Blockchain Papers

Zoë Thomas

Argentines are turning to virtual currency transactions to circumvent the government-imposed foreign exchange rate

Winston Moore, Jeremy Stephen

No abstract is available for this record.

Chelsea Deppert

No abstract is available for this record.

Daniel Folkinshteyn, Mark M. Lennon, Tim Reilly

No abstract is available for this record.

Charles G. Cascarilla

Bitcoin is a new financial system that has the potential to have a big impact on the way the world does business. Its open ledger system and distribution network make it a valuable system. Although it is still in its infancy, as bitcoin becomes larger and more sophisticated, it may very well provide solutions to many of the current financial system’s problems.

Robert Viglione

No abstract is available for this record.

Jonathan Lim

No abstract is available for this record.

Vrajlal K. Sapovadia

No abstract is available for this record.

Odile Lakomski-Laguerre, Ludovic Desmedt

Depuis quelques années, nous assistons à l’émergence de monnaies d’un genre nouveau, reposant sur des procédés cryptographiques, gérées en pair à pair selon un consensus distribué. La plus représentative d’entre elles, le Bitcoin, est lancée après la crise financière de 2008 et vient contester un ordre monétaire fondé sur le crédit et le pouvoir bancaire. Ces crypto-monnaies viennent heurter la conception traditionnelle de la monnaie : unitaire, souveraine, territoriale et centralisée. Par conséquent, elles interrogent la théorie et renouvellent le débat sur la nature de la monnaie. Dans ce papier, nous proposons d’analyser le Bitcoin au filtre d’une théorie institutionnaliste de la monnaie. En tant qu’institution sociale, la monnaie est plus qu’une technologie, car elle participe à la construction d’un espace marchand s’articulant avec un ordre socio-économique. C’est pourquoi nous mettons en évidence les arguments de la contestation et les racines idéologiques qui sous-tendent le système Bitcoin : décentralisation, anti-étatisme (cryptage) et naturalisation de la monnaie (minage). En mettant en avant la notion centrale de confiance, nous nous intéressons ensuite à la capacité du projet Bitcoin à construire un ordre monétaire, certes alternatif, mais stable.

Jeanne L. Schroeder

Much of the discussion of bitcoin in the popular press has concentrated on its status as a currency. Putting aside a vocal minority of radical libertarians and anarchists, however, many bitcoin enthusiasts are concentrating on how its underlying technology – the blockchain – can be put to use for wide variety of uses. For example, economists at the Fed and other central banks have suggested that they should encourage the evolution of bitcoin’s blockchain protocol which might allow financial transactions to clear much efficiently than under our current systems. As such, it also holds out the possibility of becoming that holy grail of commerce – a payment system that would eliminate or minimize the roles of third party intermediaries. In addition, the NASDAQ and a number of issuers are experimenting with using the blockchain to record the issuing and trading of investments securities.\nIn this Article, I examine the implications for bitcoin under the Uniform Commercial Code (the “U.C.C.”). Specifically, I consider three issues. In Part 1, I discuss the characterization of bitcoin – which I am using generically to refer to any virtual or cryptocurrency – under Article 9. The bad news is that it does not, and cannot be made to fit into, the U.C.C.’s definition of “money”. If held directly by the owner, bitcoin constitutes a “general intangible”. Unfortunately, general intangibles are non-negotiable. This could greatly impinge on bitcoin’s liquidity and, therefore, its utility as a payment system.\nIn Part 2, I show how this may be mitigated by the rules of Article 8 governing investment securities. If the owner of bitcoin were to choose to hold it indirectly through a financial intermediary, then she and the intermediary could elect to have it treated as a “financial asset” which is super-negotiable. Unfortunately, this comes at the cost of eliminating one of the primary attractions of cryptocurrency, namely the ability to engage in financial transactions directly without a third-party intermediary. However, Article 8, may already provide a legal regime for another contemplated use for the blockchain – namely as a readily searchable means of recording the ownership and transfer of property generally.\nIn Part 3, I explain how cryptosecurities fall squarely within Article 8's definition of “uncertificated securities.” Ironically, therefore, the creation of bitcoin securities may finally breathe life to little used provisions that were invented almost 40 years ago in a failed attempt to solve a completely different problem.

