Crypto Uncovered (eBook)

Sarah Swammy is a Senior Vice President and Chief Operating Officer for the Portfolio Solutions businesses in both State Street Global Markets, LLC, a registered broker dealer subsidiary of State Street Bank and Trust and in State Street Bank and Trust.  Sarah joined State Street from BNY Mellon where she held several leadership positions.  She has held compliance positions at Deutsche Bank Securities, Inc., CSFB, and Barclays Capital, Inc.Richard Thompson has more than 25 years of experience directing the development of world-class institutional financial systems and pioneering the next generation of "cloud" technology. The integration of blockchain, artificial intelligence, machine learning, and automation workflows into a single delivery fabric is the primary focus of his efforts in Digital Air. Helping to launch two ICO’s, fx, fxoptions, multiple fixed income, and a number of derivatives platforms, Richard is widely acknowledged as one of the foremost quantitative IT architects in the financial industry. Marvin Loh has 30 years of experience in the financial service industry where he has been an analyst at various firms covering a multitude of asset classes.  At present, he follows global macro themes for BNY Mellon, where he evaluates asset valuations by looking for intersections within the FX, fixed income and equity markets. Marvin has also been active in identifying disruptive technologies and business models. 

Foreword 5
Acknowledgments 8
Contents 9
Notes on Contributors 11
List of Figures 15
List of Charts 17
List of Tables 18
1: History of Money 19
Barter 20
Moving Beyond Barter 21
The Illustrious History of Shell Money 21
From Shells to Coins and Paper 22
The Role of Gold in Money 27
Determining the Value of Money 31
Bibliography 34
2: Tales from the Crypt: The Dawn of Crypto Currency 35
Development of Bitcoin 37
Bitcoin Versus Fiat 37
History of Fiat Money 38
How Bitcoin and Crypto Currencies Can Change the Existing System 41
3: Silk Road to Wall Street: Accepting Crypto Currency as a Tradable Asset 46
Trying to Determine Value 47
Important Developments in the Evolution of Trading Crypto Currencies 49
Nuances in Trading Crypto Currencies 53
How Trading of Traditional Financial Securities Is Structured 54
What’s Different in Trading Crypto Assets 54
Using Wall Street for Crypto Investing 56
Governments Get Involved 56
Regulations Emerge and Are Often Welcome 57
ICOs: Crypto Currencies’ Hottest Trend 59
Bibliography 61
4: Crypto Currency: What Do We Know About Investment Performance and Risk? 64
Introduction 64
Prior Empirical Literature on Crypto Currency Pricing and Returns 65
Bitcoin Returns and Risks Relative to Established Financial Assets 67
Comparative Financial Performance of Alternative Crypto Currencies 70
Establishment of Exchange-Traded Funds, Options, and Future Contracts on Crypto Currency 74
Conclusions and Future Directions in Research 75
Bibliography 75
5: Managing the Crypto Marketplace 77
Early Days of Bitcoin 78
Establishing a Baseline Value for Bitcoin 80
Silk Road 80
Creating a Store of Value 81
The Market Awakens 82
Participant Management 89
Role Management 91
Actions and Entitlements 93
Events and Activities 96
6: Crypto Currency: The Birth of an ICO 100
Crypto Currency 100
How Crypto Currency Works 101
Types of Crypto Currency 102
Transactional 102
Platform 103
Utility Tokens 103
Ethereum 104
Smart Contract 105
How to Launch an ICO 108
Build the Product 109
Write the White Paper 110
Perform Legal Checks 112
Create the Token 113
Security Audit 116
Leadership 117
Manage the Community 117
ICO Crowd Sale 118
Ethereum Development Model 118
Solidity Programming Language 120
Smart Contract 122
Creating a Truffle Project 123
Creating the Smart Contract 124
Compile the Smart Contract 126
Migration 127
Testing the Smart Contract 128
Develop the User Interface 130
Installation of Web 3 132
Instantiation of Contract 132
UI Update 133
Manipulating the Adopt Function 134
Completion of the Application 134
Create an ERC 20 Token on Ethereum 137
LUCKY Coin: Decentralized Pet Care Blockchain Solution Features 138
ERC 20 Token Definition for LUCKY DOG 139
Token Smart Contract Specification 139
Minimum Viable Token 140
Create an ICO (Crowd Sale) Contract on Ethereum 141
LUCKY Token contract definition 142
ICO Smart Contract Specification 143
ICO Smart Contract Code 144
ICO Smart Contract Flow Diagram 146
7: Creation of a Distributed Ledger 147
Blockchain 147
Hash 147
Block 149
Mining 150
Bitcoin 154
Crypto Currency Wallet 156
Types of Wallets 158
Wallet Security 160
Appendix 161
Complete Token Contract for LUCKY DOG 161
8: ICO Regulatory and Reporting Framework 163
Design Considerations for Reporting 164
Governance 165
Identity 165
Verification and Authentication 166
Access Control 167
Data Ownership 167
Security 168
Blockchain Ecosystem 168
Users 169
Community 170
Infrastructure 171
Financials 172
Reporting 173
Dimensions 177
Analytics 177
Financial Reporting and Auditing 178
Auditor of Smart Contracts and Oracles 180
Service Auditor of Consortium Blockchains 181
Administrator Function 181
Arbitration Function 182
9: Crypto Currency: Another Block in the Continuum of Value Exchange 183
Historical Backdrop 183
Crypto Currency Wallet Security 184
The Next Block in the Chain 185
10: A Vision for the Future: The Bermuda FinTech Story 186
Blockchain Potential 187
The Bermuda FinTech Story: Building on a Reputation for Innovation and Collaboration 187
A Brief History of Bermuda 187
The Economy 188
The Bermuda FinTech Strategy 189
The Legislative Components 189
Initial Coin Offering Legislation 189
The Digital Asset Business Act 2018 190
Banking Service for FinTech Companies 191
National E-ID System 192
Land Title Registration 192
The Bermuda FinTech Innovation Hub 192
Setting Up Business in Bermuda 192
Summary 193
Conclusion 193