It is high time to end the hype. Bitcoin is a slow energy-inefficient dinosaur that will never be able to process transactions as quickly or inexpensively as an Excel spreadsheet. Ethereum’s plans for an insecure proof-of-stake authentication system will render it vulnerable to manipulation by influential insiders.And Ripple’s technology for cross-border interbank financial transfers will soon be left in the dust by Swift, a non-blockchain consortium used by all of the world’s major financial institutions. Similarly, centralised e-payment systems with almost no transaction costs – Faster Payments, AliPay, WeChat Pay, Venmo, PayPal, Square – are being used by billions of people around the world.Today’s coin mania is not unlike the railway mania at the dawn of the industrial revolution in the mid-19th century. On its own, blockchain is hardly revolutionary. In conjunction with the secure, remote automation of financial and machine processes, however, it can have potentially far-reaching implications.Ultimately, blockchain’s uses will be limited to specific, well-defined, and complex applications that require transparency and tamper-resistance more than they require speed – for example, communication with self-driving cars or drones. As for most of the coins, they are little different from railway stocks in the 1840s, which went bust when that bubble – like most bubbles – burst.
cryptocurrencies
Environmentalism in Cryptoanarchism: Gridcoin Case Study by Usman Chohan :: SSRN
This paper discusses the intersection of environmentalism and cryptoanarchism, in the form of Gridcoin, a cryptocurrency which aims to mitigate the environmental impact of cryptocurrency mining, through the implementation of two methods: a Proof-of-Research scheme and a Proof-of-Stake protocol. This raises questions about the need for an environment-friendly consideration of the costs of cryptocurrency mining.
Source: Environmentalism in Cryptoanarchism: Gridcoin Case Study by Usman Chohan :: SSRN
Blockchain Protocol Analysis and Security Engineering 2017 | Cyber Initiative
The conference will explore the use of formal methods, empirical analysis, and risk modeling to better understand security and systemic risk in blockchain protocols. The conference aims to foster multidisciplinary collaboration among practitioners and researchers in blockchain protocols, distributed systems, cryptography, computer security, and risk management.
Source: Blockchain Protocol Analysis and Security Engineering 2017 | Cyber Initiative
Addressing the Dark Side of the Crypto World | IMF Blog
Indeed, the same innovations that power crypto-assets can also help us regulate them.
To put it another way, we can fight fire with fire.
Regulatory technology and supervisory technology can help shut criminals out of the crypto world. More broadly, we are seeing crypto-asset exchanges in some countries that are subject to know-your-customer requirements.
https://blogs.imf.org/2018/03/13/addressing-the-dark-side-of-the-crypto-world/
Google bans bitcoin adverts in cryptocurrency crackdown | Technology | The Guardian
Ads for cryptocurrencies, ICOs, wallets and exchanges will be blocked from June to prevent scams, following Facebook’s move in January
Source: Google bans bitcoin adverts in cryptocurrency crackdown | Technology | The Guardian
Ignorance, Debt and Cryptocurrencies: The Old and the New in the Law and Economics of Concurrent Currencies by Hossein Nabilou, André Prüm :: SSRN
The main contribution of this paper lies in the synthesis of information economics in finance – as related to the mechanisms of money and quasi-money creation in the banking and shadow banking sector – and the mechanism of money creation in cryptocurrency ecosystem. In particular, drawing lessons from the literature on ‘safe assets’ and building on Holmstrom’s seminal work (2015), this paper highlights striking differences in the basic information economics of cryptocurrencies as opposed to fiat currencies (including the monetary aggregates). The main finding of this paper is that, Bitcoin trumps central bank money and private and quasi-private money – created by the banking and shadow banking system – on account of its informational foundations. The superior information economics of Bitcoin, which is built on symmetric (common) knowledge as to the inner workings of Bitcoin Blockchain, as opposed to that of fiat currencies, which is built on symmetric ignorance as to the underlying collateral, would make Bitcoin a new ‘safe’ asset holding the promise of maturing into a viable store of value, a potential medium of exchange, and a unit of account. By comparing the information economics of central, commercial and shadow bank money with that of Bitcoin, we highlight important aspects of information economics of Bitcoin that would inform any pending regulatory intervention in the cryptocurrency ecosystem.
EU says stands ready to regulate cryptocurrencies
The European Union is ready to regulate cyptocurrencies if risks from the sector are not tackled at the global level.The global investment craze over bitcoin and other cryptocurrencies over the past year have seen wild gyrations in their valuations.G20 finance ministers will meet in March, with cryptocurrencies slated to be on the agenda.
The Regulation of Cryptocurrencies – between a Currency and a Financial Product by Hadar Yoana Jabotinsky :: SSRN
As cryptocurrencies gain popularity, the issue of how to regulate them becomes more pressing. The attractiveness of cryptocurrencies is due in part to their decentralized, peer-to-peer structure. This makes them an alternative to national currencies which are controlled by central banks. Given that these cryptocurrencies are already replacing some of the “regular” national currencies and financial products, the question then arises: should they be regulated? And if so, how? This paper draws the legal distinction between cryptocurrencies which are in fact currency and those which are securities disguised as currency. It further suggests that in cases where a token is indeed a security, regular securities regulation should apply. In all other cases anti-fraud measures should be in place in order to protect investors. Further regulation should only be put in place if the cryptocurrency starts increasing systemic risk in the general financial system.
Legislative Regulations to Prevent Terrorism and Organized Crime from Using Cryptocurrencies and Its Effect on the Economy and Society by Stephan Breu, Theodor G. Seitz :: SSRN
First it has to be stated that Cryptocurrencies are mostly used for legal transfers between legitimate partners and are becoming more and more popular in our society. Any heavy regime of new regulations would make all transactions costlier and less convenient. Such negative economic impact is opposing the need of monitoring the financing structures of organized criminal and terrorist organisations. With the increasing importance of cryptocurrencies, a completely new field of complex problems is arising through the implied anonymity and complexity or sheer impossibility to track transfers in the dark net. As regulations in this new financial market will be difficult to enforce, it is necessary to establish international cooperation and capacity building to implement some possibilities for law-enforcement and intelligence entities to monitor the illegal parts of the capital flowing in these systems. To solve this situation, the focus should lie on the attempts to make the risk of detection of such transfers higher for the parties involved. Without interfering too strongly with the new financing system developing, this process asks for improved compliance and cooperation on all levels and capacities.
A Fistful of Bitcoins: Characterizing Payments Among Men with No Names | April 2016 | Communications of the ACM
Bitcoin is a purely online virtual currency, unbacked by either physical commodities or sovereign obligation; instead, it relies on a combination of cryptographic protection and a peer-to-peer protocol for witnessing settlements. Consequently, Bitcoin has the unintuitive property that while the ownership of money is implicitly anonymous, its flow is globally visible. In this paper we explore this unique characteristic further, using heuristic clustering to group Bitcoin wallets based on evidence of shared authority, and then using re-identification attacks (i.e., empirical purchasing of goods and services) to classify the operators of those clusters. From this analysis, we consider the challenges for those seeking to use Bitcoin for criminal or fraudulent purposes at scale.