Bitcoin as a Real Money: A Statistical Approach

This research study aims to develop a broad understanding of Bitcoin and explore trends related to cryptocurrency. It covers topics such as the relationship between Bitcoin and USD, the number of cryptocurrencies introduced, trends in Bitcoin transactions, the relationship between Bitcoin price and vendors, and the impact of inflation on Bitcoin price. The study also discusses the rationale and significance of the research.

Bitcoin AS A REAL MONEY: A
STATISTICAL APPROACH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1.1 ...............................................................................................................................................3
1.2 Research aims and objectives................................................................................................4
1.3 Rationale of study..................................................................................................................5
1.4 SignificenceSignificance of research study...........................................................................6
StrcutureStructure of report.........................................................................................................7
CHAPTER 2: LITERATURE REVIEW.........................................................................................9
List of cyptocurrencies introduced............................................................................................10
To identify trends in number of transaction of Bitcoin which will reflect number of mining
firms increase or decrease across the globe...............................................................................14
Relationship between price of bitcoin and vendors...................................................................17
Inflation and bitcoin price..........................................................................................................18
REFERENCES..............................................................................................................................21

INTRODUCTION
1.1 Background of study
Technology is evolving at a rapid pace across the globe. In past few years, a lot of work
is done on the development of technology. Bitcoin is one of the electronic currency that is used
at a wide scale across the globe. Before going in to deep research on Bitcon, it is necessary to
develop broad understanding about it. Under this electronic mode of payment, online currency
is issued that remain in our account. The business firm makes online payments and currency is
not related to specific government or central bank. Under electronic mode of payment that is
done through Bitcoin, there are some entities like miners (Simser, 2015). These entities enter in
to network and try to develop block of Bitcoin. In this regard, they need to perform a tough job.
They need to develop hash below threshold limit that is commonly determined for all miners that
are operating in the network of Bitcoin. When hash value is less than threshold value, one can
successfully build a block and add it to the block chain. Block refers to the vector, which
contains list of the current transactions that are done by people through Bitcoin.
Miners verify the transactions that are covered in block and in return, Bitcoin receive Bit
coin’s and transaction fee, which is their income. This is the entire process that is going on while
transactions take place through Bitcoin. Like bank account, each holder of Bitcoin has some
unique number that is encrypted and linked to specific algorithm (Reynolds and Angela, Irwin.,
2017). Algorithms are set of instructions that execute specific thing on the execution of
command. When anyone enters key with respect to account through algorithm, verification is
done and it is ensured that data will remain safe and no one would steal it easily. Thus, it can be
said that payment through Bitcoin is safe. In the current report, different aspects Bitcoin of
Bitcoin are covered. Along with that, detailed analysis of importance and relevance of Bitcoin as
a payment method is done. Apart from this, application of Bitcoin technology is analysed in
terms of its use that is done by the people and number of countries, which are Bitcoin accepting
Bitcoin for making and receiving payment. Apart from this, in the report, it will be identified
that whether regulation related to Bitcoin is developed or not. It can be said that scope of present
research study is wide in nature and in future, many new things can be observed with respect to
Bitocoin (Ram, Maroun and Garnett, 2016).
Inflation is the factor that largely affects the nation and economic growth as well as
currency exchange rate. Thus, in the research, an attempt will be made to identify the impact that
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inflation rate has on Bitcoin. USD also affects the currency value and in the present study,
relationship Bitcoin between Bitcoin value and currency will be identified. It can be said that
there is significant importance of Bitcoin. Bitcoin for the business firms. Many things can be
covered in research about Bitcoin. With passage of time, use of Bitcoin. Bitcoin is increasing
across the nations. Now, more and more vendors are accepting payments in the mentioned
currency. Due to this reason, demand for same increased in the market. It can be said that time
will come when more payments will be made and accepted in Bitcoin in the market. With
passage of time, it is very important that number of dealers that execute trade related to Bitcoin
must be increased. This is because; when more will be the dealers, less will be control of it on
the network, which is very important in current scenario. This will prove to be good for Bitcoin
across the globe.
