DOCSLIB.ORG

Deregulatory Potential of Blockchain Technology for Peer-To-Peer Lending

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Deregulatory Potential of Blockchain Technology for Peer-To-Peer Lending KU LEUVEN FACULTY OF LAW Academic year 2017 - 2018 Deregulatory potential of blockchain technology for peer-to-peer lending Supervisor: prof. dr. V. COLAERT Master thesis, submitted by Corrector: prof. dr. W. DEVROE Eline HOOGMARTENS As part of the final examination for the degree of MASTER OF LAW KU LEUVEN FACULTY OF LAW Academic year 2017 - 2018 Deregulatory potential of blockchain technology for peer-to-peer lending Supervisor: prof. dr. V. COLAERT Master thesis, submitted by Corrector: prof. dr. W. DEVROE Eline HOOGMARTENS As part of the final examination for the degree of MASTER OF LAW Summary FinTech, technology-enabled innovation in financial services, has developed significantly over recent years and is impacting the way financial services are produced and delivered. Perhaps the most disruptive technology in the FinTech industry is blockchain technology. Blockchain technology enables the chronologically recording, sharing and synchronizing of data in a digital system decentralised across a network of multiple datastores. The main reason that blockchain technology is disruptive is that it allows transactions to take place without any intermediary. One of the areas in which blockchain technology can play a significant role is peer-to-peer lending. P2P lending is a method of debt financing that enables individuals and businesses to lend or borrow directly from each other through an internet-based platform without the involvement of a bank. The removal of intermediaries not only leads to higher yields for the parties, it also brings significant risks. Examples include credit risk, liquidity risk, fraud, money laundering and conflict of interest. Blockchain technology is a natural ally for P2P lending as it allows transactions to take place directly between the parties in a secure and tamperproof way. Although the potential of blockchain technology for P2P lending has been suggested many times, the concrete possibilities of blockchain technology to address P2P lending risks are still waiting to be discovered. When it emerges that blockchain technology has the potential to adequately address P2P lending risks, (the impact of) regulatory measures might potentially be reduced for P2P lending platforms based on the blockchain. This interdisciplinary research paper wants to fill this gap by answering the research question: “What is the deregulatory potential of blockchain technology for peer-to-peer lending?” On the basis of a thorough analysis of the risks of P2P lending and their regulatory framework (Chapter I) and the functioning of blockchain technology (Chapter II), the research paper studies the possibilities of blockchain technology to eliminate or reduce P2P lending risks (Chapter III) with a view to evaluating the deregulatory potential of blockchain technology for P2P lending (Chapter III and Conclusion). The research paper shows that blockchain technology has an enormous potential to eliminate or reduce P2P lending risks and to support regulatory measures addressing these risks. This applies particularly to platform risk, fraud, money laundering, hacking and liquidity risk. However, (additional) regulatory measures remain necessary to adequately address several P2P lending risks. This applies particularly to credit risk, liquidity risk, conflict of interest and operational risk. Exceptions can be made for platform risk and, to a large extent, hacking. Acknowledgements I would like to thank prof. dr. Colaert (Financial Law Professor KU Leuven) for her valuable feedback and useful critiques on this master thesis and for our interesting changes of views on the potential of blockchain technology for financial law. A special word of thanks also goes to Tom Vos (PhD student KU Leuven), Sophie Peeters (Linklaters) and Arben Dervisholli (Architects for Business & ICT) for their valuable suggestions and critical remarks. i Table of contents INTRODUCTION ...................................................................................................................... 1 I. Introductory chapter ............................................................................................................ 1 1. Blockchain technology .................................................................................................... 1 2. Peer-to-peer lending ........................................................................................................ 3 3. Potential of blockchain technology for P2P lending? ..................................................... 6 4. Gap in the literature ......................................................................................................... 8 II. Research objectives, relevance and research question .................................................... 9 1. Research objectives and relevance .................................................................................. 9 2. Research question ............................................................................................................ 9 III. Methodology ................................................................................................................... 9 CHAPTER I: PEER-TO-PEER LENDING .......................................................................... 14 I. Peer-to-peer lending: concept ........................................................................................... 14 II. Peer-to-peer lending: process ........................................................................................ 