Application of Blockchain Smart Contracts in E-Commerce and Government

With technological advances and the establishment of e-commerce models, business challenges have shifted to online platforms. The promise of embedding self-executing and autonomous programs into blockchain technologies has attracted increased interest and its use in niche solutions. Using qualitative interviews, this paper sought the opinions of the eleven industry leaders regarding smart contracts. Findings reveal that the technology is gaining momentum in e-commerce, particularly in financial transfer, record-keeping, real estate, and property management, insurance, mortgage, supply chain management, data storage, authorization of credit, denaturalized intelligence, aviation sector, shipping of products, invoice financing and other domains. The significant benefits of widespread adoption and deployment of smart contracts include their capability to deliver decentralization, efficacy, cost-effectiveness, transparency, speed, autonomy, transparency, privacy, and security, encouraging the emergence of novel business models. Albeit these benefits that revolutionize online transactions, the technology faced multifaceted challenges. Smart technologies are only a decade old and are not advanced in security, transparency, cost-effectiveness, and regulatory framework. Furthermore, organizational, and technical challenges limit their deployment: incompatibility with legacy systems, scalability, bugs, speed, and lack of talent and understanding regarding smart contracts. Consequently, policymakers, developers, researchers, practitioners, and other stakeholders need to invest effort and time to foster the technologies and address pertinent issues to enable the global adoption of smart contracts by small and big businesses

The new ecosystem of the digital age: Impact of blockchain technology on the accounting environment and financial statement fraud detection

The agency theory is an underlying framework for the installation of corporate governance roles in business enterprises. Their function to shield from financial statement fraud remains a shield with lacks that allow the occurrence of unsolved and intrinsic misbehaviour in business conduct. Technological developments have not been able to solve this issue, still waiting for a liberator from these well-known chains. One is seen in the use of Blockchain technology, the framework that builds trust among untrusting participants in networks such as Bitcoin or Ethereum. Since its mainstreaming popularity, researchers, corporations, and advocates foresee a great impact on the accounting industry that stems from the use of Blockchain. Taking this opportunity, this work investigates on these assumptions by reviewing literature on the domain, using case studies of former financial statement frauds to frame the fraudster’s profile, and applying it in the suggested scenario of blockchain-based accounting. By doing so, the use of permissioned blockchains raises doubt in a scenario that is shaped by management override activities, causing severe adversely affections to tiers in an ecosystem that trusts a technology and its “immutable” records.A teoria da agência é um quadro subjacente para a instalação de funções de governação empresarial em empresas comerciais. A sua função de protecção contra a fraude de declarações financeiras continua a ser um escudo com carências que permitem a ocorrência de comportamentos incorrectos não resolvidos e intrínsecos na conduta empresarial. Os desenvolvimentos tecnológicos não foram capazes de resolver esta questão, ainda à espera de um libertador destas bem conhecidas cadeias. Vê-se na utilização da tecnologia Blockchain, a estrutura que gera confiança entre os participantes não confiantes em redes como a Bitcoin ou a Ethereum. Desde a sua popularidade de mainstreaming, investigadores, empresas e defensores prevêem um grande impacto na indústria da contabilidade que resulta da utilização da Blockchain. Aproveitando esta oportunidade, este trabalho investiga estes pressupostos através da revisão da literatura sobre o domínio, utilizando estudos de caso de antigas fraudes em demonstrações financeiras para enquadrar o perfil do fraudador e aplicando-o no cenário sugerido de contabilidade baseada em cadeias de bloqueio. Ao fazê-lo, a utilização sugerida de cadeias de bloqueio autorizadas levanta dúvidas num cenário que é moldado por actividades de substituição da gestão, causando graves afecções negativas a camadas num ecossistema que confia numa tecnologia e nos seus registos "imutáveis"

A Ripple-Turned-Tidal Wave: \u3cem\u3eSEC v. Ripple Labs\u3c/em\u3e as an Inflection Point in the Regulatory Approach to Innovation in Complex Systems