1.2 Research aim and objectives
Aim: To develop a broad understanding of Bitcoin and exploring trends related to crypto
currency.
Objectives:
 To identify relationship between Bitcoin and USD
 To identify number of crypto currency introduced
 To identify trends in that prevailed in respect to number of transactions of Bitcoin which
will reflect number of mining firms increase or decrease across the globe
 To identify relationship between price of Bitcoin and number of vendors To identify relationship between inflation and price of Bitcoin
Research questions
 What is the relationship between Bitcoin and USD?
 What is the rate at which crypto currency is issued in the market?
 What are the trends in market with respect to Bitcoin?
 What is the relationship between price of Bitcoin and number of vendors?
 What is the relationship between inflation and price of Bitcoin?
l 1.3 Rationale of study
It is important to identify the reasons due to which research study is carried out in the
specific domain. As this reflect the importance of present research study, it was important to
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perform the current research study as Bitcon is in market for more than 5 years but today also,
Bitcoin is not a popular medium for making a payment. Transaction cost is low and instant
payment happened is case of mentioned virtual currency while doing transactions then also
Bitcoin does not achieve a huge success (S.M. Irwin. and Milad, 2016). Thus, it is very
important identify and evaluate Bitcoin on number of factors. This will reflect the reasons due to
which Bitcoin achieve success of failure in the market. There are many positive sides of the
Bitcoin as a currency. Like a single currency is accepted across the nations.
Thus, one does not need to care or concern about exchange rates in the market. Thus, it
was important to conduct present research study as by doing so, different aspects that are related
to Bitcoin can be covered easily add deep analysis of same can be done in a systematic manner.
Thus, it can be said that there is significant importance of the present research study for varied
entities. In current scenario, while doing trade with any nation, companies have to consider the
exchange rate. Fluctuation in these rates significantly affects the profit that firms earned in their
business. Bitcoin is the currency whose value is increasing rapidly and due to this reason, firms
are increasingly making use of mentioned electronic currency in their business.
l 1.4 Significance of research study
There is huge significance of the present research study as it covers varied aspects of
Bitcoin. In the current research study, importance of Bitcoin will be discussed in detail along
with discussing different areas where Bitcoin benefits the firm. Thus, it can be said that scope of
the present study is wide and many things can be done with making use of Bitcoin as a mode of
payment. In this research, number of people and countries that are covered will be studied in
detail. This will show the extent to which Bitcoin is preferred by the people and business firms.
Bitcoin is one of the important currencies that can be used by business firms to perform business
transactions across the globe. Thus, it is highly important to identify that after having such a
strong positive points what are the reasons due to which still at global level Bitcoin is not
accepted by the firms. Government can impose some of the important rules and regulations as
well.
This research study will help readers in understanding the extent to which government
intervene on use of Bitcoin in Malaysia by imposing strict rules and regulations. This reflects
that there is high importance of the present research study for individuals. Inflation is another
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factor that indirectly affects the currency value. Increase or decrease in currency value heavily
affects the usage of specific currency in nation or across globe. Present research study is
focusing on identifying whether inflation rate has any impact on Bitcoin. This reflects that there
is significance of study as it helps one in understanding whether there is any impact of inflation
on Bitcoin value or not. If there is any impact then to what extent it leads to up and down in the
Bitcoin value. Finally, in the research study, relationship will identified between USD and
Bitcoin. Usually, in case of paper currency, every nation’s currency’s value is compared with
USD as well as strengths and weaknesses are identified. Accordingly, the firm exchanges
payments.l It can be said that like issues are observed in pear currency same are evaluated in
respect to electronic currency. This reflects that at vast level relationship is identified among
variables. Structure of report
 Introduction: In order to prepare dissertation in a systematic manner, first introduction part is
prepared and in this, detailed discussion is carried out on Bitcoin along with its advantages and
issues that can be associated with it (DeWaal and Dempsey, 2015). In this section of report,
rationale and significance of research is explain briefly. It can be assumed that there is huge
importance of the present research study for researchers.
