INTRODUCTION

What is cryptocurrency? Cryptocurrency is an internet-based medium of

exchange which uses cryptographical functions to conduct financial
transactions. It is digital cash for the digital age. It’s similar to regular money
but it’s digital-only, so there are no bills or coins to carry around.

 it is managed by a network of computers running open source code.

 the value of crptocurrency is primarily based on supply and demand.
 Unlike banks and government securing physical money, cryptocurrency
is secured by a network of computers that verify every transaction —
 Can be used to buy things anywhere in the world but only where
merchants accept it.
 The most important feature of a cryptocurrency is that it is not controlled by
any central authority: the decentralized nature of the blockchain makes
cryptocurrencies theoretically immune to the old ways of government control
and interference.
 can be sent directly between two parties via the use of private and public
keys. These transfers can be done with minimal processing fees, allowing
users to avoid the steep fees charged by traditional financial institutions.
 Cryptocurrencies are built on strong cryptography. Hence the name. They are
not secured by people or by trust, but by math.

PROPERTIES

1. Irreversible: After confirmation, a transaction can‘t be reversed

2. Pseudonymous: Neither transactions nor accounts are connected to
real-world identities.
3. Fast and global: Transactions are propagated nearly instantly in the
network and are confirmed in a couple of minutes, irrespective of the
sender’s and receiver’s locations.
4. Secure: Cryptocurrency funds are locked in a public key
cryptography system. Only the owner of the private key can send
cryptocurrency
5. Permissionless: It‘s a software that everybody can download for
free and use without permission.
6. Controlled supply: Most cryptocurrencies limit the supply of the
tokens. The monetary supply of a cryptocurrency in every given
moment in the future can roughly be calculated today.
What is Bitcoin? Bitcoin is , the first and still most important cryptocurrency
introduced on October 31 2008 by Satoshi Nakamoto. A few months later, on
January 3, 2009, the code was released and the first bitcoins appeared.

Bitcoin is often compared to gold in that there is a limited supply — the

maximum number of bitcoins that will ever enter circulation is 21 million.
Unlike gold, however, bitcoin is digital, making it far easier to divide, transfer,
and store.

What is a blockchain? a blockchain is a list of transactions that anyone can

view and verify. The Bitcoin blockchain, for example, is a record of every time
someone sent or received bitcoin.

This list of transactions is fundamental for most cryptocurrencies because it

enables secure payments to be made between people who don’t know
each other without having to go through a third party verifier like a bank.

How is cc mined?

Bitcoins can only be created if miners solve a cryptographic puzzle. Since

the difficulty of this puzzle increases the amount of computer power the
whole miner’s invest, there is only a specific amount of cryptocurrency
token that can be created in a given amount of time. This is part of the
consensus no peer in the network can break.

Mining is the process of computers solving specific cryptographic

problems to confirm transactions on the blockchain. Miners are
rewarded with coins for solving these problems before others.

How does a transaction work?

Cryptocurrency users send funds between wallet addresses on the

blockchain. Imagine two users, Alice and Bob. If Alice wants to send
one Bitcoin to Bob, she first needs to know the address of Bob’s
Bitcoin wallet. Alice then uses her private key to securely sign a
transaction containing Bob’s wallet address and the amount to be
transferred. Alice then sends the signed transaction to the Bitcoin
network, where it is confirmed across the blockchain by “miners” and
recorded into a transaction “block.” Once this occurs, the transaction is
complete: one Bitcoin is debited from Alice’s wallet and added to
Bob’s. The Bitcoin network retains a record of this transfer on the
blockchain forever.

ADVANTAGES/DISADVANTAGES

(adv)

1. Easy to Use.
In the case of cryptocurrency you just need a device that able access
the internet with the help of the device, you can create your wallet
and use where ever and whenever you wan

2. Decentralization.
most of the cryptocurrencies have no central authority to control,
the network is distributed to all participants, each mining computer
is a member of this system. And even if some part of the network
goes offline, the payment system will continue to operate s tably.

3. Universal currency.
Being a digital currency, cryptocurrency doesn’t not need to keep in
terms with any exchange rates, transaction charges or anything like that
of other countries. This gives it a great appeal in order to make use of it
on a universal level. One can send funds to a person sitting in the other
hemisphere.

