It is the objective of this paper to elaborate on what Cryptocurrencies are and which potentials they bear. At first, an overview of the current Cryptocurrency market is given before the current financial system is explained, in order to understand the different nature of Cryptocurrencies. This is followed by the analysis of regulations of virtual coins in the United States, Europe, and China. Moreover, four main potentials of Cryptocurrencies will be examined before general risks will be explained. To end, a conclusion and an outlook of the Cryptocurrency environment is given.
Cryptocurrencies are a phenomenon which has recently conquered the financial market. While Digitization processes are continuously disrupting the sector, Cryptocurrencies are the latest evolvement. During their presence of the last ten years, they remained generally uncontrolled and unregulated by financial authorities. They do not have any company or government issuing them and rather serve as an independent, peer-to-peer medium of exchange. They are virtual tokens which are stored and distributed on a so-called Distributed Ledger, the Blockchain, on which every participant of the network obtains the latest version in an encrypted format.
The market of Cryptocurrencies has witnessed high fluctuations and the appearance of new currencies, reaching its ultimate peak at the beginning of 2018. Since traditional measures do not work and these coins, since they are privately created and do not have an underlying asset, it is hard for financial authorities to regulate or even predict the movement of Cryptocurrencies. However, various potentials exist, which may change the financial system by the regulated implementation and acceptance of virtual coins.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Cryptomarket Overview
- Current Financial System
- Cryptocurrencies and Regulations
- Distributed Ledger Technologies
- Cryptocurrencies
- Regulation of Cryptocurrencies
- Potentials of Cryptocurrencies
- Initial Coin Offerings
- Instant Payments via Blockchain
- Central Bank Cryptocurrencies
- Cryptocurrencies in Emerging Markets
- Risks of Cryptocurrencies
- Security and Transaction Risk
- Forking Risk
- Cyber-crime Risk
- Market Risk
- Credit Risk
- Conclusion and Outlook
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This seminar paper aims to provide an in-depth analysis of cryptocurrencies, exploring their current state, potential benefits, and inherent risks. The paper will focus on understanding the nature of cryptocurrencies, their impact on the financial system, and the regulatory challenges they present.
- The characteristics and evolution of cryptocurrencies
- The current state and future prospects of the cryptocurrency market
- The challenges and opportunities posed by cryptocurrencies for the existing financial system
- The regulatory frameworks for cryptocurrencies around the world
- The potential risks and benefits associated with cryptocurrencies
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the concept of cryptocurrencies and their emergence in the financial market. It highlights the decentralized nature of cryptocurrencies, their reliance on distributed ledger technology (blockchain), and the challenges of regulation.
- Cryptomarket Overview: This chapter provides an overview of the cryptocurrency market, highlighting its volatility and the diverse range of cryptocurrencies available. It discusses the dominance of Bitcoin, the emergence of other popular cryptocurrencies like Ethereum and Ripple, and the rapid market growth experienced in recent years.
- Current Financial System: This chapter explores the existing financial system, contrasting it with the decentralized nature of cryptocurrencies. It examines the role of traditional financial institutions, regulatory frameworks, and the potential impact of cryptocurrencies on this established system.
- Cryptocurrencies and Regulations: This chapter delves into the complexities of regulating cryptocurrencies. It examines the challenges posed by their decentralized nature and the evolving regulatory approaches in different jurisdictions like the United States, Europe, and China.
- Potentials of Cryptocurrencies: This chapter focuses on the potential benefits of cryptocurrencies. It explores their applications in areas like initial coin offerings (ICOs), instant payments via blockchain, central bank digital currencies, and their potential impact on emerging markets.
- Risks of Cryptocurrencies: This chapter outlines the inherent risks associated with cryptocurrencies. It discusses security and transaction risks, forking risks, cyber-crime risks, market volatility, and credit risks.
Schlüsselwörter (Keywords)
Cryptocurrencies, blockchain, distributed ledger technology, decentralized finance, regulation, financial system, Bitcoin, Ethereum, Ripple, ICOs, instant payments, central bank digital currencies, emerging markets, security risks, market volatility, cyber-crime, credit risk.
- Citar trabajo
- Jaby Felix Coronel (Autor), 2019, Regulations, Potentials and Risks of Cryptocurrencies, Múnich, GRIN Verlag, https://www.grin.com/document/904828
