Jan 1, 2017·Proceedings of the ... Annual Hawaii International Conference on System Sciences/Proceedings of the Annual Hawaii International Conference on System Sciences
Blockchain is an emerging technology that is perceived as groundbreaking. However, blockchain presents incumbent organizations with significant challenges. How should they respond to the advent of this innovative technology, and how can they build the capabilities that are necessary to successfully engage with blockchain? In this case study, we analyze how an incumbent bank deals with the radical innovation of blockchain. We find that blockchain as an innovation is unique, because its transaction cost-lowering nature requires cooperation not only on an intra-organizational, but also on an inter-organizational level to fully leverage the technology. We develop a framework illustrating how the process of discovering, incubating, and accelerating with blockchain can look like. Our research is one of the first case studies in the area; shedding light on the organizational challenges of incumbents as they engage with blockchain. The paper provides a blueprint for business executives in their endeavor of embracing blockchain technology.
Jan 1, 2017·Proceedings of the ... Annual Hawaii International Conference on System Sciences/Proceedings of the Annual Hawaii International Conference on System Sciences
Juho Lindman, Virpi Kristiina Tuunainen, Matti Rossi
Blockchain technologies offer new open source-based opportunities for developing new types of digital platforms and services. While research on the topic is emerging, it has this far been predominantly focused to technical and legal issues. To broaden our understanding of blockchain technology based services and platforms, we build on earlier literature on payments and payment platforms and propose a research agenda divided into three focal areas of 1) organizational issues; 2) issues related to the competitive environment; and 3) technology design issues. We discuss several salient themes within each of these areas, and derive a set of research question for each theme, highlighting the need to address both risks and opportunities for users, as well as different types of stakeholder organizations. With this research agenda, we contribute to the discussion on future avenues for Information Systems research on blockchain technology based platforms and services.
Objective: The main purpose of the paper is to show that blockchain technology may disrupt the existing business models and to explore how this may occur. Research Design & Methods: This is a theory development paper which relies on a literature review and desk re-search. The discussion of the reviewed sources leads to the formulation of three re-search propositions. Findings: The paper provides a short overview of key literature on business models and business model innovation, indicating, among others, that new technologies may be one of the drivers of business model innovation. This study also provides an overview of blockchain technology and a range of its business applications showing how it can disrupt business models. It is shown that blockchain technology may affect many dimensions of business models. We propose that there are three crucial ways in which blockchain technology can affect and disrupt business models: by authenticating traded goods, via disintermediation and via lowering transaction costs. Implications & Recommendations: This study shows that blockchain technology may affect diverse dimensions of business models in diverse industries. It is recommended that mangers should follow developments in this field in order to prepare for possible disruptions in their industries. Contribution & Value Added: This study provides an analysis of the possible impact of blockchain technology on business model innovation. Blockchain technology is gaining momentum with more and more diverse applications, as well as increasing numbers of actors involved in its applications. This paper contributes to our understanding of the possible applications of blockchain technology to businesses, and in particular to its impact on business models.
Summary This paper investigates alternative configurations of different blockchain architectures that can be used for gathering and processing transactions in a range of different settings, including accounting, auditing, supply chain and other types of transaction information. Although there has been substantial focus on the peer‐to‐peer and public versions of blockchain, this paper focuses primarily on cloud‐based and private configuration versions of blockchains and investigates use configurations, advantages and limitations as firms bring blockchain‐based market mechanisms into their organizations. In addition, this paper investigates some emerging issues associated with blockchain use in consortium settings. Finally, this paper relates some proposed uses of blockchain for transaction processing to other technologies, such as data warehouses and databases.
Ming Li, Jian Weng, Anjia Yang, Wei Lu · 9 authors
Crowdsourcing systems which utilize the human intelligence to solve complex tasks have gained considerable interest and adoption in recent years. However, the majority of existing crowdsourcing systems rely on central servers, which are subject to the weaknesses of traditional trust-based model, such as single point of failure. They are also vulnerable to distributed denial of service (DDoS) and Sybil attacks due to malicious users involvement. In addition, high service fees from the crowdsourcing platform may hinder the development of crowdsourcing. How to address these potential issues has both research and substantial value. In this paper, we conceptualize a blockchain-based decentralized framework for crowdsourcing named CrowdBC, in which a requester's task can be solved by a crowd of workers without relying on any third trusted institution, users' privacy can be guaranteed and only low transaction fees are required. In particular, we introduce the architecture of our proposed framework, based on which we give a concrete scheme. We further implement a software prototype on Ethereum public test network with real-world dataset. Experiment results show the feasibility, usability, and scalability of our proposed crowdsourcing system.
Philip Treleaven, Richard Gendal Brown, Danny Yang
The banking and financial-services industry has taken notice of blockchain technology’s many advantages. This special issue explores its unlikely origins, tremendous impact, implementation challenges, and enormous potential. The web extra at https://youtu.be/wPFxKnlu1bA features R3’s Tim Swanson as he interviews global experts on blockchain technology for finance.