 Literature review: This is the second part and one of the important sections of present research
study. At this stage, literature of different scholars is review in detail and positive and negative
points that they speak with respect to research objectives are explained.
 Research methodology: It is another important segment of the current research study. Research
methodology section reflects the approach that is followed to conduct the present research study.
There are number of sub parts of the research methodology section, which will cover approach
which will be followed for carrying out research study. In this section of report research
philosophy, ethics and limitations of study will also be included. It can be said that there is huge
significance of this part of research as it shows whether research is carried out in a legitimate
way by the researcher or not.
 Data analysis section: In this part of the research report, data is analysed through using relevant
tools like thematic analysis and SPSS. Based on analysis of results, it is find out that in what
specific direction research variable move like customers are satisfied from the firm etc. In many
researches on collected data, SPSS is also used for analysis purpose. The tool reflects
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relationship among variables. It can be assumed that SPSS is one of the most important tools that
is used for analysis purpose by researchers.
 Conclusion and recommendations: Finally, after preparation of data analysis section,
conclusion and recommendations are given in the report. In this, results obtained on analysis are
taken in account to reach at the conclusion and provide recommendations accordingly. It can be
said that in this section of the report, overall conclusion of research study is described in detail.
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 CHAPTER 2: LITERATURE REVIEW
To identify relationship between Bitcoin and USD
According to Bonneau and Narayanan, (2016) there is a strong relationship between
different currencies like USA and Pounds. With change in single currency, automatic change
takes place in other one. It may be seen that there are number of factors like economy of nation
and interest rates that have their impact on a currency. It can be observed that there is a strong
relationship between Bitcoin and USD. With change in USD, variation is observed in Bitcoin.
Mentioned electronic currency is treated as safe heaven by the USA investors. It is very
important to understand the meaning of “safe heaven”. Safe heaven reflects the area where
money invested by investor is safe and value of currency will not be detoriate. In some of the
nations like Cyprus, it is find out that there is interconnection between Bitcoin and domestic
currency. This is because; when crisis occur in this nation, more people become concerned about
the currency. Hence, they store amount in form of Bitcoin. This raises the demand of currency in
mentioned nation. It can be said that difficulties in currency have a huge impact on Bitcoin. In
the past few years, demand of Bitcoin increased at a rapid rate.
Contrary to this, Eyal and Van Renesse, (2016) state that there is no relationship between
electronic currency i.e. Bitcoin and value of USD. It is due to the reason that USD is used at a
large level in order to purchase and sale items in the international market. Whereas, Bitcoin is
the newly launched currency in market and is not used at vast level to make purchase and sale of
items. Bitcoin is employed at a small scale relative to USD and thus, it cannot be said that there
is any kind of relationship between both currencies. People at a large scale no longer use virtual
money. Hence, there is no relationship between Bitcoin and USD. It can be observed that
mentioned same that is operated by other nations of the world affect currency of USA. Thus, it
can be assessed that vicissitudes in those currencies lead to serious changes in the value of USD
in international market in relation to domestic currency. Such things cannot take place with
Bitcoin, as it is not used at a large scale like USD, GBP, EURO or INR. Hence, it can be
assumed that there is no interrelationship between USD and Bitcoin.
According to Scaillet and Trevisan, (2017) there is high relationship between USD and
Bitcoin as interest rate interlinks both with each other. It can be observed that when interest rate
is increased, it is the symbol of strong economic growth. With increase in interest rate, USD
value is increased. In opposite to this, if in any case interest rate is decline, it acts as symbol of
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slowdown in nation’s economy. All these things lead to decline in export of the nation and due
to this reason, currency value reduced sharply. Interesting fact is that due to all these things,
those who make investment in stock market and other risky assets face heavy loss on investment.
Thus, in order to ensure safety of investment amount, people start buying Bitcoins and due to
sudden increase in demand of the product, price of Bitcoin it increased at a rapid rate relative to
USD. Thus, it can be said that there is high but negative correlation between both currencies.
Usually, when stock price declined, USA investor’s sale mentioned security in the market and
invest received amount on gold. This common behaviour is observed in case of USA market.
