An Analysis of Cryptocurrency and Their Functioning

Abstract

Cryptocurrency is a digital currency which acquires cryptography to secure the transactions. It is designed to make payments anonymously and in more secured way. In this paper, I first explain the detailed meaning of cryptocurrency. Then some features of trade in cryptocurrency are discussed such as the technique include the zero involvement of any governmental authority and allowing users to store and trade anonymously. Next, I demonstrate the facts and functioning of blockchain technology. It is believed that block chain technique has potential to disrupt many industries such as finance, law, banking or accounting. For the explanation of this, I state some critic point of views for the use of cryptocurrencies. It also faces criticism for vulnerabilities of the infrastructure and volatility of exchange rates. Being the nature of anonymous, cryptocurrency becomes a host for money laundering, tax evasion and other illicit activities. After this, I bring to discuss the types of cryptocurrency. Today there are thousands of cryptocurrencies with various functions and specifications. Some of the very first and famous cryptocurrencies are studied in the paper such as Bitcoin, Ethereum and XRP. The timeline of global market growth of cryptographic currencies are covered next. The idea of digital currency is not new. From 1998, Wei Dai’s ‘B-money’ concept to first ever functioning cryptocurrency ‘Bitcoin’ in 2008, many digital currencies introduced. For that some basic terminologies are bought to discuss in the paper. And lastly the journey of cryptocurrency in India is described.

Keywords: Cryptocurrency, Blockchain, Global Market, Digital Currency, Virtual Asset, Bitcoin, Ethereum, Cryptography

JEL Classification: G11, G12, G15, G18, G19