Blockchain Papers

Julia Limitone

Dan Morehead, the CEO of first bitcoin investment firm Pantero, tells FOX Business bitcoin is the “final piece of the Internet protocol puzzle.”

Md. Jakariya, Asmaul Housna, Md. Nazrul Islam, Gias U. Ahsan · 5 authors

No abstract is available for this record.

Tatiana Zalan

Purpose The purpose of this paper is to alert international business (IB) and international entrepreneurship (IE) researchers of a new phenomenon and novel research opportunities arising as a result of digital innovations brought about by the new, decentralized internet popularly known as “blockchain”. The paper contains a general overview of the blockchain technology and maps connections with the IB/IE literature, focusing on explaining accelerated internationalization of firms that are born global on blockchain. Design/methodology/approach The paper is a viewpoint based on the author’s ongoing research on blockchain and fintech and reflections on the born global literature. The paper has benefited from the author’s insights through her involvement in the global blockchain community as an investor and advisor. Findings The author argues for establishing a theoretical link between the born global literature and the literature on the economics of information goods and platform economics to explain the pace of international growth in the context of blockchain start-ups. Research limitations/implications The author urges IB/IE researchers to pay attention to research opportunities in the blockchain area, especially those related to explaining rapid internationalization of digital start-ups and a new organizational form for organizing cross-border activities known as decentralized autonomous organization. Originality/value Three factors are shown to contribute to a rapid internationalization of blockchain start-ups: network effects, solving the chicken-and-egg problem and building an ecosystem around the evolving technology.

P. M. Krafft, Nicolás Della Penna, Alex Sandy Pentland

As cryptocurrencies gain popularity and credibility, marketplaces for cryptocurrencies are growing in importance. Understanding the dynamics of these markets can help to assess how viable the cryptocurrnency ecosystem is and how design choices affect market behavior. One existential threat to cryptocurrencies is dramatic fluctuations in traders' willingness to buy or sell. Using a novel experimental methodology, we conducted an online experiment to study how susceptible traders in these markets are to peer influence from trading behavior. We created bots that executed over one hundred thousand trades costing less than a penny each in 217 cryptocurrencies over the course of six months. We find that individual "buy" actions led to short-term increases in subsequent buy-side activity hundreds of times the size of our interventions. From a design perspective, we note that the design choices of the exchange we study may have promoted this and other peer influence effects, which highlights the potential social and economic impact of HCI in the design of digital institutions.

Mega Satish, Indranil Sengupta, K. Pratap

This paper presents the implementation of an interactive Zero Knowledge Password authentication scheme for commercial Web sites. In this scheme, a legitimate prover (client) can exchange a secret code (password) with a remote skeptic (server), in order to reveal his/her identification. Based on the validity of the secret code the skeptic then allows the prover to login to the site and access the web services. This paper introduces a protocol that integrates the concepts of Discrete Logarithm Problem (DLP) and Zero-Knowledge Proofs (ZKP). The protocol consists of three entities, namely, the prover, the skeptic, and the facilitator who interact with one another to generate the secret code. When tested, the time to carry out various operations related to this protocol was reasonably small (under 4 seconds). Our scheme is resistant to man-in-the-middle attack and discourages replaying previously intercepted secret codes. We also propose two modifications to our basic scheme to make it resistant against the attack on Integrity and Denial of Service attack (DOS).

Mohammad Arzaghi, Andrew Balthrop

Rents from natural resources can alter the relationship between central and local governments by providing a new source of government financing. We develop a model to explore the relationship between fiscal decentralization and resource abundance. Our model indicates that natural resource rents can detach central government expenditures from the tax base so that the central government can spend more to persuade a fractious periphery to remain under central government control. Thus, other things being equal, higher natural resource rents can result in less decentralized government expenditures. We empirically explore the relationship between fiscal decentralization and natural resource rents using a panel of 60 countries over the past 40 years. Empirical results support our economic model: A 1% increase in natural resource rents as a fraction of gross domestic product results in government expenditures that are 0.53% less decentralized.

