Finance and Financial Management Commons^™

Cryptocurrencies: An Overview, Investment Investigation, Comparative Analysis, And Regulatory Proposals, Jacob Franzen

Theses/Capstones/Creative Projects

With cryptocurrencies moving out of obscurity and into the public eye, the initial purpose of this research paper is to provide the history of cryptocurrencies, to explain the complex workings in and around cryptocurrencies, investigate their investment potential, and to draw attention to their potential for misuse. To follow, the primary purpose is to create a platform on which to compare cryptocurrencies with more common mediums of exchange, analyze their current international regulatory climate, highlight their trends within influential nations, discuss their pending and future regulation, and provide personal proposals for additional regulation. Due to the complex nature of the …

Semantic Understanding Of Smart Contracts: Executable Operational Semantics Of Solidity, Jiao Jiao, Shuanglong Kan, Shang Wei Lin, David Sanan, Yang Liu, Jun Sun

Research Collection School Of Computing and Information Systems

Bitcoin has been a popular research topic recently. Ethereum (ETH), a second generation of cryptocurrency, extends Bitcoin's design by offering a Turing-complete programming language called Solidity to develop smart contracts. Smart contracts allow creditable execution of contracts on EVM (Ethereum Virtual Machine) without third parties. Developing correct and secure smart contracts is challenging due to the decentralized computation nature of the blockchain. Buggy smart contracts may lead to huge financial loss. Furthermore, smart contracts are very hard, if not impossible, to patch once they are deployed. Thus, there is a recent surge of interest in analyzing and verifying smart contracts. …

Understanding Cryptocurrencies, Wolfgang Karl Hardle, Campbell R. Harvey, Raphael C. G. Ruele

Sim Kee Boon Institute for Financial Economics

Cryptocurrency refers to a type of digital asset that uses distributed ledger, or blockchain, technology to enable a secure transaction. Although the technology is widely misunderstood, many central banks are considering launching their own national cryptocurrency. In contrast to most data in financial economics, detailed data on the history of every transaction in the cryptocurrency complex are freely available. Furthermore, empirically oriented research is only now beginning, presenting an extraordinary research opportunity for academia. We provide some insights into the mechanics of cryptocurrencies, describing summary statistics and focusing on potential future research avenues in financial economics.

From Bitcoin To Blockchain, And Back Again, Danielle Szetho, Rene Michau

Asian Management Insights

In the context of the current FinTech revolution, it remains to be seen how the wealth of knowledge on new technologies and business models in the area of finance can effectively and efficiently drive change and seize the new opportunities being created in the vast and fast-paced world of digital and crypto-assets.

Nonprofit Reputation And Bitcoin Use, Crystal A. Evans, Abigail B. Schneider

Journal of Ideology

In recent years, cryptocurrencies, digital assets used as mediums of exchange that use cryptography to secure the creation and exchange of the currency, have gained in popularity. One cryptocurrency in particular, Bitcoin, has received a considerable amount of attention in the media. As the general public’s awareness of Bitcoin increases, one must consider the impact that aligning a nonprofit with such a currency could have. The present research uses three studies to examine the impact that advertising the nonprofits’ alignment with Bitcoin has on perceived effectiveness as well as potential donors’ attitudes toward investing nonprofits’ assets in the currency. Results …

Two Essays On Bitcoin Price And Volume, Mohammad Bayani Khaknejad

Theses and Dissertations in Business Administration

Bitcoin is a decentralized peer to peer digital transactions system that was introduced in 2009 in the aftermath of the financial crisis. Since its introduction, it has had a volatile journey, being adopted by computer programmers, cyber punk enthusiasts, criminals, and financial investors. While the future of bitcoin is still not clear, it has been widely adopted by many, not necessarily as a new method of transactions, but rather as a new investment vehicle. Being a new asset class, there are many unknown financial characteristics to be investigated about bitcoin and in this dissertation, we try to explore two of …

Collusion Attacks And Fair Time-Locked Deposits For Fast-Payment Transactions In Bitcoin, Xingjie Yu, Shiwen Michael Thang, Yingjiu Li, Robert H. Deng

