The term ‘Cryptocurrencies’ evolved as an imperfect form of memory, one which fits somewhere in between commodity money and fiat money, a synthetic commodity money. Regardless, of its technological and monetary benefits, cryptocurrency lack to attract larger parts of the German population. With the use of an active research approach, this research paper utilizes three different work cycles to identify the potential. Further insights from qualitative sources including an intensive literature review on the types and functionalities of money, case studies of potential consequences that private or state-owned cryptocurrencies have on the economy, and expert interviews will support to identify the macroeconomic and social barriers towards the acceptance of cryptocurrencies in the German economy. Cryptocurrencies characteristics follow Austrian economic principles which clash with the current fiat-money system. Broader adaption of cryptocurrencies would weaken the government's monetary policy tools, whereby the European Commission stands ready to take regulatory actions against such a scenario, but shows no further indications to implement a central bank digital currency of its own.
The findings show that the intrinsic aspects of private cryptocurrencies, like Bitcoin, perceivably creates an unsecured, unfamiliar and unregulatable, even criminal, playfield for most of the German citizens. Whereas most cryptocurrencies provide a strong potential to act as a better medium of exchange, it’s deflationary characteristics of being limited in supply and un-controllable features make most cryptocurrencies a less valuable unit of account and store of value, due to high price fluctuations that are solely affected by the demand and perception of its users. Government regulations and negative sentiment of national media communicate Bitcoin as a risky financial asset and further falsely highlight its limited use to act as a currency. German citizens have a strong saving culture and high trust in the Euro and fore mostly neglect risky financial investments. A further lack of retailer acceptance of cryptocurrencies as a payment method has dispirited a potential network effect, which is a fundamental requirement for a successful adoption of new technology.
Table of Contents
1.Introduction
1.1 Initial Situation
1.2 Objective & Research Approach
1.3 Theoretical & Practical Relevance
1.4 Methodology & Structure
2. History of Money
2.1 The types & functions of Money
2.1.1 Medium of Exchange
2.1.2 Unit of Account
2.1.3 Store of Value
2.2. Cryptocurrency: A paradigm shift
2.3 Types of Cryptocurrencies
2.3.1 Type 1: Closed Virtual Currency Schemes
2.3.2 Type 2: Virtual Currency Schemes With Unidirectional Flow
2.3.3 Type 3: Virtual Currency Schemes With Bidirectional Flow
3. Monetary policy’s cryptocurrency challenge
3.1 The impact on the European Monetary System & Money Supply
3.1.1 Monetary Aggregate
3.1.2 Fractional Reserve Banking
3.1.3 Distributed ledger money and Austrian policy objectives
4. Empirical Part
4.1 Monetary Theory and Potential Use Cases of Cryptocurrencies
4.1.1 Central Bank Issued Digital Currency (CBDC)
4.1.2 Private Cryptocurrencies as an Alternative Currency
4.2 Research Design and Process
4.2.1 Theory Models of Adopting Cryptocurrencies
4.2.2 Research Quality
4.3 Research Method and Data Collection
4.3.1 Selection of Interviewees
4.3.2 Questionnaire format
4.4 Evaluation Methods
4.5 Evaluation of the Findings
4.5.1 Function of Money
4.5.2 Intrinsic aspects of cryptocurrencies
4.5.3 External forces
4.5.4 Future Outlook
5. Conclusion
5.1 Discussion
5.2 Critical Reflection
Objectives and Research Themes
This master thesis critically assesses the barriers to the integration of cryptocurrencies within the German economy. By analyzing the functionality of money and contrasting it with current blockchain-based assets, the research aims to determine why mass adoption remains limited in Germany despite the technological potential of decentralized finance.
- Evaluation of money functionalities (Medium of exchange, Unit of account, Store of value) in the context of cryptocurrencies.
- Analysis of the impact of cryptocurrencies on the European Monetary System and money supply.
- Investigation of potential use cases for Central Bank Issued Digital Currencies (CBDC).
