DECLARATION

I the undersigned her by declare that the dissertation report

titled To Study Crypto currency and its downfall in And To
Suggest Measures For Performance Improvement which has
been submitted by me to savitribaiphulepune university, in
partial fulfilment of requirement for the award of degree of
Master of Business Administration under the guidance of
Prof. Shardha Shinde , is an original work of the undersigned
and has not been reproduced from any other source.

Place Name

Date Signature
 ACKNOWLEDGEMENT

I acknowledge my sincere thanks and gratitude to our

director sir Dr. RAKESH DOLAKIA And our Hod Mam
Dr.MEGHANA BHILARE of DYPIMR.

Further, I also acknowledge my sincere and special thanks

and gratitude to my project guide Prof.SHRADHA
SHINDE without her continuous guidance and
encouragement it would not have been possible for me to
complete this project work.
 EXECUTIVE SUMMARY

Today crypto currencies have become a global phenomenon known to most people. While
still somehow geeky and not understood by most people, banks, governments and many
companies are aware of its importance. In 2016, you‘ll have a hard time finding a major
bank, a big accounting firm, a prominent software company or a government that did not
research crypto currencies, publish a paper about it or start a so-called block chain-project.

But now the revolutionary crypto currency is seeing free fall and no one’s sure where the
bottom lies. The study will be conducted through the use of research analysis. Its goal is to
understand the history, General Position of crypto currency and the downfall of crypto
currency.

To conduct this dissertation project, no primary data was taken but this project rely on the
secondary data collected through various research papers and annual report on crypto
currency.

This dissertation project contains in the first phase Introduction and objectives of the project.
Second phase contains review of literature, review of literature is divided into two parts and
they are theoretical review and research review. Third phase contains research methodology.
Fourth phase contains data analysis. Fifth phase contains observation and findings. And the
last phase contains the conclusion along with bibliography references.

The observations that were made during this project are as follows. Crypto currency markets
have lost more than $60 billion in value in less than a week, following a price crash that
has caused bit coin, ethereal and ripple to hit their lowest levels since 2017The price falls
appear even more dramatic given the remarkable period of stability that preceded them,
which had prompted some analysts to warn that the lack of any major market movement
since early September would likely be the "calm before the storm."Speculation around why
the crypto currency collapse has happened focuses not on bit coin but its spin-off, bit coin
cash. On 15 November, the rival cryptocurrency experienced something called a hard fork,
whereby a brand new cryptocurrency was created. This led to uncertainty in the market and a
major sell-off of bitcoin cash. With a market cap of around $4 billion, bitcoin cash is the
world's fourth most valuable cryptocurrency, however more than half of its value has been
wiped off since the downfall. It is not clear if or when the crypto market will level out, with
many of the price predictions from earlier this year now looking improbably optimistic.

Following are the findings made doing this project,Crypto currency if properly regulated and
given a free market can decentralize the financial system. Youth are the most who are
investing in crypto currency. Even if the price is going down there are people who are still
buying crypto currency and its market volume is increasing.

Crypto currency in the future on currency.

 INTRODUCTION
In this Dissertation project the idea is to understand crypto currency and its downfall. Crypto
currency being a new technological innovation in the sector of financial system can be a
revolution and would change the entire financial systems by decentralizing it.

Hence its necessary to understand crypto currency its history, general position around the
world and why is it being a revolutionary innovation is in a down fall. This project helps to
understand combining multiple research paper data and studying it and reaching on a
conclusion.
OBJECTIVE & SCOPE
 Objectives:-
 To study the history of crypto currency.
 To understand the general position of crypto currency.
 To examine the downfall of crypto currency.

Scope:-

 LITERATURE REVIEW

Theoretical
Understanding the history of crypto currency

History of crypto currency (Bernard Marr, forbes dec 6 2017):-

1998 to 2008 was the time when crypto currency was introduced to the world; there had
been previous attempts at creating online currencies with ledgers secured by encryption.
Two examples of these were B-Money and Bit Gold, which were formulated but never
fully developed.

During 2008 The domain name "bitcoin.org" was registered on 18 August 2008. On 31
October 2008, the mystery guy Mr Satoshi Nakamoto posted paper called Bitcoin – A
Peer to Peer Electronic Cash System to a mailing list discussion on cryptography. whose
real identity remains a mystery to this day.

2009 was the beginning of Bitcoin software which was made available to the public for
the first time and mining – the process through which new Bitcoins are created and
transactions are recorded and verified on the blockchain.

2010 was the first time when Bitcoin is valued As it had never been traded, only mined,
it was impossible to assign a monetary value to the units of the emerging cryptocurrency.
In 2010, someone decided to sell theirs for the first time – swapping 10,000 of them for
two pizzas. If the buyer had hung onto those Bitcoins, at today’s prices they would be
worth more than $100 million.

