DOCSLIB.ORG

Blockchain As an Anti- Corruption Tool Case Examples and Introduction to the Technology

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Blockchain As an Anti- Corruption Tool Case Examples and Introduction to the Technology U4 Issue 2020:7 Blockchain as an anti- corruption tool Case examples and introduction to the technology By Per Aarvik Series editor: Arne Strand Disclaimer All views in this text are the author(s)’, and may differ from the U4 partner agencies’ policies. Partner agencies Australian Government – Department for Foreign Affairs and Trade – DFAT German Corporation for International Cooperation – GIZ German Federal Ministry for Economic Cooperation and Development – BMZ Global Affairs Canada Ministry for Foreign Affairs of Finland Ministry of Foreign Affairs of Denmark / Danish International Development Assistance – Danida Swedish International Development Cooperation Agency – Sida Swiss Agency for Development and Cooperation – SDC The Norwegian Agency for Development Cooperation – Norad UK Aid – Department for International Development About U4 U4 is a team of anti-corruption advisers working to share research and evidence to help international development actors get sustainable results. The work involves dialogue, publications, online training, workshops, helpdesk, and innovation. U4 is a permanent centre at the Chr. Michelsen Institute (CMI) in Norway. CMI is a non-profit, multi-disciplinary research institute with social scientists specialising in development studies. www.U4.no [email protected] Cover photo Clifford Photography on Unsplash (CC cc0) https://unsplash.com/photos/TekPZz1YP3A Keywords blockchain - corruption - development - e-government - illicit financial flows - money laundering - sustainable development goals - transparency Publication type U4 Issue Creative commons This work is licenced under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International licence (CC BY-NC-ND 4.0) The technology behind bitcoin and other cryptocurrencies was supposed to end poverty, eliminate corruption, and provide financial inclusion for all. The very financial institutions it was created to exclude are adopting the technology to increase transactions’ security and reduce costs. Its degree of success is more contextual than related to the technology itself. Main points • Blockchain has the potential to be a game changer in anti-corruption efforts. Whether it is successful or not largely depends on contextual elements – infrastructures, legal systems, social or political settings – rather than on the technology itself. • Implementation of blockchain technologies in governance affects fundamental aspects of society, such as trust in institutions, identity, transparency, and data and privacy protection. • A blockchain is designed to operate in environments where trust in data/code is greater than trust in individuals or institutions. • Records entered in the blockchain are transparent and immutable. Because of these features, there may be conflicts with individual rights such as the right to privacy or the right to be forgotten, as described in the European Union General Data Protection Regulation (GDPR). • When blockchains hold registries of physical items, trusted gatekeepers have to ensure that the physical reality and digital information correspond. • Digital infrastructure, governing regulations, and digital literacy should be in place before blockchain-enabled registries are rolled out, particularly in developing countries. • Decision makers should have an understanding of the technology before deciding on whether or not it is appropriate. Table of contents An overview of blockchains and cryptocurrencies 2 The blockchain and Bitcoin: A brief history 2 Consensus mechanisms 3 Power consumption and energy footprint 4 Sovereign and corporate cryptocurrencies 5 The four major types of blockchain 7 Confusing definitions 8 Prerequisites for blockchain technologies 9 Properties of blockchain relevant for anti-corruption 10 Trust in people and trust in code 11 Trust in gatekeepers 11 Transparency vs privacy 13 Distributed or re-centralised power? 14 Blockchain applications 14 Land rights 14 Digital Identities 18 Remittances and global transactions 21 Regulating the flow of crypto assets 22 Blockchain, provenance, and logistics tracking 23 Digital literacy as a prerequisite to harness the blockchain’s potential 24 Methodology 24 References 26 a About the author Per Aarvik Per is an independent writer on applied digital technology for humanitarianism, development, governance and anti-corruption. Social media data, satellite imagery, geographical information systems, and applied artificial intelligence are among his interests. He holds a Master's degree in Democracy Building from the Department of Comparative Politics, University of Bergen, Norway. His thesis focused on the potential of crowdsourced civil society election monitoring as a tool to combat election fraud. His background is from journalism, advertising and higher design education – as a practitioner, educator, and in managerial roles. In recent years he has led digital humanitarian work during disasters and in democracy projects. Acknowledgements Niklas