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July 12, 2022In the decentralized ballet of finance, crypto pirouettes on the blockchain stage, its digital tutu adorned with the promise of autonomy. Each cryptographic step whispers a unique saga, where the currency of the future waltzes between code and currency, scripting a novel narrative in the evolving choreography of economic evolution.
Outline
- Research Aim
- Importance of the Research
- References
Bitcoin is a decentralized cryptocurrency that incorporates peer-to-peer technology that enables a network to collectively perform all operations, including cash issuance, transactions, and authentication. It is a digital currency created and controlled using advanced cryptographic techniques known as cryptography. With the launch of Bitcoins in 2009, cryptocurrency leaped from being an academic term to (virtual) reality. Although Bitcoin gained an increase in subsequent years, it captured considerable media attention and investors. Bitcoin flaunted a market valuation of around $2 billion at its height, but a 50 percent plunge soon after sparked a raging debate about the sustainability and future of cryptocurrency, specifically Bitcoin (Farell, 2015).
Discover Insights from Economic Experts on the Future of Cryptocurrency
Some economic experts anticipate that there might be a significant shift in Bitcoins as institutional capital approaches the market. In addition, there is the likelihood that Bitcoin might float on the Nasdaq, which may further give prestige to cryptocurrency and its applications as a substitute for traditional currencies. Bitcoins operate digitally and float against all other currencies, and are protected from economic uncertainty or problems such as political turmoil (Nian & Chuen, 2015). Nevertheless, Bitcoins' price is very volatile due to speculations, media attention, and uncertainty as a currency Bitcoins are still in their infancy.
Understand the Entities Overseeing Bitcoin Currency and Its Control
Normally the flow of currency is authorized and controlled by the governments. As an emerging technology, Bitcoins are not controlled by the governments but rather by the individuals who own them in plenty. Although the cost of production of bitcoin is quite high as compared to other cryptocurrencies. Liquidity is still lacking in Bitcoins, to some extent, where it might be very difficult to utilize it as a substitute for fiat currency (Lustig & Nardi, 2015). Most companies decided to persistently use Bitcoins in their business activities, and the demand for bitcoin would generate a demand and supply imbalance, further improving the uncertainty of the prices.
The price of bitcoin is unpredictable and subject to speculation. For instance, Bitcoin's price soared from $250 to $10,000 within three years. It now controls a market capitalization approaching $185 billion and has several hundreds of millions of dollars consisting of transactions entering its network daily (Greaves & Au 2015). This has caused several investors to believe that the bitcoin's price is experiencing a huge speculation bubble, with some analysts suggesting its value is not underpinned by any fundamental.
Research Aim
This study aims to find out whether bitcoin could be used as a currency or as an investment in the future.
Research Objectives
In line with the proposed research aim, the following three research objectives are to be addressed in this study.
- To analyze past literature regarding the potential of bitcoin as a currency or as an investment for the future.
- To analyze the perception of professionals in the Finance Industry regarding the potential of bitcoin as a currency or as an investment for the future.
- To make recommendations regarding the potential of bitcoin as a currency or as an investment for the future.
Importance of the Research
Cryptocurrency is regarded as one of the most imperative and emerging digital currencies during the last decade. Especially Bitcoins has been emerged and gained popularity among all digital currencies (Godsiff, 2015). As a novel concept, researchers from across the world are analyzing the complex process of Bitcoins, their trade, price fluctuations, and popularity (Ciaian, Rajcaniova & Kancs, 2016).
Moreover, the significance of Bitcoins as a currency or investment in the future has been discussed in this research. Since Bitcoins were introduced back in 2009, their usability as a currency and a medium of transaction is discussed by experts, professionals, and policymakers. As an emerging phenomenon, there is not much literature available on this topic. As the area of the research topic is emerging therefore research is needed to extend the existing literature (Baek & Elbeck, 2015), which highlights the need for this present research. Given this, the present study focuses to contribute and add more information as well as fill the gap in the research. This study emphasizes identifying the future aspects of Bitcoins, whether they may become an effective mode of payment shortly, or might be just an economic bubble. Furthermore, this study is likely to help investors in better decision-making regarding investments in Bitcoin.
Besides, this research is important because it addresses the known vulnerabilities and complexities associated with the use of Bitcoins while dealing with the Blockchain. The benefits such as privacy and liquidity as well as drawbacks such as risk and security issues of using Bitcoins are discussed to identify how effective and secure it can be if it is used as a currency or as an investment option.
References
Baek, C., & Elbeck, M. (2015). Bitcoins as an investment or speculative vehicle? A first look. Applied Economics Letters, 22(1), 30-34.
Ciaian, P., Rajcaniova, M., &Kancs, D. A. (2016). The economics of BitCoin price formation. Applied Economics, 48(19), 1799-1815.
Farell, R. (2015). An analysis of the cryptocurrency industry.
Godsiff, P. (2015). Bitcoin: bubble or blockchain. In Agent and multi-agent systems: Technologies and applications (pp. 191-203). Springer, Cham.
Greaves, A., & Au, B. (2015). Using the bitcoin transaction graph to predict the price of bitcoin. No Data.
Lustig, C., & Nardi, B. (2015). Algorithmic authority: The case of Bitcoin. In 2015 48th Hawaii International Conference on System Sciences (pp. 743-752). IEEE.
Nian, L. P., & Chuen, D. L. K. (2015). Introduction to bitcoin. In Handbook of digital currency (pp. 5-30). Academic Press.
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