Publications

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With our publications we would like to offer you valuable insights into the evolution of the Blockchain ecosystem. We would like to expand and enhance the scientific discourse and want to support the various stakeholders from science, business and politics in their decision-making.

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Refereed articles

forthcoming

International Journal of Innovation and Technology Management

Individual cryptocurrency investors: Evidence from a population survey

Abstract: Cryptocurrencies such as Bitcoin are a highly volatile asset class where very high returns are offset by large losses. This study examines the financial success of individual investments in cryptocurrencies and analyzes whether it relates to similar explanatory factors as for investments in other asset classes. For this purpose, a nationally representative survey data set of 3,864 German citizens is used, of which 354 (9.2%) reported owning cryptocurrencies in March 2019. We analyze the subpopulation of 225 cryptocurrency owners who classify as investors. 56% of them experienced positive returns, while 29% had negative results. The remaining respondents broke even. The average investment was €1,773 in a portfolio of two cryptocurrencies. At the time of the survey, the average portfolio value had risen to €7,094 – an average gain of 300%. While nearly half of the investors (44%) outperformed Bitcoin market returns, not a single one of the early investors (2009-12) did. We find that net income, the degree of cryptocurrency knowledge and the degree of ideological motivation for owning cryptocurrency have positive effects on returns. This first scientific analysis of individual investment in cryptocurrencies provides a basis for future research and for regulatory decision-making.

Keywords: Bitcoin; Blockchain; Individual investors; Alternative investments; Financial performance

Suggested citation: Ante, L., von Meduna, M., Fiedler, I. & Steinmetz, F. (2022). Individual cryptocurrency investors: Evidence from a population survey. International Journal of Innovation and Technology Management, forthcoming.

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14 Aug 2021

Technological Forecasting and Social Change

Ownership, uses and perceptions of cryptocurrency: Results from a population survey

AbstractA decade after the launch of Bitcoin, cryptocurrencies are maturing from a niche phenomenon and appealing to a broader audience. However, the actual prevalence of cryptocurrency ownership and usage, the users’ socio-demographics, the motives to buy, and the popularity of and knowledge about cryptocurrencies have not been sufficiently researched. Based on a representative online survey among 3,864 Germans, we find that 83% of the respondents are aware of the phenomenon, yet the respondents’ self-assessed knowledge about cryptocurrencies and the underlying blockchain technology is limited. 9.2% of the respondents owned cryptocurrencies at the time of the survey; another 9.1% have owned cryptocurrencies in the past. Cryptocurrency users tend to be young, male, well-educated and well-off. Ownership is often associated with long-term investments, and 62% of the respondents state that their ownership is ideologically motivated. The empirical analysis discloses that a major driver of ownership is knowledge about cryptocurrencies, mediated by trust. There is some discrepancy between the actual and perceived usage domains of cryptocurrencies, which reflects the polarization of the phenomenon. The findings have implications for regulators and businesses which are potentially affected by the increasing societal relevance of cryptocurrency.

KeywordsCryptocurrency; Blockchain technology; Cryptocurrency ownership; Adoption decision; Socioeconomic profile; Perceptions

Suggested citationSteinmetz, F., von Meduna, M., Ante, L. & Fiedler, I. (2021). Ownership, uses and perceptions of cryptocurrency: Results from a population survey. Technological Forecasting and Social Change, forthcoming.

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28 Jun 2021

Technological Forecasting and Social Change

The Impact of Transparent Money Flows: Effects of Stablecoin Transfers on Return and Trading Volume of Bitcoin

Lennart Ante, Ingo Fiedler, Elias Strehle

AbstractStablecoins are digital currencies that peg to non-volatile values, such as most commonly fiat currency. Yet unlike fiat currency, stablecoins are fully transparent: every transfer is recorded on a public blockchain. In this regard, they can serve as a valuable case study of the disruptive effect which transparent money flows could have on financial markets. This study analyzes how 1,587 stablecoin transfers of $1 million or more between April 2019 and March 2020 affected Bitcoin returns and trading volume. It finds highly significant positive abnormal trading volume and significant abnormal returns in the hours around stablecoin transfers. The sender and receiver of each transfer are categorized as (1) unknown, (2) cryptocurrency exchange or (3) stablecoin treasury. The effects on trading volume and returns differ across the resulting nine subsamples, which suggests that market participants presume different transfer motives and varying degrees of information asymmetry for each sender-receiver combination. The findings illustrate the feedback effects between cryptocurrency markets and stablecoin usage and suggest that transparent money flows have the potential to increase market efficiency.

KeywordsMarket efficiency, Informational efficiency, Price discovery, Asset pricing, Event study, Transaction activity, Tether, Feedback trading

Suggested citationAnte, L., Fiedler, I. & Strehle, E. (2021). The impact of transparent money flows: Effects of stablecoin transfers on the returns and trading volume of Bitcoin. Technological Forecasting and Social Change, forthcoming.

OtherPresented under the name “Monetary flows and feedback trading in cryptocurrency markets: Effects of stablecoin transfers on Bitcoin returns and trading volume” at The 2nd Crypto Asset Lab Conference (CAL2020) by the Crypto Asset Lab of Università Milano-Bicocca, organised jointly with the Joint Research Centre is the European Commission’s science and knowledge service.

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10 Jun 2021

Finance Research Letters

The Influence of Stablecoin Issuances on Cryptocurrency Markets

Lennart Ante, Ingo Fiedler, Elias Strehle

Abstract: Stablecoins are digital currencies that are pegged to non-volatile assets. As alternatives to fiat currencies, they constitute an important aspect of cryptocurrency markets. We analyze returns of cryptocurrencies around 565 stablecoin issuances events for seven different stablecoins between April 2019 and March 2020. Our event study reveals market downturns in the week before issuance and positive abnormal returns in the twenty-four hours around the issuance. Effects differ and remain insignificant for some stablecoin subsamples and issuance size does not significantly affect the abnormal returns. We conclude that stablecoin issuances contribute to price discovery and market efficiency of cryptocurrencies.

Keywords: market efficiency; price discovery; asset pricing; tether; bitcoin; ethereum

Suggested citation: Ante, L., Fiedler, I. & Strehle, E. (2020). The Influence of Stablecoin Issuances on Cryptocurrency Markets. Finance Research Letters. doi:10.1016/j.frl.2020.101867

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17 Mar 2021

Decisions in Economics and Finance

Cross-listings of Blockchain-based Tokens issued through Initial Coin Offerings: Do Liquidity and specific Cryptocurrency Exchanges matter?

Lennart Ante, André Meyer

Abstract: Initial coin offerings (ICOs) represent a novel funding mechanism where digital tokens are issued on the blockchain and sold to investors. One major reason for the success of this financing model is the fact that the issued tokens can immediately be traded on secondary markets. This event study analyzes 250 exchange cross-listings of 135 different tokens issued through ICOs on 22 cryptocurrency exchanges. We find significant abnormal returns of 6.51% on the listing day and 9.97% over a seven-day window around the event. Further analysis shows that the results clearly differ for individual cryptocurrency exchanges, as listings on individual exchanges yield returns of up to 34% on the event day, while others are negligible. An investigation of liquidity-related metrics shows that lower prior trading volume and asset market capitalization have positive effect on listing returns. Investors use phases of high market liquidity to sell off positions around the period of cross-listing events. The results on the cross-listing effects of ICOs may be of relevance to investors/traders, ICO projects, cryptocurrency exchanges and regulators.

AbstractMarket efficiency; Informational efficiency; Price discovery; Cryptocurrency; Event study; Transaction activity

Suggested citationAnte, L. & Meyer, A. (2021). Cross-listings of blockchain-based tokens issued through initial coin offerings: Do liquidity and specific cryptocurrency exchanges matter?. Decisions in Economics and Finance. doi:10.1007/s10203-021-00323-0

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12 Mar 2021

Renewable and Sustainable Energy Reviews

Blockchain and energy: A bibliometric analysis and review

Abstract: Blockchain technology provides an immutable ledger for secure value transactions in a network. This base layer technology has the potential to boost the efficiency of various processes in the energy sector. In this article, the intersection of blockchain and energy is analyzed based on the underlying references of 166 publications via co-citation analysis. Using exploratory factor analysis, six distinct research streams are identified: I. energy market innovation and transformation (through blockchain technology), II. blockchain for data sharing and security, III. energy management in smart grids and scalable systems, IV. information transmission across networks and its applications, V. peer-to-peer energy microgrids, and VI. potential of blockchain technology. For each of these streams, the highest-impact articles are reviewed. In addition, social network analysis allows to reveal the relationships and dependencies between the streams. The results indicate a high degree of homogeneity in this field of research, as the six streams explain more than 71% of variance. The degree to which the streams are centered on blockchain technology varies. While the two most established discourses and the least established one focus at least in part on blockchain, the other three streams prioritize energy issues. It is postulated that specific research fields on this topic are only beginning to emerge, implications are discussed and areas for future research are derived.

