Blockchain Papers

Chris Jaikaran

This report explains the technologies which underpin blockchain digital financial ledgers, how blockchain works, potential applications for blockchain, concerns with it, and potential considerations for Congress.

Gyung-Young Jung

No abstract is available for this record.

Paul Klimos

... The financial industry has been witnessing an exponential rise in the number of innovative start-ups. Waves of digital innovation (widely known as financial technology or FinTech) have reached the world of banking and finance, and the distributed ledger technology (DLT) is one of the leading ‘surfers’. The DLT might have been created for the main purpose of serving digital cash. Today, both the public and private sectors are actively studying the concept and seeking possible ways to extend its application to a variety of other activities and problems. The trend is growing and different DLT designs are under test. Being at a very early stage of development, there are still numerous issues to tackle before this technology eventually realizes its full potential.1 That being said, the more the DLT develops and expands, the more experts would be able to evaluate its intrinsic as well as practical risks and rewards. In other words, the concern is not only about whether the DLT is inherently good or bad; stakeholders are also looking at the purposes for which and ways in which it would eventually be implemented.

Ogami Tomoya, Hiroyuki Inaba

No abstract is available for this record.

M Meima, Yoga Nugraha Pratama

Uang merupakan alat tukar menukar yang sangat mudah dibawa kemana–mana dan tahan awet. Uang diciptakan untuk mempermudah masyarakat atau manusia dalam jual beli dimanapun berada dan kapanpun berada, karena itu kita harus mempergunakan uang dengan sebaik-baiknya. Pada tanggal 2 November 1949 merupakan hari ditetapkan uang menjadi mata uang resmi negara Indonesia yang diatur dalam Undang-Undang No 7 Tahun 2011 Tentang Mata Uang. Seiring berkembangnya jaman mata uangpun berkembang dan saat ini yang muncul adalah mata uang virtual (Bitcoin), pengertian bitcoin adalah sebuah mata uang virtual yang pertama kali dikembangkan pada tahun 2009, oleh Satoshi Nakatomo, (nama samaran), Pada tahun 2017 Pemerintah Indonesia berencana untuk melegalkan mata uang virtual didalam kegiatan transaksi di pasar modal untuk mengikuti perkembangan jaman dan meningkatkan ekonomi di Indonesia menurut Undang-Undang No 8 Tahun 1995 Tentang Pasar Modal adalah kegiatan yang bersangkutan dengan Penawaran Umum dan perdagangan Efek, Perusahaan Publik yang berkaitan dengan Efek yang diterbitkannya, serta lembaga dan profesi yang berkaitan dengan Efek, dalam hal ini identfikasi masalah dari pernyataan diatas adalah bagaimanakan legalitas mata uang virtual (bitcoin) dalam transaksi pasar modal menurut hukum di Indonesia dan bagaimanakah penggunaan mata uang virtual (bitcoin) dalam pasar modal dikaitkan dengan Undang-Undang Nomor 8 Tahun 1995 Tentang Pasar Modal. Hasil penelitian menyimpulkan bahwa Penerapan pengaturan mengenai legalitas untuk menggunakan Bitcoin sebagai mata uang di Indonesia sangatlah sulit karena dalam Undang Undang Nomor 7 Tahun 2011 Tentang Mata Uang sudah sangat jelas bahwa mata uang yang sah d Indonesia adalah rupiah, terlebih BI menyatakan larangan tentang penggunaan Mata Uang Bitcoin dan Bitcoin juga bukan merupakan mata uang atau alat pembayaran yang sah di Indonesia. Penggunaan mata uang Bitcoin di pasar modal akan sangat terkendala karena PT Bitcoin Indonesia harus menyerahkan semua kewenangan dan pengaturan mata uang Bitcoin kepada Otoritas Jasa Keuangan sebagai lembaga pengawas pasar modal dan PT Bitcoin Indonesia juga harus menjadi Bank Kustodian karena Bank Kustodian adalah lembaga penyimpanan dan penyelesaian, perusahaan efek, atau bank umum yang telah mendapat persetujuan Bapepam.

