Understanding the Aspects of Trust in Blockchain and Cryptocurrencies

Research output: ThesisDoctoral ThesisCollection of Articles

Abstract

The advent of cryptocurrencies like Bitcoin has revolutionized the financial industry through a peer-to-peer network that allows the transfer of money without involving a financial intermediary. The underlying blockchain technology of cryptocurrencies provides a platform on which parties without any pre-existing trust among each other can conduct transactions without any involvement or mediation by a trusted third party. Traditional financial organizations are governed by centralized authorities, which are not transparent about their operations, while cryptocurrencies operate on a decentralized system with a distributed ledger, which offers an extremely high degree of transparency. Having a centralized authority incurs several costs that the customers of financial organizations need to pay as transaction fee, which is not required in the case of cryptocurrencies. However, cryptocurrencies do come with a serious drawback. Due to the absence of a centralized authority, fraudulent transactions cannot be reverted. Despite this shortcoming, cryptocurrencies are still able to create trust among users. Hence, it is important to understand what technological attributes of cryptocurrencies create trust among the users. Our research findings suggest that the openness and immutability of the ledger are the technological attributes that create trust in cryptocurrencies, which are the features of blockchain. Once I identified the technological attributes of blockchain that create trust in cryptocurrencies, I explored how these attributes of blockchain technology can bring trust in a different domain, the hiring process. The process of verifying the documents of job applicants in the hiring process is time-consuming, costly, and inefficient. I built a prototype using blockchain by which the immutable and distributed ledger helps to accurately verify the documents of job applicants immediately and at a low cost. The research provides valuable insights into how blockchain can be implemented in a business process. Finally, millions of dollars' worth of cryptocurrencies are lost in cyber-attacks on cryptocurrency exchanges every year. Whenever these cyber-attacks happen, customers might lose trust not only in that exchange but also in cryptocurrencies in general. To understand how exchanges rebuild trust, I studied the trust rebuilding measures taken by seven exchanges after cyber-attacks. The research results suggest that compensation is the best technique to rebuild trust while merging with a reputed organization can also be studied as a structural solution to rebuild trust among the customers of the exchange. Overall, this dissertation examines how trust is created, how it is applied, and how it is rebuilt in the domain of blockchain and cryptocurrencies
Translated title of the contributionUnderstanding the Aspects of Trust in Blockchain and Cryptocurrencies
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
Supervisors/Advisors
  • Tuunainen, Virpi, Supervising Professor
  • Rossi, Matti, Thesis Advisor
Publisher
Print ISBNs978-952-64-0497-4
Electronic ISBNs978-952-64-0498-1
Publication statusPublished - 2021
MoE publication typeG5 Doctoral dissertation (article)

Keywords

  • cryptocurrencies
  • bitcoin
  • trust

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