The K-Y Protocol: The First Protocol for the Regulation of Crypto Currencies (E.g.-Bitcoin)

Hegadekatti, Kartik and S G, Yatish (2016): The K-Y Protocol: The First Protocol for the Regulation of Crypto Currencies (E.g.-Bitcoin). Published in: Monetary Economics: International Financial Flows, Financial Crises, Regulation & Supervision eJournal , Vol. Vol 1, No. Issue 9 (15 March 2016)

Abstract

Crypto currencies like Bitcoin are gaining prominence as a medium of exchange. They have several benefits like very low transaction cost, fungibility etc. But Crypto currencies are also identified with their use in crimes, illegal activities and speculation. Part of the reason for their prominence as well as notoriety is the fact that they have no Sovereign Backing whatsoever and also because they are decentralized. To make Crypto currencies acceptable by the people and also curb their misuse, the authors have proposed a protocol containing a set of standards and procedures. By using this procedure, any nation can create its own Sovereign Backed crypto currency called NationCoin. A commission will be established which will hold a certain quantum of money loaned by the Government. This loaned money will provide the Sovereign backing to the Crypto Currency. A Controlled Block Chain Protocol is used. The Genesis Block of several NationCoins is then provided to the banks in the country to use them for interbank settlements. These Interbank transactions will lead to the mining (generation) of additional NationCoins by the commission which will hold it without releasing it to the public. Once there are sufficient numbers of NationCoins so as to be equal to the loaned amount unit-for-unit, it shall be released to the public for use.

• Item Type: MPRA Paper
• Language: English
• Keywords: bitcoin, blockchain, cryptocurrency
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; F - International Economics > F3 - International Finance > F33 - International Monetary Arrangements and Institutions; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O38 - Government Policy

References

Bitcoin: A Peer-to-Peer Electronic Cash System-Satoshi Nakamoto