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1,518 results · page 59 of 64
Dirk Andreas Zetzsche, Ross P. Buckley, Douglas W. Arner
No abstract is available for this record.
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.
Carlos Pinzón, Camilo Rocha
Bitcoin is a digital currency in which the need for a trusted third party is avoided. Instead, this digital currency is based on the concept of ‘proof of work’ allowing users to execute payments by digitally signing their transactions. Since electronic files can be duplicated, fraudulent transactions in the form of double-spend attacks – where users spend the same money at least twice – can happen. This paper is about attack models that can assign possible time advantage to attacker agents in the Bitcoin network. In particular, this paper presents: (i) two attack models in which partial advancement towards block production can be influenced by time and not only by the hashpower used to produce blocks of hashes, and (ii) algorithmic experimentation comparing these models against existing well-known hashrate-based attack models that do not consider time advantage. As a conclusion, this paper presents evidence on the fact that advantages are not negligible for cases in which an attacker has had enough time for secretly mining fraudulent blocks or significant control over the network. Also, the models presented in this paper help in supporting previous claims in the literature about how to correctly model and detect double-spend attacks in the Bitcoin network.
Jean-Marc Figuet
L'émergence de monnaies virtuelles, fondées sur des protocoles cryptographiques suscite des interrogations quant à leur statut de monnaie au sens classique du terme. Dans cet article, nous analysons le cas du bitcoin. Nous montrons qu'il ne satisfait pas aujourd'hui les fonctions usuelles de la monnaie. Son acceptabilité en tant que moyen de paiement est limitée, sa volatilité est trop forte pour servir de réserve de valeur et il n'est pas utilisé comme unité de compte. Cependant la technologie collaborative et décentralisée, la blockchain , utilisée pour émettre cette monnaie et régler les transactions, recèle un potentiel de modification de l'organisation centralisée des systèmes de paiement et de règlement-livraison. Classification JEL : E40, G21, G23.
Angela S.M. Irwin, George Milad
Purpose The purpose of this paper is to look at current discourse on the topic of crypto-currencies, more specifically Bitcoins, and their application to funding acts of terror. The paper clearly establishes the risks posed by this new payment technology and value transfer system to assist in the process of funding, planning and implementing acts of terror. Design/methodology/approach Publications, blogs and sites published and administered by terrorists groups and their supporters are examined to determine their interest in leveraging emerging payment and value transfer systems to facilitate the funding, planning and implementation of terror attacks. Press releases and other publications are also examined to determine whether crypto-currencies have been used by these groups in fund raising, fund transfer or recent terror attacks. Findings Although it is difficult to find concrete evidence of largescale use of Bitcoins and other crypto-currencies by terrorist groups and their supporters, there is strong evidence to suggest that they have been linked to a number of terror attacks in Europe and Indonesia. Supporters of Islamic State of Iraq and Syria (ISIS), jihadists and terrorist organisations are actively looking to and promoting the use of new and emerging technologies, such as Bitcoin, to mitigate some of the risks associated with traditional fund transfer methods. Some websites associated with terrorist organisations have started to collect donations in Bitcoins. Many Bitcoin ATMs and Bitcoin exchanges are located in countries that have seen significant numbers of foreign fighters join ISIS in the Middle East and are also positioned in countries that have seen increased risk of terror attack. These present a significant risk because they allow for the seamless, anonymous transfer of funds to and from terrorist groups and their supporters. The paper highlights the need for further in-depth research into reliable ways to circumvent the current difficulties experienced in differentiating illicit transactions from legitimate ones and establishing reliable means of attribution. Originality/value Using a document published by ISIS, which provides would-be jihadists detailed instructions on how they can get to Syria or Iraq without being detected, a set of models were created showing how this could be achieved using Bitcoins alone. From this scenario, red flag indicators and suspicious behaviour models have been created to determine whether they can be identified during detailed analysis of the Bitcoin blockchain which will be conducted in later stages of research.
