trusted third party, has created a new hope for this integration. This study approached to the electronic documents in foreign trade and finance in the perspective of blockchain technology
Xueping Liang, Sachin Shetty, Deepak K. Tosh, Daniel Bowden · 6 authors
Enabled by mobile and wearable technology, personal health data delivers immense and increasing value for healthcare, benefiting both care providers and medical research. The secure and convenient sharing of personal health data is crucial to the improvement of the interaction and collaboration of the healthcare industry. Faced with the potential privacy issues and vulnerabilities existing in current personal health data storage and sharing systems, as well as the blockchain integration concerns summarized in this paper, an innovative user-centric health data sharing solution by utilizing a decentralized but permissioned blockchain is proposed to protect privacy and enhance access management, with the help of channel formation scheme supported by the blockchain. By developing a web application for Personal Health Data Management (PHDM) systems, the individuals are capable of synchronizing sensor data from wearable devices with online account and controlling data access from any third parties. A mobile application is deployed to collect health data from personal wearable devices, manual input, and medical devices, and synchronize data to the cloud for data sharing with healthcare providers and health insurance companies. To preserve the integrity of health data, a proof of integrity and validation, is made available to each record, which is permanently retrievable from cloud database and is anchored to the blockchain network. Moreover, for scalable and performance considerations, a tree-based data processing and batching method is adopted to deal with large data sets of personal health data collected and uploaded by the mobile platform. To enable a trusted data access record, the Intel Software Extensions technology is utilized to ensure the accountability for data access and token based access control scheme is enhanced with the trusted hardware. Analysis shows that the proposed approach provides user privacy and accountability with acceptable overhead and scalability.
Considers two significant (2014–17) reforms in Papua New Guinea and their potential combined significance in strengthening Public Financial Management for Service Delivery. Public Financial Management (PFM)/Budget execution, including an Integrated Financial Information System (IFMS), involves reforms driven principally by the Department of Finance (DoF)); and Public Sector and Institutional (PSI) reform, including decentralization and local service delivery, involves reforms driven by the Department of Provincial and Local Government Affairs (DPLGA). Papua New Guinea’s budget execution reforms emerged from a combination of political and executive leadership, benchmarked against international standards via a robust Public Expenditure and Financial Accountability (PEFA) review process. While current decentralization remains at an early stage, provincial government, subject to irregular, inadequate resourcing and limited political and executive accountability, has undergone reforms but failed to remedy the difficult three-tier governance arrangements. The new approach to decentralization and service delivery has constituted District Development Authorities (DDAs) as the primary vehicle through which to pursue local development goals.
Banking malware is malicious software that aims to steal money from victims via manipulated bank transfers in online banking. This paper describes how the profits of banking malware are generated and subsequently laundered, with a particular focus on the use of bitcoins and other digital payment methods. Computers are infected with banking malware via phishing emails, in which people are persuaded in various ways to click on links or open attachments, or via exploit kits, programs that try to find weak spots in the security of computer systems. After infection, bank transfers of the online banking accounts of victims are manipulated via fake website screens (web injects). Behind the screens the amounts and beneficiaries of transactions are modified, emptying the victims’ bank accounts. In the next step, the banking malware profits are laundered. In this paper we describe two models that are used in particular (next to more traditional money laundering methods). The first model involves the use of money mules and a quick cash-out. The second model focuses on direct spending via (a) direct purchases of products via online shopping, (b) direct purchases of bitcoins via Bitcoin exchanges or (c) direct purchases of luxury goods. Bitcoins can be further laundered via so-called mixing services. All in all, these methods allow criminals to launder profits in relative anonymity and prevent seizure of the illegal profits.
Kripto para birimleri teknolojinin gelişmesiyle birlikte son yıllarda önem kazanmış ve daha çok kullanılır hale gelmiştir. Merkezi bir otoriteye bağlı olmayan ve kriptografik sistemler ile güvenliği sağlanan bu para birimlerinden en bilineni Bitcoin’dir. Bu çalışmada, başlıca kripto para birimleri ve işleyiş süreçleri incelenmiştir. Buna ek olarak Bitcoin’in döviz, hisse senedi emtia piyasaları ve faiz ile olan ilişkisi ele alınmıştır. Çalışmada kullanılan veri setinin frekansı aylık olup Mart-2012 ile Mayıs-2018 dönemini kapsamaktadır. Zaman serisi yöntemlerinden Johansen Eşbütünleşme ve Granger Nedensellik analizleri uygulanmıştır. Çalışmanın sonuçlarına göre, Bitcoin fiyatlarının artan bir trende ve yüksek bir volatiliteye sahip olduğu görülmektedir. Faiz değişkeni ile Bitcoin fiyatları arasında diğer analizler ve Granger nedensellik testi sonuçlarına göre istatistiksel olarak anlamlı bir ilişki vardır.
Interest in green energy has increased worldwide. Therefore, smart grid projects to form a more efficient and eco-friendly intelligent grid by combining information technology (IT) technology with the existing grid are actively being conducted. In Korea, a national-level smart grid project road map has been confirmed, and an action plan has been prepared. Despite such actions, there may appear various threat scenarios in the application of the IT to the grid as a reverse function. Security technology is a measure to respond to such threats effectively. The security technology of a smart grid is an important factor that is directly related to the success or failure of the smart grid project. A smart grid is a new type of next-generation grid born of the fusion with IT. If the smart grid, the backbone of the power supply, is damaged by a cyberattack, it may cause huge damage, such as a nationwide power outage. In fact, there is an increasing cyberattack threat, and the cyber security threat to the smart grid is not insignificant. Furthermore, the legal system related to information protection is also important in order to support it systematically. In this paper, the necessity of the smart grid is examined, and the industry’s initiative toward the smart grid security threat and threat response is examined. In this paper, we also suggest a security plan of applying Rainbowchain, the Blockchain technology, to the smart grid and energy exchange. We propose achieving superior performance and security functions by using Rainbowchain, which contains seven authentication techniques among existing Blockchain technologies, and propose the ecosystem and architecture necessary for its application.
