Advertisement

Cryptocurrencies in the Digital Era: The Role of Technological Trust and Its International Effects

  • Serif Dilek
Chapter
Part of the Contributions to Economics book series (CE)

Abstract

Due to the lack of trust as a result of the 2008 global financial crisis, the leading cryptocurrency, Bitcoin, is increasingly thought of as an alternative to the prevailing financial architecture by presenting a technologically more trustworthy alternative. Because of the effect it had due to its number of users, volume, and market size, Bitcoin attracted the attention of the whole world. By using blockchain technology and mining, Bitcoin attempts to replace the services based on trust and the mediation role offered by banks in the traditional finance system.

With its characteristics such as low cost, fast transaction times, and low risks, Bitcoin first emerged in 2008 and since then, due to these characteristics, has triggered an important change and transformation. The fact that Bitcoin is used for speculative investment motives, and that the energy used for its mining is made up of conventional energy sources brought a debate about the sustainability and environmental effects of this system. This article evaluates the evolution of money in the era of digital transformation and the repositioning of cryptocurrencies with a focus on Bitcoin. The study analyzes the global effects of blockchain technology and cryptocurrencies, and the risks, opportunities and environmental effects of mining.

Keywords

Crypto currency Bitcoin Blockchain Global effects 

References

  1. Adamopoulos, A. (2015). Greeks protect their money by converting them to Bitcoin. Greece Greek Reporter. Retrieved November 12, 2018, from https://greece.greekreporter.com/2015/07/03/greeks-protect-their-money-by-converting-them-to-bitcoin/
  2. Ahmed, K. (2017). Regulator warns Bitcoin buyers: Be ready to lose all your money. BBC. Retrieved January 24, 2019, from https://www.bbc.com/news/business-42360553
  3. Ali, R., Barrdear, J., Clews, R., & Southgate, J. (2014). The economics of digital currencies. Bank of England Quarterly Bulletin, 54(3), 276–286.Google Scholar
  4. Andreessen, M. (2014). Why Bitcoin matters. The New York Times. Retrieved December 12, 2018, from https://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/
  5. Arnold, M. (2017). Banks team up with IBM in trade finance blockchain. Financial Times. Retrieved September 23, 2018, from https://www.ft.com/content/7dc8738c-a922-11e7-93c5-648314d2c72c
  6. Atabaş, H. (2018). Blokzinciri teknolojisi ve kripto paraların hayatımızdaki yeni yeri. Istanbul: Ceres Press.Google Scholar
  7. Baek, C., & Elbeck, M. (2015). Bitcoins as an investment or speculative vehicle? A first look. Applied Economics Letters, 22(1), 30–34.CrossRefGoogle Scholar
  8. Baker, N., & Massa, A. (2017, November 29). Nasdaq plans to introduce Bitcoin futures. Bloomberg. Retrieved November 12, 2018, from https://www.bloomberg.com/news/articles/2017-11-29/nasdaq-is-said-to-plan-bitcoin-futures-joining-biggest-rivals
  9. Balaam, N. D., & Dillman, B. (2015). Uluslararası ekonomi politiğe giriş. Ankara: Adres Press.Google Scholar
  10. Bariviera, A. F., Basgall, M. J., Hasperué, W., & Naiouf, M. (2017). Some stylized facts of the Bitcoin market. Physica A: Statistical Mechanics and its Applications, 484, 82–90.CrossRefGoogle Scholar
  11. 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.CrossRefGoogle Scholar
  12. Bech, M. L., & Garratt, R. (2017). Central bank cryptocurrencies. BIS Quarterly Review, 55–70.Google Scholar
  13. Bendiksen, C., Gibbons, A., & Lim, E. (2018). The Bitcoin mining network: Trends, composition, marginal creation cost, electricity consumption & sources. Retrieved December 24, 2018, from https://coinshares.co.uk/wp-content/uploads/2018/11/Mining-Whitepaper-Final.pdf
  14. Bitcoinist. (2016). Can Bitcoin be used to pay for a college education? Retrieved November 15, 2018, from https://bitcoinist.com/can-bitcoin-be-used-to-pay-for-a-college-education/
