Blockchain Papers

Garrick Hileman

No abstract is available for this record.

Esther Salmerón-Manzano, Francisco Manzano‐Agugliaro

The advent and development of digital technologies has had a significant impact on the establishment of contracts. Smart contracts are designed as computer code containing instructions for executing user agreements, offering a technologically secure solution with numerous advantages and applications. However, smart contracts are not without their problems when we try to fit them into the traditional system of contract law, and their presumed benefits can become shortcomings. Bibliometric studies can help to assess the current state of science in a specific subject and support decision making and research direction. Here, this bibliometric study is used to analyze global trend research in relation to this novel contractual methodology, the smart contract, which seems to have experienced exponential growth since 2014. Specially, this analysis was focused on the main countries involved and the institutions that lead this research worldwide. On the other hand, the indexations of these works are analyzed according to major scientific areas and the keywords of all the works, to detect the subjects to which they are grouped. Community detection has been used to establish the relationship between countries researching in this area, and six clusters have been identified, around which all the work related to this topic is grouped. This work shows the temporal evolution of research related to smart contracts, highlighting that there are two trends—e-commerce and smart power grids. From the perspective of driving sustainability, smart contracts could provide a contribution in the near future.

Olivier Desplebin, Gulliver Lux, Nicolas Petit

La technologie Blockchain se diffuse très récemment à de nombreux domaines, au-delà même des crypto monnaies. Ses caractéristiques et son mode de fonctionnement sont potentiellement porteurs d’innovations dans le champ de la comptabilité et de l’audit. Après une présentation de la technologie Blockchain et de son mode de fonctionnement, nous questionnons les potentielles transformations comptables et identifions les potentiels impacts sur les métiers d’auditeurs externes et de comptables d’entreprise liés à la diffusion de cette technologie.

Alpen Sheth, Hemang Subramanian

Purpose The purpose of this paper is to model blockchain-based smart contracts specifically for the insurance industry. The authors introduce the concept of smart contracts and further discuss the implementation of a decentralized insurance marketplace, namely Etherisc, using smart contracts on the Ethereum blockchain platform. Design/methodology/approach The authors employ three methods in this paper. The first one is a design illustration of a live application, namely, Etherisc. The second one is an economic model using demand–supply and equilibrium economics. The third one is an illustration using principal–agent modeling using constrained optimization. Findings The findings illustrate the following: in the design discussion, the authors demonstrate the architecture of a live Ethereum-based smart contract system. In the economic model, the authors illustrate how decentralized smart contract systems can increase social welfare by shifting demand and supply by reducing transactional costs. In the principal–agent model, the authors show how both the principal and agent are positively benefited by various mechanisms. Originality/value The paper is an original contribution and can be used as a reference model to study insurance or other similar marketplaces and the underlying economic transformations happening therein.

Mark Grabowski

Cryptocurrency is the latest step in the evolution of money. This chapter covers the pioneers, breakthroughs and developments that led to the birth and growth of cryptocurrency. Key topics include David Chaum, the godfather of cryptocurrency; Satoshi Nakamoto, the mysterious figure behind the world’s first cryptocurrency, Bitcoin, and inventor of blockchain technology; Vitalik Buterin, a young rising star who created Ethereum and was dubbed by Vice “the blockchain’s movement’s biggest celebrity”; Silk Road, the illegal online marketplace that first created demand for cryptocurrency; and the ups and downs of the volatile cryptocurrency market, including the parabolic gains of 2017 and the great recession of 2018. Understanding this context helps explain how cryptocurrency became so revolutionary, acclaimed and controversial. The chapter concludes discussing cryptocurrency’s hotly debated future. Naysayers such as Warren Buffett predict the market is a bubble that will end poorly, while enthusiasts point to Bitcoin’s previous crashes and multiple comebacks.