4. Low Operation Cost.

Transfering crypto requires no payment of commission and fees
to banks and other organizations. It only charges a very small
amount of the transaction as a fee, and in crypto’s, it is the buyer
paying the small fee.
5. Fast.
 Cryptocurrencies are based on the blockchain technology, which
removes delays, payment of fees and a host of other third party
approval that might have been present.
6. Highly Secured.
The strong encryption techniques employed throughout the distributed
ledger (blockchain) and cryptocurrency transaction processes are a
safeguard against fraud and account tampering, and guarantors of
consumer privacy.

(disadv)

1. Volatile.
The cryptocurrency market is quite volatile, so it is unpredictable. This is
one of the main reasons why mass adoption is taking longer than
it should.

2. Lack of knowledge.

Most people are not aware of how to use cryptocurrency and

hence open themselves to the hacker. The digital currency
technology is somewhat complex and therefore one needs to be
mindful of it before investing.
3. Large risks.
Crypto investments are involved high risk because of its volatile
nature and terrorist and other illegal activity financings, lack of a
central issuer, which means that there is no legal formal entity to
guaranty in case of any bankruptcy. According to a report by the
cyber-security company Carbon Black, approximately $1.1 billion in
cryptocurrency was stolen in the first half of 2018 alone.
 4. Not accepted widely.
Still, cryptocurrencies are not acceptable in countries and online
websites, Very few countries have legalized the use of
cryptocurrencies. It makes it impractical for everyday use. Not
many merchants are willing to take up the risks and accept digital
money.
5. Problems in storage.
If a user forgets his cryptocurrency password in the wallet, it is
impossible to recover lost data due to the strict integration of the
encrypted blockchain, which can be disastrous for its users.

Cryptocurrencies are here because now our daily transactions are

becoming easier as time passes by using technology and also receives a
wide range, as well as more and more pros and cons added to
technology, and it all depends on us how we use technology to make
our life better and easier.

6. Cryptocurrency Is Difficult To Understand

Cryptocurrency is a digital currency based on a rather complex blockchain

technology. This technology was introduced into practice in large scale just a
few years ago. Today, the best experts in cryptocurrency and blockchain can be
counted on the fingers, and these technologies are still developing. For
learning cryptocurrency or blockchain you need to know a lot of tweaks and
curves of bends. Without understanding the details of cryptocurrency, it is
unsafe to deal with it.
https://medium.com/altcoin-magazine/top-5-disadvantages-of-cryptocurrency-
925d6679195d

It is a means of payment is an attack on the control of banks and

governments over the monetary transactions of their citizens. You can‘t
hinder someone to use Bitcoin, you can‘t prohibit someone to accept a
payment, you can‘t undo a transaction.
As money with a limited, controlled supply that is not changeable by a
government, a bank or any other central institution, cryptocurrencies attack
the scope of the monetary policy. They take away the control central banks
take on inflation or deflation by manipulating the monetary supply.
WHY BANNED IN INDIA

India is all set to ban private cryptocurrencies after an inter-ministerial

committee suggested outlawing private cryptocurrencies, created by non-
sovereigns, like Bitcoin, apart from declaring any activities related to virtual
currencies as a criminal act. The report lays down that all private
cryptocurrencies except the ones issue by the state be banned in India and
endorses the stand taken by the RBI to eliminate the interface of institutions
regulated by the central bank from cryptocurrencies.

The Committee is of the clear view that the private cryptocurrencies should
not be allowed. These cryptocurrencies cannot serve the purpose of a
currency. The private cryptocurrencies are inconsistent with the essential
functions of money/currency, hence private cryptocurrencies cannot
replace fiat currencies.”
A crackdown on cryptocurrency has strongly batted for introduction of an
official state-issued digital currency in India which can be provided the status
of a legal tender regulated by the Reserve Bank of India.

Points against cryptocurrencies:

1) All the cryptocurrencies have been created by non- sovereigns and are in
this sense entirely private enterprises.
2) There is no underlying intrinsic value of these cryptocurrencies back they
lack all the attributes of a currency.
3) There is no fixed nominal value of these private cryptocurrencies i.e. neither
act as any store of value nor they are a medium of exchange.
4) Since their inceptions, cryptocurrencies have demonstrated extreme
fluctuations in their prices.
5) These crytocurrencies cannot serve the purpose of a currency. The private
cryptocurrencies are inconsistent with the essential functions of
money/currency, hence private cryptocurrencies cannot replace fiat currencies.
6) A review of global practices show that they have not been recognised as a
LEGAL tender in any jurisdiction.
7) Committee also recommends that all exchanges, people, traders and other
financial system participants should be prohibited from dealing with
cryptocurrencies.
https://www.indiatoday.in/technology/news/story/govt-committee-recommends-ban-
on-cryptocurrency-in-india-1572446-2019-07-23
https://thenextweb.com/hardfork/2019/07/22/indian-government-ban-cryptocurrency-jail-10-
years/
AFFECT ON WORLD ECONOMIES

Today, the internet is ablaze with talk about blockchain technology and
cryptocurrency. The conversation on the topic is greatly polarized with strong
sentiments on all sides of the multi-faceted aisle that is the cryptocurrency
argument. There are those who call it a bubble and there are others who say it
has the potential to disrupt the global economy.