2011 was the time when Bitcoin increases in popularity and the idea of decentralized
and encrypted currencies catch on, the first alternative crypto currencies appear. These are
sometimes known as altcoin and generally try to improve on the original Bitcoin design
by offering greater speed, anonymity or some other advantage. Among the first to emerge
were Namecoin and Litecoin. Currently there are over 1,000 crypto currencies in
circulation with new ones frequently appearing.

Shortly after the price of one Bit coin reaches $1,000 during 2013 for the first time, the
price quickly begins to decline. Many who invested money at this point will have suffered
losses as the price plummeted to around $300 – it would be more than two years before it
reached $1,000 again.
Perhaps unsurprisingly for a currency designed with anonymity and lack of control in
mind, Bitcoin has proven to be an attractive and lucrative target for criminals. In January
2014, the world’s largest Bitcoin exchange Mt.Gox went offline, and the owners of
850,000 Bitcoins never saw them again. Investigations are still trying to get to the bottom
of exactly what happened but whatever the story, someone dishonestly got their hands on
a haul which at the time was valued at $450 million dollars. At today’s prices, those
missing coins would be worth $4.4 billion.

One cryptocurrency came close to stealing Bitcoin’s thunder, in 2016 as enthusiasm grew
around the Ethereum platform. This platform uses cryptocurrency known as Ether to
facilitate blockchain-based smart contracts and apps. Ethereum’s arrival was marked by
the emergence of Initial Coin Offerings (ICOs). These are fundraising platforms which
offer investors the chance to trade what are often essentially stocks or shares in startup
ventures, in the same manner that they can invest and trade cryptocurrencies. In the US
the SEC warned investors that due to the lack of oversight ICOs could easily be scams or
ponzi schemes disguised as legitimate investments. The Chinese government went one
further, by banning them outright.

A gradual increase in the places where Bitcoin could be spent contributed to its continued
growth in popularity, during a period where it’s value remained below previous peaks.
Gradually as more and more uses emerged, it became clear that more money was flowing
into the Bitcoin and cryptocoin ecosystem. During 2017, this period the market cap of all
cryptocoins rose from $11bn to its current height of over $300bn. Banks including
Barclays, Citi Bank, Deutsche Bankand BNP Paribas have said they are investigating
ways they might be able to work with Bitcoin. Meanwhile the technology behind
Bitcoin blockchain has sparked a revolution in the fintech industry and beyond which is
only just getting started.

2018 has been a rough year for Bitcoin users, especially ones who held on assuming the
price would keep ascending. Many sold their Bitcoins while they could, and the price has
steadily dropped all year. As of this writing, Bitcoin's price is at $6,542.78, a decline of
67%.

By the end of the year total market cap of crypto currency drop by -78.85%. In which
bitcoin fell -73%, ethirium fell by -82%, XRP fell by -84%, BCH fell by 93%, EOS fell
by -66%.(Coingecko yearly report 2018, market dynamics of top five coins)
General position of crypto currency
Crypto currencies by country (Thomson Reutres, 25 Oct 2017):-

Introduced in 2008, Bitcoin was heralded for its potential to disrupt the traditional banking
model for businesses and consumers alike. In this research, we’ve looked at governmental
attitudes toward cryptocurrencies. The picture produced across the world is patchy. Some
countries have become global advocates, while others have actively banned cryptocurrencies
completely, with various shades in between.

The most notable disrupter is Japan, which has passed a law accepting Bitcoin as legal tender.
At the other end of the spectrum, Bangladesh passed a law in 2014 stating that anybody
caught using the virtual currency could be jailed under the country’s strict anti-money-
laundering laws.

To understand the general position worldwide this project focuses on major countries and
their decisions which would affect the growth of crypto currency.

