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Digital phenomena pose unique challenges to social science researchers investigating the impact of new and changing technologies. In part, this challenge derives from the constantly evolving practices, actants, and geographies enrolled in the digital. When these phenomena are coupled with over-the-top expectations and media hype, initial impressions often mask the complicated and nuanced ways new technologies are put to use. Blockchain (and its original application Bitcoin) represent one of these new, unstable digital phenomena that simultaneously captures public imagination and generates powerful discourses of disruption and change. One way of clarifying the messiness of technologies like blockchain is to ground its practices within the materiality of geography. The DIGO framework proposed in this article uses four broad categories—discourses (measured via Twitter), infrastructures (indicated by Bitcoin mining), groupings (based on firms and exchanges), and outcomes (measured by initial coin offerings)—located in geographic space. Each category is meant to provide insight on blockchain as it unfolds across space and scale. The same framework can guide research on other digital phenomena, based on appropriate measures for each of the four DIGO foci. © 2021 Canadian Association of Geographers / L'Association canadienne des géographes
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More than 1000 distributed ledger technology (DLT) systems raising $600 billion in investment in 2016 feature the unprecedented and disruptive potential of blockchain technology. A systematic and data-driven analysis, comparison and rigorous evaluation of the different design choices of distributed ledgers and their implications is a challenge. The rapidly evolving nature of the blockchain landscape hinders reaching a common understanding of the techno-socio-economic design space of distributed ledgers and the cryptoeconomies they support. To fill this gap, this paper makes the following contributions: (i) A conceptual architecture of DLT systems with which (ii) a taxonomy is designed and (iii) a rigorous classification of DLT systems is made using real-world data and wisdom of the crowd. (iv) A DLT design guideline is the end result of applying machine learning methodologies on the classification data. Compared to related work and as defined in earlier taxonomy theory, the proposed taxonomy is highly comprehensive, robust, explanatory and extensible. The findings of this paper can provide new insights and better understanding of the key design choices evolving the modeling complexity of DLT systems, while identifying opportunities for new research contributions and business innovation. Supplementary information: The online version contains supplementary material available at 10.1007/s10586-021-03256-w.
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We discuss how quantum computation can be applied to financial problems, providing an overview of current approaches and potential prospects. We review quantum optimization algorithms, and expose how quantum annealers can be used to optimize portfolios, find arbitrage opportunities, and perform credit scoring. We also discuss deep-learning in finance, and suggestions to improve these methods through quantum machine learning. Finally, we consider quantum amplitude estimation, and how it can result in a quantum speed-up for Monte Carlo sampling. This has direct applications to many current financial methods, including pricing of derivatives and risk analysis. Perspectives are also discussed.
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Banking and financial services have traditionally been a heavily regulated industry where technology alone has not been a sufficient factor to transform the operating architectures of the industry. The pervasive view in the financial industry has been that digitaliza-tion and its integrational development will take place on the platforms of the banks. Due to the inherent secondary nature of financial services , however, it is more likely that the customer interface of financial services will increasingly migrate towards primary service platforms. As a result, the commoditization of payment processing services is expected to increase. Additionally, the visibility into customer data will become more opaque and the value capturing capabilities of the financial industry will be radically redefined. Furthermore, a strategic impact can also be anticipated on several public institutions , such as financial supervisory authorities, the tax administration and other public registry holders.
Conference Paper
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The growing usage of tokens in real-world blockchain projects-mostly visible in ICOs-has unveiled the need to understand what blockchain tokens in fact represent and how they relate to their underlying business model. Previous research has contributed to this gap but often lacks a comprehensive understanding of tokens and their design as well as of the growing and rapidly-changing complexity in token landscape. This has crucial implications for assessing tokens' value and utility. Applying a structured, scientific approach towards blockchain tokens, we provide a comprehensive token classification and a decision-aid on token design. This is based on a literature review and an empirical study to cover this research gap. Our work offers a novel contribution in an emerging field within the Blockchain research domain and proposes structured analytical tools which can be used by both practitioners and researchers.
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We investigate the economic and technological determinants inducing entrepreneurs to establish ventures with the purpose of reinventing financial technology (fintech). We find that countries witness more fintech startup formations when the economy is well-developed and venture capital is readily available. Furthermore, the number of secure Internet servers, mobile telephone subscriptions, and the available labor force has a positive impact on the development of this new market segment. Finally, the more difficult it is for companies to access loans, the higher is the number of fintech startups in a country. Overall, the evidence suggests that fintech startup formation need not be left to chance, but active policies can influence the emergence of this new sector.