Abstract: Distributed ledger; Energy markets; Smart grids; Electricity; Energy trading; Microgrids; Data privacy; Social network analysis; Bitcoin

Suggested citationAnte, L., Steinmetz, F. & Fiedler, I. (2021). Blockchain and energy: A bibliometric analysis and review. Renewable and Sustainable Energy Reviews, 173, 110597. doi:10.1016/j.rser.2020.110597

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27 Feb 2021

Finance Research Letters

Market reaction to large transfers on the Bitcoin blockchain – Do size and motive matter?

Abstract: How does the market react to large Bitcoin transactions? We analyze effects of 2,132 transactions involving at least 500 Bitcoins. While results for all transactions are inconclusive, further analysis of transaction size and presumed transfer motives based on publicly known Bitcoin addresses of cryptocurrency exchanges reveals significant price effects depending on the type of transaction. The results indicate that the market recognizes the nature of the transfer and prices in new information.

Abstract: Market efficiency; Informational efficiency; Price discovery; Cryptocurrency; Event study; Transaction activity

Suggested citation: Ante, L. & Fiedler, I. (2021). Market reaction to large transfers on the Bitcoin blockchain – Do size and motive matter?. Finance Research Letters, 39, 101619. doi:10.1016/j.frl.2020.101619

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10 Feb 2021

Manufacturing Letters

Digital Twin technology for smart manufacturing and Industry 4.0: A bibliometric analysis of the intellectual structure of the research discourse

Abstract: The Digital Twin (DT) concept is gaining increasing attention with the rapid growth of cyber-physical systems and smart manufacturing. DT comprises the digital reflection, replica or identity of physical systems, objects or assets, which, for example, can be used for industrial health monitoring or process optimization and tracking. This study provides an overview of the intellectual discourses of DT research. The 23,419 references of 647 publications on the topic of DT are empirically analyzed using bibliometric methods to identify underlying connections and research streams. Using explorative factor analysis, seven strands of research are objectively identified. These comprise i) DT as paradigm for the virtual representation of real systems, ii) DT for manufacturing processes and human-robot collaboration, iii) cyber-physical systems for coordination between physical and computational elements, iv) Industry 4.0 for the automation of manufacturing and industrial practice, v) relationship extraction and matching in a social manufacturing context, vi) advances in computing and communication technologies and vii) optimization of geometrical variation in spot welding sequences. An objective overview of the DT discourse, its underlying themes and high-impact publications is presented.

Abstract: digital twin; internet of things; cyber-physical system; product lifecycle management; health monitoring; authentication

Suggested citation: Ante, L. (2021). Digital Twin technology for smart manufacturing and Industry 4.0: A bibliometric analysis of the intellectual structure of the research discourse. Manufacturing Letters. doi:10.1016/j.mfglet.2021.01.003

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29 Jan 2021

Telematics and Informatics

Smart Contracts on the Blockchain – A Bibliometric Analysis and Review

Abstract: Smart contracts are decentrally anchored scripts on blockchains or similar infrastructures that allow the transparent execution of predefined processes. Using smart contracts, business logic can be automated and assets such as money become programmable, which opens up previously inaccessible application potential. To date, smart contracts control billions in value. This paper analyzes 468 articles on the topic of smart contracts and their 20,188 references, providing a summary and analysis of the current state of research on smart contracts and identifying intellectual structures and emerging trends. Using exploratory factor analysis for co-citation analysis, six different strands of research are identified that concern technical, social, economic and legal disciplines: I) technical foundations, development and open questions of blockchain networks, II) blockchain and smart contracts for the Internet of Things, III) smart contract standardization, verification and security, IV) blockchain and smart contracts for the disruption of existing processes and industries, V) potentials and challenges of smart contracts, and VI) smart contracts and the law. The interrelations between these groups and individual high-impact publications are visualized using social network analysis. A structured overview of the main strands of research concerning smart contracts, their development over time, the relevance of smart contract platforms in research, and conceptual connections between publications and discourses is obtained. Based on the results, starting points for future research are derived, which offer researchers and practitioners a substantial basis for their work on smart contracts.

Abstract: Distributed ledger; Ethereum; Informetric analysis; Internet of Things; Social network analysis

Suggested citation: Ante, L. (2021). Smart Contracts on the Blockchain – A Bibliometric Analysis and Review. Telematics and Informatics, 57, 101519.  doi:10.1016/j.tele.2020.101519

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12 Dec 2020

Journal of Grid Computing

Dominating OP Returns: The Impact of Omni and Veriblock on Bitcoin

Elias Strehle, Fred Steinmetz

Abstract: Bitcoin has always been used to store arbitrary data, particularly since Bitcoin Core developers added a dedicated method for data storage in 2014: the OP Return operator. This paper provides an in-depth analysis of all OP Return transactions published on Bitcoin between September 14, 2018, and December 31, 2019. The 32.4 million OP Return transactions (22% of all Bitcoin transactions) published during this period added 10 GB to the blockchain’s size. Almost all OP Return transactions can be attributed to one of 37 blockchain services. The two dominant services are Veriblock (58% of OP Return transactions) and Omni/Tether (40%). Veriblock transactions pay only 14% of the average transaction fee, partly because most of them are submitted during times when overall activity on Bitcoin is low. Omni transactions, on the other hand, pay more than twice the average transaction fee and therefore compete with regular Bitcoin transactions for inclusion in new blocks.

Keywords: blockchain; econometrics of cryptocurrencies; op_return; tether; transaction fees

Suggested citation: Strehle, E. & Steinmetz, F. (2020). Dominating OP Returns: The Impact of Omni and Veriblock on Bitcoin. Journal of Grid Computing, 18, 575–592. doi:10.1007/s10723-020-09537-9

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21 Sep 2020

Quantitative Finance and Economics

Cheap signals in security token offerings (STOs)

Abstract: Blockchain-based security token offerings (STOs) provide a new way of crowdfunding and corporate financing. Tokens are immediately transferable and can be traded 24/7 on secondary markets, clearing and settlement is a matter of only a few minutes, tokens can be held personally, i.e. brokers and custody accounts are no longer required and the underlying blockchain ensures transparency of all transactions. This study provides an overview of security tokens and the STO model for corporate financing. Our analysis investigates security tokens from the perspective of a firm looking to raise capital. Building on signaling theory, this paper examines 1) whether companies conducting an STO make use of cheap signals to influence investment behavior and 2) if such use of cheap signals is effective. We analyze a dataset of 151 STOs and identify that cheap signals of human capital and social media are used by projects and have a positive effect on funding success. The type of signals influencing funding success indicate that the market is still immature, as projects have a clear incentive to enlarge the level of asymmetric information between them and potential investors. The anticipated level of punishment for misusing cheap signaling is low, as the mechanism does not represent fraud but “cheating”. This is a concern for investor protection.

Abstract: entrepreneurial finance; blockchain; crowdfunding; initial coin offering; initial public offering; corporate finance

Suggested citation: Ante, L. & Fiedler I. (2020). Cheap signals in security token offerings (STOs). Quantitative Finance and Economics, 4(4), 608-639. doi:10.3934/QFE.2020028.

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20 Jul 2020

Digital Finance

Effects of initial coin offering characteristics on cross-listing returns

André Meyer, Lennart Ante

Abstract: The low level of regulation and publication requirements in cryptocurrency markets leads to little information on cryptocurrency projects being publicly available. Against the background of high information asymmetry, the interpretation of the available information is all the more important. This paper examines how initial coin offering (ICO) characteristics affect cross-listing returns, i.e. whether or not available information is a valuable market signal of quality. For this purpose, we analyze 250 cross-listings of 135 different tokens issued via ICOs and calculate abnormal returns for specific samples using event study methodology. We find that cross-listing returns are driven by success in terms of token performance and project funding, as well as by jurisdiction-specific characteristics like the extent of regulation and domestic market size. Other characteristics such as the choice or change of blockchain infrastructure, token distribution across investors and the project team, campaign duration and whitepaper characteristics also seem to influence perceived project quality and thus cross-listing returns. The results contribute to the literature on cross-listings, cryptocurrency markets and entrepreneurial finance in the form of ICOs. They also make it possible to interpret the information available on the market and enable investors, project teams and cryptocurrency exchanges to evaluate probable market reactions to cross-listings.

