Bitcoin's Authenticity: A Statistical Research Proposal

This research proposal investigates Bitcoin's authenticity as a real currency, employing a descriptive research design and secondary data analysis. The study aims to understand Bitcoin's value relative to USD, the impact of inflation, and trends in transactions. The objectives include identifying th...Read More

Bitcoin as a real money: A statistical
approach
Dissertation proposal

Research proposal title: Comprehending Bitcoin and factors affecting its price
ABSTRACT
Bitcoin is referred to as crypto currency as well as digital system for payment. It is being
invented by the unknown programmer or group of programmers. The system is peer to peer as
well as transactions is taking place among the users in direct manner without absence of
intermediary. In the proposed research that aims at assessing the authenticity of using Bitcoin in
exchange of a real currency descriptive research design would be applied. In addition to this use
of secondary information will be done. Moreover for data analysis quantitative tool would be
employed.
INTRODUCTION
Research background
Money possess three features that it acts as medium of exchange, a nominal monetary
unit and store of value. Bitcoin has been progressively satisfying all the following criteria as a
reason of increase in number of merchants specifically in case of online markets. This
demonstrates willingness to make its adoption as form of payment. The term Bitcoin is referred
to as crypto currency as well as digital system for payment. It is being invented by the unknown
programmer or group of programmers. The system is peer to peer as well as transactions is
taking place among the users in direct manner without absence of intermediary. The verification
of the transaction is being done by the network nodes as well as recorded within the public
distributed ledger that is referred to as block chain. Bitcoin is considered as the decentralized
digital currency (Importance of bitcoin,2017). Besides being rewarded for mining, Bitcoin can be
exchanged for the other currencies, products as well as services within the legal or black
markets. As of February 2015 more than 100000 merchants as well as vendors are accepting
Bitcoin as the system for payment.
Problem statement
The major issue in the present investigation is to identify whether Bitcoin can be
considered as real currency. There are number of vendors that are not accepting Bitcoin. Thus,
main emphasis is give on understanding it in terms of value relative to USD and impact that
inflation have on its value. Bitcoin can be used as hedging currency in crisis situation. But
currently, also people are in confusion whether Bitcoin must be used to make transactions.
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Answers of such questions will be identified through present research study. This is because at
present people to a greater extent are involved in using technology that can make their work
easier. The particular technology is effective but has series of issues. It is significant that in-
depth assessment of same is done so that suitable conclusion can be drawn.
Research aim and objective
Aim: To developing broad understanding of Bitcoin and exploring trends related to crypto
currency in terms of number of transactions, its value relative to USD and impact on inflation on
same.
Objectives:
 To identify relationship between Bitcoin and USD.
 To identify number of crypto currency introduced.
 To identify trends in number of transaction 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.
Significance of the study
The proposed research is suitable towards making in-depth analysis of the use of Bitcoin
and trends prevailed in the market in relation to Bitcoin. Along with this assessment of Bitcoin
on several grounds would result in creating greater awareness. The importance of proposed
investigation has been stated in the manner as under:
 It assist that academicians in conducting PH.D. The proposed thesis provides adequate
amount of information regarding the authenticity of using Bitcoin in exchange of a real
currency.
 Along with this the investigation possess greater importance for the firms who are
operating online.
 The investigation would be significant for the thinkers as it reflects innovative knowledge
in relation to tools that have been applied within the research.
LITERATURE REVIEW
As per the views of Hurlburt and Bojanova, (2014) Bitcoins are not being printed in
physical terms by the Central bank. If this is possible the can lead to devaluation of the currency.
Rather community of the individual is engaged in creation of the money in digital terms that is
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referred to as mining (Singh, Chandavarkar, Arora and Agrawal, 2013). Such are being mined
through the usage of computing power in network that is distributed one. Here the transactions
are processed through the virtual currency. Thus such is making own payment network. The term
Bitcoin is referred to as cryptocurrency as well as digital system for payment. It is being invented
by the unknown programmer or group of programmers (O'Dwyer and Malone, 2014). Bitcoin is
based on the mathematical algorithms. Beside the traditional method people across the globe are
making utilization of such software that offers mathematical formula for the sake of making
production of Bitcoin. There is existence of records over distributed ledger that is referred to as
block chain, copies of that is being shared by the volunteer network of the computers that are
being connected. Bitcoin simply is being referred as possessing the capability to control the
transfer within the block chain. These are on the basis of some algorithms such as ECSDA that
makes use of elliptical curves for signing information in manner that third parties are able to
provide verification of the authenticity of the signature when the signer possess the potential to
make creation of the signature (Luther and Olson, 2013).
By the means of the information which is signed is being transacted that is transferring
the ownership. The world's leading provider associated with the Bitcoin software is referred to as
Block chain. This is considered secure, open platform that can be utilized by anyone. It is
offering services that is comprised of wallet, API and also make utilization of the business
assessment as well as purpose of investigation. Transaction are being fast, secure as well as
globe. Bitcoins are enabling the individual towards maintaining the records without any fear
against the breach within the data privacy. The major advantage is that individual can make
creation of N number of Bitcoin wallet (Moore and Christin, 2013). This is not mandate for the
individual to demonstrate the identities while the business transactions as the users can maintain
the finances in private.