Article
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Purpose This paper demonstrates the importance of a cash flow generating standard for individual financial contract level data and the ability to create such a standard. Design/methodology/approach We analyze the importance for such a standard of 1) software that turns natural language contracts into cash flow generating algorithms; 2) a data dictionary that standardizes contract terms; and 3) access to variables that represent the state of the world (e.g. market risk, counterparty risk, etc.) that affect contractual obligations. Findings The ability to realize benefits from the use of such a contract level algorithmic standard depends on: 1) making the standard's software open source; 2) fully testing the software in order to have complete confidence in its accuracy; and, 3) enabling the software to use of a wide range of models of various sources of risk (market, credit, and behavior risk) to support forward-looking analysis. Such a standard would solve the disconnect that exists in financial firms between the representation of financial contracts for transaction processing and analysis. The ACTUS Financial Research Foundation is building, testing, and making available such a standard that represents almost all financial contracts extant in markets. Practical implications The adoption of such a standard would: reduce the costs of operations of financial firms; provide the computational infrastructure for more effective regulatory oversight; reduce regulatory reporting costs; and improve financial market transparency. It would also enable the assessment of systemic risk by directly quantifying the interconnectedness of firms. Originality/value This is a new approach to financial analytics that clearly separates the deterministic components of finance that can be standardized from the stochastic elements that cannot be standardized.
Conference Paper
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The balanced scorecard (BSC) initially developed by R. Kaplan and D. Norton (1996), is a performance management system that enables businesses to drive strategies based on measurement and follow-up. In recent years, the BSC has been applied to information technology (IT). The IT BSC is becoming a popular tool with its concepts widely dispersed by international consultant groups such as Gartner Group, Renaissance Systems, Nolan Norton Institute, and others. As a result of this interest, the first real-life applications are starting to emerge. The development and implementation of an IT BSC within an Information Services Division (ISD) serving a Canadian financial group is described and discussed. On the basis of this case study, a maturity model for the IT BSC is introduced and the necessary linkage between the business and IT scorecard is clarified.
Article
Given the rapid emergence of FinTechs, the objective of this paper is to determine location-specific factors associated with FinTech establishment intensity using Porter’s diamond framework. The analysis is based on a country-level dataset covering the period of 2007–2017 and 107 countries. The results reveal that greater FinTech establishment intensity characterizes smaller countries, countries with stronger information and communications technology (ICT) services clusters, and countries that have experienced a crisis during the recent decade. Greater FinTech establishment intensity is also observed in countries with greater tertiary education enrolment rates, stronger university-industry cooperation, greater fixed line availability, and overall ICT readiness. The macroeconomic situation and indicators of financial development prove to be important determinants of FinTech formation. Given the importance of several dimensions of location’s diamond in FinTech formation, FinTech entrepreneurs could benefit from a careful analysis of the diamond of locations that they are considering as potential places of doing business. Countries hoping to become more attractive FinTech establishment sites, in turn, should focus on the elimination of weaknesses in the location’s diamond in close co-operation with FinTechs.
Article
Startup valuation in the venture capital (VC) context is often said to be more art than science. In view of this, it is particularly important to be aware of and understand the different underlying determinants that affect the valuation of startups. This paper conducts a systematic review of the existing empirical literature to illustrate the determinants of startup valuations in the VC context. Beyond that, the paper seeks to provide an organizing structure to the current literature as well as to detect academic voids and directions for future research. To achieve these goals, it develops an integrative framework for the factors determining startup valuations in the VC environment, which should be of use to both practitioners and researchers. That framework illustrates how startup valuations in the VC context are shaped by a three-sided interplay of factors related to startups, venture capitalists, and the external environment.
Article
Young companies are difficult to value for a number of reasons. Some are start-up and idea businesses, with little or no revenues and operating losses. Even those young companies that are profitable have short histories and most young firms are dependent upon private capital, initially owner savings and venture capital and private equity later on. As a result, many of the standard techniques we use to estimate cash flows, growth rates and discount rates either do not work or yield unrealistic numbers. In addition, the fact that most young companies do not survive has to be considered somewhere in the valuation. In this paper, we examine how best to value young companies. We use a combination of data on more mature companies in the business and the company’s own characteristics to forecast revenues, earnings and cash flows. We also establish processes for estimating discount rates for private capital and for adjusting the value today for the possibility of failure. In the process, we argue that the venture capital approach to valuation that is widely used now is flawed and should be replaced.
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