Abstract: entrepreneurial finance; financial innovation; blockchain technology; tokenization; cryptocurrency; cryptocurrency exchanges; ethereum; event study; token sales

Suggested citation: Meyer, A. & Ante, L. (2020). Effects of Initial Coin Offering Characteristics on Cross-listing Returns. Digital Finance, 2259–283. doi:10.1007/s42521-020-00025-z

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02 Jun 2020

Quantitative Finance and Economics

Bitcoin Transactions, Information Asymmetry and Trading Volume

Abstract: The underlying transparency of the Bitcoin blockchain allows transactions in the network to be tracked in near real-time. When someone transfers a large number of Bitcoins, the market receives this information and traders can adjust their expectations based on the new information. This paper investigates trading volume and its relation to asymmetric information around transfers on the Bitcoin blockchain. We collect data on 2132 large transactions on the Bitcoin blockchain between September 2018 and November 2019, where 500 or more Bitcoins were transferred. Using event study methodology, we identify significant positive abnormal trading volume for the 15-minute window before a large Bitcoin transaction as well as during and after the event. Using public information about Bitcoin addresses of cryptocurrency exchanges as proxies for information asymmetry, we find that transactions with high levels of information asymmetry negatively affect abnormal trading volume once the event becomes public knowledge, while some effects are even opposite for transactions with lower information asymmetry. The results show that blockchain transaction activity is a relevant aspect of Bitcoin‘s microstructure, as informed traders make use of the information in general and adjust their expectations based on the degree of information asymmetry.

Abstract: market efficiency; informational efficiency; asset pricing; asymmetric information; cryptocurrency; event study; transaction activity; informed trading; cryptocurrency exchanges

Suggested citation: Ante, L. (2020). Bitcoin transactions, information asymmetry and trading volume. Quantitative Finance and Economics, 4(3), 365-381. doi:10.3934/QFE.2020017

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15 May 2020

Scientometrics

A place next to Satoshi: foundations of blockchain and cryptocurrency research in business and economics

Abstract: Blockchain technology has become an ubiquitous phenomenon. While the topic originated in computer science, the business and economics literature was comparatively slow to pick up on it. To better understand the academic basis, current developments and future research avenues of the discourse, 9672 cited references of 467 blockchain and cryptocurrency articles from the fields of business and economics are gathered from the Web of Science Core Collection and are analyzed. Five major strands of research are identified through factor analysis. They are reviewed and their interrelation is mapped using social network analysis. Research on (I) market efficiency and economics and (II) asset pricing and valuation is relatively mature and focuses on cryptocurrencies, while research on (III) the principles and applications of blockchain technology, (IV) transactions and anonymity and (V) monetary theory and policy lacks maturity. Potential paths for future research are pointed out and in conclusion, it is assessed that this young field of research still leaves plenty of room for manoeuvre. A scientific place next to Nakamoto (2008) is still available for existing, emerging and new research streams.

Abstract: distributed ledger; bitcoin; informetric analysis; bibliometric analysis; social network analysis

Suggested citation:Ante, L. (2020). A place next to Satoshi: foundations of blockchain and cryptocurrency research in business and economics. Scientometrics, 124, 1305–1333. doi: 10.1007/s11192-020-03492-8

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16 Dec 2019

Gaming Law Review

A State-operated Blockchain-based System for the Transparent Processing of Online Gambling Payments in Germany

AbstractOnline gambling and its regulation is a sensitive topic, controversely discussed in politics and the public. On the one hand, unrestricted gambling is an indicator for people’s sovereignty and freedom to take risks and satisfy their desire to play. On the other hand, however, it entails risks for individuals and society as whole, which stem from its addictive potential and utilization for money laundering. Regulators face the challenge of composing and enforcing regulative measures which bear financial interests while also protecting youth and players from the threats it entails. This indicates the importance of an effective law enforcement of online gambling regulation, which oftentimes fails to prosecute gambling operations outside of the respective jurisdictions. The most promising way for protecting players from unregulated gambling operators is identified to be cutting their monetary accessibility through the traditional financial system. At the example of the regulatory framework for online gambling in Germany, this paper conceptualises and discusses how a dedicated blockchain system can be employed to separate monetary streams from and to regulated and unregulated operators onto two different infrastructures and thus contribute to law enforcement against unregulated and unlicensed gambling operators. While the proposed blockchain system causes additional effort for its implementation and maintenance, it significantly increases the transparency of monetary streams between players and operators for supervisory authorities and creates a technical distinct separation of unregulated and regulated offerings for financial service providers, authorities and players.

Abstract: online gambling regulation, blockchain technology, law enforcement, payment blocking, player protection, money laundering

Suggested citation: Steinmetz, F., & Fiedler, I. (2019). A State-Operated Blockchain-Based System for the Transparent Processing of Online Gambling Payments in Germany. Gaming Law Review, 23(10), 715-725. doi: 10.1089/glr2.2019.23108

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21 Nov 2018

Journal of Risk and Financial Management

Blockchain-based ICOs: Pure hype or the dawn of a new era of startup financing?

Lennart Ante, Philipp Sandner, Ingo Fiedler

Abstract: This study explores the determinants of initial coin offering (ICO) success, where success is defined as the amount of capital a project could raise. ICOs are a tool for startups in the blockchain ecosystem to raise early capital with relative ease. The market for ICOs has grown at a rapid pace since its start in 2013. We analyze a unique dataset of 278 projects that finished their ICOs by August 2017 to assess determinants of funding success that we derive from the crowdfunding and venture capital literature. Our results show that ICOs exhibit similarities to classical crowdfunding and venture capital markets. Specifically, we identify resemblances in determinants of funding success regarding human capital characteristics, business model quality, project elaboration, and social media activity.

Abstract: entrepreneurial finance; financial innovation; initial coin offering; venture capital; crowdfunding

Suggested citation: Ante, L., Sandner, P., & Fiedler, I. (2018). Blockchain-based ICOs: Pure hype or the dawn of a new era of startup financing?. Journal of Risk and Financial Management, 11(4), 80. doi: 10.3390/jrfm11040080

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BRL Working Paper Series

As the scientific environment is in a constant state of flux with comparatively young technologies like blockchain, our BRL Working Paper Series serves to make relevant research results available to both the scientific community and the general public at an early stage.

No. 24

05 Oct 2021

Behavioural clusters of cryptocurrency users: Frequencies of non-speculative application domains

Abstract: Cryptocurrency markets are still mostly associated with speculation and investment. Accordingly, most surveys to date focus solely on the prevalence of these use cases and the associated user motives while neglecting the wide range of other application areas. These include accessing services, making payments, preserving privacy, or voting on projects’ governance decisions. Based on a representative, cross-sectional survey among 3,864 German citizens, this study discloses the black box of usage patterns by cryptocurrency users (N = 357). Using a generalised distance measure (GDM2) and partitioning around medoids (PAM) method on the frequency of use across eight application domains, three distinct clusters are identified. The clusters differ noticeably in terms of the frequency of accessing services (H(2)=260, p=.00), payments (H(2)=257, p=.00) and voting (H(2)=254, p=.00), which indicates that for certain user groups, speculating and investing are not the major use cases for cryptocurrency. The frequencies across all domains are similar within each of the three clusters, outlining passive investors, all-out activists and moderate conservatives. The findings contribute to research on cryptocurrency adoption, have implications for cryptocurrency regulation and provide the cryptocurrency industry with an improved understanding of their users.

Keywords: Cryptocurrency; Technology adoption; Blockchain technology; Cluster analysis; Usage patterns

Publication status: Working paper

Suggested citation: Steinmetz, F. (2021). Behavioural clusters of cryptocurrency users: Frequencies of non-speculative application domains. BRL Working Paper No. 24.

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No. 23

24 Aug 2021

Bitcoin’s energy consumption and social costs in relation to its capacity as a settlement layer

Abstract: Bitcoin runs on energy. The decentralized network’s amount of energy consumption has resulted in multifaceted discussions about its efficiency and environmental impact. To put Bitcoin’s energy consumption into perspective, we propose to relate (a) the energy consumption in TWh and (b) resulting social costs in the form of carbon emissions to the Dollar value settled on the Bitcoin network. Both metrics allow to relate and quantify the capacity of Bitcoin as a settlement layer to the network’s energy consumption and resulting carbon emissions, or social costs. We find that in early 2021 Bitcoin (a) settles between $2,333 and $7,555 for each Dollar spent on energy and (b) that, on average, a Dollar settled on the Bitcoin blockchain causes in social costs between 0.007% and 0.01%, depending on the estimated energy consumption converted into the costs of carbon emissions. These results help to assess the efficiency, cost and sustainability of Bitcoin and may allow a comparison of Bitcoin with existing settlement base layers such as Fedwire or gold.

