Cryptocurrency Technology Research Articles

The Valuation and Investment Risk of Cryptocurrency: Evidence from Bitcoin and Ethereum

From gold standard currencies to fiat money secured by government credit, to today's cryptocurrencies, the basic form of money and mankind's perception of its value has shifted dramatically. This paper will demonstrate the value and risk assessment of the two cryptocurrencies with the highest market share, i.e., Bitcoin and Ethereum. Although the current technology of cryptocurrencies is not perfect, it will improve over time and their value will increase due to the high demand for them. This aim of the study to give first-time investors an understanding of the valuation and risks of cryptocurrencies, rather than treating them as simple financial assets for investment. According to the analysis, the value and risk of Bitcoin depend deeply on many characteristics that were initially built into it. It also has an impact on the value of other virtual currencies at the same time. On the other hand, Ether is a much more open platform, so its value and risk depend more on the various applications and contracts built into a blockchain than Bitcoin. These results shed the light on guiding the further exploration of solving the safety problem of cryptocurrencies from different perspectives.

Analysis of POW in Bitcoin and POS in Peercoin

The technology of blockchain, which is the underlying technology of cryptocurrency like Bitcoin, has changed the world dramatically and it has fascinated researchers from all over the world. Originating from the Byzantine General Problem, the consensus mechanism is utilized to reach an agreement in a group where the channel for communication could be unreliable. Among all the consensus mechanisms in the blockchain, proof of stake (POS) and proof of work (POW) are the most widely used. POW was first used in the Bitcoin blockchain and soon became its central consensus mechanism of it and the earliest implementation of POS for cryptocurrency was Peercoin. Numerous research has been done in this field, but they failed to explain the features of the two mechanisms comprehensively. In this paper, the author did a brief introduction to the hash function and consensus mechanism as well as how POW and POS work, then made detailed analysis and comparisons of a POW in Bitcoin and POS in Peercoin in terms of fairness, security, environmental influence, penalty, negotiability and sustainability, and future trend, and declared that both of POS and POS had some advantages and drawbacks. The author also listed some risks and potential problems of POW and POS and then gave possible solutions for them.

Blockchain and Cryptocurrency Technology in the Saudi Arabia

Blockchain and Cryptocurrency Technology in the Saudi Arabia

The principle of operation of a decentralized money transfer information system

The article is devoted to reviewing the concept of blockchain in the implementation of a decentralized money transfer system. The concept of fault tolerance of cryptocurrency technology is considered and some aspects of the fault tolerance solution are given. The analysis of information security of enterprises was carried out. The questions of anonymity of banking systems are touched upon. The dependence of the anonymity of the banking system on the quality of the software and on the security policy is shown. Recommendations are given for solving the problem of anonymity, in particular, generating a private key or embedding an algorithm for connecting transactions. Approaches to creating transactions are considered. Examples of algorithms that allow protecting user transactions are given. The description of the blockchain structure and the consensus algorithm has been carried out. The issues of generating a chain of blocks of an honest user and a chain of blocks of an attacker are considered. Formalization of the estimate of the probability of transaction break-even has been carried out. Binomial random walk was used for estimation. The end of the transaction process is just as justified as waiting for new blocks to be added to the chain of an honest user. A digital signature is used to identify whether a transaction belongs to a public key. The processes of signing a transaction and verifying a signature are considered. Separately, the approaches used in the design of cryptocurrencies are highlighted. The network stores the entire history of transactions, it is possible to calculate the balance of the total amount of incoming funds and spending money. These approaches are software solutions based on game theory and cryptography. The main attention is drawn to the business values of cryptocurrencies and ways to achieve them. As a result, the necessary functionality of the software client is formulated. The article provides a thorough analysis of a new financial and settlement instrument - electronic money. The task of developing a virtual payment system has recently received much attention.