Research Collection School Of Computing and Information Systems

In Bitcoin network, the distributed storage of multiple copies of the block chain opens up possibilities for doublespending, i.e., a payer issues two separate transactions to two different payees transferring the same coins. While Bitcoin has inherent security mechanism to prevent double-spending attacks, it requires a certain amount of time to detect the doublespending attacks after the transaction has been initiated. Therefore, it is impractical to protect the payees from suffering in double-spending attacks in fast payment scenarios where the time between the exchange of currency and goods or services is shorten to few seconds. Although we cannot prevent double-spending …

The Introduction Of Bitcoin Futures: An Examination Of Volatility And Potential Spillover Effects, Benjamin M. Blau, Ryan J. Whitby

Economics and Finance Faculty Publications

Theory in Stein (1987) suggests that introducing derivative contracts, such as futures, can destabilize underlying asset prices if the contracts attract enough speculative traders. This paper examines how the introduction of Bitcoin futures influences the underlying Bitcoin market. Consistent with Stein (1987), we find that that Bitcoin's volatility increases significantly during the post-introduction period. Perhaps more importantly, however, we observe significant spillover effects into related markets. For instance, in other cryptocurrencies, the increase in volatility in these markets is greater than the post-introduction increase in Bitcoin.

Is Bitcoin Reminiscent Of Past Bubbles?, Jessica L. Leath

Honors Theses

Bitcoin, an open-source decentralized peer-to-peer payment system, has made an unprecedented rise to notoriety in the last decade. In 2018, Bitcoin reported its worst year in history with depreciation of more than 70% from its year opening price. Consequently, the narrative of a bubble that surrounded Bitcoin was amplified by this news. The purpose of this paper is to analyze the presence of a bubble within Bitcoin by comparing its price volatility and the psychological factors that influence its price formation to that of two historic bubbles, the Dotcom Bubble and the Tulip Mania.

Cryptocurrencies: Their Current Validity And Future As Currency And As A Part Of An Investment Strategy, Austin R. Johnson

Senior Theses

This paper examines the current and future prospects of cryptocurrencies with a focus on the most well-known and highest valued cryptocurrency, Bitcoin. Specifically, it will address how Bitcoin can be utilized as a currency and as part of an investment strategy and whether its utilization makes financial sense now and will in the future. The paper showcases the past behavior of Bitcoin, how the Bitcoin system functions, how Bitcoin acts as a currency, how Bitcoin can be used as an investment asset, and why it will continue to be employed as such in the future. This paper will show that …

Cryptovisor: A Cryptocurrency Advisor Tool, Matthew Baldree, Paul Widhalm, Brandon Hill, Matteo Ortisi

SMU Data Science Review

In this paper, we present a tool that provides trading recommendations for cryptocurrency using a stochastic gradient boost classifier trained from a model labeled by technical indicators. The cryptocurrency market is volatile due to its infancy and limited size making it difficult for investors to know when to enter, exit, or stay in the market. Therefore, a tool is needed to provide investment recommendations for investors. We developed such a tool to support one cryptocurrency, Bitcoin, based on its historical price and volume data to recommend a trading decision for today or past days. This tool is 95.50% accurate with …

Illustrating The Contrasts Of Initial Coin Offerings And Initial Public Offerings, Adam Jones

Finance Undergraduate Honors Theses

This paper explores the intricacies of an Initial Coin Offering and how it differs from an Initial Public Offering, specifically in terms of its process, regulations, utility, performance, and risks. The paper begins with an introduction to cryptocurrencies that includes the development of Bitcoin to more recent developments, in order to give readers the proper background knowledge to understand Initial Coin Offerings. The paper then describes the differences between a coin and a token. Finally the paper lays out the characteristics of an Initial Coin Offerings and then compares those characteristics with that of an Initial Public Offering.