- Qualitative research through expert interviews to identify internal and external barriers to adoption.
- Reflections on the German "cash culture" and regulatory skepticism toward decentralized assets.
Excerpt from the Book
1.1 Initial Situation
“I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed, is a reliable e-cash, a method whereby on the internet you can transfer funds from A to B without A knowing B or B knowing A, the way in which I can take a twenty-dollar bill and hand it over to you and there is no record of where it came from and you may get that without knowing who I am.” - Milton Friedman (1999)
The Professor and Nobel Prize winner in economics, Milton Friedman was a true visionary and advocate for human freedom and economic theory. Not many people realized the value of the internet when it became public in the early 1990’s. It turned out to be a revolutionary commodity that changed how humans interact, communicate and transfer data. The internet has initially been invented as a cryptographic way of sending a message from one server to another and endorsed the globalization. It further advanced a flexible cross-border transfer of money with the rise of web-based third-party payment processors. The vast increase of households with access to the internet has amplified the opportunities to digitally transfer, invest or store wealth and foremost increased the global GDP growth (Manyika & Roxburgh, 2011).
Summary of Chapters
1.Introduction: Sets the stage by contextualizing cryptocurrencies within economic history and outlining the research approach to identify adoption barriers in Germany.
2. History of Money: Provides an overview of the evolution of money from bartering to physical coins, paper money, and electronic forms, positioning cryptocurrencies as the next evolutionary step.
3. Monetary policy’s cryptocurrency challenge: Examines how decentralized assets interact with current European monetary frameworks, focusing on money supply and central banking objectives.
4. Empirical Part: Presents the primary research findings, including expert interview data regarding the potential for CBDCs and the hurdles for private cryptocurrency integration.
5. Conclusion: Summarizes the key findings and highlights that while technological advancements continue, structural and behavioral barriers in the German market persist.
Keywords
Cryptocurrencies, Bitcoin, German economy, Central Bank Digital Currency, CBDC, Blockchain, Monetary policy, Financial innovation, Adoption barriers, Digital transformation, Eurosystem, Decentralization, Payment systems, Expert interviews, Financial stability.
Frequently Asked Questions
What is the fundamental focus of this thesis?
This thesis examines the barriers preventing cryptocurrencies from becoming fully integrated as a rational alternative to fiat money within the German economy.
What are the primary thematic areas covered?
The work covers monetary theory, the history of money, the impact of blockchain on the European Monetary System, and a qualitative empirical study involving experts in the field.
What is the core research objective?
The primary goal is to critically assess the macroeconomic and social factors that hinder the mass adoption of private cryptocurrencies in Germany.
Which scientific methodology is applied?
The researcher utilizes an active research approach, incorporating secondary literature reviews, case studies, and qualitative guided expert interviews.
What does the main body of the work address?
The main body focuses on theoretical frameworks of money, the challenge cryptocurrencies pose to central banks, and an analysis of adoption models including CBDC scenarios.
Which keywords best describe this research?
Key terms include Cryptocurrencies, Bitcoin, CBDC, German economy, Blockchain, Monetary Policy, and Adoption barriers.
How does the "cash culture" in Germany impact cryptocurrency adoption?
According to the expert interviews, the strong German preference for physical cash acts as a significant cultural barrier, often fueled by a perceived need for anonymity and security that current cryptocurrency solutions have not yet fully addressed.
What is the expert view on the role of the European Central Bank (ECB)?
Experts generally agree that the ECB is unlikely to stop private cryptocurrencies entirely, but it is also unlikely to issue its own "Krypto Euro" in the near future due to the institutional complexity of the Eurozone.
How do bankers view the rise of cryptocurrencies?
Views are divided; while some bankers fear disruption to traditional business models, others see the underlying blockchain technology as an opportunity to innovate and improve banking infrastructure.
- Citation du texte
- Anonym (Auteur), 2018, What are the barriers to the acceptance of cryptocurrencies in the German economy?, Munich, GRIN Verlag, https://www.grin.com/document/458035