Same thing is also observed in case of Bitcoin as investors when then think that they can observe
loss on stocks make invest in Bitcoin. It can be said that there is high degree of negative
correlation between USD and Bitcoin.
List of cyptocurrencies introduced
As per views of Narayanan and Goldfeder, (2016) number of crypto currencies increase
with passage of time period. In the FY 2009, Bitcoin was the first currency that was introduced
and after that many new currencies that are digital were launched. This reflects that demand of
crypto currencies are increasing at rapid pace as it can be observed that with passage of time
usage of the virtual currency increased at rapid pace across the globe. Moreover, demand of
currency is increasing at rapid rate. It can be said that there is huge importance of the electronic
currency for the people. It can be observed that in the FY 2014 2 new crypto currencies were
launched namely Dash and Digital note. Whereas, in FY 2015 again two electronic currencies
comes in the market which are Ethereal and Etheric classic. It can be assume that with increasing
in use of crypto currency new one are launches in the market. This is clearly reflecting that with
passage of time transactions through Bitcoin increased at rapid rate.
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It can be seen from the chart given above that number of total merchants accepting Bitcoin
increasing at fast rate. In line graph number of total merchants enhanced. In the April 2014, it
was 40,000 and same increased to July 2014 to 65000 which means that plunge of 2500 comes
in the overall number of merchants that are accepting Bitcoin as currency. In the April 2015, this
number increased to 9000 from the value that is observed in case of July 2014. This means that
from July 2014 to April 2015 total merchants increased by 35000. All these things are clearly
communicating that two-fold increase happened in number of total merchants accepting
transactions from Bitcoin. These figures are sufficient to assume that at fast rate more and more
shops.
Contrary to this Tschorsch and Scheuermann, (2016) state that it is true that in past
couple of years demand of crypto currencies increased at fast rate due to wide acceptance of
Bitcoin by the retailers and business firms. However, this does not mean that all crypto
currencies will be successfully operated in the market. It can be observed that there are some of
similar currencies that are failed in the market and today are inactive. For example, Connie was
launched in the FY 2014 but become inactive, as today there is no demand of mentioned
electronic currency in the market. It can be said that those make investment in mentioned
electronic currency face heavy loss in it. This is because one who buys Coniye is not getting any
buyer. Hence, there is heavy risk in making investment in any crypto currency. This is the reason
due to which in future demand of virtual currency will not increase at fast rate in the market.
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According to Morgan, (2016) there are number of factors that lead to acceptance of
Bitcoin across the globe. One of them is that people now become more habitual of doing trading
in the digital currency. Means that in today time one can make online payment and can buy
anything. In this regard, bank accounts are used to make payment. It can be observed that
Bitcoin is completely online currency that cannot be touched physically by human being. More
and more people are currently purchasing Bitcoin because in the current time period price of
paper currencies are fluctuating and declining at rapid pace. In order to manage loss in value of
currency people are using Bitcoin whose value is increasing consistently. Due to rise in price of
currency more and more people are using it as weapon to use against inflation. Thus, in
comparison to previous time period in order protect self from inflation more and more people
purchase Bitcoin and use same to purchase products in the international market. It can be said
that this is the reason due to which large number of people are taking interest in Bitcoin and
using it to make online payment for purchasing product. With passage of time same trend may
be observed consistently because economy are operating in uncertain environment and it became
difficult to make accurate decisions in respecting to hedging positions that are open in the
market. Investment in the Bitcoin is the only way that is available to the people to handle such
kind of situations.
Opposite to this Ali and Hao, (2016) state that Bitcoin will never be surpass the usage of
current currencies in the domestic and international market. This is because people are more
familiar with usage of USD and other currencies not Bitcoin. Moreover, nation’s governments
do not give any recognition to the Bitcoin. Due to this reason, there will be limited use of
Bitcoin in the market. Due to non-recognition of Bitcoin as legal tender, it will no longer used
widely as method of making payment. If contrast to this happened then in that case also demand
of Bitcoin will remain low in the market. It can be said that in the upcoming period Bitcoin
usage will not increase at rapid pace in the market. There is common assumption among the
people that investment in Bitcoin will provide then safety against market. This is true that when
all instruments of market failed to give good return on investment people resort to Bitcoin.