  15. Blundell-Wignall, A. (2014). The Bitcoin question. OECD Working Papers on Finance, 37, 1–21.Google Scholar
  16. Bordo, M. D., & Levin, A. T. (2017). Central bank digital currency and the future of monetary policy. (No. w23711). National Bureau of Economic Research, 237(11), 1–30.Google Scholar
  17. Bouri, E., Molnár, P., Azzi, G., Roubaud, D., & Hagfors, L. I. (2016). On the hedge and safe haven properties of Bitcoin: Is it really more than a diversifier? Finance Research Letters, 20, 192–198.CrossRefGoogle Scholar
  18. Bovaird, C. (2018, July 3). Could Bitcoin benefit from a trade war? Forbes. Accessed November 26, 2018, from https://www.forbes.com/sites/cbovaird/2018/07/31/could-bitcoin-benefit-from-a-trade-war/#6f4ba2b644cb
  19. Çarkacıoğlu, A. (2016). Kripto-para bitcoin. Sermaye Piyasası Kurulu Araştırma Dairesi Araştırma Raporu. Google Scholar
  20. Chapman, B. (2017). Bitcoin latest: North Korea suspected of South Korean cryptocurrency exchange hack. Independent. Retrieved December 23, 2018, from https://www.independent.co.uk/news/business/news/bitcoin-latest-updates-north-korea-south-youbit-exchange-hack-cryptocurrency-a8121781.html
  21. Chatfield, T. (2014). Bitcoin and the illusion of money, BBC. Retrieved December 17, 2018, from http://www.bbc.com/future/story/20130412-bitcoin-and-the-illusion-of-money
  22. 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.CrossRefGoogle Scholar
  23. Chen, O. (2017, September 13). Bitcoin mining: A new way for North Korea to generate funds for the regime. CNBC. Retrieved November 21, 2018, from https://www.cnbc.com/2017/09/13/bitcoin-mining-a-new-way-for-north-korea-to-generate-funds-for-the-regime.html
  24. Coin Atm Radar. (2018). Bitcoin ATM industry statistics/chart. Retrieved January 3, 2018, from https://coinatmradar.com/
  25. Coinmarket. (2019). Retrieved February 8, 2019, from www.coinmarketcap.com
  26. Collomb, A., & Sok, K. (2016). Blockchain/distributed ledger technology (DLT): What impact on the financial sector? Digiworld Economic Journal, 103, 93–111.Google Scholar
  27. Costelloe, K. (2018). Bitcoin ought to be outlawed’ Nobel prize winner Stiglitz says. Bloomberg. Retrieved January 23, 2019, from https://www.bloomberg.com/news/articles/2017-11-29/bitcoin-ought-to-be-outlawed-nobel-prize-winner-stiglitz-says-jal10hxd
  28. Cox, J. (2013). Bitcoin bonanza: Cyprus crisis boosts digital dollars. CNBC. Retrieved December 25, 2018, from https://www.cnbc.com/id/100597242
  29. Cox, J. (2017). Federal reserve starting to think about its own digital currency, Dudley says. CNBC. Retrieved September 25, 2018, from https://www.cnbc.com/2017/11/29/federal-reserve-starting-to-think-about-its-own-digital-currency-dudley-says.html
  30. Dahan, M., & Casey, M. (2016). Blockchain technology: Redefining trust for a global, digital economy. World Bank. Retrieved November 27, 2018, from http://blogs.worldbank.org/ic4d/blockchain-technology-redefining-trust-global-digital-economy
  31. De Vries, A. (2018). Bitcoin’s growing energy problem. Joule, 2(5), 801–805.CrossRefGoogle Scholar
  32. Digiconomist. (2018a). Bitcoin energy consumption index. Retrieved April 29, 2019, from https://digiconomist.net/bitcoin-energy-consumption
  33. Digiconomist. (2018b). Bitcoin mining is more polluting than gold mining. Retrieved January 23, 2018, from https://digiconomist.net/bitcoin-mining-more-polluting-than-gold-mining
  34. DigitalTalks. (2017). Kripto para burada ve biraz korkutucu. Retrieved November 25, 2018, from https://www.digitaltalks.org/2017/08/23/kripto-para-burada-ve-biraz-korkutucu/
  35. Doguet, J. J. (2013). The nature of the form: Legal and regulatory issues surrounding the Bitcoin digital currency system. Louisiana Law Review, 73(4), 1120–1153.Google Scholar
  36. Dorfman, J. (2017). Bitcoin is an asset, not a currency. Forbes. Retrieved November 16, 2018, from https://www.forbes.com/sites/jeffreydorfman/2017/05/17/bitcoin-is-an-asset-not-a-currency/#1259d4452e5b
