Blockchain: A Misunderstood Digital Revolution.

Things You Need to Know about Blockchain 

Dr. John Taskinsoy a

ABSTRACT

Blockchain and distributed ledger technology (DLT) are used interchangeably. In the aftermath of the
2008 global financial crisis, Bitcoin gave birth to blockchain, or vice versa. A decade has passed since
the launch of the first successful cryptocurrency in January 2009 by a mysterious creator under the
alias Satoshi Nakamoto. Now along with Bitcoin, 2,915 altcoins are trading with a combined market
cap of $222 billion, Bitcoin’s market cap alone is $150 billion (67.6% of the market). Blockchain’s
potential is much bigger than Bitcoin; if regulatory uncertainty alleviates, the blockchain’s value can
easily increase by hundred-fold to $3 to $4 trillion dollars by 2030. Although financial sector leads
blockchain adoption, blockchain’s opportunities in non-financial sectors are immense. In the simplest
terms, blockchain is a distributed ledger made up of two parts, blocks containing of data and a chain
that holds them together. Blocks are like storage units that store anything of value related to minting
coins (i.e. Bitcoin) via a mining process and keeps a chronology of transactions (e-commerce); chain
can be metaphorically viewed as a string that holds all the blocks together, created using a consensus
algorithm based on proof-of-work (PoW) or proof-of-stake (PoS). Blockchains are often organized
into three most common forms; as such, public blockchain (purely peer-to-peer, decentralized and
permissionless; any miner (i.e. node) at any time can access the network to add, verify or validate
data without restrictions), private blockchain (permissioned, it is controlled by a central authority
which grants permission to pre-selected people who can add and verify records), and consortium
blockchain (also formed as permissioned, a group of nodes governs all transactions). It is true that
blockchain provides anonymity making identities of its users pseudonymous; but contrary to popular
belief, blockchain will not possibly solve all our problems and a permissionless blockchain will not
guarantee complete privacy since all transactions become visible to all nodes of the network.

Keywords: Blockchain; Decentralization; Permissionless; Cryptocurrency; Bitcoin

JEL classification: O31, G12, E42, C40

 This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
a Corresponding author email address: [email protected]
Faculty of Economics & Business – Universiti Malaysia Sarawak (Unimas), 94300 Kota Samarahan, Sarawak, Malaysia.

1
1.0 Introduction

Blockchain is misunderstood by many due in most part to its use as an underlying infrastructure
technology of cryptocurrencies1, but blockchain is much more than Bitcoin and can be used in many
diverse areas (Ganne, 2018). The farfetched implications of the global financial crisis (GFC) of 2008
not only gave birth to macroprudential stress testing and spurred adoption of Basel III2, but provided
a perfect ground for Satoshi Nakamoto (a pseudonym) to launch3 Bitcoin in January 2009 as the first
successful cryptocurrency4 (Nakamoto, 2008). Blockchain and Bitcoin as a viable alternative5 became
a household name in the aftermath of the GFC, however it should not be taken as a direct consequence
of the financial crisis because the history of previous attempts to create electronic cash actually began
in the 1980s and accelerated in the 1990s with the advent of internet and e-commerce.

Table 1: Earlier Electronic Payments Systems & Proposals

ACC CommerceSTAGE Hashcash Mini-Pay PayMe Secure Courier

Agora Cybank HINDE Minitix PayNet Semopo
AIMP CyberCash iBill MobileMoney PayPal SET
Allopass CyberCoin IMB-MP Mojo PaySafeCard SET2GO
n-money CyberGold InterCoin Mollie PayTrust SubScrip
BankNet DigiGold Ipin Mondex PayWord Trivnet
Bitbit Silk Road Javien MPTP Peppercoin TUB
Bitgold E-Gold Karma Net900 PhoneTicks Twitpay
Bitpass ECash LotteryTickets NetCard Playspan VeriFone
C-SET eCharge Lucre NetCash Polling VisaCash
CheckFree eCoin MagicMoney NetCheque Proton Wallie
ClickShare First Virtual MicroMint NetFare Redi-Charge Way2Pay
CommerceNet FSTC Micromoney No3rd S/PAY WorldPay
CommercePOINT Globe Left MilliCent One Click Charge Sandia Lab E-Cash X-PAY
Source: Narayanan et al (2016)

In the pre-Bitcoin world (Table 1), traditional online transactions had to rely on trusted third parties
to perform three essential tasks; (i) to validate all of transactions; (ii) to ensure secured execution of
transactions; and (iii) to maintain a chronology of transaction history. Virtually all of the electronic
cash schemes and online payment systems existed prior to Bitcoin failed to see their widespread
deployment. Nevertheless, their invaluable contribution to further developments of enhanced future

1 For a longer discussion on cryptocurrencies, see Taskinsoy (2018a; 2019a, b, c, d)

2 See Taskinsoy (2012; 2013a, b; 2018b, c, d; 2019e, f, g, h, i)
3 Satoshi Nakamoto (a pseudonym, his identity is unknown) supposedly worked about two years for writing the codes of

Bitcoin. Once writing of codes was completed, he registered the domain name bitcoin.org on 18 August 2008 and published
his White Paper on 31 October 2008, “Bitcoin: A peer-to-peer Electronic Cash System”. Next, he kicked off Bitcoin project on
November 9, 2008. On January 3, 2009, he created the genesis block (first block); a week later on January 9, 2009, Bitcoin
v0.1 was released. As a symbolic first Bitcoin peer-to-peer transaction took place on January 12, 2009 when Satoshi sent
10 BTC to a computer programmer by the name of Hal Finley (see Nakamoto, 2008).
4 Also referred to as electronic money, digital money, digital cash, digital coin, virtual money, and digital currency.
5 See Taskinsoy (2019j, k); for the use of dollar as a weapon of economic destruction, see Taskinsoy (2019l, m, n, o, p),

2
technologies (i.e. blockchain) could not be ignored. A decade has passed since the launch of Bitcoin in
January 2009, many of us still do not understand blockchain technology (Katz & Lindell, 2014; Levy,
2001; Ferguson et al., 2012); in fact, some people see blockchain as a magical invention to solve all
our problems, but there may be unforeseeable hazards to this prophecy (Clarke, 1962).

The first wave of cryptocurrency research began in early 1980s with Chaum’s proposal of untraceable
payments (Chaum, 1982) and later untraceable electronic cash (Chaum et al., 1998). The second wave
started with members of Cypherpunk’s Manifesto (Hughes, 1993)6 and the Crypto Anarchist Manifesto
(May, 1992). Nakamoto (2008) had knowledge of the antecedent research and appreciated Back’s
Hashcash7 (Back, 2002) and the proof-of-work PoW in early 1990s (Woodford, 2000; Camenisch et
al., 2005; Okamoto & Ohta, 1992). By the late 1990s, two attempts at creating a decentralized digital
currency emerged; “b-money” (proof-of-stake POS) by Wei Dai (Dai, 1998) and Bitgold by blockchain
pioneer Nick Szabo8 (Goldschlag & Stubblebine, 1998; Vishnumurthy et al., 2003; Okamoto & Ohta,
1992; Kocherlakota, 1998; Sander & Ta-Shma, 1999). Unfortunately, applications such as combating
email spam (Dwork & Naor, 1992; Laurie & Clayton, 2004), internet-based payment systems (Sirbu
& Tygar, 1995) and minting digital coins (Rivest & Shamir, 1997) did not survive long to see the realm
of blockchain and Bitcoin. The skepticism among risk-averse investors caused the notable attempts
by DigiCash (Schoenmakers, 1998; Chaum et al., 1998) and Peppercoin (Rivest, 2004) to fail, which
led to the bankruptcy of DigiCash (1990) in 1998. One of the few successful attempts prior to Bitcoin
had a head on collision with the US regulators, e-gold (founded in 1996) was shut down by the U.S.
government in 2008 after reaching several million users in over a decade of operation.