Efpraxia D. Zamani, George M. Giaglis

Purpose The purpose of this paper is to argue for the role of the blockchain, i.e., distributed ledger technology, in building innovative business models, including machine money, autonomous economic agents and decentralised organisations. Design/methodology/approach The paper is conceptual/argumentative. As such, it draws on research on (e-)commerce, theories of markets, disruptive innovation and extant studies and conceptual work at the intersection of cryptocurrencies, machine-to-machine commerce and the Internet of Things. Findings The authors highlight three application areas for blockchains, whereby they can function as applications, can help develop autonomous economic agents and can lead the development of decentralised autonomous organisations. With regards to the question of market disintermediation, the authors suggest that, rather than complete disintermediation, the most probable scenario is that of new types of intermediaries finding previously unthinkable roles to play in mediating blockchain-based economic transactions. With regards to the inhibitors that slow down the technology’s adoption and, therefore, the development of new business applications, the authors posit that these relate mainly to the inherent risk of the technology, infrastructure requirements, scepticism of early decision makers and the lack of required new skills and competencies. Originality/value The authors examine how new forms of digital money and technologies embedding trust in decentralised networks will alter markets and commerce, at a time when many regulatory issues remain unresolved; in doing so, the authors focus on how blockchain-enabled technologies can be used to enable and further develop decentralised trusted peer-to-peer transaction ledger systems and applications and lead to sustainable business models.

Valentina Gatteschi, Fabrizio Lamberti, Claudio Giovanni Demartini, Chiara Pranteda · 5 authors

Blockchain is receiving increasing attention from academy and industry, since it is considered a breakthrough technology that could bring huge benefits to many different sectors. In 2017, Gartner positioned blockchain close to the peak of inflated expectations, acknowledging the enthusiasm for this technology that is now largely discussed by media. In this scenario, the risk to adopt it in the wake of enthusiasm, without objectively judging its actual added value is rather high. Insurance is one the sectors that, among others, started to carefully investigate the possibilities of blockchain. For this specific sector, however, the hype cycle shows that the technology is still in the innovation trigger phase, meaning that the spectrum of possible applications has not been fully explored yet. Insurers, as with many other companies not necessarily active only in the financial sector, are currently requested to make a hard decision, that is, whether to adopt blockchain or not, and they will only know if they were right in 3–5 years. The objective of this paper is to support actors involved in this decision process by illustrating what a blockchain is, analyzing its advantages and disadvantages, as well as discussing several use cases taken from the insurance sector, which could easily be extended to other domains.

G. S. Bektenova

British Financial Supervision and Control Authority has identified new technologies as a component of fintech. These components include regtech, insurtech, blockchain. These new areas of the market development are incomprehensible to a wide range of people. However, this area attracts venture capital which is actively growing worldwide. The prospects of development of these areas are interesting for many reasons: reduction of financial costs for market participants, reduction of information processing time, security of financial transactions, information security and completeness. The article describes: objective reasons of the occurrence of such a kind of the product, risks of using these products and advantages of their introduction in all spheres of life, as well as the scope of regtech implementation.Keywords: Fintech, regtech, blockchain, insurtech

Jiao Liang, Weili Han, Zeqing Guo, Yaoliang Chen · 7 authors

No abstract is available for this record.

