The traditional banking functions of lending, deposit-taking and payment intermediation are being unbundled in the new frontiers of money that extend from virtual currencies to crypto-assets and from shadow payments to quasi-money. The possibility for digital-centred change in the financial industry is illustrated by distributed ledger technology, of which ‘blockchain’ is the most prominent example of automated decision-making. Other forms of decentralised supply of money, payment services, and funding processes may allow households and businesses to obtain loans and pool risks without having recourse to financial intermediaries. This article examines the alternative provision of access to low-cost zero-friction payments from the perspective of the underbanked. Promoting innovation through alternatives to credit means integrating vulnerable and excluded customers into mainstream financial systems. Blockchain technology backed by a possible modification of the law on the recognition and transfer of property rights might prove instrumental in unlocking the value of the assets possessed by the underbanked or even the unbanked.
Many services that are taken for granted in smart cities are not even remotely available in dislocated areas yet, due to the lack of or too costly wide area network connectivity. With the aim to offer a practical and secure way to transport data and allow for communications in such constrained scenarios, we focus on the problem of incentivizing to data mules, i.e. devices dedicated to enable the data transfer even in the absence of the Internet. Our solution combines the use of several distributed technologies for verifying the correct behavior of all the partici-pants and incentivize them. We focus on the use of state channels to support the flow of smart-contract-based tokens as a form of payment, in a condition where participants communicate only with others in physical proximity. Furthermore, we validate the viability of the application through the simulation of peer-to-peer interactions between the participants. In this work we achieve positive results in terms of communication latency and percentage of client nodes which are able to benefit from the system.
Cryptocurrencies are gaining popularity as a means of electronic payment across the globe. The aim of this paper is to analyse how financial regulatory environment can leverage the adoption of cryptocurrencies and enhance financial inclusion. The study used case of Malawi as an example of a developing country that was considering regulating cryptocurrencies. Using Pathetic Dot Theory to analyse secondary data, the findings showed that the country had substantial ICT infrastructure concentrated in urban areas that may support cryptocurrencies services. However, the country did not have adequate legal frameworks to regulate use of cryptocurrencies. The demand-side of payment systems e.g. the cryptocurrency market was still underdeveloped and required awareness of cryptocurrencies services to support financial inclusion. The study contributes to the understanding of cryptocurrencies regulatory environment in the context of developing countries.
This article emphasizes the types and threats of cybercrime related to cryptocurrencies. The necessity of implementing legislative regulations and invention of administrative control mechanisms in connection with the growth of the digital economy is also discussed. The presented article also elucidates features of cyber-cartels and their new instruments, such as “Auction Robots”, for committing illicit activities as the new type of the organized crime in a digital world. This work also focuses on describing certain categories of cybercrime, such as cryptojacking, which is a scheme to use people’s devices (computers, smartphones, tablets and etc.), without their consent or knowledge, to secretly mine cryptocurrency on the victim’s dime. To analyze the growth in demand, this work highlights the index of the whole capitalization and the exchange rates of the cryptocurrencies. Article also underlines the threat of the element of anonymity related to cryptocurrencies as the main instrument for criminals to either disguise terrorism financing or evade paying taxes. Some valuable examples of amendments developed and introduced by the US and Great Britain legislations to regulate crypto market and control tax evasion are also cited
In recent years, blockchain technologies are constantly transforming many business processes. A shared, distributed ledger has revolutionized transaction recording, handling trust, and robustness in business network participants. In the telecommunication sector, the primary concern of voice over internet protocol (VoIP) providers when exchanging calls is the transparent storage of call detail records (CDRs) to avoid billing discrepancies, disputes, and interruption of services. In this chapter, the authors aim to investigate the utilization of permissioned blockchain in carriers' business models in telecommunication. They propose a business model architecture based on hyperledger fabric for developing smart contracts, which are invoked to store information about each CDR generated and business cases. The necessary steps and configurations for integrating the different technologies and building a development network are presented. Finally, the performance testing results regarding the latency for a transaction submission are shown.
Kruakae Pothong, Larissa Pschetz, Arlene Bailey, Billy Dixon
What difference can new technologies make for small-scale farmers facing a multitude of uncertainties that could affect not only the value of their crops but also when and whether they get paid? To understand how Distributed Ledger Technologies such as Blockchains, could be leveraged to address such uncertainties in agricultural trade, we engaged small-scale farmers in a problem delineation exercise and designed CariCrop, a payment system and currency that specifically addresses the issue of delayed payments. We investigated the potential impact of this system through immersive drama and deliberative workshops. We found that although digital payment systems can give farmers greater autonomy in agri-cultural trade, these systems do need to be designed with careful consideration of social values and integrate local economic and legal infrastructures.
Fernando Parahyba, Eldair F. Dornelles, Fabrícia Roos-Frantz, Rafael Z. Frantz · 8 authors
Integration processes involve Business Constraints and Service Level Agreements that, with current technology, are not monitored or enforced automatically at run-time. This approach leaves the participants with no means of supervising the development of their interactions or of collecting indisputable evidence to ease the resolution of disputes that can potentially emerge. In this paper, to address the issue, we suggest the inclusion of smart contracts in integration processes to supervise and mediate, at run-time, the agreements to which the participants commit. We discuss the requirements that smart contracts for integration processes need to meet and the challenges involved in writing, executing, deploying, and verifying them.