  37. Dunkley, E. (2017). Problems at two cryptocurrency exchanges raise security concerns. Financial Times. Retrieved November 26, 2018, from https://www.ft.com/content/aa9fdd64-e536-11e7-97e2-916d4fbac0da
  38. Dyhrberg, A. H. (2015). Hedging capabilities of Bitcoin. Is it the virtual gold? Finance Research Letters, 16, 139–144.CrossRefGoogle Scholar
  39. Economist, T. (2015). The promise of the blockchain: the trust machine. The Economist. Retrieved November 22, 2018, from https://www.economist.com/leaders/2015/10/31/the-trust-machine
  40. Elgot, J. (2015, August 1). Ex-boss of MtGox Bitcoin exchange arrested in japan over lost $390m. The Guardian. Retrieved November 25, 2018, from https://www.theguardian.com/technology/2015/aug/01/ex-boss-of-mtgox-bitcoin-exchange-arrested-in-japan-over-lost-480m
  41. Fanusie Y. (2018, August 15). Blockchain authoritarianism: The regime in Iran goes crypto. Forbes. Retrieved December 12, 2018, from https://www.forbes.com/sites/yayafanusie/2018/08/15/blockchain-authoritarianism-the-regime-in-iran-goes-crypto/#5c2f87273dc6
  42. Ferguson, N. (2008). The ascent of money: A financial history of the world. New York: Penguin.Google Scholar
  43. Foley, S., Karlsen, J., & Putnins, T. J. (2018). Sex, drugs, and Bitcoin: How much illegal activity is financed through cryptocurrencies? Review of Financial Studies, 1–62.Google Scholar
  44. Fry, J., & Cheah, E. T. (2016). Negative bubbles and shocks in cryptocurrency markets. International Review of Financial Analysis, 47, 343–352.CrossRefGoogle Scholar
  45. Ganne, E. (2018). Can blockchain revolutionize international trade? In World Trade Organization Report, Geneva, 1–145.Google Scholar
  46. Gibs, S. (2017). Bitcoin: $64m in cryptocurrency stolen in ‘sophisticated’ hack, exchange says. The Guardian. Retrieved December 15, 2018, from https://www.theguardian.com/technology/2017/dec/07/bitcoin-64m-cryptocurrency-stolen-hack-attack-marketplace-nicehash-passwords
  47. Glaser, F., Haferkorn, M., Weber, M., & Zimmermann, K. (2014). How to price a digital currency? Empirical insights on the influence of media coverage on the Bitcoin bubble. MKWI 2014 (Paderborn) & Banking and Information Technology, 15(1), 1–14.Google Scholar
  48. Graeber, D. (2011). Debt-updated and expanded: The first 5,000 years. Brooklyn: Melville House.Google Scholar
  49. Greenberg, A. (2013). End of the Silk Road: FBI says it has busted the web’s biggest anonymous drug black market’. Forbes. Retrieved November 26, 2018, from https://www.forbes.com/sites/andygreenberg/2013/10/02/end-of-the-silk-road-fbi-busts-the-webs-biggest-anonymous-drug-black-market/#1a7e93d55b4f
  50. Grinberg, R. (2011). Bitcoin: An innovative alternative digital currency. Hastings Science and Technology Law Journal, 4, 159–208.Google Scholar
  51. Grym, A. (2018). The great illusion of digital currencies. BoF Economics Review, 1–17.Google Scholar
  52. Gurguc Z. & Knottenbelt W. (2018). Cryptocurrencies: Overcoming barriers to trust and adoption. Imperial College London Consultants.Google Scholar
  53. Hern, A. (2018). Bitcoin’s energy usage is huge – we can’t afford to ignore it. The Guardian. Retrieved November 12, 2018, from https://www.theguardian.com/technology/2018/jan/17/bitcoin-electricity-usage-huge-climate-cryptocurrency
  54. IEA. (2018). Statistics. Retrieved December 12, 2018, from https://www.iea.org/
  55. Johnson, K. (2018). The buck stops here: Europe seeks alternative to US-dominated financial system. Foreign Policy. Retrieved December 26, 2018, from https://foreignpolicy.com/2018/09/05/europe-seeks-alternative-to-us-financial-system-germany-france-sanctions/
  56. Kancs, D. A., Ciaian, P., & Miroslava, R. (2015). The digital agenda of virtual currencies. Can Bitcoin become a global currency? Information Systems and e- Business Management, 14(4), 883–913.Google Scholar
  57. Kelly, J. (2015). Fearing return to drachma, some Greeks use Bitcoin to dodge capital controls. Reuters. Retrieved December 21, 2018, from https://www.reuters.com/article/us-eurozone-greece-bitcoin-idUSKCN0PD1B420150703