Kossow, PhD at Hertie School, The University of Governance in Berlin, and Jan Isaksen, CMI Emeritus, have contributed valuable inputs and comments to the report. Thanks also to Arne Strand, director of U4, for his guidance and conversations in the making of the text. Abbreviations AML – Anti-Money Laundering CBDC/NDC – Central Bank Digital Currency also referred to as National Digital Currency CDD – Customer Due Diligence CFT / CTF – Countering the Financing of Terrorism / Counter Terrorist Financing (used) DBVN – Decentralized Borderless Voluntary Nation DAO – Decentralized autonomous organisation FATF – Financial Action Task Force Fork – A blockchain fork is the split occurring when consensus is not reached on a new block GDPR – General Data Protection Regulation (Europe) ISA – Information System Authority (Estonia) KYC – Know Your Client / Know Your Customer NAPR – National Agency of Public Registry (Georgia) P2P – Peer-to-Peer networks without a central hub or decision maker PoS – Proof of Stake – consensus algorithm in blockchains such as Ethereum PoW – Proof of Work – consensus algorithm in blockchains such as the Bitcoin VA – Virtual Asset / Virtual Goods – non-tangible assets or goods VASP – Virtual Asset Service Provider Stablecoin – A cryptocurrency linked to fiat currencies or other values for stability SSO – Single Sign On – offered by corporations such as Google, Facebook or Twitter SSI – Self Sovereign Identity – ID system proposed by Blockchain Bundesverband, Germany U4 ISSUE 2020:7 Bitcoin, cryptocurrencies, and the blockchain technology behind them, have gained a lot of attention in recent years. Bitcoin was introduced in 2008 when trust in financial institutions was at its lowest. The technology was later repurposed for thematic areas other than digital currency. Some experts predicted that blockchain technologies would end poverty, eliminate corruption, and provide financial inclusion for all. Things have changed. Financial institutions and digital corporations are adopting the technology to increase efficiency and to create new financial products. Blockchain technologies are attracting development organisations and anti-corruption communities because of their potential to prevent corruption and protect public registries from fraud and tampering. Blockchain technologies also attract development organisations and anti-corruption communities as tools that can potentially prevent corruption and protect public registries from fraud and tampering. These technologies have even been suggested as a tool to fulfil Sustainable Development Goals (SDGs) related to legal identity and financial inclusion. In humanitarian contexts, the blockchain has, in some cases, replaced traditional banking services to reduce transaction costs and to facilitate tracking of funds and audits in cash-based interventions. Diamonds, luxury objects or gemstones are recorded on blockchains to provide proof of provenance and prevent illegal goods from entering the market. The technology has many uses and can be implemented to increase efficiency and profit, or to reduce the risk of disputes and increase traceability. Blockchain is the underlying platform for Bitcoin and other cryptocurrencies. The technology, designed for a borderless digital currency, was intended to be free from the control of countries and financial institutions, which are now adopting it and modifying it to fit their needs. Digital currencies such as the Libra, part of a project launched by a consortium of companies and NGOs, challenge lawmakers and regulators. Blockchain is a method for storing records, where cryptography is used to link data in a chained structure. Through its verification mechanisms, the blockchain promises to establish trust where trust is absent. Its distributed nature, where a ledger is duplicated among several nodes, prevents unnoticed attempts to falsify records. Because of its potential and its different applications, the technology generates diverging, if not contradicting, opinions. Enthusiasts describe it as a “revolution in trust,” while sceptics criticise it for potentially leading to a society trusting code and 1 U4 ISSUE 2020:7 technology more than humans. Some view blockchain as the most “promising disruptive technology in the fight against corruption” and as a reliable alternative in countries where data maintenance is poor and corruption rampant. Others warn against deploying it unless a number of prerequisites are in place, such as internet connectivity, digitised public records, and a tech-savvy population. The following
Load more

Recommended publications
  • Blockchain in an Internet-Of-Things Network Based on User Participation
