Challenges and Analytical Research Problems in the Cryptocurrency Market

This article discusses the challenges facing the cryptocurrency market, including lack of governance standards, accountability, and price manipulation. It also presents analytical research problems such as trading volume, fiat currency, and cryptocurrency trading volume.

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FINANCIAL TECHNOLOGY
Name
Course
Institution
Date

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Part 1
The cryptocurrencies debate has taken the financial world by storm since its market is
growing popularity with every beginning day. With the main commodities in the Cryptocurency
market being Bitcoin and Ethereum, many people and businessmen have gain lots of interest to
this electronic currency made to utilize the public platform to implement itself in a centralized
design. Although the market is growing, it has been associated with the ‘dark web’, a form of
modern payments associated with money laundering as well as trafficking illegal substances of
numerous specifications. In link to the issue that came before the Congress, this study is in
complete agreement. For better link of the same, it was noted that the various departments
regulating security issues in the United States appeared before the Congress with tough stands on
the cryptocurrency market (Harwick, 2016). Based on the report, they claimed four vital issues
challenge the cryptocurrency market including the lack of sovereign back up, the standards of
governance, supervision and culpability as well as reliable reporting of trading and related
financial data.
The nature of the Cryptocurency market is strange to the global market in the sense that it
is not easily controllable even by huge economies like the United States of America. This point is
fronted by the fact that the daily trading on daily average volume in the market normally
determined in ranges of trillions of dollars (Fung and Halaburda, 2014). The financial
determination of the entire market is astonishingly huge, yet the market is less than ten years old
in the financial market. These facts make the claims by the heads of the security organ heads on
matters pertaining security regulations in the U.S. to get their legitimacy. Based on the above
information, it is true that the Cryptocurency market lack the governance standards and
accountability.

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The other problem of the Cryptocurency market is the manipulation of price. Under
normal economic terms, the product and service market is usually controlled by the natural forces
of demand and supply under the strict check by the authorities. However, the biggest problem of
the Cryptocurency market is within its excessive volatility. Within a very short period of time,
the prices of the Cryptocurency fall and rise unprecedentedly on the exchange platform. This fall
and rise in a drastic pattern makes the market to become very volatile, thus only favoring
individuals with huge holdings in the Cryptocurency market. This makes the crypto-trading
platform very tricky based on the required standards of financial governance (Chishti and
Barberis, 2016). The next challenge of the market comes with the inefficient up-drive of the price
in the market without actually investing in it, with the traders with large holdings in the market
only leaving the smaller traders to be the boosters of the actual price in the market. This happens
due to the absence of position price limits on the cryptocurrency trading platform that can
discourage the movement of the large buy and sell market positions.
The cryptocurrency market is a harbor for the activities of the cyber-related criminals.
Hackers and cybercriminals find it easy to make their financial deals using the cryptocurrency
market. The rising number of cybercrimes and hackers has been facilitated by this high volatile
market resulting in loss of millions of dollars for traders and investors (Fry and Cheah, 2016).
All these among others, like the lack of price uniformity in the crypto currency market affirm the
claims by the departments controlling the agencies of security regulations in the United States
before the congress.

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Part 2: Analytical research problems
Name of the
Cryptocurrency
Market Cap
Volume (24
hours)
Price
($)
Change
crypto-
for- fiat
Bitcoin $111,191,861,136 3,994,092,521 6,455.00 -3.73%
Ethereum $27,864,944,513 1,371,916,370 274.54 -4.54%
XRP $12,842,685,216 238,272,104 0.32 -4.88%
Bitcoin Cash $9,084,162,518 285,303,288 524.85 -5.04%
EOS $4,326,925,856 458,590,702 4.77 -5.99%
Steller $3,922,643,197 50,879,649 0.21 -8.59%
Ethereum Classic $3,179,304,892 205,102,560 54.85 -5.00%
Tether $2,825,701,959 2,756,620,592 1 -0.03%
Cardano $2,335,420,220 50,524,426 0.09 -6.86%
Monero $1,458,574,893 18,948,372 89.25 -7.26%
IOTA $1,357,692,576 38,719,047 0.49 -8.65%
TRON $1,312,667,143 86,605,958 0.02 -6.52%
Litecoin $1,276,145,520 227,453,980 12.27 -6.01%
Dash $1,130,572,884 218,493,959 136.66 -8.05%
NEO $1,102,019,093 57,740,427 16.95 -8.45%
Binance Coin $907,565,666 18,545,903 9.5 -5.17%
NEM $878,516,477 7,679,805 0.1 -5.50%
VeChain $780,985,483 57,549,186 0.01 -8.56%

