Cryptocurrency's Economic Impact: A Bitcoin Case Study

Desklib provides past papers and solved assignments for students. This project analyzes Bitcoin's economic impact and challenges.

Research Project
To determine the potential impact of Crypto currency, i.e. Bitcoin on an economy
and its challenges
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Table of Contents
Introduction......................................................................................................................................3
Background of the information........................................................................................................4
Research Aim...........................................................................................................................5
Research objectives.................................................................................................................5
Research Questions..................................................................................................................6
Significance of the study.................................................................................................................7
Limitation of the study.....................................................................................................................8
Research Methodology that is used or applied in the research work............................................14
Data Analysis or examination........................................................................................................15
Conclusion.....................................................................................................................................26
Recommendations..........................................................................................................................27
References......................................................................................................................................29
Appendix........................................................................................................................................31
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Introduction
There is development in online technology which includes day to day activities of an individual.
Online users increase day by day. Crypto currency is a digital asset which exchange & deals in
strong cryptography to maintain financial transactions. It added more value and also creates asset
value. Bitcoin is kind of money and it is a creative network of payment. Bitcoin is an open
source network which cannot be controlled by banks or central authority and dealers can only
take part of it. The business created new phenomena of crypto currency which increases using of
internet. The meaning of a crypto currency is an intangible application used by different
networks such as social networks, virtual network, and peer to peer network. Crypto currency
has a type which is known as bitcoin. In this report, there will be a discussion on crypto
currency and bitcoin. This report helps to analyses the benefits and issues of crypto currency and
bitcoin. It includes discussion on user’s confidence while trading in crypto currency, the
currency is not organized. A literature review is maintained to find better outcomes for the
research of the project. Data is collected from the best sources to obtain the best useful
information which is relevant to research. The overall report provides for the series of the
recommendations and suggestions that can be used or applied by the business concern authority
in order to deal with the negative and positive impact associated with crypto currency so as to
have better supervision on market terms.
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Background of the information
A crypto currency is a digital currency that trades for the security of cryptography. It is digital
asset design work which is a medium of the strong and secure financial transaction. Crypto
currency is also called monetary creativity (King and Nadal, 2012). The main objective of the
research is to resolve the issues and challenges which arise due to disrupting financial
arrangements. The monetary innovation is represented through crypto currency and bitcoin. It
has been analyzed that in the month of January 2018 market capitalization is $520 billion and it
gets down by $830 billion. Crypto currency provides different financial advantages it reduces the
cost of transactions and expands the transitions related to finance. At the same time, it is analyses
that crypto currency and bitcoin contain financial risk due to not proper control by authority. It
includes a few factors such as massive increasing crypto currency and provision of private
money. The transactions of crypto currency are inconsistent, it cannot be easily measurable. For
protecting the macroeconomics it is essential to ceiling the funds available in the economy. In
this report, it is observed that different research on crypto currency and bitcoin is conducted to
state the financial impact on the result of currency and dollarization. It creates a risk for
microeconomic steadiness (Ri and Fujimoto, 2015). There are various regulatory issues which
include market manipulation, consumer protection, governance capital flight, and illicit
transactions. Money laundering and finance related issues are related to terrorist actives which
reduce the participants. In this report, the benefits of crypto currency will be discussed. Crypto
currency becomes a global phenomenon in the world. People, banks government and other
institutions know the value or worth of it. Very few people have a good knowledge of crypto
currency. To deal profitably in the crypto currency it is important to have deep knowledge of the
market. Crypto currency is generated as a new invention and innovative technology in the
market. Bitcoin is one of the essential crypto currencies invented to trade among the global
market. It creates a digital-based cash system. In past eras, it was trying to invent digital cash
money but it failed because of not proper planning. Crypto currency is the birth of decisions. It is
the piece of digital cash system. It is a complex and technical process to trade virtually. A
payment network is with transaction, account and balance system to maintain the digital cash
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system. It is important to solve the issue of double spending of money. For controlling double
entry few steps are taken to resolve it (Ri and Fujimoto, 2015). The central server maintains the
data which keeps records. It is observed that very few entries find in the database to fulfill the
specific conditions. It defines what exactly the currency is measured (Chenung, et. al., 2015). In
a few jobs, the employer is rewarded by giving crypto currencies for good performance. The
properties of transactions are irreversible, secure, fast and global. The monetary property of
crypto currency is controlled supply and no debt bearer. Crypto currency is made to take
advantage of the internet and its working. It verifies the truncations to verify the guarantee
transactions. The transactions are verified by computer system log. It increases the money supply
and algorithm rate. Bitcoin is the crypto currency which gets massive success. It can be
converted into other currencies and deposited into accounts. Most of the currencies transacted
through online cash at any place. It is generally safe to transit (Chenung, et. al., 2015). Crypto
currency is all-time high to a misconception about it. Currencies can be traded in an
unconventional way and use of different algorithms. It is important to study various outlooks
before investing in bitcoin. Market capitalization is the total worth of current circulation among
the market. It does not have a high market capitalization. Crypto currency has various method of
verification. Crypto currency did not accept the other dealers to use. Bitcoin is a very popular
currency traded among the digital market.