What is blockchain? In the simplest terms, blockchain is a type of distributed ledger technology (DLT),
made up of two parts, blocks containing of data and a chain that links them together. Blocks are like
storage units that store anything of value related to minting coins (i.e. Bitcoin) via a mining process
and keeps a chronology of transactions (e-commerce); chain can be metaphorically viewed as a string
that holds all the blocks together, created using a consensus algorithm based on proof-of-work (PoW)
or proof-of-stake (PoS). Blockchain is the underlying infrastructure technology underpinning Bitcoin
and over 2,900 altcoins (see Baek & Elbeck, 2015; Blundell-Wignall, 2014; Bartos, 2015; Berentsen &
Schär, 2018; Catalini et al., 2019; Chiu & Wong, 2014; Taskinsoy, 2019a, b, c, d). According to the 2018
PwC survey, the financial sector leads blockchain adoption (46%); 600 executives took part in the

6 Eric Hughes (a mathematician), Timothy May (a retired businessman), and John Gilmore (a computer scientist) along with
20 closest friends held a meeting to discuss the world’s cryptographic issues. The group called themselves Cypherpunk
which was derived from the word ‘cipher’ or ‘cypher’ (see Hughes, 1993).
7 Adam Back created Hashcash in 1997 as an anti-spam mechanism to make sending of spam uneconomical (Back, 2002).
8 Szabo (2005), “Bit Gold” available at: http://unenumerated.blogspot.rs/2005/12/bit-gold.html

3
survey and said that the regulatory uncertainty (and backlash by the Fed and ECB) tops the list of
barriers to blockchain adoption. Interoperability and lack of integration among different blockchains
are also identified as major hurdles standing in the way of blockchain’s future prospects. As a spinoff
from PoW, proof-of-stake (PoS) algorithm has been developed which is not based on a mining process
(e.g. LA, 2019). Facebook’s permissioned decentralized Libra blockchain uses PoS under which trust
is not removed but centralized where all of transactions are governed by a Fed-like de facto central
authority (i.e. the Libra Association) comprising a group of validators from founding members who
have no restrictions to access data, whereas some information may be restricted to participants

Blockchain provides anonymity making identities of its users pseudonymous; but contrary to popular
belief, permissionless blockchains will not guarantee complete privacy since all transactions and their
history in a chronological order are visible to all nodes. The Blockchain distributed ledger is resistant
to attacks providing a secure platform for processing, validating and authorizing records. Blockchains
are often organized based on who can access and control the network; as such, public blockchain
(purely peer-to-peer, decentralized and permissionless; any miner (i.e. node) at any time can access
the network to add, verify or validate data without restrictions), private blockchain (permissioned, it
is controlled by a central authority which grants permission to pre-selected people who can add and
verify records), and consortium blockchain (also formed as permissioned, a group of nodes governs
all transactions). Although blockchain possesses immense future prospects (i.e. smart contracts), it
will not solve all human problems. If prospects of blockchain in non-financial fields are materialized,
the value of blockchain can easily exceed a few trillion dollars by 2030; after all, blockchain has bigger
potential than its current role of underpinning cryptocurrencies (Bitcoin in particular). Blockchain’s
close link to Bitcoin also gave the technology a bad reputation due to Bitcoin’s extreme price volatility
plus its illegal use in activities related to money laundering and anti-terrorism financing.

Notwithstanding considerable enhancements made to blockchain distributed ledger since its debut
with Bitcoin’s launch in 2009, blockchain still faces regulatory concerns (mainly by the Fed and ECB)
along with numerous technical challenges. Blockchain’s biggest challenge is scalability; for instance,
Bitcoin decentralized blockchain based on PoW through a mining process leads to lower transaction
throughput (i.e. about 7 per second compared to 3,000+ by OES), higher latency, and very high energy
cost; the latter point makes the mining of Bitcoin less profitable at current price levels. There are
proposals to increase blockchain’s storage capacity and performance (i.e. speed of execution), Libra’s
decentralized permissioned blockchain is one of them, which is based on PoS where there is no mining
process and all transactions are governed by the non-profit Libra Association as the de facto central
authority comprising pre-selected nodes with unrestricted access to validate transactions.

4
Blockchain was an arcane topic in the 1990s, but since the debut of Bitcoin in 2009 and the immense
prominence it gained quickly, more than 2,900 altcoins have sprouted like wild mushrooms; in fact,
as of October 1, 2019, Bitcoin along with 2,915 altcoins9 are trading with a combined market cap of
$222 billion where Bitcoin’s market cap alone is $150 billion (67.6% of the market share).10

Source: Adapted from Nakamoto (2008)

Figure 1: Schematic Overview of Bitcoin Transactions

Heavy use of proven cryptographic techniques based on either proof-of-work (see Figure 1 and 2 for
Bitcoin) or proof-of-stake (see Figure 3 for Libra) along with key characteristics such as immutability,
traceability, transparency, and tamper-proof (i.e. resistant to attacks by hackers) make blockchain a
highly secure technology. For instance, mineable Bitcoin blockchain tolerates 51% (1/2) of malicious
nodes, whereas Libra blockchain can still function with 1/3 (i.e. 2/3 compromised), this makes Libra
more secure than Bitcoin (e.g. Barber et al., 2012; Bentov et al., 2014; Bech & Garatt. 2017; Bonneau
et al., 2015; Coombs, 2005; Ferguson et al., 2012; Garay et al., 2014; Levy, 2001). Bitcoin blockchain
solves double-spending via a mining process where a timestamp server timestamps a hash of a block
of items and the distributed ledger publishes the hash to all nodes proving the data (transactions)
existed (Bayer et al., 1993; Haber & Stornetta, 1991, 1997; Massias et al., 1999).

9 https://coinmarketcap.com/currencies/bitcoin/historical-data/?start=20130428&end=20181113 (August 6, 2019).

10 In the absence of an official Bitcoin exchange at its launch in January 2009, Bitcoin price was practically $0.00. With the
establishment of a Japanese-based Bitcoin exchange Mt. Gox in July 2010, 20 bitcoins changed hands at a price of $0.05.
Other price milestones as follow; $0.29 on December 27, 2010; $4.38 on December 26, 2011; $13.41 on December 31,
2012; $979 on November 25, 2013; $323 on December 23, 2014; $438 on December 21, 2015; $958 on December 26,
2016; $17,549 on December 11, 2017; $3,880 on December 31, 2018; $8,316 on September 30, 2019.

5
Source: Nakamoto (2008)
Figure 2: Overview of Bitcoin Blockchain Protocol

6
Source: The Libra Association
Figure 3: Overview of Libra Blockchain Protocol
Notes: Under Libra blockchain protocol, executing a transaction follows six specific steps; (1) the signature on the transaction
is verified to match the sender’s public key; (2) the sender gets authenticated (verified) and his/her LibraAccount is checked
for sufficient Libra coins (funds); (3) running prologue ensures that the account has enough Libra coins, the Move bytecode
verifies the transaction script and modules that no duplication, double spending, or violation of safety (i.e. type, reference, and
resource); (4) modules are published under the sender’s account (no module with the same name, meaning duplication is not
permitted); (5) successfully completed transaction scripts are committed to the global state, but not the failed ones; and (6)
Move virtual machine (VM) runs the epilogue to finalize the transaction.

7
2.0 Literature Review

Bitcoin runs on blockchain as its underlying technology, but their close association created confusion
among people who have often used Blockchain and Bitcoin interchangeably. Before going further, it
is important to note that Bitcoin with uppercase “B” is a purely peer-to-peer network of electronic
cash and bitcoin with lowercase “b” denotes a unit of account; blockchain, on the other hand, is a
technology (just like internet) underpinning Bitcoin. A blockchain, whether open (permissionless or
permissioned) or closed (consortium or private permissioned) is decentralized and works as a public
distributed ledger (Berryhill et al., 2018; Cascarilla, 2015; Duffie, 2019; Dwyer, 2014; Pike, 2018). As
outlined by Demirors (2017), blockchain has three layers; application layer (built applications used
by participants), networking layer (protocol rules implemented), and protocol layer (programming
language and computational rules). The timeline of blockchain developments date back to 1940s (see
Figure 5). The following diagram illustrates blockchain’s characteristics.