This Comment makes both an observation and an argument about the SEC v. Ripple Labs, Inc. litigation. First, this Comment observes that the facts of the case constitute a challenge to the lack of clarity surrounding the current regulatory regime governing blockchains and initial coin offerings (ICOs). Second, this Comment argues that the Ripple case provides regulators an opportunity to, if they choose, use complexity theory to address technological innovation—such as blockchain—as an emergent phenomenon in a complex system rather than as a binary policy choice to be either encouraged or discouraged. Ripple, the U.S. company behind one of the world’s largest crypto assets by capitalization, deployed a blockchain network designed to remove the traditional friction points of intermediation and settlement from money transfer systems. To obtain widespread adoption of its crypto asset, XRP, both Ripple and its executives sold XRP to speculators and professional investors, but more than five years later—and following a rash of enforcement actions against other blockchain companies—the U.S. Security and Exchange Commission (SEC) brought Ripple and its executives into federal court for allegedly violating U.S. securities laws. The lawsuit is unique because it was not only brought against the company and personnel behind one of the most successful iterations of a novel technology, but effectively, it was brought against a widely held cryptocurrency at a time when pandemic- driven economic and social pressure and billions of dollars in main-street investment in new blockchain technologies was occurring in the wider U.S. economy. But as important as the result of the case is, this Comment suggests that the long view of the case’s impact should be understood through the lens of complexity theory: regulators should, in cases of innovative technology, use this discipline to see the case as both an emergent phenomenon and a point in the trajectory of the larger U.S. economy where innovation and consumer protection are not binary, opposed considerations. To flesh this out, this Comment offers a broad, high-level overview informed by complexity science of the basic operation and recent history of blockchain technology and ICOs as well as the economic forces at work in the U.S. and an explanation of Ripple’s use case. This Comment then will turn to the regulatory history between the SEC and Ripple and analyze the merits of the investment contract approach necessary for SEC jurisdiction. Understanding the history, the parties, and the litigation as parts of a complex system, this Comment concludes by listing several expert suggestions regarding blockchain technologies consistent with obtaining short term stability that the court can take up in dealing with the facts of the case in the light of existing precedent

Modelling and Simulation of Blockchain based Education system

Since Bitcoin’s launch in early 2009, the industrial and academic interest in Blockchain and other cryptocurrencies have grown rapidly. Blockchains have been applied in many areas outside of finance such as healthcare, commerce and judiciary already. This technology promotes the creation of a decentralized environment where transactions and data are not under the control of any third-party organization. Blockchain is a fundamentally new technology that could revolutionize the future of transaction-based exchanges. Extensive research is being done in order to implement this technology various sectors. Blockchain technology comes with an edge of inbuilt auditability, trust and transfer of value which also makes it irresistible. This work explores an agent based Blockchain-based Education System through mathematical modeling and simulation tools. The model is constructed to explore how Blockchain technology can be used to verify credit score of students, identify the occurrence and prevention of potential attacks. Along with technical characteristics of Bitcoin and Blockchain; cost, time and behavioural considerations of the system are also made. This is followed by analysing of the number of transactions, size of blockchain, network efficiency, cost analysis of the system along with the network efficiency. The proposed model, based on the blockchain technology shifts the education grading and credit rewarding system from the analog and physical world into a globally efficient, transparent and universal version. The work contributes a foundation for advancing current understanding of blockchain systems, and to further the development of simulation models of blockchains

Reconciling the conflict between the ‘immutability’ of public and permissionless blockchain technology and the right to erasure under Article 17 of the General Data Protection Regulation

This thesis focuses on the issues between a blockchain technology and the new European Union General Data Protection Regulation (GDPR). The Blockchain technology is a rather new technology which potential has been recognised only in the recent years. Essentially, a blockchain is a distributed database in which data is stored in blocks, which form a chronological chain of blocks. Blockchains have many types and possible use cases, but this research focuses on public and permissionless blockchains, which primary objective is to enable individuals to transact with each other without centralised intermediaries. The GDPR entered into force on 25 May 2018. The GDPR was not drafted taking account of distributed ledger technologies, such as the blockchain technology, which has raised several points of tension between the regulation and the technology. The primary focus of this thesis is on the conflict between the ‘immutability’ of blockchain technology and the right to erasure under Article 17 of the GDPR. One of the main features of blockchains is the immutability, that is to say, data on old blocks is extremely difficult to modify or delete. This feature seems prima facie to conflict with Article 17 of the GDPR that provides data subjects with the right to request erasure of their personal data under certain conditions. Firstly, this thesis analyses the current state of the conflict. Before analysing the conflict, the research addresses two essential preliminary questions: the question about anonymisation and personal data and the question about allocation of responsibilities on blockchains. After that, different solutions proposed to reconcile the conflict are analysed to understand the current situation. While public and permissionless blockchains currently may infringe Article 17 of the GDPR, there are potential solutions for the conflict in the future. The second purpose of this thesis is to identify relevant legal problems and propose how to address the problems in the future. Blockchain developers should consider data protection obligations already in the design phase. From the legal side, this research has provided flexible interpretations for the legal problems that could help to comply with the right to erasure. There is a need for a flexible approach to the problems between the regulation and the technology

Reversing the Irreversible: Mitigating Legal Risks of Blockchain-Based Data Breach through Corporate Governance

The European General Data Protection Regulation (GDPR) embodies a set of enforceable data subject rights, data controller and processor obligations, and compliance requirements. The GDPR outreach is extraterritorial and impacts US blockchain-based businesses that collect and process personal data of individuals from the EU. Given the ambiguities of the law itself surrounding what is considered as personal data on blockchain, and who data controllers and processors are, this research examines the corporate governance response to the GDPR as a bottom-up solution for compliance. To secure the sustainability of the business models based on blockchain solutions there is an immediate need to revisit traditional agency theory of corporate governance. Modern theory of corporate governance must inevitably integrate Corporate Social Responsibility and Environmental, Social, and Governance standards into its policies and procedures to mitigate risks and hedge against breaches of data security and privacy