However, it is not considered as currency in most of nations of the world. Due to the reason even
one accumulate huge benefit of mentioned currency cannot be derived because same is not used
at rapid pace by the general public.
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As per views of Wiseman (2016) number of transactions in Bitocin may increase at rapid
pace because some of the nations like Japan are accepting Bitcoin as legal tender. Gradually, it is
possible that other nations of the world start accepting Bitcoin as money. If same will happened
then in that case value of Bitcoin will increase at rapid pace in the market. In such kind of
situation, demand of Bitcoin will further increase and more it will be used to make online
payment and purchasing products to meet needs. It can be said slowly acceptance of Bitcoin by
most of nations of the world it become legal tender across the globe and due to this reason
assumption that there is not much importance of Bitcoin is wrong.
To identify trends in number of transaction of Bitcoin which will reflect number of mining firms
increase or decrease across the globe
According to Brière, Oosterlinck and Szafarz, (2015) with passage of duration number of
transactions in Bitcoin increased at rapid rate. It can be observed that from FY 2012 number of
these transactions is increasing at fast pace and until 2014 this trend skyrocketed. Growth rate in
number of transactions increased at fast rate from FY 2014 to FY 2017. This clearly reflects that
with passage of time period number of Bitcoin transactions are increasing at rapid pace. This
reflects that business firms as one of the important mode of payment accept more and more
currency. This reflects that miners are also increasing in respect to Bitcoin. This is because
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transactions are increasing which means Bitcoin is increasing at rapid pace. Bitcoin increased
when number of miners elevate at rapid rate. So it can be said that over the past couple of years
number of Bitcoin miners increase at rapid pace. It can be said that in the upcoming time also
demand for Bitcoin will increase which will lead to strong increase in number of transactions. In
current time, period numbers of miners that through hashing at Bitcoin block chain are
generating Bitcoin are 5000 in number. A common term node is used in the block chain
technology. Node refers to computer that connects to the Bitcoin network. These nodes run the
original Bitcoin core wallet and develop strong foundation for network. Nodes about which
discussion is carried above assist entire network by accepting transactions and blokes from other
nodes. It must be noted that blocks refers to the group of transactions that individuals intends to
do in Bitcoin currency.
Figure estimated number of Bitcoin miners
Chart that is given above is clearly reflecting that number of Bitcoin miners is increase
rapidly after FY 2013. It can be seen that number of Bitocin miners increased from around
20000 to 90000. However, thereafter fluctuation is observed in estimated number of Bitcoin
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miners but same is increasing at same rate over the years. It can be said that because number of
transactions on Bitcoin increased at rapid pace miners number will also elevate at fast rate. There
are number of nations that are starting accepting Bitcoin in the country like Japan. Due to this
reason, it is expected that in the upcoming period also demand for Bitcoin will increase in the
upcoming time. There are number of benefits of using Bitcoin for the people and due to this
reason over the past few years use of mentioned currency increased at fast rate and number of
Bitcoin generators also increased. It is expected that in upcoming time also same trend will
continue to exist.
As per views of Vasek, Thornton and Moore, (2014) if data from January 2016 to
October 2016 is analysed then it can be observed that from December 2016 number of miners
increase at fast rate to month of March 2016. In the chart that is given below, it can be said that
there is shaded line
Which is reflecting confidence interval at 95% level the shaded lines that are above and
below grey line is reflecting upper and lower limit or range within which value of variable lie. It
can be observed that value at 95% confidence interval is increasing at rapid pace, which means
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that value of confidence that there is 95% probability that value or number of miners will
increase at specific rate.
Relationship between price of Bitcoin and vendors
As per views of Piotrowska, (2016) vendors in the foreign market will make investments
in various securities to earn profit in short run. There are various market securities available for
the vendors in the foreign market to invest their amount of money. The Bitcoin is type of
currency under which the vendors are taking interests in today's market. There are many
countries like Japan and china are taking interest to regulate their investment in foreign market.