    Blockchain in an Internet-of-Things Network Based on User Participation Robert Ljungblad Computer Science and Engineering, bachelor's level 2019 Luleå University of Technology Department of Computer Science, Electrical and Space Engineering ABSTRACT The internet-of-things is the relatively new and rapidly growing concept of connecting everyday devices to the internet. Every day more and more devices are added to the internet-of-things and it is not showing any signs of slowing down. In addition, advancements in new technologies such as blockchains, artificial intelligence, virtual reality and machine learning are made practically every day. However, there are still much to learn about these technologies. This thesis explores the possibilities of blockchain technology by applying it to an internet-of-things network based on user participation. More specifically, it is applied to a use case derived from Luleå Kommun’s wishes to easier keep track of how full the city’s trash cans are. The goal of the thesis is to learn more about how blockchains can help an internet-of-things network as well as what issues can arise. The method takes an exploratory approach to the problem by partaking in a workshop with Luleå Kommun and by performing a literature study. It also takes a qualitative approach by creating a proof-of-concept solution to experience the technology firsthand. The final proof-of-concept as well as issues that arose during the project are analysed with the help of information gathered and experience gained throughout the project. It is concluded that blockchain technology can help communication in an internet-of-things network based on user participation.
    [Show full text]
  • Cryptocurrency: the Economics of Money and Selected Policy Issues
    Cryptocurrency: The Economics of Money and Selected Policy Issues Updated April 9, 2020 Congressional Research Service https://crsreports.congress.gov R45427 SUMMARY R45427 Cryptocurrency: The Economics of Money and April 9, 2020 Selected Policy Issues David W. Perkins Cryptocurrencies are digital money in electronic payment systems that generally do not require Specialist in government backing or the involvement of an intermediary, such as a bank. Instead, users of the Macroeconomic Policy system validate payments using certain protocols. Since the 2008 invention of the first cryptocurrency, Bitcoin, cryptocurrencies have proliferated. In recent years, they experienced a rapid increase and subsequent decrease in value. One estimate found that, as of March 2020, there were more than 5,100 different cryptocurrencies worth about $231 billion. Given this rapid growth and volatility, cryptocurrencies have drawn the attention of the public and policymakers. A particularly notable feature of cryptocurrencies is their potential to act as an alternative form of money. Historically, money has either had intrinsic value or derived value from government decree. Using money electronically generally has involved using the private ledgers and systems of at least one trusted intermediary. Cryptocurrencies, by contrast, generally employ user agreement, a network of users, and cryptographic protocols to achieve valid transfers of value. Cryptocurrency users typically use a pseudonymous address to identify each other and a passcode or private key to make changes to a public ledger in order to transfer value between accounts. Other computers in the network validate these transfers. Through this use of blockchain technology, cryptocurrency systems protect their public ledgers of accounts against manipulation, so that users can only send cryptocurrency to which they have access, thus allowing users to make valid transfers without a centralized, trusted intermediary.
    [Show full text]
  • A Cryptocurrency Spectrum Short Analysis
    Journal of Risk and Financial Management Review A Cryptocurrency Spectrum Short Analysis 1 2 3 Mircea Constantin S, cheau , Simona Liliana Crăciunescu , Iulia Brici and Monica Violeta Achim 3,* 1 Faculty of Automation, Computers and Electronics, University of Craiova, 200585 Craiova, Romania; [email protected] 2 Simona Liliana Crăciunescu, The Bucharest University of Economic Studies, 010374 Bucharest, Romania; [email protected] 3 Faculty of Economics and Business Administration, Babes, -Bolyai University, 400591 Cluj-Napoca, Romania; [email protected] * Correspondence: [email protected] Received: 30 June 2020; Accepted: 11 August 2020; Published: 17 August 2020 Abstract: Technological development brings about economic changes that affect most citizens, both in developed and undeveloped countries. The implementation of blockchain technologies that bring cryptocurrencies into the economy and everyday life also induce risks. Authorities are continuously concerned about ensuring balance, which is, among other things, a prudent attitude. Achieving this goal sometimes requires the development of standards and regulations applicable at the national or global level. This paper attempts to dive deeper into the worldwide operations, related to cryptocurrencies, as part of a general phenomenon, and also expose some of the intersections with cybercrime. Without impeding creativity, implementing suggested proposals must comply with the rules in effect and provide sufficient flexibility for adapting and integrating them. Different segments need to align or reposition, as alteration is only allowed in a positive way. Adopting cryptocurrency decisions should be unitary, based on standard policies. Keywords: cryptocurrencies; fraud; algorithms; correlations; impact; risks; regulation; blockchain 1. Introduction In the area of influence of computer science, the terms undergo rapid mutations, both in sense and interpretability.
