# Managed Blockchain Based Cryptocurrencies with Consensus Enforced Rules and Transparency

## TL;DR

This paper proposes a hybrid managed cryptocurrency system that combines distributed consensus with management capabilities, ensuring transparency and preventing arbitrary actions by the administrator.

## Contribution

It introduces a novel approach to managed cryptocurrencies using consensus methods to enforce rules and transparency, bridging the gap between unmanaged and fully managed systems.

## Key findings

- Enables transparent management in cryptocurrencies
- Modifications to Bitcoin can implement the approach
- Applicable to various blockchain consensus methods

## Abstract

Blockchain based cryptocurrencies are usually unmanaged, distributed, consensus-based systems in which no single entity has control. Managed cryptocurrencies can be implemented using private blockchains but are fundamentally different as the owners have complete control to do arbitrary activity without transparency (since they control the mining). In this work we explore a hybrid approach where a managed cryptocurrency is maintained through distributed consensus based methods. The currency administrator can perform ongoing management functions while the consensus methods enforce the rules of the cryptocurrency and provide transparency for all management actions. This enables the introduction of money management features common in fiat currencies but where the managing entity cannot perform arbitrary actions and transparency is enforced. We thus eliminate the need for users to trust the currency administrator but also to enable the administrator to manage the cryptocurrency. We demonstrate how to implement our approach through modest modifications to the implicit Bitcoin specification, however, our approach can be applied to most any blockchain based cryptocurrency using a variety of consensus methods.