Digital Currencies: Principles, Trends, Opportunities, and Risks

Tasca, Paolo

doi:10.2139/ssrn.2657598

Cited by 50 publications

(42 citation statements)

References 63 publications

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“…of land transfers. Tasca (2015) discusses a number of specific projects aimed at asset registry applications. Open access ledgers are a useful mechanism in these applications because they disseminate ownership information to a wide population of potential transactors.…”

Section: Motivations For Using Crypto-currenciesmentioning

confidence: 99%

Crypto‐Currencies – An Introduction to Not‐So‐Funny Moneys

Kumar¹,

Smith²

2019

Contemporary Topics in Finance

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This paper introduces the distributed ledger technology of crypto-currencies. We aim to increase public understanding of these technologies, highlight some of the risks involved in using cryptocurrencies, and discuss some of the potential implications of these technologies for consumers, financial systems, monetary policy and financial regulation.Crypto-currencies have no physical existence, but are best thought of as electronic accounting systems that keep track of people's transactions and hence remaining purchasing power. Cryptocurrencies are typically decentralised, with no central authority responsible for maintaining the ledger and no central authority responsible for maintaining the code used to implement the ledger system, unlike the ledgers maintained by commercial banks for example. As crypto-currencies are denominated in their own unit of account, they are like foreign currencies relative to traditional fiat currencies, such as dollars and pounds.We examine the 'monetary' attributes of crypto-currencies, and describe some of the reasons they have been adopted. While crypto-currencies are clearly used for exchange, we argue that theyare not yet generally accepted, and for the most part they are not used as a unit of account.Bitcoin, the most-traded crypto-currency, has been a volatile and hence imperfect store of value.In the particular case of Bitcoin, the ultimate supply of bitcoins approaches a fixed limit, which means that any fluctuation in the demand for bitcoins is reflected in substantial movements in its price. Like fiat currencies, crypto-currencies have no secondary use. Their utility as a payment mechanism stems from a belief that others will continue to use the corresponding ledger systems to exchange goods and services in future.The paper discusses the mechanics of Bitcoin -the original crypto-currency -to illustrate the fundamental elements of decentralized crypto-currencies. In short, transactions are implemented as messages that debit or credit account balances in duplicate ledgers. Programming protocols ensure that ledgers are synchronized, and agents are rewarded for updating and quality-assuring the ledgers with transaction data, which accumulate in 'blocks'. Cryptography is used to secure the transaction messages and the integrity of the ledgers containing account balances.The latter part of the article provides a high-level summary of the implications of crypto-currencies for consumers, financial systems, monetary policy, and regulatory policy. Crypto-currencies ex-1 We would like to thank Jonathan Chiu and Thorsten Koeppl for providing access to their own research on blockchain technology, which helped to improve our understanding of its implementation and the issues that arise. Helpful comments were also received from

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Section: Motivations For Using Crypto-currenciesmentioning

confidence: 99%

Crypto‐Currencies – An Introduction to Not‐So‐Funny Moneys

Kumar¹,

Smith²

2019

Contemporary Topics in Finance

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“…The Massachusetts Institute of Technology has developed a blockchain to record degrees awarded to students . Tasca () discusses a number of specific projects aimed at asset registry applications. Open access ledgers are a useful mechanism in these applications because they disseminate ownership information to a wide population of potential transactors.…”

Section: What Purpose Do Crypto‐currencies Serve?mentioning

confidence: 99%

Crypto‐currencies – An Introduction to Not‐so‐funny Moneys

Smith

Kumar²

2018

Journal of Economic Surveys

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We introduce the distributed ledger (blockchain) technology of crypto‐currencies. We examine the ‘monetary’ attributes of crypto‐currencies, and describe some of the reasons they have been adopted. The paper discusses the mechanics of Bitcoin – the original crypto‐currency – to illustrate the fundamental elements of decentralized crypto‐currencies. We then provide a high‐level summary of the implications of crypto‐currencies for consumers, financial systems, and for monetary and regulatory authorities. We argue that crypto‐currencies are unlikely to supplant traditional fiat currencies and we anticipate an enduring role for financial intermediaries in facilitating credit.

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“…Also, there were certain factors considered for selection of cryptocurrency [23], [24]. But, as with any new emerging technology, digital currencies also bring certain security risks [25].…”

Section: Bitcoin Cryptosystemmentioning

confidence: 99%

Comparisons of Bitcoin Cryptosystem with Other Common Internet Transaction Systems by AHP Technique

Maček¹,

Alagić²

2017

JIOS

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This paper describes proposed methodology for evaluation of critical systems and prioritization of critical risks and assets identified in highly secured information systems. For different types of information assets or security environments it is necessary to apply different techniques and methods for their prioritization and evaluation. In this article, VECTOR matrix method for prioritization of critical assets and critical risks is explained and integrated into AHP (Analytic Hierarchy Process) technique as a set of fixed criteria for evaluation of defined alternatives. Bitcoin cryptocurrency was compared and evaluated along with other common Internet transaction systems by information security professionals according to defined VECTOR criteria. Also, the newly proposed hybrid AHP model is presented with potential case studies for future research. This article tries to discover security posture of Bitcoin cryptocurrency in the context of information security risks related to the existing most common online payment systems like e-banking, m-banking, and ecommerce.

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Digital Currencies: Principles, Trends, Opportunities, and Risks

Cited by 50 publications

References 63 publications

Crypto‐Currencies – An Introduction to Not‐So‐Funny Moneys

Crypto‐Currencies – An Introduction to Not‐So‐Funny Moneys

Crypto‐currencies – An Introduction to Not‐so‐funny Moneys

Comparisons of Bitcoin Cryptosystem with Other Common Internet Transaction Systems by AHP Technique

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