Ethem Ilbiz, Susanne Durst

This article aims to provide a conceptual framework for small and medium-sized enterprises (SMEs) to evaluate the appropriation of blockchain technology for their business needs and challenges. This conceptual framework aims to respond to the problem of increasing speculations surrounding the blockchain that is considered to be an absolute and innovative solution to many business-related problems. However, this argument might not be realistic for SMEs despite this assumption. The main argument of the article is that SMEs should be skeptical while evaluating the appropriation of this technology for their business needs and they should follow a tailored approach whilst adopting it. Otherwise, the likelihood is high that a short-term and unstructured knowledge management process to adopt blockchain will end up with a waste of resources. The present paper conceptualizes an appropriation framework within nine factors namely, reduction of costs, internalization, digital representation of assets, unalterable data recording, network size, transparent and synchronized ledger, scalability, fair trade, and financing. Given the field’s infancy state of development, the paper relies on a qualitative document analysis involving SME literature and extant literature and white papers of blockchain applications.

Gowri Ramachandran, Bhaskar Krishnamachari

The advent of Blockchain and Distributed Ledger Technologies enable IoT and smart city application developers to conceive new types of applications and solutions for identity management, trust, and data monetization. However, architecting blockchain-based IoT applications remain challenging due to the heterogeneous nature of blockchain platforms and lack of guidelines on how to interface existing components in the IoT ecosystem with the emerging Blockchain technology. This article explains the characteristics of blockchain and IoT technologies and presents a general reference architecture that can be used to develop many blockchain-based peer-to-peer IoT applications.

Han Luo, Moumita Das, Jun Wang, Jack C.P. Cheng

A construction contract facilitates payments through the supply chain by integrating people, activities, and events throughout the project period through obligations, permissions, and prohibitions in its terms and conditions. The management of payments is a manual process and is more difficult in the case of construction projects as different stakeholders at different levels of the project organizational structure are bound by different contracts. Moreover, payments are strongly affected by the lack of clarity in the definitions of the obligations, responsibilities, and liabilities of various stakeholders in construction contracts. This intensifies disputes and causes delays in construction payments leading to additional expenditure, cash flow problems, and lack of trust. Therefore, to address these problems, we propose a methodology to automate construction payments by formalizing them into smart contracts and executing on a decentralized blockchain based framework. We formalize the payment logic that binds the prohibitions and liabilities associated with financial commitments, such as interim payments on completion of tasks in a construction project, and convert it into a computer-executable code. A framework based on blockchain is used to host this smart contract and to automate actions such as the triggering of payments after achieving consensus among the relevant project stakeholders. This framework also address the conditions required for the security of information in construction projects, such as confidentiality and information integrity in a multi-party environment. The proposed framework is demonstrated through a case-based scenario. © 2019 International Association for Automation and Robotics in Construction I.A.A.R.C. All rights reserved.

Christian Masiak, Joern Block, Tobias Masiak, Matthias Neuenkirch · 5 authors

Abstract We apply a vector autoregression (VAR) model to investigate the market cycles of Initial Coin Offerings (ICOs) as well as their relationships with bitcoin and ether. Our sample covers 104 weekly observations between January 2017 and December 2018. Our results show that ICO market cycles exist and that shocks to the growth rates of ICO volumes are persistent. In addition, shocks in cryptocurrency returns have a substantial and positive effect on ICO volumes. In contrast, the volatility of cryptocurrency returns does not significantly affect ICO volumes. Our results are robust to using (i) the number of successfully completed ICO campaigns instead of ICO volumes and (ii) ICO data from a different data source. Our study has implications for financial practice, in particular for cryptocurrency investors and entrepreneurial firms conducting ICOs.

Hao Wang, Chaonian Guo, Shuhan Cheng

No abstract is available for this record.

Xiongfeng Pan, Xianyou Pan, Malin Song, Bowei Ai · 5 authors

No abstract is available for this record.