The Impact of Blockchain Technology on Financial Transactions

Blockchain technology could emerge as a disruptive innovation that streamlines financial transactions and attenuates their cost. Therefore, the financial industry must assess the opportunities and challenges presented by the technology. As a grand breakthrough, it could transform financial transactions and introduce new possibilities for established financial institutions as well as for new entrants. At the same time, incumbents and startups need to overcome technological, regulatory, and adoption challenges before blockchain technology can become a mainstream reality. Despite its potential, the literature on its impact on financial transactions is still fragmented, with weak empirical insights and limited theoretical explanations. Therefore, financial industry managers lack guidance on how to plan and prepare for the impact of blockchain technology on the operation of financial transactions. Against that backdrop, this dissertation explores the asserted and potential impacts on financial transactions with emphasis on asset verification, record keeping, data privacy, and transaction costs. The dissertation adopts a pluralist approach to examine the subject matter based on three approaches: analysis of the extant literature about blockchain technology concerning financial transactions; perception analysis based on interviews with financial executives, subject matter experts, and researchers; and a theoretical interpretation using transaction cost theory. Therefore, the dissertation synthesizes insights from the three approaches to offer managers of financial institutions guidance concerning the opportunities and challenges of blockchain technology

Algorithmic Regulation using AI and Blockchain Technology

This thesis investigates the application of AI and blockchain technology to the domain of Algorithmic Regulation. Algorithmic Regulation refers to the use of intelligent systems for the enabling and enforcement of regulation (often referred to as RegTech in financial services). The research work focuses on three problems: a) Machine interpretability of regulation; b) Regulatory reporting of data; and c) Federated analytics with data compliance. Uniquely, this research was designed, implemented, tested and deployed in collaboration with the Financial Conduct Authority (FCA), Santander, RegulAItion and part funded by the InnovateUK RegNet project. I am a co-founder of RegulAItion. / Using AI to Automate the Regulatory Handbook: In this investigation we propose the use of reasoning systems for encoding financial regulation as machine readable and executable rules. We argue that our rules-based “white-box” approach is needed, as opposed to a “black-box” machine learning approach, as regulators need explainability and outline the theoretical foundation needed to encode regulation from the FCA Handbook into machine readable semantics. We then present the design and implementation of a production-grade regulatory reasoning system built on top of the Java Expert System Shell (JESS) and use it to encode a subset of regulation (consumer credit regulation) from the FCA Handbook. We then perform an empirical evaluation, with the regulator, of the system based on its performance and accuracy in handling 600 “real- world” queries and compare it with its human equivalent. The findings suggest that the proposed approach of using reasoning systems not only provides quicker responses, but also more accurate results to answers from queries that are explainable. / SmartReg: Using Blockchain for Regulatory Reporting: In this investigation we explore the use of distributed ledgers for real-time reporting of data for compliance between firms and regulators. Regulators and firms recognise the growing burden and complexity of regulatory reporting resulting from the lack of data standardisation, increasing complexity of regulation and the lack of machine executable rules. The investigation presents a) the design and implementation of a permissioned Quorum-Ethereum based regulatory reporting network that makes use of an off-chain reporting service to execute machine readable rules on banks’ data through smart contracts b) a means for cross border regulators to share reporting data with each other that can be used to given them a true global view of systemic risk c) a means to carry out regulatory reporting using a novel pull-based approach where the regulator is able to directly “pull” relevant data out of the banks’ environments in an ad-hoc basis- enabling regulators to become more active when addressing risk. We validate the approach and implementation of our system through a pilot use case with a bank and regulator. The outputs of this investigation have informed the Digital Regulatory Reporting initiative- an FCA and UK Government led project to improve regulatory reporting in the financial services. / RegNet: Using Federated Learning and Blockchain for Privacy Preserving Data Access In this investigation we explore the use of Federated Machine Learning and Trusted data access for analytics. With the development of stricter Data Regulation (e.g. GDPR) it is increasingly difficult to share data for collective analytics in a compliant manner. We argue that for data compliance, data does not need to be shared but rather, trusted data access is needed. The investigation presents a) the design and implementation of RegNet- an infrastructure for trusted data access in a secure and privacy preserving manner for a singular algorithmic purpose, where the algorithms (such as Federated Learning) are orchestrated to run within the infrastructure of data owners b) A taxonomy for Federated Learning c) The tokenization and orchestration of Federated Learning through smart contracts for auditable governance. We validate our approach and the infrastructure (RegNet) through a real world use case, involving a number of banks, that makes use of Federated Learning with Epsilon-Differential Privacy for improving the performance of an Anti-Money-Laundering classification model