Tax compliance requires businesses to implement compliant processes but also documenting and reporting mechanisms to proof a compliant process execution. Non-compliance has far-reaching consequences ranging from financial penalties to criminal investigations, thus threatening the competitive position of a business. Therefore, the Organisation for Economic Co-operation and Development (OECD) investigates means, among others the blockchain technology, to ease the tax compliance efforts of businesses. However, ensuring tax compliance in business processes is a complex and challenging task, which is why tax compliance management is often implemented as an independent area of responsibility within a business. Nevertheless, an integration of tax compliance into the business processes is necessary to enable compliance by design, resulting in efficient processes. In this paper, we investigate whether blockchain technology can contribute to tax compliance by design in business processes. To meet this end, we provide a conceptual design and a prototype for compliant process execution in the context of value-added taxes.
Ali Alzubaidi, Ellis Solaiman, Pankesh Patel, Karan Mitra
In pursuit of effective service level agreement (SLA) monitoring and enforcement in the context of Internet of Things (IoT) applications, this article regards SLA management as a distrusted process that should not be handled by a single authority. Here, we aim to justify our view on the matter and propose a conceptual blockchain-based framework to cope with some limitations associated with traditional SLA management approaches.
Alen Hrga, Federico-Matteo Bencic, Ivana Podnar Ćœarko
Initial Coin Offering (ICO) is a process similar to crowdfunding, in which companies raise funds from investors, who in return receive tokens or digital assets. With conventional methods of crowdfunding, the level of transparency depends on a centralized platform used in campaigns. With the emergence of peer-to-peer digital currency systems, also known as cryptocurrencies, it became possible to implement crowdfunding campaigns in a fully transparent way for investors. Public sales of blockchain digital assets are known as crowdsales which are implemented using blockchain smart contracts. The paper presents a solution for automating ICO processes implemented using the Ethereum blockchain and explain the basics of crowdsale token sale flow. Next, we analyze features vital for transparent ICO execution as well as the benefits and costs of running an ICO on cryptocurrency application platforms.
Unfulfilled expectations from macro-economic initiatives during the Great Recession and the massive shift into globalization echo today with political upheaval, anti-establishment propaganda, and looming trade/currency wars that threaten domestic and international value chains. Once stable entities like the EU now look fragile and political instability in the US presents unprecedented challenges to an International Monetary System (IMS) that predominantly relies on the USD and EUR as reserve currencies. In this environment, it is critical for an international organization mandated to ensure stability to plan and act ahead. This paper argues that Decentralized Ledger-based technology (DLT) is key for the International Monetary Fund (IMF) to mitigate some of those risks, promote stability and safeguard world prosperity. Over the last two years, DLT has made headline news globally and created a worldwide excitement not seen since the internet entered the mainstream. The rapid adoption and open-to-all philosophy of DLT has already redefined global socioeconomics, promises to shake up the world of commerce/finance and challenges the workings of central governments/regulators. This paper examines DLT core premises and proposes a two-step approach for the IMF to expand Special Drawing Rights (SDR) into that sphere so as to become the originally envisioned numeraire and reserve currency for cross-border transactions in this new decentralized century.
International roaming is one of the many essential services a carrier enables on its customer's subscriber identity module (SIM) cards that allows its users to send and receive calls, messages, and e-mails whenever they travel to another country. From its beginnings in voice roaming in the last 1.5 decades up to today, international roaming has been a pivotal contributor to the sales of telecommunications carriers. It does however come at a high cost, which the users end up paying, due to numerous factors such as roaming agreements between home carriers and visited carriers as well as clearinghouses needed by companies to settle disputes in agreements between the carriers involved. This paper proposes a consortium blockchain approach coupled with smart contract application. The decentralized nature of a blockchain and the automation that smart contracts provide solves two of international roaming problems-intermediaries and high cost. Together with Tendermint-a consensus mechanism that requires no mining, implementation of the consortium blockchain can be done involving all carriers around the world with them being the privileged users and verify the transactions of two engaging carriers. With this setup, the blockchain is privatized yet still able to perform the essential functions of a blockchain, which are immutability, security, and transparency of data. The proposal can eliminate the need for continually changing roaming agreements and clearing houses that increase the price for the users as well as slow down the processing time making international roaming services much more efficient, user-friendly and cost-effective for both its consumers and carriers.