Keywords: blockchain; Bitcoin; network value; carbon emissions; climate change; sustainability; green finance

Publication status: Working paper

Suggested citation: Ante, L. & Fiedler, I. (2021). Bitcoin’s energy consumption and social costs in relation to its capacity as a settlement layer. BRL Working Paper No. 23.

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No. 22

13 Aug 2021

Non-fungible token (NFT) markets on the Ethereum blockchain: Temporal development, cointegration and interrelations

Abstract: The market for non-fungible tokens (NFTs), transferrable and unique digital assets on public blockchains, has received widespread attention and experienced strong growth since early 2021. This study provides an introduction to NFTs and explores the 14 largest submarkets using data from the Ethereum blockchain between June 2017 and May 2021. The analyses rely on (a) the number of NFT sales, (b) the dollar volume of NFT trades and (c) the number of unique blockchain wallets that traded NFTs. Based on the number of transactions and wallets, the Ethereum-based NFT market peaked at the end of 2017 due to the success of the CryptoKitties project. As of 2021, fewer transactions occur but the traded value is much higher. We find that NFT submarkets are cointegrated and feature various causal short-run connections between them. The success or adoption of younger NFT projects is influenced by that of more established markets. At the same time, the success of newer markets has an impact on the more established projects. The results contribute to the overall understanding of the NFT phenomenon and suggest that NFT markets are immature or even inefficient.

Keywords: NFTs; non-fungible tokens; cryptocurrency; cointegration; Granger causality

Publication status: Working paper

Suggested citation: Ante, L. (2021). Non-fungible token (NFT) markets on the Ethereum blockchain: Temporal development, cointegration and interrelations. BRL Working Paper No. 22.

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No. 21

02 Aug 2021

Readability affects scientific impact: Evidence from emerging technology discourses

Abstract: This study examines how the readability of scientific discourses changes over time and to what extent readability can explain scientific impact in terms of citation counts. The basis is a representative dataset of 135,502 abstracts from academic research papers pertaining to twelve technologies of different maturity. Using three different measures of readability, it is found that the language of the abstracts has become more complex over time. Across all technologies, less easily readable texts are more likely to receive at least one citation, while the effects are most pronounced for comparatively immature research streams. Among the more mature or larger discourses, the abstracts of the top 10% and 1% of the most often cited articles are significantly less readable. It remains open to what extent readability actually influences future citations and how much of the relationship is causal. If readability indeed drives citations, the results imply that scientists have an incentive to (artificially) reduce the readability of their abstracts in order to signal quality and competence to readers—both to get noticed at all and to attract more citations. This may mean a prisoner dilemma in academic (abstract) writing, where authors intentionally but unnecessarily complicate the way in which they communicate their work..

Keywords: Readability; Citations; Scientific impact; Emerging technologies

Publication status: Working paper

Suggested citation: Ante, L. (2021). Readability affects scientific impact: Evidence from emerging technology discourses. BRL Working Paper No. 21.

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No. 20

06 Jun 2021

The non-fungible token (NFT) market and its relationship with Bitcoin and Ethereum

Abstract: Non-fungible tokens (NFTs) are transferrable rights to digital assets, such as art, in-game items, collectables or music. The phenomenon and its markets have grown significantly since early 2021. We investigate the interrelationships between NFT sales, NFT users (unique active blockchain wallets), and the pricing of Bitcoin and Ether. Using daily data between January 2018 and April 2021, we show that a Bitcoin price shock triggers an increase in NFT sales. Also, Ether price shocks reduce the number of active NFT wallets. The results suggest that (larger) cryptocurrency markets affect the growth and development of the (smaller) NFT market, but there is no reverse effect.

Keywords: NFTs; non-fungible tokens; cryptocurrency

Publication status: Working paper

Suggested citation: Ante, L. (2021). The non-fungible token (NFT) market and its relationship with Bitcoin and Ethereum. BRL Working Paper No. 20.

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No. 19

24 Feb 2021

Ownership, uses and perceptions of cryptocurrency: Results from a population survey

Abstract: A decade after the launch of Bitcoin, cryptocurrencies are maturing from a niche phenomenon and appealing to a broader audience. However, the actual prevalence of cryptocurrency ownership and usage, the users’ sociodemographics, the motives to buy, and the popularity of and knowledge about cryptocurrencies have not been sufficiently researched. Based on a representative online survey among 3,864 Germans, we find that 83% of the respondents are aware of the phenomenon, yet the respondents’ self-assessed knowledge about cryptocurrencies and the underlying blockchain technology is limited. 9.2% of the respondents owned cryptocurrencies at the time of the survey; another 9.1% have owned cryptocurrencies in the past. Cryptocurrency users tend to be young, male, well-educated and well-off. Ownership is often associated with long-term investments, and 62% of the respondents state that their ownership is ideologically motivated. The empirical analysis discloses that a major driver of ownership is knowledge about cryptocurrencies, mediated by trust. There is some discrepancy between the actual and perceived usage domains of cryptocurrencies, which reflects the polarization of the phenomenon. The findings have implications for regulators and businesses which are potentially affected by the increasing societal relevance of cryptocurrency.

Keywords: Cryptocurrency; Blockchain technology; Cryptocurrency ownership; Adoption decision; Socioeconomic profile; Perceptions

Publication status: Working paper

Suggested citation: Steinmetz, F., von Meduna, M., Ante, L. & Fiedler, I. (2021). Ownership, uses and perceptions of cryptocurrency: Results from a population survey. BRL Working Paper No. 19.

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No. 18

10 Feb 2021

The DibiChain protocol: Privacy-preserving discovery and exchange of supply chain information

Elias Strehle, Martin Maurer

Abstract: Connecting and exchanging information across organizations becomes increasingly important as supply chains become more complex and expectations with regard to sustainability, transparency and resilience increase. At the same time, organizations are adamant about protecting any competitive advantage which derives from private information about, for example, supplier networks, available inventory or production processes. Technology aimed at enabling information exchange within and across supply chains must therefore ensure high degrees of privacy and control over private information. In light of this, we specify the DibiChain protocol for the discovery and exchange of supply chain information. The protocol prioritizes data minimization in shared data stores, avoidance of persistent user identifiers and anonymous communication with minimal intermediation. We further outline how the DibiChain protocol can serve as the foundation for privacy-preserving supply chain applications, including an anonymous discovery service for GS1 EPCIS event data.

Keywords: Privacy; Anonymity; Supply chain; Distributed ledger technology; Blockchain

Publication status: Working paper

Suggested citation: Strehle, E. & Maurer, M. (2021). The DibiChain protocol: Privacy-preserving discovery and exchange of supply chain information. BRL Working Paper No. 18.

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No. 17

09 Feb 2021

A bibliometric review of research on digital identity

Lennart Ante, Constantin Fischer, Elias Strehle

Abstract: In recent years, potentially disruptive identity-related topics emerged, such as digital twin technology for product lifecycle management or self-sovereign identity (SSI) for sovereign data control. In this study, we identify research streams and emerging trends in academic research on digital identity through a bibliometric analysis of 1,395 peer-reviewed articles and their 44,412 references. We derive seven distinct research streams and their interrelations by means of co-citation analysis. We name the seven research streams: i) Digital twin technology for smart manufacturing and industrial health monitoring, ii) identity-based signcryption schemes, iii) distributed networks and user privacy, iv) user authentication in wireless sensor networks, v) attribute-based encryption schemes, vi) secure data exchange in the Internet of Things and vii) blockchain and smart contracts for secure data management. Each stream’s high-impact publications and its development over time are reviewed and the interrelation between publications and streams are visualized. In addition, we extract directions for future research from the field’s most influential publications. The results offer a comprehensive and systematic overview of publications and discourses in digital identity research.

Keywords: Digital Twin; Internet of Things; Industry 4.0; Blockchain; Smart Manufacturing; Identity Management

Publication status: Working paper

Suggested citation: Ante, L., Fischer, C. & Strehle, E. (2021). A bibliometric review of research on digital identity. BRL Working Paper No. 17.

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No. 16

03 Feb 2021

How Elon Musk’s Twitter activity moves cryptocurrency markets

Abstract: Elon Musk, the richest person in the world, is considered a technological visionary and has over 44.7 million Twitter followers. We analyze to what extent Musk’s Twitter activity affects short-term cryptocurrency returns and volume. Based on six recent cryptocurrency-related Twitter activities, we identify highly significant abnormal trading volume following each event. Furthermore, we discover significantly abnormal returns of up to 18.99% for Bitcoin and 17.31% for Dogecoin across different time frames. Nevertheless, not all tweets lead to significant abnormal returns. Our study shows the significant impact that social media activity of influential and well-known individuals can have on cryptocurrencies.

