55-706553 MSc Big Data Analytics Sample

Debate the use of crypto-currencies”

Introduction

Crypto currency can be defined as a specific kind of digital asset and this type of digital currency operates via the internet without needing to be upheld or maintained by a central authority, such as the government or a bank. The CC ecosystem saw an explosion in market capitalization that reached 795 billion USD on January 6, 2018, at its peak. During the past three years, the ecosystem of Crypto currency Capital saw more than 400 crypto-funds launched, aside from hedge funds and institutional investors interested in diversifying their portfolios. Based on this particular factual knowledge, the study has aimed to argue over “the use of crypto-currencies”.

Argument

In accordance with the words of some critics, crypto currency has been considered as a medium of “frictionless financial transaction”. On the basis of the viewpoint of Senner & Sornette (2019), ideally, a frictionless market would be one in which there would be no transaction costs and restrictions. In support of the statement of Schinckus et al. (2020), it can be stated that the elimination of the market cost increases the risk of encountering fraud. VISA processes more than two million transactions every single day, compared to the digital coins and adoption that are increasing rapidly (Zhao & Duncan, 2018). In addition, the transaction speed has been considered as another metric which is important that crypto currenciesdo not able to“compete with on the same level as players like VISA and Mastercard until the infrastructure delivering these technologies is massively scaled”. In a nutshell, this digital asset offers several advantages with disadvantages underlined that the customers feel attraction towards this crypto currency nowadays.

In current pieces of literature based on crypto-currencies, it has been stated that this particular digital asset has offered the users access to it anonymously. As a consequence of that phenomenon, the currency can change values as there is no authority to regulate the value. In some cases, it has been stated that this particular attribute of this digital currency helps to go beyond the global boundaries (Kim et al. 2021). On one hand, the lack of regulations regarding this particular kind of digital asset increases the issue and market risks of investments, on the contrary, offers the users a vast market of trading without any boundaries. Based on these circumstances, it can be stated that digital currencies may lose value and become worthless if consumers or companies stop using them or switch to another cryptocurrency from one (Viktoriia & Karyna, 2021). On the other hand, the “Financial Conduct Authority” (FCA) does not regulate the crypto currency market, so one’s business is not protected. As per the view of Hamledari & Fischer (2021), it can be stated that as the crypto-currency offers a straightforward and quick process of transaction, the usage of crypto currency has become wider among large organizations. However, the lack of governance and increased rate of cybercrime increased the risk of losing digital wallets as well.

Conclusion

In order to sum up all that has been stated so far in this study, it can be stated that the study has cast light on both good and wrong implications of the digital asset named crypto-currency. Decentralized crypto-asset governance forms a basis for reaching a consensus on a shared perception of reality without the need for trust. In the benefits, it has been seen that the crypto currency allows the person who wants to invest in trading to access a wide market without any boundaries. This free availability of the market demonstrates on the other hand that the currency has no governing body or regulations. In addition to having appropriate and effective regulatory acts, this currency can lose its value and the investor has the possibility of losing digital wallet as well.

References

Hamledari, H., & Fischer, M. (2021). The application of blockchain-based crypto assets for integrating the physical and financial supply chains in the construction & engineering industry. Automation in construction, 127, 103711. Retrieved from: https://arxiv.org/pdf/2012.02147

Kim, A., Trimborn, S., &Härdle, W. K. (2021). VCRIX—A volatility index for crypto-currencies. International Review of Financial Analysis, 78, 101915. Retrieved from: https://www.econstor.eu/bitstream/10419/230803/1/irtg1792dp2019-027.pdf

Schinckus, C., Nguyen, C. P., & Ling, F. C. H. (2020).Crypto-currencies trading and energy consumption.International Journal of Energy Economics and Policy, 10(3), 355. Retrieved from: https://pdfs.semanticscholar.org/6b61/e3c63e720dc9c45f08e072d5a2fd3e998886.pdf

Senner, R., &Sornette, D. (2019). The holy grail of cryptocurrencies: ready to replace fiat money?.Journal of Economic Issues, 53(4), 966-1000. Retrieved from: https://www.research-collection.ethz.ch/bitstream/handle/20.500.11850/321135/1/thesis_foronlinewithoutCV.pdf#page=20