1. United States – The U.S. has the highest number of cryptocurrency users, the highest
number of Bitcoin ATMs and also the highest Bitcoin trading volumes globally.
However, there is a differing picture state by state: Texas, Kansas, Tennessee, South
Carolina and Montana appear to be the friendliest based on state regulation, whereas
New York, New Hampshire, Connecticut, Hawaii, Georgia, North Carolina,
Washington and New Mexico have regulations not favorable to virtual currency. The
other 37 states/territories are gray areas currently.
2. Japan – Japan has eliminated the consumption tax on Bitcoin trading on April 1, 2017,
when it officially declared Bitcoin as a legal tender. Japan also eliminated the
possibility of double taxation on trading of Bitcoins.
3. China – In late 2013, China’s Central Bank (the People’s Bank of China) barred
financial institutions from partaking in digital currency and Bitcoin transactions, but
individuals are free to trade as they wish – Chinese yuan to Bitcoin is the most traded
daily fiat to Bitcoin pair.
4. Germany – The German government released a report in August 2013 saying that
Bitcoins should be treated as a trading activity and therefore be subject to capital
gains taxes unless they were held for a year or more. The German Federal Ministry of
Finance further clarified its position by saying that Bitcoin should be treated as a unit
of account and private money and should therefore be subject to sales taxes and VAT.
5. United Kingdom – The Bank of England continues to monitor Bitcoin technology,
while it continues to be classified as private money, with VAT applied and also
subject to capital gains tax, where there P&Ls are involved.
6. Argentina– Bitcoins are not legal currency strictly speaking, since they are not issued
by the government monetary authority and are not legal tender. Therefore, they may
be considered money but not legal currency, since they are not a mandatory means of
cancelling debts or obligations.
7. Australia – Removing Bitcoins from double taxation policies, the government also
legalized Bitcoin and said it can be used just like money.
8. Bangladesh – Bangladesh Bank issued a warning against conducting transactions in
cryptocurrency, and reportedly stated that such use is punishable by up to 12 years in
jail.
9. Bolivia – The Bolivian government has banned the use of Bitcoin in the belief that it
will allow tax evasion and monetary instability.
10. Brazil – The Brazilian government has declared that Bitcoin is not a currency but an
asset and therefore subject to 15 percent capital gains taxes above a threshold.
11. Bulgaria – Bulgaria has accepted the digital currency. Its National Revenue Agency
had issued new taxation guidelines stating that income from the sale of digital
currencies such as Bitcoin will be treated as income from the sale of financial assets
and taxed at a rate of 10 percent.
12. Canada – In November 2013, the Canada Revenue Agency declared that Bitcoin
payments should be treated as barter transactions. The Canadian federal government
also announced its intention to regulate Bitcoin through its anti-money laundering and
counter-terrorist financing legislation.
13. Chile– The first Bitcoin exchange in Chile, where citizens can buy Bitcoin with
pesos, launched in 2015 with funding from the Chilean government. This would
appear to be in line with the Chilean government’s ambition to transform itself into an
innovation and entrepreneurial hub for Latin America. The government has also
committed to providing regulation and oversight in the form of financial audits and
anti-money laundering regulation.
14. Czech Republic – The Czech government recently introduced a law requiring virtual
currency exchanges determine the identity of customers. Alongside this, the country’s
authorities will also soon add a Value Added Tax (VAT) to virtual currencies in the
near future.
15. Denmark – The Danish government and Financial Supervisory Authority have
announced that Bitcoin businesses will be taxed in a normal manner, and individuals
will not be subject to taxation from trading. “The Danish central bank is considering a
digital-only e-krone.”
16. Estonia – Bitcoins and digital currencies could be declared as an alternative payment
means, subjecting them to capital gains liabilities and VAT.
17. Finland – The Finnish regulatory body has declared that Bitcoin should be treated as
an asset and be subject to VAT and capital gains, although the capital gains losses
would not be deductible.
18. Israel – Israel’s government is set to apply capital gains tax to Bitcoin sales,
categorizing digital currencies as a type of property.
19. Italy – Tax authorities appear to be treating Bitcoin as a form of currency. They have
clarified purchases and sales made with Bitcoin remain exempt from VAT.
However, Italian tax officials appear to be applying income tax to speculative uses of
Bitcoin, or events in which money is made during a sale or purchase. Those buying
Bitcoins outside of the scope of speculative activity, it indicates, aren’t required to
pay income tax.
20. Kazakhstan – Seeking to become the regional hub for cryptocurrencies. In June 2017,
Kazakhstan announced plans to begin selling blockchain based bonds, and the
country’s President announced that, “It is high time to look into the possibility of
launching the international payment unit. It will help the world get rid of monetary
wars, black marketeering and decrease volatility at markets.”
21. Luxembourg– In April 2016, it granted a payment institution license to a Bitcoin
exchange, making the company the first nationally licensed Bitcoin exchange in the
world.
22. Mexico – The Mexican government has not banned the use of alternative digital
currencies outright but instead is in talks with government regulators to try and
introduce their own form of Bitcoin and their own blockchain specific to Mexico.
23. The Netherlands – In June 2013, the Dutch Finance Minister released a report that
gave Bitcoin the status of an item of barter, meaning it needed no specific licensing or
compliance requirements. He said, “Bitcoin is not a financial product as defined by
law; purchase or sale of Bitcoins is not a financial service either, so the financial
services act does not apply.”
24. Nigeria – On January 19, 2017, the Central Bank of Nigeria “officially outlawed
digital currencies.” The CBN cited reasons like money laundering and terror financing
to prohibit banks to use, hold or transact virtual currencies, and they should ensure
“existing customers that are virtual currency traders have effective AML/CFT
controls.”
25. Norway – The Norwegian tax authorities declared at the end of 2013 that “Bitcoins
don’t fall under the usual definition of money or currency” and therefore making them
subject to the usual capital gains tax laws, but Norway’s largest online-only bank,
Skandiabanken, recently announced plans to offer clients the ability to link their
regular bank accounts with their Coinbase account.
26. Philippines – In February 2017, BSP the Philippine Central Bank said it plans to
officially regulate local Philippine Bitcoin exchanges as remittance companies and
recognize Bitcoin as a legitimate payment method, while issuing a proper regulatory
framework for Bitcoin users, exchanges and companies.
27. Poland – It has officially recognized the trading and mining of virtual currencies as an
“official economic activity” but has said that regulation should come from the EU.
28. Portugal – Taxable, but unregulated.
29. Russia – The Russian Deputy Finance Minister has stated that regulators will be
looking to recognize Bitcoin and other cryptocurrencies legally next year. The
government is eager to tackle money laundering, which certainly incentivizes greater
oversight and regulation, ultimately leading to its legitimacy.
30. Singapore – In early 2014, the Singapore government declared Bitcoin as a good
purchased to purchase goods and therefore subject to a specific tax. The Monetary
Authority of Singapore then required exchanges and ATM providers to Green-list, or
de-anonymize their users to allow while simultaneously declaring that virtual
currencies such as Bitcoin are not securities and not subject to regulation.
31. South Africa – The South African Revenue Service has stated that any transaction or
speculation in Bitcoin is subject to general tax rules; it has added that it is the
responsibility of both citizens and residents of South Africa to report each and every
Bitcoin transaction detail to the South African Revenue Service.
32. Spain – Notable among EU members, Spain is lobbying to establish a cryptocurrency
regulatory framework. The Spanish government has confirmed that cryptocurrencies
are exempt from Value Added Tax, and Spain has whole streets full with Bitcoin-
friendly stores. Plus, many Bitcoin companies call Spain their home, and Spanish
banks BBVA and Bankinter now invest in Bitcoin companies.
33. Sweden – Looking to shift to digital currency, the central bank’s decision to cut
interest rates into negative territory has led to an increase in demand, supporting
appetite for Bitcoins and alternatives to protect capital. Unlike neighboring Denmark,
the Swedish regulator has publicly declared Bitcoin as a legal currency.
34. Switzerland – Switzerland’s financial markets regulator has approved the first Swiss
private bank for Bitcoin asset management, potentially paving the way for other
global banks to offer digital currency products.
35. Turkey – The Turkish authorities have issued guidance saying that Bitcoin does not
meet the standards of electronic money and that the volatility leaves users with a high
level of risk; a major Bitcoin exchange has ceased operations after local banks closed
the main accounts of the company without prior notice.
36. Ukraine – Despite vague Government regulations and political uncertainty in some
areas, a major bank announced the ability to purchase Bitcoins in any of its
nationwide ATM terminals.
37. Vietnam – The government has moved from banning Bitcoin in 2014 to now wanting
to streamline the industry so as to be able to tax, monitor and eliminate any so-called
negative impacts.
Down fall of crypto currency
Jasper Lawler Short-term horizon, research analyst, macro, ETF investing nov 22 2018:-