Source: Author
Figure 4: Key Characteristics of Blockchain

8
Source: PwC
Figure 5: Timeline of Blockchain Developments
1940s – Cryptography emerged; 1980s – Open-source communities, digital money, distributed computing; 1980s – 2000s – Development and use of cryptography (e.g.
ECDSA, SHA functions); 1990s – P2P networks, Manifesto; 2008 – Satoshi publishes a white paper describing the bitcoin digital currency; 2009 – First bitcoin
transaction between Satoshi and Hal Finney; 2011 – Bitcoin market cap exceeds $1 bn; 2013 – ICO fundraising is born – the first Mastercoin issued; 2015 – The
Ethereum project is created, introducing smart contracts and blockchain apps (Expansion of blockchain platforms such as bitcoin and the crypto market exceeds $100
billion with over 1,000 different cryptocurrencies); 2017 – First proof of stake verification on Ethereum platform (Emergence of new platforms e.g. Corda, Openchain
and Stellar) and emerging methods of verification – “proof of authority” (PoA), “proof of importance” (PoI) and “proof of history” (PoH).
Blockchain scaling – the future: Expansion and evolution of networks that form the infrastructure layer of the crypto stack (e.g. protocol for security tokens); Use of
blockchain for social purposes including messaging, games, social networks and rating systems; Growth of decentralized applications (dApps) to create large-scale
decentralized services; Blockchain scaling – the value of blockchain is projected to exceed $176 billion by 2025, and $3.1 trillion by 2030.

9
Blockchain is a decentralized mechanism without the need of trusted third party intermediation,
and has distributed ledger technology (DLT) relying on cryptographic proof. Any hashed data that is
added to a block (chained) is inalterable, meaning it could not be changed, modified, or deleted. A
decentralized blockchain removes any Fed like de facto central authority, therefore decisions are
reached by a consensus protocol (Ben-Sasson et al., 2014; Buchman et al., 2018; Yin et al., 2018). Due
to the fact that blockchain itself is the trust technology not allowing any single entity or individual to
control it (i.e. purely peer-to-peer), timestamped data in a chronological order become visible to all
nodes (Massias et al., 1999; Haber & Stornetta, 1991). Blockchains are developed as permissionless
and permissioned; under a permissionless blockchain (Bitcoin and Ethereum), trust is decentralized
where participants have unrestricted access to data at any time (Bitcoin versus traditional databases,
see Ray, 2017); under permissioned blockchain (Libra), trust is centralized where authorized nodes
(i.e. the Libra Association comprises a group of validators) govern transactions, but access to data by
non-validators is usually restricted (Ganne, 2018; Pike, 2018; Hileman & Rauchs, 2017). While Staples
et al. (2017) investigated inherent risks and opportunities using blockchain, Vigna and Casey (2016)
examined how the advent of blockchain has changed the electronic cash and payment systems.

Blockchain is temper-proof (resistant to attacks), the fact that all transactions are time-stamped
and any hashed data added to a block is permanently inalterable makes blockchain highly secure (e.g.
Casey & Vigna, 2018). The intrinsic characteristics like traceability (changes made are easily tracked),
transparency (transactions are visible at all times), immutability (products and documents can easily
be authenticated), share-ability (distributed ledger eliminates database backups and prevents loss of
data since most nodes have a copy), and consensus algorithm (blocks are created and published via
consensus) contribute to the resilience of blockchains to both fraud and cyberattacks than traditional
databases (see Merkle, 1980; Schoenmakers, 1998; Staples et al., 2017; Risberg, 2018; Vishnumurthy
et al., 2003; Wood, 2016). It is important to note that blockchain will not have answers to all our
problems since there is no such thing as perfect resilience because the security or integrity of the
system may be bridged or compromised by a group of hackers, designers or nodes who are in charge
of running the network. For example, Bitcoin can function correctly even if half (1/2) of its network
is either controlled by validators or hackers, but 51 percent attack is a problem (Bernstein et al., 1987)
for most blockchains except Libra which uses Byzantine Fault Tolerant (LibraBFT) and is claimed to
be designed to function correctly even if two-thirds of its network’s computing power fails or hacked
(see LA, 2019; Buchman et al., 2018; Castro & Liskov, 1999; Vukoli´c, 2015; Yin et al., 2018).

Blockchains use consensus approaches to ensure high security. Various consensus approaches are
used by different blockchains; in the proof-of-work (PoW) hashing scheme (Bitcoin’s PoW is derived

10
from Adam Back’s Hashcash (Back, 2002) using SHA-256 hash function), transactions via a mining
process are hashed in a Merkle tree (Merkle, 1980, 1987; Eastlake & Hansen, 2011) that verifies and
validates the accuracy of the hash value in the block header. However, PoW is slow and inefficient
(Bonneau et al., 2015), seven transactions per second – (Cascarilla, 2015) compared to Ethereum’s
15, Ripple’s 1,500, and Libra’s estimated 1,000; this makes PoW low scalability, higher latency, lower
processing speed and higher energy cost (Table 2). Proof-of-stake (POS), a more popular alternative
to PoW due to its higher transaction throughput, scalability, lower latency, and lower energy cost.

Table 2: The Cost to Mine One Bitcoin11

Albania $3,894 Ireland $11,105 Romania $5,698

American Samoa $10,706 Israel $6,087 Russia $4,675
Argentina $4,560 Italy $10,310 Rwanda $8,922
Australia $9,913 Jamaica $7,867 Saudi Arabia $3,172
Bahrain $16,773 Japan $8,723 Serbia $3,133
Bangladesh $2,379 Jordan $9,913 Singapore $5,936
Belarus $2,177 Kazakhstan $2,835 Slovakia $4,746
Belgium $13,482 Kiribati $12,966 Slovenia $7,645
Brazil $6,741 Kosovo $3,133 Solomon Islands $16,209
Brunei $4,758 Kuwait $1,983 South Africa $5,948
Bulgaria $4,362 Laos $4,845 South Korea $26,170
Cambodia $8,307 Latvia $7,122 Spain $11,103
Canada $3,965 Lithuania $5,155 Siri Lanka $11,630
Chile $9,120 Luxembourg $7,693 Surinam $2,956
China $3,172 Macedonia $3,914 Sweden $4,746
Colombia $7,157 Malaysia $5,147 Switzerland $7,494
Cook Islands $15,861 Malta $6,079 Tahiti $11,103
Croatia $5,551 Marshall Islands $14,751 Taiwan $3,774
Cyprus $8,723 Mexico $7,645 Thailand $4,943
Denmark $14,275 Moldova $4,651 Tonga $14,671
Egypt $3,172 Montenegro $6,384 Trinidad A. Tobago $1,190
Estonia $5,551 Myanmar $1,983 Turkey $4,984
Ethiopia $2,855 Nepal $3,569 Tuvalu $14,493
Fiji $5,155 Netherlands $9,449 Uganda $7,637
Finland $7,122 New Zealand $7,593 Ukraine $1,852
France $7,930 Nicaragua $8,613 UAE $3,569
Georgia $3,316 Nigeria $5,321 United Kingdom $8,402
Germany $14,275 Norway $7,784 United States $4,758
Gibraltar $5,710 Pakistan $7,137 Uruguay $8,723
Greece $9,120 Palau $9,053 Uzbekistan $1,789
Guyana $10,627 Papua New Guinea $9,913 Vanuatu $13,085
Hong Kong $7,930 Paraguay $3,140 Venezuela $531
Hungary $5,365 Peru $4,140 Vietnam $4,717
Iceland $4,746 Philippines $7,137 Western Samoa $12,689
India $3,274 Poland $6,931 Zambia $3,569
Indonesia $4,329 Portugal $10,825

Source: Elite Fixtures; MarketWatch

Notes: The cost figures were calculated based on average electricity rate in each country

11 https://www.marketwatch.com/story/heres-how-much-it-costs-to-mine-a-single-bitcoin-in-your-country-2018-03-06

11
Different methods12 are used under POS13 to prove ownership of cryptocurrency (i.e. stake), and the
argument in support of POS is that the likelihood of an attack by those with higher stakes (i.e. owning
a large amount of coins) is less likely. POS is certainly better and more economical than PoW, but POS
may lead to unfairness and domination by a single person or entity with the largest holding of coins;
to avoid this, POS uses random selection along with stake size and coin age (i.e. older coins with larger
stake), which have been employed by Blackcoin (e.g. Vasin, 2014) and Peercoin respectively (King &
Nadal, 2012; Vukoli´c, 2015). Another consensus algorithm used by blockchains is Byzantine Fault
Tolerant, which is based on military combat situation where generals must decide whether attack or
retreat (Lamport et al., 1982). Variations of BFT have been developed; as such, a replication of BFT as
Practical Byzantine Fault Tolerance (PBFT)14, Stellar Consensus Protocol (SCP), Delegated Byzantine
Fault Tolerance (dBFT); for a longer discussion, see Mazieres (2015), Miguel and Barbara (1999).