Carolin Kaiser
The European Anti-Money Laundering Directive 2015/849 sets out detailed rules for the prevention of money laundering and terrorist financing. It presents a clear framework for financial institutions, covering both cash and electronic payments systems. However, the directive fails to regulate digital currencies, such as bitcoin, leaving a large lacuna in the directive. Financial institutions specializing in digital currencies are thus left to their own devices with little information about how best to address the obligations set forth in directive 2015/849. In this paper, the author will propose the application of the rules on cash to digital currencies. As digital currencies are limited to the digital sphere and operate in a closed environment, they are often mistakenly compared to e-money, but the way digital currencies operate is in fact very close to how cash is used today. Digital currencies are obtained through online exchanges, just as cash is usually obtained from an (automatic) bank teller. Cash and digital currencies are both typically exchanged between individuals without interference of a third party. Finally, there is no entity who can be obliged to track the movement of cash or digital currencies between individuals, except if a payment is exceptionally large. However, unlike anonymous cash, there exists a ledger of all transactions carried out in digital currencies, which can be used by financial intelligence units directly to track suspicious movements. Therefore, it can be argued that the application of the rules on cash could facilitate a smooth incorporation of digital currencies into the existing framework.
Primavera De Filippi, Benjamin Loveluck
A trustless technology, Bitcoin tries to solve issues of social coordination and economic exchange by relying exclusively on technological means. Is technology alone able to resolve the social and political concerns affecting the Bitcoin network?
Elie Bouri, Péter Molnár, Georges Azzi, David Roubaud · 5 authors
This paper uses a dynamic conditional correlation model to examine whether Bitcoin can act as a hedge and safe haven for major world stock indices, bonds, oil, gold, the general commodity index and the US dollar index. Daily and weekly data span from July 2011 to December 2015. Overall, the empirical results indicate that Bitcoin is a poor hedge and is suitable for diversification purposes only. However, Bitcoin can only serve as a strong safe haven against weekly extreme down movements in Asian stocks. We also show that Bitcoin hedging and safe haven properties vary between horizons.
Cindy Tekobbe, John McKnight
Financial technologies embody and shape notions of social, as well as financial, worth. New digital ‘alt-finance’ systems, including the blockchain technology underlying Bitcoin and similar ‘cryptocurrencies,’ are no exception: technology, rhetoric, imagined users and non-users, and a long history of sociotechnical, political, and cultural relations are all elements in a dynamic assemblage with wide-ranging consequences. This paper examines the rise and fall of one alt-finance system: MazaCoin, a Bitcoin variant intended to benefit the Oglala Lakota of the Pine Ridge Indian Reservation. The story of MazaCoin is one of an attempt to unite two apparently divergent sociotechnical assemblages: (1) a libertarian, elite technology of cryptocurrency, and (2) a richly traditional indigenous community with a deep desire for cultural survivance, bound up in a precarious economy left behind in the wake of more than a century of genocide.
Piotr Pryzmont
Bitcoin, a fascinating phenomenon of crypto-technology, has emerged in financial markets as a potential alternative to standard fiat currencies. It represents unique sociotechnical \necosystem working outside of any traditional markets, and its economy is still not well understood. Dynamics of Bitcoin price proves to be quite a controversial subject, but there is a strong indication that social factors mainly influence its economy. \n \nTechnical flaws and lack of any central authority issuing and controlling this digital currency make it vulnerable to abuse. It has been associated with controversy due to frequent incidents, namely hacks, theft, scam, and illicit use, which affected its ecosystem ever since it gained popularity. \n \nThis thesis adds to the discussion about social aspects of Bitcoin economy by analysing the changes in its price volatility in the context of incidents occurring in its \necosystem. As empirically proven, those negative events have no impact on the fluctuations of Bitcoin price.
Mariusz Nowostawski, Christopher Frantz
We present a novel institutional perspective on the distributed consensus and ledger technology known as blockchain. We discuss the concept of Distributed Autonomous Institutions that are able to facilitate global interactions, contracts, and value transfers, all of which are achieved without the need for the human-based third party trust. We argue that due to its properties and design blockchain technology represents a disruptive change in the modelling paradigms of socio-technical systems. Distributed trust and consensus mechanisms offered by blockchain technology represent a novel, qualitatively different, phenomenon. We present the general design principles, stakeholders, the dynamics between those stakeholders, the incentive models, and the consensus protocols currently used in blockchains, before highlighting the potential of blockchain technology to develop distributed autonomous institutions. We conclude with a discussion of challenges associated with the adoption of blockchain technology.
