Banks and other financial institutions have evolved along with e-commerce by enabling unfamiliar parties to transact around the globe with little to no risk. This service does not come without a price. Bitcoin was established as a more efficient way to securely transact online, removing the need for third-party financial institutions. The purpose of this Note is to highlight the potential of Bitcoin as a medium of exchange, making Internet transactions more flexible and affordable to all. The author analyzes Bitcoin’s current price volatility, highlighting a trend of Bitcoin-backed investments, and argues against any government action in support of these purely speculative and short-sited investment schemes. This Note expounds upon the major obstacles facing Bitcoin’s acceptance by mainstream commercial marketplaces. Most importantly, the author looks at future government intervention, and argues against any direct legislation on the Bitcoin system in order to allow for its growth and development.
This paper studies the impacts of Bitcoin networks in international trade and suggests the mechanisms through which the effects come into place. In this paper, we examine the networks effects promote trade by mitigating the informal barriers and the issue of whether the efficiency of the Bitcoin payment system would induce its users to trade more internationally. The study related to Bitcoin is still lacking, as data available is not very accessible and adequate, and the nature of price volatility leads people to make presumption that it is just a form of speculation. Gravity model approach is used in our regression. We found Bitcoin networks have significantly positive impacts on international trade. The aggregate effect is then further analyzed in accordance to industries to draw deeper insights. Given the findings, we could learn more about the effects of its community on international trade, as well as how the users are making use of Bitcoin, as a more efficient payment system.
W artykule zwrócono uwagę na wybrane zagrożenia związane z internetowym systemem płatności za pomocą kryptowaluty bitcoin. Poruszone zostały zagadnienia związane z anoniowością w sieci Bitcoin, pozyskiwaniem bitcoinów, prawdopodobieństwem podwójnego wydania środków (ang. double spending), ryzykiem inwestycji w kryptowalutę oraz ryzykiem AML.
Il saggio propone alcune considerazioni sulla natura giuridica delle 'criptovalute' e dei Bitcoin in particolare, in assenza di specifica legislazione che ne definisca i caratteri e che individui la disciplina loro applicabile.
OZ Internet [1] hayatin her alanini etkilemektedir. Gun gectikce Internet’e baglanan kisilerin sayisi artmaktadir. Pek cok alanda yararlanilan Internet’ten ticarette de yararlanilmaktadir. Internet’te herhangi bir calisma saati veya isyeri ile siniri olmaksizin gerceklesen ticaret, isletmelerin giderek daha fazla ilgisini cekmektedir [2] . Elektronik ticaretin [3] yukselisi ve teknolojideki ilerlemeler yeni odeme sistemlerinin kullanimini baslatmistir. Bu makalede elektronik odeme yontemleri genel olarak degerlendirdikten sonra elektronik paranin bir cesidi olan sanal paranin en bilinen orneklerini olusturan Bitcoin ve Linden Dolari incelenmektedir. Calismada elektronik paranin avantaj ve dezavantajlari ve konu ile ilgili oneriler dunyadaki ve Turkiye’deki uygulamalar gozonunde tutularak degerlendirilmistir. Anahtar Kelimeler: Elektronik Para, Sanal Para, Kripto Para, Bitcoin, Linden Dollars ABSTRACT Internet affects all areas of life. The number of persons who connects to the Internet increases day by day. It has been benefited from the Internet in numerous fields and in commerce as well. The commerce which takes place on the Internet without any burdens of working hours or workplaces attracts the business concerns increasingly. The rise of electronic commerce and the developments in technology have started the use of new payment systems. This article attempts to assess the electronic payment methods generally and then analyse the best known virtual currencies Bitcoin and Linden Dollars which are also types of electronic money. In this work the advantages and the disadvantages of electronic money and the suggestions about the subject has been evaluated by looking