Ma619 Impact Of The Cryptocurrency Assessment Answers

Discussion of the Literature

Looking closely at the market, the assessment can be made that people were not initially that inclined to give cryptocurrency any chance with regards to its success (Gandal & Halaburda, 2014). That has changed, as the prices of the instruments known as cryptocurrencies have i9ncreased. There is a conscious effort on the part of some governments to make sure that these currencies are not being used. For instance, India has specifically asked its citizen to make sure that they do not fall into this trap of cryptocurrency (Catallini, 2017). 

The larger organizations and corporations though seem to be thinking otherwise. There is a large surge in the number of people who are using these currencies.  There is a perception in the market that the organizations that are not using cryptocurrencies are losing the advantage due to the tremendous incremental value that it is going to be offering to its users (Gandal & Halaburda, 2014).

Longfin Corporation; a New Symbol for Movement

The new symbol for this movement is probably going to be Long fin Corporation.  This development happened after they had announced that they are buying blockchain empowered global lending solutions providers (Fry & Cheah, 2016).  As soon as this press release was carried out by them, there was a sudden increase in their stocks, and most of the stock markets experts were of the point of that it is something that does not happen a lot (Fry & Cheah, 2016).  The main reason that this surge was witnessed was that how they had changed their asset policy.  It is one of the clear paradigm shift that was witnessed regarding the way performance of the financial market was witnessed in the given period (Gandal & Halaburda, 2014).

The surge in the Prices of the Other Coins

One of the earlier signs that the cryptocurrency is going to stay was the instance when there was a surge in the prices of the lesser coins during the coming week (Fry & Cheah, 2016). There is a dedicated portal that goes to show that changes in the prices of these crypto currencies (Fry & Cheah, 2016). The evidence was there that how the price of the coins has increased (Fry & Cheah, 2016). The coins that were valued at about $ 1 last week have witnessed a surge of about $ 100 in the given period (Gandal & Halaburda, 2014). 

It was one of the drastic changes in the price, and no matter what one perceived about the legality and validity of these instruments, the key thing here was that one does not get to see such a surge in the stock market without significant effort, to say the least (Fry & Cheah, 2016).  So this apparent increase in the price of the instruments was one of the key determinants with regards to the way their performance was going to stay in the market at the first place (Fry & Cheah, 2016).

Future Prospect and Would Companies be becoming the Part of the cryptocurrency Bubble

The interesting thing that is needed to be looked at is that how the response of the investors is going to be working out (Fry & Cheah, 2016). What the organizations need to do is to make sure that how the dotcom bubble is going to be working out in the same time period (Fry & Cheah, 2016). The historical precedent provides an interesting perspective in this regard.

Looking at the previous trend and what happened during the 1990, during the dot-com bubble, all the organizations had to show the others that they are serious about the commercial use of the internet (Cocco, 2017). Even just a press release would have gone a long way towards making sure that the prices of the stocks are increasing. The stock market and financial market is something that is highly speculative in its nature and these little announcements used to go a long way towards improving the stock value of the businesses (Cocco, 2017). 

Comparing this with the cryptocurrency, it can be said that the same thing is happening these days (Gandal & Halaburda, 2014). As the cryptocurrency is something that has just started to trend and it has become an "it" trend,   it is creating an artificial pressure of sorts for the financial decision makers (Cocco, 2017).  The economic impact of such thing is that the larger than the market value of the cryptocurrency is going to suggest for the same period, to say the least (Cocco, 2017).  Thus it is one of the key things that are needed to be looked at with regards to the way the stock market is going to be affected by the whole incident (Cocco, 2017).  The example of the Chanticleer comes to the mind that is the operating number of Hooters franchises (Cocco, 2017). 

They announced at the start of the year that how they are going to be initiating a launch and reward program that is using the cryptocurrency. Its stock that had stuck between 96 % in the same period during 2012 had rebounded with this small announcement which was about 20 % of the actual value (Härdle, 2016). Even though the whole thing sounds very promising regarding the value and utility of the cryptocurrency, it has to be noted that financial market is heading towards in the same direction as it was heading towards the course of 1990. So all these things are needed to be taken into perspective with regards to the longevity of the cryptocurrency (Cocco, 2017).

Economic Theory and Rationale Behind The Emergence Of The Crypto-Currency

In this section, it would be seen that how it is emerging as a possible disruptor in the global currency market and what are going to be spill over effects of the whole thing (Härdle, 2016).  Now, it is a well-known fact that the dollar movement is something on which the financial market is standing (Cheah & Fry, 2015).  The key thing that is noted here is that the United States Dollar is the reserve currency in the world. About every mainstream financial actor from the world is functioning one way or another in the United States Dollar. So if there is going to be any change in the way global currency outlook, it is bound to have some implication over the financial and the stock market (Cheah & Fry, 2015). 

The advantage that United States dollar tend to offer is that how it is some sense centralizing the global economy (Crosby, 2016). What has happened due to the emergence of the Bitcoin as well as about 1,000 cryptocurrencies being used in the world, the financial transactions across the world are becoming more and more decentralized (Brito, 2014).  When these non-centralized transactions are carried out across the world, they are not bound to have any resource on the functionality of the United States dollar (Brito, 2014).  What it is going to do is to affect the way dynamics of the international trade is going to work out (Brito, 2014). There have been some conscious efforts by some of the economies to make sure that the global economy can be decentralized to a great extent (Härdle, 2016).

Basic Finance Theory and How Crypto Currency Holds Up To It

The basic finance theory is about the fact that how the investment and profit from the asset are going to be carried out and how the eventual decline from the asset is carried out (Härdle, 2016).  The rationale is that if there is no way an investment is carried out and there is no profit from the decline of the price of the asset, the price is then going to be determined by the buyer that is going to be the most optimistic one (Brito, 2014). 

