Practical solutions to save bitcoins applied to an identity system proposal

In a recent work by Augot et al. (2017), a scheme is proposed to build an identity system on top of the Bitcoin network. However, this proposal incurs very high costs since Bitcoin transactions require heavy fees. The current work introduces modifications to their scheme to make it more cost...

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Cryptocurrencies, Currency Competition, and the Impossible Trinity

We analyze a two-country economy with complete markets, featuring two national currencies as well as a global (crypto)currency. If the global currency is used in both countries, the national nominal interest rates must be equal and the exchange rate between the national currencies is a risk-adjusted martingale. We call the...

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Some simple Bitcoin Economics

In a novel model of an endowment economy, we analyze coexistence and competition between traditional fiat money (Dollar) and another intrinsically worthless medium of exchange, not controlled by a central bank, such as Bitcoin. Agents can trade consumption goods in either currency or hold on to currency for speculative purposes....

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Central Bank Digital Currency: Central Banking For All?

The introduction of a central bank digital currency (CBDC) allows the central bank to engage in large-scale intermediation by competing with private financial intermediaries for deposits. Yet, since a central bank is not an investment expert, it cannot invest in long-term projects itself, but relies on investment banks to do...

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On Fairness in Committee‐based Blockchains

Committee-based blockchains are among the most popular alternatives of proof-of-work based blockchains, such as Bitcoin. They provide strong consistency (no fork) under classical assumptions, and avoid using energy-consuming mechanisms to add new blocks in the blockchain. For each block, these blockchains use a committee that executes Byzantine-fault tolerant distributed consensus...

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Rational vs Byzantine Players in Consensus‐based Blockchains

We analyze from the game theory point of view Byzantine Fault Tolerant blockchains when processes exhibit rational or Byzantine behavior. Our work is the first to model the Byzantine- consensus based blockchains as a committee coordination game. Our first contribution is to offer a game-theoretical methodology to analyse equilibrium interactions...

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