Consider the study by Yermack (2016) named “Corporate Governance and Blockchains.” Which of the following claims and statements are made by that article?

           I.          Maintaining anonymity has at times proven difficult in the Bitcoin blockchain. Law enforcement officials have successfully identified and prosecuted money launderers, drug dealers, operators of virtual casinos and Ponzi schemes, and other miscreants.

         II.          The first suggestion of blockchain-like structure was introduced in Haber and Stornetta’s (1991) proposal for the digital time stamping of documents in sequence to authenticate authorship of intellectual property, however the first reference to this data structure a “chain of blocks” appears to come from Nakamoto (2008).

       III.          If a company’s shares are traded on an exchange that is built on blockchain, then there will be consequences. For example, blockchain trading of a company’s shares would likely reduce the effectiveness of equity-based management incentives.

If the current price of Bitcoin is $15,134, calculate by how much (in dollar terms) the monetary supply of Bitcoin grows every day (as of the day of this exam)? Hint: How long does it take to solve for one nonce (on average) and what is its current reward (since April 2024) ?

Consider

the research report prepared by Goldman Sachs’ “Profile in Innovation:

Blockchain” and the seven cases that are covered there. In the beginning of

each of these cases, there is a section named “What are the pain points?”

describing what are the pain points that can be solved by the blockchain

technology. Using your knowledge of these seven cases, determine which of the

following is one of the pain points listed in either of these 7

cases.

I.      Decentralization of property records

. Given

the fact that property records are stored at the county level, title companies

must build and maintain title plants – a time-consuming and labor-intensive

process –  in order to index the public

records geographically, with the aim of increasing search efficiency and

reducing claims.

II.    The settlement process is long

. While stocks in the US

trade in fractions of seconds, the settlement process takes three days (moved

to two in 2017), which ties up capital and liquidity.

III.  Tracking merchandise shipments.

Package shippers (e.g.,

DHL, UPS) take certain risks of losing package’s in the distribution routs,

which hurts their insurance costs, their reputation, and increases search costs

for lost merchandise.

Recall the main findings of J.P. Morgan’s report named “Decrypting Cryptocurrencies: Technology, Applications and Challenges.” Which of the following statements is not based on that report?

The statements below are explaining how Bitcoin’s blockchain technology maintains the privacy (anonymity, etc.). Which statement about this is not correct?

Which of the following is not one of the tasks performed by the miners within the Bitcoin’s network?

I.   Providing potential users of bitcoin with a wallet.  

II.   Verifying a bitcoin transaction took place between two parties and then distribute it to the entire network.

III.   Every bitcoin miner usually keeps a copy of the entire blockchain on his/her computer.

IV.   Scrutinizing various updates, like the authentication of new blocks, which are provided by the network of bitcoin miners at large.

Consider the article by Raskin and Yermack (2016) named “Digital, Currencies, Decentralized, Ledgers, and Future of Central Banking.” Which of the following is not consistent with the findings and claims of this study?

You are given the following information. The height of the Bitcoin blockchain now is 630,583. Since the creation of Bitcoin, the average reward for a block has been around 27 bitcoins per block. The price of Bitcoin is $7,935. Assume that the monetary supply of Bitcoin grows every day by about $8 million. Given this information, what is the annual inflation rate of bitcoin (1year=365days)? Hint: first calculate how big (in dollar terms) is the total money supply of bitcoin since the creation of this cryptocurrency.

Which of the following is not one of the steps performed in a typical Initial Currency Offering (ICO) event?

             I.          Blockchain project developers invite the public to invest in their idea. This proposal involves the pre-purchase of crypto coins or tokens set to be created by the application.

           II.          A regulatory agency (in U.S. it is SEC) scrutinizes this proposal and issues an opinion. 

         III.          The blockchain application launches and early investors are provided their promised crypto coins/tokens for personal use or investment.

         IV.          Miners verify that a token is legitimate and that it has a valid nonce.

Consider the composition of a Bitcoin block (what goes inside a block). Which of the following items are not chosen (or modified) by a miner who is competing for the right to form the next block (i.e., to solve the nonce)?

           I.         the hash output of the previous block

           II.         the order of transactions in the candidate block (i.e., Merkle tree of transactions)

           III.         time stamp of the block

           IV.         difficulty of task (how many zeros the hash output has to have)