at the practice in the world and in Turkey. Keywords: Electronic Money, Virtual Currency, Crypto Currency, Bitcoin, Linden Dollars [1] Bu calismada Internet kelimesinin ilk harfi ozel isim olmasi nedeni ile buyuk yazilmistir. Internet, birbirine bagli bilgisayar aglari kelimelerinin (Interconnection of computer networks) kisaltmasidir. http://www.Internetnedir.net/Internet-nedir-ne-degildir.html (Erisim: 22.03.2014); Turk Dil Kurumu, Internet kelimesinin karsiligi olarak genel ag demektedir. http://tdk.gov.tr/index.php?option=com_gtsa Oyle ki, elektronik ticaret Amerika Birlesik Devletleri’nde her yil %20 buyuyen 220 Milyar Amerikan Dolarlik bir endustri haline gelmistir. 2017 yilinda bu rakamin 270 Milyar Amerikan Dolari’na cikmasi beklenmektedir. Avrupa’da ise elektronik ticaretin her yil buyume orani %11’dir.; Morrison, K.: The Growth of E-commerce, http://socialtimes.com/data-growth-e-commerce-infographic_b198687 (Erisim 31.08.23014); Turkiye’de 2009 yilindan 2013 yilina kadar olan donemde elektronik ticarette buyume orani % 379,91’dir. 2013 yili itibari ile elektronik ticaret 35 Milyar Turk Lirasina yakin islem hacmine ulasmistir. Yillara gore elektronik ticaretin gelisim oranlari ve detayli bilgi icin bkz. http://www. platinmarket.com/2009-2013-arasi-turkiye-e-ticaret-buyume-orani/ (Erisim 30.10.2014). [3] 6563 sayili Elektronik Ticaretin Duzenlenmesi Hakkinda Kanun’un 1(a) maddesinde elektronik ticaret “fiziki olarak karsi karsiya gelmeksizin elektronik ortamda gerceklestirilen cevrimici iktisadi ve ticari her turlu faaliyet” olarak tanimlanmistir. Elektronik ticaretin doktrinde degisik tanimlari bulunmaktadir. “Elektronik ticaret, yazi, ses ve/veya goruntu seklindeki verilerin elektronik ortamda islenmesi ve iletilmesi suretiyle gerceklestirilen ticari islemlerin butunudur.” seklindeki tanim icin bkz. Ozdemir Kocasakal, H.: Elektronik Sozlesmelerden Dogan Uyusmazliklarin Cozumunde Uygulanacak Hukukun ve Yetkili Mahkemelerin Tespiti, Vedat Kitapcilik, Istanbul 2003, s.5; Dar anlamda elektronik ticaretin Internet uzerinden ve bilgisayar vasitasi ile gerceklestirilen ticari faaliyetleri ifade ettigi seklinde tanim icin bkz. Kayihan, S. / Yildiz, H.: Elektronik Ticaretin Hukuki ve Vergi Boyutu, Seckin Yayinevi, Ankara 2004, s.39; Elektronik ticaretin ticari islemlerin tamaminin veya bir kisminin elektronik iletisim araclari araciligiyla gerceklestirilmesi seklinde tanimi icin bkz. Sariakcali, T.: Internet Uzerinden Akdedilen Sozlesmeler, Seckin Yayinevi, Ankara 2008, s.19.
This paper is concerned with the new Darwinism of the payment system. The researcher discusses the payment system to understand if Bitcoin would replace our cash-based society. The analysis is based on the technology S-curve and Schumpeter’s model of economic development. At present, there are problems hindering Bitcoin innovation to achieve a wide adoption as the innovation is not well received by the government central banks around the world. It is interesting to see that the swing of S-curves is not strong enough to cause a paradigm shift according to the Schumpeterian concept of creative destruction. The results have shown parallel S-curve trajectories of electronic money innovations signifying a move from a cash-based economy towards a less cash society. The study provides useful implications to support the diffusion of Bitcoin innovation.
Ever since its creation by the presumed pseudonymous Satoshi Nakamoto, Bitcoin has garnered significant attention as an innovative online payment system. The purpose of this paper is to discover the degree to which the participation of a Bitcoin user is dependent on the speculative opportunities in the Bitcoin market and, accordingly, to test Bitcoin’s competence against traditional currency. Using a panel data set from one of the largest Bitcoin traders in Asia, we find that $1 increase in arbitrage between market prices is associated with 0.1 more log-ins of users. However, the paper also suggests that such a speculative nature might not be strong enough to dominate user behaviors entirely. The findings report that the actual reason for Bitcoin’s incompetence as a form of currency against the conventional tools of trade may be attributable to its low level of network effects.