Wang Jing

The financial sector in China is well known as a government-dominated hierarchy, and the access to financial services has been controlled primarily by the state-run banks. Fin-tech businesses, or so-called “Internet finance,” in China have included new actors such as Internet companies, small and medium enterprises, and small lay investors in the financial regime. The new entrants’ technology-mediated interactions with the government engendered new politico-economic relations within and beyond the market, in the cyberspace and in everyday life. How have the Chinese modes of financial inclusion reconfigured the power relations between the state, corporations, and the investing public in China? Through the political-economic analyses of three specific forms of fin-tech businesses—third-party payment, peer-to-peer lending, and money market fund this article argues that Chinese fin-techs have enabled a broader societal participation to investment practices and empowered Internet corporations alongside the state-controlled financial systems. Thus, such an inclusion is less about the “inclusive finance” endorsed by the World Bank for the under-represented social groups’ accesses to financial services. It is more of a technology-facilitated financialization initiated by the state, promoted by information technology companies, and popularized among small investors. Rather than leading to the decentralization of financial power, China’s fin-tech has formed a higher level of concentration of financial capital controlled by the Chinese oligopoly Internet corporations. Moreover, the collaborations and competitions between the growing fin-tech companies and the state-owned financial sector deserve further observations.

Roberto Tonelli, G. A. Pierro, Marco Ortu, Giuseppe Destefanis

Smart contracts (SC) are software programs that reside and run over a blockchain. The code can be written in different languages with the common purpose of implementing various kinds of transactions onto the hosting blockchain. They are ruled by the blockchain infrastructure with the intent to automatically implement the typical conditions of traditional contracts. Programs must satisfy context-dependent constraints which are quite different from traditional software code. In particular, since the bytecode is uploaded in the hosting blockchain, the size, computational resources, interaction between different parts of the program are all limited. This is true even if the specific programming languages implement more or less the same constructs as that of traditional languages: there is not the same freedom as in normal software development. The working hypothesis used in this article is that Smart Contract specific constraints should be captured by specific software metrics (that may differ from traditional software metrics). We tested this hypothesis on 85K Smart Contracts written in Solidity and uploaded on the Ethereum blockchain. We analyzed Smart Contracts from two repositories "Etherscan" and "Smart Corpus" and we computed the statistics of a set of software metrics related to Smart Contracts and compared them to the metrics extracted from more traditional software projects. Our results show that generally, Smart Contract metrics have more restricted ranges than the corresponding metrics in traditional software systems. Some of the stylized facts, like power law in the tail of the distribution of some metrics, are only approximate but the lines of code follow a log-normal distribution which reminds us of the same behaviour already found in traditional software systems.

Allan D. Grody

Setting proprietary standards for elemental data components of financial transactions, once the province of market participants and intermediaries, their sovereign regulators, and software and data vendors, has evolved into a global open source standards requirement. Global data standards initiatives are now seeking to eliminate unnecessary infrastructure costs and risks arising from use of proprietary data and interoperability standards and processes. Data standards have taken on new meaning and urgency as they have also become a prerequisite to securing financial networks from cyberattacks and enabling new technologies of the digital age. A new generation of innovation led by distributed ledger technology (DLT), a supportive database technology of the Blockchain, is being actively pursued by financial institutions and their financial market utilities. It is also of interest to many financial market regulators who are requesting access to more granular standardised transactional data. It has tremendous potential to eliminate reconciliation processes at financial institutions and refocus many of the hundreds of data intermediaries and financial market utilities that play a significant role in reconciling risk prone and costly non-standard data. This paper argues that the components of a sustainable financial industry infrastructure rebuild are coming into existence, but uncoordinated efforts across the globe will stifle the effectiveness of these changes. Therefore, this paper proposes a new global industry/ government partnership to coordinate implementation of data identification standards, accelerate data harmonisation initiatives and sponsor a secure financial-sector DLT protocol standard.

육태우

No abstract is available for this record.

Joost de Kruijff, Hans Weigand

Smart contracts gain rapid exposure since the inception of blockchain<br/>technology. Today's smart contracts are coded in non-mainstream<br/>procedural programming languages (e.g. Solidity for Ethereum),<br/>which lifts the requirement to draft enterprise ready smart contract to<br/>both a legal professional and a programmer instead of only the former.<br/>In search for a smart contract language that reduces the threshold to<br/>draft one, this conceptual paper elaborates how business logic can be<br/>converted to executable code for commitment-based smart contracts.<br/>Hereby, a contract is viewed as a set of reciprocal commitments. The<br/>smart contract ensures the automated execution of all or most of these<br/>commitments. In order to leverage its event processing capabilities,<br/>Reaction RuleML has been used to appropriately represent the<br/>elements and working of passive and active rules within a<br/>commitment based smart.

