Cryptocurrencies as an Alternative Asset Class

Bitcoin was the first digital currency to rely on a decentralized peer-to-peer network instead of a trusted third party. This was achieved through Bitcoin’s revolutionary underlying technology based on cryptographic proof: the blockchain. After Bitcoin’s emergence, many other so called cryptocurrencies entered the market and we have seen enormous price increases that romised large returns for early users. The return characteristics of cryptocurrencies have been studied by various scholars and some have even declared cryptocurrencies to be an asset class instead of a digital currency. Due to the fast changes in the cryptocurrency market and the increased importance of other cryptocurrencies than Bitcoin, we believe that research focusing on the financial performance of cryptocurrencies should be renewed on a regular basis. Therefore, with this work we aim to shed light on the return characteristics of cryptocurrencies in relation to traditional asset classes and on the potential of cryptocurrencies to improve portfolio diversification. In addition, we investigate the cryptocurrency market, describe selected cryptocurrencies in more detail and provide an overview of potential technological risks arising with the use of cryptocurrencies. Our results indicate that cryptocurrencies provide large return potentials with high levels of volatility but compared to traditional asset classes provide a higher level of return per level of risk. We also find that selected cryptocurrencies can improve diversification in a cryptocurrency portfolio, as well as in a portfolio of international equity and private equity investments. Keywords: Alternative Asset Classes, Cryptocurrency, Portfolio Diversification, Risk-Reward Profile und Cryptocurrency Risk

Cryptocurrency in the Aftermath: Unveiling the Impact of the SVB Collapse

In this paper, we explore the aftermath of the Silicon Valley Bank (SVB) collapse, with a particular focus on its impact on crypto markets. We conduct a multi-dimensional investigation, which includes a factual summary, analysis of user sentiment, and examination of market performance. Based on such efforts, we uncover a somewhat counterintuitive finding: the SVB collapse did not lead to the destruction of cryptocurrencies; instead, they displayed resilience

Prospects of using cryptocurrencies in the context of global financial market development

Магістерська робота присвячена дослідженню блокчейну на прикладі криптовалют. В роботі проаналізовано та порівняно підходи до регулювання первинного випуску монет (ICO) та криптовалют в розрізі країн світу. Проаналізовано сприйняття фінансового ринку та грошово-кредитної системи такого явища як криптовалюти. Досліджено обмеження технології блокчейн, які сповільнюють розвиток криптовалютного ринку. Надано рекомендації розробникам криптовалют та систем, побудованих на блокчейні на основі проаналізованих проблем.The master’s thesis focuses on research of poorly investigated issues in blockchain on the example of cryptocurrencies. Regulation approaches on ICO and cryptocurrencies turnover are also discovered. The issue of cryptocurrencies is researched through the current attitude to cryptocurrencies by financial market and monetary system. The issues of blockchain that limiting development of cryptocurrencies market are discovered. Research also provides implications on the investigated topics for cryptocurrencies and blockchain developers

The Rise and Fall of Cryptocurrencies: Defining the Economic and Social Values of Blockchain Technologies, assessing the Opportunities, and defining the Financial and Cybersecurity Risks of the Metaverse

This paper contextualises the common queries of "why is crypto crashing?" and "why is crypto down?", the research transcends beyond the frequent market fluctuations to unravel how cryptocurrencies fundamentally work and the step-by-step process on how to create a cryptocurrency. The study examines blockchain technologies and their pivotal role in the evolving Metaverse, shedding light on topics such as how to invest in cryptocurrency, the mechanics behind crypto mining, and strategies to effectively buy and trade cryptocurrencies. Through an interdisciplinary approach, the research transitions from the fundamental principles of fintech investment strategies to the overarching implications of blockchain within the Metaverse. Alongside exploring machine learning potentials in financial sectors and risk assessment methodologies, the study critically assesses whether developed or developing nations are poised to reap greater benefits from these technologies. Moreover, it probes into both enduring and dubious crypto projects, drawing a distinct line between genuine blockchain applications and Ponzi-like schemes. The conclusion resolutely affirms the continuing dominance of blockchain technologies, underlined by a profound exploration of their intrinsic value and a reflective commentary by the author on the potential risks confronting individual investors

Convenience Theory of Cryptocurrency Crime: A Content Analysis of U.S. Federal Court Decisions