Asma Salman, Muthanna G. Abdul Razzaq

A peer-to-peer system of blockchain, originally started for a cryptocurrency Bitcoin, has caused major disruptions in the stock market. It has affected many businesses if not all, but its significance in the financial world is magnanimous. Historical data (daily rates) for the past 23 months are analyzed to understand the market size, market capitalization and price volatility for Bitcoin. Time series data and financial model are applied to realize the shocks. Monte Carlo simulation is applied to assess the dynamic structure of Bitcoin. With greater volume and activity, the banks and financial intermediaries may become outdated, and the middleman will have no place. It seems like a distant thought, but the facts are pointing toward its reality.

José M. Magone

The political regime allowed economic liberalization after 1960; nevertheless, its impact did not change the regional disparities between the less and more developed regions of Spain. In spite of all that, the Spanish economy became quite modem on the eve of the death of Franco on 20 November 1975. In the Article 131.2 of the Spanish Constitution, it clearly enshrines the foundation of a committee for the participation of the trade unions and other professional, entrepreneurial, and economic organizations. In the 1990s, the autonomous communities developed their own systems of interest intermediation, which were working well in certain regions and less so in others. The decentralization and regionalization of industrial relations is being complemented by national indicative pacts, which shape the bargaining boundaries at the regional level. The integration into the European Union was a major factor in stabilizing the political economy of Spain, particularly in view of decentralizing production and economic processes.

Svetlana Aleksandrovna Zaytseva, Stella Iraklievna Gurtskaya

The paper proves the validity of studying cryptocurrency as a cultural phenomenon. According to the Fundamentals of State Cultural Policy, culture is a resource of the social and economic development of the country, therefore, examining the economic aspects of the society is of great importance to cultural scientists. The possibility of dealing with cryptocurrency as a cultural element is confirmed by the following statements. Cryptocurrency refers to the economic culture of a society. The cryptocurrency impact is covered in mass media which constitute the cultural institution. In addition, cryptocurrency is consolidated in culture through the specialized exhibitions supported by public cultural agencies. The paper defines the promising trends in researches identifying the capacity of the virtual reality in the field of cultural patterns development. The authors note that studying cryptocurrency as a part of virtual reality will allow one to determine the mechanisms, borders, and technologies of this type of reality.

Marcus Brandenburger, Christian Cachin

Modern Trusted Execution Environments (TEEs), such as Intel SGX, gain more and more popularity in the blockchain community and their adoption has already been started. Combining smart-contract execution with TEEs promises efficient solutions for protecting data privacy in distributed ledgers, as an alternative to much more costly cryptographic protocols. This paper describes practical challenges that arise from the combination of smart contracts with TEEs. In particular, we discuss existing solutions and their conceptional differences of on-chain and off-chain execution followed by technical challenges on attestation, key management, and non-deterministic execution.

Claude Crépeau, Nan Yang

In multi-prover interactive proofs (MIPs), the verifier is usually non-adaptive. This stems from an implicit problem which we call ``contamination'' by the verifier. We make explicit the verifier contamination problem, and identify a solution by constructing a generalization of the MIP model. This new model quantifies non-locality as a new dimension in the characterization of MIPs. A new property of zero-knowledge emerges naturally as a result by also quantifying the non-locality of the simulator.

Claude Crépeau, Nan Yang

In multi-prover interactive proofs (MIPs), the verifier can provide non-local resources for the provers intrinsically. In most cases, this is undesirable. Existing proofs of soundness do not account for the verifier's non-local potential. We show that this may be a problem for many MIPs. We provide a solution by constructing a generalization of the MIP model, of which standard MIPs are a special case. This new model accounts for both the prover and the verifier's non-local correlations. A new property of multi-prover zero-knowledge naturally emerges as a result.