Keywords: Twitter; Bitcoin; Dogecoin; Event study; Social media

Publication status: Working paper

Suggested citation: Ante, L. (2021). How Elon Musk’s Twitter activity moves cryptocurrency markets. BRL Working Paper No. 16.

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No. 15

24 Oct 2020

The Impact of Transparent Money Flows: Effects of Stablecoin Transfers on Return and Trading Volume of Bitcoin

Lennart Ante, Ingo Fiedler, Elias Strehle

Abstract: Stablecoins are digital currencies that peg to non-volatile values, such as most commonly fiat currency. Yet unlike fiat currency, stablecoins are fully transparent: every transfer is recorded on a public blockchain. In this regard, they can serve as a valuable case study of the disruptive effect which transparent money flows could have on financial markets. This study analyzes how 1,587 stablecoin transfers of $1 million or more between April 2019 and March 2020 affected Bitcoin returns and trading volume. It finds highly significant positive abnormal trading volume and significant abnormal returns in the hours around stablecoin transfers. The sender and receiver of each transfer are categorized as (1) unknown, (2) cryptocurrency exchange or (3) stablecoin treasury. The effects on trading volume and returns differ across the resulting nine subsamples, which suggests that market participants presume different transfer motives and varying degrees of information asymmetry for each sender-receiver combination. The findings illustrate the feedback effects between cryptocurrency markets and stablecoin usage and suggest that transparent money flows have the potential to increase market efficiency.

Keywords: Market efficiency, Informational efficiency, Price discovery, Asset pricing, Event study, Transaction activity, Tether, Feedback trading

Publication status: Working paper

Suggested citation: Ante, L., Fiedler, I. & Strehle, E. (2020). The impact of transparent money flows: Effects of stablecoin transfers on the returns and trading volume of Bitcoin. BRL Working Paper No. 15.

Other: Presented under the name “Monetary flows and feedback trading in cryptocurrency markets: Effects of stablecoin transfers on Bitcoin returns and trading volume” at The 2nd Crypto Asset Lab Conference (CAL2020) by the Crypto Asset Lab of Università Milano-Bicocca, organised jointly with the Joint Research Centre is the European Commission’s science and knowledge service.

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No. 14

30 Sep 2020

Public Versus Private Blockchains

Elias Strehle

Abstract: Public blockchains like Bitcoin and Ethereum continue to have an exaggerated influence on the overall perception of blockchain technology. As a consequence, trustlessness is often presented as the central characteristic of blockchain: It is claimed that blockchain designers must assume that users do not trust each other and that there is no trusted third party. While this is arguably true for public blockchains, it is not a helpful perspective for private blockchains. Private blockchains can be highly efficient and effective when they act as a team player, operating alongside legal contracts, trust relationships, regulatory frameworks and trusted third parties.

Keywords: Blockchain; Enterprise Architecture

Publication status: Working paper

Suggested citation: Strehle, E. (2020). Public Versus Private Blockchains. BRL Working Paper No. 14.

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No. 13

04 Sep 2020

Exclusive Mining of Blockchain Transactions

Elias Strehle, Lennart Ante

Abstract: After creating a new blockchain transaction, the next step usually is to make miners aware of it by having it propagated through the blockchain’s peer-to-peer network. We study an unintended alternative to peer-to-peer propagation: Exclusive mining. Exclusive mining is a type of collusion between a transaction initiator and a single miner (or mining pool). The initiator sends transactions through a private channel directly to the miner instead of propagating them through the peer-to-peer network. Other blockchain users only become aware of these transactions once they have been included in a block by the miner. We identify three possible motivations for engaging in exclusive mining: (i) reducing transaction cost volatility (“confirmation as a service”), (ii) hiding unconfirmed transactions from the network to prevent frontrunning and (iii) camouflaging wealth transfers as transaction costs to evade taxes or launder money. We further outline why exclusive mining is difficult to prevent and introduce metrics which can be used to identify mining pools engaging in exclusive mining activity.

Keywords: Blockchain, Tax Evasion, Cryptocurrency, Money Laundering, Frontrunning

Publication status: Published in Scientific Reports 2020 – Conference proceedings of the Scientific Track of the Blockchain Autumn School 2020

Links: [Published version]

Other: Presented at the Scientific Track of the 4th Blockchain Autumn School, Mittweida, Germany, 01 October 2020. Won best paper award (2nd place).

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No. 12

15 Jun 2020

Blockchain for Supply Chain: From Promise to Practice

Elias Strehle

Abstract: The potential of blockchain for the supply chain sector is widely acknowledged, but it is not always clear how this potential can be realized in specific use cases. Supply chain blockchains must fit into the wider context of complex business relationships, existing technical systems, and ever-changing requirements. Consequently, their design requires a holistic approach which appreciates the complex interplay between the technology and its context. This paper presents a corresponding framework for analyzing and designing blockchain systems in the supply chain sector. It outlines the benefits of blockchain technology, provides guidance on deriving requirements from the use case, and distills critical implementation features.

Keywords: Blockchain, Supply Chain

Publication status: Working paper

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No. 11

15 Jun 2020

The Influence of Stablecoin Issuances on Cryptocurrency Markets

Lennart Ante, Ingo Fiedler, Elias Strehle

Abstract: Stablecoins are digital currencies whose value is pegged to fiat currencies like the dollar or other assets. They were created as a more flexible alternative to fiat currencies for cryptocurrency exchanges and constitute an increasingly important aspect of cryptocurrency markets and alternative finance. We analyze the influence of stablecoin issuances on the returns of major cryptocurrencies across 565 issuance events of $1 million or more for seven different stablecoins on four different blockchains between April 2019 and March 2020. Our event study reveals cryptocurrency market downturns in the week before a stablecoin issuance and positive abnormal returns for major cryptocurrencies in the twenty-four hours before and after the issuance. Effect sizes differ across stablecoins. Counterintuitively, we find that issuance size does not significantly affect the abnormal returns. We conclude that stablecoin issuances contribute to price discovery and market efficiency of cryptocurrencies.

Keywords: market efficiency, informational efficiency, price discovery, asset pricing, event study, transaction activity, tether, bitcoin, ethereum

Publication status: Published in Finance Research Letters

Links: [Published version]

Suggested citation: Ante, L., Fiedler, I. & Strehle, E. (2020). The Influence of Stablecoin Issuances on Cryptocurrency Markets. Finance Research Letters. doi:10.1016/j.frl.2020.101867

Other: Accepted for presentation at 2020 International Conference in Banking and Financial Studies (ICBFS2020), Department of Management and Quantitative studies of The University of Naples Parthenope, Naples, Italy.

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No. 10

15 Apr 2020

Smart Contracts on the Blockchain – A Bibliometric Analysis and Review

Abstract: Smart contracts are decentrally anchored scripts on blockchains or similar infrastructures that allow the transparent execution of predefined processes. Using smart contracts, business logic can be automated and assets such as money become programmable, which opens up previously inaccessible application potential. To date, smart contracts control billions in value. This paper analyzes 468 articles on the topic of smart contracts and their 20,188 references, providing a summary and analysis of the current state of research on smart contracts and identifying intellectual structures and emerging trends. Using exploratory factor analysis for co-citation analysis, six different strands of research are identified that concern technical, social, economic and legal disciplines: I) technical foundations, development and open questions of blockchain networks, II) blockchain and smart contracts for the Internet of Things, III) smart contract standardization, verification and security, IV) blockchain and smart contracts for the disruption of existing processes and industries, V) potentials and challenges of smart contracts, and VI) smart contracts and the law. The interrelations between these groups and individual high-impact publications are visualized using social network analysis. A structured overview of the main strands of research concerning smart contracts, their development over time, the relevance of smart contract platforms in research, and conceptual connections between publications and discourses is obtained. Based on the results, starting points for future research are derived, which offer researchers and practitioners a substantial basis for their work on smart contracts.

Keywords: blockchain technology; tokenization; ethereum; bibliometrics; informetric study; ethereum; social network analysis

Publication status: Published in Telematics and Informatics

Links: [Published version]

Suggested citation: Ante, L. (2020). Smart Contracts on the Blockchain – A Bibliometric Analysis and Review. Telematics and Informatics. doi:10.1016/j.tele.2020.101519

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No. 9

30 Mar 2020

Market Reaction to Large Transfers on the Bitcoin Blockchain – Do Size and Motive Matter?

Abstract: How does the market react to large Bitcoin transactions? We analyze effects of 2,132 transactions involving at least 500 Bitcoins. While results for all transactions are inconclusive, further analysis of transaction size and presumed transfer motives based on publicly known Bitcoin addresses of cryptocurrency exchanges reveals significant price effects depending on the type of transaction. The results indicate that the market recognizes the nature of the transfer and prices in new information.

