A New Frontier for Financial Systems. Exploring the Role and Implications of Cryptocurrencies
Miloš Grujić - Independent University of Banja Luka, Bosnia and Herzegovina
DOI: https://doi.org/10.31410/Balkans.JETSS.2024.7.2.59-67
Miloš Grujić - Independent University of Banja Luka, Bosnia and Herzegovina
DOI: https://doi.org/10.31410/Balkans.JETSS.2024.7.2.59-67
|
Balkans Journal of Emerging Trends in Social Sciences, (2024) , Vol 7, No 2
ISSN: 2620-164X |
| ||
Abstract: Cryptocurrencies are new financial instruments that pose opportunities and challenges for modern finance. This paper synthesizes previous research using a literature review method and various academic databases. The results show that cryptocurrencies offer lower transaction costs, greater privacy, diversification benefits, and alternative financing solutions for institutional investors and individuals. However, they also face challenges such as regulatory uncertainty, criminal activity, environmental costs, prohibitions and restrictions on use, security and privacy concerns, and high volatility. The paper provides useful information for the academic and professional public who want to understand these new financial instruments. The research question is, “What are the opportunities and challenges of cryptocurrencies in modern finance?”
Keywords: Cryptocurrencies, Finance, Financial systems.
JEL Classification G23 · O16 · P43
Keywords: Cryptocurrencies, Finance, Financial systems.
JEL Classification G23 · O16 · P43
REFERENCES
Amor, S. B., Althof, M., & Härdle, W. K. (2022). Financial Risk Meter for emerging markets. Research in International Business and Finance, 60, 101594, https://doi.org/10.1016/j.ribaf.2021.101594
Auer, R. (2019). Beyond the Doomsday Economics of “Proof-of-Work” in Cryptocurrencies. SSRN Scholarly Paper ID 3331413. https://doi.org/10.24149/gwp355
Bação, P., Duarte, A. P., Sebastião, H., & Redzepagic, S. (2018). Information Transmission Between Cryptocurrencies: Does Bitcoin Rule the Cryptocurrency World? Scientific Annals of Economics and Business, 65(2), 97–117. https://doi.org/10.2478/saeb-2018-0013
Baek, C., & Elbeck, M. (2015). Bitcoins as an investment or speculative vehicle? A first look. Applied Economics Letters, 22(1), 30-34. https://doi.org/10.1080/13504851.2014.916379
Baldimtsi, F., Kiayias, A., & Samari, K. (2021). Watermarking public-key cryptographic functionalities and implementations: The case of encryption and signatures. IET Information Security, 15(3), 205-222. https://doi.org/10.1049/ise2.12013
Baur, D. G., Hong, K., & Lee, A. D. (2018). Bitcoin: Medium of exchange or speculative assets? Journal of International Financial Markets, Institutions and Money, 54, 177-189. https://doi.org/10.1016/j.intfin.2017.12.004
Bouri, E., Molnár, P., Azzi, G., Roubaud, D., & Hagfors, L. I. (2017). On the hedge and safe haven properties of Bitcoin: Is it really more than a diversifier? Finance Research Letters, 20, 192-198. https://doi.org/10.1016/j.frl.2016.09.025
Bunjaku, F., Gorgieva-Trajkovska, O., & Miteva-Kacarski, E. (2017). Cryptocurrencies – Advantages and Disadvantages. Journal of Economics, 2(1), 31-39.