  58. Kharpal, A. (2016). Major banks trade cotton using blockchain in a move that could transform a major industry. CNBC. Retrieved November 12, 2018, from https://www.cnbc.com/2016/10/24/major-banks-blockchain-trade-cotton-in-a-move-that-could-transform-a-major-industry.html
  59. Kharpal, A. (2017). Blockchain technology is moving into the financial mainstream with IBM and seven European banks. CNBC. Retrieved September 28, 2018, from https://www.cnbc.com/2017/06/26/ibm-building-blockchain-for-seven-major-banks-trade-finance.html
  60. Knezevic, D. (2018). Impact of blockchain technology platform in changing the financial sector and other industries. Montenegrin Journal of Economics, 14(1), 109–120.CrossRefGoogle Scholar
  61. Kostakis, V., & Giotitsas, C. (2014). The (A) political economy of Bitcoin. Triple C: Communication, Capitalism & Critique. Open Access Journal for a Global Sustainable Information Society, 12(2), 431–440.Google Scholar
  62. Kowalski, P. (2015). Taxing Bitcoin transactions under Polish tax law. Comparative Economic Research, 18(3), 139–152.CrossRefGoogle Scholar
  63. Kristoufek, L. (2015). What are the main drivers of the Bitcoin price? Evidence from wavelet coherence analysis. PLoS One, 10(4), 1–15.CrossRefGoogle Scholar
  64. Krugman, P. (2013). Bitcoin is evil. The New York Times. Retrieved December 3, 2018, from https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/
  65. Kurtuluş, K. (2018). Fokus programı [TV Programme]. Istanbul: Bloomberg. Retrieved November 19, 2018, from https://www.youtube.com/watch?v=VuIudxQZiP8
  66. Lagarde, C. (2018). Central banking and fintech: A brave new world. Innovations: Technology, Governance, Globalization, 12(1–2), 4–8.CrossRefGoogle Scholar
  67. Luther, W., & White, L. (2014). Can Bitcoin become a major currency? In GMU Working Paper in Economics, (1417), 1–9.Google Scholar
  68. Mankiw, N. G. (2003). Macroeconomics. New York: Worth Publishers.Google Scholar
  69. Marian, O. Y. (2013). Are cryptocurrencies ‘super’ tax havens? 112 Michigan Law Review First Impressions, 38, 1–57.Google Scholar
  70. Meyer, D. (2017). South Korea follows china by banning icos. Fortune. Retrieved November 15, 2018, from http://fortune.com/2017/09/29/south-korea-china-bitcoin-ethereum-icos-ban/
  71. Meyer, D. (2018). Iran is planning to launch its own cryptocurrency in order to bust U.S. sanctions. Fortune. Retrieved November 12, 2018, from http://fortune.com/2018/07/26/iran-sanctions-cryptocurrency/
  72. Monaghan, A. (2017). Bitcoin is a fraud that will blow up, says JP Morgan boss. The Guardian. Retrieved December 26, 2018, from https://www.theguardian.com/technology/2017/sep/13/bitcoin-fraud-jp-morgan-cryptocurrency-drug-dealers
  73. Mora, C., Rollins, R. L., Taladay, K., Kantar, M. B., Chock, M. K., Shimada, M., et al. (2018). Bitcoin emissions alone could push global warming above 2°C. Nature Climate Change, 8(11), 931–933.CrossRefGoogle Scholar
  74. Motamedi, M. (2018). US sanctions accelerate Iran’s blockchain drive. Al Monitor. Retrieved December 29, 2018, from https://www.al-monitor.com/pulse/originals/2018/12/iran-cryptocurrency-blockchain-swift-russia-agreement.html
  75. Mougayar, W. (2016). The business blockchain: Promise, practice, and application of the next internet technology. New York: Wiley.Google Scholar
  76. Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. Bitcoin.org. Retrieved September 12, 2018, from https://bitcoin.org/bitcoin.pdf
  77. Nghiem, A. (2017). Bitcoin: Would you want to get paid in cryptocurrency? BBC. Retrieved November 24, 2018, from https://www.bbc.com/news/business-42435838
  78. Nuroğlu, E. (2018). Dünya Bitcoin’i tartışıyor. Anadolu Ajansı. Retrieved January 24, 2018, from https://www.aa.com.tr/tr/analiz-haber/dunya-bitcoini-tartisiyor/1028051
  79. Papapostolou, A. (2015). Yanis Varoufakis: Greece will adopt the Bitcoin if Eurogroup doesn’t give us a deal. Greece GreekReporter. Retrieved December 29, 2018, from https://greece.greekreporter.com/2015/04/01/yanis-varoufakis-greece-will-adopt-the-bitcoin-if-eurogroup-doesnt-give-us-a-deal/