17 III. Peer-to-peer lending: risks ............................................................................................ 25 1. Credit risk ...................................................................................................................... 25 1.1 Credit risk .................................................................................................................... 25 1.2 Regulatory framework ................................................................................................ 33 2. Fraud .............................................................................................................................. 43 2.1 Fraud ........................................................................................................................... 43 2.2 Regulatory framework ................................................................................................ 45 3. Money laundering ......................................................................................................... 45 3.1 Money laundering ....................................................................................................... 45 3.2 Regulatory framework ................................................................................................ 46 4. Hacking ......................................................................................................................... 49 4.1 Hacking ....................................................................................................................... 49 4.2 Regulatory framework ................................................................................................ 49 5. Liquidity risk ................................................................................................................. 50 5.1 Liquidity risk ............................................................................................................... 50 5.2 Regulatory framework ................................................................................................ 51 6. Conflict of interest ......................................................................................................... 53 6.1 Conflict of interest ...................................................................................................... 53 6.2 Regulatory framework ................................................................................................ 55 7. Operational risk ............................................................................................................. 57 7.1 Operational risk ........................................................................................................... 57 ii 7.2 Regulatory framework ................................................................................................ 59 CHAPTER II: BLOCKCHAIN TECHNOLOGY ................................................................... 63 I. Blockchain technology: terminology ............................................................................ 63 II. Blockchain technology .............................................................................................. 65 A. Blockchain technology: common basis ..................................................................... 65 1. Public/private and permissioned/permissionless blockchains ................................... 65 2. Blockchain technology as a synthesis of three distinct technologies ........................ 67 2.1 Peer-to-peer technology .............................................................................................. 68 2.2 Cryptographic mechanisms ......................................................................................... 70 2.3 Consensus mechanisms ............................................................................................... 76 B. Particularities of Blockchain and Ethereum .............................................................. 80 1. Blockchain (or Bitcoin)
Load more

Recommended publications
  • Regulating On-Line Peer-To-Peer Lending in the Aftermath of Dodd-Frank: in Search of an Evolving Regulatory Regime for an Evolving Industry
    DISCUSSION DRAFT Chaffee & Rapp Washington and Lee Law Review REGULATING ON-LINE PEER-TO-PEER LENDING IN THE AFTERMATH OF DODD-FRANK: IN SEARCH OF AN EVOLVING REGULATORY REGIME FOR AN EVOLVING INDUSTRY Eric C. Chaffee* Geoffrey C. Rapp** I. INTRODUCTION Like Congress’s prior attempt to legislate a post-bubble repair and prevention strategy for the American economy, the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley),1 the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) has received a somewhat chilly response from legal academics.2 As was the case with Sarbanes-Oxley,3 however, even amid all of the proposals included for the sake of “doing something” rather than for a strong policy justification, a few nuggets of genuine value can be found. One of those, in the case of Dodd-Frank, is the opening effort to address the regulatory gap surrounding on-line peer-to- * Associate Professor of Law and Chair of the Project for Law and Business Ethics, University of Dayton School of Law; J.D., University of Pennsylvania (2002); B.A., The Ohio State University (1999). I would like to thank Christine Gall, Esq. for support and encouragement while drafting this essay. ** Harold A. Anderson Professor of Law and Values, University of Toledo College of Law; J.D. Yale Law School (2001), A.B. Harvard College (1998). Eric Johnson (Toledo ’12) provided excellent research in support of portions of this article. 1 Sarbanes-Oxley Act, Pub. L. No. 107-204, 116 Stat. 745 (2002) (codified at 15 U.S.C.