Do cryptocurrencies have the potential to mitigate the impact of sanctions

Purpose- Sanctions, as an alternative to the use of military force, are used as a means of diplomatic coercion for the target country to abandon some of its decisions or avoid some possible practices. While half a century ago, sanctions included issues such as trade and travel restrictions and arms embargo, today the form and content of sanctions have changed significantly. In the last decade, most of the sanctions imposed on some states, especially to Iran and the Russian Federation, are financial sanctions. These financial sanctions, it is aimed to cut the target country's ties with the global financial markets, to disrupt the cash/capital inflow and outflow to the target country, to prevent trade by removing them from global payment systems such as SWIFT and to restrict some activities of central banks. However, the issue of whether cryptocurrencies, which we have heard frequently since 2009, can be used as a means of mitigating or overcoming the financial sanctions is frequently on the agenda. In this context, we analyze whether cryptocurrencies can be used to mitigate or overcome the financial sanctions imposed on the target country. Methodology- The size of the financial sanctions applied by the USA, Canada, Australia, Japan and EU countries against the Russian Federation, after the war started in Ukraine on 24 February 2022 and the foreign money inflow/outflow volume needed by the Russian Federation as a result of its removal from the SWIFT system are compared with the volume of cryptocurrencies owned by the Russian Federation. Findings- The blockchain database system, which underpins cryptocurrencies, still struggles with a number of challenges. Especially the ability to increase the capacity (scalability) of the blockchain network is one of these problems. The scalability problem hinders the effective use of cryptocurrencies by the Russian Federation. In addition, when the financial transaction capacity and the size of the sanctions applied to the Russian Federation are compared with the crypto market size of the Russian Federation, it is seen that there is a significant difference in sizes. Conclusion- In today's conditions, cryptocurrencies stay away from the capacity to mitigate or overcome the financial sanctions applied to countries with large trading capacities such as the Russian Federation and to be used as a means of payment. However, in the coming years, in the case of developments in cryptocurrency technologies, cryptocurrencies have the capacity to be used to circumvent financial sanctions. Keywords: Sanctions, financial sanctions, payment instrument, crypto assets, blockchain. JEL Codes: F51, G20, B17

Cryptocurrency technology revolution: are Bitcoin prices and terrorist attacks related?

As a financial innovation of the information age, cryptocurrency is a complex concept with clear advantages and disadvantages and is worthy of discussion. Exploring from a terrorism perspective, this study uses the time-varying parameter/stochastic volatility vector autoregression model to explore the risk hedging and terrorist financing capabilities of Bitcoin. Empirical results show that both terrorist incidents and brutality may explain Bitcoin price, but their effects are slightly different. Compared to terrorist brutality, terrorist incidents have a weaker impact on Bitcoin price, showing that Bitcoin investors are more concerned about the number of deaths than the frequency of terrorist attacks. In turn, the impact of Bitcoin price on terrorist attacks is negligible. Bitcoin is a potential means of financing terrorism, but it does not currently play an important role. Our research findings can help investors analyze and predict Bitcoin prices and help improve the theoretical system of anti-terrorist financing, helping to maintain world peace and security.

ВЛИЯНИЕ КРИПТОВАЛЮТНОГО РЫНКА В УСЛОВИЯХ ЦИФРОВОЙ ТРАНСФОРМАЦИИ СОЦИУМА

The scientific article explores the impact of cryptocurrencies on modern society in the context of digital transformation. The article provides a literature review, describes the research methodology, and analyzes the impact of cryptocurrencies on various areas of life, including finance, economics, politics, education and sociocultural aspects. The study highlights the importance of understanding and accounting for cryptocurrency technologies in the context of modern sociocultural and economic changes. The relevance of studying the significance of cryptocurrency development in the context of digital societal transformation is driven by several key factors: 1. The growing popularity and use of cryptocurrencies challenge existing financial institutions and payment systems, raising the potential for changes in financial infrastructure and the global economy. This necessitates urgent research into the impact of cryptocurrencies on financial stability. 2. The evolution of cryptocurrencies also has profound sociocultural implications, influencing how people interact, exchange information, and even their national identities. Research on this topic is relevant as it helps to understand how technological changes affect sociocultural aspects of life and interactions within society. Therefore, the study of the importance of cryptocurrencies in the context of digital societal transformation is relevant in light of their potential impact on financial systems and the sociocultural changes they induce. The research aims to analyze the impact of cryptocurrency development on political and legal aspects in different countries. To achieve the goal of studying trends in the impact of cryptocurrency technologies on the economy, the following objectives have been formulated: • analyze the historical context of cryptocurrency development and their role in the digital transformation of society; • examine the technological aspects of cryptocurrencies, including the principles of blockchain operation and cryptographic mechanisms; • evaluate the impact of cryptocurrencies on the financial sector, including investments, payment systems, and banking activities; • investigate the influence of cryptocurrencies on economic processes, such as global trade, inflation, and macroeconomic stability; • consider the impact of cryptocurrencies on political and legislative aspects, including the regulation and taxation of cryptocurrencies. Scope of Research Application: 1. The research findings can be valuable for shaping economic policies, regulating cryptocurrency markets, and developing financial stability strategies. 2. Financial institutions and banks can use the research conclusions to adapt their services and products to new technological realities, including blockchain and digital currencies. 3. The study can be beneficial in the development of legislation and regulations governing cryptocurrency operations and in making decisions regarding taxation and financial transaction monitoring. 4. The research findings can contribute to the development of educational programs and courses aimed at training specialists in the field of cryptocurrencies and blockchain. 5. The results can be applied to the analysis of sociocultural and social aspects of cryptocurrency impact on society, including changes in consumer behavior and financial literacy.