Despite a high volatility and the recent fall in price, more and more merchants and consumers adopt Bitcoin. The virtual currency might be standing at its critical point to reach the early majority of adopters. This paper examines whether an application called ChangeTip has the potential to catalyze the breakthrough of Bitcoin. We assume a strong linkage between the diffusion of ChangeTip and Bitcoin so that we can directly deduce the impact of this application on Bitcoin. Results from a conducted online survey of 210 potential early adopters indicate that the diffusion of ChangeTip has the potential to advance the diffusion of Bitcoin to mainstream markets. We found that performance expectancy is the key driver for the intention to recommend ChangeTip. Also, effort expectancy, social influence and facilitating conditions are important factors for recommending ChangeTip. Concerning the intention to use ChangeTip in the future, performance expectancy and social influence are the main drivers. Furthermore, facilitating conditions are important for using ChangeTip. In addition, an analysis of the non-user of Bitcoin and ChangeTip was conducted. Theoretical and practical implications of these results are discussed.
This paper describes a study to understand what differentiates organization adopters of Bitcoin from nonadopters by comparing their IT-readiness, innovativeness and social media presence. The craze over cryptocurrency such as Bitcoin has been likened to a modern-day gold rush, yet academic research has not caught up. Governments are struggling with the very idea of cryptocurrency systems. After the price of Bitcoin fell from $1,200 to $300 in 2014, consumer interest flagged, leaving the future of Bitcoin adoption uncertain despite a slow and steady increase of organization adopters. Organization adoption is more important than consumer, because consumers can’t use cryptocurrency if organizations don’t accept them as payment. This research serves as a basis for future research on Bitcoins and Bitcoin adoption by highlighting some important hurdles to its adoption as a new innovation, in the hope that such endeavors move us ever closer to the vision of a true “people’s currency.”
Bitcoin has become the de facto 'gold' standard among cryptocurrencies as it is the most widely accepted in commerce, has the largest mining network, and greatest volume of transactions. Because of this, miners of other SHA-256 cryptocurrencies will tend to convert those altcoins into bitcoin in order to transact in a meaningful way with the real economy. The result is that bitcoin mining regulates that of all other SHA-256 blockchains. Specifically, what matters is the expected number of bitcoins produced per day given a unit of hashing (mining) power, whatever the equivalence in the coin being mined. If mining for a different coin would yield a greater return in bitcoins at the margin (per day) for a miner, an apparent arbitrage opportunity will exist to direct mining effort at that cryptocurrency and subsequently exchange those for bitcoin. These opportunities, once taken, quickly eliminate the profitable arbitrage and appear to operate in a fairly efficient and predictable manner. A model is developed in this paper to formalize this process where cryptocurrency miners seeking to maximize production in terms of bitcoins earned in a day will exploit any such opportunities. If no such opportunities exist, they will simply revert to mining bitcoins directly. There are some important implications to this process, such as a tendency for cryptocurrencies to fall in price relative to bitcoin over time, and for changes in bitcoin mining difficulty to indirectly influence the market prices of altcoins. Finally, it seems that those undertaking this process of miners' arbitrage do so at the expense of speculators and noise traders who make decisions regarding buy and sell trades without the use of fundamental data. These participants generally have poor timing, follow trends, and over-react to good and bad news. Altcoins are produced by miners and subsequently offered for sale in the market in order to obtain bitcoins; meanwhile noise traders serve as the only bid-side to the market, on average.
This paper assesses costs and benefits of regulating Bitcoin. A review of the main justifications for regulating it shows that scope for efficient regulation is limited. Private governance structures and fee-based services have already begun addressing many of the known problems. Furthermore, since a regulation would discourage use, the costs—in terms of technological gains forgone—are potentially high. Nonetheless, there is scope for regulation, to ensure one has recourse in the event of theft, as long as the following are addressed: 1) provide a clear regulatory framework; 2) supervise transactions to dissuade crime, without compromising the medium; 3) regulate exchanges, rather than users; 4) encourage technological progress by committing to an environment of permissionless innovation.
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.
This Article looks at competing models for regulating providers of services to individuals and businesses that take cryptocurrencies in payment for goods and services, including operators of online wallets and exchanges, and other cryptocurrency market intermediaries whose functions resemble "money service businesses" or "money transmission." We conclude that, in addition to whatever "money services" or "money transmission "prudential regulation the States or federal government may adopt, the operation of wallets and exchanges requires a new commercial law that lays out rights and liabilities of cryptocurrency users in a robust and transparent fashion. We use Article 4A of the Uniform Commercial Code as a model for regulating cryptocurrency transactions in which intermediaries play a role.
