Emergence, Development, and Cryptocurrency's Economic Impact Report

This report provides an in-depth analysis of the emergence and development of cryptocurrency, focusing on its impact on economic activities. The report begins with an introduction that outlines the background of cryptocurrency, its aims, objectives, and research questions. Chapter 2 offers a comprehensive literature review, covering the emergence and invention of cryptocurrency, its working mechanisms, benefits, and limitations. Chapter 3 details the research methodology, including the research onion, design, approach, and data collection methods used. The study employs a descriptive research design and a positivism approach to analyze the impact of cryptocurrency, addressing its influence on the economy, its future development, potential threats to financial institutions, and its disruption of the global economy. The report highlights the growing popularity of cryptocurrencies, their decentralized nature, and the challenges they face, such as volatility and regulatory issues, while also acknowledging their benefits in terms of facilitating fund transfers and reducing fees. The report concludes by summarizing the key findings and implications of the research.

Running head: EMERGENCE AND DEVELOPMENT OF CRPTO-CURRENCIES AND ITS
IMPACT ON ECONOMIC ACTIVITIES
EMERGENCE AND DEVELOPMENT OF CRPTO-CURRENCIES AND ITS IMPACT ON
ECONOMIC ACTIVITIES
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Chapter 1: Introduction....................................................................................................................4
Background of research study.....................................................................................................4
Aims of the research....................................................................................................................5
Objectives of study......................................................................................................................6
Research Questions......................................................................................................................6
Chapter 2: Literature Review...........................................................................................................7
Introduction..................................................................................................................................7
Emergence and invention of Cryptocurrency..............................................................................7
Working of cryptocurrency..........................................................................................................8
Benefits of cryptocurrency..........................................................................................................9
Limitations of cryptocurrency...................................................................................................10
Chapter 3: Research Methodology................................................................................................11
Introduction................................................................................................................................11
Research Onion..........................................................................................................................11
Research Design........................................................................................................................12
Research Approach....................................................................................................................12
Research Method.......................................................................................................................13
Data collection Method..............................................................................................................13

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Conclusion.....................................................................................................................................14
References......................................................................................................................................15

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Chapter 1: Introduction
This chapter will focus on the background of the research study that aligns with the topic
of emergence and development of cryptocurrency and its affect on the economic activities. The
pros and cons of crptocurrency is also elucidated in this chapter. The aim and objectives of this
research study is also highlighted in this chapter. The research questions have been framed based
on the research objectives of the research topic.
Background of research study
The research study provides an overview about the emergence and development of
cryptocurrency and its affect on the economic activities. Cryptocurrency have attained huge
popularity since the year 2008 with near about 1000 in existence till today. Cryptocurrency refers
to the digital currency that utilizes cryptography for securing its transactions, controlling creation
of extra units and also verifying transfer of assets. It also uses decentralized control as opposed
to central banking systems and electronic money (Heid 2013). Decentralized control of the
cryptocurrency mainly works through the blockchain that is basically public transaction database
working as distributed ledger. Bitcoin was the first cryptocurrency created in the year 2009.
The nature of transactions of cryptocurrency makes them suited for the host of activities
including tax evasion and money laundering. In the recent years, crptocurrency specifically
Bitcoin has demonstrated their value boasting to near about 14 millions Bitcoins in circulation.
Cryptocurrencies makes easier for transferring the funds between the two parties in specific
transaction. However, these transfers made are basically facilitated through utilization of both
private as well as public keys for the purpose of security (Iwamura, Kitamura and Matsumoto
2014). These transfers of funds are mainly done with less processing fees and thus permitting

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users for avoiding high fees that are charged by the financial institutions and banks. On the
contrary, crptocurrencies are basically not immune to hacking threat. Some industries are
presently facing some challenges that involve- volatility, regulatory and complexity in
technology. The bitcoin value fluctuated at high rate after it had been released owing to infancy
of currency. Bitcoin also experienced many glitches in technology, which in turn resulted to halt
of transactions and improper transactions (Qian 2014). Another challenge that faces
cryptocurrencies such as Bitcoin is transparency. As the transactions made become transparent,
individuals associated to these cash transactions were not easily recognized.
One of the major areas of development has been the technologies of cryptocurrencies.
The distributed or blockchain ledger approaches, which has been utilized for these currencies
provides huge potential for development in several areas (Narayanan et al. 2016). The
development as well as application of technologies that underpins bitcoin is mainly the
utilization by banks for automating their system of payment. It has been evident from recent
studies that several banks involving Barclays, Deutsche Bank, UBS has been experimenting with
the technologies that are based on blockchain framework. From the customer’s perspective,
cryptocurrencies basically offers cheaper peer- to peer options of payments as compared to that
provided by traditional businesses. Additionally, cryptocurrencies provides low volatility risk as
well as less transaction fees as seen from the perspective of merchants.
Aims of the research
The aim of this research study will analyze on the impact of cryptocurrency on the economic
activities. This study will focus on the emergence and future development of cryptocurrency.
The research study will also highlight on how the cryptocurrency has been disrupting the
economy worldwide.

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Objectives of study
The objectives of this research study will be-
 To evaluate the significance of cryptocurrencies in the market
 To identify the future development of cryptocurencies
 To analyze the positive and negative impact of cryptocurrency in the economic activities
Research Questions
The research questions that has been framed for this research study are given below-
 Do cryptocurrencies impact the activities occurring in the economy?
 Does cryptocurrency have further development in future?
 Whether cryptocurrencies will pose threat to the banks and financial institutions in
future?
 Does cryptocurrency disrupts the global economy?