1. cryptocurrency eliminates the need for middlemen in financial

transactions. This is and advantage but effects the survival of banks,
because cryptocurrency eliminates the need for their services. Since they
don't have to pass through multiple hands, transactions take place
much more quickly. It also has caused concern because it's become
harder to regulate financial activity,

2. One potential challenge related to cryptocurrency transactions is that

they're hard to regulate due to their anonymous nature. This anonymity
enables various scams.

Governments are concerned about cryptocurrency as it also makes it

easy for people to avoid paying taxes. This fact has caused various
countries to consider stricter regulations on crypto and even develop
their own government-sponsored cryptocurrencies.

3. The United States Treasury essentially a de facto global Central Bank. A

large part of the ability of the United States to maintain its dominance in
the world is down to the Dollar standard. This is a form of centralization
that is being massively disrupted by cryptocurrency operations. There
have always been attempts to “de-dollarize” the global economy and
cryptocurrencies seem to be a veritable means of achieving that goal.

4. In 2017, ICOs became the leading crowdfunding method for technology-

based start-ups. No longer do developers and entrepreneurs want to
spend time trying to convince venture capitalists, banks, and investors to
put up equity in their start-ups. These days, once a seemingly tangible
idea is conceptualized, it is tokenized and sold to the public directly.
 Many countries have placed tighter restrictions on ICO. If it wasn’t
disrupting the market, it wouldn’t cause this much of an uproar.

Concluding, Blockchain technology and the digital currencies created on

its basis can exponentially reduce the cost of international transactions,
including making these transactions absolutely free. Cryptocurrencies
facilitate international economic integration and provide a number of
other benefits as well.
reuters.com

STAKEHOLDERS

1. Developers. Developers are involved with setting up blockchain

protocols that serve networks. They have all the powers, they write the
rule book and almost everyone uses their software. The more a
particular cryptocurrency is used globally, the more its developer(s)
benefit. They require media to be able to popularise their developments.
2. Researchers and Academia. Blockchain research aids in educating
others on the implications of blockchain technology, especially
considering this is a fairly new software platform. Having academics
involved in the blockchain strategy system, ensures blockchain is
continually challenged and researched in varying disciplines like
political, behavioural, economic and psychological.
3. Miners. They control the size and the degree of security of the network
they build. There can be a very public and large network like the bitcoin
network, or if the network is going to be used by an enterprise, it would
not be public. Depending on requirements, miners may even be paid to
validate a network. Since miners control the history of a network, they
can manipulate the rules to make the network function in the direction
they desire.
4. Traders. (they perform the role of providing access to blockchain
networks). This is so that others can interact and transact in the
blockchain strategy system. They control the population of recipients in
a network. Traders essentially sell a usage token needed to join the
blockchain network.
5. Entrepreneurs. These stakeholders are the people who build the
applications, products or services utilising the blockchain protocols and
 networks. Many of these entrepreneurs have a vision to bridge the gap
between the traditional world of banking and the world of digital
currencies. This is an extremely difficult task and comes with a lot of
regulation, risk and resistance. Their survival depends on the success of
their cryptocurrency network. Many startups turn to digital currency to
collect funds for their businesses.
6. End-users/customers. (The general public). They generate the primary
demand for the cryptocurrencies. Higher the demand, higher the value
of the currency. The customer’s choice of method of transaction directly
effects the physical as well as the digital currency. Emergence of
cryptocurrency has made many to shift from the traditional methods of
transaction towards using digital currency.
7. Investors. These are the people or organisations that provide capital to
create the blockchain infrastructure. These stakeholders are motivated
by profit, but are also values- and mission-based. They determine
whether a cryptocurrency has any value or not. The investors are the
first to take up risks of dealing in digital currency. They put in their
funds in the blockchain networks to attract users.
8. Banks and governments. Increasing popularity of cryptocurrencies is a
major concern for banks and governments globally. With more people
taking up decentralized digital currency as a means of transaction, the
ability to control transfers and regulate funds gets reduced for the
official bodies. Banks face a decline in their businesses. While
governments find it difficult to trace illegal and harmful activities
occurring across the blockchain networks.