Claus Dierksmeier, Peter Seele
No abstract is available for this record.
Patrick M. Monamo, Vukosi Marivate, Bhekisipho Twala
The rampant absorption of Bitcoin as a cryptographic currency, along with rising cybercrime activities, warrants utilization of anomaly detection to identify potential fraud. Anomaly detection plays a pivotal role in data mining since most outlying points contain crucial information for further investigation. In the financial world which the Bitcoin network is part of by default, anomaly detection amounts to fraud detection. This paper investigates the use of trimmed k-means, that is capable of simultaneous clustering of objects and fraud detection in a multivariate setup, to detect fraudulent activity in Bitcoin transactions. The proposed approach detects more fraudulent transactions than similar studies or reports on the same dataset.
Marco Masoni, Maria Renza Guelfi, Gian Franco Gensini
Illegal activities prosecutable by law in the real life can be committed on the internet alike. In the healthcare domain, we refer mainly to selling of illegal and counterfeit drugs, exchange of pedo-pornographic material and marketing of stolen medical records. These illegal activities are made easier by recent developments of the Internet that medical community must be aware of: darknet and bitcoin. The first allows anonymous surfing and the last anonymous financial transactions. After discussing which healthcare areas are affected by these technological developments of the Internet and the deriving consequences, then the Authors express their opinion on what actions can be taken to protect internet community.
Steven David Brown
Bitcoin has become the currency of choice for cybercriminals. Its distinctive characteristics of decentralisation and pseudo-anonymity are also attractive to criminal actors in general, and yet Bitcoin has been assessed as representing only a low money laundering risk. In many respects, cryptocurrencies are still viewed as an unfamiliar, marginal phenomenon restricted to the purview of specialists. This article seeks: to demystify the Bitcoin concept; to demonstrate that, far from being low-risk, Bitcoin constitutes a substantial danger in terms of criminal enterprise; and to promote the case for greater awareness among criminal justice professionals and law enforcement officers in particular.
Aggelos Kiayias, Ηλίας Κουτσουπιάς, Maria Kyropoulou, Yiannis Tselekounis
We study the strategic considerations of miners participating in the bitcoin's protocol. We formulate and study the stochastic game that underlies these strategic considerations. The miners collectively build a tree of blocks, and they are paid when they create a node (mine a block) which will end up in the path of the tree that is adopted by all. Since the miners can hide newly mined nodes, they play a game with incomplete information. Here we consider two simplified forms of this game in which the miners have complete information. In the simplest game the miners release every mined block immediately, but are strategic on which blocks to mine. In the second more complicated game, when a block is mined it is announced immediately, but it may not be released so that other miners cannot continue mining from it. A miner not only decides which blocks to mine, but also when to release blocks to other miners. In both games, we show that when the computational power of each miner is relatively small, their best response matches the expected behavior of the bitcoin designer. However, when the computational power of a miner is large, he deviates from the expected behavior, and other Nash equilibria arise.
Mikhail Prostoserdov
No abstract is available for this record.
Kevin Liao, Ziming Zhao, Adam Doupé, Gail‐Joon Ahn
Bitcoin, a decentralized cryptographic currency that has experienced proliferating popularity over the past few years, is the common denominator in a wide variety of cybercrime. We perform a measurement analysis of CryptoLocker, a family of ransomware that encrypts a victim's files until a ransom is paid, within the Bitcoin ecosystem from September 5, 2013 through January 31, 2014. Using information collected from online fora, such as reddit and BitcoinTalk, as an initial starting point, we generate a cluster of 968 Bitcoin addresses belonging to CryptoLocker. We provide a lower bound for CryptoLocker's economy in Bitcoin and identify 795 ransom payments totalling 1,128.40 BTC ($310,472.38), but show that the proceeds could have been worth upwards of $1.1 million at peak valuation. By analyzing ransom payment timestamps both longitudinally across CryptoLocker's operating period and transversely across times of day, we detect changes in distributions and form conjectures on CryptoLocker that corroborate information from previous efforts. Additionally, we construct a network topology to detail CryptoLocker's financial infrastructure and obtain auxiliary information on the CryptoLocker operation. Most notably, we find evidence that suggests connections to popular Bitcoin services, such as Bitcoin Fog and BTC-e, and subtle links to other cybercrimes surrounding Bitcoin, such as the Sheep Marketplace scam of 2013. We use our study to underscore the value of measurement analyses and threat intelligence in understanding the erratic cybercrime landscape.