According to Eyal and Sirer, (2014) when price of USD increases price of Bitcoin also
increased because with elevation in price of USD value of other currencies declined. Thus, those
nations whose currency value reduce start purchasing Bitcoin in the market. Currently, value of 1
Bitcoin in the market is 2459USD. Hence, nations whose currency value devalued get benefit
when they convert their currency in Bitcoin or do trading in mentioned crypto currency. Thus,
with decline in exchange rate of currency demand for Bitcoin increased among the nations so
that loss can be minimized.
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As per views of Ron and Shamir, (2013) from 2010 to 2018 number of crypto currency
introduced in the market as it can be observed that in 2009 Bitcoin was issued and in 2013 two
crypto currencies were issued followed by 4 crypto currencies launched in the year 2014. In the
year 2015 again two new crypto currencies were issued. This reflects that on year on year basis
many new crypto currencies were launched in the market. Apart from this, number of miners
also increased in the network as this is reflected by elevation in transactions that takes place at
fast rate in the recent years. It can be said that demand of Bitcoin is increasing at rapid pace.
Remelts (2015) price of Bitcoin and number of vendors are closely associated with each
other. It can be observed that with passage of time number of vendors increased at rapid pace. It
can be said that there is close association between value of Bitcoin and number of vendors. It is
very important to explore the relationship between inflation rate and price of Bitcoin in the
market. It can be observed that with increase in inflation price of Bitcoin increased at rapid rate.
This is because price of Bitcoin is always high and when inflation rate get increase people start
using more Bitcoin in order to hedge themselves from inflation.
METHODOLOGY
Research design
This is considered as most significant part under the research. This is referred to as the
entire strategy which is been formulated by investigator in order to include different components
in relation to the investigation process in logical manner. The procedure ensures that the
problems regarding effectiveness would be resolved. Thus, the research design is considered as
the blue print for the purpose of gathering, analysing as well as measurement of the data. The
research design has been divided into various parts (Qur, 2013). This includes illustrative, fact
finding. The design of the research such as fact finding is effective in order to find the cause and
effective relationship. The purpose of this design is towards investigating the variables that can
lead to some action. On the other hand the fact finding research design seeks at making
generation of the hypothesis by determining the data set as well as examining the association
between the variables. Illustrative research design is used to address the answers to the question
such as whom, how, what, when and where, which are related to particular issues in the
investigation process. Above explained procedure is the statistical research having huge
accuracy.
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Proposed research focuses at evaluating the authenticity of Bitcoin usage in exchange of
a real currency illustrative research design would be applied. Hence, the reason that can be used
for reflecting the characteristics of the population or phenomenon that is required to be
investigated. This is considered effective for the sake of assessing the issues faced in
implementation of the technology related with Bitcoin.
Data collection
Data collection is regarded as the crucial part of every investigation and in the present
research study research will be done on secondary data. It reflects the appropriate methods which
the researcher has used for data collection for the sake of attaining the aims as well as targets of
the research. There are two techniques available for the purpose of gathering data for
investigation. This comprises primary as well as secondary technique. Former one is the tool
wherein the data collection is done for the first time. In this the investigator makes data
collection on their own when carrying out the investigation. The researcher collects data to
conduct investigation in most appropriate way. Primary data collection involves questionnaire,
interview, surveys and focus group. This facilitates understanding of in-depth views of the
participants. While, on the other hand secondary data collection is another method (Remelts,
2015). Under this data already used by varied scholars in being utilized with the investigation.
This is regarded as second hand tool. The proposed investigation that aims at assessing the
authenticity of using Bitcoin in exchange of a real currency use of secondary information has
been done. In this relation published articles, books of several researchers would be used.
Secondary information can be gathered through the sources like internet, official governmental
reports and Census.
Reliability and validity
There is greater importance in applying appropriate method for the purpose of carrying
out the composition in an effective manner. Such that the concept associated with reliability and
validity has become more important in the process of the investigation. Validity is the ability of
being sound in terms of facts and in logical manner. It is the level which the researcher takes into
account while assessing what is required to be examined within the investigation. Inside validity
can be reflected through validity test. On the other hand the external validity can be referred as
the potential to make generalization upon the outcomes of the research in order to target
audience. In the proposed research that aims at assessing the authenticity of using Bitcoin in
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exchange of a real currency validity is being maintained. This is being made sure through the
means of collection of the data is through the appropriate tools for data collection.
Reliability is another major concept within the research process. It exhibits the level to
which the outcomes that are being presented through evaluation tool are stable as well as
consistent. The particular term that assists in determining whether the research would yield same
outcome in situation the research is carried out in years to come. Proposed research on
authenticity of using Bitcoin in exchange of a real currency is considered reliable. This is due to
the reason that the information gathered should be from authentic source. This ensures that the
research is not biased. Moreover, it demonstrates that manipulation is not being done. Thus, data
is not changed anywhere which demonstrates reliability.