Wolverine: A Scalable and Transaction-Consistent Redactable Permissionless Blockchain

The immutability of blockchains makes it a critical technology for cryptocurrencies, but an imperative need arises for the redaction of on-chain data due to privacy-protecting laws like GPDR. Recently, Ateniese et al. (EuroS&P 2017) proposed an elegant solution to this problem based on chameleon hash functions, followed by many subsequent works. While these works offered a solution to the permissioned blockchain, the approaches were not efficient enough for the permissionless setting, in terms of either security (which may cause inconsistent historical transactions) or performance (only up to a few hundred nodes). In this paper, we investigate this problem and present Wolverine, a redactable permissionless blockchain. First, we present a formal redactable blockchain model, carefully considering transaction consistency. Next, towards a practical scheme, we introduce the novel concept of non-interactive chameleon hash (NITCH). NITCHs dynamically distribute a trapdoor key among a group and each party in the group can compute its partial share without communicating with others. Anyone who possesses enough shares can then find a valid hash collision. To prevent the static group from being compromised after a sufficiently long time, we provide a generic transform from NITCHs to decentralized random beacons (DRBs) and design a committee evolution protocol based on DRBs that refresh the group after every fixed interval of time. Based on NITCH and the committee evolution protocol, we construct Wolverine which offers important features such as scalability, transaction consistency, and public accountability. Finally, we demonstrate the practicality of Wolverine by giving a proof-of-concept implementation based on Bitcoin in Golang.

Major Models and Theories of Cryptocurrency Technology Adoption: A Theoretical Review

A review of a selected theories that influence the adoption of technology will serve as the objective of this paper. In this work, we attempt to discover traits that might improve the possibility of acceptance and ongoing usage of technology such as cryptocurrency adoption. More specifically, we focused on Rogers' Innovation Diffusion Theory (IDT, Theory of Technology Acceptance (TAT), and Technology Acceptance Model. (TAM)/TAM2/TAM3, Theory of Reasoned Action (TRA), Unified Theory of Acceptance and Use of Technology (UTAUT), and Theory of Planned Behaviour (TPB). When researching the tendency of individuals to adopt certain technologies, researchers draw from a wide variety of conceptual frameworks and analytical approaches. In this review, social psychology and its applied notions have been utilised most frequently. As a primary theoretical foundation, the theories centre on people's intentions to engage in a specific behaviour (i.e., adopt and utilise ICT), which is the emphasis of the theories. Research on the adoption and usage of information and communication technologies has made extensive use of both the Theory of Reasoned Action (TRA) and the Theory of Planned Behaviour (TPB). They are two of the key intention-based theories, which means they give the core theoretical underpinnings for other adoption theories, such as the Technology Acceptance Model (TAM) and the Enhanced Technology Acceptance Model. Both the transpersonal relationship analysis and the transpersonal behaviour analysis begin with the fundamental premise that individuals deliberately choose whether or not they will engage in a certain behaviour. In this sense, the adoption and usage intentions are typically seen of as a primary outcome variable that is influenced by a variety of independent variables. This is because of the way that they are typically studied. In the following, we will discuss significant theories regarding the adoption of technology.

