EVOLUTION OF CRYPTO CURRENCY& ITS

GROWING IMPACT ON THE BUSINESS

ENVIRONMENT

LIJO SUNNY
ABSTRACT

This study is about Crypto currency or the new age Currency.A crypto currency is
the new wealth for the new generation.And it’s time to recognise its importance.It
can be a healthy substitute to fiat currency if the common man understands its
worth & governments embrace it as they have done in the case of diamonds &
gold.

Key Words

Robust, cryptography, Network effects, Friction, entailed, Block chain,

double spending, Crypto currency, Bit coin.

Definition

A Cryptocurrency is a de-centralized,direct, peer to peer,affordable way of

transacting, which is different from the conventional banking system. This is a
revolutionary development in the history of money, wealth & economics, and it
has created a trustworthy and robust environment globally.

Meaning of Crypto Currency

A cryptocurrencyis a digital or virtual currency designed to work as a medium of

exchange. It uses cryptography to secure and verify transactions as well as to
control the creation of new units of a particular cryptocurrency.
The most valuable crypto currency is Bit Coin.

Valuation of Crypto Currency

The value of crypto currencies is simply derived from the future probabilities of
their popularity and usage, the gap between supply and demand, and the network
effects(a technical term)of the self sufficient closed economy which uses the
currency.According to digital-currency website CoinDesk — whose Bitcoin Price
Index tracks prices from digital currency exchanges Bitfinex, Bit stamp, Coinbase
and itBit — the value of bitcoins was volatile in 2013, particularly toward the end
of the year: In December alone, the price per bitcoin hit highs of around Rs68,650
and lows below Rs 42,600.
If you purchased Rs. 71,000 worth of bitcoin back then at a price of Rs 42600 per
coin , you'd have a little over 1.6 bitcoins.

DESCRIPTION
There have been many attempts at creating a digital currency during the 90s tech
boom, with systems like Flooz, Beenz and DigiCash emerging on the market but
inevitably failing. There were many different reasons for their failures, such as
fraud, financial problems and even frictions between companies’ employees and
their bosses.Bit coin has no central bank and is not linked to or regulated by any
state.

Then, in early 2009, an anonymous programmer or a group of programmers

under an alias Satoshi Nakamoto introduced Bitcoin. Satoshi described it as a
‘peer-to-peer electronic cash system.’ It is completely decentralized, meaning there
are no servers involved and no central controlling authority. The concept closely
resembles peer-to-peer networks for file sharing.

One of the most important problems that any payment network has to solve is
double-spending. It is a fraudulent technique of spending the same amount twice.
The traditional solution was a trusted third party - a central server - that kept
records of the balances and transactions. However, this method always entailed an
authority basically in control of your funds and with all your personal details on
hand.In a decentralized network like Bitcoin, every single participant needs to do
this job. This is done via the Blockchain - a public ledger of all transaction that
ever happened within the network, available to everyone. Therefore, everyone in
the network can see every account’s balance.
How transactions are done in crypto currency?
Every transaction is a file that consists of the sender’s and recipient’s public keys
(wallet addresses) and the amount of coins transferred. The transaction also
needsto be signed off by the sender with their private key. All of this is just basic
cryptography. Eventually, the transaction is broadcasted in the network, but it
needs to be confirmed first.

Within a cryptocurrency network, only miners can confirm transactions by solving

a cryptographic puzzle. They take transactions, mark them as legitimate and spread
them across the network. Afterwards, every node of the network adds it to its
database. Once the transaction is confirmed it becomes unforgeable and
irreversible and a miner receives a reward, plus the transaction fees.

Essentially, any cryptocurrency network is based on the absolute consensus of all

the participants regarding the legitimacy of balances and transactions. If nodes of
the network disagree on a single balance, the system would basically break.
However, there are a lot of rules pre-built and programmed into the network that
prevents this from happening.

Crypto currencies buyers have to purely go by the percentage appreciation of

prices, rather than the initial value,which is set by the makers. This valuation is
random there is no inherent value at the beginning. Gold is a finite resource,
making it a perfect store of value. Crypto currency too, shares this perceived
scarcity with gold.