Keywords: Market efficiency; Informational efficiency; Price discovery; Cryptocurrency; Event study; Transaction activity

Publication status: Published in Finance Research Letters

Links: [Published version]

Suggested citation: Ante, L. & Fiedler, I. (2020). Market reaction to large transfers on the Bitcoin blockchain – Do size and motive matter?. Finance Research Letters. doi:10.1016/j.frl.2020.101619

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No. 8

19 Mar 2020

Effects of Initial Coin Offering Characteristics on Cross-listing Returns

André Meyer, Lennart Ante

Abstract: The lack of transparency in cryptocurrency markets means that investors must assess a project’s quality on the basis of public information. This paper examines how initial coin offering (ICO) characteristics affect cross-listing returns, i.e. whether or not the available information is a valuable signal of quality. For this purpose, we analyze 250 cross-listings of 135 different tokens issued via ICOs and calculate abnormal returns for specific samples using event study methodology. We find that cross-listing returns are driven by success in terms of token performance and project funding, as well as by jurisdiction-specific characteristics like the extent of regulation and domestic market size. Other characteristics like the choice or change of blockchain infrastructure, token distribution across investors and the project team, campaign duration and whitepaper characteristics also seem to influence perceived project quality and thus cross-listing returns. The results provide insights for the literature on cross-listings, cryptocurrency markets and entrepreneurial finance in the form of ICOs. They also make it possible to interpret the information available on the market and enable investors, project teams and crypto currency exchanges to evaluate probable market reactions to cross-listings.

Keywords: entrepreneurial finance; financial innovation; blockchain technology; tokenization; cryptocurrency; cryptocurrency exchanges; ethereum; event study; token sales

Publication status: Published in Digital Finance

Links: [Published version]

Suggested citation: Meyer, A. & Ante, L. (2020). Effects of Initial Coin Offering Characteristics on Cross-listing Returns. Digital Finance. doi:10.1007/s42521-020-00025-z

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No. 7

10 Mar 2020

Dominating OP Returns: The Impact of Omni and Veriblock on Bitcoin

Elias Strehle, Fred Steinmetz

Abstract: Bitcoin has always been used to store arbitrary data, particularly since Bitcoin Core developers added a dedicated method for data storage in 2014: the OP Return operator. This paper provides an in-depth analysis of all OP Return transactions published on Bitcoin between September 14, 2018, and December 31, 2019. The 32.4 million OP Return transactions (22% of all Bitcoin transactions) published during this period added 10 GB to the blockchain’s size. Almost all OP Return transactions can be attributed to one of 37 blockchain services. The two dominant services are Veriblock (58% of OP Return transactions) and Omni/Tether (40%). Veriblock transactions pay only 14% of the average transaction fee, partly because most of them are submitted during times when overall activity on Bitcoin is low. Omni transactions, on the other hand, pay more than twice the average transaction fee and therefore compete with regular Bitcoin transactions for inclusion in new blocks.

Keywords: blockchain; econometrics of cryptocurrencies; op_return; tether; transaction fees

Publication status: Published in Journal of Grid Computing

Suggested citation: Strehle, E. & Steinmetz, F. (2020). Dominating OP Returns: The Impact of Omni and Veriblock on Bitcoin. Journal of Grid Computing. forthcoming

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No. 6

19 Feb 2020

Individual cryptocurrency investors: Evidence from a population survey

Abstract: Cryptocurrencies such as Bitcoin are a highly volatile asset class where very high returns are offset by large losses. This study examines the financial success of individual investments in cryptocurrencies and analyzes whether it relates to similar explanatory factors as for investments in other asset classes. For this purpose, a nationally representative survey data set of 3,864 German citizens is used, of which 354 (9.2%) reported owning cryptocurrencies in March 2019. We analyze the subpopulation of 225 cryptocurrency owners who classify as investors. 56% of them experienced positive returns, while 29% had negative results. The remaining respondents broke even. The average investment was €1,773 in a portfolio of two cryptocurrencies. At the time of the survey, the average portfolio value had risen to €7,094 – an average gain of 300%. While nearly half of the investors (44%) outperformed Bitcoin market returns, not a single one of the early investors (2009-12) did. We find that net income, the degree of cryptocurrency knowledge and the degree of ideological motivation for owning cryptocurrency have positive effects on returns. This first scientific analysis of individual investment in cryptocurrencies provides a basis for future research and for regulatory decision-making.

Keywords: Bitcoin; Blockchain; Individual investors; Alternative investments; Financial performance

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No. 5

10 Feb 2020

Cross-listings of Blockchain-based Tokens issued through Initial Coin Offerings: Do Liquidity and specific Cryptocurrency Exchanges matter?

Lennart Ante, André Meyer

Abstract: Initial coin offerings (ICOs) represent a novel funding mechanism where digital tokens are issued on the blockchain and sold to investors. One major reason for the success of this financing model is the fact that the issued tokens can immediately be traded on secondary markets. This study analyzes 250 exchange cross-listings of 135 different tokens issued through ICOs on 22 cryptocurrency exchanges. We find significant abnormal returns of 6.51% on the listing day and 9.97% over a seven-day window around the event. Further analysis shows that the results clearly differ for individual cryptocurrency exchanges, as listings on individual exchanges yield returns of up to 34% on the event day, while others are negligible. An investigation of liquidity-related metrics shows that lower prior trading volume and asset market capitalization have positive effect on listing returns. Investors use phases of high market liquidity to sell off positions around the period of cross-listing events. The results can help traders form their strategies, assist projects in selecting appropriate exchanges, help exchanges select projects, and provide regulators and society with in-depth insights into the ICO market. The results may also inspire a wide range of future research approaches that can bring more transparency to this still under-researched and opaque market.

Keywords: entrepreneurial finance; financial innovation; blockchain technology; tokenization; cryptocurrency; cryptocurrency exchanges; ethereum; event study; token sales

Publication status: Working paper

Suggested citation: Ante, L. & Meyer, A. (2020). Returns from Investing in Cryptocurrency: Evidence from German Individual Investors. BRL Working Paper No. 5.

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No. 4

26 Oct 2019

A place next to Satoshi: foundations of blockchain and cryptocurrency research in business and economics

Abstract: Blockchain technology has become an ubiquitous phenomenon. While the topic originated in computer science, the business and economics literature was comparatively slow to pick up on it. To better understand the academic basis, current developments and future research avenues of the discourse, 9672 cited references of 467 blockchain and cryptocurrency arti‐ cles from the fields of business and economics are gathered from the Web of Science Core Collection and are analyzed. Five major strands of research are identified through factor analysis. They are reviewed and their interrelation is mapped using social network analysis. Research on (I) market efficiency and economics and (II) asset pricing and valuation is relatively mature and focuses on cryptocurrencies, while research on (III) the principles and applications of blockchain technology, (IV) transactions and anonymity and (V) mon‐ etary theory and policy lacks maturity. Potential paths for future research are pointed out and in conclusion, it is assessed that this young field of research still leaves plenty of room for manoeuvre. A scientific place next to Nakamoto (2008) is still available for existing, emerging and new research streams.

Keywords: distributed ledger; bitcoin; informetric analysis; bibliometric analysis; social network analysis

Publication status: Published in Scientometrics

Links: [Published version]

Suggested citation: Ante, L. (2020) A place next to Satoshi: foundations of blockchain and cryptocurrency research in business and economics. Scientometrics, 1241305–1333. doi:10.1007/s11192-020-03492-8

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No. 3

08 Sep 2019

Market Reaction to Exchange Listings of Cryptocurrencies

Abstract: Cryptocurrency markets operate at a global scale and are lightly regulated compared to traditional securities markets. Cryptocurrencies like Bitcoin trade across multiple secondary markets that differ significantly in term of liquidity, governance and trust. This study explores 327 exchange listings of 180 cryptocurrencies on 22 different cryptocurrency exchanges and examines the resulting price effects using event study methodology. The results show a significant average abnormal return of 5.7% on the day of the listing event and 9.2% in the window of three days before until three days after the listing. The effects clearly differ for individual cryptocurrency exchanges, with listings on only a few exchanges yielding significant positive short-term abnormal returns of up to 25.5% on the day of the listing. Other exchanges show no significant effects at all or even significant negative returns, which suggests informed trading or market manipulation. Additional tests show that higher market capitalization in combination with lower trading volume leads to higher abnormal returns at exchange listings of blockchain-based assets.

Keywords: cross-listings; cryptocurrency exchanges; blockchain; informed trading; event study

Publication status: Working paper

Suggested citation: Ante, L. (2019). Market Reaction to Exchange Listings of Cryptocurrencies. BRL Working Paper No. 3.