Viktoriia, S., &Karyna, K. (2021, January). VIRTUAL CURRENCY: DISTRIBUTION AND RECOGNITION. In The 6th International scientific and practical conference “The world of science and innovation”(January 14-16, 2021) Cognum Publishing House, London, United Kingdom. 2021. 1289 p. (p. 257). Retrieved from: http://lib.udau.edu.ua/bitstream.pdf

Zhao, Y., & Duncan, B. (2018, July).The impact of crypto-currency risks on the use of blockchain for cloud security and privacy. In 2018 International Conference on High Performance Computing & Simulation (HPCS) (pp. 677-684). IEEE. Retrieved from: http://bobduncan.info/sites/default/files.pdf

Appendix

Appendix 1: Stakeholders and Criteria

The topic / question/ position
Issues Enter against the closest category. Don’t worry about overlaps	● Description ● Impact, positive and negative.	Stakeholder 1 Common People	Stakeholder 2 Government agencies	Stakeholder 3 Industry Bodies	Stakeholder 4 Investors and Traders	Stakeholder 5 Developers
Criteria 1 Market risk	· The value of crypto currency in the market fluctuates according to supply and demand. · The impact is quite positive as crypto networks reap economic benefits through innovation, investment, jobs and taxes	Common people who possess crypto currency use it as a digital asset (Viktoriia&Karyna, 2021).	As crypto currency is not regular money and is subjected to market risk, government does not support its use (Zhao&Duncan, 2018).	It has made it easier for entrepreneurs to reach international markets rather than strictly sticking to the national markets (Kimet al. 2021).	The investors will be highly affected when the market value of crypto currency falls (Viktoriia&Karyna, 2021).	Developers would not be attracted if the market value of crypto currency decreases (Zhao & Duncan, 2018).
Criteria 2: Security Risk	· Complex encoding helps crypto currency transactions within digital platforms. · security has a negative impact as it is prone to operation glitches, malware and breaches.	The public are mostly in fear that the crypto currency will be stolen (Zhao & Duncan, 2018).	Government does not support crypto currency, which makes security more vulnerable (Kim et al. 2021).	Industries have to set up firewall and issue complex framework to minimise security risk (Viktoriia&Karyna, 2021)	Investors have to take preventive measures when trading with crypto currency due to its poor security (Kim et al. 2021).	Developers are the most affected as they try to enforce crypto currency with more complex coding to avoid breach (Viktoriia, S., &Karyna, 2021).
Criteria 3: Government regulations	· Government regulations have been quite aggressive as most country government do not support the crypto currency. · Impact is negative as some countries have even banned trading with crypto.	Public are often reluctant to pursue crypto currency trading due to government regulations (Schinckuset al. 2020).	Government bodies and state agencies try to remain indifferent towards crypto currency (Viktoriia, S., &Karyna, 2021).	Industries keep a close eye on the international development of crypto as if crypto gets banned then their investment will face loss (Kim et al. 2021)	SInvestors and traders have shared the same sentiment as they take notice of government laws before dealing with crypto currency (Zhao & Duncan, 2018).	The developers are trying to make the government assured that crypto currency is safe money but it will still need time (Schinckuset al. 2020).
Criteria 4: Issue of inheritence	· The unregulated nature of bitcoin means that without the keys needed to view a relative’s digital wallet, there’s no way of accessing their funds if they are to pass away · It has a negative impact on end-users.	As issue of inheritance is not yet resolved, the general public has preferred to not get involved too much (Zhao & Duncan, 2018).	Government bodies have stated that if the money cannot be accessed, they will not be able to help (Kim et al. 2021).	Industries have made backup plans such due to the issue of inheritance (Viktoriia, S., &Karyna, 2021).	Investors and traders do not have any back-up plans, as such the issue of inheritance can severely affect them (Zhao & Duncan, 2018).	Developers are trying to find suitable ways by which the issue of inheritance can be solved (Schinckuset al. 2020).