    [Show full text]
  • East Africa Crowdfunding Landscape Study
    REPORT | OCTOBER 2016 East Africa Crowdfunding Landscape Study REDUCING POVERTY THROUGH FINANCIAL SECTOR DEVELOPMENT Seven Things We Learned 1 2 3 4 East African East Africa’s Crowdfunding There’s appetite to crowdfunding platforms report risks and the do business and to markets are on promising regulatory learn more from the move. progress. environment. across East Africa. Crowdfunding platforms Since 2012 M-Changa In Kenya, for example, Over 65 participants at- (donation, rewards, debt has raised $900,000 Section 12A of the Capi- tended the Indaba & and equity) raised $37.2 through 46,000 tal Markets Act provides a Marketplace from all cor- million in 2015 in Kenya, donations to 6,129 safe space for innovations ners of the East African Rwanda, Tanzania and fundraisers. Pesa Zetu to grow before being sub- market. Uganda. By the end of Q1 and LelaFund are also ject to the full regulatory 2016, this figure reached opening access to their regime. $17.8 million – a 170% deals on the platform. year-on-year increase. 5 6 7 East Africa’s MSMEs ex- There are both commercial Global crowdfunding press a demand for alterna- and development oppor- markets are growing tive finance, but they’re not tunities for crowdfunding fast but also evolving. always investment-ready or platforms in East Africa. Finance raised by crowdfunding able to locate financiers. Crowdfunding platforms have the platforms worldwide increased from 45% of Kenyan start-ups sampled re- potential to mobilise and allocate $2.7 billion in 2012 to an estimated quire between $10,000 and $50,000 capital more cheaply and quickly $34 billion in 2015.
    [Show full text]
  • Moneylab Reader: an Intervention in Digital Economy
    READER A N INTERVENTION IN DIGITAL ECONOMY FOREWORD BY SASKIA SASSEN EDITED BY GEERT LOVINK NATHANIEL TKACZ PATRICIA DE VRIES INC READER #10 MoneyLab Reader: An Intervention in Digital Economy Editors: Geert Lovink, Nathaniel Tkacz and Patricia de Vries Copy editing: Annie Goodner, Jess van Zyl, Matt Beros, Miriam Rasch and Morgan Currie Cover design: Content Context Design: Katja van Stiphout EPUB development: André Castro Printer: Drukkerij Tuijtel, Hardinxveld-Giessendam Publisher: Institute of Network Cultures, Amsterdam, 2015 ISBN: 978-90-822345-5-8 Contact Institute of Network Cultures phone: +31205951865 email: [email protected] web: www.networkcultures.org Order a copy or download this publication freely at: www.networkcultures.org/publications Join the MoneyLab mailing list at: http://listcultures.org/mailman/listinfo/moneylab_listcultures.org Supported by: Amsterdam University of Applied Sciences (Hogeschool van Amster- dam), Amsterdam Creative Industries Publishing and the University of Warwick Thanks to everyone at INC, to all of the authors for their contributions, Annie Goodner and Morgan Currie for their copy editing, and to Amsterdam Creative Industries Publishing for their financial support. This publication is licensed under Creative Commons Attribution NonCommercial ShareAlike 4.0 Unported (CC BY-NC-SA 4.0). To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/4.0/. EDITED BY GEERT LOVINK, NATHANIEL TKACZ AND PATRICIA DE VRIES INC READER #10 Previously published INC Readers The INC Reader series is derived from conference contributions and produced by the Institute of Network Cultures. They are available in print, EPUB, and PDF form. The MoneyLab Reader is the tenth publication in the series.
    [Show full text]
  • Dn-153040 Filed Pursuant to Rule 424(B)(3
    Filed Pursuant to Rule 424(b)(3) Registration Statement No. 333-147019 $500,000,000 Borrower Payment Dependent Notes This is a public offering to lender members of Prosper Marketplace, Inc., or Prosper, of up to $500,000,000 in principal amount of Borrower Payment Dependent Notes, or “Notes.” We will issue the Notes in a series, with each series of Notes dependent for payment on payments we receive on a specific borrower loan described in a listing posted on our peer-to-peer online credit auction platform, which we refer to as our “platform.” All listings on our platform are posted by individual consumer borrower members of Prosper requesting individual consumer loans, which we refer to as “borrower loans.” Important terms of the Notes include the following, each of which is described in detail in this prospectus: Our obligation to make payments on a Note will be limited to an amount equal to the lender member’s pro rata share of amounts we receive with respect to the corresponding borrower loan for that Note, net of any servicing fees. We do not guarantee payment of the Notes or the corresponding borrower loans. The Notes are special, limited obligations of Prosper only and are not obligations of the borrowers under the corresponding borrower loans. The Notes will bear interest from the date of issuance, have a fixed rate, be payable monthly and have an initial maturity of three years from issuance, which we may change from time to time. A lender member’s recourse will be extremely limited in the event that borrower information is inaccurate for any reason.