In this, we have done an analysis of the relationship between the price of Bitcoin and the number
of the companies or vendors who are accepting the Bitcoin. A continuous growth in the
technology has increased the role of transferring the digital funds between the countries as well
as the companies who have trade relation with each other. We have the discussed the relationship
as above. The currency Bitcoin has a relationship with vendors because its demand in the market
will depend upon the numbers of vendors who are accepting as a mode of payment for purchase
and sale of goods and services.
According to this Samtani and Baliga, (2015) there is a perfect relationship between the
fluctuation in the price of Bitcoin as per the increase and decrease in the number of acceptance
by the companies. The companies in the international market are now taking it as mode of digital
payment against the goods purchased or sold in the market. It has been considered that value of
Bitcoin will increase if there will be an increase in its acceptance by the number of investors or
vendors and its value or price will decrease if there is a decrease in number of acceptance by the
stores and its price is continuously taking a growth in the foreign market. It based on a
distributed register, which is known as block chain. It provides an ease in mode of accepting the
payment from the large retail stores whom they sell their products. In order to maintain the
supply of goods and services the stores have accepted it widely. Its sale in the market will
diminish its prices in exchange of the other currencies in the market place. On the contrary,
according to, it has also given an impact on the value of other currencies in the foreign market. It
has created a confusion the suppliers to accept it or not because all the stores in the countries are
not accepting the Bitcoin as mode of exchange of goods and services. After increase in its
popularity and widely gained the attention of the public.
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Contrary to this Kumaresan and Bentov, (2014) state that there is not any big relationship
between Bitcoin price and number of vendors. This means that if vendors will increase then it
does not necessarily mean that price of mentioned currency would elevate. This is because it is
not necessary that number of vendors accepting Bitcoin will increase then more and more people
will start purchasing products and services by using mentioned currency. Currently, also virtual
currency does not accepted by most of nations of the world and due to this reason even vendors
accepting Bitcoin it is not necessary that price of it will increase at fast rate.
Inflation and Bitcoin price
According to Gandal and Halaburda, (2016) Bitcoin is an electronic currency, which is
used for exchange of goods and services. Inflation is a financial term in which price of various
commodities rises and currency loses its purchasing power. It varies from country to country to
determine the financial condition of different nation. Bitcoin is affected by two factors that is
price inflation and price deflation: Price Inflation it defines that when price of goods and
services decreases, the price of Bitcoin increases. It means when value of goods and services
increases, the value of Bitcoin decreases. The value of electronic currency decreases when its
supply in the market increases. It means the value of digital currency increases, the supply of
Bitcoin decreases. It shows there is inverse relation between Bitcoin and inflation and deflation.
The price of Bitcoin fluctuates according to the exchange rates and market price, which is
decided by purchaser, consumer and traders. These parties directly trade this currency with all
other types of currency. Value of goods and services reflective of exchange rates because and the
Bitcoin manufacturing rate due to mining.
If Bitcoin were accepted as global reserve currency then it would create an environment
that assist to face inflation and provide a neutral amount of fall in the value of goods and
services. Further sufficient supply of Bitcoin to move the people ahead as fast as the tradition
system does cope with rising price of goods and services. The program sets supply of Bitcoin
and demand is a function of speculation in today’s time. Increase in price enhances more release
of this currency. Similarly, the money supply along with Bitcoin is developed to increase its
value. The money supply grows by allowing the value of goods and services decrease to fit the
amount of this electronic currency, this motivates saving. At the same time, saving increases the
cost of digital currency. Bitcoin is developed as world's primary currency, at the time of
contingency like bank robberies. The economy of developing country feels deep impact from
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Bitcoin. As it provides more benefits, it depends on their political geography. People living in
high inflation country with sufficient interest access as most of the person seek refuge in `Bitcon.
