Research topic: The impact of cryptocurrency on economy


This research proposal illustrates the impacts that the cryptocurrency has on the economy. Over the last decade, cryptocurrency has gained huge popularity in different countries.

It opposes the idea of a centralised entity such as government and banks to control the monetary system and shares more power with its own users. The impacts of cryptocurrency are removing the need of middlemen, eradicating entry barriers, complicating regulations, segregating transactions from USD, allowing international transactions and development of ETF.

Application of reliable and authentic secondary sources and no unscrupulous form of secondary sources are being considered for the research work. 


Cryptocurrency is often described as the digital currency which are developed following the cryptographic protocols which ensure the transactions cannot be faked and it remains secure.

The fact that it is not managed by central authority or in other words, it remains theoretically immune to the old interference and control of the government due to its decentralized feature of blockchain(Narayanan, et al., 2016).

With the use of private and public keys, users can carry out the transactions quite easily and it also adds substance to its privacy and security features. There are many cryptocurrency available in the market such as Bitcoin,Litcoin,Monero, EOS,Ethereum, NEO etc.

Since its inception in the form of Bitcoin by Satoshi Nakamoto in 2008, it has created a radical transformation in the way payments are being done (Telegraph, 2018).

Such is the growth of the cryptocurrency in the last decade, it has completely changed the perception towards form of money. With the increasing investment in the cryptocurrencies across the world, they have started to take the financial entities by storm and showed their major impact on the economy.

Despite the huge popularity gained in the last decade, cryptocurrency is still suffering from its highly volatile nature and questions have been raised over its effectiveness.

Research aim and objectives

The way cryptocurrency has gained momentum in the last few years is quite astonishing. Cryptocurrency such as Bitcoin has shown massive surge in the current calendar year as the price per bitcoin was under $ 4,000 at the starting of this year and at the end of May, it has gone upto $ 9,000 per bitcoin (Forbes, 2019).

This staggering surge by 120 % in the price of bitcoin is due to the fact that people are seeing it as once in a lifetime opportunity and in future, it is expected to increase more. Other cryptocurrencies such as Ethereum, Dash, Rippleetc have also gained huge popularity among the consumers of the cryptocurrency.

Despite the massive investment made by the consumers in these cryptocurrencies, few major concerns have been raised on cryptocurrencies such as shortage of price uniformity, price manipulation, cybercriminal activities etc(Raymaekers, 2015).

This research aim of the study emphasizes on the impact that the cryptocurrency has on the economy. The objectives of this research are as follows:

  • To illustrate the concept of cryptocurrency.
  • To highlight the impacts of cryptocurrency on the economy.
  • To exemplify the recommended solutions for the challenges due to cryptocurrency.

Project rationale

The arrival of cryptocurrency into the global market is only a decade old and it has created quite a stir on the worldwide economy. The fact that the government or financial institutions play no role in the financial transactions carried out by investors of crypto assets have created major issues for these entities(Narayanan, et al., 2016).

This subject of discussion is quite appealing in the sense that it facilitates the owners of cryptocurrency the power to carry out the transactions without indulging any protocols from government and financial institutions. The rise of prices of the crypto assets such as Bitcoin and the increasing number of people investing in cryptocurrency have also impacted the economy.

Therefore, through this work I would like to highlight the impacts cryptocurrency has on the economy and the challenges it presents. In addition to the intriguing nature of this research, much has not been elaborated in academic literatures related to the impacts it has on the global economy. Hence, this research proposal is going to reflect on the impacts of the cryptocurrency on economy.

Literature review

According to Narayanan, et al., (2016), cryptocurrency are presented as the digital assets which are developed by the use of blockchain technology. As the name suggested, this form of digital currency applies cryptography to secure the transaction process.

More than thousand cryptocurrencies are present across the world. This digital form of currency are often viewed by many people as the lynchpin of a future economy. From the article by, the fundamentals of cryptocurrency has been based on the notion of decentralisation which is exactly the opposite of the centralised systems that currencies of different economies have followed over ages.