Calafos, M. W., & Dimitoglou, G. (2023). Cyber Laundering: Money Laundering from Fiat Money to Cryptocurrency. Principles and Practice of Blockchains, 271-300. https://doi.org/10.1007/978-3-031-10507-4_12
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. https://doi.org/10.1016/j.econlet.2015.02.029
Chimienti, M. T., Kochanska, U., & Pinna, A. (2019). Retrieved from ecb.europa.eu: Understanding the crypto-asset phenomenon, its risks and measurement issues
Cui, W., & Gao, C. (2023). WTEYE: On-chain wash trade detection and quantification for ERC20 cryptocurrencies. Blockchain: Research and Applications, 4(1), 100108. https://doi.org/10.1016/j.bcra.2022.100108
Demir, E., Gozgor, C. K. M., & Lau, S. A. Vigne (2018). Does economic policy uncertainty predict the Bitcoin returns? An empirical investigation. Finance Research Letters Available at https://doi.org/10.1016/j.frl.2018.01.005
Dyhrberg, A. H., Foley, S., & Svec, J. (2018). How Investible is Bitcoin? Analyzing The Liquidity and Transaction Costs of Bitcoin Markets. Economics Letters, 171, 140–143. https://doi.org/10.1016/j.econlet.2018.07.032
Fadeyi, O., Krejcar, O., Maresova, P., Kuca, K., Brida, P., & Selamat, A. (2020). Opinions on Sustainability of Smart Cities in the Context of Energy Challenges Posed by Cryptocurrency Mining. Sustainability, 12(1), 169. https://doi.org/10.3390/su12010169
Fosso Wamba, S., Kala Kamdjoug, J. R., Epie Bawack, R., & Keogh, J. G. (2020). Bitcoin, Blockchain and Fintech: a systematic review and case studies in the supply chain. Production Planning & Control, 31(2-3), 115-142. https://doi.org/10.1080/09537287.2019.1631460
Giudici, G., Milne, A., & Vinogradov, D. (2020). Cryptocurrencies: market analysis and perspectives. Journal of Industrial and Business Economics, 47(1), 1-18. https://doi.org/10.1007/s40812-019-00138-6
Grujić, M., & Šoja, T. (2021). Portfolio diverzifikacija sa bitkoinom. Dokazi iz perspektive institucionalnih investitora. XI International Scientific Conference on Economic Development and Standard of Living EDASOL 2021 – Banja Luka, novembar/November 12, 2021.
Guadamuz, A., & Marsden, C. (2015). Blockchains and Bitcoin: Regulatory Responses to Cryptocurrencies. First Monday, 20(12). https://doi.org/10.5210/fm.v20i12.6198
Guesmi, K., Saadi, S., Abid, I., & Ftiti, Z. (2019). Portfolio diversification with virtual currency: Evidence from bitcoin. International Review of Financial Analysis, 63, 431-437. https://doi.org/10.1016/j.irfa.2018.03.004
Harwick, C. (2016). Crypto-Currency and the Problem of Intermediation. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2523771
Hong, K. (2017). Bitcoin as an alternative investment vehicle. Information Technology and Management, 18(4), 265–275. https://doi.org/10.1007/s10799-016-0264-6
Jalan, A., Matkovskyy, R., Urquhart, A., & Yarovaya, L. (2023). The role of interpersonal trust in cryptocurrency adoption. Journal of International Financial Markets, Institutions and Money, 83, 101715. https://doi.org/10.1016/j.intfin.2022.101715
Katsiampa, P. (2017). Volatility estimation for Bitcoin: A comparison of GARCH models. Economics Letters, 158, 3-6. https://doi.org/10.1016/j.econlet.2017.06.023
Kerr, J. (2018). How can legislators protect sport from the integrity threat posed by cryptocurrencies? The International Sports Law Journal, 18(1-2), 79-97. https://doi.org/10.1007/s40318-018-0132-0
Kfir, I. (2020). Cryptocurrencies, National Security, Crime and Terrorism. Comparative Strategy, 39(2), 113–127. https://doi.org/10.1080/01495933.2020.1718983
Kristoufek, L. (2015). What Are the Main Drivers of the Bitcoin Price? Evidence from Wavelet Coherence Analysis. PLOS ONE, 10(4), e0123923. https://doi.org/10.1371/journal.pone.0123923
Laabs, M., & Đukanović, S. (2018). Blockchain in Industrie 4.0: Beyond cryptocurrency. it - Information Technology, 60(3), pp. 143-153. Available at https://doi.org/10.1515/itit-2018-0011
Miller, P. (2016). Chapter 1—The cryptocurrency enigma. In J. Sammons (Ed.), Digital forensics (pp. 1–25). Syngress. https://doi.org/10.1016/B978-0-12-804526-8.00001-0
Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf
Omane-Adjepong, M., Alagidede, P., & Akosah, N. K. (2019). Wavelet time-scale persistence analysis of cryptocurrency market returns and volatility. Physica A: Statistical Mechanics and its Applications, 514, 105-120. https://doi.org/10.1016/j.physa.2018.09.013
Pieters, G., & Vivanco, S. (2017). Financial regulations and price inconsistencies across Bitcoin markets. Information Economics and Policy, 39, 1-14. https://doi.org/10.1016/j.infoecopol.2017.02.002
Platanakis, E., & Urquhart, A. (2019). Portfolio management with cryptocurrencies: The role of estimation risk. Economics Letters, 177, 76-80. https://doi.org/10.1016/j.econlet.2019.01.019
Pu, H., Ge, Y., Yan-Feng, Z., & Yu-Bin, B. (2017). Survey on blockchain technology and its application prospect. Computer science, 44(4), 1-7.