This paper aims to identify the likely source(s) of value that cryptocurrencies exhibit in the marketplace using cross sectional empirical data examining 66 of the most used such 'coins'. A regression model was estimated that points to three main drivers of cryptocurrency value: the aggregate computational power employed in mining for units of the cryptocurrency; the rate of unit production; and the cryptologic algorithm used for the protocol. Bitcoin-denominated relative prices were used, avoiding much of the price volatility associated with the dollar price of Bitcoin. The resulting model can be used so better understand the drivers of value observed in cryptocurrencies. These findings may also have implications in understanding other assets such as commodity forms of money.
Kalliopi N. Kypriotaki, Efpraxia D. Zamani, George M. Giaglis
Inspired by the new technological advancements and the groundbreaking technology at the foundation of cryptocurrencies, organizational structures are expected to evolve and new corporate structures to emerge, based on full decentralization. We posit that the blockchain, i.e., the technology, system and protocol behind and beyond the most popular digital crypto-currencies, will introduce decentralization in many manifestations of our everyday life, especially in cases where an independent trusted third party is needed to ensure and verify operations and transactions. This paper builds upon the blockchain technology and discusses how it could enable fully decentralized forms of business structures to emerge; decentralized autonomous corporations (DACs) are business entities totally based on code; running on the cloud, providing certain services and creating value for their customers. Thus, we argue that DACs could prove a means of decentralizing and automating decision making in organizations.
Gareth W. Peters, Efstathios Panayi, Ariane Chapelle
The internet era has generated a requirement for low cost, anonymous and rapidly verifiable transactions to be used for online barter, and fast settling money have emerged as a consequence. For the most part, e-money has fulfilled this role, but the last few years have seen two new types of money emerge. Centralised virtual currencies, usually for the purpose of transacting in social and gaming economies, and crypto-currencies, which aim to eliminate the need for financial intermediaries by offering direct peer-to-peer online payments. We describe the historical context which led to the development of these currencies and some modern and recent trends in their uptake, in terms of both usage in the real economy and as investment products. As these currencies are purely digital constructs, with no government or local authority backing, we then discuss them in the context of monetary theory, in order to determine how they may be have value under each. Finally, we provide an overview of the state of regulatory readiness in terms of dealing with transactions in these currencies in various regions of the world.
This systematic literature review examines cryptocurrencies (CCs) and Bitcoin. Because cryptocurrency research has not gained much attention from Information Systems (IS) researchers and needs a more vivid discussion, this review summarizes the main concepts of 42 papers and aligns them to IS Research. Although, cryptocurrency research has not reached IS mainstream yet, there is massive potential for multifaceted research ranging from protocol development to designing alternative digital currency schemes. Cryptocurrencies entail a core digital artifact and present a rich phenomenon based on the intertwining of technological artifacts and social contexts. We argue that cryptocurrencies are an alternative payment method that may replace intermediaries with cryptographic methods and should be embedded in the research areas of SIGeBIZ and SIGSEC. At the end of this literature review, we discuss some open research gaps like new business models based on cryptocurrencies or the influence of culture on cryptocurrencies and Bitcoin.
The advent of Bitcoin in 2009 has not only introduced Cryptocurrencies and lead to a new digitization movement in the financial, especially payments industry but also made way for a new breed of innovative technologies based on decentralized digital currencies. Generally, decentralized consensus systems could change the very nature of how companies, organizations and individuals are built and interact with each other. Decentralized consensus systems, decentralized applications and smart contracts provide the conceptual framework as well as the technological basis to establish predefined, incorruptible protocols and contracts to organize human behavior and interconnectedness. However, the technical protocols and implementations are quite complex and practitioners as well as interdisciplinary researchers not familiar with cryptography, network protocols or decentralized networks are struggling to find access to these concepts and grasp their potential. To fill this gap, we develop a comprehensive taxonomy of decentralized consensus systems in order to provide a tool for researchers and practitioners alike to facilitate classification and analysis of emerging technologies in the field of "Crypto 2.0", the next level of innovation beyond cryptocurrencies.