Dan Bousfield

Abstract In this article, I discuss the role of crypto‐coins (CCs) as an explicit response to the 2008 economic crisis. Drawing on networked social movement theory, I outline the tension between blockchain based currencies promoted as horizontal markets of technological innovation and the persistence of hierarchical authority within these networks. By examining the assumptions about authority and regulation that underpin the creation of CCs I argue that the cryptographic responses to the financial crisis understate the persistence of hierarchies in their claims to upset traditional monetary authority. As global networks, blockchain technology faces political challenges from regulators, hegemonic market actors and adherents devoted to particular CCs. Consequently, I draw parallels between CCs and networked social movements to argue that the emergence and proliferation of ‘altcoins’ presents a series of political challenges to the framing of CCs as disruptive technology. The innovative character of CCs relies on tacit and explicit assumptions about politics that social movement theory can help to explain. By examining the altcoins through the concepts of resource mobilization, framing and identity formation, I argue that the dynamics of offline social hierarchies persist and are magnified in the world of CCs.

Horst Treiblmaier

About a decade ago the fundamental operating principle of the Blockchain was introduced. It took several years before the technology gained widespread recognition in industry and academic communities outside of the computer science sphere. Since then many academic communities have taken up the topic, but so far no well-defined research agenda has emerged: research topics are scattered and rigorous approaches are scarce. More often than not, use cases implemented by industry apply a trial and error approach and there exists a dearth of theory-based academic papers on the topic following robust methodologies. Being a nascent research topic, case studies on Blockchain applications are a suitable approach to systematically transfer industry experience into research agendas which benefit both theory development and testing as well as design science research. In this paper I offer guidelines and suggestions on how to design and structure Blockchain case studies to create value for academia and the industry. More specifically, I describe Blockchain characteristics and challenges, present existing Blockchain case studies, and discuss various types of case study research and how they can be useful for industry and academic research. I conclude with a framework and a checklist for Blockchain case study research.

Naoko Nemoto, Naoyuki Yoshino

SMEs play a vital role in the Asian economy and comprise about 70% of the workforce and GDP in the region. To enhance productivity and ensure sustainable growth in Asia, it is vital to provide smooth financing to SMEs. Traditionally, commercial banks in Asia have regarded loans to SMEs as too risky relative to high transaction costs. However, new technologies including distributed ledger technology, cloud computing, and artificial intelligence are becoming a means of offering faster and more convenient and cost-effective financial services. The digital innovation could help SMEs to have easy access to finance in various routes. This book identifies and develops ideas on how to utilize new technologies to promote SME finance. It could encourage financial institutions and investors to develop new credit risk analysis tools, increase credit supply, and encourage sustainable growth for SME sectors. In addition, the book explores the ways policy makers and market participants could maximize the benefits while mitigating potential risks arising from the new digital era. The messages are important for the public and private sectors in Asia.

Afiya Ayman, Amna Aziz, Mohammad Amin Alipour, Áron Lászka

Blockchain based platforms are emerging as a transformative technology that can provide reliability, integrity, and auditability without trusted entities. One of the key features of these platforms is the trustworthy decentralized execution of general-purpose computation in the form of smart contracts, which are envisioned to have a wide range of applications from finance to the Internet of Things. As a result, a rapidly growing and active community of smart contract developers has emerged in recent years. A number of research efforts have investigated the technological challenges that smart contract developers face. However, very little is known about the community itself, about the developers, and about the issues that they discuss and care about. To address this gap, we study the online community of smart contract developers on Stack Overflow. We provide insight into the topics that they discuss, their technological and demographic background, and their awareness of security issues and tools. Our results show that the community of smart contract developers is very active and growing rapidly, in comparison with the general user population. However, a large fraction of smart contract related questions remain unanswered, which can pose a real threat to the viability of a sustainable community and may indicate gaps in community knowledge. Further, we observe very limited discussion of security related topics, which is concerning since smart contracts in practice are plagued by security issues.

