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(PDF) An Analysis of Cryptocurrency, Bitcoin, and the Future

   

Added on  2021-02-19

16 Pages7193 Words205 Views
Table of ContentsTITLE............................................................................................................................................................2INTRODUCTION...........................................................................................................................................2OBJECTIVES..................................................................................................................................................3LITERATURE REVIEW....................................................................................................................................4REFERENCES..............................................................................................................................................14

TITLE“An exploration of the key issues surrounding the acceptance of Cryptocurrency inUK”INTRODUCTIONOverview:This research establishes to explore the degree of acceptance and its related issues inthe UK. With the advent of technology, recent years have observed disruptive innovations inwide variety of sectors such as hospitality, logistics as well as data analytics. It is interestingto note that, in present-day-scenario, only 8 percent of the world's money comprises physicalnotes while majority of the transactions are constituent of digital sources such as credit ordebit cards and payment applications among others. One such concept relates tocryptocurrency. Since time immemorial, every era or dynasty minted their own coins for thepurpose of conducting financial transactions in a manner which could be easily measured. Inrecent years, virtual currency has gained immense prominence and stirred up controversy allaround the world. One can define this virtual currency as a digital asset which is developed tofacilitate the exchange of commodities in return for definite units of cryptocurrencies. One ofits main features is that it is decentralised in nature. Thus, it is not backed by a central bank orfederal authority who has the power to determine the way it would be circulated within aparticular economy. This is a crucial piece of information since the world's cash reserves arevalued based on Gold Standards.Background:Crypto-currency is a digital asset that follows the rules of cryptography to conductfinancial transactions in a secured and highly controlled environment. It includes utilisationof encryption techniques which help in regulation in terms of units generated and fundstransferred from one point to another. One of the key features of this concept is that those aredifficult to counterfeit. With no central authority to regulate its circulation, cryptocurrencyhas proven to be a highly decentralised medium of exchange for its users. These decentralisedsystems are mainly based on a technology known as 'Block-chain' which acts as a ledger forall the transactions that are engaged into by using this currency.Blockchain can be defined as a technology that includes a chain of blocks (Gainsbury,and Blaszczynski, 2017). These blocks are a digital piece of information which detail thedate, time and amount regarding the last transaction that a user is engaged in usingcryptocurrency. Thus, place of transaction as well as one's digital signature is recorded

through this technology. It is important to note that each block contains a unique code knownas 'hash' which enables one to distinguish between two or more blocks.Nowadays, there are many countries where crypto-currency has been accepted andrecognised as a valid source from transactional perspective. In the context of UK, there is nospecific regulation governing crypto-currency trades. However, the government has notawarded this asset the status of valid currency although HMRC (Her Majesty's Revenue andCustoms) has added certain clauses regarding the tax treatment of such virtual assets,specifically relating to the Capital Gains Taxes.Research Aim:“To explore the key issues surrounding the acceptance of crypto currency in UK”OBJECTIVESTo understand the Concept of Crypto-currency and Block-chain.To ascertain main differences between Crypto-currency and existing Banking andRegulations in UK.To explore key issues related to the acceptance of Crypto-currency in UK.To ascertain suitable ways to overcome issues related to Crypto-currency's acceptancein UK.Research Questions:What do the concepts of Crypto-currency and Block-chain entail?What are the main differences between Crypto-currency and existing Banking andRegulations in UK?Why Crypto-currency is not widely accepted in UK?In what ways can issues related to Crypto-currency's acceptance in UK be resolved?

LITERATURE REVIEWLiterature review is one of the important sections of a research project whereby theresearch indulges in to deep research over the research topic and present different views,perceptions, opinions and statement given by different people which precisely includes writerof books, articles and authors. All the reference for the research material is taken from thebooks, journals and articles written by authentic writers and authors who have conductedresearch in this direction. For the present research project, the research has been carried outover the research topic of exploring the key issues surrounding the acceptance of cryptocurrency in UK, which presenting its concept, legal regulation and issues related with itsacceptance by presenting both favouring and contradictory points.I: Understanding the concept of Crypto currencyAccording to Swan (2015), the concept of Blockchain is considered as the 'internet ofindividuals'. With an ever-growing increasing demand of innovative solutions to trivialproblems, the 'internet of things' has become a widespread phenomenon which is expected toexpand to 26 billion devices and $1.9 trillion economy by 2020 (Scott,2016). In order to meetthese needs, a corresponding currency is required to be formulated which is considered toenable its users to manage their financial transactions in a secured and efficient manner. Thisconcept is known as 'Internet of Money' according to (Fanning and Centers, 2016) which isessentially related to the concept of 'Crypto-currency'. Birch (2015) seem to have observedthat the introduction of this digital asset would provide a transition from universal credit to amore value and community-based world of currencies.Iwamura Mitsuru, (2014) assert that there are many differences between the crypto-currency and banking systems when it comes to their mechanisms. One of the maindemarcations between the two is that one is centralised while the other is decentralised.Whereas another important distinguishing feature is the level of volatility recorded among thetwo. While existing currencies, known as 'fiat money', are heavily controlled by centralgovernment, the digital asset is not governed by any such authority. Thus, it records morevolatility in comparison to existing currencies. As a result, it can be said that due to itsinstability, acceptance of such a medium of exchange is quite controversial.Choo (2015) states that due to no legal authority, governing the mechanisms ofCrypto-currency is more prone to illicit activities such as corruption, money laundering,terrorism financing risks. This is possible since there is no evidence of transaction once the

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