This article examines cryptocurrency cases decided in the U.S. District and Circuit Courts to determine the applicability of Gottschalk’s convenience theory of white collar crime to cryptocurrency crime litigation and to empirically analyze whether the conditions under which cryptocurrency offenses occurred show support for the convenience theory. Analysis of U.S. federal district and circuit court case law involving cryptocurrency crimes and fraud indicate support for the convenience theory of white-collar crime. Defendants in various schemes were motivated by financial gain, either for the company or for personal use. Their roles and positions in the businesses allowed them access to resources that helped them perpetrate fraud through the following mechanisms: (1) operation of front companies; (2) relationship building by defendants; (3) over representing profits that investors would obtain from purchases of virtual currencies, representing that tokens were safe and reliable investments when they were risky, and overestimating abilities and capacities to provide services promised to investors in securities fraud; (4) breaching fiduciary duties to their clients and corporate stockholders by misappropriating profits for their own personal gain; and, (5) engaging in dark web transactions that guaranteed anonymity. Defendants also employed various neutralization techniques to justify their crimes

Bitcoin : users’ characteristics, motivations and investment behaviours

In less than a decade, the cryptocurrency known as Bitcoin has gone from a fringe phenomenon to a topic of increasing interest to academia and mainstream investors. However, despite the growing body of research seeking to understand Bitcoin, the pseudonymous, decentralised, and globally-diffused nature of its user base means that the individuals who use it remain poorly understood. In particular, the motivations, risk-appreciation, and investment behaviours of early adopters and innovators are subject to supposition in the absence of data derived from the user base. This thesis seeks to address this gap in knowledge by employing a multi-stage, mixed methodology approach and a theoretical framework to understand the Bitcoin user base. Utilising semantic analysis, a survey of online cryptocurrency communities, and econometric time-series analysis, this thesis addresses the extent and nature of Bitcoin in hedging; how individual users perceive their own motivations, uses, and risks that have driven their behaviour; and the nature of the relationship between the prices of cryptocurrency and indices of confidence. Analysis of the data determined that the use of Bitcoin as an instrument of hedging is limited, and influenced by political and institutional factors. Likewise, its motivations, uses, and risks are reflective of the users’ political ideology, with the community and marketplace becoming more sophisticated as they evolve over time. Additionally, despite several case studies demonstrating risk-averse adoption of Bitcoin, there is no relationship between its prices and confidence.Doctor of Philosoph

Cryptocurrencies and future financial crime.

Background: Cryptocurrency fraud has become a growing global concern, with various governments reporting an increase in the frequency of and losses from cryptocurrency scams. Despite increasing fraudulent activity involving cryptocurrencies, research on the potential of cryptocurrencies for fraud has not been examined in a systematic study. This review examines the current state of knowledge about what kinds of cryptocurrency fraud currently exist, or are expected to exist in the future, and provides comprehensive definitions of the frauds identified. Methods: The study involved a scoping review of academic research and grey literature on cryptocurrency fraud and a 1.5-day expert consensus exercise. The review followed the PRISMA-ScR protocol, with eligibility criteria based on language, publication type, relevance to cryptocurrency fraud, and evidence provided. Researchers screened 391 academic records, 106 of which went on to the eligibility phase, and 63 of which were ultimately analysed. We screened 394 grey literature sources, 128 of which passed on to the eligibility phase, and 53 of which were included in our review. The expert consensus exercise was attended by high-profile participants from the private sector, government, and academia. It involved problem planning and analysis activities and discussion about the future of cryptocurrency crime. Results: The academic literature identified 29 different types of cryptocurrency fraud; the grey literature discussed 32 types, 14 of which were not identified in the academic literature (i.e., 47 unique types in total). Ponzi schemes and (synonymous) high yield investment programmes were most discussed across all literature. Participants in the expert consensus exercise ranked pump-and-dump schemes and ransomware as the most profitable and feasible threats, though pump-and-dumps were, notably, perceived as the least harmful type of fraud. Conclusions: The findings of this scoping review suggest cryptocurrency fraud research is rapidly developing in volume and breadth, though we remain at an early stage of thinking about future problems and scenarios involving cryptocurrencies. The findings of this work emphasise the need for better collaboration across sectors and consensus on definitions surrounding cryptocurrency fraud to address the problems identified