The research focuses on identifying Bitcoin ecosystem factors and modeling a causal loop diagram of the complete ecosystem. Bitcoin is a complex social, economical and technical system and a brand. Defining Bitcoin is very hard or even impossible, as it is a peer-to-peer phenomenon without central authority or formal definition. System dynamics methods are used to create a causal loop diagram of the Bitcoin ecosystem. Semi-structured expert interviews are used to improve and validate the CLD model and to gain insight about what is Bitcoin, why and how it works and generally about factors related to Bitcoin. Results, in addition to the CLD model, show that Bitcoin is a complex phenomenon without definition and with loads of subjective opinions about what it really is.
Stefanos Leonardos, Daniel Reijsbergen, Georgios Piliouras
The rapid evolution of blockchain technology has brought together stakeholders from fundamentally different backgrounds. The result is a diverse ecosystem, as exemplified by the development of a wide range of different blockchain protocols. This raises questions for decision and policy makers: How do different protocols compare? What are their trade-offs? Existing efforts to survey the area reveal a fragmented terminology and the lack of a unified framework to reason about the properties of blockchain protocols. In this paper, we work towards bridging this gap. We present a five-dimensional design space with a modular structure in which protocols can be compared and understood. Based on these five axes -- Optimality, Stability, Efficiency, Robustness and Persistence -- we organize the properties of existing protocols in subcategories of increasing granularity. The result is a dynamic scheme -- termed the PREStO framework -- which aids the interaction between stakeholders of different backgrounds, including managers and investors, and which enables systematic reasoning about blockchain protocols. We illustrate its value by comparing existing protocols and identifying research challenges, hence making a first step towards understanding the blockchain ecosystem through a more comprehensive lens.
The purpose of this paper is to understand the high Australian dollar Bitcoin prices on LocalBitcoins (localbitcoins.com), which appear to be out of line with market prices. The findings indicate that the price driver is not a reaction to market conditions, but a consequence of the high risk payment methods deemed acceptable by LocalBitcoins. With sellers being allowed to offer Bitcoins in exchange for gift card codes, Bitcoin is traded at four to five times the market price. These trades are typically small in value and the construction of a value-weighted daily Bitcoin price series reveals more accurately LocalBitcoinsâ daily price movements. Benchmarking against CoinDeskâs Bitcoin Price Index (BPI) shows that LocalBitcoins trades can fall above or below this benchmark. When viewed in relation to the LocalBitcoins two market system, a value-weighted price can be calculated to determine a daily premium and discount. Value-weighted prices can also be used to compare trades on LocalBitcoins with the more traditional Bitcoin exchange BTC Markets. These comparisons reveal that prices on LocalBitcoins are not more volatile than prices on BTC Markets or the BPI. It is recommended that any analysis of price behavior on LocalBitcoins take into account the dollar value of the trades to address the adverse impact that high price-low value trades have on volatility. Otherwise, a conclusion of high volatility will continue to persist.
This thesis aims to contribute to the understanding of the economics of the cryptocurrency market. In the first chapter, I document the literature on cryptocurrency and the financial applications of blockchain infrastructure. Finance and economics literature on the area of cryptocurrency is relatively new and spans only the last seven years, thus this review intends to serve as a foundation to prompt future work and a deeper understanding of this field. In the second chapter, I develop an equilibrium model of proof-of-work cryptocurrencies. Equilibrium behaviour of miners and users are characterised for exogenous blockchain protocol metrics; I demonstrate that equilibrium between miners and users can be achieved in the long run. High fixed mining rewards are the reason for instability in current cryptocurrency designs. The equilibrium model has two key implications: first, decentralisation and technological improvement in mining are drivers of low transaction fees and low mining costs in a proof-of-work cryptocurrency environment; and second, limited block size and mining difficulty create an incentive mechanism that achieves cryptocurrency sustainability in the long run. In the third chapter, I study the return spillover and systemic risk in the cryptocurrency market in the context of connectedness. The data illustrates that system-wide connectedness in the cryptocurrency market, commonly observed as the level of systemic risk in the literature, changes over time with respect to the adoption rate of cryptocurrencies. Cryptocurrency protocol disputes, malicious activities in the cryptocurrency environment, and negative financial regulations on cryptocurrencies are key sources of increased connectedness over different time periods. Instead, pairwise connectedness between cryptocurrency pairs can be explained by cryptocurrency fundamentals.
