Table of Contents
Introduction and motivation
Technological developments over the years have created ingenious ways of holding business transactions in safe and secure ways. One of the latest technological craze is cryptocurrency and the inherent blockchains. Cryptocurrencies refers to digital currencies that exist in the form of encryptions utilized to regulate the generation of unit of currencies and the subsequent transfer of funds in exchange of goods and services (Felten & Miller, 2016). Blockchains on the other hand are digital ledgers utilized to record transactions made in cryptocurrencies like bitcoin among others. blockchain exist as continuously growing records known as blocks. Each block comprises of a hash that points to previous transactions, transaction data and a timestamp. The nature and design of the digital ledge enhances their safety and security.
Cryptocurrencies have drawn interest from numerous sources within the past few years. Bitcoin, a leading cryptocurrency has been growing in value at an exponential rate thus attracting interests from both skeptics and optimists alike. At the close of trading on January 28, 2017, the cost of one bitcoin was $11,592.05. the figure was a decline following a sustained interest the cryptocurrency had attracted for the preceding months reaching as high as $18,000. The sustained stellar performance of the cryptocurrency has attracted millions of investors and traders who seek to reap from the new and equally exciting frontier. Cryptocurrencies and the complementary blockchains have both advantages and disadvantages. Key among the advantages of cryptocurrencies like bitcoin is the promise for massive returns. The value of the currency continues to fluctuate. The sustained interest on the currency promises a massive potential for high and quick returns on investments. However, cryptocurrencies leave room for mismanagement a feature that heightens the risk for massive losses as well.
Cryptocurrencies and the pertinent blockchains are therefore interesting topical issues that require comprehensive research and analysis to reveal some pf its underlying aspects. The new business frontier exploits the features of the internet (Scholl, 2018). It for example overcomes geographical barriers and attracts investors and traders from different parts of the world. as such, cryptocurrencies have minimal legislations a factor that creates a free market for both legitimate and illegitimate businesspeople. Furthermore, the risk of terrorism and other illicit activities taking place in the dark web could rely on cryptocurrencies which promise increased secrecy and anonymity. I believe that cryptocurrencies are risky since they expose the social order to numerous risks. The spiral effects of every economic transaction as manifested by the 2007/2008finanacial crisis implies that a crash of the cryptocurrencies could cause far reaching financial implication with the potential of morphing into a global economic crash. However, the innovation continues to attract immense interest and present a potential for millions of people to mint millions.
My interest in blockchains and cryptocurrencies began towards the end of 2016 following the rising popularity of bitcoin. I have followed the growth of the digital currency as its value rose to unimaginable figures towards the end of last year. At some point, the value of the currency dipped thus escalating fears of its collapse only for the cryptocurrency to stabilize. While people from different parts of the world continue to make profits, a part of me remains sceptic even thinking that the currency could be a Ponzi scheme. The topic is of immense interest because of the economic value of cryptocurrency. Any technological development that attracts such immense financial interest from the public requires extensive scrutiny to determine its stability as a key way of safeguard public interest. Millions of people have invested in cryptocurrency and rely on blockchains to trace and secure their investments. As such, investigations should concentrate on the intricate features of the technology to improve public awareness.
Proposed Methodology, Data Sources, Applications, and Research Methods
The study is a typical correlational or descriptive research that seeks to determine the complex aspects of cryptocurrencies and the pertinent blockchain technology. The study strives to establish the relationship that exists between cryptocurrencies like bitcoin and blockchain and the level of security offered by the digital ledger system. the study is therefore a quantitative research that will utilize data from two groups of participants to help evaluate and compare two variables and the relationship between blockchains and cryptocurrencies. The study will employ various methods including case studies and surveys to evaluate the safety features of the new technologies. Bitcoin forms a perfect case study for the research. First, the cryptocurrency has been in circulation for a while and has attracted immense interest across the world as its value continues to rise. Furthermore, the study will enjoy readily accessible data to facilitate the analysis of the various aspects of the cryptocurrency and the related blockchain.
The research will utilize Bitcoin as a case study. The cryptocurrency provides a practical framework to study and understand similar cryptocurrencies. The research will concentrate on the security features of the of the currency. Likewise, the research will analyze other critical aspects of the currency including demand, supply and the factors that help determine the value of the cryptocurrency on every trading day. The researchers will concentrate on understanding some of the vulnerabilities of the currency and how they relate to the overall global and national economies across the world. the primary source of data for the research is existing data on Bitcoin. The existing data cover most of the critical elements of the research including supply and demand and the factors influencing the value of the currency. The researchers will rely on the internet to access up-to-date data on the cryptocurrency thereby facilitating a holistic and equally current analysis of a famous modern technological invention.
In addition to the existing data drawn from government agencies and other trading websites, the research will employ several data collection techniques to exhaust the topical issues. key among such techniques is interview. the research will carry out a series of interviews to understand the issue. the research will use a sample size of sixty respondents who will include government officials, traders, brokers, and other members of the society. the interviews will utilize structured questionnaires comprising of both open and close ended questions (Martin & Bridgmon, 2012). The research will utilize multiple hypothesis testing tools to help explain the relationship between the blockchain technology and the spread of cryptocurrencies. The hypothesis testing tools the study will use include the P-Value approach and the students t-distribution. The two approaches will test the evaluate the hypothesis against numerous factors to reveal conclusive findings on the cryptocurrency and the blockchain technology.
The research will draw data from a series of investigations. The potential interviewees will include people with adequate knowledge about the topical issue and influence to change public view about such critical issue. the potential interviewees will include random members of the society who have heard and even invested on bitcoin and similar cryptocurrencies. The potential interviewees will also include government officials, journalists and authors who have written extensively on the prevalent technologies.
Some of the journalists who have written extensively on Bitcoin include Maev Kennedy of the Gurdian, Panos Mourdoukoutas, from Forbes and Don Lemon from CNN. The journalists are a critical source of information about the topic and will therefore help accentuate the fears and underlying benefits and risks that characterize the use and investment on cryptocurrencies. Journalists are influencers of public opinion with vast understanding on myriad topics. The journalists above have written stories about bitcoin and other cryptocurrencies. They thus understand the complex features of the new financial system.
Other potential key interviewees for the study will include notorious cryptographers who can manifest the complex nature of the system. Nick Szabo, Vitalik Buterin, Andreas Antonopoulos and Marc Andreessen are some of the leading cryptographers who understand both the market and the industry. Nick Szabo, for example was a critical player on the team that led to the development of Ethereum which is yet another cryptocurrency. Edward Felten and Andrew Miller are two celebrated authors who have written books on bitcoin and other cryptocurrencies. The two will provide practical source of useful information on the study. Authors provide a scholarly assessment of scenarios and can therefore cite critical observations and extrapolate on future developments in the financial sector. the researchers will also attempt to reach officials from the Internal Revenue Services to seek their indulgence and explain the opinion and role of government in the booming market and industry.
- Felten, E. & Miller, A. (2016). Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. Princeton: Princeton University Press.
- Martin, W. E., & Bridgmon, K. D. (2012). Quantitative and statistical research methods: From hypothesis to results. San Francisco: Jossey-Bass.
- Scholl, H. (2018). Bitcoin Investment Know How Made Easy. New York: Sage Publications.