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No. 2

17 Jun 2019

Discovering market prices: Which price formation model best predicts the next trade?

André Meyer, Ingo Fiedler

Abstract: For most purposes of technical analysis, valuation metrics and many other relevant financial methods, the price of the last transaction is considered representative of the market price. The straightforward argument is that at this price, supply and demand have last met. However, on closer examination, the question arises as to why a past event should be relevant to the future, and why other, potentially more recent information should not be used to discover a future price. Building on this question, we apply a range of new price formation models to current data available on crypto currency exchanges that depict level II market data, and compare their short-term forecast accuracy against the common-used ticker price and mid-price. Data on cryptocurrencies is used as the closest example to free markets, since cryptocurrency trading is continuous, markets never close, and interferences through oversight is extremely rare. We find that two of the five price formation models investigated outperform the widely used ticker as a price indicator for the next trade. We conclude that the volume-limited clearing price best predicts the price of subsequent trades. Its usage can thus enhance the explanatory power of various financial analyses.

Keywords: price discovery; high-frequency trading; short-term price prediction; limit order book; mid-price; micro-price; clearing price

Publication status: Working paper

Suggested citation: Meyer, A. & Fiedler, I. (2019). Discovering market prices: Which price formation model best predicts the next trade? BRL Working Paper No. 2.

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No. 1

18 Feb 2019

Cheap Signals in Security Token Offerings (STOs)

Abstract: Blockchain-based security token offerings (STOs) provide a new way of crowdfunding and corporate financing. Tokens are immediately transferable and can be traded 24/7 on secondary markets, clearing and settlement is a matter of only a few minutes, tokens can be held personally, i.e. brokers and custody accounts are no longer required and the underlying blockchain ensures transparency of all transactions. This study provides an overview of security tokens and the STO model for corporate financing. Our analysis investigates security tokens from the perspective of a firm looking to raise capital. Building on signaling theory, this paper examines 1) whether companies conducting an STO make use of cheap signals to influence investment behavior and 2) if such use of cheap signals is effective. We analyze a dataset of 151 STOs and identify that cheap signals of human capital and social media are used by projects and have a positive effect on funding success. The type of signals influencing funding success indicate that the market is still immature, as projects have a clear incentive to enlarge the level of asymmetric information between them and potential investors. The anticipated level of punishment for misusing cheap signaling is low, as the mechanism does not represent fraud but “cheating”. This is a concern for investor protection.

Keywords: entrepreneurial finance; blockchain; crowdfunding; initial coin offering; initial public offering; corporate finance

Publication status: Published in Quantitative Finance and Economics

Suggested citation: Ante, L. & Fiedler (2020). Cheap signals in security token offerings (STOs). Quantitative Finance and Economics, 4(4), 608-639. doi:10.3934/QFE.2020028.

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BRL Reports

Our BRL Reports are designed to inform the general public and the scientific community about specific issues and topics. The reports are intended to provide an objective (data) basis for broad use by the public, business and politics.

No. 6

04 Nov 2020

Digital Identity and Personal Data in 2020: Citizens‘ Opinions and Motives

Executive summary: Based on a representative survey among 1,000 German adult internet users, this report offers insights about the motivational factors for using digital identity solutions and risk perceptions towards the sharing and provision of personal data online as well as the trust placed in companies and institutions handling personal data. Citizens see “trust” and “actual benefits” of digital identity solutions as the most important motives, whereas “social motives” are subordinate. The highest risk associated with sharing personal data online is perceived to be its undetected usage without consent. Most personal data are provided for authentication while logging into specific online systems. The most trusted organizations handling personal data are friends and family, followed by public authorities and government institutions. The overall level of trust with regard to personal data handling is rather low, whereas the lowest trust is placed in companies’ unknown to them and internet companies.

Suggested citation: Blockchain Research Lab (2020). Digital Identity and Personal Data in 2020: Citizens’ Opinions and Motives. BRL Report No. 6.

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No. 5

15 Jun 2020

Choosing a Distributed Ledger Technology: Looking at the Popularity and Activity of Major Players

AuthorGuénolé Le Pennec

Executive summary: To implement a blockchain-based system it is of critical importance to choose a well-suited Distributed Ledger Technology (DLT). To make that choice, the activity of the community and quantity and quality of resources for using the technology are relevant criteria. Here, we give information on non-technical characteristics of fifteen DLTs, including the activity of the developing community, the popularity of the DLTs, and available documentation. Our search was based on data available on GitHub, social media and other resources available on the internet. The results allow comparison of the fifteen DLT included in our search and can facilitate the choice of DLT for the realization of blockchain projects.

Suggested citation: Le Pennec, G. (2020). Choosing a Distributed Ledger Technology: Looking at the Popularity and Activity of Major Players. BRL Report No. 5.

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No. 4

24 Mar 2020

Perceptions towards the Digital Currency Project Libra: Germany Q4 2019

Executive summary: Based on a representative survey among 3,059 German adult Internet users, this report captures users’ perceptions and anticipations towards Libra. Libra is a blockchain-based payment token that is backed by a basket of financial assets, such as the Dollar and the Euro. It is developed by the Swiss-based Libra Association initiated by Facebook. The project is discussed controversially by the public and governments. Among the respondents, Libra (82%) is almost as well-known as Bitcoin (85%). On a scale from 0 to 10, the respondents assess the trustworthiness of Libra rather low at 3.48. Nearly one fifth (19.4%) do not perceive Libra as trustworthy at all. The majority of the respondents (57%) would not use Libra for payments, while 12% would certainly and 31% would possibly do so. The assessment of perceptions towards Libra differs significantly in regard to respondents’ previous touchpoints with crypto- currencies. Current and former owners of cryptocurrencies are more open to the project: their average level of trust is 5.78, while 39% indicated that they would use it. Socio-demographics also make a difference: younger age cohorts, men and respondents with the highest and the lowest levels of education tend to report a higher level of trust and willingness to use Libra.

Suggested citation: Blockchain Research Lab (2020). Perceptions towards the Digital Currency Project Libra: Germany Q4 2019. BRL Report No. 4.

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No. 3

12 Feb 2020

The State of Cryptocurrency Adoption: Germany Q4 2019

Executive summary: Based on a representative survey among 3,059 German adult Internet users, this report offers a range of insights about cryptocurrencies and blockchain technology. 86.8% of the respondents have at least some knowledge of cryptocurrencies, whereas only 64% of them know about blockchain technology. 14.1% of the respondents currently own cryptocurrency, while another 10.7% did so in the past. Among the cryptocurrency owners, 85% hold Bitcoin, followed by Ethereum (30%) and Litecoin (23%). Cryptocurrency owners have on average made a profit of 85% on their initial investment. The average (former) cryptocurrency owner is male (68.7%), well-educated, and over 10 years younger than a non-owner. Additionally, their average net income is €432 higher than that of non-owners. A ‘predominantly ideological’ motivation for buying and owning cryptocurrency can be assigned to 64% of current and past owners.

Suggested citation: Blockchain Research Lab (2020). The State of Cryptocurrency Adoption: Germany Q4 2019. BRL Report No. 3.

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No. 2

03 Jul 2019

Perceived and Actual Use of Cryptocurrencies: Germany Q1 2019

Executive summary: To implement a blockchain-based system it is of critical importance to choose a well-suited Distributed Ledger Technology (DLT). To make that choice, the activity of the community and quantity and quality of resources for using the technology are relevant criteria. Here, we give information on non-technical characteristics of fifteen DLTs, including the activity of the developing community, the popularity of the DLTs, and available documentation. Our search was based on data available on GitHub, social media and other resources available on the internet. The results allow comparison of the fifteen DLT included in our search and can facilitate the choice of DLT for the realization of blockchain projects.

Suggested citation: Blockchain Research Lab (2020). Perceived and Actual Use of Cryptocurrencies: Germany Q1 2019. BRL Report No. 2.

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No. 1

20 May 2019

The State of Cryptocurrency Adoption: Germany Q1 2019

Executive summary: A survey among 3,864 respondents that is representative of the adult Internet population in Germany allows deep and reliable insights into the adoption and usage of cryptocurrencies. 87% of the population know about cryptocurrencies. 18% of all adult Internet users in Germany either currently own cryptocurrencies (9.2%) or have owned some in the past (9.1%), with Bitcoin being most well-known (83%), followed by Bitcoin Cash (27%) and Ethereum (23%). Most users first acquired or mined cryptocurrency in 2017 or 2018. Bitcoin.de is the preferred exchange of Germans, followed by Coinbase and Kraken. On average, €2,770 was invested and the current average portfolio value is €6,314 (+128%). Nearly two thirds of crypto users (62%) report their exposure to be ideologically motivated. The average age of crypto users is 39 years, they are very often male (68%), better educated, and have a higher income compared to non-users.