Monica J. Barratt, Jason Ferris, Adam Winstock
No abstract is available for this record.
Monica J. Barratt, Simon Lenton, Alexia Maddox, Matthew Allen
No abstract is available for this record.
Marinelly Montoya-Vásquez
Proyecto de Graduación (Maestría en Administración de Empresas) Instituto Tecnológico de Costa Rica, Escuela de Administración de Empresas, 2016.
Dominick j Battistini
Money laundering can be defined as any act or attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources (Money Laundering, 2016). It is difficult to determine the magnitude of money laundering because these illicit financial flows remain hidden (Schott, 2006). A report issued by the United Nations Office on Drugs and Crime (UNODC) quoted that the total of all criminal proceeds amounted to $2.1 trillion in 2009. The study also shows that “Less than 1 percent of global illicit financial flows are currently seized and frozen” (Pietschmann & Walker, 2012). This is concerning because money laundering not only enables the operation of criminal organizations such as drug and human traffickers but can also significantly distort the economies in which they enter.\nThe Financial Action Task Force (FATF) is an inter-governmental policy-making body that has helped to promote anti-money laundering efforts since its formation in 1989. It has issued 40 recommendations to fight money laundering and nine special recommendations to combat terrorist financing which have been adopted by 32 countries (About - Financial Action Task Force, 2016). Unfortunately, implementing these strategies has proved to be difficult for both developed and lesser developed countries. According to a study conducted by PricewaterhouseCoopers in 2016, “over the last few years, in the U.S. alone, nearly a dozen global financial institutions have been assessed fines in the hundreds of millions to billions of dollars for money laundering and/or sanctions violations" (PricewaterhouseCoopers, 2016). It stands to say that if financial institutions are having difficulties implementing frameworks to prevent and detect money laundering, then our enforcement agencies are unable to adequately address the issue as well.\nA new hurdle that enforcement agencies have had to face is the emergence of Bitcoin, as well as other cryptocurrencies, that can be described as “a digital currency and online payment system in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank” (Swan, 2015). Being an often unrecognized currency, many banks and financial institutions have not had to worry about modifying their compliance programs. The biggest benefit of cryptocurrencies to money launderers is its decentralized nature. There is no governing authority, as members of the network handle issuances and payments. Once a disruptive technology, Bitcoin is beginning to lose momentum for a number of reasons and some its strongest proponents are now referring to it as nothing more than an experiment. The purpose of this paper is not to examine Bitcoin, but rather its underlying technology that has been found to be the actual value: blockchain. After providing a brief overview of the technology and the hurdles that financial institutions face when implementing anti-money laundering compliance programs, the possible ways in which blockchain can help alleviate these difficulties will be examined.
Joseph Bonneau
No abstract is available for this record.
Andrea Borroni
Reviews and journals are currently revolving the topic of cryptocurrencies, even if, so far, the domain of law has not found the spur to adequately and univocally frame this phenomenon. Nonetheless, the US legal theory is presently debating how to include Bitcoins into pre-existing “regulatory folders”, while the country’s judiciary is dealing with the first cases pertaining to Bitcoins. The reaction of the US legal system to this radical technological innovation demonstrates that the operational rules resulting from the joint action of the legal formants may grant a legal system a first response by relying merely on its own legal tools. In light of this, the present article investigates the reactions to Bitcoin and the potentially suitable regulatory frameworks proposed by US legal theory. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.