    [Show full text]
  • Whitepaper [2], Nakamoto Explains That
    Introduction Since its inception in 2009, Bitcoin [1] and the concept of a blockchain, was developed in response to an inherent flaw in the way transactions were processed on the Internet. In his whitepaper [2], Nakamoto explains that Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model (Nakamoto, 2007) Bitcoin has been rapidly adopted into today’s modern marketplaces. A primary issue with Bitcoin’s rapid adoption is the increase of demand on the original blockchain to handle varying degrees of large transactions. With increased demand comes increased transactional waiting periods, and this has resulted in higher transactional fees in attempts to try and speed-up transaction confirmation times. Official Verge Blackpaper 5.0 2 Table of contents Introduction 2 1.0 Overview 4 1.1 Multi-Algo PoW 4 1.2 Tailored transactional applications 4 1.3 Simple transactions 4 1.4 Stealth transactions 5 1.5 Anon transactions 5 2.0 The Verge Network 6 2.1 TOR Integration 6 2.2 I2P Integration 7 2.3 Electrum 7 2.4 TOR Android 9 3.0 Encrypted Messaging 10 3.1 Message Propagation 11 4.0 Dual-Key Stealth Addressing 12 4.1 Dual-Key Stealth Address Protocol 13 4.2 Key Agreements 14 4.3 The Diffie-Hellman algorithm 14 4.4 Elliptic-Curve Diffie-Hellman (ECDH) 15 4.5 Key Take-aways 17 5.0 Atomic Swaps 18 5.1 What is a Hash Time-Locked Contract (HTLC)? 18 5.2 How do Hash Time-Locked Contracts work? 18 5.3 What are the benefits of HTLC’s? 19 5.4 What are the benefits of Atomic Swaps? 19 5.5 What are the limitations of on-chain Atomic Swaps? 19 5.6 What is the Lightning Network? 19 6.0 Rootstock (RSK) 21 7.0 Ring confidential transactions 24 7.1 Ring Signatures 25 7.2 Pendersen Commitment 25 7.3 Range Proofs 26 Conclusion 26 References 28 Personal Note 30 Official Verge Blackpaper 5.0 3 1.0 Overview The core innovation behind Bitcoin is its decentralized structure.
    [Show full text]
  • Coinbase Explores Crypto ETF (9/6) Coinbase Spoke to Asset Manager Blackrock About Creating a Crypto ETF, Business Insider Reports
    Crypto Week in Review (9/1-9/7) Goldman Sachs CFO Denies Crypto Strategy Shift (9/6) GS CFO Marty Chavez addressed claims from an unsubstantiated report earlier this week that the firm may be delaying previous plans to open a crypto trading desk, calling the report “fake news”. Coinbase Explores Crypto ETF (9/6) Coinbase spoke to asset manager BlackRock about creating a crypto ETF, Business Insider reports. While the current status of the discussions is unclear, BlackRock is said to have “no interest in being a crypto fund issuer,” and SEC approval in the near term remains uncertain. Looking ahead, the Wednesday confirmation of Trump nominee Elad Roisman has the potential to tip the scales towards a more favorable cryptoasset approach. Twitter CEO Comments on Blockchain (9/5) Twitter CEO Jack Dorsey, speaking in a congressional hearing, indicated that blockchain technology could prove useful for “distributed trust and distributed enforcement.” The platform, given its struggles with how best to address fraud, harassment, and other misuse, could be a prime testing ground for decentralized identity solutions. Ripio Facilitates Peer-to-Peer Loans (9/5) Ripio began to facilitate blockchain powered peer-to-peer loans, available to wallet users in Argentina, Mexico, and Brazil. The loans, which utilize the Ripple Credit Network (RCN) token, are funded in RCN and dispensed to users in fiat through a network of local partners. Since all details of the loan and payments are recorded on the Ethereum blockchain, the solution could contribute to wider access to credit for the unbanked. IBM’s Payment Protocol Out of Beta (9/4) Blockchain World Wire, a global blockchain based payments network by IBM, is out of beta, CoinDesk reports.