Cryptocurrency: A New Investment Opportunity?, David Kuo Chuen Lee, Li Guo, Yu Wang

Research Collection Lee Kong Chian School Of Business

Bitcoin was the first cryptocurrency to use blockchain and has been the market leader since the first bitcoin was mined in 2009. After the birth of Bitcoin with the genesis block, more than 1,000 altcoins and crypto-tokens have been created, with at least 919 trading actively on unregulated or registered exchanges. This entire class of cryptocurrencies and tokens has been classified by some tax authorities as having the same status as commodities. If cryptocurrency is viewed in the same class as commodities, how different is it in terms of its risk and return structure? This article sets out to help …

Flight To Quality In Cryptocurrencies, Scott Brockelbank Jr.

Honors Theses and Capstones

The topic of cryptocurrencies has been on the forefront of investors’ minds as they have seen ridiculous returns from the volatile swings in price. Its value highly debated because the asset is not backed by a hard asset. If we look back at the beginning of our country, we see how each state had its own currency and the difficulties that users faced around who would accept that as legal tender. The birth of a federal currency was accepted because it served as a medium of exchange and was backed by gold through the U.S. government. The final evolution of …

What Bitcoin Is, And How It Can Change Commerce, Jeffrey Bukhari

Capstones

The use of the digital currency Bitcoin has spiked dramatically over the last several years. Spurred by interest from investors and those excited about its commercial and banking potential, the value of the cryptocurrency has seen its value greatly increase since its beginning in 2009.

This project explains the underlying technology behind Bitcoin, how Bitcoin is and will change commerce, and what potential lies ahead for the digital currency.

Reshaping The Financial Order, Christopher Dula, David Kuo Chuen Lee

Research Collection Lee Kong Chian School Of Business

The financial system, which governs and manages the practice of deposits, lending and payments, is in the throes of disruption following the shortcomings of the current regime. Despite US$11 trillion in quantitative easing since 2007, economic growth has been persistently sluggish. The money isn't going where it should be. In 2015, McKinsey reported that global debt had grown by US$57 trillion since 2007. The debt is becoming unsustainable, yet the global debt-to-income ratio continues to rise disproportionally to any deleveraging. The Fed's meandering signaling to nudge up interest rates beyond the near zero range raises concerns that private and even …

From Bit Valley To Bitcoin: The Nasdaq Odyssey, Mark Lennon, Daniel Folkinshteyn

Rohrer College of Business Departmental Research

Over the past 15 years, NASDAQ, the world’s first all-electronic stock exchange, has actively engaged in efforts to serve the global digital economy by expanding its reach beyond its original domestic U.S. market. They have attempted to create a global 24/7 trading platform, to serve customers in the U.S., Japan, and Europe. These efforts have met with varying degrees of success. More recently, the renamed NASDAQ OMX Group has been experimenting with the disruptive fintech (financial technology) Bitcoin and its underlying technology blockchain to develop robust trading solutions, which drastically reduce transaction and record keeping costs. In this paper we …

An Analysis Of Bitcoin Market Efficiency Through Measures Of Short-Horizon Return Predictability And Market Liquidity, William L. Brown

CMC Senior Theses

Bitcoins have the potential to fundamentally change the way value is transferred globally. Their rapid adoption over the past four years has led many to consider the possible results of such a technology. To be a viable currency, however, it is imperative that the market for trading Bitcoins is efficient. By examining the changes in availability of predictable outsized returns and market liquidity over time, this paper examines historical Bitcoin market efficiency and establishes correlations between market liquidity, price predictability, and return data. The results provide insight into the turbulent nature of Bitcoin market efficiency over the past years, but …

The Efects Of Cryptocurrency Wealth On Household Consumption And Investment, Darren Aiello, Scott R. Baker, Tetyana Balyuk, Marco Di Maggio, Mark J. Johnson, Jason Kotter

Faculty Publications

This paper uses transaction-level bank and credit card data to identify cryptocurrency investors and assess the impact of crypto wealth fuctuations on household consumption, as well as on investments in other assets. We fnd an $0.09 MPC from crypto gains, exceeding most previous estimates from unrealized equity gains. However, crypto investors are mostly also active equity investors, with many similar consumption patterns across gains from both asset classes. Households sell cryptocurrencies to increase discretionary and housing expenditures, with the latter causing local house price appreciation.