Pratyush Agarwal, Shruti Jalan, Abhijit Mustafi

In this fast pacing world of modernisation, people are moving ahead at the expense of affecting the society cataclysmically and making the people more standoffish and aloof. Some people are becoming too competitive to earn money while others have no clue how about getting even a penny. But at the same time, there exist people who wish to contribute to the society out of altruism. But the existing centralised systems and brokers for charities are so corrupt that people lose belief in these trustless systems and hence the charities become futile. What if we can use the rapacious ideology of money minded people coupled with the modern technology to make the charity system more effective and trustful. Using an approach of decentralisation, cryptocurrency and finance for donations, the system of charity can be improved to a great extent with the added advantage of the involvement of even these people in a conducive way. We propose a system, backed by cryptocurrency transactions, to make the system of charity more transparent and trustworthy where the charity (in form of work) by individuals or organizations is done first and then that work can be sold later as a stock (here we call it a certificate). This will work in a manner similar to the exchange market using crypto-currency. So, people can raise money out of it, just like stocks but finally the money would go to the charities, as the certificates can only be generated by the charity doers. The complete system will be decentralised using Blockchain Technology, Smart Contractsl[2]and Cryptocurrency. This system would facilitate any individual to contribute independently to the society using his time and abilities apart from just money, and ultimately this will lead to an increase in hands towards the amelioration of the society.

Ahmed Alketbi, Qassim Nasir, Manar Abu Talib

Public sector and governments have been actively exploring new technologies to enable the smart services transformation and to achieve strategic objectives such as citizens satisfaction and happiness, services efficiency and cost optimization. The Blockchain technology is a good example of an emerging technology that is attracting government attention. Many government entities such as United Kingdom, Estonia, Honduras, Denmark, Australia, Singapore and others have taken steps to unleash the potential of Blockchain technology. Dubai Government is aiming to become paperless by adopting the Blockchain technology for all transactions by 2021. The Blockchain is a disruptive technology that is playing a vital role in many sectors. It's a revolutionary technology transforming the way we think about trust as it enables transacting data in a decentralized structure without the need to have trusted central authorities. Blockchain technology promises to overcome security challenges in IoT enabled services such as enabling secure data sharing and data integrity. However, it also introduces new security challenges that should be investigated and tackled. In this paper, we review the literature to identify the potential use cases and application of Blockchain to enable government services. We also synthesized literature related to the security of Blockchain implementations to identify the security benefits, challenges and the proposed solutions. The analysis shows that is huge potential for Blockchain technology to be used in to enable smart government services. This paper also highlights future research in the areas of concerns that required further investigation.

Mayank Raikwar, Subhra Mazumdar, Sushmita Ruj, Sourav Sen Gupta · 6 authors

We design a distributed platform with blockchain as a system service for supporting transaction execution in insurance processes. The insurance industry is heavily dependent on multiple processes between transacting parties for initiating, maintaining and closing diverse kind of policies. Transaction processing time, payment settlement time and security protection of the process execution are major concerns. Blockchain technology, originally conceived as an immutable distributed ledger for detecting double spending of cryptocurrencies, is now increasingly used in different FinTech systems to address productivity and security requirements. The application of blockchain in FinTech processing requires a deep understanding of the underlying business processes. It supports automated interactions between the blockchain and existing transaction systems through the notion of smart contracts. In this paper, we focus on the design of an efficient approach for processing insurance related transactions based on a blockchain-enabled platform. An experimental prototype is developed on Hyperledger fabric, an open source permissioned blockchain design framework. We discuss the main design requirements, corresponding design propositions, and encode various insurance processes as smart contracts. Extensive experiments were conducted to analyze performance of our framework and security of the proposed design.