Radivojac, G., & Grujić, M. (2018a). Dometi i ograničenja primjene krptovaluta i blokčejn tehnologije u međunarodnom poslovanju i na finansijskim tržištima. Acta Economica, 16(29), 79-102. https://doi.org/10.7251/ACE1829079R
Radivojac, G., & Grujić, M. (2018b). Fenomen kriptovaluta - spoj finansija i tehnologija na finansijskim tržištima. Banja Luka: Financing, 1(1), https://doi.org/FIN1801015G
Scharding, T. (2019). National currency, world currency, cryptocurrency: A Fichtean approach to the Ethics of Bitcoin. Business and Society Review, 124(2), 219-238. https://doi.org/10.1111/basr.12169
Shahzad, F., Xiu, G., Wang, J., & Shahbaz, M. (2018). An Empirical Investigation on the Adoption of Cryptocurrencies Among the People of Mainland China. Technology in Society, 55, 33–40. https://doi.org/10.1016/j.techsoc.2018.05.006
Squarepants, S. (n.d.). Bitcoin: A Peer-to-Peer Electronic Cash System. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3977007
WEF. (2021, May 6). Blockchain in capital markets: Here’s what we’ve learned after 5 years of experimentation. Retrieved from WEForum: https://www.weforum.org/agenda/2021/05/after-morethan-5-years-of-experimenting-with-blockchain-here-s-what-we-ve-learned/
WEF. (2022, November 4). Understanding the macroeconomic impact of cryptocurrency and stablecoin economics. Retrieved from WEForum: https://www.weforum.org/agenda/2022/11/the-macroeconomic-impact-of-cryptocurrency-and-stablecoin-economics/
Wei, Q., Li, S., Li, W., Li, H., & Wang, M. (2019). Decentralized Hierarchical Authorized Payment with Online Wallet for Blockchain. Lecture Notes in Computer Science, 358-369. https://doi.org/10.1007/978-3-030-23597-0_29
White, L. H. (2015). The market for cryptocurrencies. Retrieved from Cato Journal, 383 - 402. https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2015/5/cj-v35n2-13.pdf
Yermack, D. (2015). Is Bitcoin a Real Currency? An Economic Appraisal. Handbook of Digital Currency, 29-40. https://doi.org/10.1016/b978-0-323-98973-2.00014-9
REFERENCES
Amor, S. B., Althof, M., & Härdle, W. K. (2022). Financial Risk Meter for emerging markets. Research in International Business and Finance, 60, 101594, https://doi.org/10.1016/j.ribaf.2021.101594
Auer, R. (2019). Beyond the Doomsday Economics of “Proof-of-Work” in Cryptocurrencies. SSRN Scholarly Paper ID 3331413. https://doi.org/10.24149/gwp355
Bação, P., Duarte, A. P., Sebastião, H., & Redzepagic, S. (2018). Information Transmission Between Cryptocurrencies: Does Bitcoin Rule the Cryptocurrency World? Scientific Annals of Economics and Business, 65(2), 97–117. https://doi.org/10.2478/saeb-2018-0013
Baek, C., & Elbeck, M. (2015). Bitcoins as an investment or speculative vehicle? A first look. Applied Economics Letters, 22(1), 30-34. https://doi.org/10.1080/13504851.2014.916379
Baldimtsi, F., Kiayias, A., & Samari, K. (2021). Watermarking public-key cryptographic functionalities and implementations: The case of encryption and signatures. IET Information Security, 15(3), 205-222. https://doi.org/10.1049/ise2.12013
Baur, D. G., Hong, K., & Lee, A. D. (2018). Bitcoin: Medium of exchange or speculative assets? Journal of International Financial Markets, Institutions and Money, 54, 177-189. https://doi.org/10.1016/j.intfin.2017.12.004
Bouri, E., Molnár, P., Azzi, G., Roubaud, D., & Hagfors, L. I. (2017). On the hedge and safe haven properties of Bitcoin: Is it really more than a diversifier? Finance Research Letters, 20, 192-198. https://doi.org/10.1016/j.frl.2016.09.025
Bunjaku, F., Gorgieva-Trajkovska, O., & Miteva-Kacarski, E. (2017). Cryptocurrencies – Advantages and Disadvantages. Journal of Economics, 2(1), 31-39.
