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Permissionless blockchains require a protocol to generate consensus. Many prominent permissionless blockchains employ Proof-of-Work (PoW) for that purpose, but PoW possesses significant shortcomings. Various alternatives have been proposed. This paper provides the first formal economic model of the most famous alternative, Proof-of-Stake (PoS), and establishes conditions under which PoS generates consensus. A sufficiently modest reward schedule not only implies the existence of an equilibrium in which consensus obtains as soon as possible but also precludes a persistent forking equilibrium. The latter result arises because PoS, unlike PoW, requires that validators are also stakeholders.

Technology is changing money and this book looks at where it might be taking us. Technology has transformed money from physical objects to intangible information. With the arrival of smart cards, mobile phones and Bitcoin it has become easier than ever to create new forms of money. Crucially, money is also inextricably connected with our identities. Your card or phone is a security device that can identify you - and link information about you to your money. Dave Birch looks back over the history of money, spanning thousands of years. He sees in the past, both recent and ancient, evidence for several possible futures. Looking further back to a world before cash and central banks, there were multiple 'currencies' operating at the level of communities, and the use of barter for transactions. Perhaps technology will take us back to the future, a future that began back in 1971, when money became a claim backed by reputation rather than by physical commodities of any kind. Since then, money has been bits. The author shows that these phenomena are not only possible in the future, but already upon us. We may well want to make transactions in Tesco points, Air Miles, Manchester United pounds, Microsoft dollars, Islamic e-gold or Cornish e-tin. The use of cash is already in decline, and is certain to vanish from polite society. The newest technologies will take money back to its origins: a substitute for memory, a record of mutual debt obligations within multiple overlapping communities. This time though, money will be smart. It will be money that reflects the values of the communities that produced it. Future money will know where it has been, who has been using it and what they have been using it for. -- Provided by publisher.

Bitcoin is designed as a peer-to-peer cash system. To work as a currency, it must be stable or be backed by a government. In this paper, we show that the volatility of Bitcoin prices is extreme and almost 10 times higher than the volatility of major exchange rates (US dollar against the euro and the yen). The excess volatility even adversely affects its potential role in portfolios. Our analysis implies that Bitcoin cannot function as a medium of exchange and has only limited use as a risk-diversifier. In contrast, we use the deflationary design of Bitcoin as a theoretical basis and demonstrate that Bitcoin displays store of value characteristics over long horizons.

We develop a dynamic asset pricing model of cryptocurrencies/tokens that allow users to conduct peer-to-peer transactions on digital platforms. The equilibrium price of tokens is determined by aggregating heterogeneous users’transactional demand, rather than discounting cash flows as is done in standard valuations models. Endogenous platform adoption builds on user network externality and exhibits an S-curve: it starts slow, becomes volatile, and eventually tapers off. The introduction of tokens lowers users’ transaction costs on the platform by allowing users to capitalize on platform growth. The resultant intertemporal feedback between user adoption and token price accelerates adoption and dampens user-base volatility.

Bitcoin’s emergence has the potential to pave the way for a technological revolution in financial markets. What determines its valuation is an important open question with far-reaching business and policy implications. Building on information systems and finance literature, we examine the dynamic interactions between social media and the monetary value of bitcoin using textual analysis and vector error correction models. We show that more bullish forum posts are associated with higher future bitcoin values. Interestingly, social media’s effects on bitcoin are driven primarily by the silent majority, the 95 percent of users who are less active and whose contributions amount to less than 40 percent of total messages. In addition, messages on an Internet forum, relative to tweets, have a stronger impact on future bitcoin value. Overall, our findings reveal that social media sentiment is an important predictor in determining bitcoin’s valuation, but not all social media messages are of equal impact. This study offers new insights into the digital currency market and the economic impact of social media.

The rise of centralized mining pools for risk sharing does not necessarily undermine the decentralization required for blockchains: because of miners’ cross-pool diversification and pool managers’endogenous fee setting, larger pools better internalize their externality on global hash rates, charge higher fees, attract disproportionately fewer miners, and grow more slowly. Instead, mining pools as a financial innovation escalate miners’ arms race and significantly increase the energy consumption of proof-of-work-based blockchains. Empirical evidence from Bitcoin mining supports our model’s predictions. The economic insights inform other consensus protocols and the industrial organization of mainstream sectors with similar characteristics but ambiguous prior findings.