ILLEGAL USAGE OF CC
How do criminals, terrorist organizations, and sanctioned states use
cryptocurrencies?

For decades, the global banking system has been subject to heavy
regulations concerning money laundering, terrorist financing, and customer
identification. Cryptocurrencies hinge on peer-to-peer transactions
independent of regulated financial institutions, they have removed an
important source of friction for various illicit activities.

Dark web markets. Shortly after its inception, Bitcoin became a popular
medium of exchange on so-called dark net marketplaces—highly
anonymized online markets for illegal goods and services, primarily
narcotics. In 2013, U.S. authorities, including the Federal Bureau of
Investigation (FBI) and the Drug Enforcement Administration (DEA), shut
down Silk Road, the first and largest dark net marketplace, and arrested its
owner, Ross Ulbricht. Tens of thousands of users had bought and
sold more than $200 million worth of illegal goods and services on Silk
Road.

Terrorist organizations. The self-proclaimed Islamic State saw the benefits

of cryptocurrencies as early as 2014, when it first declared its purported
caliphate in Iraq and Syria. In 2015, a Virginia man pleaded guilty to
conspiring to provide material support to the Islamic State for attempting
to teach others how to use Bitcoin to anonymously fund the terrorist
group. Although most of the group’s financing still comes through
conventional means, there is anecdotal evidence that the Islamic State has
used cryptocurrencies to acquire weapons and pay affiliated fighters for
carrying out attacks.

Criminal groups. Criminal groups, including transnational drug cartels and

money launderers, are also keen to leverage cryptocurrencies, according to
the DEA’s most recent annual assessment. The report highlights Bitcoin’s
popularity as a means for such groups to evade capital controls in China.
While these organizations once relied on creative methods to smuggle
large amounts of physical cash across borders, in cryptocurrencies they
have found a frictionless means of virtually transferring ill-gotten wealth.

Sanctioned states. Venezuela has taken an interest in creating its own

cryptocurrencies to circumvent international sanctions. In February 2018,
Venezuela became the first national government to debut a digital
currency, issuing the first $735 million of a planned $6 billion worth of
“petro” coins.

North Korea has turned to hacking tools such as ransomware to coerce

victims to pay it cryptocurrency. Ransomware attacks infect a computer or
network [PDF], encrypt its files, and demand that a ransom be paid in
cryptocurrency to decrypt them. The most prominent and widely damaging
ransomware attack in recent times, infecting systems in more than 150
countries, the WannaCry worm, was attributed to the North Korean
government in late 2017.

North Korea is reportedly also experimenting with other malware-enabled

means of raising revenue through cryptocurrencies. In January 2018, a U.S.
cybersecurity firm found that hackers in the country were hijacking foreign
computers and forcing them to mine Monero, the more anonymous
alternative to Bitcoin. North Korea has also sponsored efforts to steal
cryptocurrency from investors outright.

GROWTH TRENDS OF CC

The global bitcoin technology market was valued at USD 273 million, in
2018. Due to the zero risk of inflation, bitcoin is trending over the years. The
bitcoin system was created with the sole purpose of being finite.
Commercial payments are slowly warming up to the prospects of Bitcoin. Most
recently, in October 2019, Data by Ico data revealed that as of 2019, about
15558 businesses were accepting Bitcoins around the world, with Slovenia
having the highest business, which accepts Bitcoins at 314 business outlets.

According to Coin ATM Radar, as of March 2019, the main manufacturers of

the Bitcoin ATMs were Genesis Coin and General Bytes, with 31.5 % and 31.4
% of the market share, respectively. The number of global bitcoin ATMs is also
on the rise.

North America is one of the fastest growing regions of bitcoin mining and
vendors offering bitcoin services. According to Coin ATM Radar, the highest
number of bitcoin ATMs is in the United States (3229 locations), followed by
Canada (687 locations), as on 2018.

There are ~24M bitcoin wallet addresses in total. This doesn’t mean there are
24M Bitcoin users because one person can have more than 1 wallet address

we can also look at the overall trading volume of all cryptocurrencies over time
to see how trading volume have been trending from 2014–18. The chart below
is also in log scale and the values have been averaged out per month to get a
better sense of the overall trend line.

https://medium.com/@mccannatron/12-graphs-that-show-just-how-early-
the-cryptocurrency-market-is-653a4b8b2720
https://www.mordorintelligence.com/industry-reports/global-bitcoin-
technology-market-industry