Aishath Muneeza, Nur Aishah Arshad, Asma’ Tajul Arifin
The emergence of innovative digital financial technologies, namely blockchain and crowdfunding, indicates new ways to reach the poor and economically vulnerable groups. This paper contributes to the emerging literature on financial technology by presenting the case of crowdfunding in financial inclusion. The rationale behind this inquiry is to demonstrate the relevance of crowdfunding to financial inclusion, and how might blockchain technology fuel the development of crowdfunding. This paper also constitutes one of the first attempts to analyse crowdfunding in Malaysia and Shariah-compliant crowdfunding. In this paper, a desk research is conducted where journal articles, books, magazines, newspapers, industry reports published on the subject matter are reviewed critically. To analyse the development of crowdfunding in Malaysia, 6 crowdfunding platforms are examined. The outcome of this research suggests that crowdfunding is a viable means to promote financial inclusion, and blockchain technology could help mitigate the current issues faced by platform operators.
Lars Brünjes, Aggelos Kiayias, Ηλίας Κουτσουπιάς, Aikaterini-Panagiota Stouka
We introduce and study reward sharing schemes (RSS) that promote the fair formation of {\em stake pools}\ in collaborative projects that involve a large number of stakeholders such as the maintenance of a proof-of-stake (PoS) blockchain. Our mechanisms are parameterized by a target value for the desired number of pools. We show that by properly incentivizing participants, the desired number of stake pools is a Nash equilibrium arising from rational play. Our equilibria also exhibit an efficiency / security tradeoff via a parameter that calibrates between including pools with the smallest cost and providing protection against Sybil attacks, the setting where a single stakeholder creates a large number of pools in the hopes to dominate the collaborative project. We then describe how RSS can be deployed in the PoS setting, mitigating a number of potential deployment attacks and protocol deviations that include censoring transactions, performing Sybil attacks with the objective to control the majority of stake, lying about the actual cost and others. Finally, we experimentally demonstrate fast convergence to equilibria in dynamic environments where players react to each other's strategic moves over an indefinite period of interactive play. We also show how simple reward sharing schemes that are seemingly more "fair", perhaps counterintuitively, converge to centralized equilibria.
In the era of the Internet of Things (IoT), smart connected devices have the ability to generate data that could be of interest to the public. This paves the way for an emerging market for monetized data exchanges, where IoT device owners can sell access to live data generated by their connected devices to interested users. Implementing a trusted, cost‐efficient, automatic monetization solution of IoT data can be a challenging problem and usually involves intermediaries and centralised governance and management. Blockchain and smart contracts introduce a secure and trusted platform to carry out transactions in a highly trusted, secure, decentralised manner. In this study, they present a blockchain‐solution and implementation using Ethereum smart contracts for monetizing IoT data with automated payment involving no intermediary. The authors discuss key aspects related to architectural design, entity relations, interactions among participants, logic flow, implementation and testing of the overall system functionality.
This study assesses the roles of Bitcoin as a hedge, a safe haven and/or a diversifier against extreme oil price movements, in comparison to the corresponding roles of gold. We use a quantile-on-quantile regression approach to capture the dependence structure between the considered market returns under different Bitcoin market conditions, while considering nuances of oil price movements, compared to gold. Our findings show that both Bitcoin and gold would serve the roles of a hedge, a safe haven and a diversifier for oil price movements. However, this property seems to be sensitive to the Bitcoin's and gold's different (bear, normal or bull) market conditions and to whether the oil price is in a downside, normal or upside regime. By controlling for new and relevant U.S. and global uncertainty indicators, we confirm that both Bitcoin and gold, but not oil, are assets where investors may park their cash during times of political and economic turmoil. The conditional Value-at-Risk (CoVaR) approach to risk management is then conducted, providing robust evidence of the usefulness of each of the Bitcoin and gold in expanded oil portfolios, in terms of diversification opportunities and downside risk reductions.
Networked flying platforms can be used to provide cellular coverage and capacity. Given that 5G and beyond networks are expected to be always available and highly reliable, resilience and reliability of these networks must be investigated. This paper introduces the specific features of airborne networks that influence their resilience. We then discuss how machine learning and blockchain technologies can enhance the resilience of networked flying platforms.
Ali Dorri, Fengji Luo, Salil S. Kanhere, Raja Jurdak · 5 authors
Blockchain is increasingly being used to provide a distributed, secure, trusted, and private framework for energy trading in smart grids. However, existing solutions suffer from lack of privacy, processing and packet overheads, and reliance on Trusted Third Parties (TTP). To address these challenges, we propose a Secure Private Blockchain-based (SPB) framework. SPB enables the energy producers and consumers to directly negotiate the energy price. To reduce the associated packet overhead, we propose a routing method which routes packets based on the destination Public Key (PK). SPB eliminates the need for TTP by introducing atomic meta-transactions. The two transactions that form a meta-transaction are visible to the blockchain participants only after both of them are generated. Thus, if one of the participants does not commit to its tasks in a pre-defined time, then the energy trade expires and the corresponding transaction is treated as invalid. The smart meter of the consumer confirms receipt of energy by generating an Energy Receipt Confirmation (ERC). To verify that the ERC is generated by a genuine smart meter, SPB supports authentication of anonymous smart meters which in turn enhances the privacy of the meter owner. Qualitative security analysis shows the resilience of SPB against a range of attacks.