    [Show full text]
  • Peer-To-Peer Lending Corporate Excellence Insights
    August 2018 CORPORATE EXCELLENCE INSIGHTS We are a specialized provider of systematic Quality Investment Solutions and one of the few providers of Quality equity investment strategies worldwide. Corporate Excellence Insight is our monthly publication that includes a brief update on markets and our thoughts about major trends that are impacting the investment management industry. MARKET UPDATE: STRONG CORPORATE GROWTH Strong global economic and corporate profit growth outweighed the escalating trade tensions in July. Economic data surprised on the upside in the US, picked up in Japan while stabilized in Europe. Strong Q2 corporate results reaffirmed the estimates for double digit profit growth in 2018. $3.5bn 48.5 x11 U.S. WEEKLY JOBLESS CLAIMS HIT FIAT’S VALUE WAS MULTIPLIED WORLD'S FIRST BIG 5G DEAL MORE THAN 48-AND-A-HALF-YEAR LOW 11 TIMES THROUGH 14 YEARS T-Mobile US named Nokia to supply it The number of Americans filing for Sergio Marchionne, the executive who with next-generation 5G network gear, unemployment benefits dropped to a more rescued Fiat and Chrysler from bankruptcy marking the world’s largest 5G deal so far than 48-1/2-year low in July as the labor after taking the wheel of the Italian and concrete evidence of a new wireless market strengthens further, however trade carmaker in 2004 and multiplied Fiat’s upgrade cycle taking root. tensions are casting a shadow over the value 11 times through 14 years, has died economy’s outlook. aged 66. MONTHLY TOPIC PEER-TO-PEER LENDING Central banks in Europe and the United States got into the rate increasing stance, but the levels are still low and the pace of rate increase is very moderate.
    [Show full text]
  • Prosper Marketplace, Inc. (Exact Name of Registrant As Specified in Its Charter)
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2009 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 333-147019 Prosper Marketplace, Inc. (Exact name of registrant as specified in its charter) Delaware 73-1733867 (State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.) organization) 111 Sutter Street, 22nd Floor San Francisco, CA 94104 94104 (Address of principal executive offices) (Zip Code) (415) 593-5400 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered None None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
    [Show full text]
  • Pushing Boundaries: the 2015 UK Alternative Finance Industry Report
    PUSHING BOUNDARIES THE 2015 UK ALTERNATIVE FINANCE INDUSTRY REPORT February 2016 Bryan Zhang, Peter Baeck, Tania Ziegler, Jonathan Bone and Kieran Garvey In partnership with with the support of CONTENTS Forewords 04 Introduction 10 About this study 12 The Size and Growth of the UK Online Alternative 13 Finance Market Market Size and Growth by Alternative Financing 14 Models Increasing Share of the Market for Business Funding 19 Market Trends in Alternative Finance 22 Expanding Base of Funders and Fundraisers 23 Market Entrants and Partnership strategies 25 Seeking Growth Through Awareness, Increased 26 Marketing and Forging Partnerships 27 Institutionalisation of the Market Cross-Border Transactions and Internationalisation 30 The Geography and Industries & Sectors of 31 Alternative Finance Industry Perspectives on Regulation, Tax Incentives 33 and Risks Size and Growth of the Different Online 38 Alternative Finance Models Peer-to-Peer Business Lending 39 Peer-to-Peer Business Lending (Real Estate) 40 Peer-to-Peer Consumer Lending 41 Invoice Trading 42 Equity-based Crowdfunding 43 Equity-based Crowdfunding (Real Estate) 44 Reward-based Crowdfunding 45 Community Shares 46 Donation-based Crowdfunding 46 Pension-led Funding 47 Debt-based Securities 47 Conclusion 48 Acknowledgements 50 Endnotes 51 3 ABOUT THE AUTHORS BRYAN ZHANG Bryan Zhang is a Director of the Cambridge Centre for Alternative Finance and a Research Fellow at the Cambridge Judge Business School. He has co-authored !ve industry reports on alternative !nance. PETER BAECK Peter Baeck is a researcher at Nesta, where he focuses on crowdfunding, peer-to-peer lending and the role of digital technologies in public and social innovation.