Research Aim
To determine the potential impact of Cryptocurrency, i.e. Bitcoins and its challenges.
Research objectives
 To examine the conceptual background and mechanism of bitcoins.
 To analyse the impact of bitcoin on an Economy
 To study the challenges of Cryptocurrency.
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Research Questions
Following is given the main research question of this study, such as –
 What is the conceptual backgrounds and mechanism of bitcoins?
 What is the impact of bitcoins on an economy?
 What are the imperative challenges of Cryptocurrencies?
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Significance of the study-
The term crypto currency refers to giving the advantage of purchasing, selling and trading of
financial activities. Crypto currency refers to intangible and valuable goals which they are used
in different application and network. It is also using in online mode. Crypto currency basically
defines a thing of exchange that separates from the real-world currency which is used in the
many transactions of financial nature whether they represent real transaction or virtual
transaction (Coho, 2015). Crypto currency is the independent currency which is in the form of
notes and coins that are particularly fixed monetary value as a medium of exchange. For the
industry prospectus bit coin takeover, the electronic market which basically influences the
subordinate power and it overcome from the top level power. Bit coin is the function of the
complete digital money payment system. It is an advanced and reliable method to convert
payment in digital form. It is a safe and secure method because during the transaction it protects
the IP address and hacking passwords. The bit coin is the function of the only receives or sent the
transaction on the ledger which is accessible by the public, also known as block chain to
managing by the cluster of computers. This is for the understanding of challenges faced by the
company for the future. This research project basically for the re-examination of the present
development of the crypto currency and monetary history of the previous years. It provides the
virtual payment of goods and service which is free from the central trusted authority (Darlington
III, 2014).
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Limitation of the study
It is always necessary for the researcher to discover the limitation of the findings and data
collection process and also for the recommended plan for the future. The crypto currency has
some limitation in terms of the safety, security and monetary system. These are as follows-
Collapse concern in crypto currency-
The problem of extra issuing the virtual currency community which is basically increasing the
economic problem since it is not based on the supply and demand. It increases the inflation and
economic issue which is growing to the virtual currency problem. This mainly occurs of increase
virtual currency system for collecting for the real revenue.
Security threats-
Hackers and malicious users break the system by using the method of the virtual currency
system. They create a system of fake virtual items and steal the currency system by changing the
account balance and password. They are selling the game of virtual items and virtual currency is
informed to the world of Warcraft (wow) game policies.
Impact on real monetary systems:
Some of the virtual currency systems are connected with real-world monetary system. This can
affect the demand and supply of real-world money. Virtual currency system may reduce the
demand for real money. On the other hand, some platform may decrease the demand for real
money. Some platform identifies users to exchange their virtual currency with real currency and
this will increase the demand on real-world currency (ElBahrawy, et. al, 2017).
Money laundering-
Money laundering is the one case that is very much attached to the virtual currency. In practical
of China in 2008 the police arrested 14 groups of person for laundering of $ 38 million obtained
from selling virtual currency. This group converted &38 million by gold farming.
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Literature review- crypto currency is the more known activity for every day with more people
investing in different currencies and using them for the transaction because of the various
advantages that represent such as has no rules and regulation. But few people understand the
characteristics of how they are formed. Crypto currency is the electronically designed such a way
that work as a medium of exchange that uses positive cryptography in order to secure financial
transaction, control the creation of additional units and verify the transfer of assets. Crypto
currency is mainly used by the international countries that the transaction becomes easy. The
main reason behind this no one-third party can block a single person amount. In an extra way,
crypto currencies allow to users and help them inform others; sometimes it results from the help
them in from of others keep away their money.