TOP 5 CRYPTO CURRENCIES

1) Litecoin (LTC)
Lite coin, launched in 2011, was among the initial cryptocurrencies following
bitcoin and has often been referred to as “silver to bitcoin’s gold.” It was created
by Charlie Lee, an MIT graduate and former Google engineer. Litecoin is based on
an open source global payment network that is not controlled by any central
authority and uses "scrypt" as a proof of work, which can be decoded with the help
of CPUs of consumer grade.. As of October 5, 2018, Litecoin had a market cap of
$3.40 billion and per token value of $58.09 or Rs 39878.87.

2) Ethereum (ETH)
Launched in 2015, Ethereum is a decentralized software platform that
enablesSmart Contracts and Distributed Applications (DApps) to be built and run
without any downtime, fraud, control or interference from a third party. During
2014, ethereum launched a pre-sale for ether which received an overwhelming
response; this helped to usher in the age of the initial coin offering (ICO). As of
October 5, 2018, Ethereum (ETH) had a market cap of $22.97 billion and as per
token value of $224.42 or Rs15406.43.

3) Zcash (ZEC)
Zcash, a decentralized and open-source cryptocurrency launched in the latter part
of 2016, looks promising. “If bitcoin is like http for money, zcash is https," is one
analogy zcash uses to define itself. Zcash offers privacy and selective transparency
of transactions. Thus, like https, zcash claims to provide extra security or privacy
where all transactions are recorded and published on a blockchain, but details such
as the sender, recipient, and amount remain private.. As of October 5, 2018,
Zcash had a market cap of $633.64 million and a value per token of $128.08 or Rs
8792.69.

4) Dash (DASH)
Dash (originally known as darkcoin) is a more secretive version of bitcoin.
Launched in January 2014, dash experienced an increasing fan following in a short
span of time. This cryptocurrency was created and developed by Evan Duffield and
can be mined using a CPU or GPU. In March 2015, ‘Darkcoin’ was rebranded to
dash, which stands for “digital cash” and operates under the ticker DASH. As of
October 5, 2018, Dash had a market cap of $1.51 billion and as per token value of
$181.42 or Rs12454.48.

5) Ripple (XRP)
Ripple is a real-time global settlement network that offers instant, certain and low-
cost international payments. Launched in 2012, ripple “enables banks to settle
cross-border payments in real time, with end-to-end transparency, and at lower
costs.So far, ripple has seen success with this model; it remains one of the most
enticing digital currencies among traditional financial institutions looking for ways
to revolutionize cross-border payments.As of October 5, 2018, ripple had a market
cap of $20.07 billion and per token value of $0.518 or Rs 35.5607.

FEATURES OF CRYPTO CURRENCY

The features of Crypto currencies are censorship-resistance, scarcity security and a

hard coded immutable monetary policy that make it far more advanced store of
value-it does not have the physical constraints of Gold(such as extraction,
transportation and storage costs). It is known as Cryptocurrencies because the
consensus-keeping process is ensured with strong cryptography.

The main problem that any payment network has to solve is double-spending. It is
a fraudulent technique of spending the same amount twice. The traditional solution
was a trusted third party - a central server - that kept records of the balances and
transactions. However, this method always has an authority basically in control of
your funds and with all your personal details on hand.

ADOPTION IN BUSINESS
As bitcoin‘sdecentralized network allows users to transact directly,peer –to –peer
without a middlemen to manage the exchange of funds,this practice makes it a very
affordable way of transacting as against the legacy banking network.Bit coin
improves system efficiency and enables the provision of financial services at a
drastically lower cost ,giving users more freedom to format with the continual
developing interest among the populace in the last quarter of 2017,motre than
10,000business worldwide have started accepting crypto currencies.Global Brands
such as Paypal, subway, shopify ,Microsoft ,Expedia ,overstock , and pizzaforcoins
are accepting crypto currency as a reliable and valid form of transaction for their
goods and services.

CRYPTO ATMs
The USA has Bit coin ATMs in 1700+ Locations. Canada follows with 462 crypto
currency ATMs; Austria ranks third with 140 ATMs; and the UK has 119 Crypto
ATMs. There are more than 66 countries comprising a total of 2000+ bit coins and
other crypto ATMs, of which approximately 75% of them are located in North
America ,205 In the Europe,2% in Asia ,and the remaining 3% in the rest of the
world.