Boon Seng Tan, Kin Yew Low

Abstract This paper examines the prediction that blockchain technology will transform accounting and the profession because transactions recorded on a blockchain can be aggregated into financial statements and confirmed as true and accurate. We argue that blockchain technology affects the database engine of the accounting information system (AIS) through digitisation of the current paper‐based validation process. In a blockchain‐based AIS, accountants will no longer be the central authority but will remain the preparer of financial reports required by regulations; they will continue to influence policies such as the choice and accreditation of validators and serve as validators of last resort. Audit evidence still needs to be gathered for rendering of an audit opinion in a blockchain‐based AIS. While digitisation of the validation process reduces the error rate and lowers the cost of vouching and tracing, and immutability of blockchain data reduces the incentive and opportunities for fraud, a blockchain‐based AIS alone does not guarantee that financial reports are true and fair. Lower error rates and reduced incentives for accounting fraud in a blockchain‐based AIS are expected to improve audit quality. This prediction will need to be empirically tested when blockchain‐based AIS become available. Using the three‐tier architecture of the AIS, this paper addresses the gap in the literature that misses how characteristics of blockchain technology can influence the implementation of a blockchain‐based AIS with related implications for the accounting profession.

Augustas Subačius, Rasa Subačienė

[full article and abstract in Lithuanian; abstract in English] The main feature of the twenty-first century could be named as permanent transformation that covers all areas. Payments and money are developing and changing especially fast. Technological evolution and development have led to the emergence of new transactional techniques on the Internet, mobile phones, and credit cards. Various systems of payment / money transfer have considerably expanded payment options and possibilities. And such conditions have created opportunities for the emergence of a cryptocurrency. The purpose of the study is to investigate the cryptocurrency, its concept, advantages and disadvantages. Analysis of the scientific literature, systematization, comparison, interpretation and generalization of information research methods were used for the study. Evaluation of the reasons for the emergence of cryptocurrency let to generalise, that the process was mostly influenced by technological progress and the aspiration to find faster, cheaper and more confidential settlement tools. Cryptocurrency may be defined as digital money or property in electronical form. This currency may be characterized by properties of decentralization, uncontrollability and higher risk management. The most important advantages of using a cryptocurrency may be: the speed of settlements; cheaper financial services; additional investment opportunities. Disadvantages - unpredictable, fluctuating value; possible fraud cases; possibility to use cryptocurrency for illegal activities.

Laura Gonzalez

Purpose The gradual implementation of blockchain technology in peer-to-peer (P2P) lending platforms facilitates safer, transparent and quick access to funds without having to deal with the more complex and costly processes of banks. Beyond that, the purpose of this paper is to examine trust-enhancing heuristics that show a need for blockchain to assist in monitoring and bad loan recovery. Design/methodology/approach This study examines 909 lending decisions by 303 finance students on a mock P2P site. Each participant was asked to make three lending decisions. The loan applications were identical with the exception of a female or male photo (vs an icon) and reports of having raised half the loan in either 2 or 11 days (vs 7). Findings Investors who have experienced financial trauma are more likely to herd and lend higher amounts to loan applicants that are highly trusted by other lenders. This effect is more pronounced for male investors lending to highly trusted female loan applicants. Practical implications Blockchain can compensate for behavioral biases and improve monitoring by helping track digital money transactions and assisting in bad loan recovery efforts. Originality/value This study is the first behavioral experiment to examine herding in P2P lending. The findings complement and corroborate those by Gonzalez and Komarova (2014, 2015) and emphasize the need for blockchain to assist beyond trusted records and safe transfers of funds.

Panagiotis Chatzigiannis, Foteini Baldimtsi, Igor Griva, Jiasun Li

Abstract Mining is a central operation of all proof-of-work (PoW)-based cryptocurrencies. The vast majority of miners today participate in “mining pools” instead of “solo mining” in order to lower risk and achieve a more steady income. However, this rise of participation in mining pools negatively affects the decentralization levels of most cryptocurrencies. In this work, we look into mining pools from the point of view of a miner: We present an analytical model and implement a computational tool that allows miners to optimally distribute their computational power over multiple pools and PoW cryptocurrencies (i.e. build a mining portfolio), taking into account their risk aversion levels. Our tool allows miners to maximize their risk-adjusted earnings by diversifying across multiple mining pools. Our underlying techniques are drawn from both the areas of financial economy and computer science since we use computer science-based approaches (i.e. optimization techniques) to experimentally prove how parties (and in particular miners) interact with cryptocurrencies in a way of increasing their Sharpe ratio. To showcase our model, we run an experiment in Bitcoin historical data and demonstrate that a miner diversifying over multiple pools, as instructed by our model/tool, receives a higher overall Sharpe ratio (i.e. average excess reward over its standard deviation/volatility).