Benjamin Munro, Julia McLachlan

We propose a high level network architecture for an economic system that integrates money, governance and reputation. We introduce a method for issuing, and redeeming a digital coin using a mechanism to create a sustainable global economy and a free market. To maintain a currency's value over time, and therefore be money proper, we claim it must be issued by the buyer and backed for value by the seller, exchanging the products of labour, in a free market. We also claim that a free market and sustainable economy cannot be maintained using economically arbitrary creation and allocation of money. Nakamoto, with Bitcoin, introduced a new technology called the cryptographic blockchain to operate a decentralised and distributed accounts ledger without the need for an untrusted third party. This blockchain technology creates and allocates new digital currency as a reward for "proof-of-work", to secure the network. However, no currency, digital or otherwise, has solved how to create and allocate money in an economically non-arbitrary way, or how to govern and trust a world-scale free enterprise money system. We propose an "Ontologically Networked Exchange" (ONE), with purpose as its highest order domain. Each purpose is defined in a contract, and the entire economy of contracts is structured in a unified ontology. We claim to secure the ONE network using economically non-arbitrary methodologies and economically incented human behaviour. Decisions influenced by reputation help to secure the network without an untrusted third party. The stack of contracts, organised in a unified ontology, functions as a super recursive algorithm, with individual use programming the algorithm, acting as the "oracle". The state of the algorithm becomes the "memory" of a scalable and trustable artificial intelligence (AI). This AI offers a new platform for what we call the "Autonomy-of-Things" (AoT).

Thibault Darcillon

This article focuses on the impact of the process of financialization on two central labor market institutions, workers' bargaining power and employment protection legislation, in 16 OECD countries from 1970 to 2009. Financialization is described as a finance-led regime of accumulation and as the emergence of a shareholder value maximization strategy. Using various mechanisms at the micro and macro levels, empirical work has investigated the relationship between the type of financial relations and the agents' capacities of maintaining strong encompassing labor market institutions. I argue that the process of financialization will exert strong pressures on labor markets toward more eroded/decentralized bargaining institutions and more flexible employment relations. This article proposes an updated indicator of workers' bargaining power and various measures of financialization. Using panel data models, our main results point out that increased financialization is clearly associated with a reduction in workers' bargaining power and in the strictness of employment protection.

Dirk G. Baur, Adrian D. Lee, KiHoon Hong

No abstract is available for this record.

Dirk G. Baur, KiHoon Hong, Adrian D. Lee

Bitcoin is defined as digital money within a decentralized peer-to-peer payment network. It is a hybrid between fiat currency and commodity currency without intrinsic value and independent of any government or monetary authority. This paper analyses the question of whether Bitcoin is a medium of exchange or an asset and more specifically, what is its current usage and what usage will prevail in the future given its characteristics. We analyse the statistical properties of Bitcoin and find that it is uncorrelated with traditional asset classes such as stocks, bonds and commodities both in normal times and in periods of financial turmoil. The analysis of transaction data of Bitcoin accounts shows that Bitcoins are mainly used as a speculative investment and not as an alternative currency and medium of exchange.

Alessandro Caiani, Antoine Godin, Eugenio Caverzasi, Luca Riccetti · 8 authors

We present an agent based stock flow consistent macroeconomic model with heterogeneous agents interacting through a decentralized matching process across multiple markets with multiple assets. The model is consistent across both the micro and macroeconomic levels, by providing a detailed, comprehensive, and rigorous accounting of real and financial flows and stocks. We implement the model using a brand new Java programming platform, explicitly designed for AB-SFC models.

Malte Möser, Rainer Böhme

No abstract is available for this record.

Alejandro Drexler, Antoinette Schoar

We show that the cost of employee turnover in firms that rely on decentralized knowledge and personal relationships depends on the firms' planning horizons and the departing employees' incentives to transfer information. Using exogenous shocks to the relationship between borrowers and loan officers, we document that borrowers whose loan officers are on leave are less likely to receive new loans from the bank, are more likely to apply for credit from other banks, and are more likely to miss payments or go into default. These costs are smaller when turnover is expected, as in the case of maternity leave, or when loan officers have incentives to transfer information, as in the case of voluntary resignations. This paper was accepted by Wei Jiang, finance.

Adrian Blundell‐Wignall

The financial crisis has led to a widespread loss of trust in financial intermediaries of all kinds, perhaps helping to open the way towards the general acceptance of alternative technologies. This paper briefly summarises the crypto-currency phenomenon, separating the ‘currency’ issues from the potential technology benefits. With respect to crypto currencies, the paper argues that these can’t undermine the ability of central banks to conduct monetary policy. They do, however, raise consumer protection and bank secrecy issues. The valuation of Bitcoins and price volatility issues are discussed, as well as electronic theft, contract failures, etc., all of which could result in large losses to users and hence ultimate costs to the taxpayer (e.g. the failure to provide adequate private pensions resulting in increased reliance on public pensions). The anonymity features of the crypto-currencies also facilitate tax evasion and money laundering, both of which are major public policy concerns. The technology associated with crypto-currencies, on the other hand, could ultimately shift the entire basis of trust involved in any financial transaction. It is an innovation that creates the ability to carry out transactions without the need for a trusted third party; i.e. a move towards trust-less transactions. This mechanism could work to eliminate the role of many intermediaries, thereby reducing transactions costs by introducing much needed competition to incumbent firms. The generic issues that policy makers need to examine are summarised.