Advances in technology and digitalisation are widespread and affect all facets of life, including jobs, education and social interactions. Electronic devices and high-speed networks have become practically ubiquitous, leading to the rise of the modern, digital consumer, who is positively inclined towards mobile and online platforms and is increasingly the driving force of consumption. The need for speed, convenience, round-the-clock availability and an enhanced user experience has led to significant changes in the payments space. These include the emergence of non-bank payment service providers, private cryptocurrencies and real time gross settlement (RTGS) enhancements. These changes have prompted many central banks to study the possibility of a central bank digital currency (CBDC) as a payment token and the impact it could have on their economies. Electronic central bank-based currencies have been in place for decades. They are in the form of banknotes and serve as reserve balances that banks and participating financial institutions maintain with central banks. The latter are used for interbank settlements. CBDC is a potential new form of money, issued digitally by the central bank and intended to serve as legal tender. Given that these are government-issued legal tender, CBDCs will need to be backed by government debt. This paper aims to provide an understanding of the concept of CBDCs, the case for and against CBDCs and the CBDC experiments worldwide that explore central bank investigations around CBDC usage.
Ray Neiheiser, Gustavo InĂĄcio, Luciana Rech, Joni Fraga
Transparency is a problem in the hiring process of many institutions. For applicants, this process is often difficult to follow since applicants never know the state of their application and can't be sure that they are being evaluated in a fair manner. This is especially important in the public sector. Based on these premises, we propose a transparent and decentral model for the application processes by using Blockchain and smart contracts. In this system, vacancies are published to the blockchain as smart contracts, and candidates, as well as application reviewers and institutions, are rewarded for their honest participation in the process. This paper evaluates the proposed system and offers an example application to prove the viability of the model.
This paper explores how distributed ledger technology (DLT) can contribute to the instant payments market, discussing the potential impacts of the technology. The paper defines how the locus of control in DLT shifts from centralised system administrators to end users, while the locus of knowledge shifts from organisational to smart-contract programmersâ knowledge. The radical implementation of DLT is depicted as a single-layer network where intermediaries are eliminated from the payment cycle, while the conservative approach is described as the gradual application of some DLT components into existing ecosystems. Both designs are briefly discussed from the perspective of database centrality, technological literacy and quality assurance. The paper then compares DLT and instant payments schemes through the lens of standardisation, market adoption and platformisation. The paper shows that to be successful, both instant payment systems and DLT need to gain traction in the market, and that service fragmentation must be resolved by unifying the market. The paper ends by contrasting the various components of instant payment and DLT systems, and concluding that while DLT remains an evolving technology, instant payment systems will continue to play a more prominent role in the market.
Purpose The purpose of this paper is to model blockchain-based smart contracts specifically for the insurance industry. The authors introduce the concept of smart contracts and further discuss the implementation of a decentralized insurance marketplace, namely Etherisc, using smart contracts on the Ethereum blockchain platform. Design/methodology/approach The authors employ three methods in this paper. The first one is a design illustration of a live application, namely, Etherisc. The second one is an economic model using demandâsupply and equilibrium economics. The third one is an illustration using principalâagent modeling using constrained optimization. Findings The findings illustrate the following: in the design discussion, the authors demonstrate the architecture of a live Ethereum-based smart contract system. In the economic model, the authors illustrate how decentralized smart contract systems can increase social welfare by shifting demand and supply by reducing transactional costs. In the principalâagent model, the authors show how both the principal and agent are positively benefited by various mechanisms. Originality/value The paper is an original contribution and can be used as a reference model to study insurance or other similar marketplaces and the underlying economic transformations happening therein.
About a decade ago the fundamental operating principle of the Blockchain was introduced. It took several years before the technology gained widespread recognition in industry and academic communities outside of the computer science sphere. Since then many academic communities have taken up the topic, but so far no well-defined research agenda has emerged: research topics are scattered and rigorous approaches are scarce. More often than not, use cases implemented by industry apply a trial and error approach and there exists a dearth of theory-based academic papers on the topic following robust methodologies. Being a nascent research topic, case studies on Blockchain applications are a suitable approach to systematically transfer industry experience into research agendas which benefit both theory development and testing as well as design science research. In this paper I offer guidelines and suggestions on how to design and structure Blockchain case studies to create value for academia and the industry. More specifically, I describe Blockchain characteristics and challenges, present existing Blockchain case studies, and discuss various types of case study research and how they can be useful for industry and academic research. I conclude with a framework and a checklist for Blockchain case study research.