The security measure of the cryptomacy is creating very much confusion towards others because
they want to result from the danger of losing someone else's password. Bit coin was the first time
released the open source software which comes in 2009 that is known as decentralizing crypto
currency. In advance, bit coin is a kind of intangible entity of questionable value. The
cryptomacy has given the wide impact of the economic condition of a direct and indirect manner.
The major influence of the dark web’s financial power; here dark web is a part of the internet
which is usually not found in search optimization. Bit coin is also related to the speculative
trading as bit coins value is more determine which represent with larger possibilities of
speculators. The good system of crypto currency is basically for a certain result and copied or
forged. This crypto currency is basically for computers and they cannot be canceled, twice and
the transaction cannot be changed. Each transaction is full fill with confidentiality. There are
many kinds of crypto currencies in the online market. But all of them basically have the same
objectives. There should be transaction must be a safe and secure manner. In order to do a
transaction that is safe because it is a peer to peer system transaction basically objective of crypto
currency are as follows- each transaction is a confidential and information must be separate from
the third party. The integrity is must secret from the third party. The transaction needs to be
authentic because it is done through two people.
Bit coin is an open source system of the peer to peer digital currency in the form of 2008.
Perhaps a bit coin is the greatest technological achievement targets. Under the bit coin protocol,
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all transaction during the collected period of a time period is collected into something called a
block. The block connected with all the nodes and currently connected with the bit coin network.
Bit coins are vastly connected with the economic structure world. Bit coins are, majorly by
connected with the UK that field namely IBM and wall mart have teamed up in order to
communicate the supply chain management which focuses on the improvement of the supply
chain management and will discuss the purchasing block chain which will track all movement by
the china. By using block chain technology manufacturers can also use the 3d network
technology it enables them to produce collectively effort (Gainsbury and Blaszczynski, 2017).
Along with this, there is a challenge of the using crypto currency faced on individual or economy
for e.g. technical limitation, the market is still unregulated and poor user experience and the
market is too volatile and so on. The reason behind this value of crypto currency is used by the
experience of users, which is included in coupled and limited supply; it makes the virtual
currency makes the volatile facility. Cryptomacy is increasing its brand value which is for the
rising the prices, it is basically for the concern of customers and investors in terms of safety and
build market integrity. It basically for the measuring incomes and value for international
business.
There are following challenges faced by the bit coin user that they need to overcome- these
are as follows (Middlebrook and Hughes, 2013)-
Expensive transaction- the transaction is subject to a transaction fee which also gives pending
transaction. The effect of implementing a bit coin process basically for expensive. It gives
structure for the person if he wants to send money across instantly which give the highest
transaction fee. By the reason of this people are seeking fast and find alternatives to remove
expensive way (Cermeño, 2016).
Slow transaction-
Bit coin is facing the transaction which is mainly facing highly time taken process which
increasing continuously. This incurs because stop accepting the crypto currency. The problem of
slow transaction basically for the time taking process. The challenge of basically focus on the
process of block chain- the decentralized; distributed ledger technology to underpins bit coin.
The average time taken the process of bit coin Transaction is 43 minutes, while some transaction
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remains unverified. The main reason for this purpose basically for bit coin transaction fee and it
means those offering higher get beneficial first. This creates a list of a transaction and those play
a fee of them or basically kept for identified in a good manner. Sometimes even a day for the
transaction to complete. When someone uses the main focus on the paying items in the shop, that
transaction must need to verify on the block chain. The finding of the slowdown transaction
clearance rates which led to coming completely (Mandeng, 2018).
Privacy-
Lack of privacy on the block chain is a major challenge faced by the bit coin which makes
basically for the switchover in crypto currency. Every transaction takes place is available for
public security and analysis instead of getting the advantage they are basically this point against
the assets. It is a major privacy concern that basically highlighting by using bit coin.
Support for poor mobile phone- irrespective of the huge market over there it is very shocking
news that Google and Apple still do not support bit coin mobile platform. The recent big news of
this point i.e. apple banned bit coin wallet on app play store. However they are some other
platform app developer provide app download bit coin, this is harmful to the ecosystem. Google
does not give permission to download payment on the app store. These larger companies do not
have a wait for developers to allow bit coin. So they are using powers of restrictive government
to use their powers to regulate within a performance.
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