Pavel Ciaian, Miroslava Rajčániová, d’Artis Kancs

This is the first article that studies BitCoin price formation by considering both the traditional determinants of currency price, e.g., market forces of supply and demand, and digital currencies specific factors, e.g., BitCoin attractiveness for investors and users. The conceptual framework is based on the Barro (1979) model, from which we derive testable hypotheses. Using daily data for five years (2009–2015) and applying time-series analytical mechanisms, we find that market forces and BitCoin attractiveness for investors and users have a significant impact on BitCoin price but with variation over time. Our estimates do not support previous findings that macro-financial developments are driving BitCoin price in the long run.

Bernhard Rengs, Manuel Scholz-Wäckerle

We present a highly stylized agent-based computational model (ABM) of an artificial economic and monetary union. Contrary to other current macroeconomic ABMs, it focuses on the relations/consequences of credit-financed, high-leveraged economies, conspicuous consumption within and across borders and a monetary and economic union of individual countries. The model includes a number of boundedly rational agents of the following types: a central bank, states & governments, banks, firms and households. In summary, it enables simulations of interacting political economies within a monetary union, entailing complex interactions and interdependencies between centralized governments/central banks and decentralized markets for goods (regular and status), labor, loans as well as bonds from the bottom up. Through its modular structure, we are able to apply dynamic comparative institutional analysis by investigating medium and long-run economic effects.

Tadej Ošlovnik

Razsirjenost uporabe virtualnih denarnih valut se v zadnjem casu naglo povecuje, kar napeljuje na potrebo po podrobnejsi seznanitvi z njimi. Virtualne denarne valute, ki iz tehnicnega vidika ponujajo relativno dovrsen in delujoc sistem, obenem prinasajo stevilne negotovosti na podrocju njihovega umescanja v obstojece zakonodajne okvire. Zakonodajalci in pravni strokovnjaki po svetu so sele pred kratkim zaceli odkrivati ta fenomen. V diplomskem delu je iz pravne, ekonomske in tehnicne plati predstavljen sistem virtualnih denarnih valut s poudarkom na valuti bitcoin. Sirok vpogled v delovanje sistema je podlaga za razumevanje zakonodajnih procesov, ki bodo sooblikovali prihodnost virtualnih denarnih valut. Diplomsko delo povzema del zakonodajnih in regulacijskih procesov v razlicnih pravnih redih, ki na teoreticni in prakticni ravni skusajo vkljuciti virtualne denarne valute v urejene pravne okvire.

David Christopher Vitt

I explore a popular Bitcoin futures market and make empirical observations on the divergence between standard futures model and the observed futures prices by backing out what the implied risk-free rate of return would be if the standard assumptions held for this exchange. Intended as a blog post.

P. Carl Mullan

Introduction 1. What Is Digital Currency? 2. Who Uses Digital Currency? 3. Digital Gold Currency 4. E-gold 5. Digital Currency Growth 6. Regulatory History 7. Follow the Money 8. Money Service Business 9. Prepaid Access 10. WebMoney Transfer 11. Loom 12. Bitcoin Decentralized Virtual Currency 13. Early Bitcoin 14. Bitcoin Mining 15. Bitcoin Differences 16. Benefits and Advantages 17. Disadvantages and Barriers 18. FIN-2013-G001 19. Global Bitcoin 20. Bitcoin Challenges 21. Bitcoin Merchant Services 22. Bitcoin Opportunity 23. The Future

Yutaka Suzuki

This paper uses a contract theory framework to analyze the mechanisms of eurozone financial governance, with a focus on centralization vs. decentralization and incentive problems. By constructing a Stackelberg game model with n Ministries of Finance as the first movers and the European Central Bank as the second mover, we show that each government can create growth in its own country (self-benefit) by increasing government spending, but that this will increase inflation, resulting in a decrease in the value of the euro. As these effects are shared equally by eurozone countries (cost sharing), an incentive to free-ride at the expense of other countries is present. We then analyze a penalty-based solution to the free-rider problem and derive a second-best solution where a commitment not to renegotiate penalties ex-post is impossible. The optimal solution shows that ¡°limited sovereignty, ¡± that is, substantially constrained fiscal sovereignty, should be imposed as a high marginal cost for the issuance of public debt. Finally, we close the paper by discussing the possibility of Fiscal Integration (Fiscal Union).