Blockchain offers anonymity, immutability, scalability, and traceability. Blockchain has great
potential to revolutionize how humans conduct business, interact and transact with each other as
well as with trusted machines; furthermore, blockchain facilitates purely (or governed) peer-to-peer
payments, stores records, manages inventory of wealth (tangible and intangible assets), transfers (i.e.
smart contracts) and receives funds within seconds. In a broader sense, blockchain will re-define how
integral components of a society (i.e. governments, public/private entities, universities, and etc.) will
operate. Therefore blockchain, due to its immense opportunities waiting to be harnessed, is way more
than cryptocurrencies (i.e. Bitcoin). Blockchain provides anonymity (not 100 percent privacy), the
identity of users is not revealed (pseudonymous). This aspect of blockchain prompted governments
to call for greater scrutiny of cryptocurrencies on terrorism financing, money laundering, illegal drugs
(i.e. Silk Road15) and human trafficking (see Adrian & Mancini-Griffoli, 2019; Cuthell, 2019; Duffie,
2019; Milne, 2018; Sapienza & Zingales, 2012). Public permissionless blockchains are immutable
(resistant to attacks) since any hashed data added to a block is immediately visible via the distributed
ledger and stored by nodes of the network (Bonneau et al., 2014; Kosba et al., 2016; Möser, 2013;
Nakamoto, 2008). Scalability has been a concern for Bitcoin blockchain due to the PoW verification

12 Also see the Ripple Protocol Consensus Algorithm, here subnetworks (i.e. server for consensus and client for the transfer
of funds). Each server has a unique node list (UNL), for consensus purposes, UNLs with 80% or higher are included in the
ledger and UNLs with less than 20% are considered to be faulty (see Schwartz et al., 2014). Although Bitcoin is mineable,
out of the top-100 list by market capitalization, about two-thirds or 64 cryptocurrencies are non-mineable such as Ripple-
XRP, Binance Coin, Tether, EOS, Stellar, UNUS SED LEO, Chainlink, Tezos, NEO, and IOTA. Consensus protocol without
mining used by Tendermint involves three stages; pre-vote step, pre-commit step, and the final commit step; after rounds
of voting, a block that gets two-thirds or more of commits is accepted and published as a new block (see Kwon, 2014).
13 Delegated proof of stake (DPOS) is a close variation of POS; the difference between the two is while in POS the selection

is random whereas in DPOS blocks are generated and validated by nodes selected by stakeholders like a corporation. After
the first proof of stake verification on Ethereum platform different methods of verification have emerged; “proof of
authority” (PoA), “proof of importance” (PoI) and “proof of history” (PoH).
14 PBFT protocol was used in Hyperledger project Available: https://www.hyperledger.org/
15 On October1, 2013 the FBI shut down the black market website Silk Road and seized its assets including 26,000 bitcoins.

12
and the mining process where a new block limited to 1 MB is mined every ten minutes. Scalability has
improved under POS; for instance, from Bitcoin’s seven transactions per second to Ripple’s 1,500, and
Libra’s estimated 1,000. According to Vukoli´c (2015), Libra’s high scalability along with its fast
processing time are inseparable (Vukoli´c, 2015; Ray, 2017). A decade after the launch of Bitcoin16 in
2009, blockchain still invites skepticism regarding its scalability; as of October 1, 2019, Bitcoin and
2,915 altcoins are traded with a combined market cap of $222 billion where Bitcoin’s market cap
alone is $150 billion (67.6%).17 Blockchain has the intrinsic characteristic of traceability because
transactions are time-stamped and the hashed data added to a block is permanently inalterable.

Blockchains are classified as permissionless versus permissioned and public versus private or
consortium. Blockchains, in terms of access to data, are formed as permissioned, permissionless,
public, private or consortium. A permissionless blockchain imposes no restrictions on who can access
and validate transactions, this is opposite of permissioned; in permissioned blockchains (private or
consortium), access is controlled by a de facto central authority which authorizes the level of access
by participants and validators (Ganne, 2018). However, permissioned blockchains are increasingly
used in international trade due to their processing speed and higher scalability. Public versus private
or consortium blockchains are based on management of the network (i.e. anonymity of nodes).

Table 3: Blockchain Segmented by Permission Model

Type Read Write Commit Example

Public Open Bitcoin,
Anyone Anyone
permissionless to anyone Ethereum

Open Supply chain

All or subset
Blockchain Types

Public Open Authorized ledger for retail

of authorized
permissioned to anyone participants brand viewable
participants
by public
Restricted to an All or subset Multiple banks
Authorized
Consortium authorized set of authorized operating a
participants
of participants participants shared ledger

Closed Fully private External bank

Private or restricted to Network ledger shared
Network
permissioned a limited set operator between parent
operator only
“enterprise” of authorized only company and
nodes subsidiaries

Source: Hileman and Rauchs (2017)

16 In the absence of an official Bitcoin exchange at its launch in January 2009, Bitcoin price was practically $0.00. With the
establishment of a Japanese-based Bitcoin exchange Mt. Gox in July 2010, 20 bitcoins changed hands at a price of $0.05.
Other price milestones as follow; $0.29 on December 27, 2010; $4.38 on December 26, 2011; $13.41 on December 31,
2012; $979 on November 25, 2013; $323 on December 23, 2014; $438 on December 21, 2015; $958 on December 26,
2016; $17,549 on December 11, 2017; $3,880 on December 31, 2018; $8,316 on September 30, 2019.
17 https://coinmarketcap.com/currencies/bitcoin/historical-data/?start=20130428&end=20181113 (August 6, 2019).

13
2.1 Opportunities and Challenges

A public permissionless blockchain is an open system (i.e. unrestricted access) that operates without
the need of validator nodes or a trusted third party (bank or central authority). Unlike permissioned,
nodes or network participants in permissionless blockchains do not need to get a prior permission in
order to access data or/and validate transactions. With complete transparency of public blockchains,
any new data (i.e. block or transaction) becomes immediately visible to all nodes in the network. Also,
public blockchains are decentralized and purely peer-to-peer platforms (i.e. Bitcoin blockchain) that
enable individuals and entities to send and receive funds as well as conduct business in the absence
of a third party intermediation (i.e. a bank). In traditional databases, the trust is in the hands of public
or private entities; but in public permissionless blockchains, blockchain is the trusted machine using
PoW or POS algorithms18 based on cryptographic proof to ensure safe and secure transactions.