The price of bitcoin has plunged by over a quarter in the past week. Nov. 20th 2017 saw
bitcoin drop another 7% to below $4,500, as it extended 14% losses. The most well-known
cryptocurrency is trading at a one-year low. While it has been a rough period for long-term
holders, the volatility has been a bonus for crypto traders willing to trade short.

The recent price action represents a 77% decline from bitcoin's December peak at $19,511.
That is a bubble popping personified. As the price was running up in 2017, there was clear
euphoria above-and-beyond the fundamental benefits of digital currencies and the
blockchain. What we are witnessing is the collapse of that euphoria.

Following are the seven reasons that for the fall of cryptocurrency according to (Jasper
Lawler Short-term horizon, research analyst, macro, ETF investing nov 22 2018)

1) Public awareness
Crypto enthusiasts point to similar percentage declines through bitcoin's short history. We
would differentiate the recent price drop in bitcoin from similar past examples. The level of
public awareness was much greater this time around.

2) Sentiment hit by drop through $6,000

Bitcoin is famously bereft of fundamentals. The 2017 crypto bull market, like many before it
was based on the "greater fool theory". New money needed to join the bitcoin party at $6,000
and it never did. Technically, the prospects for bitcoin are very poor while below 6,000.
Bitcoin is trading in a bear trend and below its 200-day moving average, with technical
indicators firmly in negative territory.

3) The marginal cost of production

As the price of bitcoin drops, the profit gained from mining new coins falls. The marginal
cost of production including electricity and rig purchase costs is $4,300 according to EFT
Securities. $4,300 happens to be where the price bottomed out on Tuesday (Nov. 20, 2018).
Excluding rig costs, the marginal cost of production is $2,250 - perhaps the next logical
downside price target.

4) Instability keeping institutions away

Lack of interest from major institutional players for bitcoin has been an ongoing hurdle to
bitcoin going mainstream. Many assumed that the creation of cryptocurrency futures would
increase legitimacy and interest. The volatility is starting to attract big traders like George
Soros, but large pension and mutual fund investors are a long way from making crypto part of
their portfolio.
5) Bitcoin ETF approval a long way off
The other great hope for the crypto resurgence is a bitcoin ETF. An ETF must be approved by
regulators, but bitcoin, by being decentralised, is inherently unregulated. We tend to think
there will never be a bitcoin ETF. If there ever were to be, it is at least 10 years away.