Zhetao Li, Jiawen Kang, Rong Yu, Dongdong Ye · 6 authors
In industrial Internet of things (IIoT), peer-to-peer (P2P) energy trading ubiquitously takes place in various scenarios, e.g., microgrids, energy harvesting networks, and vehicle-to-grid networks. However, there are common security and privacy challenges caused by untrusted and nontransparent energy markets in these scenarios. To address the security challenges, we exploit the consortium blockchain technology to propose a secure energy trading system named energy blockchain. This energy blockchain can be widely used in general scenarios of P2P energy trading getting rid of a trusted intermediary. Besides, to reduce the transaction limitation resulted from transaction confirmation delays on the energy blockchain, we propose a credit-based payment scheme to support fast and frequent energy trading. An optimal pricing strategy using Stackelberg game for credit-based loans is also proposed. Security analysis and numerical results based on a real dataset illustrate that the proposed energy blockchain and credit-based payment scheme are secure and efficient in IIoT.
What are cryptocurrencies and how do they work? Using bitcoin as a case study, Jean-Paul Delahaye surveys the current state of blockchains, hash functions, mining, proof of work systems, and some of the myriad of ways peer-to-peer cash systems may be used in the future.
This paper is placed in the context of a growing number of social and political critiques of blockchain technologies. We focus on the supposed potential of blockchain technologies to transform political institutions that are central to contemporary human societies, such as money, property rights regimes, and systems of democratic governance. Our aim is to examine the way blockchain technologies canbring about - and justify - new models of governance. To do so, we draw on the philosophical works of Hobbes, Rousseau, and Rawls, analyzing blockchain governance in terms of contrasting social contract theories. We begin by comparing the justifications of blockchain governance offered by members of the blockchain developers’ community with the justifications of governance presented within social contract theories. We then examine the extent to which the model of governance offered by blockchain technologies reflects key governance themes and assumptions located within social contract theories, focusing on the notions of sovereignty, the initial situation, decentralization and distributive justice.
Christopher D. Clack, Vikram A. Bakshi, Lee Braine
Smart Contract Templates support legally-enforceable smart contracts, using operational parameters to connect legal agreements to standardised code. In this paper, we explore the design landscape of potential formats for storage and transmission of smart legal agreements. We identify essential requirements and describe a number of key design options, from which we envisage future development of standardised formats for defining and manipulating smart legal agreements. This provides a preliminary step towards supporting industry adoption of legally-enforceable smart contracts.
The practice of securities holding, transfer, and collateral has changed significantly over the past 200 years—moving from paper certificates and issuer registers, to an intermediated environment, and from there to computerization and globalization. These changes have made transacting more efficient and thus rendered markets more liquid. However, the law has lagged behind and is now itself an obstacle to efficiency because international securities transactions are subject to considerable legal uncertainty. The latest global market development, a cryptographic transfer process commonly called the blockchain, is the most recent efficiency-enhancing change. It offers a unique possibility to create a consistent legal framework for securities from scratch, on the basis of a legal concept that, to some extent, resembles bearer securities. This article shows what the new international legal framework could look like in the light of experience gained from earlier developments.
Distributed ledger technologies (DLTs), including blockchains, are increasingly getting a massive interest from established industries. The interest is especially strong among financial services firms, which are starting to see DLTs as a potential driver of huge savings in infrastructure and back-office processes.
In this article, the authors assess the benefits of blockchain/distributed ledger technology for the holding, clearing and settlement of securities currently held in intermediated holding structures and consider the steps needed to facilitate an efficient market. The recommendation is that investors should receive full disclosure of the custody and sub-custody arrangements associated with their investments
Leif-Nissen Lundbæk, Andrea Callia D’Iddio, Michael Huth
We propose the formal study of governed blockchains that are owned and controlled by organizations and that neither create cryptocurrencies nor provide any incentives to solvers of cryptographic puzzles. We view such approaches as frameworks in which system parts, such as the cryptographic puzzle, may be instantiated with different technology. Owners of such a blockchain procure puzzle solvers as resources they control, and use a mathematical model to compute optimal parameters for the cryptographic puzzle mechanism or other parts of the blockchain. We illustrate this approach with a use case in which blockchains record hashes of financial process transactions to increase their trustworthiness and that of their audits. For Proof of Work as cryptographic puzzle, we develop a detailed mathematical model to derive MINLP optimization problems for computing optimal Proof of Work configuration parameters that trade off potentially conflicting aspects such as availability, resiliency, security, and cost in this governed setting. We demonstrate the utility of such a mining calculus by solving some instances of this problem. This experimental validation is strengthened by statistical experiments that confirm the validity of random variables used in formulating our mathematical model. We hope that our work may facilitate the creation of domain-specific blockchains for a wide range of applications such as trustworthy information in Internet of Things systems and bespoke improvements of legacy financial services.