The key difference between public blockchains versus private/consortium blockchains is who can
access data and validate mined blocks (and transactions). In private permissioned blockchains, data
and transactions are governed by a group of nodes (validators) who are granted unrestricted access
by owners of blockchains, therefore this blockchain type is more centralized than decentralized. In
the case of Facebook’s Libra coin (i.e. consortium), the non-profit Libra Association acts as the de facto
central authority comprising 28 heavyweight founding-members, mostly private corporations from
the U.S. such as Visa, MasterCard, PayPal19, Facebook Calibra, and eBay (see Bonneau et al., 2015;
Gudgeon et al., 2019; Lagarde, 2018; McLeay et al., 2014; Phillips & Gorse, 2017). Libra is distinctly
different than Bitcoin, its permissioned blockchain (will transition into permissionless) is supported
by a Proof-of-Stake (PoS) algorithm (Catalini et al., 2019; Josefsson & Liusvaara, 2017), where nodes
rely on an improved consensus such as LibraBFT (Buchman et al., 2018; Yin et al., 2018). To improve
scalability, Libra uses a new programming language “Move” which is specifically written for Libra to
implement smart contracts (Blackshear et al., 2019; Lamport et al., 1982; Lamport, 1998).

Blockchain is so much bigger than Bitcoin (altcoins too) and possesses immense potential for future
opportunities, well beyond its current use in financial services underpinning cryptocurrencies (i.e.
replacing traditional trusted third parties with trusted machines). Blockchain gave birth to Bitcoin as
its infrastructure technology or Bitcoin gave birth to blockchain as its primary product, regardless of
which one of the two was first, moving forward blockchain does not have to be only in financial nature.
Figure 6 lists a number of financial and non-financial fields where blockchain could be utilized.

18 Emerging methods of verification – “proof of authority” (PoA), “proof of importance” (PoI) and “proof of history” (PoH).
19 PayPal has just recently announced that it has decided to pull out of the Libra consortium due to increasing opposition
from regulators in the U.S. and Europe.

14
Source: Citi Ventures and Imperial College
Figure 6: Blockchain Future Opportunities

15
Source: Demirgüç-Kunt et al (2018); FDIC (2018)
Figure 7: Financial Inclusion Worldwide and the U.S. (2017)
Notes: Account ownership worldwide grows but inequality between men and women or rich and poor continues to persist; as of 2017, the gender gap in account
ownership worldwide was 7 percentage points, 72% men compared to 65% women (gender gap in developing countries was 9 percentage points). Financial inclusion
throughout the world has improved since 2011, nevertheless 31% of adults did not have an account in 2017, up from 39% in 2014 and 49% in 2011. In other words,
account ownership rose from 51% (2011) to 61% (2014) and then to 69% (2017), Out of the world’s 1.7 billion unbanked adults, 46% of them (782 million) live in 7
countries; furthermore, 56% of the unbanked adults (950 million) are women and the remaining about 750 million (44%) are men. However in China, India and
Turkey, women make up circa 60% of the unbanked adults. In 2017, 6.5% or 8.4 million households in the U.S. were unbanked, which amounts to 14.1 million adults
and 6.4 million children (i.e. there were 129.3 million U.S. households in 2017). Also in 2017, the number of underbanked U.S. households was 18.7%, or 24.2 million
households comprising 48.9 million adults and 15.4 million children. In the U.S., 68.4% of the households in 2017 were fully banked; and interestingly, 58.7% of the
unbanked households in 2017 stated that they were not likely to open a bank account, not having enough money was given as the main reason.
16
If Facebook’s Libra project does not sputter out due to regulatory backlash, it will spur central banks
throughout the world to introduce their own cryptocurrency projects, and this will increase the value
of blockchain hundred times or more by 2030. Although Facebook’s primary goal is to revolutionize
the existing electronic payment systems and money transfers, its side goal is to tap on the gold mine
of 1.7 billion unbanked people worldwide of which, 56% are women and 44% are men (see Figure 7).
Libra, as a stable cryptocurrency, is going to enhance financial inclusion and global stability as a public
good (LA, 2019). Economists and financial historians agree that financial inclusion aids development
and helps people escape destitution as access to and use of financial services enable people to invest
in their careers, education, businesses, and health (Demirgüç-Kunt et al., 2017). Despite the continued
growth in account ownership since 2011 (from 51% in 2011 to 69% in 2017), still 31% of adults (1.7
billion) globally did not have an account in 2017 (Demirgüç-Kunt et al., 2018). The National Survey
of Unbanked Households (FDIC, 2018) shows that 6.5% of the U.S. households were unbanked as of
2017 (14.1 million adults and 6.4 million children), up from 7.6% in 2009. The same report indicates
that 52.7% of unbanked households in the U.S. cited “do not have enough money” as a reason for not
opening a bank account; interestingly, 30% of the unbanked adults said that they did not need a bank
account, this was the second most popular reason given by the survey respondents (FDIC, 2018).

Source: PricewaterhouseCoopers – PwC blockchain survey (2018)

Figure 7: The Biggest Barriers to Blockchain Adoption

17
After a decade has passed since Bitcoin’s debut in January 2009, blockchain technology still faces
many barriers and challenges, but blockchain’s potential business value is a lot greater than any of
cryptocurrencies or as a whole. According to the 2018 PricewaterhouseCoopers (PwC) survey, more
than three quarters of 600 executives took the survey say their companies are at least looking into
how they can benefit from blockchain technology. The survey has also revealed interesting views such
as 45% of respondents believe the “trust” could delay adoption, 30% see China as a rising blockchain
leader, and 28% say blockchain’s success depends on interoperability of different blockchains. Not
surprisingly, virtually all 600 executives indicate that regulatory uncertainty is the biggest barrier not
only to blockchain’s adoption but the regulatory backlash (intensified with Libra announcement) may
cause further damage to consumers as well as developments of enhanced technologies in the future
(see Reitman, 2019). Christine Lagarde, Managing Director of the International Monetary Fund (IMF),
urged central banks not to ignore “winds of change” and consider looking into the case of central bank
digital currency (Lagarde, 2018; Bech & Garatt. 2017; Mancini-Griffoli, 2018; McLeay et al., 2014).

PwC survey shows financial services industry as the leader in blockchain adoption (46%) followed
by industrial products and manufacturing (12%), energy and utilities (12%), and healthcare (11%);
the bottom three are government (8%), retail and consumer (4%), entertainment and media (1%).
As of 2018 (Table 4 and 5), 24 nations have a ban on digital coins (15 implicit and 9 absolute), 34
countries have passed anti-money laundering and anti-terrorism financing laws against the use of
cryptocurrencies and at least 8 member-states of the Eastern Caribbean Currency Union participate
in a pilot test the use of cryptocurrencies alongside national currencies (LLC, 2018).

Table 4: Legal Status of Cryptocurrencies

Implicit Ban Absolute Ban National Crypto-Projects

ISO Code Country Name ISO Code Country Name ISO Code Country Name
BH Bahrain DZ Algeria AI * Anguilla
BD Bangladesh BO Bolivia CN China
CN China EG Egypt DM * Dominica
CO Colombia IQ Iraq GD * Grenada
DO Dominican Republic MA Morocco IE Ireland
ID Indonesia NP Nepal LT Lithuania
IR Iran PK Pakistan MH Marshall Is.
KW Kuwait AE UAE MS * Montserrat
LS Lesotho VN Vietnam LC * Saint Lucia
LT Lithuania VE Venezuela
MO Macau KN * Saint Kitts
OM Oman and Nevis
QA Qatar AG * Antigua
SA Saudi Arabia and Barbuda
TW Taiwan
Source: The Law Library of Congress; http://www.law.gov
ISO: International Standard Organization; * Eastern Caribbean Currency Union

18
 Table 5: Regulatory Framework for Cryptocurrencies

Application of Tax Laws AML & ATF Laws Both Laws

ISO Code Country Name ISO Code Country Name ISO Code Country Name
AR Argentina KY Cayman Islands AU Australia
AT Austria CR Costa Rica CA Canada
BG Bulgaria CZ Czech Republic DK Denmark
FI Finland EE Estonia JP Japan
IS Iceland GI Gibraltar CH Switzerland
IL Israel HK Hong Kong
IT Italy IM Isle of Man
NO Norway JE Jersey
PL Poland LV Latvia
RO Romania LI Liechtenstein
RU Russia LU Luxembourg
SK Slovakia SG Singapore
ZA South Africa KR South Korea
ES Spain
SE Sweden
GB United Kingdom

Source: The Law Library of Congress; http://www.law.gov

AML: Anti-Money Laundering; ATF: Anti-Terrorism Financing Laws

3.0 Conclusion

This paper has provided an introduction to blockchain technology, explained three most common
blockchain types and outlined blockchain’s future prospects along with both benefits and risks. A
recent survey by PwC indicates that the financial sector leads blockchain adoption; furthermore, 600
executives who took part in the survey said that the increasing regulatory uncertainty was the biggest
barrier to blockchain adoption in non-financial sectors including law enforcement (digital identity),
education sector (paperless digitalized records), healthcare sector (self-sovereign health records),
logistics sector (tracking products in transit), forestry and fishing industries, agriculture sector
(agricultural insurance, smart contracts and automated payments), energy sector (decentralized
platform for energy trading), and government sector (central bank cryptocurrencies). Blockchain is
bigger than Bitcoin and has a great potential to transform non-financial sectors.