Integrated cloud computing and blockchain systems: A review

Blockchain technology is one of the crypto-currency technologies that has received a lot of attention. It has also found use in various applications, including the Internet of Things (IoT) and Cloud computing. Nonetheless, Blockchain has a significant scalability issue, restricting its ability to support services with various transactions. On the other hand, cloud computing is the on-demand availability of shared computer system resources, although issues now beset it in automation, processes, management, policies, and human aspects. Combining cloud computing and blockchain technology into a single system can improve network control, task scheduling, data integrity, resource management, pricing, fair payment, and resource allocation. In this article, we offered a comprehensive and up-to-date survey of cloud computing and Blockchain integration, a critical service for business applications due to the benefits of privacy, security, and service support. The lack of a comprehensive assessment examining the significance of BaaS platforms used in cloud computing prompted this review. We focus on the various BaaS tools that are currently in use. This report also examines the most common BaaS platforms incorporating Blockchain as a cloud service, such as Alibaba, Oracle, Azure, Amazon, and IBM. Furthermore, this research highlighted some major technological issues associated with merging Blockchain with cloud computing.

Implementation of Accounting Standards for Cryptocurrency Companies in Indonesia

The development of number of cryptocurrency startups around the world, including in Indonesia, is increasing every year, demanding business people to provide financial services by accepting the presence of cryptocurrency technology directly in the real world. The purpose of this study is to explore the application of the Statement of Financial Accounting Standards (PSAK) adopting International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) on cryptocurrency companies at the Indonesian National Indodax Company (Bitcoin Indonesia). This research method is descriptive qualitative with data collection methods using interview and observation techniques. The results show that the Indodax Company (Bitcoin Indonesia) uses IAS 2 inventory because the company's core business is in brokerage, which measures cryptocurrency inventory recorded at fair value after deducting costs to sell and is recognized in the income statement and reported in the Available for sale financial asset account. At the same time, the entity applies IAS 38 intangible assets in the measurement, valuation, and presentation of financial statements that refer to computer software and internet domains, not cryptocurrency assets in the form of coins and tokens. In addition, entities that measure and value cryptocurrency assets (cash and tokens) using financial instruments IFRS 9 Financial Instruments: Recognition and Measurement are calculated and recorded as financial assets at fair value through profit or loss (FVTPL).

Anti-money laundering regulation of cryptocurrency: UAE and global approaches

PurposeThe purpose of this paper is to provide a high-level analysis of the intersection emerging cryptocurrency sector with anti-money laundering (AML) regulations and risk-based AML diligence systems maintained by financial institutions.Design/methodology/approachThe analysis begins with a description of cryptocurrencies, focusing specifically on how the supporting technologies and applications increase vulnerabilities. The information will lay the foundation for examining the vulnerabilities existing in the architecture of cryptocurrency technology, as well as potential targets for regulations. The second part of the analysis will then shift focus to defining the scope of the money laundering problem associated with cryptocurrencies. An in-depth understanding of the problem is necessary to inform tailored AML legislation and regulations. The third part of the analysis will explore emerging AML regulations that govern cryptocurrencies, focusing specifically on those being developed and implemented in the United Arab Emirates (UAE). The UAE regulations will then be compared to those of the USA and European Union (EU) for comparative analysis and best practices.FindingsThe UAE has a robust legal system aimed at bolstering AML efforts while supporting widespread integration of crypto assets into business and government operations. A review of the UAE’s legislative framework reveals critical issues. First, the current regulations do not cover decentralized finance (DeFi) and non-fungible tokens (NFTs). The absence of clear regulations for DeFi and NFT protocols has created a leeway for money laundering and related criminal activities. Second, there is a high level of fragmentation in the UAE’s legislative landscape. The UAE does not have uniform, national laws that apply to all the Emirates. Fragmentation is not unique to the UAE but a major global problem that affects the USA and EU. Therefore, it is necessary to adopt a tailored approach where standard rules and regulations are responsive to the diverse aspects of cryptocurrencies. The strategy is vital, as it will be impractical to create a single legislation or law that will cover all the crypto assets, including their diverse applications. Furthermore, the Financial Action Task Force (FATF) should develop a global standard that will support a unified/harmonized application of AML/counter-terrorist financing (CTF) laws and regulations related to cryptocurrencies and the blockchain technology.Originality/valueThe borderless nature of digital currency and exchanges means that the existing laws and regulations are inadequate to address cross-border money laundering activities. Thus, there is an urgent need of harmonizing global regulations to ensure uniformity in applications. The quest for harmonization should be a priority as the FATF works towards developing a global standard. The global standard will support a uniform application of AML/CTF laws and regulations related to cryptocurrencies and the blockchain technology.