Equity crowdfunding via the Internet is a new channel of raising money for startups. It features low barriers to entry, low cost, and high speed, and thus encourages innovation. In recent years, equity crowdfunding in China has experienced some developments. However, some problems remain unsolved in practice. Blockchain is a decentralized and distributed ledger technology to ensure data security, transparency, and integrity. Because it cannot be tampered with or forged, the technology is deemed to have great potential in the finance industry. This study examines current problems in the practice of equity crowdfunding in China. Based on the analysis of the characteristics of blockchain technology, this study further explores its practical applications in equity crowdfunding. 1) Blockchain technology may be a secure, efficient, low-cost solution for the registration of stocks and shares of a firm financed by crowdfunding; 2) Blockchain technology simplifies the transaction and transfer of crowdfunding equities, and thus facilitates their circulation; 3) Blockchain technology enables peer to peer transactions between investors and entrepreneurs, and solves the problems of regulatory compliance and security of fund management; Blockchain technology can be used to develop a voting system for crowdfunders, which enables them to be involved in corporate governance. This helps protect the rights and interests of small investors; 5) Blockchain technology helps regulators know about market conditions, and supports regulatory activities such as managing investors and fighting money laundering.
David C. Mills, Kathy Wang, Brendan Malone, Anjana Ravi · 14 authors
Digital innovations in finance, loosely known as fintech, have garnered a great deal of attention across the financial industry. Distributed ledger technology (DLT) is one such innovation that has been cited as a means of transforming payment, clearing, and settlement (PCS) processes, including how funds are transferred and how securities, commodities, and derivatives are cleared and settled. DLT is a term that has been used by the industry in a variety of ways and so does not have a single definition. Because there is a wide spectrum of possible deployments of DLT, this paper will refer to the technology as some combination of components including peer-to-peer networking, distributed data storage, and cryptography that, among other things, can potentially change the way in which the storage, recordkeeping, and transfer of a digital asset is done.
Blockchain technology is a core, underlying technology with promising application prospects in the banking industry. On one hand, the banking industry in China is facing the impact of interest rate liberalization and profit decline caused by the narrowing interest-rate spread. On the other hand, it is also affected by economic transformation, Internet development, and financial innovations. Hence, the banking industry requires urgent transformation and is seeking new growth avenues. As such, blockchains could revolutionize the underlying technology of the payment clearing and credit information systems in banks, thus upgrading and transforming them. Blockchain applications also promote the formation of “multi-center, weakly intermediated” scenarios, which will enhance the efficiency of the banking industry. However, despite the permissionless and self-governing nature of blockchains, the regulation and actual implementation of a decentralized system are problems that remain to be resolved. Therefore, we propose the urgent establishment of a “regulatory sandbox” and the development of industry standards.
According to the World Economic Forum, by 2025 10% of global GDP will be stored on blockchains, a type of decentralised database and distributed shared ledger. Smart contracts are automated computable contracts that are executed in blockchains, with the benefit of removing intermediaries and reducing costs. The use cases in finance include: in cross-border payments, to capture obligations, minimize operational errors and expedite transfers; for property and casualty claims in insurance, to automate claims processing through third-party data sources and codification of business rules; for deposits and lending in syndicated loans, to facilitate real-time loan funding and automated servicing activities without intermediaries; for deposits and lending in trade finance, to automate the creation and management of credit facilities ultimately eliminating correspondent banks; for contingent convertible bonds in capital raising, to alert regulators when loan absorption needs to be activated, minimizing need for point-in-time stress tests; for compliance in investment management, to execute reporting and facilitate the automated creation of periodic filings; for proxy voting in investment management, to automate end-to-end confirmation by the validation of votes, increasing transparency; for asset rehypothecation in market provisioning, to enable the real-time reporting of asset history and the enforcement of regulatory constraints, including facilitating clearing and settlement to eliminate need for intermediaries and reduce settlement time; for equity post-trade in market provisioning, to simultaneously transfer equity and cash in real time, reducing the likelihood of errors impacting settlement.The policy implications introduced by decentralization require that economists and lawyers understand this technological shift, and more importantly, the risks related to tangible (e.g consensus selection as a security choice) and intangible (e.g contract incompleteness/code errors) factors. We demonstrate a decision making method where utility is measured by “levels of trust” using artifacts from fields finance applied to a portfolio of institutional smart contract companies. Expected utility is measured by mapping a demand vector field (the attention level), and funding by plotting a scalar field (the investment level); the associated risk exposure is implicit in the consensus mechanism tradeoffs, according to the progression of firms represented in the system of coordinates. The goal is to provide a device for portfolio analysis and construction. The data comes from a panel of 200 million internet users, and investment databases. The result is a comprehensive and scalable view of decentralised portfolios, inspired in the methods of behavioural finance.
The sharing economy, the business of collectively using pri- vately owned objects and services, has fuelled some of the fastest growing businesses of the past years. However, popular sharing platforms like Airbnb or Uber exhibit several draw- backs: a cumbersome sign up procedure, lack of participant privacy, overbearing terms and conditions, and significant fees for users. We demonstrate a Decentralised App (DAPP) for the sharing of everyday objects based on a smart contract on the Ethereum blockchain. This contract enables users to register and rent devices without involvement of a Trusted Third Party (TTP), disclosure of any personal information or prior sign up to the service. With increasing distribution of cryptocurrencies the use of smart contracts such as proposed in this paper has the potential to revolutionise the sharing economy.