References

Adrian, T. & Mancini-Griffoli, T. (2019). The Rise of Digital Money. Fintech Notes, Washington, D.C.:
International Monetary Fund.
Andolfatto, D. (2018). Assessing the Impact of Central Bank Digital Currency on Private Banks.
Federal Reserve Bank of St. Louis Working Paper 2018–026C.
Back, A. (2002). Hashcash-A Denial of Service Counter-Measure.
http://www.hashcash.org/papers/hashcash.pdf.

19
Baek, C. & Elbeck, M. (2015). Bitcoins as an Investment or Speculative Vehicle? A First Look. Applied
Economics Letters, vol. 22, no. 1, pp. 30–34.
Barber, S., Boyen, X., Shi, E. & Uzun, E. (2012). Bitter to Better—How to Make Bitcoin a Better
Currency. In Financial Cryptography.
Bartos, J. (2015). Does Bitcoin Follow the Hypothesis of Efficient Market? International Journal of
Economic Sciences 4: 10-23.
Bayer, D., Haber, S. & Stornetta, W. S. (1993). Improving the Efficiency and Reliability of Digital
Time-Stamping. In Sequences II: Methods in Communication, Security and Computer Science,
pages 329-334.
Bech, M. L. & Garatt. R. (2017). Central Bank Cryptocurrencies. BIS Quarterly Review.
Ben-Sasson, E., Chiesa, A., Garman, C., Green, M., Miers, I., Tromer, E. & Virza. M. (2014). Zerocash:
Decentralized anonymous payments from Bitcoin. In IEEE Symposium on Security and
Privacy.
Berentsen, A. & Schär, F. (2018). A Short Introduction to the World of Cryptocurrencies. Federal
Reserve Bank of St. Louis REVIEW, First Quarter, 100(1), pp. 1-16.
Bentov, I., Lee, C., Mizrahi, A. & Rosenfeld, M. (2014). Proof of Activity: Extending Bitcoin’s Proof of
Work via Proof of Stake. Cryptology ePrint Archive, Report 2014/452.
Bernstein, P. A., Hadzilacos, V. & Goodman, N. (1987). Concurrency Control and Recovery. In
Database Systems.” Addison-Wesley.
Berryhill, J., Bourgery, T. & Hanson, A. (2018). Blockchains Unchained: Blockchain Technology and
its Use in the Public Sector. OECD Working Papers on Public Governance, No. 28, OECD
Publishing, Paris, https://doi.org/10.1787/3c32c429-en.
Blackshear, S., Cheng, E., Dill, D. L., Gao, V., Maurer, B., Nowacki, T., Pott, Qadeer, S., Rain, Russi, D.,
Sezer, S., Zakian, T. & Zhou, R. (2019). Move: A Language with Programmable Resources.
https://developers.libra.org/docs/move-paper.
Blundell-Wignall, A. (2014). The Bitcoin Question: Currency versus Trust-Less Transfer Technology.
OECD Working Papers on Finance, Insurance and Private Pensions, (37), 1.
Bonneau, J., Miller, A., Clark, J., Narayanan, A., Kroll, J. A. & Felten, E. W. (2015). Sok: Research
Perspectives and Challenges for Bitcoin and Cryptocurrencies. In Symposium on Security and
Privacy. IEEE, pp. 104–121.
Bonneau, J., Narayanan, A., Miller, A., Clark, J., Kroll, J. A. & Felten, E. W. (2014). Mixcoin: Anonymity
for Bitcoin with Accountable Mixes. In Proceedings of International Conference on Financial
Cryptography and Data Security, Berlin, Heidelberg, pp. 486–504.
Buchman, E., Kwon, J. & Milosevic, Z. (2018). The Latest Gossip on BFT Consensus. CoRR, vol.
abs/1807.04938.
Camenisch, J., Hohenberger, S. & Lysyanskaya, A. (2005). Compact ecash. In EUROCRYPT.
Cascarilla, C. G. (2015). Bitcoin, Blockchain, and the Future of Financial Transactions. In CFA
Institute Conference Proceedings Quarterly (Vol. 32, No. 3, pp. 18-24). CFA Institute.
Casey, M. & Vigna, P. (2018). In Blockchain We Trust. MIT Technology Review, Vol. 121, No. 3.
Cambridge.
Castro, M. & Liskov, B. (1999). Practical Byzantine Fault Tolerance. In USENIX Symposium on
Operating Systems Design and Implementation (OSDI), 1999, pp. 173–186.
20
Catalini, C., Kominers, S. D. & Jagadeesan, R. (2019). Market Design for a Blockchain-Based Financial
System. Working paper no. 3396834. Social Science Research Network.
Chaum, D. (1982). Blind Signatures for Untraceable Payments. CRYPTO.
Chaum, D., Fiat, A. & Naor, M. (1998). Untraceable Electronic Cash. CRYPTO.
Chiu, J. & Wong, T-N. (2014). E-money: Efficiency, Stability and Optimal Policy. Bank of Canada,
Working Paper, 2014–16, April.
Coombs, K. A. (2005). Protecting USER PRIVACY in the Age of DIGITAL LIBRARIES. Computers in
Libraries 25(6), 16-20.
Dai, W. (1998). B-money. http://www.weidai.com/bmoney.txt.
Demirgüç-Kunt, A., Klapper, L. & Singer, D. (2017). Financial Inclusion and Inclusive Growth: A
Review of Recent Empirical Evidence. Policy Research Working Paper 8040, World Bank
Group, Washington, DC.
Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S. & Hess, J. (2018). The Global Findex Database
2017: Measuring Financial Inclusion and the Fintech Revolution. World Bank Group.
Demirors, M. (2017). Oxford Blockchain Strategy Programme. Said Business School, University of
Oxford, UK, https://www.getsmarter.com/presentations/uk/oxford-said/whatstakeholders-
are-involved-in-the-blockchain-strategy-system
Duffie, D. (2019). Digital Currencies and Fast Payment Systems. Mimeo, Stanford University.
Dwork, C. & Naor, M. (1992). Pricing via Processing or Combatting Junk Mail. CRYPTO.
Dwyer, G. P. (2014). The Economics of Bitcoin and Similar Private Digital Currencies. Journal of
Financial Stability, 333, pp. 1-11.
Eastlake, D. & Hansen, T. (2011). US Secure Hash Algorithms (SHA and SHA-based HMAC and
HKDF). RFC 6234 (Informational), May, available at: http://www.ietf.org/rfc/rfc6234.txt.
FDIC (Federal Deposit Insurance Corporation) (2018). FDIC National Survey of Unbanked and
Underbanked Households. Division of Depositor and Consumer Protection, October.
Ferguson, N., Schneier, B. & Kohno, T. (2012). Cryptography Engineering: Design Principles and
Practical Applications. John Wiley & Sons.
Ganne, E. (2018). Can Blockchain Revolutionize International Trade? World Trade Organization. Print
ISBN 978-92-870-4760-1, Web ISBN 978-92-870-4761-8.
Garay, J., Kiayias, A. & Leonardos, N. (2014). The Bitcoin Backbone Protocol: Analysis and
Applications. Cryptology ePrint Archive, Report 2014/765.
Goldschlag, D. M. & Stubblebine. S. G. (1998). Publicly Verifiable Lotteries: Applications of Delaying
Functions. Financial Cryptography.
Gudgeon, L., Moreno-Sanchez, P., Ross, S., McCorry, P. & Gervais, A. (2019). Sok: Off the Chain
Transactions. IACR Cryptology ePrint Archive, vol. 2019, p. 360.
Haber, S. & Stornetta, W. S. (1991). How to Time-Stamp a Digital Document. In Journal of Cryptology,
Vol 3(2), pp. 99-111, 1991.
Haber, S. & Stornetta, W. S. (1997). Secure Names for Bit-Strings. In Proceedings of the 4th ACM
Conference on Computer and Communications Security, pages 28-35, April.

