Cryptofinance and Mechanisms of Exchange - The Making of Virtual Currency

Preface

Contents

About the Editors

Cryptocurrencies as an Asset Class

1 Introduction

2 The Technology Behind Cryptocurrency

3 The Rise of Cryptocurrency

4 Potential Assets: Cryptographic Coins and Tokens

5 Cryptocurrencies as Investments

5.1 Investability

5.2 Impact on Portfolio Performance

6 Dataset and Methodology

6.1 Data

6.2 Methodology

6.2.1 Correlation

6.2.2 Liquidity

6.2.3 Stability

6.2.4 Portfolio Optimizations

7 Results

7.1 Correlation

7.2 Liquidity

7.3 Stability

7.4 Portfolio Optimization

8 Conclusion

References

Are Virtual Currencies Virtuous? Ethical and Environmental Issues

1 Introduction

2 Cryptocurrencies and Energy Consumption: Virtual Currency but Real Environmental Impact

2.1 Why This Is a Serious Issue?

2.1.1 Bitcoin and Other Main Crypto Currencies: An Overview

2.1.2 Systems Dynamics: Applied to the Bitcoin Case

2.2 What Are the Solutions?

2.2.1 Green Energy

2.2.2 Mining Equipment Energy Efficiency

2.2.3 System Parameters

2.2.4 Mining Competition

2.3 A Striking Example of Real Issues Related to Virtual Systems

3 Cryptocurrencies and the Dark Net: The Dark Side of Cryptocurrencies

3.1 Financing Illegal Activities

3.1.1 Financing of Illicit Products

3.1.2 Terrorist Financing

3.2 Cyber Attacks

3.3 Money Laundering and Tax Evasion

4 Ethical Aspects and Uses of Cryptocurrencies

4.1 Business Ethics Beyond Government Control

4.2 Reduction in Inflation and Central Bank Adjustments

4.3 Poverty Reduction

4.4 Protection of Privacy and Personal Data

5 Conclusion: Regulatory Issues and Challenges

References

Cryptocurrency Mining

1 Introduction

2 How Does Mining Work?

2.1 Methods of Mining

2.2 Hardware for Mining

2.3 Software for Mining

3 Evolution of Mining

4 Factors Influencing Mining

4.1 Energy Consumption and the Wastage of Resources

4.2 Volatility

4.3 Mining Puzzles/Solving Blocks

References

Regulating Bitcoin: A Tax Case Study

1 Introduction

2 The Coffee Bonding Theory

3 A Tax Case Study

3.1 Involuntary Noncompliance

3.2 Voluntary Noncompliance

4 Conclusion

References

Are Cryptocurrencies Truly Trustless?

1 Introduction

2 The Promise de Trustlessness

3 Hard Forks

4 Cryptocurrency Exchanges

4.1 Mt. Gox

4.2 Quadriga CX

5 Initial Coin Offerings

6 Recourse of Traditional Structures

6.1 SEC and CFTC as Regulators

6.2 Quadriga CX in Court

7 Conclusion

References

Blockchain and Alternative Sources of Financing

1 Introduction

2 The Ethereum Blockchain and the Ether Crypto-currency

2.1 CryptoKitties

2.2 Brave Browser

2.3 uPort

3 A New Age of Financing, Birth of the ICOs

3.1 What is an ICO?

3.2 Cryptoexchanges

3.3 Similarities Between ICO and Traditional Stock Market

3.4 The Pump and Dump Online Community

3.4.1 Consequences of Pumps and Dumps

4 A New Age of Financing, Birth of the STOs

4.1 Coin Classification Framework

4.2 The Dawn of the STOs

4.3 Avoiding the Mistakes of the Past

4.4 Steps for Launching an STO

4.5 Advantages and Disadvantages of STOs vs. ICOs

5 IEO, Innovating in an Emerging Industry

5.1 The IEO Process

6 Conclusion

References

Tokenomics

1 Introduction

2 Initial Coin Offerings

3 History of ICOs

4 Literature Review of Parameter of Tokenomics

5 Research of Parameter of Tokenomics

6 Conclusion

References

Crypto Tokens and Token Offerings: An Introduction

1 Introduction

2 Tokens and Token Offerings

2.1 What Are Crypto Tokens?

2.2 A Comparison of Token Offerings and IPOs

3 The Emergence of Tokenization and Tokenomics

3.1 Tokenomics

3.2 The Economic Value of Tokens for Entrepreneurs

3.2.1 Benefits of ICOs to Entrepreneurs

3.2.2 Drawbacks

3.2.3 Implications for Entrepreneurs

3.3 The Economic Value of Tokens for Investors

3.4 Corporate Governance with Tokens

3.4.1 Token Holders as a New Type of Corporate Stakeholders

3.4.2 The Emergence of Distributed Governance

4 Valuation of Crypto Tokens

4.1 Token Velocity Methodology

4.2 Crypto J-Curve Methodology

4.3 Network Value-to-Transaction Ratio (NVT)

4.4 Security Token Valuation

4.5 Traditional Valuation Methods in Crypto Valuation

5 ICO Underpricing and Token Returns

5.1 Underpricing and First-Day Returns

5.2 Long-Term Returns and Performance

5.3 Behavioral Biases in ICOs

6 Conclusion

References

Initial Coin Offerings: What Do We Know and What Are the Success Factors?

1 Introduction

2 The Market for ICOs and Cryptocurrencies

2.1 ICO Market Overview

2.2 Four Stages of ICOs

3 Planning Stage of ICOs

3.1 White Paper

3.1.1 White Paper Quality and Informativeness

3.1.2 Legal Aspects of the White Paper

3.1.3 Technical Aspects of the White Paper

3.1.4 Disclosure on the Use of Proceeds and Token Allocation

3.1.5 Management Team and Advisers

3.2 Token Design and Tokenomics

3.2.1 Token Type

3.2.2 Fraction of Tokens for Sale

3.2.3 Soft Cap and Hard Cap

3.2.4 Token Supply

3.2.5 Lock-up Mechanism

3.2.6 Currency Accepted

3.3 Legal Aspects

3.3.1 Sales Restrictions

3.3.2 Know Your Customer (KYC) Policies

3.4 Technology and Source Code

3.5 Marketing and Social Media

3.5.1 Social Media

3.5.2 ICO Ratings and Online Forums

4 ICO Sale

4.1 ICO Presale

4.2 ICO Sale

4.3 Post-ICO

4.3.1 Exchange Listing

5 Conclusion

References

Initial Coin Offerings (ICOs): Risks, Regulation, and Accountability

1 Introduction

2 Academic Interest in ICOs

3 The Wild West of ICOs

4 Regulatory Responses to ICOs

5 Conclusion

References

Cryptocurrencies and Risk Mitigation

1 Introduction

2 Cryptocurrency Market Efficiency

3 Risk Mitigation Using Cryptocurrencies

4 Hedging Cryptocurrency Investments

5 Economic Policy and Market Uncertainties

6 Cryptocurrencies and Gold

References

Index