Micropayments for Decentralized Currencies

Electronic financial transactions in the US, even those enabled by Bitcoin, have relatively high transaction costs. As a result, it becomes infeasible to make \emph{micropayments}, i.e. payments that are pennies or fractions of a penny. To circumvent the cost of recording all transactions, Wheeler (1996) and Rivest (1997) suggested the notion of a \emph{probabilistic payment}, that is, one implements payments that have \emph{expected} value on the order of micro pennies by running an appropriately biased lottery for a larger payment. While there have been quite a few proposed solutions to such lottery-based micropayment schemes, all these solutions rely on a trusted third party to coordinate the transactions; furthermore, to implement these systems in today\u27s economy would require a a global change to how either banks or electronic payment companies (e.g., Visa and Mastercard) handle transactions. We put forth a new lottery-based micropayment scheme for any ledger-based transaction system, that can be used today without any change to the current infrastructure. We implement our scheme in a sample web application and show how a single server can handle thousands of micropayment requests per second. We analyze how the scheme can work at Internet scale

(WP 2013-09) Virtual Currency and the Financial System: The Case of Bitcoin

Technological development and the increased use of the internet have led to the proliferation of virtual communities. Some of these communities have created and circulated their own currency for exchanging goods and services. Bitcoin is currently the most popular among these virtual or digital currencies and has been in news recently because of the wild fluctuations in its ‘value’ and also significant venture capital investment in entities associated with it.1 Bitcoin is relevant in several areas of the financial system and is therefore of interest to central banks, consumers and investors. Digital currencies are part of a broader group of virtual currencies that include credit card points, air miles, loyalty points and coupons (Chart 1). With the advent of the Internet, mobile devices and detailed consumer information, companies are increasingly using digital currencies as a marketing tool. As a result, there has been a sharp increase in the use of digital currencies, particularly for app-based coins and tokens, mobile coupons, and personal data exchanged for digital content. As these trends evolve, digital currencies have the potential to become more popular and compete with traditional currencies. This paper aims to provide some clarity in particular on Bitcoin, its role and potential future use in the financial system and the risks associated with this form of digital currency.. It will begin by providing a short introduction to the Bitcoin network as well as describe the benefits of allowing the Bitcoin network to develop and innovate. It will highlight concerns for consumers, policymakers and financial regulators. Next it will analyze the role that Bitcoin could play in the financial system. The paper will conclude by providing recommendations to address policymakers’ concerns while allowing for further innovation within the Bitcoin network. An initial comprehensive overview of this kind is absent from the existing literature. This paper intends to fill that gap in the literature

An Analysis of Decentralized Finance and its Applications

Cryptocurrency and blockchain technology are relatively recent economic and technological trends. Within the cryptocurrency sphere a new form of decentralized peer-to-peer finance network has emerged. This is of course Decentralized Finance (DeFi). DeFi is a relatively quick and permissionless financial movement within the greater world of cryptocurrency and blockchain technology. DeFi is built on ideas of easy access, interoperability, transparency, and limited third-party meddling. As such, DeFi and its principles are in clear contrast to traditional financial institutions that value centralized control. The aim of the thesis is to further investigate the technological and financial properties of DeFi and disclose how these relate to the broader aspects of the financial world. The thesis answers key research questions of interest by performing a deep dive into the DeFi sphere. In this thesis the underlying protocols of DeFi is analyzed. This is supplemented by examining and comparing DeFi to traditional financial foundations and values. A comprehensive literature review is explored and summarized to point out the uniqueness of DeFi, in addition to advantages and disadvantages and finally what yet needs to be improved within the sphere. Based on the analysis in this thesis, several findings were made regarding the nature of the decentralized market today. Finally, concluding remarks are provided about DeFi and its greater implication on today’s world and what the future holds for alternative financial options. The research and results show DeFi as a growing movement with real life implications and use cases, but still in its infancy with legislative challenges yet to be properly addressed

Publicación de acceso abierto sostenible mediante Blockchain, Interledger y monetización web