Cryptocurrency opposes the idea of a centralised entity such as government and banks to control the monetary system. Bitcoin, which is the first cryptocurrency developed to offer an alternative solution to the centralised monetary system and it does not involve the need of any intermediaries, for example – payment processors and banks.

Bypassing the centralised system has allowed the cryptocurrency users to have an immutable and transparent transaction, lesser transfer fees, secured and faster confirmation time. Although, decentralisation is prioritised in the cryptocurrency but many cryptocurrency has evolved in the last few years based on the centralisation system(DeVries, 2016).

Cryptocurrency with centralisation system focuses on either token ownership or mining centralisation. The best example of centralised cryptocurrency is Ripple where the founding company owns almost 60 % of the pre – mined currency supply. On the other hand, Mining centralisation has two key elements and they are centralised nodes and hashing power centralisation.

Centralised nodes explains the degree of nodes controlled by the entity itself and the best example is NEO which has 7 validation nodes. Whereas hashing power centralisation underlines the nodes computational power and it happens when most of the computational power is restricted to a single entity.

Whether it’s a centralised or a decentralised from of cryptocurrency, cryptocurrency has garnered massive attention from the consumers across the globe. The fact that since the inception of first cryptocurrency i.e. Bitcoin in 2008, crypto assets in the current year has reached a figure of $ 823 billion USD as their total market capitalisation and thus influencing the economies across worldwide.

The major impacts of cryptocurrency on the economy can be seen in different ways and they are segregating transactions from USD, removing the need of middlemen, eradicating entry barriers, complicating regulations, allowing international transactions and development of ETF.

From the article by Elliott, (2017), decentralised cryptocurrency such as Bitcoin does not need an intermediary as it discards the involvement of centralised institutions such as banks and government entities, instead gives the power to the users of the currency while verifying the transaction. Thus, this eradication of the service requirements from the financial institutions has made them worried.

Although this gives more power and privacy to the owners of crypto assets but it has raised some serious concerns because of no following of the protocols during these financial activities and it has serious implications on international level transactions(Elliott, 2017).

For ages, U.S dollar has been considered as the currency of the global economy and used as a benchmark of mainstream financial activities across the globe. But with the adoption of the cryptocurrency as the global currency, the status of U.S dollar across worldwide will be in jeopardy. Already different countries have introduced cryptocurrency and the prime example of it is Venezuela. ICO is another feature of cryptocurrency which has its impact on different economies, as stated by Zetzsche, et al., (2017).

Having crypto assets has allowed entrepreneurs to circumvent traditional approach of looking for loan in banks or from venture capitalists. With the help of ICO, the users are able to sell their portion of the crypto assets in return for funding for their business. This has not gone well with banks of many countries such as People’s Bank of China has completely discarded them. With the use of more cryptocurrencies, the financial institutions are taking a massive hits and this would surely going to impact the economy of countries as to recover from such losses, banks might increase the taxes on general public.

Due to anonymous nature, cryptocurrency are not adhering to financial regulations and this has presented serious concerns for the government. For example – there were many investors who bought illegal items from Silk Road with the use of cryptocurrency until the organisation had been shut down by FBI(BBC, 2013). More often this kind of anonymity often leads to different scams and people end up losing their investment.

Many consumers are even investing in crypto assets so that they can circumvent from paying taxes which prompted different governments to take serious actions on cryptocurrency. According to DeVries, (2016), the major impact on economy can be seen from the rise of international transactions with the help of crypto assets.

The money that are charged by the banks during international transactions would not further required with cryptocurrency and thus highlighting the loss which can be incurred by the banks in the coming days. Money laundering would become easy with cryptocurrency as the transactions are not regulated so a large chunk of cash can be transferred from one country to another country without even getting noticed.

Based on the article by Raymaekers, (2015), challenges such as highly volatile nature, price manipulation, pumping and dumping out ICO schemes and attention from cybercriminals have been linked with cryptocurrency. Challenge like highly volatile nature of the crypto assets can be explained on the basis of sudden rise of the price of the assets and then fall within short time interval.