6) Hard forks mean unlimited supply

It is no coincidence that the selloff in cryptocurrencies came alongside a "hard-fork" in
bitcoin cash. As a reminder, bitcoin cash is an offshoot from the original bitcoin. The hard-
fork has now divided bitcoin cash into two separate coins, which are now competing for
dominance. The competition amongst different altcoins highlights the immaturity of the
market.

7) Fraud and regulatory concerns

The drop through $6,000 also occurred as US regulators close in on an alleged fraud.
Regulatory concerns have weighed on sentiment over recent sessions following the US
Securities and Exchange Commission announcing civil penalties against two cryptocurrency
companies that didn't register their ICOs as securities. This move by the SEC may be the
precursor to prosecutions for price rigging, which allegedly (very likely?) drove the bitcoin
price to its all-time high last year

Research:-

Below is a list of some impactful research papers

1. Should cryptocurrencies be included in the portfolio of the International Reserves held

by the Central Bank of Barbados?

(Authors: Winston Moore, Jeremy Stephen )

This research paper describes the recognition status Bitcoin is receiving from all over
the world. It also describes how it is useful for the Central banks.

2. The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments

(Authors: Joseph Poon, Thaddeus Dryja )

This paper enlightens people about the medium which allows for instant transactions
between two entities without any mediator using the Lightning network.
3. The Bitcoin Backbone Protocol

(Authors: Juan A Garay, Nikos Leonardos, Aggelos Kiayias. )

The authors have described the chain and prefix quality concepts. They have analyzed
the protocols and underlying concepts.

4. Bitcoin-NG: A Scalable Blockchain Protocol

(Authors: Adem Efe Gencer, Emin Gun Sirer, Ittay Eyal, Robbert van Renesse)
The authors have described the mining algorithm and scalability, which give details
about the key blocks for throughput during transactions.

5. Does Governance Have a Role in Pricing? Cross-Country Evidence from Bitcoin

Markets

(Author: Robert Viglione )

This paper throws light on the analysis of the bitcoin market data in elections along with
the data generated via bitcoin.

6. Eclipse Attacks on Bitcoin’s Peer-to-Peer Network

(Authors: Alison Kendler, Aviv Zohar, Ethan Heilman, Sharon
Goldberg)This paper describes the attacks which are employed on bitcoin network
and security issues faced on the network and deeply explain about the Eclipse
attack.

7. Confidential Transaction ( Author: Gregory Maxwell) In this paper, the author has
focused on the methodology to follow in order to hide the payment values in a
cryptographic transaction.

8. SoK: Research Perspectives and Challenges for Bitcoin and Cryptocurrencies.

(Authors: Edward W Felten, Andrew Miller, Jeremy Clark, Joseph Bonneau,
Arvind Narayanan, Joshua A. Kroll). In this paper, the authors have focussed on
various aspects of cryptocurrencies like mining, transactions, network etc.

9. Bitcoin in Islamic Banking and Finance

( Author: Charles W Evans )
This paper describes how much importance Bitcoin has received from the Islamic
community worldwide.
10. Digital Currencies ( Author: Committee on Payments, Bank of International
Settlements, Market Infrastructures.)
This analysis states the method in which digital currencies can revamp the payment
system.
 RESEARCH DESIGN AND METHODOLOGY DATA

Research Methodology

Introduction: -

Research in common parlance refers to a search for knowledge. It is a SCIENTIFIC AND

SYSTMATIC search for pertinent information on a specific topic. It is actually a voyage of
discovery. It can also be said to be a movement on a path from the known to the unknown.
Research an academic activity and as such the term should be used in a technical sense.

RESEARCH is thus an original contribution to the exiting stock of knowledge making

for its advancements. It is the pursuit of truth with the help of study, observation, comparison,
and experiment. In short the search for knowledge through objective and systematic method
finding solution to a problem is “RESEARCH.”

Definition: -

“Research is a systematized effort to gain new knowledge.”

Research Design:

DESCRIPTIVE Research design is used in the Dissertation. It describes the characteristics

of a phenomenon. In other words, it can be said that descriptive research seeks to explain a
phenomenon and the reasons and assumptions behind the specific behavior. It emphasizes on
explaining the phenomenon by providing factual and accurate information, but does not
discuss the variables responsible for a situation.

The empirical-analytical group approaches the study of social sciences in a similar

manner that researchers study the natural sciences. This type of research focuses on
objective knowledge, research questions that can be answered yes or no, and operational
definitions of variables to be measured. The empirical-analytical group employs deductive
reasoning that uses existing theory as a foundation for formulating hypotheses that need to be
tested. This approach is focused on explanation
Sampling Method:

Simple Random Sampling is done. This is the most famous and simple method of sampling
where each unit of the client is equally probable of getting included in the sample. Sample
random sampling says that: There is an equal chance of each element of the clients to be
included in sample and choices are independent to each other and each possible sample
combination has an equal chance of being chosen.