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Chapter 2: Literature Review
Introduction
Although cryptocurrency has been in existence and in increased popularity in the recent
period only, however, there exists considerable literary works and empirically supported
evidences regarding the emergence, evolution, significance as well as limitations of the usage of
the same in the global economic scenario. This section of the report tries to conduct an extensive
review of the existing literatures existing in this domain.
The term “Cryptocurrency” has been defined in various ways from different perspectives
by many scholars. However, the most comprehensive definition of the term is given by Anderson
(2017), who explains the term as the new type of virtual currency or medium of exchange in the
contemporary period which is secured in its own virtue and which was primarily brought to
existence in the contemporary global economy with the vision of decreasing the fraudulent and
unfair activities in the financial markets.
Emergence and invention of Cryptocurrency
The phenomenon of invention of Cryptocurrency was in fact an unintended by product of
another invention, as can be seen to be highlighted and discussed extensively by Chohan (2017).
As the author asserts, the unknown inventor of cryptocurrency is known in the Pseudonym of
Satoshi Nakamoto. The person or organization (still not known) invented the first ever
cryptocurrency in the world known as the Bitcoin (Qian2014). Heid (2013), argues that Bitcoin,
according to the inventor was the first ever “Peer-to-peer Electronic Cash System”, with full
decentralization and no central authority or server, which was expected to facilitate worldwide

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easy and fast digital financial transaction, without the usage of any hard cash, thereby saving
time as well as preventing different money-laundering which the conventional cash forms face.
However, eventually the concept outgrew from a peer-to-peer digital money framework
to become an alternative form of currency itself, which started to be traded, purchased and
valued in the international financial scenario.
In the contemporary period, the term cryptocurrency, as defined by Engle (2017), defines
the same to be “limited entries to a particular decentralized and non-authoritatively governed
database”, which cannot be changed by anyone without access which can be gained only by
gaining fulfilling certain conditions. There exist different types of cryptocurrencies in the global
framework in the contemporary period, much of which can be attributed to the increasing
popularity of the same. The primary ones, except that of Bitcoin, the most popular form of
cryptocurrency, are names as Litecoin, PPcoin and Namecoin. From 2009, since the emergence
of Bitcoin in the global economy, till 2015, the total number of Bitcoins circulating in the global
market has increased to as high as 14.6 million with the total valuation of nearly $3.4 billion.
Working of cryptocurrency
The following flow chart shows extensively and elaborately the working of
Cryptocurrency in the contemporary economy:

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Figure 1: Flowchart showing the working of cryptocurrency
(Source: Blockgeeks 2018)
Benefits of cryptocurrency
Zavorinet al. (2017), highlights the different benefits of the usage of cryptocurrency,
which primarily includes the ease of transfer of funds between the different parties in concern, to
and from any corner of the world, without compromising the security of the financial aspects of
the parties involved. This, as the author asserts, has been becoming increasingly important given
the fact that the global business environment and economy has been becoming integrated and

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inclusive and given that increasing numbers of business from all parts of the world are going
global. The assertions of the authors are also supported and augmented by the works of
Sapuric,Kokkinakiand Georgiou (2017), who highlights the aspects of reduction in the
processing fees and mediatory charges taken by the financial institutions like banks and others in
currency transfer across the different parts of the globe.
Limitations of cryptocurrency
However, in spite of the benefits of the same, cryptocurrency and its usage is still
bounded by several constraints and serious limitations. The currency and its usage is primarily
not comprehensive and easy to understand for major population across the globe, especially
those who are not comfortable with digital transactions. This makes the acceptance of
cryptocurrency comparative much less than the conventional forms of currencies in the major
parts of the world. Their also remains huge threats of volatility of this form of currency due to
the lack of mass adoption and acceptance of the same. There also remains no scope of reversal of
such payments, thereby making the potential users sceptic about the viability and authenticity of
these alternative forms of virtual currencies (Coinpupil.com 2018).

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Chapter 3: Research Methodology
Introduction
This chapter highlights on the various tools that the researcher will be using for
completing this research study including- research design, research paradigm, research method
and data collection method. For this research study, the researcher will be conducting secondary
data collection method for analyzing the impact of cryptocurrency in the economic activities.
Research Onion
The research onion demonstrates the phases that the researcher will adopt in order to develop
strategy for completing this study. Research onion mainly reflects on the six phases that is
related to time horizon and research process.
Figure 1: Research Onion
Source: (Flick 2015 )

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Research Design
The research design method helps the researcher to appraise the variables that will be
used in the research problem. There are three broad categories of research design including-
exploratory, explanatory and descriptive.
Exploratory research design helps the researcher to survey the situation for meeting the
main objectives of the research study (Mitchell and Jolley 2012). It basically involves various
methods involving – interviews, experiments, group design etc that the researcher adopts for
attaining accurate data relating to the research topic.
Explanatory research design indicates the attempt to relate with the thoughts to
understand the cause as well as effect of relations. It also interrelates with those factors that come
in collective manner.
Descriptive research design highlights on the behavior and attitude of the respondents in
proper way. The research also endeavors to analyze the additional data collected for the
particular research topic.
Justification of using descriptive research
In this research study, the research will adopt descriptive research design in order to
explore the impact of cryptocurrency in the economic activities across the globe. Descriptive
research is mainly used in this research study as it helps to describe, explain and validate
findings of research. On the contrary, exploratory and explanatory research design will not be
adopted in this research as it uses modest samples that are not chosen on probability basis and
relates to capability of making forecasting from results