21
Hileman, G. & Rauchs, M. (2017). Global Blockchain Benchmarking Study,
https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-
finance/downloads/2017-09-27-ccaf-globalbchain.pdf.
Hughes, E. (1993). A Cypherpunk’s Manifesto. Accessed on September 30, 2019. Available at:
https://www.activism.net/cypherpunk/manifesto.html.
Josefsson, S. & Liusvaara, I. (2017). Edwards-Curve Digital Signature Algorithm (EdDSA). RFC, vol.
8032, pp. 1–60.
King, S. & Nadal, S. (2012). Ppcoin: Peer-to-Peer Crypto-Currency with Proof-of-Stake. Self-Published
Paper, August, vol. 19.
Kocherlakota, N. R. (1998). Money Is Memory. Journal of Economic Theory 81(2): 232–51, August.
Kosba, A., Miller, A., Shi, E., Wen, Z. & Papamanthou, C. (2016). Hawk: The Blockchain Model of
Cryptography and Privacy-Preserving Smart Contracts. In Proceedings of IEEE Symposium on
Security and Privacy (SP), San Jose, CA, USA, 2016, pp. 839–858.
Kwon, J. (2014). Tendermint: Consensus without Mining. http://tendermint. com/docs/tendermint {
} v04. pdf, 2014.
LA (The Libra Association) (2019). An Introduction to Libra. https://libra.org/en-us/whitepaper.
Lagarde, C. (2018). Winds of Change: The Case for New Digital Currency. Prepared for delivery by IMF
Managing Director, Singapore Fintech Festival, November 14.
Lamport, L. (1998). The Part-Time Parliament. ACM Transactions on Computer Systems, vol. 16, no.
2, January, pp. 133–169., https://dl.acm.org/citation.cfm?doid=279227.279229.
Lamport, L.., Shostak, R. & Pease, M. (1982). The Byzantine Generals Problem. ACM Transactions on
Programming Languages and Systems (TOPLAS), vol. 4, no. 3, pp. 382–401.
Laurie, B. & Clayton, R. (2004). Proof-of-work Proves not to Work. WEIS.
Levy, S. (2001). Crypto: How the Code Rebels Beat the Government‐‐Saving Privacy in the Digital Age.
Penguin.
LLC (The Law Library of Congress) (2018). Regulation of Cryptocurrency around the World. The Law
Library of Congress, Global Legal Research Center, June, http://www.law.gov
Mancini-Griffoli, T., Peria, M. S. M., Agur, I., Ari, A., Kiff, J., Popescu, A. & Rochon. C. (2018). Casting Light
on Central Bank Digital Currency”, IMF Staff Discussion Note SDN/18/08, November.
May, T. C. (1992). The Crypto Anarchist Manifesto. Accessed on September 30, 2019. Available at:
https://www.activism.net/cypherpunk/crypto-anarchy.html.
Massias, H., Avila, X. S. & Quisquater, J-J. (1999). Design of a Secure Timestamping Service with
Minimal Trust Requirements. In 20th Symposium on Information Theory in the Benelux, May.
Mazieres, D. (2015). The Stellar Consensus Protocol: A federated Model for Internet-Level Consensus.
Stellar Development Foundation.
McLeay, M., Radia, A. & Thomas. R. (2014). Money Creation in the Modern Economy. Bank of England
Quarterly Bulletin 2014, Q1, pp. 14–27.
Merkle, R. C. (1980). Protocols for Public Key Cryptosystems. In Proc. 1980 Symposium on Security
and Privacy, IEEE Computer Society, pages 122-133, April.

22
Merkle, R. C. (1987). A Digital Signature Based on a Conventional Encryption Function. In Advances
in Cryptology - CRYPTO ’87, A Conference on the Theory and Applications of Cryptographic
Techniques, Santa Barbara, California, USA, August 16-20, 1987, Proceedings, pp. 369–378.
Miguel, C. & Barbara, L. (1999). Practical Byzantine Fault Tolerance. In Proceedings of the Third
Symposium on Operating Systems Design and Implementation, vol. 99, New Orleans, USA, 1999,
pp. 173–186.
Möser, M. (2013). Anonymity of Bitcoin Transactions: An Analysis of Mixing Services. In Proceedings
of M¨unster Bitcoin Conference, Münster, Germany, 2013, pp. 17–18.
Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Unpublished paper, available at
https://bitcoin.org/bitcoin.pdf.
Okamoto, T. & Ohta, K. (1992). Universal Electronic Cash. CRYPTO.
Pfitzmann, A. & Köhntopp, M. (2001). Anonymity, Unobservability, and Pseudonymity—A Proposal
for Terminology. In Designing privacy enhancing technologies, pp. 1–9.
Phillips, R.C, & Gorse, D. (2017). Predicting Cryptocurrency Price Bubbles Using Social Media Data and
Epidemic Modelling. IEEE Symposium Series on Computational Intelligence.
Pike, C. (2018). Blockchain Technology and Competition Policy. OECD Issues Paper on Competition,
https://one.oecd.org/document/DAF/COMP/WD(2018)47/en/pdf.
Ray, S. (2017). Blockchain versus Traditional Databases. Online,
https://hackernoon.com/blockchains-versus-traditionaldatabases-cla728159f79
Reed, D. P. (1978). Naming and Synchronization in a Decentralized Computer System. Ph.D.
Dissertation, Massachusetts Institute of Technology, Cambridge, MA, USA.
Reitman, R. (2019). Could Regulatory Backlash Entrench Facebook’s New Cryptocurrency Libra?
Electronic Frontier Foundation (EFF) (July 10),
https://www.eff.org/deeplinks/2019/07/could-regulatory-backlash-entrench-facebooks-
new-cryptocurrency-libra.
Risberg, J. (2018). Yes, the Blockchain Can Be Hacked. Accessed on 20 August 2019.
https://coincentral.com/blockchainhacks/
Rivest. R. L. (2004). Peppercoin Micropayments. Financial Cryptography.
Rivest, R. L. & Shamir, A. (1997). PayWord and MicroMint: Two Simple Micropayment Schemes.
Security Protocols Workshop.
Sander, T. & Ta-Shma, A. (1999). Auditable, Anonymous Electronic Cash. CRYPTO.
Schoenmakers, B. (1998). Security Aspects of the EcashTM Payment System. State of the Art in
Applied Cryptography.
Schwartz, D., Youngs, N. & Britto, A. (2014). The Ripple Protocol Consensus Algorithm. Ripple Labs
Inc. White Paper, vol. 5.
Sirbu, M. & Tygar, J. D. (1995). NetBill: An Internet Commerce System Optimized for Network
Delivered Services. IEEE Personal Communications, 2(4):34–39.
Staples, M., Chen, S. Falamanski, S., Ponomarev, A., Rimba, P., Tran, A.P., Weber, I., Xu, X. & Zhu, J.
(2017). Risks and Opportunities for Systems using Blockchain and Smart Contracts. Canberra.
Commonwealth Scientific and Industrial Research Organization.