    [Show full text]
  • “P2P Lending As an Alternative to Bank Lending in Ukraine”
    “P2P lending as an alternative to bank lending in Ukraine” AUTHORS Alexander Lavryk Alexander Lavryk (2016). P2P lending as an alternative to bank lending in ARTICLE INFO Ukraine . Banks and Bank Systems, 11(4), 20-30. doi:10.21511/bbs.11(4).2016.02 DOI http://dx.doi.org/10.21511/bbs.11(4).2016.02 RELEASED ON Friday, 09 December 2016 JOURNAL "Banks and Bank Systems" FOUNDER LLC “Consulting Publishing Company “Business Perspectives” NUMBER OF REFERENCES NUMBER OF FIGURES NUMBER OF TABLES 0 0 0 © The author(s) 2021. This publication is an open access article. businessperspectives.org Banks and Bank Systems, Volume 11, Issue 4, 2016 Alexander Lavryk (Ukraine) P2P lending as an alternative to bank lending in Ukraine Abstract The goal of the article is to consider peer-to-peer lending and its interaction with bank lending that creates an aggregate hybrid lending. The article’s objective is the research of development of P2P lending on the financial market and beyond, which is particularly relevant today. This goal is achieved by using the methods of evaluation and comparative analysis of different principles, which makes it possible to structure the general scientific understanding of P2P lending with the help of statistical methods. The study of the dynamics and structure of peer-to-peer lending in various coun- tries for the period 2005-2016 led to the conclusion that in Ukraine, there is a decline in the share of bank lending in favor of peer-to-peer lending in the total amount of loans with an increasing role of non-bank and hybrid forms of len- ding in ensuring economic growth.
    [Show full text]
  • Економічний Форум 4/2017 248 Удк 347.336.004 Поліщук В.Г., К.Е.Н
    Економічний форум 4/2017 УДК 347.336.004 Поліщук В.Г., к.е.н. Луцький національний технічний університет ЗАБЕЗПЕЧЕННЯ ФІНАНСОВОЇ БЕЗПЕКИ ПРИ ВИКОРИСТАННІ ІННОВАЦІЙНОЇ КРИПТОВАЛЮТИ BITCOIN У публікації досліджуються передумови виникнення криптовалют, визначено їх основні види. Проаналізовано складності функціонування криптовалют на території України. Визначено ризики, що впливають на фінансову безпеку країни. Ключові слова: криптовалюта, біткойн, біткойн гаманець, фінансова безпека. Polishchuk V. ENSURE FINANCIAL SECURITY BY USING INNOVATIVE CRYPTOCURRENCY BITCOIN In the publication, the premise of the emergence of cryptocurrencies are being investigated, their main types are determined. The complexity of the operation of cryptocurrencies in the territory of Ukraine is analyzed. The risks affecting the financial security of the country are determined. Key words: cryptocurrency, bitcoin, bitcoin wallet, financial security. Полищук В.Г. ОБЕСПЕЧЕНИЕ ФИНАНСОВОЙ БЕЗОПАСНОСТИ ПРИ ИСПОЛЬЗОВАНИИ ИННОВАЦИОННОЙ КРИПТОВАЛЮТЫ BITCOIN В публикации исследуются предпосылки возникновения криптовалют, определены их основные виды. Проанализированы сложности функционирования криптовалют на территории Украины. Определены риски, влияющие на финансовую безопасность страны. Ключевые слова: криптовалюта, биткойн, биткойн кошелек, финансовая безопасность. Постановка проблеми у загальному вигляді і її зв’язок з важливими науковими та практичними завданнями. Криптографія з метою конфіденційних платежів почала використовуватися з 1990 року в системі DigiCash Девіда
    [Show full text]
  • Prosper Marketplace Ca, Inc
    THESE NOTES ARE ONLY BEING OFFERED AND SOLD TO LENDER MEMBERS WHO ARE RESIDENTS OF THE STATE OF CALIFORNIA AND WHO SATISFY THE FINANCIAL SUITABILITY REQUIREMENTS SET FORTH IN THIS PROSPECTUS. PROSPER MARKETPLACE CA, INC. $250,000,000 Prosper Borrower Payment Dependent Notes $250,000,000 Open Market Borrower Payment Dependent Notes This is a limited public offering being made to lender members of Prosper Marketplace CA, Inc., or Prosper, who are residents of the State of California, of up to $250,000,000 in principal amount of Prosper Borrower Payment Dependent Notes, or “Prosper Borrower Notes,” and up to $250,000,000 in principal amount of Open Market Borrower Payment Dependent Notes, or “Prosper Open Market Notes” issued by Prosper. The Prosper