Suggested citation: Blockchain Research Lab (2020). The State of Cryptocurrency Adoption: Germany Q1 2019. BRL Report No. 1.

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Books

30 Jul 2020

Blockchain and the Digital Economy: The Socio-Economic Impact of Blockchain Technology

Abstract: Blockchain technology has the potential to disrupt digital interaction in our economy and society. The technology’s rapid and dynamic technical development is driven by startups and incumbents alike, creating a myriad of applications across economic and societal domains. However, the implications of this potential new technological paradigm have not yet reached wider public debate, nor have economic and societal implications been adequately explored.

Distributed ledger technologies and blockchains stem from an ideological open-source movement and facilitate the exchange of assets via a complementary technical layer on top of the internet. Current platform-based business structures like Facebook, Uber, Airbnb or Amazon could be replaced by evolving decentralized ecosystems. At the same time, community-owned neutral networks could facilitate a re-empowerment of individuals including but not limited to the sovereignty over one’s data. It is likely that blockchain technology will eventually affect everyone in our society.

In this book the key concepts of blockchain technology and an overview of the machinations of different blockchain ecosystems are presented. The socio-economic impact of this new technology is discussed including its impact on sectors such as energy, data, capital markets, logistics, and gambling. Challenges of adoption and roll out will be discussed with a specific focus on scalability and regulation. Non-technical and accessible, the book seeks to demystify the functionalities of blockchains, their potential as well as their likely socio-economic impacts.

Suggested citation: Steinmetz, F., Ante, L. & Fiedler, I. (2020). Blockchain and the Digital Economy. Agenda Publishing. doi: 10.2307/j.ctv16qjxg0

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Book chapters

23 Oct 2018

The Money Laundering Market: Regulating the Criminal Economy

Using Blockchain Technology for the Prevention of Criminal Activity

Abstract: Since the creation of Bitcoin in 2009, interest in the cryptocurrency and its features has been growing, mostly within IT-related communities (Romano & Schmid 2017). For many years, the technology that underpins Bitcoin has largely been unnoticed by the public (Mattila 2016). Although Bitcoin constitutes an independent monetary system, free from governmental influence, via monetary politics, and free from intermediation by fi nancial institutions and service providers, the underlying technology can be decoupled from it: blockchain describes the data structure, which is managed in decentralized ways and facilitates frictionless transactions directly between trading counterparties. Bogart and Rice (2015) explain that…

Suggested citation: Steinmetz, F. (2018). Using Blockchain Technology for the Prevention of Criminal Activity. In McCarthy, K. (Ed.), The Money Laundering Market: Regulating the Criminal Economy (pp. 199–222). Agenda Publishing. doi: 10.2307/j.ctv5cg8z1.11

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23 Oct 2018

The Money Laundering Market: Regulating the Criminal Economy

Cryptocurrency, Blockchain and Crime

Abstract: Blockchain technology and cryptocurrencies are innovative technologies that facilitate trust in distrusted systems. The technological ecosystem of cryptocurrency has experienced rapid growth since its inception in 2009, with all cryptocurrencies totalling a value of $590 billion in December 2017. Criminals exploit cryptocurrency as a way to process private transactions that cannot be revoked. Alongside the growth of this ecosystem, criminal activities such as ML, tax evasion, fraud, theft and hacking have been increasing. Cryptocurrency can be used to transfer funds across borders and to disguise the ownership and possession of funds. Virtual currency is used as means of payment for…

Suggested citation: Ante, L. (2018). Cryptocurrency, Blockchain and Crime. In McCarthy, K. (Ed.), The Money Laundering Market: Regulating the Criminal Economy (pp. 171–198). Agenda Publishing. doi:10.2307/j.ctv5cg8z1.10

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Conference proceedings

21 Jun 2021

10th International Conference on Model and Data Engineering (MEDI 2021)

The DibiChain protocol: Privacy-preserving discovery and exchange of supply chain information

Elias Strehle, Martin Maurer

AbstractConnecting and exchanging information across organizations becomes increasingly important as supply chains become more complex and expectations with regard to sustainability, transparency and resilience increase. At the same time, organizations are adamant about protecting any competitive advantage which derives from private information about, for example, supplier networks, available inventory or production processes. Technology aimed at enabling information exchange within and across supply chains must therefore ensure high degrees of privacy and control over private information. In light of this, we specify the DibiChain protocol for the discovery and exchange of supply chain information. The protocol prioritizes data minimization in shared data stores, avoidance of persistent user identifiers and anonymous communication with minimal intermediation. We further outline how the DibiChain protocol can serve as the foundation for privacy-preserving supply chain applications, including an anonymous discovery service for GS1 EPCIS event data.

KeywordsPrivacy; Anonymity; Supply chain; Distributed ledger technology; Blockchain

Suggested citationStrehle, E. & Maurer, M. (2021). The DibiChain protocol: Privacy-preserving discovery and exchange of supply chain information. In 10th International Conference on Model and Data Engineering (MEDI 2021).

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01 Oct 2020

Blockchain Autumn School 2020 (BAS2020)

Exclusive Mining of Blockchain Transactions

Elias Strehle, Lennart Ante

Abstract: After creating a new blockchain transaction, the next step usually is to make miners aware of it by having it propagated through the blockchain’s peer-to-peer network. We study an unintended alternative to peer-to-peer propagation: Exclusive mining. Exclusive mining is a type of collusion between a transaction initiator and a single miner (or mining pool). The initiator sends transactions through a private channel directly to the miner instead of propagating them through the peer-to-peer network. Other blockchain users only become aware of these transactions once they have been included in a block by the miner. We identify three possible motivations for engaging in exclusive mining: (i) reducing transaction cost volatility (“confirmation as a service”), (ii) hiding unconfirmed transactions from the network to prevent frontrunning and (iii) camouflaging wealth transfers as transaction costs to evade taxes or launder money. We further outline why exclusive mining is difficult to prevent and introduce metrics which can be used to identify mining pools engaging in exclusive mining activity.

Keywords: Blockchain, Tax Evasion, Cryptocurrency, Money Laundering, Frontrunning

Suggested citation: Strehle, E. & Ante, L. (2020) Exclusive Mining of Blockchain Transactions. In Scientific Reports 2020 – Conference proceedings of the Scientific Track of the Blockchain Autumn School 2020, (1), pp. 87-95.

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Other publications

06 Jul 2018

Binary District

Distributed Ledger Technology: A Possible Way forward for Securities Clearing

Abstract: The current system of securities clearing and settlement is dysfunctional, slow, prone to (tax) fraud, and expensive to operate. An alternative system based on distributed ledger technology could eradicate any uncertainty as to who holds a given security and the associated rights at any time. This would allow for much more transparent and efficient clearing and settlement. A decentralised database (such as a distributed ledger) provides a great deal of transparency for regulatory supervision. It also provides substantial cost savings, as the need for harmonising proprietary databases diminishes. By applying specific cryptographic methods and selectively adjusting reading rights, sensitive business data in the shared ledger can be protected while being selectively accessible for supervisory authorities. Consequently, DLT can enable a system of securities trading that is transparent, efficient and much less prone to fraud.

Suggested citation: Fiedler, I., Ante, L., Steinmetz, F., & Häseler, S. (2018). Distributed Ledger Technology: A Possible Way Forward for Securities Clearing. Binary District.

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12 Sep 2017

Blockchain Monitor

Blockchain for FinTech

Abstract: It is said that Blockchain will change the structure of the financial industry. Many financial institutions, large corporations and small startups are researching and testing the use of Blockchain technology to disrupt current markets and establish new business models. At the same time, Blockchain is increasingly attracting attention from regulatory authorities. However, potential use cases, opportunities and risks associated with the technology are the subject of heated debate among industry participants: what is the killer application and what is merely hype? In this report we present the results of a survey among more than one hundred professionals and senior-level management from the financial services industry, the information technology sector and academia. Among all the different areas where Blockchain can be applied, we find the highest impact in energy and FinTech. For FinTech, we note that currently the identification of use cases is in highest demand. This clearly indicates that many companies are still in the early stages of their Blockchain journey. Three important knowledge gaps can be identified in the FinTech industry: (1) Individuals are perceived to be much more knowledgeable on Blockchain topics than companies are, (2) Mid-Level Management is under-educated compared to Entry-Level Employees and Senior-Level Management, (3) Public Administration and Law show the strongest discrepancy between perceived Blockchain importance for the sector and current Blockchain competence

Suggested citation: Fiedler, I., Holthusen, J., Steinmetz, F. & Ante, L. (2017). Blockchain for FinTech. Report.

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