23
Taskinsoy, J. (2012). Relevancy of Corporate Financial Policies and the Profit Maximization View of
Islamic Banks. Journal of Social and Development Sciences, Vol. 3(6), pp. 184-193, June, ISSN
2221-1152.
Taskinsoy, J. (2013a). Rigorous Capital Requirements under Basel III: Possible impact on Turkey’s
financial sector. Journal of WEI Business and Economics, Vol. 2(1), pp. 1-30, April.
Taskinsoy, J. (2013b). Basel III: Road to Resilient Banking, Impact on Turkey's Financial Sector. LAP
LAMBERT Academic Publishing, 237 pages, ISBN 13: 978-3-659-30696-9.
Taskinsoy, J. (2018a). Bitcoin Mania: An End to the US Dollar’s Hegemony or another
Cryptocurrency Experiment Destined to Fail? (December 1, 2018). Available at SSRN:
https://ssrn.com/abstract=3311989 or http://dx.doi.org/10.2139/ssrn.3311989.
Taskinsoy, J. (2018b). Effects of Basel III Higher Capital and Liquidity Requirements on Banking
Sectors across the Main South East Asian Nations. International Journal of Scientific &
Engineering Research (IJSER), Vol. 9(4), pp. 214-37, April, ISSN 2229-5518.
Taskinsoy, J. (2018c). The Cost Impact of Basel III across ASEAN-5: Macro Stress Testing of Malaysia’s
Banking Sector. LAP LAMBERT Academic Publishing, 369 pages, ISBN-13 978-613-9-90012-1.
Taskinsoy, J. (2018d). A Macro Stress Testing Framework for Assessing Financial Stability: Evidence
from Malaysia. Journal of Accounting, Finance and Auditing Studies (JAFAS), Vol. 4(3), July, ISSN
2149-0996.
Taskinsoy, J. (2019a). Facebook’s Project Libra: Will Libra Sputter Out or Spur Central Banks to
Introduce Their Own Unique Cryptocurrency Projects? (July 20, 2019). Available at SSRN:
https://ssrn.com/abstract=3423453 or http://dx.doi.org/10.2139/ssrn.3423453.
Taskinsoy, J. (2019b). This Time Is Different: Facebook’s Libra Can Improve Both Financial Inclusion
and Global Financial Stability as a Viable Alternative Currency to the U.S. Dollar. Journal of
Accounting, Finance and Auditing Studies (JAFAS), Vol. 5(4), October, ISSN 2149-0996. Doi:
10.32602/jafas.2019.38.
Taskinsoy, J. (2019c). Is Facebook’s Libra Project Already a Miscarriage? (August 15, 2019). Available
at SSRN: https://ssrn.com/abstract=3437857 or http://dx.doi.org/10.2139/ssrn.3437857.
Taskinsoy, J. (2019d). Facebook’s Libra: Big Bang or Big Crunch? A Technical Perspective and
Challenges for Cryptocurrencies (August 29, 2019). Available at SSRN:
https://ssrn.com/abstract=3445150 or http://dx.doi.org/10.2139/ssrn.3445150.
Taskinsoy, J. (2019e). Ever More Financial Instability notwithstanding the Basel Standards and the
IMF’s Financial Sector Assessment Program (February 4, 2019). Available at SSRN:
https://ssrn.com/abstract=3328473 or http://dx.doi.org/10.2139/ssrn.3328473.
Taskinsoy, J. (2019f). Stress Testing Made Easy: No More US Banks Stumbling and Facing Public
Embarrassment Due to the Federal Reserve’s Qualitative Objection (March 17, 2019). Available
at SSRN: https://ssrn.com/abstract=3354018 or http://dx.doi.org/10.2139/ssrn.3354018.
Taskinsoy, J. (2019g). Typology of Stress Testing: Microprudential vs. Macroprudential Stress Testing
of Risk Exposures (March 28, 2019). Available at SSRN: https://ssrn.com/abstract=3361528 or
http://dx.doi.org/10.2139/ssrn.3361528.
Taskinsoy, J. (2019h). Higher Capital and Liquidity Regulations of Basel Standards Have Made Banks
and Banking Systems Become More Prone to Financial and Economic Crises (June 9, 2019).
Available at SSRN: https://ssrn.com/abstract=3401378 or
http://dx.doi.org/10.2139/ssrn.3401378.

24
Taskinsoy, J. (2019i). Asian Miracle, Asian Tiger, or Asian Myth? Financial Sector and Risk
Assessment through FSAP Experience: Enhancing Bank Supervision in Thailand (May 9,
2019). Available at SSRN: https://ssrn.com/abstract=3385337 or
http://dx.doi.org/10.2139/ssrn.3385337.
Taskinsoy, J. (2019j). The Transition from Barter Trade to Impediments of the Dollar System: One
Nation, One Currency, One Monopoly (March 6, 2019). Available at SSRN:
https://ssrn.com/abstract=3348119 or http://dx.doi.org/10.2139/ssrn.3348119
Taskinsoy, J. (2019k). Pure Gold for Economic Freedom: A Supranational Medium of Exchange to
End American Monetary Hegemony as the World’s Main Reserve Currency (April 25, 2019).
Available at SSRN: https://ssrn.com/abstract=3377904 or
http://dx.doi.org/10.2139/ssrn.3377904.
Taskinsoy, J. (2019l). Turkish Lira – A Fiat Currency that Resembles the Volatility of
Cryptocurrencies: The Effects of Exchange Rate Volatility on Turkish Economy (February 15,
2019). Available at SSRN: https://ssrn.com/abstract=3335545 or
http://dx.doi.org/10.2139/ssrn.3335545.
Taskinsoy, J. (2019m). A Delicate Moment in Turkey’s Economic Transition: Can Turkey Survive
Mounting Economic Problems without the IMF’s Bailout Package? (June 22, 2019). Available at
SSRN: https://ssrn.com/abstract=3408520 or http://dx.doi.org/10.2139/ssrn.3408520.
Taskinsoy, J. (2019n). We Need No Dime from the IMF: Is This a Temporary Illusion or Can the
Turkish Economy Recover from the Current Recession without the IMF Loans? (July 9, 2019).
Available at SSRN: https://ssrn.com/abstract=3417431 or
http://dx.doi.org/10.2139/ssrn.3417431.
Taskinsoy, J. (2019o). A Hiccup in Turkey’s Prolonged Credit Fueled Economic Transition: A
Comparative Analysis of Before and After the August Rout. Journal of Accounting, Finance and
Auditing Studies (JAFAS), Vol. 5(4), October, ISSN 2149-0996. Doi: 10.32602/jafas.2019.37.
Taskinsoy, J. (2019p). Turkey’s Unravelling Economy Resembles the Ottoman Empire’s Financial
Collapse (September 29, 2019). Available at SSRN: https://ssrn.com/abstract=3461216 or
http://dx.doi.org/10.2139/ssrn.
Vasin, P. (2014). Blackcoins Proof-of-Stake Protocol v2. Online, available at:
https://blackcoin.co/blackcoin-pos-protocol-v2-whitepaper.pdf
Vigna, J. & Casey, M. J. (2016). The Age of Cryptocurrency: How Bitcoin and the Blockchain Are
Challenging the Global Economic Order. Picador.
Vishnumurthy, V., Chandrakumar, S. & Sirer. E. G. (2003). Karma: A Secure Economic Framework for
Peer-to-Peer Resource Sharing. Workshop on Economics of Peer-to-Peer Systems.
Vukoli´c, M. (2015). The Quest for Scalable Blockchain Fabric: Proof-of-Work vs. BFT Replication.
International Workshop on Open Problems in Network Security. Springer, 112–125.
Wood, G. (2016). Ethereum: A Secure Decentralized Generalized Transaction Ledger.
http://gavwood.com/paper.pdf.
Woodford, M. (2000). Monetary Policy in a World without Money. International Finance 3(2), 229–
60.
Yin, M., Malkhi, D., Reiter, M. K., Golan, G. G. & Abraham, I. (2018). Hotstuff: BFT Consensus in the
Lens of Blockchain. arXiv preprint arXiv:1803.05069.

25