Ali Dorri, Salil S. Kanhere, Raja Jurdak

BlockChain (BC) immutability ensures BC resilience against modification or removal of the stored data. In large scale networks like the Internet of Things (IoT), however, this feature significantly increases BC storage size and raises privacy challenges. In this paper, we propose a Memory Optimized and Flexible BC (MOF-BC) that enables the IoT users and service providers to remove or summarize their transactions and age their data and to exercise the "right to be forgotten". To increase privacy, a user may employ multiple keys for different transactions. To allow for the removal of stored transactions, all keys would need to be stored which complicates key management and storage. MOF-BC introduces the notion of a Generator Verifier (GV) which is a signed hash of a Generator Verifier Secret (GVS). The GV changes for each transaction to provide privacy yet is signed by a unique key, thus minimizing the information that needs to be stored. A flexible transaction fee model and a reward mechanism is proposed to incentivize users to participate in optimizing memory consumption. Qualitative security and privacy analysis demonstrates that MOF-BC is resilient against several security attacks. Evaluation results show that MOF-BC decreases BC memory consumption by up to 25\% and the user cost by more than two orders of magnitude compared to conventional BC instantiations.

Greg Slepak, Anya Petrova

Blockchain design involves many tradeoffs, and much debate has focused on tradeoffs related to scaling parameters such as blocksize. To address some of the confusion around this subject, we present a probability proof of the DCS Triangle. We use the triangle to show decentralized consensus systems, like blockchains, can have Decentralization, Consensus, or Scale, but not all three properties simultaneously. We then describe two methods for getting around the limitations suggested by the triangle.

He Zhu, Changcheng Huang, Jiayu Zhou

The state-of-the-art mobile edge applications are generating intense traffic and posing rigorous latency requirements to service providers. While resource sharing across multiple service providers can be a way to maximize the utilization of limited resources at the network edge, it requires a centralized repository maintained by all parties for service providers to share status. Moreover, service providers have to trust each other for resource allocation fairness, which is difficult because of potential conflicts of interest. We propose EdgeChain, a blockchain-based architecture to make mobile edge application placement decisions for multiple service providers. We first formulate a stochastic programming problem minimizing the placement cost for mobile edge application placement scenarios. Based on our model, we present a heuristic mobile edge application placement algorithm. As a decentralized public ledger, the blockchain then takes the logic of our algorithm as the smart contract, with the consideration of resources from all mobile edge hosts participating in the system. The algorithm is agreed by all parties and the results will only be accepted by majority of the mining nodes on the blockchain. When a placement decision is made, an edge host meeting the consumer's latency and budget requirements will be selected at the lowest cost. All placement transactions are stored on the blockchain and are traceable by every mobile edge service provider and application vendor who consumes resources at the mobile edge.

Hermann Levy

Modern promoters bear a certain resemblance to the "projectors" of former centuries, they are a new set of commercial or financial industrialists who were certainly not known, because they were not a necessity, in the single-factory era of decentralized industrial development. Their task has been and still is to float financial projects huge enough to tackle the wide field of capital supply necessitated by the amalgamative aims of large undertakings, which imply the buying out of weak competitors. In last fifteen years it has certainly not always been genuine financial need of industry in regard to the carrying through of a more economic concentrative organization, which has bestowed upon finance capital the opportunity of providing new services for industry and has created a closer link between finance and industry, but the reverse has happened as well. It has of late become more and more evident that the concentrative tendencies in modern industry are giving a double role to financial capital.

Dana Országhová, Radomí­ra Hornyák Gregáňová, Viera Papcunová

Changes in the socio-economic conditions of countries initiate modifications in the management of its economic and social processes, which are also followed by conversions in the public administration. At the same time, they are also looking for the concepts of rational organization and effective management of the public administration. The public administration of the Slovak Republic is created by local self-government and regional selfgovernment. Municipalities represent the local self-government bodies. The effective conditions of the municipalities are creating the effective setting of its financing. Until 2004 the financing of municipalities was determined annually by the state budget act and for the municipalities distributed from the state budget a share of the tax of personal income, which consisted of three taxes: tax of personal income, tax of the corporation income and road tax. In 2005 the fiscal decentralization took place in Slovakia as a part of the consolidation of public finances, resulting in a new way of financing municipalities. The basis of the new financing system of municipalities was to determine the tax of personal income as a single share tax, in particular, because the dynamics of the income of this tax was expected to grow even in the medium term. The objective of the paper is to evaluate changes and trends in the financial management of municipalities based on selected fiscal indicators within the period 1993 -2015.