It increase purchasing power as it has short term fluctuations and the latest medium of exchange
against the liquidity, bank closure, government related policies. It increases purchasing power
for decentralised currency and its worldwide user. It is equivalent to gold.
As per views of Ong and et.al., (2015) it is also view as either currency or
commodity , its purchasing power explain gold price in BTC. Inflation is a characteristic of
currency along with increase in supply and decrease in demand. Digital money is not accepted as
legal tender in any nation. Bitcoin assist to deal with inflation, as it cannot be produced, but its
value go down which means it fluctuates. Bitcoin will replace currency of a nation and provides
various benefits to not only citizen but also government to cope with rise in price. Increase in
inflation very serious issue because it slowly decreases the value of people's earnings. The world
of physical currency views straight, provide monetary policies to those people who keeps
standard and stable way of exchange. Most of irregularity arises in the money supply is due to
lending by banks, so Bitcoin helps to cope with this situation. In Bitcoin, software can be audited
any time creates transparency in monetary policies of any nation. So it is required to adopt at
large scale. This digital currency has abundant in supply and have ability to become secure from
long-term inflation. High-rise in price can be sum up with internet a facility that leads to use
Bitcoin on large scale. Bitcoin is deflationary in nature there are various circumstances where
demand is more than supply and miners cannot mine Bitcoin on a large scale, as a result, there is
rise in price. It is not deflationary in some of the circumstances like high unemployabilty,
increase in production, decrease in the supply of currency, heavy tax and public debt etc. These
factors affect the valuation of digital currency. At present there are Bitcoin that will be required
to mine as a result supply is increasing. These factors have neutral effect on the price of Bitcoin
as in the case of any currency of a nation. If government is raising tax then it will not have any
effect on Digital currency. Bitcoin have exchange rate with all the physical currency and other
digital currency, which is not yet issued. The market will determine the value of Bitcoin. As it,
changes in price in relation to other currency then decimalization will be the sole solution for
changes in the price of goods and services. However, that price will move up and down in
accordance with all the supply and demand forces those market places on commodities. Price
changes in the Bitcoin on the Bitcoin exchange is affected by various factors. Bitcoin fluctuation
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is driven in large part by different perception about its intrinsic value of digital currency as store
of value method of value transfer. Store value means an asset can be useful in future with some
expectation.
Contrary to this Johnson and et.al., (2014) state that there is little relationship between
price of Bitcoin and inflation rate because inflation rate does not change at fast pace in nations of
the world. If comparison will be made between price of Bitcoin and inflation rate then it can be
observed that former increase at fast rate then latter one. Hence, it can be said that there is little
or no relevance between inflation rate and price of Bitcoin. Thus, it is clear that apart from
inflation there are some few major factors that have huge impact on the price of Bitcoin. It is
observed that demand of Bitcoin is the one of the main factor that have heavy influence on price
of mentioned virtual currency because increase in demand reflect that more and more people are
interested in mentioned currency then in that case more units are issued in the market and this
lead to increase in price of Bitcoin in the market. Thus, it can be said that price of Bitcoin and
inflation rate does not have any big relation.
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RESEARCH METHODOLOGY
Research introduction
Bitcoin is the one of the main virtual currency that in the current time is used for making
payments or for purchasing products and services in the market. Gradually, vendors accept
currency and its value increased consistently. There are number of factors that lead to increase or
decreases in value of currency and in the current report, varied factors that have significant
impact on value of currency are identified. An attempt is made to explore relationship between
value of currency and factors like inflation and increase in rate at which vendors are accepting
Bitcoin. In this regard in the report detail literature review is done and in this segment of report
relationship of all these variables with value of currency is explored (Marshall, Altman and
Holder, 2010). Apart from this, research methodology section is also prepared in the report. Data
analysis will be done by using thematic analysis method. Further, discussion and conclusion
section will be prepared and in this way, entire research work will be carried out. Over the past
couple of years, use of Bitcoin increased in the market at fast rate and due to this reason it was
important to identify the factors that contribute to success of the mentioned currency in the
market even there are very few nations that are accepting Bitcoin as legal tender. Thus, it can be
said that present research study will reveal many things in respect to currency to readers.