Yining Hu, Ahsan Manzoor, Parinya Ekparinya, Madhusanka Liyanage · 8 authors

Digital banking as an essential service can be hard to access in remote, rural regions where the network connectivity is unavailable or intermittent. The payment operators like Visa and Mastercard often face difficulties reaching these remote, rural areas. Although micro-banking has been made possible by short message service or unstructured supplementary service data messages in some places, their security flaws and session-based nature prevent them from wider adoption. Global-level cryptocurrencies enable low-cost, secure, and pervasive money transferring among distributed peers, but are still limited in their ability to reach people in remote communities. We propose a blockchain-based digital payment scheme that can deliver reliable services on top of unreliable networks in remote regions. We focus on a scenario where a community-run base station provides reliable local network connectivity while intermittently connects to the broader Internet. We take advantage of the distributed verification guarantees of the Blockchain technology for financial transaction verification and leverage smart contracts for secure service management. In the proposed system, payment operators deploy multiple proxy nodes that are intermittently connected to the remote communities where the local blockchain networks, such as Ethereum are composed of miners, vendors, and regular users. Through probabilistic modeling, we devise design parameters for the blockchain network to realize robust operation over the top of the unreliable network. Furthermore, we show that the transaction processing time will not be significantly impacted due to the network unreliability through extensive emulations on a private Ethereum network. Finally, we demonstrate the practical feasibility of the proposed system by developing Near Field Communication (NFC)-enabled payment gateways on Raspberry-Pis, a mobile wallet application and mining nodes on off-the-shelf computers.

Maoran Zhu, Xin Liu

With development of Big Data technology these years, Internet financial companies in China started trying using big data technology to do credit investigation instead of traditional methods. But there is some limitation and problem in terms of data acquisition channel, information asymmetry and data privacy protection, etc. Block chain, characterized in unalterability and decentralization comes into people's sight. This paper will introduce block chain technology, explore the use of block chain technology in Internet financial credit investigation, and put forward an internet financial credit data sharing model based on block chain, which mainly composed by the Fin-tech Federate Servers group (FFS), the user data storage structure and a distributed database system (DDBS). By combining DPoS and re-encryption technology, the model has the characteristics of non-tampering, authorized access and convenient accountability. Through this model, the user data is recorded by the trusted agent, encrypted by asymmetric encryption technology, and anchored to the chain of the block periodically.

Siti Rohaya Mat Rahim, Zam Zuriyati Mohamad, Juliana Abu Bakar, Farhana Hanim Mohsin · 5 authors

This study examines the two important aspect of latest technology issues in Islamic finance that related to artificial intelligence (AI) and smart contract. AI refers to the ability of machines to understand, think, and learn in a similar way to human beings, indicating the possibility of using computers to simulate human intelligence. Smart contract is a computer code running on top of a block-chain containing a set of rules under which the parties to that smart contract agree to interact with each other. The main objectives of this article are to evaluate the operations of AI and smart contract, to make comparison between the operations of AI and smart contract. This article concludes that AI and smart contract will have a huge impact in future for Islamic Finance industry.

