Cryptocurrency functioning in the global economy

The article reveals a conceptual basis of the cryptocurrency functioning. The main types of cryptocurrencies are featured and analyzed as well as their general strengths and weaknesses. Based on the price dynamics correlation analysis of some cryptocurrency types, a general low level of dependence between digital assets is established. The main functions of the cryptocurrency are formulated in the form of transformed money functions. Also, additional functions of cryptocurrencies are defined on the basis of their innovative nature, as well as the role in the modern financial system and world economic relations

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

Flight to Quality in Cryptocurrencies

The topic of cryptocurrencies has been on the forefront of investors’ minds as they have seen ridiculous returns from the volatile swings in price. Its value highly debated because the asset is not backed by a hard asset. If we look back at the beginning of our country, we see how each state had its own currency and the difficulties that users faced around who would accept that as legal tender. The birth of a federal currency was accepted because it served as a medium of exchange and was backed by gold through the U.S. government. The final evolution of the U.S. dollar was moving away from the gold standard to a fiat currency backed only by the confidence in the U.S. government’s word. Today, we live in a globalized world where there is significant communication between countries around the globe that it seems that we have almost come to the same crossing point that our country saw when it first adopted a federal currency. For cryptocurrencies to be adopted as the standard around the world, we must first discuss why they would carry the same value as the current federal currencies that are already set in place and why there may be a shift. The paper will be investigating the reasons that cryptocurrencies may gain popularity first as a flight to quality asset before a widespread adoption throughout business and individuals. This carries great importance as the adoption of cryptocurrencies would mark a new era of untested, autonomous free markets around the globe. We will look at current debt levels, different asset class correlations, perceived stable currencies, and if cryptocurrencies can act as an alternative asset. The current idea of flight to quality assets is moving away from more risky assets like equities or unstable currencies to fixed income or stable currencies like the USD but what if investors lose faith in some of the U.S. denominated assets