“Whales” with larger possession of cryptocurrency assets have the ability of manipulating the market without even investing.Zetzsche, et al., (2017) suggested thatpumping and dumping out of ICO schemes have been another challenges which have affected its market as tokens can be introduced in the market through ICOs and the entrepreneurs use this bargaining chip to surge the price up and getting attention from the investors.

Once they are able to increase the price, these entrepreneurs tend to cash out and leaving the other investors with coins of no values. As stated by Eyal, (2017), due to the nature of money involved in the crypto assets and shortage of regulations to monitor it, it has gained attention from cybercriminals and there have incidents of many heists from these criminals on cryptocurrency trading process.

The unexpected exponential surge in prices of cryptocurrency such as Bitcoin has also raised eyebrows.Therefore to address all these challenges, an ETF (exchange – traded fund) is prioritised which would control the pricing of Bitcoin in the coming days and would mitigate the vulnerability and volatile nature of cryptocurrency, as suggested by Mikhaylov, et al., (2019). Stringent protocols need to be developed for both decentralised and centralised cryptocurrency so that price manipulation can be mitigated.

Research methodology

As the research aim is to highlight the impact of cryptocurrency on the economy, therefore the first step towards achieving it can be done by done by addressing the research objectives through the approach of research methods and techniques.

The current subject of discussion provides a deeper understanding on the concept of cryptocurrency, impacts of it on economy and recommended solutions to mitigate the challenges presented by it. The research purpose of the study is highly important for the development of the research work as without clearly defining the research purpose, it would be hard to address the stated objectives of this proposal(Clarke, Tamaschke, & Liesch, 2013).

To clearly define the research purpose, the reason behind the research work needs to be understood. As the cryptocurrency has gained huge success in the last decade, therefore the impact of cryptocurrency on the economy needs to be evaluated.In order to address the objectives, research philosophy needs to be outlined.

A research philosophy ensures that the researchers have the knowledge and the idea about how they should collect the information and then analyse and use it. Positivism research philosophy specifies the use of factual information so that it allows the researcher to limit their focus on the collection and interpretation of the information and therefore it will be utilised in this proposal(Saunders, 2011).

The fact that positivism philosophy enables the researchers to be independent while performing the research and this means less interaction with participants of the study as the research is based on facts. Factual information of authentic and reliable published journal articles, books, online news articles and magazines would be developed for the content of this study.

Similarly, research approach needs to be selected for this proposal. A research approach can be defined as the decisions taken and methods selected for the detailed methods or even forbroad assumption in context to data gathered and analysed(Mackey & Gass, 2015).

Deductive approach would be used for this proposal. Deductive approach normally takes the general subject of discussion and guides it into being more specific. In this proposal, the impact of cryptocurrency on economy is quite a general subject of discussion and therefore, with deductive approach, this study can be concentrated to be more specific.

Research design has a very broad meaning as some researchers consider it as the option between quantitative and qualitative methods of research whereas others see it as an option to select methods related to information gathering and analysis(Flick, 2015).

The research design also signifies the importance of methods and strategies with respect to gathering and analysis of information. The main characteristics of research design are to provide neutrality, validity, reliability and generalisation.Descriptive research design will be chosen for this proposal.  With descriptive research design, the researchers have the luxury of describing the research subject based on the theories and contents collected from different data sources.

As the research subject is quite general therefore the scientific method of descriptive design enables the researcher to notice and explain the behavior of the subject and not impacting it any form. It is often used where there is no requirement of quantifiable measurements and the subject is more concentrated on the qualitative methods such as use of secondary sources instead on quantitative research.

As an alternative to quantitative experiments which are relatively costlier and time consuming, this research design enables them to finish the study on time. Validity of the research explains the sound nature of the research as this research proposal is trying to meet the research objectives developed in the earlier section, thus it justifies the validity of the research.

On the other hand, reliability of the research depends on the contents of the research and it has been developed from valid and authentic source of secondary information, hence also justifying the reliability of the research.