    [Show full text]
  • Liquidity Or Leakage Plumbing Problems with Cryptocurrencies
    Liquidity Or Leakage Plumbing Problems With Cryptocurrencies March 2018 Liquidity Or Leakage - Plumbing Problems With Cryptocurrencies Liquidity Or Leakage Plumbing Problems With Cryptocurrencies Rodney Greene Quantitative Risk Professional Advisor to Z/Yen Group Bob McDowall Advisor to Cardano Foundation Distributed Futures 1/60 © Z/Yen Group, 2018 Liquidity Or Leakage - Plumbing Problems With Cryptocurrencies Foreword Liquidity is the probability that an asset can be converted into an expected amount of value within an expected amount of time. Any token claiming to be ‘money’ should be very liquid. Cryptocurrencies often exhibit high price volatility and wide spreads between their buy and sell prices into fiat currencies. In other markets, such high volatility and wide spreads might indicate low liquidity, i.e. it is difficult to turn an asset into cash. Normal price falls do not increase the number of sellers but should increase the number of buyers. A liquidity hole is where price falls do not bring out buyers, but rather generate even more sellers. If cryptocurrencies fail to provide easy liquidity, then they fail as mediums of exchange, one of the principal roles of money. However, there are a number of ways of assembling a cryptocurrency and a number of parameters, such as the timing of trades, the money supply algorithm, and the assembling of blocks, that might be done in better ways to improve liquidity. This research should help policy makers look critically at what’s needed to provide good liquidity with these exciting systems. Michael Parsons FCA Chairman, Cardano Foundation, Distributed Futures 2/60 © Z/Yen Group, 2018 Liquidity Or Leakage - Plumbing Problems With Cryptocurrencies Contents Foreword ..............................................................................................................
    [Show full text]
  • Reputation Driven Dynamic Access Control Framework for Iot Atop Poa Ethereum Blockchain
    Reputation Driven Dynamic Access Control Framework for IoT atop PoA Ethereum Blockchain Auqib Hamid Lonea,∗, Roohie Naaza aDepartment of Computer Science and Engineering., NIT Srinagar, Jammu and Kashmir,India,190006 Abstract Security and Scalability are two major challenges that IoT is currently fac- ing. Access control to critical IoT infrastructure is considered as top security challenge that IoT faces. Data generated by IoT devices may be driving many hard real time systems, thus it is of utmost importance to guarantee integrity and authenticity of the data and resources at the first place itself. Due to heterogeneous and constrained nature of IoT devices, traditional IoT security frameworks are not able to deliver scalable, efficient and manage- able mechanisms to meet the requirements of IoT devices. On the other hand Blockchain technology has shown great potential to bridge the missing gap towards building a truly decentralized, trustworthy, secure and scalable environment for IoT. Allowing access to IoT resources and data managed through Blockchain will provide an additional security layer backed by the strongest cryptographic algorithms available. In this work we present a rep- utation driven dynamic access control framework for IoT applications based on Proof of Authority Blockchain, we name it as Rep-ACM. In Rep-ACM framework we build two major services, one for Reputation building (for bet- ter IoT device behaviour regulations) and other for Misbehaviour detection (for detecting any Misbehaviour on object resource usage). Both of these services work in coordination with other services of proposed framework to determine who can access what and under what conditions access should be granted.