Cristian Gómez, Juan M. Vara, Fco. Javier Perez-Blanco, Esperanza Marcos
Despite the interest in blockchain technology and smart contracts, their complexity is a problem that slows down their adoption. Due to its potential, institutions from very diverse fields are exploring the possibilities offered by the application of this technology, encountering a recurring problem: the high learning curve of the design and creation of smart contracts, both for professionals in the areas of business, as well as for developers unfamiliar with this technology. In this work, after analyzing the current situation regarding the existence of tools or solutions for the definition of smart contracts, a proposal is presented based on the application of techniques and principles of Model Driven Engineering, which will ostensibly improve the levels of usability of existing solutions.
Saulo dos Santos, Japjeet Singh, Ruppa K. Thulasiram, Shahin Kamali · 6 authors
The Bitcoin whitepaper [1] published in 2008 pro-posed a novel decentralized ledger, later called blockchain, which enabled multiple transacting parties to agree upon the shared state of the ledger without a trusted intermediary. Blockchain technology has been used to implement many decentralized payment systems, with the general term Cryptocurrency coined for the native unit of values. The launch of the Turing-complete Ethereum blockchain [2] in 2015 extended the scope of blockchain-based financial systems beyond cryptocurrencies. The suite of non-custodial financial solutions deployed as Smart Con-tracts over Turing-complete blockchains is broadly called Decentralized Finance (DeFi). These solutions have gained widespread popularity as investment vehicles in the last two years, with their total value locked (TVL) exceeding USD 100 Billion. This paper reviews the key financial services offered in DeFi and draws a parallel to the corresponding services in the centralized financial industry. Some technical and economic risks associated with the DeFi investments are also discussed in the paper. Most of the existing review papers on DeFi focus on some specific DeFi services, are theoretically inclined, and are intended for academics in computer science or economics. This paper, on the other hand, aims to give an overview of the current state of the DeFi ecosystem. We aim to keep this review lucid to make it accessible to a broader audience without compromising academic rigor. The intended audience for this paper includes anyone with a basic understanding of financial markets and blockchain systems. This work will be specifically helpful for investment professionals to understand the rapidly evolving ecosystem of DeFi services.
Cryptocurrencies (e.g., Bitcoin, EOS, Etherum, Litecoin, and others) are disrupting the traditional banking and financial systems. The cryptocurrencies are based on a set of technologies commonly referred to as blockchain technology. The potential effect of blockchain technology on institutional economics is profound. Already, blockchain technology-based applications in supply chain management, marketing, and finance are decen- tralizing and streamlining vital institutional functions. In this paper, I examine the economics of blockchain technologies as it pertains to transaction costs in startup financing. I try to draw upon the theory of transaction cost economics and the transactional nature of blockchain technology to propose a model to demonstrate how and why blockchain technology based applications are effective. I then apply the model to demonstrate how blockchain technology can be used to overcome many problems inherent in startup financing. For example, information asymmetry and transaction costs involved with matching an entrepreneur with an investor and the terms of the financing deal are some of the fundamental issues in entrepreneurial financing. I try to explain how a financing system based on blockchain technology can ameliorate the problems and lead to a more effective and decentralized entrepreneurial financing process.
The use of blockchain in regulatory ecosystems is a promising approach to address challenges of compliance among mutually untrusted entities. In this work, we consider applications of blockchain technologies in telecom regulations. In particular, we address growing concerns around Unsolicited Commercial Communication (UCC aka. spam) sent through text messages (SMS) and phone calls in India. Despite several regulatory measures taken to curb the menace of spam it continues to be a nuisance to subscribers while posing challenges to telecom operators and regulators alike. In this paper, we present a consortium blockchain based architecture to address the problem of UCC in India. Our solution improves subscriber experiences, improves the efficiency of regulatory processes while also positively impacting all stakeholders in the telecom ecosystem. Unlike previous approaches to the problem of UCC, which are all ex-post, our approach to adherence to the regulations is ex-ante. The proposal described in this paper is a primary contributor to the revision of regulations concerning UCC and spam by the Telecom Regulatory Authority of India (TRAI). The new regulations published in July 2018 were first of a kind in the world and amended the 2010 Telecom Commercial Communication Customer Preference Regulation (TCCCPR), through mandating the use of a blockchain/distributed ledgers in addressing the UCC problem. In this paper, we provide a holistic account of of the projects' evolution from (1) its design and strategy, to (2) regulatory and policy action, (3) country wide implementation and deployment, and (4) evaluation and impact of the work.
