Forms of digital money have been on the rise in the past few years. Today, a broad assortment of transactions can be undertaken without using cash and conventional types of money. Cryptocurrency is the latest entrant. Since the emergence of Bitcoin in 2009, several other cryptocurrencies have been introduced, such as Ether, Litecoin, and Monero. Cryptocurrencies are digital assets intended to function as mediums of exchange. They are based on cryptography and blockchain technology. Though cryptocurrency could be the future of money, the inherent risks cannot be understated. Understanding the world of cryptocurrency is especially important given its connection to capital and money markets. For capital and money markets to function properly, mediums of exchange must be stable and reliable. This paper discusses the future of cryptocurrency. The paper specifically focuses on the implications of cryptocurrency on capital and money markets as well as the risks and concerns presented by the rise of cryptocurrencies. Special attention is also paid to the bitcoin scandal and its implications. Additionally, cryptocurrencies are difficult to counterfeit as they are based on cryptographic techniques. This is an especially important attribute given the rise of counterfeit currency. The anonymity of cryptocurrencies makes them even more attractive. Anonymity means that each transaction is strongly encrypted, making user identification extremely difficult. These characteristics make cryptocurrencies safer than conventional currencies. Indeed, though most financial advisors are likely to discourage clients from investing in cryptocurrencies, the currencies could offer an attractive return on investment. For example, the value of one bitcoin today exceeds $4,000, an overwhelmingly exponential increase from $0.0001 in 2009.
Though cryptocurrencies have gained popularity in the last five years or so, their history dates back to the 1980s, when cryptographer David Chaum developed a complex algorithm to secure electronic fund transfers (Stark). Chaum’s algorithm laid the foundation for digital currency transfers, whether it is electronic cash transfers or virtual currencies such as Bitcoin. Nonetheless, Chaum’s efforts to popularise cryptocurrency were impeded by government restrictions, causing his cryptocurrency start-up to shut down in the 1990s. In 2009, however, what would become the first modern cryptocurrency – Bitcoin – was launched by an individual or group individuals pseudonymised as Satoshi Nakamoto. While Chaum’s idea did not involve decentralisation, Bitcoin’s idea was inherently characterised by the absence of centralised control, in addition to anonymity and blockchain technology. Since the emergence of bitcoin, some optimists have described cryptocurrencies as technologies that could revamp industries across the board (Hackett; Zhuravlyova). In future, they could be used everywhere – from banks and retail stores to pension plans and capital markets.
Cryptocurrencies are increasingly redefining capital and money markets. According to Stark, cryptocurrencies could be the new norm in the near future as far as medium of exchange is concerned. Cryptocurrencies have a number of unique characteristics that make them popular. First, dissimilar to conventional currencies, cryptocurrencies are decentralised. This means that they are not regulated by a designated authority such as a ...
For financial institutions, cryptocurrency could result in significant savings as a result of reduced paper work. The technology could eliminate the laborious, paper-intensive processes banks rely on to complete transactions (Zhuravlyova). It could make bookkeeping faster and less costly, making transactions less repetitive, safer, more streamlined, and more reliable. As a matter of fact, large banks such as HSBC are exploring the potential of cryptocurrencies. If financial institutions fully embrace the technology, capital and money markets could take a whole new direction to the benefit of both banks and their clients.
Cryptocurrencies could also revolutionise capital and money markets by addressing challenges associated with the increasingly digital economy. Across the globe, there are more than two billion people without access to the formal financial system (Stark). Cryptocurrencies can overcome this challenge by facilitating person-to-person exchanges. Cryptocurrencies could also be used as platforms for crowdfunding. With cryptocurrencies, virtually everyone can be an investor online (Hackett). This is a particularly important advantage for entrepreneurs hunting for funding. In fact, some start-ups have obtained funding through this new channel. Essentially, the growth of cryptocurrencies is driven by not only economics, but also social impact. As a result, cryptocurrencies could be the future of money.
In countries like Switzerland, the use of bitcoin is already a norm (Zhuravlyova). There are even bitcoin ATMs installed throughout the country, enabling users to exchange conventional currency for bitcoins. This has made Swiss towns like Zug to be termed as…
Additionally, cryptocurrencies are difficult to counterfeit as they are based on cryptographic techniques. This is an especially important attribute given the rise of counterfeit currency. The anonymity of cryptocurrencies makes them even more attractive. Anonymity means that each transaction is strongly encrypted, making user identification extremely difficult. These characteristics make cryptocurrencies safer than conventional currencies. Indeed, though most financial advisors are likely to discourage clients from investing in cryptocurrencies, the currencies could offer an attractive return on investment. For example, the value of one bitcoin today exceeds $4,000, an overwhelmingly exponential increase from $0.0001 in 2009.
Cryptocurrencies: Background, Details, Advantages Anyone mildly acquainted with cryptocurrency has probably heard of a currency called Bitcoin. Bitcoin and the success of bitcoin are what helped surge interest within the entire cryptocurrency market, as many view bitcoin as the pioneer of the market as a whole. According to the authoritative website cointelegraph.com, “A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography
RMMagazine 1 Tuttle, H. (2018). Only half of ransomware payouts result in data recovery. Retrieved from http://www.rmmagazine.com/2018/04/02/only-half-of-ransomware-payouts-result-in-data-recovery/ Tuttle (2018) describes how ransomware attacks are rising and people are losing their data to these attackers, who hack into computers and networks, take the information that is stored therein by locking out the users and obliging them to pay a ransom in order to get access to their data. This is why it is called
Introduction Blockchain technology is an innovative addition to the financial market. What began as a brainchild by the people or person known as ‘Satoshi Nakamoto’, blockchain technology has evolved and become something far greater than most would have imagined. Blockchain technology allows for digital data to be distributed (not copied), allowing for it to become the foundation for a new kind of internet. Businesses have used the technology to implement the
Securities AnalysisSummary of the articleIn the article, Marc Pilkington examines the aspect of the dollar-based international monetary system. The fundamental conception of a theory of money ought to be the unit of account. The procedure whereby money is generated in credit-based economies is basic and simple. Every time a bank makes a loan, there is the formation of new bank credit with new deposits, and therefore brand new money is
57 Spillover Effect on the Stock Market and Bond Prices in Relation with GARCH Abstract This study examines the spillover effect between bond and stock markets in the U.S. using GARCH. The finding of a unidirectional spillover flow from bonds to stocks in the U.S. is discussed in the light of new marketplace variables that have been introduced into the markets in the previous decade. These variables include the rise of HFT, algorithm-driven
Annotated Bibliography- For the annotated bibliography you should write approximately one paragraph on each source, explaining what the source is, where it is from, and what it contributes to your research1. Acharya, Viral V., and Lasse Heje Pedersen, 2005, “Asset Pricing with Liquidity Risk,” Journal of Financial Economics 77(2), 375–410This journal articles comes from the Journal of Financial Economics and discusses many of the value investing principles that have made