Using Unrelated IRS Guidance as a Framework for Taxing Crypto Transactions: Revenue Procedure 2019-18

ABSTRACT The cryptocurrency market has become one of the fastest growing industries in the world, with a market capitalization exceeding $2 trillion. This rapid growth has caused strains on financial systems, as well as the Internal Revenue Service. With cryptocurrency technology developing faster by the week, a unified and simplified regulatory approach is the sensible roadmap for the Internal Revenue Service in its task to impose federal income tax. This paper proposes that by researching prior IRS guidance on unrelated issues and using preexisting precedent, specifically, Revenue Procedure 2019-18, the Internal Revenue Service can more simply impose federal income taxes on the ever-changing cryptocurrency space. JEL Classifications: K23; K29; K34.

Digital Ilearning Chain Scheme in Education Blockchain Based

In the era of the digital revolution, the use of technology has made technology a major demand, coupled with the development of insight and techniques, technology in this era has been widely used in all scientific fields. In the field of monetary economics, there are payment instruments that can be used to transact both in the form of goods and services. However, nowadays it is difficult to obtain information as technology develops, the term digital transaction appears. Because many activities are carried out manually, such as searching for customer information, entering inventory items, and payment transactions, the required data display time becomes very long for users and in the process of recording reports including paper, notes, receipts, pens, filing cabinets, etc. . equipment when an error occurs during the input process, generally used simultaneously. Therefore, in this paper, the aim of this DLCS (Digital iLearning Chain Scheme) researcher to utilize Bitcoin technology can help overcome the current problem of how to use Bitcoin cryptocurrency technology in the education payment system in Indonesia. This can give birth to a Bitcoin-based scholarship system. This study uses the Blockchain method to build the system, and uses Google Forms to collect information through digital observations and questionnaires. Based on the characteristics of the system, the Slovin formula is used to analyze various aspects of system satisfaction, and the results of 0.840>0.6 are used for processing, which means if alpha>0.6 then the system can be classified as "reliable". The reliability test proved that the evaluation was based on the provided questionnaire.

The role of cryptocurrency in the dynamics of blockchain-based social networks: The case of Steemit.

A shift of paradigm is running over online social platforms: the over-centralization of these platforms is leaving room for decentralized solutions based on blockchain technologies, such as blockchain-based online social networks—BOSNs. Among the many unknown aspects of these techno-social systems, the objective of this study is to propose an analytical framework to assess the impact of the cryptocurrencies linked to a BOSN platform on the evolution of its social network and on the behavior of their users, in terms of production of content and/or its promotion through a voting and rewarding system. The framework has been applied to Steemit, one of the most widespread BOSNs, from which we collected three-year-long high-resolution data on its evolution along with the price of its main cryptocurrencies. On users’ activities extracted from these longitudinal data, we applied a time-series correlation analysis and a correlation analysis between the action allocation strategies and the obtained rewards, in the case of most central accounts. The analysis has highlighted pieces of evidence of the influence of the cryptocurrency price on users’ actions, particularly on actions that shape the structure of the social networks. Second, we also found highly rewarded users prefer actions related to the promotion of content rather than the creation of high-quality content, exploiting the reward distribution mechanisms implemented by the platform. These findings highlight that the shift of paradigm towards blockchain and cryptocurrency technologies might strengthen the influence of financial and economic factors rather than relational/social aspects on the evolution of these new complex techno-social systems.

Breaking Blockchain’s Communication Barrier With Coded Computation

Although blockchain, the supporting technology of various cryptocurrencies, has offered a potentially effective framework for numerous decentralized trust management systems, its performance is still sub-optimal in real-world networks. With limited bandwidth, the communication complexity for nodes to process a block scales with the growing network size and hence becomes the limiting factor of blockchain’s performance. In this paper, we suggest a re-design of existing blockchain systems, which addresses the issue of the communication burden. First, by employing techniques from Coded Computation, our scheme guarantees correct verification of transactions while reducing the bit complexity dramatically such that it grows logarithmically with the number of nodes. Second, with the adoption of techniques from Information Dispersal and State Machine Replication, the system is resilient to Byzantine faults and achieves linear message complexity. Third, we propose a novel 2-dimensional sharding strategy, which inherently supports cross-shard transactions, alleviating the need for complicated communication protocols between shards, while keeping the computation and storage benefits of sharding.