Trabajo de Fin de Grado en Doble Grado en Ingeniería Informática y Matemáticas, Facultad de Informática UCM, Departamento de Ingeniería del Software e Inteligencia Artificial, Curso 2020/2021.One of the main problems the academic community faces is the high prices of publishing and accessing academic papers. Authors and reviewers usually work for free or even pay for their work to be published, while the revenue generated goes to the big publishers. This project is centered around studying the technologies that would be best suited for the creation of a system or platform for donations to journals and researchers. Various centralized and decentralized technologies have been studied. Regarding centralized technologies, PayPal has been the main focus, and regarding decentralized technologies, Blockchain, Interledger and Web Monetization have been studied. Their advantages and limitations have been analyzed, as well as their different integration possibilities. These technologies have been used to implement a system that allows donations by different centralized and decentralized means. The donations can be sent between any two centralized or decentralized currencies. The system’s main feature is a donation button that can be integrated in any journal’s web page. JavaScript and React were used for the front-end implementation. This connects with the underlying subsystems that manage the different types of payments. To test the possibilities of the decentralized technologies, a new ERC20 token was implemented and integrated in the system. It was concluded that centralized technologies are easier to use for implementation, better documented and more intuitive for the user. However, PayPal, for example, imposes certain barriers and limitations that block the developers’ work. Decentralized technologies, on the other hand, are newer, so they have less documentation and are a bit more cumbersome to use. But they have proven to be way more flexible and adaptable and easier to integrate with. So, despite their limitations, they have potential to become an important part of online donations and payments in the future.Uno de los principales problemas que afronta la comunidad académica son los altos precios para publicar artículos y acceder a ellos. Habitualmente los autores y revisores trabajan gratis, o incluso tienen que pagar para poder publicar su trabajo, mientras que son los grandes editores quienes reciben los beneficios generados. Este proyecto se centra en el estudio de tecnologías que puedan resultar adecuadas para la creación de un sistema o plataforma para donaciones a revistas académicas e investigadores. Se han estudiado diversas tecnologías centralizadas y descentralizadas. Entre las centralizadas, PayPal ha sido la principal, y entre las descentralizadas, se han estudiado Blockchain, Interledger y Web Monetization. Se han analizado sus ventajas y limitaciones, así como sus diferentes posibilidades de integración. Estas tecnologías han sido utilizadas para implementar un sistema que permite realizar donaciones por vías centralizadas y descentralizadas. Las donaciones pueden realizarse entre cualesquiera dos divisas diferentes, ya sean centralizadas o descentralizadas. El elemento principal del sistema es un botón de donación que puede integrarse en la página web de cualquier revista. Para la implementación del front-end se utilizaron JavaScript y React. Esto se conecta con el subsistema subyacente que se encarga de los diferentes tipos de pagos. Para probar las posibilidades de estas tecnologías descentralizadas, se ha implementado un nuevo token ERC20 y se ha integrado en el sistema. Se comprobó que las tecnologías centralizadas son más fáciles de usar en implementación, están mejor documentadas y son más intuitivas para el usuario. Sin embargo, PayPal, por ejemplo, impone ciertas barreras y limitaciones que pueden bloquear el trabajo de los desarrolladores. Las tecnologías descentralizadas, por contra, son más nuevas, por lo que disponen de menos documentación y son algo más engorrosas de utilizar. No obstante, han demostrado ser más flexibles, adaptables e integrables. De modo que, a pesar de sus limitaciones, tiene el potencial de convertirse en una parte importante de los sistemas de pagos y donaciones en el futuro.Depto. de Ingeniería de Software e Inteligencia Artificial (ISIA)Fac. de InformáticaTRUEunpu

The Future of Bitcoin

Evolved by way of an anonymous programmer, Bitcoin is a global cryptocurrency and a machine for virtual currency. The transactions take location immediately among the users minus any intermediaries. Bitcoin is an awesome mode of exchange whilst in comparison to traditional banks. Those transactions are verified through network nodes and recorded in a public dispensed ledger called blockchain. The price of bitcoins are volatile i.e. they could unpredictably boom or lower over a quick time period. They are taken into consideration excessive-danger assets whose transactions can simplest be refunded and not reversed. The bitcoin came into life in January 2009, with Satoshi Nakamoto mined the primary block of bitcoins ever. Given that then, some of supporters engaged in transactions and acquired bitcoins. International locations round the world started out accepting bitcoin as a legitimate mode of currency like the United States. However, some countries like Djibouti haven’t legalized yet the usage of this foreign money due to some of reasons. The targets of this paper are to understand the awareness about the existence of bitcoins, to evaluate the perception of bitcoin as the future currency and to research the possibility of legalization of bitcoins in Djibouti. Keywords: Bitcoin, cryptocurrency, decentralized, experimental, legalization, security.

World monies or money-worlds: A new perspective on cryptocurrencies and their moneyness

This essay makes the case that current debates about the ‘moneyness’ of Bitcoin and other cryptocurrencies are occurring at the incorrect scale. Rather than being some form of trans-national digital money to be used alongside or compete with national fiat currencies, I argue that, instead, each cryptocurrency represents its own self-contained ‘money-world’. Put differently, a cryptocurrency is the uniquely specified unit of account and medium of exchange within the socio-technical bounds of its own blockchain. This new perspective can open new lines of intellectual dialogue and inform better policy choices for regulating cryptocurrencies

Private Electronic Money, Fiat Money and the Payments System

This paper provides insight on how a modern system of private electronic money would work and how the necessary network shall function. We present a model with two types of private electronic currencies with one being local, and the other being global. Both of them display transactional advantages and dominate fiat money in rate of return. However, in spite of these different returns, the two electronic currencies and fiat money circulate in equilibrium. We further observe that the local electronic currency can be sold with a premium or with a discount, depending on several factors including the probability of relocation faced by the agents in this economy. The higher the probability of relocation, the higher is this discount, and the lower the share of the local electronic currency in the young creditors’ portfolio.Private Money, Commodity Money, Network, Payments System, Competition