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Tezos $774,477,107 2,158,073 1.27 -8.04%
Zcash $614,280,571 82,477,821 132.51 -4.36%
OmiseGO $507,200,263 25,257,347 3.62 -7.17%
Ontology $448,150,086 6,618,807 4.1 -1.74%
Tezos $384,073,352 118,958,808 2.09 -10.07%
Qtum $365,304,100 109,079,492 4.11 -5.49%
Ox $362,632,950 17,575,146 0.67 -5.71%
Sum Total
$191,234,507,671 10,505,164,343 7,729.25 ---
(151.41%)
Retrieved on 23th, August 2018
(A) What is the trading volume (in USD), most recent 24ours (give the date of your analysis)?
On the 23th of August, 2018 at 3.41 pm, the trading volume of the cryptocurrencies in the most
recent 24 hours was $10,505,164,343
B) Of the trading volume in (a), how much was in fiat currency (e.g., BTC/USD)?
$5,357,633,814.93 was in fiat currency.
(C) Of the trading volume in (a), how much was in cryptocurrency (e.g., BTC/LTC)?
$5,147,530,528.07 was in cryptocurrency.
(D) How much cryptocurrency trading volume is crypto-for-crypto compared to
crypto-for-fiat?
Considering the cryptocurrency tabulated in the table above, the sum is $10,505,164,343. Of this
value, the flat currency was $5,357,633,814.93 while the cryptocurrency was $5,147,530,528.07

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which is 51.41%. This value implies that the crypto-for-crypto is more than crypto-for-fiat by
1.41% in comparison.
(E) What does this imply about the liquidity of these assets and the reliability of posting
their market valuations in fiat currency?
The liquidity of these assets and the reliability if posting their market valuations in flat
currency is based on the ease, speed, and the low cost at which the assets are exchanged into
cash. From the foreseeing aspects of the cryptocurrency valuation, it means that the commodity
value of the currencies are based on the currency value whereby, the more commodity they
become, the less useful in the market they are valuated. Through the mechanization of the
currencies using the approach valuation based on the market today which a future focused, the
main driving value component of the digital currencies is the ability of the market to provide the
store for monetary value for the investors. This is more prevalent in the comparison and
implications of the liquidity of these assets and the reliability of posting their market valuations in
fiat currency. For reliability issues, the cryptocurrency have a number of powerful exchange
networks that are acceptable and controlled by the systems of government. Because of the higher
trade volumes, there is higher demand, thus higher liquidity.

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References List:
Cap, C.M., 2018. Cryptocurrency Market Capitalizations. Retrieved on January, 21, p.2018.
Chishti, S. and Barberis, J., 2016. The FinTech book: the financial technology handbook for
investors, entrepreneurs and visionaries. John Wiley & Sons.
Fry, J. and Cheah, E.T., 2016. Negative bubbles and shocks in cryptocurrency markets.
International Review of Financial Analysis, 47, pp.343-352.
Fung, B. and Halaburda, H., 2014. Understanding platform-based digital currencies. Bank of
Canada Review, 2014(Spring), pp.12-20.
Gandal, N. and Halaburda, H., 2014. Competition in the cryptocurrency market.
Harwick, C., 2016. Cryptocurrency and the Problem of Intermediation. The Independent Review,
20(4), pp.569-588.
Zhu, K., Kraemer, K.L. and Dedrick, J., 2004. Information technology payoff in e-business
environments: An international perspective on value creation of e-business in the financial
services industry. Journal of management information systems, 21(1), pp.17-54.