Data collection method:

A) SECONDARY DATA: -

i) Various annual report

ii) Web Sites

iii) Research papers

 DATA ANALYSIS AND INTERPRETATION

History of crypto currency.

Sr no. years progress Result

1. 1998-2007 Introduction of crypto Paved the way for
currency, examples development of
were B-Money and cryptocurrency.
Bit Gold which were
formulated but never
fully developed.
2. 2008 Bitcoin was launched, Programmers started
The domain name to replicate bit coin.
"bitcoin.org" was
registered. Mr Satoshi
Nakamoto posted
paper called Bitcoin –
A Peer to Peer
Electronic Cash
System to a mailing
list discussion on
cryptography. Bit
coin cryptography and
programming was
open source.
3. 2009 Bit coin was made Public started to mine
available to the bit coin using block
general public for the chain where
first time. transactions are
recorded and verified.
4. 2010 first time when someone decided to
Bitcoin is valued. it sell theirs for the first
was impossible to time – swapping
assign a monetary 10,000 of them for
value to the units of two pizzas. If the
the emerging buyer had hung onto
cryptocurrency. those Bitcoins, at
today’s prices they
would be worth more
than $100 million.
5. 2011 Bitcoin increases in first alternative crypto
popularity and the currencies appear.
idea of decentralized These are sometimes
and encrypted known as altcoin and
currencies catch on generally try to
improve on the
original Bitcoin
design by offering
greater speed,
anonymity or some
other advantage.
Currently there are
over 1,000 crypto
currencies
6. 2013 Shortly after the price Many who invested
of one Bit coin money at this point
reaches $1,000 during will have suffered
2013 for the first losses as the price
time, the price quickly plummeted to around
begins to decline $300
7. 2014 Bitcoin has proven to and the owners of
be an attractive and 850,000 Bitcoins
lucrative target for never saw them again
criminals. In January on a haul which at the
2014, the world’s time was valued at
largest Bitcoin $450 million dollars.
exchange Mt.Gox At today’s prices,
went offline. those missing coins
would be worth $4.4
billion.

8. 2016 One cryptocurrency In the US the SEC

came close to stealing warned investors that
Bitcoin’s thunder. due to the lack of
enthusiasm grew oversight ICOs could
around the Ethereum easily be scams or
platform. This ponzi schemes
platform uses disguised as
cryptocurrency known legitimate
as Ether to investments. The
facilitate blockchain- Chinese government
based smart contracts went one further,
and apps by banning them
outright
9. 2017 A gradual increase in During 2017, this
the places where period the market cap
Bitcoin could be spent of all cryptocoins rose
contributed to its from $11bn to its
continued growth in current height of over
popularity, during a $300bn. Banks
period where it’s including Barclays,
value remained below Citi Bank, Deutsche
previous peaks Bankand BNP Paribas
have said they are
investigating ways
they might be able to
work with Bitcoin.
Meanwhile the
technology behind
Bitcoin blockchain
has sparked a
revolution in the
fintech industry

10. 2018 2018 has been a By the end of the year

rough year for total market cap of
Bitcoin users, crypto currency drop
especially ones by -78.85%. In which
who held on bitcoin fell -73%,
assuming the price ethirium fell by -82%,
would keep XRP fell by -84%,
ascending. Many BCH fell by 93%,
sold their Bitcoins EOS fell by -66%.
while they could,
and the price has
steadily dropped
all year. As of this
writing, Bitcoin's
price
is at $6,542.78, a
decline of 67%.
2018 has been a
rough year for
Bitcoin users,
especially ones
who held on
assuming the price
would keep
ascending. Many
sold their Bitcoins
while they could,
and the price has
steadily dropped
all year. As of this
writing, Bitcoin's
price
is at $6,542.78, a
decline of 67%.
General position of crypto currency
Sr no. Country
1. United States
2 Japan
3 China
4 Germany
5 United Kingdom
Action taken
The U.S. has the highest
number of cryptocurrency
users, the highest number of
Bitcoin ATMs and also the
highest Bitcoin trading
volumes globally. Now have
started to tax cryptocurrency
as a capital gain like stocks
and shares.
Japan has eliminated the
consumption tax on Bitcoin
trading on April 1, 2017,
when it officially declared
Bitcoin as a legal tender.
China’s Central Bank barred
financial institutions from
partaking in digital currency
and Bitcoin transactions, but
individuals are free to trade as
they wish .
Bitcoins are treated as a
trading activity and therefore
be subject to capital gains
taxes.The German Federal
Ministry of Finance further
clarified its position by saying
that Bitcoin should be treated
as a unit of account and
private money and should
therefore be subject to sales
taxes and VAT.
The Bank of England
continues to monitor Bitcoin
technology, while it continues
to be classified as private
money, with VAT applied
and also subject to capital
gains tax, where there P&Ls
are involved.
6 Argentina Bitcoins are not legal
currency strictly speaking,
since they are not issued by
the government monetary
authority and are not legal
tender. Therefore, they may
be considered money but not
legal currency, since they are
not a mandatory means of
cancelling debts or
obligations
7 Australia Removing Bitcoins from
double taxation policies, the
government also legalized
Bitcoin and said it can be
used just like money.