    [Show full text]
  • THE EVOLUTION of SCHOOL MATHEMATICS TEXTBOOKS Jeremy Kilpatrick University of Georgia [email protected]
    International Conference on Mathematics Textbook Research and Development 2014 (ICMT-2014) 29-31 July 2014, University of Southampton, UK FROM CLAY TABLET TO COMPUTER TABLET: THE EVOLUTION OF SCHOOL MATHEMATICS TEXTBOOKS Jeremy Kilpatrick University of Georgia [email protected] Over the centuries and around the world, school mathematics textbooks have differed in many ways. In this idiosyncratic survey, I attempt to portray, across time and space, something of what researchers have learned about those textbooks: what they are, what they appear to be, how they are related, and how they have been used. In general, school mathematics textbooks have differed more in approach and form than in function or content. Their principal function has been to serve as repositories of authorized knowledge, although at times they have been enlisted as resources for creative problem solving or as material for self-instruction. In the past, as textbooks took different forms and appeared in different media—clay tablet, papyrus, parchment, bamboo, paper—they also began to take on a wider span of mathematical content and to vary extensively in pedagogical approach. Research on textbooks has examined many of their characteristics, looking at how they have changed over time and, less often, how they differ across communities. Today, school mathematics textbooks seem more similar in mathematical content than they are in appearance, pedagogical outlook, or assistance for the teacher. There does seem to be something of a virtual school mathematics curriculum worldwide, whereas there is little agreement on what features the textbooks enshrining that curriculum should have. Today’s textbooks vary along many dimensions.
    [Show full text]
  • Blockchain in Japan
    Blockchain in Japan " 1" Blockchain in Japan " "The impact of Blockchain is huge. Its importance is similar to the emergence of Internet” Ministry of Economy, Trade and Industry of Japan1 1 Japanese Trade Ministry Exploring Blockchain Tech in Study Group, Coindesk 2" Blockchain in Japan " About this report This report has been made by Marta González for the EU-Japan Centre for Industrial Cooperation, a joint venture between the European Commission and the Japanese Ministry of Economy, Trade and Industry (METI). The Centre aims to promote all forms of industrial, trade and investment cooperation between Europe and Japan. For that purpose, it publishes a series of thematic reports designed to support research and policy analysis of EU-Japan economic and industrial issues. To elaborate this report, the author has relied on a wide variety of sources. She reviewed the existing literature, including research papers and press articles, and interviewed a number of Blockchain thought leaders and practitioners to get their views. She also relied on the many insights from the Japanese Blockchain community, including startups, corporation, regulators, associations and developers. Additionally, she accepted an invitation to give a talk1 about the state of Blockchain in Europe, where she also received input and interest from Japanese companies to learn from and cooperate with the EU. She has also received numerous manifestations of interest during the research and writing of the report, from businesses to regulatory bodies, revealing a strong potential for cooperation between Europe and Japan in Blockchain-related matters. THE AUTHOR Marta González is an Economist and Software Developer specialized in FinTech and Blockchain technology.
    [Show full text]
  • Towards Secure Blockchains
    Towards Secure Blockchains Concepts, Requirements, Assessments | EDITORIAL Editorial Blockchain is currently one of the most widely Consequently, the analysis on the following discussed topics in the area of information pages presents blockchain technology in detail technology. This technology for distributed data and extensively studies its aspects relevant to IT storage originated from the cryptocurrency security. It also assesses to what extent blockchain Bitcoin, which became famous especially due to technology is able to achieve the security prop- the record highs its market value attained in 2017. erties ascribed to it and how it may be evaluated Based on its promise of preventing manipulation within the current legal framework. of data on a purely technical level using its decen- tralised structure, offering maximum transpar- This document thus supports developers and ency and replacing intermediaries within business potential users of blockchain solutions in per- processes, many ideas for applying blockchain forming a well-founded assessment of risks technology in fairly different areas have been and in taking IT security into account from the developed in recent years. start. Furthermore, the dynamic development of blockchain technology offers the possibility Politics has also increasingly taken up blockchain of using the results of this analysis as a basis for technology. For instance, the term blockchain is future discussions on both the national and inter- used several times within the coalition agreement national level. With blockchain—as with other of the 19th election period of the German parlia- topics in IT security—the BSI thus strives to shape ment dating from 2018, and the German federal information security for government, business government has set itself the target of developing and society.