Calafos, M. W., & Dimitoglou, G. (2023). Cyber Laundering: Money Laundering from Fiat Money to Cryptocurrency. Principles and Practice of Blockchains, 271-300. https://doi.org/10.1007/978-3-031-10507-4_12
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. https://doi.org/10.1016/j.econlet.2015.02.029
Chimienti, M. T., Kochanska, U., & Pinna, A. (2019). Retrieved from ecb.europa.eu: Understanding the crypto-asset phenomenon, its risks and measurement issues
Cui, W., & Gao, C. (2023). WTEYE: On-chain wash trade detection and quantification for ERC20 cryptocurrencies. Blockchain: Research and Applications, 4(1), 100108. https://doi.org/10.1016/j.bcra.2022.100108
Demir, E., Gozgor, C. K. M., & Lau, S. A. Vigne (2018). Does economic policy uncertainty predict the Bitcoin returns? An empirical investigation. Finance Research Letters Available at https://doi.org/10.1016/j.frl.2018.01.005
Dyhrberg, A. H., Foley, S., & Svec, J. (2018). How Investible is Bitcoin? Analyzing The Liquidity and Transaction Costs of Bitcoin Markets. Economics Letters, 171, 140–143. https://doi.org/10.1016/j.econlet.2018.07.032
Fadeyi, O., Krejcar, O., Maresova, P., Kuca, K., Brida, P., & Selamat, A. (2020). Opinions on Sustainability of Smart Cities in the Context of Energy Challenges Posed by Cryptocurrency Mining. Sustainability, 12(1), 169. https://doi.org/10.3390/su12010169
Fosso Wamba, S., Kala Kamdjoug, J. R., Epie Bawack, R., & Keogh, J. G. (2020). Bitcoin, Blockchain and Fintech: a systematic review and case studies in the supply chain. Production Planning & Control, 31(2-3), 115-142. https://doi.org/10.1080/09537287.2019.1631460
Giudici, G., Milne, A., & Vinogradov, D. (2020). Cryptocurrencies: market analysis and perspectives. Journal of Industrial and Business Economics, 47(1), 1-18. https://doi.org/10.1007/s40812-019-00138-6
Grujić, M., & Šoja, T. (2021). Portfolio diverzifikacija sa bitkoinom. Dokazi iz perspektive institucionalnih investitora. XI International Scientific Conference on Economic Development and Standard of Living EDASOL 2021 – Banja Luka, novembar/November 12, 2021.
Guadamuz, A., & Marsden, C. (2015). Blockchains and Bitcoin: Regulatory Responses to Cryptocurrencies. First Monday, 20(12). https://doi.org/10.5210/fm.v20i12.6198
Guesmi, K., Saadi, S., Abid, I., & Ftiti, Z. (2019). Portfolio diversification with virtual currency: Evidence from bitcoin. International Review of Financial Analysis, 63, 431-437. https://doi.org/10.1016/j.irfa.2018.03.004
Harwick, C. (2016). Crypto-Currency and the Problem of Intermediation. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2523771
Hong, K. (2017). Bitcoin as an alternative investment vehicle. Information Technology and Management, 18(4), 265–275. https://doi.org/10.1007/s10799-016-0264-6
Jalan, A., Matkovskyy, R., Urquhart, A., & Yarovaya, L. (2023). The role of interpersonal trust in cryptocurrency adoption. Journal of International Financial Markets, Institutions and Money, 83, 101715. https://doi.org/10.1016/j.intfin.2022.101715
Katsiampa, P. (2017). Volatility estimation for Bitcoin: A comparison of GARCH models. Economics Letters, 158, 3-6. https://doi.org/10.1016/j.econlet.2017.06.023
Kerr, J. (2018). How can legislators protect sport from the integrity threat posed by cryptocurrencies? The International Sports Law Journal, 18(1-2), 79-97. https://doi.org/10.1007/s40318-018-0132-0
Kfir, I. (2020). Cryptocurrencies, National Security, Crime and Terrorism. Comparative Strategy, 39(2), 113–127. https://doi.org/10.1080/01495933.2020.1718983
Kristoufek, L. (2015). What Are the Main Drivers of the Bitcoin Price? Evidence from Wavelet Coherence Analysis. PLOS ONE, 10(4), e0123923. https://doi.org/10.1371/journal.pone.0123923