Jérôme Kreuser, Didier Sornette

We present a dynamic Rational Expectations (RE) bubble model of prices with the intention to evaluate it on optimal investment strategies applied to Bitcoin. Our bubble model is defined as a geometric Brownian motion combined with separate crash (and rally) discrete jump distributions associated with positive (and negative) bubbles. The RE condition implies that the excess risk premium of the risky asset exposed to crashes is an increasing function of the amplitude of the expected crash, which itself grows with the bubble mispricing: hence, the larger the bubble price, the larger its subsequent growth rate. We use the RE condition to estimate the real-time crash probability dynamically through an accelerating probability function depending on the increasing expected return. We examine the optimal investment problem in the context of the bubble model by obtaining an analytic expression for maximizing the expected log of wealth (Kelly criterion) for the risky asset and a risk-free asset. Using our bubble model on Bitcoin from 8-Jul-2013 until 19-Dec-2017 would have generated a CAGR of 140% with a maximum drawdown of 69% giving a Calmar Ratio of 2.03. It would have moved out of Bitcoin gradually since 25-Apr-2017 to be completely out on 19-Dec-2017, three days before the crash. The outperformance of the Efficient Portfolio over just investing in Bitcoin was 265%, accomplished over 117 rebalances from 08-Jul- 2013 to 20-Dec-2017. This strategy could thus afford a cost of 2.27% at each rebalancing period and still outperform investing only in Bitcoin.

Lotfi Tamazirt, Farid Alilat, Nazim Agoulmine

International audience

Léonie Pauline Benoist

In this dissertation we will present the Bitcoin and its technology and is supporting feature as a success factor for innovation and entrepreneurship. We will first demonstrate that Bitcoin is a currency and present its history and technology. Then from our literature researches and the interview we have conducted we will try to answer our problematic: Is Bitcoin and the Blockchain supporting entrepreneurship and innovation? Finally after crossing the theoretical and academic lectures with the testimony of the real actors we will present our conclusion and recommendation to the lectors.

Master of Laws, Vera Alizade, Aleksandr G. Volevodz

No abstract is available for this record.

Shelly Grossman, Ittai Abraham, Guy Golan-Gueta, Yan Michalevsky · 7 authors

Callbacks are essential in many programming environments, but drastically\ncomplicate program understanding and reasoning because they allow to mutate\nobject's local states by external objects in unexpected fashions, thus breaking\nmodularity. The famous DAO bug in the cryptocurrency framework Ethereum,\nemployed callbacks to steal $150M. We define the notion of Effectively Callback\nFree (ECF) objects in order to allow callbacks without preventing modular\nreasoning.\n An object is ECF in a given execution trace if there exists an equivalent\nexecution trace without callbacks to this object. An object is ECF if it is ECF\nin every possible execution trace. We study the decidability of dynamically\nchecking ECF in a given execution trace and statically checking if an object is\nECF. We also show that dynamically checking ECF in Ethereum is feasible and can\nbe done online. By running the history of all execution traces in Ethereum, we\nwere able to verify that virtually all existing contracts, excluding the DAO or\ncontracts with similar known vulnerabilities, are ECF. Finally, we show that\nECF, whether it is verified dynamically or statically, enables modular\nreasoning about objects with encapsulated state.\n

Aditya Asgaonkar, Pranav Palande, Ramprasad Joshi

The increasing popularity of Bitcoin, Ethereum and other cryptocurrencies has led to a rising interest in its underlying blockchain technology. Blockchains serve as distributed ledgers, and are fundamentally different from traditional distributed databases. In view of this large scale adoption of blockchain technology, it is of interest to analyze the performance of the underlying mechanisms in peer-to-peer blockchain networks.

Paul Dunphy, Fabien A. P. Petitcolas

The emergence of distributed ledger technology (DLT) based upon a blockchain data structure, has given rise to new approaches to identity management that aim to upend dominant approaches to providing and consuming digital identities. These new approaches to identity management (IdM) propose to enhance decentralisation, transparency and user control in transactions that involve identity information; but, given the historical challenge to design IdM, can these new DLT-based schemes deliver on their lofty goals? We introduce the emerging landscape of DLT-based IdM, and evaluate three representative proposals: uPort; ShoCard; and Sovrin; using the analytic lens of a seminal framework that characterises the nature of successful IdM schemes.