Cryptocurrency: History, Advantages, Disadvantages, and the Future

Cryptocurrency is a digital asset that has seen a large amount of attention within the past five years. Its origin is intriguing to some based upon its newness, yet it has invoked mysticism and skepticism in others. Bitcoin is the most recognizable currency, receiving heavy media attention. There are several other cryptocurrencies as well, less in the spotlight. Most appealing to cryptocurrency could include lack of government oversight, and increased privacy available to the consumer(s) (Bunjaku, Gjorgieva-Trajkovska, and Miteva-Kacarski, 2017, p. 37). Additional advantages include the simplicity in the start-up process, the ease of transferability, and the opportunity to have a seamless process in investing and/or exchanging monies. Cryptocurrency creates the ability to invest for some people groups that could never invest before and diversify investment portfolios (Theron and van Vuure, 2018, p. 2). While the newness of cryptocurrency certainly has been appealing for some, it also has been perceived oppositional by others. There has been concerns identified with regard to the level of trust required, an obvious and significant drawback if valid. Another identified disadvantage to cryptocurrency is its low amount of oversight and liquidity hurt for investing future. The ability for cryptocurrency to be used for illegal and/or evil activity is an ethical drawback (Nian and Chuen, 2015, p. 15). Lastly, the uncertainty of the future is a significant drawback. The future of cryptocurrency requires much economic forecasting. The new changes that cryptocurrency will bring to traditional economic institutes is an area which cryptocurrency needs to explored more. Lastly, is cryptocurrency a fad or an economic bubble

An examination of blockchain technology and Venezuela’s sovereign-based cryptocurrency including the effects of implementing a sovereign-based cryptocurrency in developing countries.

Masters Degree. University of KwaZulu-Natal, Durban.After the 2008 financial crisis and the failure of the banking system there was a need to develop alternate payment systems where there was no intermediary involved. In 2008, Bitcoin was developed by Satoshi Nakamoto, and it did not require an intermediary. The invention of Bitcoin and cryptocurrencies in general, has numerous advantages that can be beneficial to society. Venezuela, a developing country, created their own sovereign cryptocurrency as an attempt to ease the economic strain that burdens the country. The main focus of this research is to examine cryptocurrencies and blockchain technology by looking at Venezuela’s Petro as the model to assess whether such a development would be beneficial to a developing country such as South Africa. In addition, any risks that are attached to this invention will be examined. his research was based on the qualitative approach. Various journal articles, online articles and legislation was consulted to assist with the research of this paper. This research was aimed at assisting the relevant stakeholders of developing countries such as South Africa since such countries are facing economic crises. The Petro which was introduced by Venezuela has been critiqued to have numerous flaws due to the lack of research and investigation by the Venezuelan government. Furthermore, such a development defeats the purpose of a cryptocurrency. The South African Reserve Bank experimented with distributed ledger technology which is based on the blockchain, where interbank transactions were simulated. Although the experiment was successful, the South African Reserve Bank stated that such a system would not be implemented currently as more research needs to be conducted. Considering the various implications, it was concluded that introducing a sovereign cryptocurrency would not be viable and feasible in a country like South Africa. This research paper recommends that the developing countries consider implementing blockchain technology in various institutions as this technology has many uses and advantages such as assisting with the voting process, as well as minting citizen’s information. A further recommendation is for the South African Reserve Bank to research the area of blockchain technology in the banking system as this would decrease interbank transactional costs thereby allowing more transactions to be completed in a shorter amount of time

The Future of Banking: Consumer Protection and Contagion Risks of Cryptocurrency

The emergence of digital assets in the financial services industry in the 21st century raised concerns pertaining to consumer protection, regulatory oversight, and the safety and soundness of the United States financial system. In the efforts to foster digital assets in financial markets, lawmakers at both state and federal governments have begun spearheading regulatory initiatives aimed at protecting investors and consumers. This paper considers historical and current issues surrounding cryptocurrency, as well as existing policy and regulatory responses at the federal level. Among a wide array of policy issues regarding digital assets, this paper examines the consumer protection and contagion risks of cryptocurrency and their implications on U.S. financial stability. Employing the case study on the collapse of FTX cryptocurrency exchange in November 2022, this paper conducts a regression analysis between the market capitalization of FTX and other major cryptocurrency exchanges to illustrate their contagious and integrative relationships in the cryptocurrency market

The Political Economy of Global Private Currencies

This dissertation examines regulatory responses to global private currencies (GPCs). Through detailed analyses of the history and evolution of private digital currencies, and through case studies of the United States, the European Union, and China, this dissertation identifies five factors that condition regulatory responses: (1) compliance with anti-money laundering (AML) laws, (2) compliance with systems built for fiat currencies, (3) degree of transparency in operations, (4) culture of sovereignty within the nation, and (5) great power competition with other nations. Throughout the dissertation, various political, economic, social, technological, legal, and environmental (PESTLE) characteristics of GPCs are highlighted. This dissertation also proposes a ‘game transformation framework’ (GTF) by combining these PESTLE factors with concepts from game theory. A 2x2 game structure is used to analyze strategic interactions between governments in the three case studies and GPCs on a spectrum between cooperation and conflict