Research design
There are varied sort of research design methods that are used in the research studies.
Research design methods can be classified in to different categories namely exploratory,
descriptive and experimental research design. All these methods of research design are different
from each other in terms of their applicability and tools that can be used in research by
researcher. Exploratory research design is the one of the commonly used approach that is used in
research studies because this research design help firms in understanding things from starting
point. Mentioned research design help researcher in understand research topic from start. Apart
from discussed research design there is another approach, which is known as descriptive research
design (Nagai, Taura and Sano, 2011). Under this research design, one knows something about
research subject but wants to increase deep understanding about it. It can be said that both these
research designs are different from each other. Along with this, other research design that is used
in research, studies are experimental research design. Mentioned one is used in the researches
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that are scientific in nature and are related to research projects. In present research study, focus
must be on exploratory research design. This is because in the research study above literature
review is done and further collected data will be analysed deeply. In this way, entire research
work will be done. Thus, it can be assumed that descriptive research design will be better for
research study.
Research approach
Approach refers to the specific method that is used in the present research study for
doing in depth analysis of research subject. There are two sort of research approaches namely
inductive and deductive. Use of any of these approaches depends on the subject on which one is
carrying out its research. There is huge gap between both sort of research approaches, which are
inductive, as well as deductive (Megha. and Rajiv, 2013). One needs to understand requirements
of research subject because by understanding same in better manner appropriate type of research
approach can be selected. Inductive research approach is used when one wants to formulate
theory based on analysis of data. Under present research study, focus is on observing facts. In
inductive research approach first analysis of data is done. Analysis is done by using specific
tools like SPSS or thematic analysis method. Based on observation data is gathered and analysed
using above-mentioned tools. Based on results of hypothesis testing or results of thematic
analysis theory is prepared. On other hand, there is deductive approach and under this theory is
already prepared by someone but its applicability is tested by using specific tools. Thus, it can be
said that both inductive and deductive approaches are different from each other. In the current
research study, inductive approach will be used because theories are evaluated and extent to
which it are correct will be identified by using relevant tool. Thus, inductive approach will be
suitable for research study.
Research philosophy
Above given name is the one of the most important section of the research report.
Usually, in the research there are two sort of philosophies that are employed by researchers.
These research philosophies are interpritivism and positivism (Sarantakos, 2012). Both these are
different from each other. It must be noted that interpretivism philosophies are used in the
research studies where that are not scientific. Opposite to this, positivism research philosophy is
one, which is used when research that is carried out by individual is scientific in nature. Means
that advanced tools and methods are used in research like SPSS for data analysis.
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Data collection
In order to do data collection it is very important to determined appropriate method so
that data can be collected in better manner for the research study. There are number of sources
from which data may be gathered by the researcher. Often questionnaire is distributed among
respondents and answers are obtained from respondents on it. In the present research study in
order to collect data questionnaire will be distributed among respondents (Hamm and et.al.,
2013). For gathering data, there are number of approaches that are used by the researchers as
observation under which the researcher observes sample units deeply and based on observation
data is gathered. Apart from this, the individuals also take in case studies to consideration for
data collection. This is because sometimes case studies deeply cover research subject and due to
this reason, many facts are available on case studies. Thus, it can be said that apart from
questionnaire case studies are the one of best choice that is available to the researchers. Out of
both methods questionnaire will be used in present research study. Questionnaire will be
distributed among sample of 20 people that have strong knowledge of Bitcoin. In questionnaire
questions related to aims and objectives will be covered and in this way it will be linked to the
research study. After receiving entire data, evaluation of obtained values will be done and in this
way, results will be obtained.
Data analysis
There are varied methods that are used for data analysis by the researchers. In order to
analyse data there are two options are available namely thematic analysis and SPSS. In thematic
analysis, method by using charts and graphs analysis of data is done and results are obtained.
Apart from this SPSS can also be used in the research study. In the present research, SPSS will
be used and under this, varied tools will be applied to analyse data in legitimate manner.
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REFERENCES
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