Data analysis
After gathering the data through several sources another part of the proposed
investigation would be comprised of analysis as well as evaluation of the collected data. Data
Analysis is referred to as the procedure that facilitates in implementing logical and statistical
tools with effectiveness. Such investigation is being conducted for the sake providing
description, condensing, illustrating as well as evaluating the data. Through such research the
investigator can examine, alter and clean the data for the purpose of reaching at particular
conclusion. In order to analyse the information there is existence of two tools (Krishnaswamy,
Sivakumar and Mathirajan, 2009). Such includes qualitative and quantitative tool. Quantitative
information can be referred as one that can be utilized for quantifying the data. This is conducted
for the sake of generalization of the outcome for the population's interest. Quantitative tool make
utilization of the statistical method that is comprised of SPSS as well as Excel.
In the proposed investigation on assessing the authenticity of using Bitcoin in exchange
of a real currency quantitative tool would be employed in order to assess the data. The major
reason beside this is to gain suitable outcomes from the research. With the assistance of such the
investigator would be able to draw valid outcomes as well. The proposed investigation can be
quantifiable thus this approach to data analysis would be suitable.
RESEARCH ETHICS
It is considered as the most important aspect that is considered by the investigator for the
sake of carrying out the investigation. With the assistance of ethical norms study would be
accomplished in effective manner. In proposed investigation towards assessing the authenticity
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of using Bitcoin in exchange of a real currency ethical norms that would be taken into account
has been presented in the manner as under: Confidentiality: The investigator would make sure that the d ata collected by the
means of secondary sources would not be shared with any other person who is not the
part of investigation (Kuada, 2012). The anonymity principle will be complied with in
whole research. Restricted access: Within the proposed thesis on assessment of the authenticity of using
Bitcoin in exchange of a real currency the collection of the information would be done
from secondary sources. This is comprised of the several studies on specific subject.
There are certain sites that possess restricted access thus information collection would
become difficult.
 Appropriate citation of work: In the proposed investigation the research findings of
various authors are taken into account. None of the content has been pasted as such.
However, care would be provided in terms of rephrasing the content in own words.
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REFERENCES
Journals and Books
Eyal, I. and Sirer, E.G., 2014. Majority is not enough: Bitcoin mining is vulnerable. In
International conference on financial cryptography and data security (pp. 436-454). Springer,
Berlin, Heidelberg.
Hurlburt, G.F. and Bojanova, I., 2014. Bitcoin: Benefit or Curse?. IT Professional. 16(3). pp.10-
15.
Krishnaswamy, N. K., Sivakumar, I. A. and Mathirajan, M., 2009. Management Research
Methodology: Integration of Principles, Methods and Techniques. Pearson Education India.
Kuada, J., 2012. Research Methodology: A Project Guide for University Students.
Samfundslitteratur.
Luther, W.J. and Olson, J., 2013. Bitcoin is memory.
Moore, T. and Christin, N., 2013, April. Beware the middleman: Empirical analysis of Bitcoin-
exchange risk. In International Conference on Financial Cryptography and Data Security
(pp. 25-33). Springer, Berlin, Heidelberg.
O'Dwyer, K.J. and Malone, D., 2014. Bitcoin mining and its energy footprint.
Ron, D. and Shamir, A., 2013, April. Quantitative analysis of the full bitcoin transaction graph.
In International Conference on Financial Cryptography and Data Security (pp. 6-24).
Springer, Berlin, Heidelberg.
Singh, P., Chandavarkar, B.R., Arora, S. and Agrawal, N., 2013. Performance comparison of
executing fast transactions in bitcoin network using verifiable code execution. In Advanced
Computing, Networking and Security (ADCONS), 2013 2nd International Conference on (pp.
193-198). IEEE.
Online
Importance of bitcoin. 2017. [Online]. Available through:
<https://covernest.com/blog/importance-of-bitcoin/>. [Accessed on 26th June 2017].
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Qur, A., 2013. Research design and data collection. [Online]. Available through:
<http://www.iium.edu.my/iaw/SHPhDHTMLfiles/Chp_07%20datacollection.htm>.
[Accessed on 26th June 2017].
Remelts, G., 2015. Research techniques and tools. [Online]. Available through:
<http://www.calvin.edu/academic/rit/webBook/chapter4/Sec2/>. [Accessed on 26th June
2017].
https://totalbitcoin.org/some-factors-that-influence-the-bitcoin-price/
https://knoema.com/infographics/nmyfsf/bitcoin-price-index-2009-to-2017
https://en.wikipedia.org/wiki/List_of_cryptocurrencies
http://www.coindesk.com/data/bitcoin-daily-transactions/
https://www.slideshare.net/CoinDesk/state-of-bitcoin-and-blockchain-2016-57577869/69-
150k_Merchants_Accepting_Bitcoin_Forecasted
https://news.bitcoin.com/bitcoins-inverse-relationship-to-the-us-dollar-is-breaking-down/
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