8 Bangladesh Bangladesh Bank issued a

warning against conducting
transactions in
cryptocurrency, and
reportedly stated that such use
is punishable by up to 12
years in jail
9 Bolivia The Bolivian government has
banned the use of Bitcoin in
the belief that it will allow tax
evasion and monetary
instability.
10 Brazil The Brazilian government has
declared that Bitcoin is not a
currency but an asset and
therefore subject to 15
percent capital gains taxes
above a threshold.

11 Bulgaria Bulgaria has accepted the

digital currency. Its National
Revenue Agency had issued
new taxation guidelines
stating that income from the
sale of digital currencies such
as Bitcoin will be treated as
income from the sale of
financial assets and taxed at a
rate of 10 percent.
12 Canada In November 2013, the
Canada Revenue Agency
 declared that Bitcoin
payments should be treated as
barter transactions. The
Canadian federal government
also announced its intention
to regulate Bitcoin through its
anti-money laundering and
counter-terrorist financing
legislation.
13 Chile The first Bitcoin exchange in
Chile, where citizens can buy
Bitcoin with pesos, launched
in 2015 with funding from the
Chilean government. This
would appear to be in line
with the Chilean
government’s ambition to
transform itself into an
innovation and
entrepreneurial hub for Latin
America. The government has
also committed to providing
regulation and oversight in
the form of financial audits
and anti-money laundering
regulation.

14 Czech Republic The Czech government

recently introduced a law
requiring virtual currency
exchanges determine the
identity of customers.
Alongside this, the country’s
authorities will also soon add
a Value Added Tax (VAT) to
virtual currencies in the near
future.
15 Denmark – The Danish government and
Financial Supervisory
Authority have announced
that Bitcoin businesses will
be taxed in a normal manner,
and individuals will not be
subject to taxation from
trading. “The Danish central
bank is considering a digital-
only e-krone.”
16 Estonia Bitcoins and digital
currencies could be declared
 as an alternative payment
means, subjecting them to
capital gains liabilities and
VAT.

17 Finland The Finnish regulatory body

has declared that Bitcoin
should be treated as an asset
and be subject to VAT and
capital gains, although the
capital gains losses would not
be deductible
18 Israel Israel’s government is set to
apply capital gains tax to
Bitcoin sales, categorizing
digital currencies as a type of
property.
19 Italy Tax authorities appear to be
treating Bitcoin as a form of
currency. They have clarified
purchases and sales made
with Bitcoin remain exempt
from VAT. However, Italian
tax officials appear to be
applying income tax to
speculative uses of Bitcoin, or
events in which money is
made during a sale or
purchase. Those buying
Bitcoins outside of the scope
of speculative activity, it
indicates, aren’t required to
pay income tax
20 Kazakhstan Seeking to become the
regional hub for
cryptocurrencies. In June
2017, Kazakhstan announced
plans to begin selling
blockchain based bonds, and
the country’s President
announced that, “It is high
time to look into the
possibility of launching the
international payment unit. It
will help the world get rid of
monetary wars, black
marketeering and decrease
volatility at markets.”
21 Luxembourg In April 2016, it granted a
payment institution license to
a Bitcoin exchange, making
the company the first
nationally licensed Bitcoin
exchange in the world.

22 Mexican The Mexican government has

not banned the use of
alternative digital currencies
outright but instead is in talks
with government regulators to
try and introduce their own
form of Bitcoin and their own
blockchain specific to
Mexico.

23 The Netherland In June 2013, the Dutch

Finance Minister released a
report that gave Bitcoin the
status of an item of barter,
meaning it needed no specific
licensing or compliance
requirements. He said,
“Bitcoin is not a financial
product as defined by law;
purchase or sale of Bitcoins is
not a financial service either,
so the financial services act
does not apply.”
24 Nigeria – On January 19, 2017, the
Central Bank of Nigeria
“officially outlawed digital
currencies.” The CBN cited
reasons like money
laundering and terror
financing to prohibit banks to
use, hold or transact virtual
currencies, and they should
ensure “existing customers
that are virtual currency
traders have effective
AML/CFT controls.”
25 Norway The Norwegian tax
authorities declared at the end
of 2013 that “Bitcoins don’t
fall under the usual definition
 of money or currency” and
therefore making them
subject to the usual capital
gains tax laws, but Norway’s
largest online-only bank,
Skandiabanken, recently
announced plans to offer
clients the ability to link their
regular bank accounts with
their Coinbase account.