Gatekeepers Are Vital Participants in Anti-Money-Laundering Laws and Enforcement Regimes as Permission-less Blockchain-Based Transactions Pose Challenges to Current Means to Follow the Money

Two phenomena dominate reports about blockchain-based transactions—that they will disrupt and displace legacy banking, securities, and trade intermediaries, and that they present new or greater opportunities for hiding proceeds of crimes or corruption. This essay does not deal with the former topic. Rather, the organizers of the symposium at George Mason University’s Antonin Scalia School of Law asks me to consider the latter question. It proved to be a tough assignment. This essay looks at the separate questions of (1) the degree to which permission-less blockchain transactions will disrupt current anti-money laundering (AML) regimes and enforcement efforts, and (2) what efforts governments that have agreed to pursue goals of deterrence and detection of money laundering may need to initiate as blockchain-based transactions become more common

Implementation of ICO European best practices by SMEs

The article deals with a new financial tool of attracting capital, known as Initial Coin Offering (ICO). In conditions of reduced banking lending and difficult access to finance for SMEs, ICO is viewed to be one of the possible ways to access capital. It considers the main advantages and disadvantages of ICO performance, including its typical features, challenges and regulatory approaches to tax regulation, cybersecurity. The authors of the article determine stages of the ICO mechanism, identifying potential risks and ways to mitigate them, focusing primarily on the need to control and regulate ICO projects. The authors identify the main types of ICO funding, including hybrid and pure funding. The research contains an analysis of ICO trends and their duration for the period of 2013-2017. The capital raised through ICO performance over the period of 2013-2017 is analysed, and determination of the exponential trend line showing the level of its approximation is determined. The study covers the territorial distribution of ICO, in which the top positions regarding the amount of capital raised by ICO are attributed to the USA and EU member states. The existence of ICO regulation in European countries, such as Switzerland and UK, was defined positive in terms of further development of the relevant regulation in the financial market. The article considers the best ICO practices in EU member states. To mitigate risks relating to ICO performance and to increase the level of investment, it would be reasonable to create regulatory rules in every country where cases of ICO performance are reported, based on the practice of the mentioned European countries. The authors give recommendations regarding ICO regulation in Ukraine, taking into consideration the relevant European experience

Cryptocurrency as Disruptive Technology: Theoretical Insighs

Bitcoin, Cryptocurrencies and Blockchain technologies are widely discussed nowadays. The Bitcoin market value is discussed in top magazines, the names of people who earned money from cryptocurrencies are on the Richest People list. The Blockchain technology is said to be a one of disruption pioneers on the one hand, and cryptocurrency is said to be an illegal phenomenon on the other hand. The Fourth Industrial Revolution, which is based on digitalized industry is changing the power centres. Will cryptocurrency disrupt the financial sector? Or perhaps it will disrupt the retail market or global monetary policy. Disruptive technologies together with the Internet, Mobile Internet and Internet of Things are changing our world. While society has gained simple and reachable comfort for a cheaper price on the one hand, many people have lost their jobs on the other. Consequently, the authors presuppose discussion about the phenomenon of cryptocurrency through the context of social phenomena and legal regulation: divulge definitions, principles, relating to the topic; identify possible tendencies according to legal regulation and its practical realization

A CRITICAL LEGAL STUDY RELATING TO THE PLAUSIBILITY OF A REGULATORY FRAMEWORK ON CRYPTOCURRENCY IN SRI LANKA

Incredible innovations come with huge opportunities for the then existing practices and also with potential risks associated with them. Cryptocurrency is not an exception to this. Crypto is a constantly evolving topic and has gained momentum in both national and international forums. Having introduced ten years ago, the lack of unanimity in regulating and defining the crypto and associated mining process and the dilemma in associated jargon has created the lawmakers to have only three options available and they are to completely ban, regulate the mechanism, or completely ignore it and let the cryptocurrency to float on the hands of the owners. This paper intends to analyze the current legal positions in India and the European Union in regulating Virtual Currencies. It is an undisputable fact how the opportunity is exploited by the abusers to engage in illicit purposes in the absence of an effective legislative mechanism. The paper engages in justifying the necessity of a regulatory mechanism, which will be conducive to the thriving of the economy of the country amidst an economic crisis. The paper employs a black letter approach and an international and comparative one where the decided case laws and legislations are used as primary sources, and the scholarly articles and journal articles constitute secondary sources. The paper suggests that a complete ban will not be a panacea but a regulation to a certain extent is mandatory rather than ignoring the topic from the eyes of the legislature