Roei Davidson

Abstract This study considers cultural crowdfunding as a heterogeneous system that allows money and attention to flow from backers to founders of cultural projects in diverse cultural sectors and focuses on the nature of the standards governing it. It analyzes Kickstarter’s corporate blog since the platform’s launch and finds indications that social media practices are increasingly naturalized as integral to crowdfunding and that social media architectures are increasingly adopted by the crowdfunding platform. This, I argue, has a potential exclusionary effect. At the same time, the analysis finds evidence that Kickstarter is striving to develop an independent capacity to set aesthetic standards, which might moderate that effect and help constitute crowdfunding as an alternative decentralized arena for the funding of culture.

Sam Maxson, Stuart Davis, Rob Moulton

Purpose To analyse the final report of the UK Cryptoassets Taskforce published in October 2018 and discuss the UK’s policy and regulatory approach to crypto-assets and distributed ledger technology in financial services. Design/methodology/approach This article considers some of the key aspects of the final report of the UK Cryptoassets Taskforce and provides a summary of the next steps the UK authorities have committed to taking in relation to regulation of crypto-assets in the UK. Findings The approach to regulation of crypto-assets in the UK is evolving and the relevant UK authorities are continuing to improve their understanding of crypto-assets in order to assess the appropriate type and level of regulation that should apply to them. Whilst risks relating to consumer detriment and anti-money laundering have been identified as needing to be addressed as a matter of priority, the UK authorities appear to be taking a measured approach to regulation of crypto-assets. They also remain supportive of the adoption of distributed ledger technology in financial services, whilst noting some potential challenges to scalability. Originality/value This article contains valuable information about current policy direction and regulatory thinking in the UK in relation to crypto-assets, and analysis from leading FinTech lawyers.

Thomas A. Frick

No abstract is available for this record.

Luke Riley, Grammateia Kotsialou, Amrita Dhillon, Toktam Mahmoodi · 6 authors

This work demonstrates how a multi-company shareholder rights management system has been implemented using Distributed Ledger Technology (DLT). In this demo, we use a permissioned blockchain to store our corporate data, such as the list of all registered companies, each company's shareholders and how many shares everyone holds. It is assumed that the nodes of the blockchain are controlled by the main stakeholder agents but we show that users who do not run a node can still use multiple websites to access company information. On top of this, we show our system can be used to allow any shareholder to participate in elections for company matters. Lastly, we describe how we designed our system's architecture so that it could be implemented even on a public blockchain.

Arto Kovanen

The proliferation of peer-to-peer virtual alternatives to traditional banknotes has raised concerns among policymakers about the future of traditional means of making payments and how it might affect monetary policy implementation and its effectiveness. This study provides a brief overview of the existing research in this area. It compares positions taken in the literature by authors on some of the key policy issues relevant for central banks when thinking about the issuance of digitalized legal tenders. We examine the implications of government issued digital alternatives to traditional currencies for monetary policy effectiveness, payments and settlements, and financial market stability. We also discuss recent advances in financial technology to improve the making of payments and settlements, which might help contribute to financial inclusion. At the same time, new technologies represent challenges for regulatory authorities, for instance related to efforts to contain anti-money laundering and prevent financing of terrorism. A number of authors argue that government issued digital currency is necessary to address the flaws in private crypto currencies, and to improve monetary policy effectiveness. Central banks have begun to analyze possible features of digitalized legal tenders, to better understand the policy considerations involved and effects these could have for interest rate transmission and financial markets, but there is no clear consensus on key modalities associated with digitalized legal tenders. Moreover, many central banks do not regard privately issued virtual currencies as a serious threat to traditional currencies. Given the ongoing debate, it is difficult to make firm predictions about the impact of central bank issued digital currencies on monetary policy transmission and financial markets at this point.