Sustainable energy and digital currencies: challenges and future prospect

Due to the impressive growth in digital coins trading, most cryptocurrencies' market cap has increased drastically. Therefore, more people are engaged in the mining process, causing a significant increase in electrical power consumption. To make cryptocurrency technology sustainable, using renewables such as photovoltaic solar power, wind energy, tidal power, geothermal power, hydroelectric power, fuel cell, and biomass has been implemented. Moreover, to decrease electrical power consumption in the cooling process of mining systems and computers, using phase change material (PCM) has been recommended. Since the cryptocurrency mining process is very competitive, only those miners will survive who employ the most competitive mining systems and benefit from the lowest electrical power costs. While the profitability of renewable electricity-based mining is lower than grid-based mining, the latter method compensates for better sustainability in cryptocurrency and lower environmental costs. This paper reviews the possible ways to make the cryptocurrency mining process clean and environmentally friendly.

Blockchain Use Cases Against Climate Destruction

Based on the current measures, it is unlikely that the targets of the Paris Agreement on climate change are to be achieved within the given time. Therefore, new solutions are needed to get climate change under control. Emerging technologies like blockchain allow for new ways to approach climate change. The blockchain serves only as an enabling technology for cryptocurrencies but is a stand-alone tool applicable for various purposes. This paper aims to shed light on the overlap between the areas of blockchain and climate change. Research in this area was examined for potential blockchain use cases to support climate action using a systematic literature review. The found applications can be grouped into the main categories of Emissions Trading and Green Certificates, Sustainable Energy, Sustainable Mobility, and Green Financing. Within these applications, blockchains are being used as supporting technology. Especially transparency, traceability, and immutability are particularly beneficial in blockchain-based applications against climate change. As a downside of the technology, controversial aspects of the blockchain are considered as the energy consumption of the technology.

The Evolutionary Development of Money: From Minted Coins to Cryptocurrencies

The article is aimed at studying the evolution of money. The article examines the history of the emergence and evolutionary development of money and cryptocurrencies. Blockchain technology is analyzed, as well as the technological difference between Bitcoin, Ethereum, Solana cryptocurrencies is considered. The issues of the operation of the Ethereum blockchain and smart contracts are covered. An analysis of blockchain technology and the use of cryptocurrencies as a means of payment is carried out. The type of cryptocurrency such as a stablecoin is revealed in its variety. Comparisons of native blockchain coins and stablecoins as a means of payment, further of USDC and USDT stablecoins, are made. An analysis of differences between the centralized and decentralized stablecoins is carried out. It is specified what the stablecoins USDC, USDT, DAI are backed by. It is analyzed what share of the market is occupied by USDT, USDC, and DAI. The advantages and disadvantages of stablecoins are identified. A characterization of activity of the Central Bank Digital Currency (CBDC) with its connection to central banks is presented. It is determined that stablecoins are an attempt to objectively eliminate the high volatility of traditional cryptocurrencies such as Bitcoin or Ethereum by tying the value of a stablecoin to one or more other assets, such as fiat currency. Blockchain technology along with stablecoins can increase the efficiency of cross-border payments. With the growing demand for use, a stablecoin can become one of the important elements of the payment infrastructure. As result of the study, a comparison between cryptocurrencies and the companies Visa, Paypal in terms of processing speed and the amount of payment commissions is made. It is determined that blockchain and cryptocurrency technologies are a new evolutionary stage in the development of money. It is substantiated that the effect of using blockchain technology allows to cheaper and faster money transfers. It is noted that blockchain technology is young, but cooperation between traditional financial companies and cryptocurrencies is already visible.

The essence and functions of cryptocurrencies

With the development of electronic systems, ideas have repeatedly arisen to create an electronic analogue of cash for remote payment. Cryptocurrency technology was originally aimed at the absence of a trusted node - one whose actions are guaranteed to be true and who can confirm the correctness of other people's operations. For the first time, this problem was solved in the Bitcoin system due to the artificial complication of making changes to the transaction history register.