Borrower Notes and the Prosper Open Market Notes are collectively referred to as the “Notes” in this Prospectus. We will issue the Notes in a series, with each series of Notes dependent for payment on payments we receive on a specific borrower loan described in a listing posted on our peer-to-peer online credit auction platform, which we refer to as our “platform.” Two types of listings appear on our platform: (1) listings posted by individual consumer members of Prosper requesting individual consumer loans, which we refer to as “Prosper borrower loans,” and (2) listings posted by financial institutions registered with Prosper setting forth the terms of existing loans and retail installment sale contracts owned by the financial institutions and offered for sale to Prosper, which we refer to collectively as “open market loans.” The Prosper Borrower Notes are dependent for payment on Prosper borrower loans, and the Prosper Open Market Notes are dependent for payment on open market loans.
    [Show full text]
  • Peer-To-Peer Lending Annual Report 2019
    PEER-TO-PEER LENDING STATE OF THE MARKET ANNUAL REPORT 2019 | WWW.ALTFI.COM UK MARKETPLACE ONLINE LENDING RETURNS IN THE FINTEX LISTED DIRECT ADVERTISED IMPAIRMENTS LENDING IN EUROPE REALITY WAY LENDING RETURNS AND DEFAULTS We follow the trends so you can stay ahead of them. P2: We are specialist advisers in the AlternativeRSM Finance space. At RSM, we make it our priority to understand your business so youADVERT can make confident decisions about the future. Experience the power of being understood. Experience RSM | rsmuk.com The UK group of companies and LLPs trading as RSM is a member of the RSM network. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm each of which practises in its own right. The RSM network is not itself a separate legal entity of any description in any jurisdiction. The RSM network is administered by RSM International Limited, a company registered in England and Wales (company number 4040598) whose registered office is at 50 Cannon Street, London EC4N 6JJ. The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug. 3 INTRODUCTION PEER-TO-PEER LENDING: STATE OF THE UK MARKET After rapid growth from the ashes of the financial crisis, the alternative finance sector appears to be maturing. However, it faces internal and external challenges that will dictate the industry’s long-term viability and success.
    [Show full text]
  • The Anatomy of a Money-Like Informational Commodity: a Study of Bitcoin by Tim Swanson
    The Anatomy of a Money-like Informational Commodity: A Study of Bitcoin By Tim Swanson 1 © Copyright 2014 by Tim Swanson Cover art credit: Matt Thomas and Invisible Order This manuscript is released under the Creative Commons - Attribution 4.0 International license: to copy, transmit, share, adapt, remix, make commercial use of and freely distribute this work. 2 Table of Contents Preface .......................................................................................................................................................... 4 Acknowledgements ...................................................................................................................................... 5 Introduction .................................................................................................................................................. 6 Chapter 1: Bitcoin in theory and practice .................................................................................................... 9 Chapter 2: Public goods.............................................................................................................................. 24 Chapter 3: The Red Queen of Mining ........................................................................................................ 40 Chapter 4: A Bitcoin Gap ............................................................................................................................ 78 Chapter 5: Bitcoins made in China ............................................................................................................
    [Show full text]