Paying for electronic commerce products with cryptocurrencies is an increasingly popular method. However, the situations where a seller expects one specific cryptocurrency as a payment while a buyer only possesses another, inevitably create inconvenience to the buyer, which may lead to cancellation of purchase. In this paper, we propose a light-weighted software architecture of a payment system called NAGA platform that works with a number of crypto blockchain networks to support cross-cryptocurrency payments where buyers can pay in one currency, and the seller automatically receives another of his/her choice. This minimizes the complexity and inconvenience of the buyer, leading to an increase in sales and revenues of the electronic commerce system. With the built-in crypto exchange, crosscryptocurrency payment can be processed with real-time exchange rates that enables both buyers and sellers to receive cryptocurrency of their preferred choices.
Constance J. Crawford, Corinne Crawford, Glenn C. Vallach
Subtitle A, of the Internal Revenue Code (IRC), contains regulatory provisions regarding the federal taxes imposed on the income of both individuals and corporations. The IRC guidance is intended to provide a determination of all income that must be reported on tax returns and potentially could become subject to an income tax. A new form of currency, known as cryptocurrency appeared on mainstream trading platforms beginning in 2009. Bitcoin initially was the most widely recognized digital currency but other virtual currency versions soon followed. Initially, taxpayers mistakenly believed that cryptocurrency transactions were not subject to Subtitle A of the IRC. Therefore, crypto transactions were assumed to be non-taxable and non-reportable for tax purposes. However, within a few years of the introduction of Bitcoin into the US economic system, the Internal Revenue Service (IRS) introduced tax guidance pertaining to cryptocurrency transactions. In 2014, the IRS responded with Notice 2014-21 as the popularity of Bitcoin grew exponentially. The IRC guidance stated that cryptocurrency must be treated as property for federal tax purposes. The tax implication of the IRS guidance was that cryptocurrency transactions would result in either a gain or loss for tax purposes on Schedule D. This guidance resulted in a recognition that all cryptocurrency transactions would be subject to federal income tax.
Ethereum is the most popular blockchain platform that supports smart contracts. Smart contracts are computing programs that constitute the building blocks of decentralized applications (DApps). DApps are revolutionary and have led to the creation of entirely new businesses (e.g., marketplaces for digital collectibles). Nonetheless, developing and maintaining DApps lead to entirely new research challenges. Empirical research demands high-quality data, which can be obtained by carefully mining Ethereum. In this tutorial, I will discuss best practices and pitfalls associated with mining Ethereum. The tutorial will be organized into three main parts: (i) a brief introduction to Ethereum and its fundamental concepts, (ii) a hands-on mining session, and (iii) a final Q&A session.
The purpose of the article is to describe the state of the financial market during and after the COVID-19 pandemic. The financial environment is facing new questions about the future, one of which concerns the role played by cryptocurrencies in the coming years. In recent years the cryptocurrency market has been experiencing spectacular growth, with more than 5,500 cryptocurrencies now in existence worldwide. They can either be used as safe haven currencies that provide protection against market volatility or as a payment system with the prospect of consolidation. Whatever the case may be, the pandemic circumstances favour the development of these digital assets. The crisis generated by the pandemic has also affected the value of bitcoin, which has been quite volatile. While it seems to be recovering, the near future is uncertain. The uncertainty brought about by the coronavirus health crisis has caused a general collapse in the stock markets. In this context, the authors review the behaviour of bitcoin, with its dips and recoveries, which can occur in a matter of a few hours. The first months of national lockdowns were mainly marked by social issues. When social distancing has become the norm, cryptocurrencies can play a bigger role than they did previously, driving the evolution of money away from cash in the direction of cashless society.
Reza Toorajipour, Pejvak Oghazi, Vahid Sohrabpour, Pankaj C. Patel · 5 authors
Heterogeneity and complicated processes, risk of information leakage, and higher costs are some of the challenges that stem from third-party involvement in business transactions. This study proposes a novel mechanism to address the shortcomings of third-party-dependent transactions in the context of international trade. Moreover, we provide business process modeling, deployed in a business transaction scenario, to furnish a deeper perspective on the working of the mechanism based on Business Process Model and Notation (BPMN) 2.0 standards and guidelines. By analyzing and identifying blockchain roles and capabilities, this study proposes a blockchain technology-based letter of credit (BTLC), which is a mechanism providing letters of credit (LCs) that incorporate the benefits of blockchain and smart contracts.
The technological advancement of the Internet of Things (IoT) is a well-known phenomenon that mainly affects industrial sectors but also consumers in everyday life. The use of Consumer IoT, i.e. CIoT, devices is increasing, and they are paving the way for a Machine-to-Machine (M2M) communication that could highly enrich consumer services. In this paper we position ourselves in the narrowing gap between the world of CIoT and the world of money, and we explore the emerging interaction between the payment needs of a M2M Economy and the "new ways of payment". Indeed, the advent of Distributed Ledger Technology and cryptocurrencies has introduced a tech-oriented dynamism in the monetary and financial sphere. Accordingly, central banks all over the world have started investigations into digital fiat money, i.e., "retail" Central Bank Digital Currencies (CBDCs). Against this backdrop, we analyze the integration of retail CBDC models into M2M and CIoT dynamics, while heeding regulation-by-design and compliance-by/through-design methodologies, and we propose a preliminary model of integration between a two-tier retail CBDC architecture and CIoT.