    [Show full text]
  • Facilitating Cross-Chain Cryptocurrency Exchanges: an Inquiry Into Blockchain Technology and Interoperability with an Emphasis on Cryptocurrency Arbitrage
    Eastern Michigan University DigitalCommons@EMU Senior Honors Theses & Projects Honors College 2020 Facilitating cross-chain cryptocurrency exchanges: An inquiry into blockchain technology and interoperability with an emphasis on cryptocurrency arbitrage Samuel Grone Follow this and additional works at: https://commons.emich.edu/honors Part of the Computer Sciences Commons Facilitating cross-chain cryptocurrency exchanges: An inquiry into blockchain technology and interoperability with an emphasis on cryptocurrency arbitrage Abstract Since the introduction and proliferation of the blockchain-based cryptocurrency Bitcoin, alternative cryptocurrencies also based on blockchain technology have exploded in number. It was once believed that one, or very few, cryptocurrencies would eventually dominate the market and drive out competitors. This assumption, however, was incorrect. Thousands of cryptocurrencies exist concurrently. The vast number of cryptocurrencies leads to a problem—what if the cryptocurrency that an individual possesses does not meet their current needs as well as another cryptocurrency might? The attempt to solve this problem has led to the rise of many cryptocurrency exchanges and exchange schemes. In this paper, we will discuss the motivations for an individual to be interested in exchanging two or more cryptocurrencies by describing and comparing various popular cryptocurrencies with different desirable attributes. While we will discuss these attributes, this paper will give special focus to arbitrage in particular. In addition, we will describe various cryptocurrency exchange schemes and their advantages and disadvantages. Finally, we contribute to the understanding of cryptocurrency exchangeability and interoperability by comparing the historical price data of several cryptocurrencies to determine how often arbitrage has been possible in the past. Degree Type Open Access Senior Honors Thesis Department Computer Science First Advisor Weitian Tong Second Advisor S.
    [Show full text]
  • Blockchain (R)Evolution
    AUGUST 2018 REPORT BLOCKCHAIN (R)EVOLUTION EXPLORING THE PAST, PRESENT, AND FUTURE OF BLOCKCHAIN TECHNOLOGY BLOCKCHAIN (R)EVOLUTION INTRODUCTION Blockchain technology is generating a great deal of excitement as organizations consider its potential implications. Companies announcing blockchain-related initiatives have seen their stock prices spike, and the technology has ushered in talk of new levels of security, data fidelity, and an immutable digital ledger that can serve everything from supply chain data to financial transaction records. Since its early applications in cryptocurrency, blockchain implementations have focused on keeping data secure by ensuring integrity. But the journey of blockchain technology now stretches far beyond Bitcoin. For businesses, blockchain implementations can change the game in terms of providing a secure way to store and track transactions, and they have sparked significant investment and interest, particularly in the financial services industry. As can be expected however, the growing interest in blockchain technology has impacted both the legitimate and illicit economies. Due to its decentralized nature, cryptocurrency and the anonymity it can offer have been leveraged by cybercriminals for years. Beyond that, the growing popularity of cryptocurrency among the public has made it more than just a payment mechanism. It is now a target, as attackers are increasingly deploying cryptomining software onto computers surreptitiously to make money. Looking ahead, innovation is certain — both for cybercriminals and corporations. In this paper, we will examine the past and present uses of blockchain technology, provide an inside look at the growing focus on cryptomining by attackers, and offer predictions of how the technology will have an impact on both the corporate world and the underworld.
    [Show full text]