26 Philippines – In February 2017, BSP the

Philippine Central Bank said
it plans to officially regulate
local Philippine Bitcoin
exchanges as remittance
companies and recognize
Bitcoin as a legitimate
payment method, while
issuing a proper regulatory
framework for Bitcoin users,
exchanges and companies.
27 Poland It has officially recognized
the trading and mining of
virtual currencies as an
“official economic
activity” but has said that
regulation should come from
the EU.

28 Portugal Taxable, but unregulated.

29 Russia Russia – The Russian Deputy

Finance Minister has stated
that regulators will be looking
to recognize Bitcoin and other
cryptocurrencies legally next
year. The government is
eager to tackle money
laundering, which certainly
incentivizes greater oversight
and regulation, ultimately
leading to its legitimacy
30 Singapore In early 2014, the Singapore
government declared Bitcoin
as a good purchased to
purchase goods and therefore
 subject to a specific tax. The
Monetary Authority of
Singapore then required
exchanges and ATM
providers to Green-list, or de-
anonymize their users to
allow while simultaneously
declaring that virtual
currencies such as Bitcoin are
not securities and not subject
to regulation.

31 South Africa The South African Revenue

Service has stated that any
transaction or speculation in
Bitcoin is subject to general
tax rules; it has added that it
is the responsibility of both
citizens and residents of
South Africa to report each
and every Bitcoin transaction
detail to the South African
Revenue Service.

32 Spain Notable among EU members,

Spain is lobbying to establish
a cryptocurrency regulatory
framework. The Spanish
government has confirmed
that cryptocurrencies are
exempt from Value Added
Tax, and Spain has Spain
whole streets full with
Bitcoin-friendly stores.
Plus, many Bitcoin
companies call Spain their
home, and Spanish banks
BBVA and Bankinter now
invest in Bitcoin companies.

33 Sweden Looking to shift to digital

currency, the central bank’s
decision to cut interest rates
into negative territory has led
to an increase in demand,
supporting appetite for
Bitcoins and alternatives to
 protect capital. Unlike
neighboring Denmark, the
Swedish regulator has
publicly declared Bitcoin as a
legal currency.

34 Switzerland Switzerland’s financial

markets regulator has
approved the first Swiss
private bank for Bitcoin asset
management, potentially
paving the way for other
global banks to offer digital
currency products.

35 Turkey The Turkish authorities have

issued guidance saying that
Bitcoin does not meet the
standards of electronic money
and that the volatility leaves
users with a high level of risk;
a major Bitcoin exchange has
ceased operations after local
banks closed the main
accounts of the company
without prior notice.

36 Ukraine Despite vague Government

regulations and political
uncertainty in some areas, a
major bank announced the
ability to purchase Bitcoins in
any of its nationwide ATM
terminals.

37 Vietnam moved from banning Bitcoin

in 2014 to now wanting to
tax.
 OBSERVATIONS AND FINDINGS

Observation:-

1. Cryptocurrency markets have lost more than $60 billion in value in less than a week,
following a price crash that has caused bitcoin, ethereum and ripple to hit their lowest
levels since 2017
2. On 15 November, the rival cryptocurrency experienced something called a hard fork,
whereby a brand new cryptocurrency was created. This led to uncertainty in the
market and a major sell-off of bitcoin cash.
3. With a market cap of around $4 billion, bitcoin cash is the world's fourth most
valuable cryptocurrency, however more than half of its value has been wiped off since
the downfall.

Findings:-

1. Crypto currency if properly regulated and given a free market can decentralize the
financial system.
2. Youth are the most who are investing in crypto currency.
3. Even if the price is going down there are people who are still buying crypto currency
and its market volume is increasing.
Conclusion

1. Crypto currency downfall is due to Government regulations and taxation laws in

many of the countries.
2. Around the globe crypto currency is not being considered as virtual money rather the
government is trying to sate it as a commodity like shares and stock so that they can
earn revenue by taxing it.
3. Most of the government and big firms fear crypto currency and its potentials to
decentralize the financial systems which are their source of revenue.
4. Down fall of crypto currency can be averted if globally crypto currency is given the
status of virtual money like Japan.
5. Most of the government fear crypto currency because of its potential of being an
untraceable virtual money which can be used by the terrorist and drug lords to traffic
and launder money for their use.

BIBLIOGRAPHY

1. History of crypto currency (Bernard Marr, forbes dec 6 2017)

2. Brief history of crypto currency (Steve fiorillo, TheStreet, Aug 17 2018)
3. Coingecko yearly report 2018, market dynamics of top five coins
4. Crypto currencies by country (Thomson Reutres, 25 Oct 2017)
5. Seven reasons for the fall of cryptocurrency (Jasper Lawler Short-term horizon,
research analyst, macro, ETF investing nov 22 2018)