  80. Partington, R. (2017). Bitcoin bubble? The warnings from history. The Guardian. Retrieved November 23, 2018, from https://www.theguardian.com/business/2017/dec/02/bitcoin-bubble-the-warnings-from-history
  81. Piscini, E., Hyman, G., & Henry, W. (2017). Blockchain: Trust economy. Tech Trends. Google Scholar
  82. Plassaras, N. A. (2013). Regulating digital currencies: Bringing Bitcoin within the reach of IMF. Chicago Journal of International Law, 14, 377.Google Scholar
  83. Price, R. (2015). The 21 companies that control Bitcoin. Business insider. Retrieved December 25, 2018, from http://uk.businessinsider.com/bitcoinpools-miners-ranked-2015-7
  84. Reuters. (2017). South Korean cryptocurrency exchange to file for bankruptcy after hacking. Retrieved January 24, 2019, from https://www.reuters.com/article/us-bitcoin-exchange-southkorea/south-korean-cryptocurrency-exchange-to-file-for-bankruptcy-after-hacking-idUSKBN1ED0NJ
  85. Shin, L. (2015). Bitcoin blockchain technology in financial services: How the disruption will play out. Forbes. Retrieved January 24, 2019, from https://www.forbes.com/sites/laurashin/2015/09/14/bitcoin-blockchain-technology-in-financial-services-how-the-disruption-will-play-out/
  86. Smith, N. (2017). Start worrying when investors borrow to buy Bitcoins. Bloomberg. Retrieved November 12, 2018, from https://www.bloomberg.com/opinion/articles/2017-12-20/start-worrying-when-investors-borrow-to-buy-bitcoins
  87. Swift. (2015). Worldwide currency usage and trends. SWIFT Situation Reports, 1–20.Google Scholar
  88. Swift. (2017). SWIFT history. Retrieved January 24, 2019, from https://www.swift.com/about-us/history
  89. Trugman, J. M. (2014). Welcome to 21st-century Ponzi scheme: Bitcoin. New York Post. Retrieved December 5, 2018, from https://nypost.com/2014/02/15/welcome-to-21st-century-ponzi-scheme-bitcoin/
  90. USA Kaspersky. (2017). CryptoShuffler: Trojan stole $140,000 in Bitcoin. Retrieved November 20, 2017, from https://usa.kaspersky.com/blog/cryptoshuffler-bitcoin-stealer/13137/
  91. Üzer, B. (2017). Sanal para birimleri. (Uzmanlık Yeterlik Tezi), TCMB.Google Scholar
  92. Varoufakis, Y. (2013). Bitcoin and the dangerous fantasy of apolitical money. Yanisvaroufakis.EU. Retrieved December 28, 2018, from https://www.yanisvaroufakis.eu/2013/04/22/bitcoin-and-the-dangerous-fantasy-of-apolitical-money/
  93. Vigna, P., & Casey, J. M. (2017). Kriptopara çağı. Ankara: Buzdağı Yayınevi.Google Scholar
  94. Vondráčková, A. (2016). Regulation of virtual currency in the European Union. Charles University in Prague Faculty of Law Research Paper, 3, 1–17.Google Scholar
  95. Weber, B. (2016). Bitcoin and the legitimacy crisis of money. Cambridge Journal of Economics, 40(1), 17–41.CrossRefGoogle Scholar
  96. Wirdum, A. V. (2016). Bitcoin returns to its cypherpunk roots: An interview with Lupták and sip of hackers’ congress paralelní polis. Bitcoin Magazine. Retrieved November 18, 2018, from https://bitcoinmagazine.com/articles/bitcoin-returns-to-its-cypherpunk-roots-an-interview-with-lupt-k-and-sip-of-hackers-congress-paraleln-polis-1475087856/
  97. Woo, D., Gordon, I., & Laralov, V. (2013). Bitcoin: A first assessment, fx and rates, Research Report from Merrill Lynch.Google Scholar
  98. Yağcı. M. (2018). Yükselen finansal teknolojilerin ekonomi politiği: fintek ve bitcoin örnekleri. İnsan ve Toplum Dergisi, 88, 17–24.Google Scholar
  99. Yelowitz, A., & Wilson, M. (2015). Characteristics of Bitcoin users: An analysis of Google search data. Applied Economics Letters, 22(13), 1030–1036.CrossRefGoogle Scholar
  100. Yermack, D. (2013). Is Bitcoin a real currency? An economic appraisal. NBER Working Papers, 19747, 1–22.Google Scholar
  101. Yüksel, A. E. B. (2015). Elektronik para, sanal para, bitcoin ve linden doları’na hukuki bir bakış. İstanbul Üniversitesi Hukuk Fakültesi Mecmuası, 73(2), 173–220.Google Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Serif Dilek
    • 1
  1. 1.Kırklareli UniversityKırklareliTurkey

Personalised recommendations