Research methods

Research methods highlight the strategies and activities considered for this study so that this research work can be finished on a predetermined time frame. The research strategies comprise of the consideration of research philosophy, design and approach for this particular work(Olsen, 2011).

As the research subject is more general in its core, therefore a qualitative analysis would be preferred instead of quantitative analysis. Data collection methods often involve the application of primary and secondary information but in this research work, only secondary information would be preferred. Qualitative analysis would be carried out with the help of thematic analysis based on the literature review done with the application of secondary sources.

Secondary information are gathered from journal articles, books, peer reviews, online news articles and magazines(Blair & Blair, 2014). Thematic analysis is often explained as the simplest way of performing qualitative research analysis. Thematic analysis involves the generation of elements such as theme, code and topic from the qualitative contents.

Thematic analysis guides the researchers to step away from broad observation of data to exploring more meaningful patterns in the study so that it can be aligned with the research objectives. It allows the researchers to distill the information gathered and finds out the broader patterns in the information.

In this research proposal, it would be developed from the secondary contents of the literature review. The elements for the thematic analysis would be considered from the objectives that are addressed in the literature review.

Key ethical issues

Ethical issues that are required to be considered while formulating this research work are the use of reliable and authentic secondary sources and not adopting any unscrupulous form of secondary sources in the formulation of literature review(Wiles, 2012)

.As the literature review would be done based on the contents gathered from different secondary sources such as books, journal articles, online news articles, magazines etc, therefore focus needs to be on the authenticity and reliability of the information gathered from these sources. As the research is related to cryptocurrency and its impact on economy, hence priority should be on gathering viable information on these subject of discussion.

Information should be discarded from personal blogs because these contents would be used in framing the thematic analysis from the literature review. Unscrupulous form of secondary sources needs to be circumvented while framing the literature review as it would only demerit the quality and content of the literature review.


Despite taking all the precautionary measures while conducting the research work and formulating the methods and techniques, certain gaps might still be visible. There are various limitations in this research work and the first limitations is not considering the primary data(Shipman, 2014).

Given the essence of this study, there is no scope for primary research because the study selected highlights quite a broad aspect. The primary research would have provided with the ground reality on how cryptocurrency is influencing the global market and operations of government and financial bodies and thus influencing the economies.

If it would have been narrowed down to particular entity then there would have been more scope for primary research.  The second limitation is the less involvement of quantitative approach in the research work.

No involvement of questionnaire survey and analysis of it directs towards the less use of the quantitative research except numbers are used in literature review section to show the impact that cryptocurrency has on the global market and economy.

The third limitation is some of the researchers do not consider descriptive design as a viable method to meet the objectives of one’s research. As in this research work, descriptive design is used because of the nature of the research study therefore it becomes quite contradictory to the methods and techniques preferred by some researchers.

A mixed method strategy is highly prioritised in the research study as the ideal way of approaching a research and it involves the utilisation of both secondary and primary sources but in this scenario, it has not been followed and this might present itself as a limitation of this study.


The research proposal concludes the impact of cryptocurrency on economy. Cryptocurrency is has been started on the notion of decentralisation which is exactly the opposite of the centralised systems that currencies of different economies have followed over ages.

Decentralisation is prioritised in the cryptocurrency but many cryptocurrency has evolved in the last few years based on the centralisation system. The impacts of cryptocurrency on economy have been highlighted as segregating transactions from USD, removing the need of middlemen, eradicating entry barriers, complicating regulations, allowing international transactions and development of ETF.

Challenges that have been associated with cryptocurrency are highly volatile nature, price manipulation, pumping and dumping out ICO schemes and attention from cybercriminals. The adoption of ETF can be seen as the actions which can mitigate the challenges.

Positivism philosophy, deductive approach and descriptive design would be preferred for this research work. No quantitative analysis would be performed in this research and qualitative research through thematic analysis would be used in this study.

It involves the generation of elements such as theme, code and topic from the qualitative contents of literature review. Use of reliable and authentic secondary sources and not use of any unscrupulous form of secondary sources are considered as ethical considerations.


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