COUNTRIES THAT HAVE ADOPTED CRYPTO –

CURRENCIES

1) The United States of America (USA)-Since early 2013, the American

Government and its citizens have been bullish about the benefits of crypto
currency. Multi- National American Companies such as Bank of
America,Wellsfargo, American Express, and JP Morgan were the Earlier adopters
of Digital Currency.

2)SWITZERLAND-Since Early 2013,Switzerland has been dubbed a “ Crypto

Hub “due to clear Crypto Regulations .The city of Zug is called as the “Crypto
Valley” as it has begun accepting Bit coin as a form of payment for certain
municipal services ,without taxes.

3)Estonia–With a huge number of bit coin(One of the most popular crypto

currencies) ATMs Cypto currency start upsand ICOs,Estonia has a flourishing,
well positioned economy.Estonia , being one of the most advanced digital nations
allows E –residency to new ventures who opt for offshore establishments.

4) Gibraltar-The Gibraltar Financial Regulator (GFSC) has been regulating the

Operation of crypto currencies within its Jurisdiction aggressively for a longer
time. January 1st, 2018, with a hard hittingefforts of the government and some
private Committee,the positive regulations came into force.

5) Thailand –has been taken a surprising favorable stance towards cryptos as the
Thai SEC has approved seven exchanges and seven cryptos for use in ICOs and
trading Pairs within the country in August 2018.

6) Malta-In June 2018, Binance, one of the world’s largest crypto exchanges by
trading volume set up its operational base in Malta. The country has positioned
itself as a crypto friendly have to attract crypto investors.

7) Singapore-The Global Fintechcentre has become a large scale crypto and ICO
hub as well. Singapore has emerged as the third biggest market for token sales
globally, after USA and Switzerland.

BLOCK CHAIN IN INDIA

Believe it or not, the Reserve Bank of India (RBI) has barred Indian banks from
serving Bit coins & crypto currency exchanges due to its many security reasons.

The central bank (RBI) issued a press release that said:

“Technological innovations, including those underlying virtual currencies, have the
potential to improve the efficiency and inclusiveness of the financial system.
However, Virtual Currencies (VCs), also variously referred to as crypto currencies
and crypto assets, raise concerns about consumer protection, market integrity, and
money laundering, among others.

Reserve Bank has repeatedly cautioned users, holders and traders of virtual
currencies, including Bit coins, regarding various risks associated with dealing
with such virtual currencies. In view of the associated risks, it has been decided
that, with immediate effect, entities regulated by RBI shall not deal with or provide
services to any individual or business entities dealing with or settling VCs.
Regulated entities which already provide such services shall exit the relationship
within a specified time. A circular in this regard is being issued separately.”

Crypto currency and its Adoption in the Future

Start-up and funding activities in Blockchain continues to gain momentum with
new companies engaged in multiple functions, domains and industries re-
imagining business in a new Blockchain world. All in all, Blockchain currently
appears to be at the peak of what research agency Gartner calls the “Hype Cycle”
in its overall technology adoption framework. The big question is whether
Blockchain and DLT would now descend into the “Trough of Disillusionment” in
the months and quarters ahead which may present itself in the form of many
promising start-ups failing to deliver, or projects not scaling beyond POCs, or
industry consortia disintegrating or powerful use-cases for DLT not converting to
real value-adds in the market place.The Value of One Bit Coin(most valuable
Crypto Currency) has surged the highest value on Dec,2017 by reaching $19850 or
Approx. Rs 13,62,702.5.

CONCLUSION:
The Crypto currency has got a good potential market which can be seen in its
presence in all majorcountries of the world.In the near future,the world will be
crucially looking forward for themarket sentiment of crypto currency.
References:
Forbes India Magazine, Nov edition, 2018

https://en.wikipedia.org by Prableen Bajpai on Investopedia

Google scholar,Article by Krishna V Iyer:

 https://research.ark-invest.com/hubfs/1_Download_Files_ARK-
Invest/White_Papers/Bitcoin-Ringing-The-Bell-For-A-New-Asset-Class.pdf

 A New World of Virtual Currency: Cryptocurrency , Neha Jain

Bhundelkhand University
 Date Written: January 5, 2019

 Bitcoin In India: A Deep Down Scenario

By Dr. Manoj Trivedi Assistant Professor, Government PG College, Unnao.

<http://management.nrjp.co.in/index.php/JMSOS/article/view/214>

https://journals.sagepub.com/doi/abs/10.1177/1057567719827051