Economics, Law, and Institutions in Asia Pacific Makoto Yano Chris Dai Kenichi Masuda Yoshio Kishimoto Editors Blockchain and Crypto Currency Building a High Quality Marketplace for Crypto Data Economics, Law, and Institutions in Asia Pacific Series Editor Makoto Yano, Research Institute of Economy, Trade and Industry (RIETI), Tokyo, Japan The Asia Pacific region is expected to steadily enhance its economic and political presence in the world during the twenty-first century. At the same time, many serious economic and political issues remain unresolved in the region. To further academic enquiry and enhance readers’ understanding about this vibrant region, the present series, Economics, Law, and Institutions in Asia Pacific, aims to present cutting-edge research on the Asia Pacific region and its relationship with the rest of the world. For countries in this region to achieve robust economic growth, it is of foremost importance that they improve the quality of their markets, as history shows that healthy economic growth cannot be achieved without high-quality markets. High-quality markets can be established and maintained only under a well-designed set of rules and laws, without which competition will not flourish. Based on these principles, this series places a special focus on economic, business, legal, and institutional issues geared towards the healthy development of Asia Pacific markets. The series considers book proposals for scientific research, either theoretical or empirical, that is related to the theme of improving market quality and has policy implications for the Asia Pacific region. The types of books that will be considered for publication include research monographs as well as relevant proceedings. The series show-cases work by Asia-Pacific based researchers but also encourages the work of social scientists not limited to the Asia Pacific region. Each proposal and final manuscript is subject to evaluation by the editorial board and experts in the field. Editorial Board Members: Aoki, Reiko (Commissioner, Japan Fair Trade Commission, Japan) Chun, Youngsub (Professor of Economics, Seoul National University, Korea) Dixit, Avinash K. (John J. F. Sherrerd ’52 University Professor of Economics, Emeritus, Princeton University, USA) Fujita, Masahisa (Fellow, The Japan Academy, Japan) Kamihigashi, Takashi (Director and Professor, Center for Computational Social Science (CCSS), Kobe University, Japan) Kawai, Masahiro (Project Professor, Graduate School of Public Policy, The University of Tokyo, Japan) Lo, Chang-fa (Honourable Justice, The Constitutional Court, Taiwan) Matsushita, Mitsuo (Professor Emeritus, The University of Tokyo, Japan) Nishimura, Kazuo (Professor, Research Institute for Economics and Business Administration (RIEB) and Interfaculty Initiative in the Social Sciences (IISS), Kobe University, Japan; Fellow, The Japan Academy, Japan) Yabushita, Shiro (Professor Emeritus, Waseda University, Japan) Yoshino, Naoyuki (Dean, Asian Development Bank Institute, Japan; Professor Emeritus, Keio University, Japan) More information about this series at http://www.springer.com/series/13451 Makoto Yano • Chris Dai • Kenichi Masuda • Yoshio Kishimoto Editors Blockchain and Crypto Currency Building a High Quality Marketplace for Crypto Data Editors Makoto Yano Chris Dai RIETI Recika Co., Ltd Tokyo, Japan Tokyo, Japan Kenichi Masuda Yoshio Kishimoto Anderson Mori & Tomotsune Ministry of Economy, Trade and Industry Tokyo, Japan Tokyo, Japan ISSN 2199-8620 ISSN 2199-8639 (electronic) Economics, Law, and Institutions in Asia Pacific ISBN 978-981-15-3375-4 ISBN 978-981-15-3376-1 (eBook) https://doi.org/10.1007/978-981-15-3376-1 © The Editor(s) (if applicable) and The Author(s) 2020. This book is an open access publication, corrected publication 2020 Open Access This book is licensed under the terms of the Creative Commons Attribution- NonCommercial-NoDerivatives 4.0 International License (http://creativecommons.org/licenses/by-nc- nd/4.0/), which permits any noncommercial use, sharing, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if you modified the licensed material. You do not have permission under this license to share adapted material derived from this book or parts of it. The images or other third party material in this book are included in the book’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the book’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. This work is subject to copyright. All commercial rights are reserved by the author(s), whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Regarding these commercial rights a non-exclusive license has been granted to the publisher. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publi- cation does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Preface Investment in virtual currency over the past few years appears to have somewhat subsided recently. However, this does not imply that blockchain technology, which underlies virtual currencies, has become less useful. To the contrary, a new gen- eration of blockchains, and their applications, are being actively created and deployed today. The primary purpose of this book is to explore the possibilities of those new blockchains and their applications, to explain the current state of blockchain technologies, and their future use for a wide range of scholars and graduate students beyond their respective fields. Nowadays, a body of information and communication technology (ICT) and its supporting social system are often perceived as an ecosystem, or, more precisely, a cyber ecosystem. With this term, many people recognize the importance of an ecosystem in which technology and people can coexist in harmony. In this book, we study the design of such a system supported by blockchain technology. This book investigates the role that the new generation of blockchains may play in the coming data-driven society. It is expected that data will become the third major production factor next to labor and capital in the Internet era. Blockchain technology opens a new way of owning, sharing, and using data. A blockchain is often defined as a decentralized ledger. “Ledger” is an old term that refers to a “book of a permanent record”. A blockchain is a ledger created in a decentralized manner. In this process, many independent entities contribute to creating a book of permanent data that is absolutely accurate and unfalsifiable. Records that are absolutely accurate and unfalsifiable are valuable. A county recorder’soffice keeps the vital records that relate to ownership in real estate (land) and to debts or liens upon it. Without these records, it would be practically impossible to trade land and/or to lend and borrow money with land as security. These records are economically valuable because everyone trusts that they are absolutely accurate and unfalsifiable. This trust brings value to the record. Blockchains have shown that such trusted records can be stored on the Internet in a decentralized manner. The decentralization of the recording process, which has traditionally been centralized and stewarded by the government, is expected to significantly economize transaction costs (or the cost of creating and maintaining a v vi Preface ledger). That is one reason why blockchain technology has been accepted enthu- siastically by many. By making a ledger of data, a blockchain makes it possible to designate the owner of each piece of data, to trade data pieces, and to market them. This book examines the formation of markets for various types of data from the theory of market quality proposed and developed by Yano (for references, see Chap. 4). Blockchain technology can create a ledger for any type of record. The original Bitcoin blockchain records the transfers of funds between different accounts, thereby providing the same function as deposit currencies that banks offer. If blockchain technology economizes transaction costs significantly, the current monetary system based on central banknotes and deposit currencies may be replaced by a blockchain. Chapter