If there is a perception that the cryptocurrency is overpriced, they are most likely to sell their stake and would prefer to stay out of the market (Härdle, 2016). On the other hand, every other person is optimistic about the likelihood of the way cryptocurrency is going to perform likely to stay in the market (Brito, 2014).  That means that they are going to buy cryptocurrency for the higher price as compared to what it is going to stay in the market (Brito, 2014).

Simplification of the Crowdfunding Process

One of the key thing when assessing the impact of the cryptocurrency is that how they are going to be having an impact on the way Initial Coin Offerings and its mechanism is going to work out (Barber & Odean, 2015). The Crowdfunding that is done by the technological firms these days is primarily based on the cryptocurrency especially if one talk about the way start-ups are supposed to work (Härdle, 2016) (Jacko, 2012).  The key reason for this usage is that the developers and the entrepreneurs are under the impression to make sure that how they can convince the venture capitalists at the given period (Härdle, 2016).

The role of angel investors is also important in this regard (Härdle, 2016).  The businesses these days have to make sure that they are extremely fast in the way they work and as soon as any idea is conceptualized, the idea is to make sure that the idea can be initiated and sold to the prospective users (Patel & Wang, 2010). 

Data Description

To make sure that the actual impact of the cryptocurrency in the market can be evaluated, the key thing is to make sure that what sort of impact it is already having towards the organizations that are already part of the market mainstream (Härdle, 2016). To make sure that this assessment can be carried out. In the next section, it would be seen that how some of the organizations that are already the part of the market. The key thing that is going to be looked at here is that how what the performance of their stock price was after the announcement was being made by them with regards to the cryptocurrency.  At the same time, the general market outlook with regards to the cryptocurrency is also going to be looked.

Conclusion

As is the case with all the financial market implications, cryptocurrency is something that is here to stay.  The market experts are considering it as one of the biggest challenges to the supremacy at the global level and countries like Russia which are against this centralization of the global financial market are more than eager to make sure that they take advantage of this movement.

The problem is that when one talks about the functionality of the financial market, the key implication is that how it would be made sure that appropriation of the cryptocurrency is going to be done and what are some of the long-term implications in this regard. Investors are often willing to keep going in one direction, even if it seems risky or irrational until they're jarred. But when they are scared or shaken enough. For instance, by a financial collapse, like in the global financial panic in 2007—they start looking down at their feet and notice how dangerous their strategy is. The key thing is that one can hardly go anywhere in the financial world or financial press without seeing a mention of Bitcoin.

References

Barber, B. M., & Odean, T. (2015). The internet and the investor. Journal of Economic Perspectives, 15(1), 41-54.

Brito, J., Shadab, H., & Castillo, A. (2014). Bitcoin financial regulation: Securities, derivatives, prediction markets, and gambling. Colum. Sci. & Tech. L. Rev., 16, 144.

Catallini, C. (2017). How blockchain applications will move beyond finance. Harvard Business Rev, 2.

Cheah, E. T., & Fry, J. (2015). Speculative bubbles in Bitcoin markets? An empirical investigation into the fundamental value of Bitcoin. Economics Letters, 130, 32-36.

Cocco, L., Concas, G., & Marchesi, M. (2017). Using an artificial financial market for studying a cryptocurrency market. Journal of Economic Interaction and Coordination, 12(2), 345-365.

Crosby, M., Pattanayak, P., Verma, S., & Kalyanaraman, V. (2016). Blockchain technology: Beyond bitcoin. Applied Innovation, 2, 6-10.

Fry, J., & Cheah, E. T. (2016). Negative bubbles and shocks in cryptocurrency markets. International Review of Financial Analysis, 47, 343-352.

Gandal, N., & Halaburda, H. (2014). Competition in the cryptocurrency market.

Härdle, W. K., Hautsch, N., & Overbeck, L. (Eds.). (2016). Applied quantitative finance (Vol. 2). Springer.

Huckle, S., Bhattacharya, R., White, M., & Beloff, N. (2016). Internet of things, blockchain and shared economy applications. Procedia computer science, 98, 461-466.

Iansiti, M., & Lakhani, K. R. (2017). The truth about blockchain. Harvard Business Review, 95(1), 118-127.

Iwamura, M., Kitamura, Y., & Matsumoto, T. (2014). Is Bitcoin the only cryptocurrency in the town? Economics of cryptocurrency and Friedrich A. Hayek.

Jacko, J. A. (Ed.). (2012). Human computer interaction handbook: Fundamentals, evolving technologies, and emerging applications. CRC press.

Kazan, E., Tan, C. W., & Lim, E. T. (2015). Value Creation in Cryptocurrency Networks: Towards A Taxonomy of Digital Business Models for Bitcoin Companies. In PACIS (p. 34).

Li, X., & Wang, C. A. (2017). The technology and economic determinants of cryptocurrency exchange rates: The case of Bitcoin. Decision Support Systems, 95, 49-60.

Patel, M., & Wang, J. (2010). Applications, challenges, and prospective in emerging body area networking technologies. IEEE Wireless communications, 17(1).

Pilkington, M. (2016). 11 Blockchain technology: principles and applications. Research handbook on digital transformations, 225.

Sankar, L. S., Sindhu, M., & Sethumadhavan, M. (2017, January). Survey of consensus protocols on blockchain applications. In Advanced Computing and Communication Systems (ICACCS), 2017 4th International Conference on (pp. 1-5). IEEE.

Umeh, J. (2016). Blockchain double bubble or double trouble?. Itnow, 58(1), 58-61.

Zhao, J. L., Fan, S., & Yan, J. (2016). Overview of business innovations and research opportunities in blockchain and introduction to the special issue.