Laabs, M., & Đukanović, S. (2018). Blockchain in Industrie 4.0: Beyond cryptocurrency. it - Information Technology, 60(3), pp. 143-153. Available at https://doi.org/10.1515/itit-2018-0011
Miller, P. (2016). Chapter 1—The cryptocurrency enigma. In J. Sammons (Ed.), Digital forensics (pp. 1–25). Syngress. https://doi.org/10.1016/B978-0-12-804526-8.00001-0
Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf
Omane-Adjepong, M., Alagidede, P., & Akosah, N. K. (2019). Wavelet time-scale persistence analysis of cryptocurrency market returns and volatility. Physica A: Statistical Mechanics and its Applications, 514, 105-120. https://doi.org/10.1016/j.physa.2018.09.013
Pieters, G., & Vivanco, S. (2017). Financial regulations and price inconsistencies across Bitcoin markets. Information Economics and Policy, 39, 1-14. https://doi.org/10.1016/j.infoecopol.2017.02.002
Platanakis, E., & Urquhart, A. (2019). Portfolio management with cryptocurrencies: The role of estimation risk. Economics Letters, 177, 76-80. https://doi.org/10.1016/j.econlet.2019.01.019
Pu, H., Ge, Y., Yan-Feng, Z., & Yu-Bin, B. (2017). Survey on blockchain technology and its application prospect. Computer science, 44(4), 1-7.
Radivojac, G., & Grujić, M. (2018a). Dometi i ograničenja primjene krptovaluta i blokčejn tehnologije u međunarodnom poslovanju i na finansijskim tržištima. Acta Economica, 16(29), 79-102. https://doi.org/10.7251/ACE1829079R
Radivojac, G., & Grujić, M. (2018b). Fenomen kriptovaluta - spoj finansija i tehnologija na finansijskim tržištima. Banja Luka: Financing, 1(1), https://doi.org/FIN1801015G
Scharding, T. (2019). National currency, world currency, cryptocurrency: A Fichtean approach to the Ethics of Bitcoin. Business and Society Review, 124(2), 219-238. https://doi.org/10.1111/basr.12169
Shahzad, F., Xiu, G., Wang, J., & Shahbaz, M. (2018). An Empirical Investigation on the Adoption of Cryptocurrencies Among the People of Mainland China. Technology in Society, 55, 33–40. https://doi.org/10.1016/j.techsoc.2018.05.006
Squarepants, S. (n.d.). Bitcoin: A Peer-to-Peer Electronic Cash System. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3977007
WEF. (2021, May 6). Blockchain in capital markets: Here’s what we’ve learned after 5 years of experimentation. Retrieved from WEForum: https://www.weforum.org/agenda/2021/05/after-morethan-5-years-of-experimenting-with-blockchain-here-s-what-we-ve-learned/
WEF. (2022, November 4). Understanding the macroeconomic impact of cryptocurrency and stablecoin economics. Retrieved from WEForum: https://www.weforum.org/agenda/2022/11/the-macroeconomic-impact-of-cryptocurrency-and-stablecoin-economics/
Wei, Q., Li, S., Li, W., Li, H., & Wang, M. (2019). Decentralized Hierarchical Authorized Payment with Online Wallet for Blockchain. Lecture Notes in Computer Science, 358-369. https://doi.org/10.1007/978-3-030-23597-0_29
White, L. H. (2015). The market for cryptocurrencies. Retrieved from Cato Journal, 383 - 402. https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2015/5/cj-v35n2-13.pdf
Yermack, D. (2015). Is Bitcoin a Real Currency? An Economic Appraisal. Handbook of Digital Currency, 29-40. https://doi.org/10.1016/b978-0-323-98973-2.00014-9
Association of Economists and Managers of the Balkans
- UdEkoM Balkan -
179 Ustanicka St, 11000 Belgrade, Republic of Serbia
E-mail: [email protected]
www.udekom.org.rs
- UdEkoM Balkan -
179 Ustanicka St, 11000 Belgrade, Republic of Serbia
E-mail: [email protected]
www.udekom.org.rs
Tel. +381 62 812 5779
VAT number: 108747027
Registration number.: 28157347
Registration number.: 28157347