[full article and abstract in Lithuanian; abstract in English] The main feature of the twenty-first century could be named as permanent transformation that covers all areas. Payments and money are developing and changing especially fast. Technological evolution and development have led to the emergence of new transactional techniques on the Internet, mobile phones, and credit cards. Various systems of payment / money transfer have considerably expanded payment options and possibilities. And such conditions have created opportunities for the emergence of a cryptocurrency. The purpose of the study is to investigate the cryptocurrency, its concept, advantages and disadvantages. Analysis of the scientific literature, systematization, comparison, interpretation and generalization of information research methods were used for the study. Evaluation of the reasons for the emergence of cryptocurrency let to generalise, that the process was mostly influenced by technological progress and the aspiration to find faster, cheaper and more confidential settlement tools. Cryptocurrency may be defined as digital money or property in electronical form. This currency may be characterized by properties of decentralization, uncontrollability and higher risk management. The most important advantages of using a cryptocurrency may be: the speed of settlements; cheaper financial services; additional investment opportunities. Disadvantages - unpredictable, fluctuating value; possible fraud cases; possibility to use cryptocurrency for illegal activities.
Among different concepts associated with the term blockchain, smart contracts have been a prominent one, especially popularized by the Ethereum platform. In this study, we unpack this concept within the framework of Transaction Cost Economics (TCE). This institutional economics theory emphasizes the role of distinctive (private and public) contract law regimes in shaping firm boundaries. We propose that widespread adoption of the smart contract concept creates a new option in public contracting, which may give rise to a smart-contract-augmented contract law regime. We discuss tradeoffs involved in the attractiveness of the smart contract concept for firms and the resulting potential for change in firm boundaries. Based on our new conceptualization, we discuss potential roles the three branches of government â judicial, executive, and legislative â in enabling and using this new contract law regime. We conclude the paper by pointing out limitations of the TCE perspective and suggesting future research directions.
Permissionless blockchain-enabled smart contracts execute code in a distributed peer-to-peer network system and thereby overcome undesirable effects of system centralization. Smart contracts that use proof-of-stake (PoS) algorithms for the validation of transactions have advantages over proof-of-work (PoW) in that they use less electricity and perform faster. The disadvantage of PoS algorithms is the issue of nothing to stake and the emergence of staking oligopolies. Thus, significant stakeholders might be able to create an oligopoly as miners with significant stakes have the chance to validate the transaction in a dominant position. In current smart contracts, the adoption of mobile devices is another emerging trend to manage mobile smart contracts. The advantage is spreading of a democratization effect as a large number of stakers participate in transaction validation and thereby reduce the risk of oligopolies. In our work, we aim to improve the PoS algorithm to reduce oligopoly formation in smart contracts by addressing the need for creating mobile smart contracts that are governed by a mobile lifecycle management. Additionally, we enhance the scalability and performance of smart contracts by focusing specifically on ways to incentivize PoS algorithms.
Although cryptocurrencies have attracted a large amount of users and investors and there has been various researches in the area of distributed ledger technology (DLT), there is little work on cryptocurrency studies. Given the rapidly increasing number and diversity of cryptocurrencies, we present a landscape with a selective set of representative cryptocurrencies to holistically portray their characteristics and provide practitioners an analysis from both business and technical perspectives. The focused observations elaborate how the typical cryptocurrency are designed and operated in industry. This study offers a breakthrough understanding of the cryptocurrencies through the generated landscape which report the state of cryptocurrencies, and can be used as a framework for cryptocurrency analysis.
Martin B. H. Weiss, Kevin Werbach, Douglas Sicker, Carlos Caicedo
Spectrum sharing mechanisms have evolved to meet different needs related to increasing spectrum use efficiency. At first, decentralized and opportunistic cognitive radios (and cognitive radio networks) were the primary focus of research for these mechanisms. This gradually transitioned toward the development of cooperative sharing methods based on databases, typified by TV white spaces databases. Spectrum sharing is now the basis for the dynamic and fine-grained spectrum rights regime for the citizen's band radio service (CBRS) as well as for license shared access (LSA). The emergence of the cryptocurrency Bitcoin has stimulated interest in applying its underlying technology, blockchain, to other applications as well, such as securities trading and supply chain management. This paper explores the application of blockchain to radio spectrum management. While blockchains could underlie radio spectrum management more broadly, we will focus on dynamic spectrum sharing applications. Like the cooperative approaches currently in use, blockchain is a database technology. However, a blockchain is a decentralized database in which the owner of the data maintains control. We consider the benefits and limitations of blockchain solutions in general, and then examine their potential application to four major categories of spectrum sharing.