A long-time quantum memory capable of storing and measuring quantum information at the single-qubit level is an essential ingredient for practical quantum computation and communication 1 , 2 . Currently, the coherence time of a single qubit is limited to less than 1 min, as demonstrated in trapped ion systems 3 – 5 , although much longer coherence times have been reported in ensembles of trapped ions 6 , 7 and nuclear spins of ionized donors 8 , 9 . Here, we report the observation of a coherence time of over 10 min for a single qubit in a 171 Yb + ion sympathetically cooled by a 138 Ba + ion in the same Paul trap, which eliminates the problem of qubit-detection inefficiency from heating of the qubit ion 10 , 11 . We also apply a few thousand dynamical decoupling pulses to suppress ambient noise from magnetic-field fluctuations and phase noise from the local oscillator 8 , 9 , 12 – 16 . The long-time quantum memory of the single trapped ion qubit would be the essential component of scalable quantum computers 1 , 17 , 18 , quantum networks 2 , 19 , 20 and quantum money 21 , 22 . The longest coherence time of a single qubit of more than ten minutes is observed in a 171 Yb + ion. After sympathetically cooling the 171 Yb + ion qubit with a 138 Ba + ion, noise from magnetic-field fluctuations and the local oscillator is suppressed by a dynamic decoupling scheme.

Purpose Service providers have a vested interest in enhancing adoption of technologies that improve the customer service experience. Buoyed by this idea, this paper aims to explore Latin American consumers’ mobile payment (MP) adoption, conceptualized as bank-sponsored mobile wallets that facilitate payment at the point-of-purchase. This paper applies a revised unified theory of acceptance and use of technology 2 (UTAUT2) model as theoretical framework for this exploration. Design/methodology/approach To test the conceptual model of MP adoption in Latin America put forward in this paper, the authors used Colombia as a sample site and conducted two studies among a sample of consumers in this country. Completed questionnaires from 186 participants (Study 1) and 398 participants (Study 2) were used in data analyses, which were conducted using Mplus 8.4 and PROCESS. Findings In Study 1, performance expectancy, social influence, bank trust, confidence in MP system and consumer innovativeness all impact consumers’ MP use intention; and use intention impacts MP behavior. In Study 2, involving a wider sample, performance expectancy, effort expectancy, facilitating conditions, perceived quality of the MP system, bank trust, consumer innovativeness, consumer optimism and consumer insecurity all affect MP use intention; and use intention significantly impacts MP behavior. Across both studies, follow-up analysis showed that effort expectancy influences performance expectancy for MP and indirectly influences MP use intention through its impact on performance expectancy. Bank trust also indirectly affects MP use intention through its effects on system confidence. In Study 2, age did not affect MP use intention or MP use; however, education affected MP use. Research limitations/implications The theoretical underpinning for the conceptual model was the UTAUT2, and the results across the two studies support previous research in which this revised model has been useful in explaining technology adoption. Core elements of the UTAUT2 such as performance expectancy, effort expectancy, facilitating conditions and social influence had different impact on MP adoption in Latin America, depending on the sample. Technology readiness index motivators and inhibitors also aid understanding of MP adoption. Practical implications The research provides insights on the variables that members of the MP ecosystem in Latin America (e.g. banks and other service providers, card issuers) need to address in getting Latin American consumers to use MP. Originality/value This research extends the exploration of MP to a region of the world that has not been the focus of prior studies on the adoption of this technology and responds to calls by some researchers to increase research in this region. The conceptual models in the two studies also incorporate trust in the banks that are part of the MP ecosystem in Latin America and consumer overall confidence in this MP ecosystem. The results show that both these factors are influential in Latin American consumers’ adoption of MP. System confidence also mediates the relationship between bank trust and MP use intention.

We propose a new method to estimate the bid-ask spread when quote data are not available. Compared to other low-frequency estimates, this method utilizes a wider information set, namely, readily available close, high, and low prices. In the absence of end-of-day quote data, this method generally provides the highest cross-sectional and average time-series correlations with the TAQ effective spread benchmark. Moreover, it delivers the most accurate estimates for less liquid stocks. Our estimator has many potential applications, including an accurate measurement of transaction cost, systematic liquidity risk, and commonality in liquidity for U.S. stocks dating back almost one century.