Paolo Tasca, Adam Hayes, Shaowen Liu

Purpose This paper aims to gather together the minimum units of users’ identity in the Bitcoin network (i.e. the individual Bitcoin addresses) and group them into representations of business entities, what we call “super clusters”. While these clusters can remain largely anonymous, the authors are able to ascribe many of them to particular business categories by analyzing some of their specific transaction patterns (TPs), as observed during the period from 2009 to 2015. The authors are then able to extract and create a map of the network of payment relationships among them, and analyze transaction behavior found in each business category. They conclude by identifying three marked regimes that have evolved as the Bitcoin economy has grown and matured: from an early prototype stage; to a second growth stage populated in large part with “sin” enterprise (i.e. gambling, black markets); to a third stage marked by a sharp progression away from “sin” and toward legitimate enterprises. Design/methodology/approach Data mining. Findings Four primary business categories are identified in the Bitcoin economy: miners, gambling services, black markets and exchanges. Common patterns of transaction behavior between the business categories and their users are a “one-day” holding period for bitcoin transactions is somewhat typical. That is, a one-day effect where traders, gamblers, black market participants and miners tend to cash out on a daily basis. There seems to be a strong preference to do business within the bitcoin economy in round lot amounts, whether it is more typical of traders exchanging for fiat money, gamblers placing bets or black market goods being bought and sold. Distinct patterns of transaction behavior among the business categories and their users are flows between traders and exchanges average just around 20 BTC, and traders buy or sell on average every 11 days. Meanwhile, gamblers wager just 0.5 BTC on average, but re-bet often within the same day. Three marked regimes have evolved, as the Bitcoin economy has grown and matured: from an early prototype stage, to a second growth stage populated in large part with “sin” enterprises (i.e. gambling, black markets), to a third stage marked by a sharp progression away from “sin” and toward legitimate enterprises. This evolution of the Bitcoin economy suggests a trend toward legitimate commerce. Originality/value The authors propose a new theoretical framework that allows investigating and exploring the network of payment relationships in the Bitcoin economy. This study starts by gathering together the minimum units of Bitcoin identities (the individual addresses), and it goes forward in grouping them into approximations of business entities, what is called “super clusters”, by using tested techniques from the literature. A super cluster can be thought of as an approximation of a business entity in that it describes a number of individual addresses that are owned or controlled collectively by the same beneficial owner for some special economic purposes. The majority of these important clusters are initially unknown and uncategorized. The novelty of this study is given by the pure user group and the TP analyses, by means of which the authors are able to ascribe the super clusters into specific business categories and outline a map of the network of payment relationships among them.

Wenbo Wang, Dusit Niyato, Ping Wang, Amir Leshem

Blockchains enables tamper-proof, ordered logging for transactional data in a decentralized manner over open-access, overlay peer-to-peer networks. In this paper, we propose a decentralized framework of proactive caching in a hierarchical wireless network based on blockchains. We employ the blockchain-based smart contracts to construct an autonomous content caching market. In the market, the cache helpers are able to autonomously adapt their caching strategies according to the market statistics obtained from the blockchain, and the truthfulness of trustless nodes are financially enforced by smart contract terms. Further, we propose an incentive-compatible consensus mechanism based on proof-of-stake to financially encourage the cache helpers to stay active in service. We model the interaction between the cache helpers and the content providers as a Chinese restaurant game. Based on the theoretical analysis regarding the Nash equilibrium of the game, we propose a decentralized strategy-searching algorithm using sequential best response. The simulation results demonstrate both the efficiency and reliability of the proposed equilibrium searching algorithm.

Thomas M. Hughes

Bitcoin and its enabling technology, the blockchain, are front and center in discussions of the future of finance and “fintech.” This essay argues that Bitcoin is a special case and a weak analogy for future applications of blockchain technology. Adoption will grow, and applications will spread, but the nature of the technology and of the financial markets suggest that instead of being disruptive to major incumbent institutions, blockchain-based innovation will tend to strengthen existing market participants, serving more to lower costs than to encourage new entrants or new business methods. <b>TOPICS:</b>Currency, global

Lana Swartz

In its first decade, Bitcoin has not proven to be a practical money form for most circumstances, but it has become a staging ground for debate around the cultural role of money in society. This debate is poised between two related but ultimately incompatible techno-economic imaginaries: infrastructural mutualism and digital metallism. Each offers a theory not just of money, but also of relations, identities, and the larger imaginaries we call ‘society’ and ‘the economy’. In particular, they offer distinct visions of what it means to be a ‘peer’ in a peer-to-peer money system, and perhaps, a peer-to-peer society. This article traces the pre-history of Bitcoin, as well as more recent developments, to inquire about its future, as well as the future of money more broadly.