This study investigates the cryptocurrency called bitcoin. A cryptocurrency is a type of currency that depends on cryptography to issue new units instead of depending on government decree like fiat currencies. The study will first explain some of the technical details that make bitcoin work. This is necessary to lay groundwork to get to the actual aim of the study, namely investigating the economic aspects of bitcoin. The study will evaluate bitcoin, and other cryptocurrencies, along with fiat currencies against certain definitions. In the process it will introduce a new subclass of cryptocurrency - the sovereign cryptocurrency. Bitcoin’s implied monetary policy will also be discussed, as well as the problems it creates for central banks. A hypothesis on the behaviour of the bitcoin price will be explained and research will be provided to support the acceptance of the hypothesis. Using this hypothesis, a stochastic pricing model for bitcoin will be derived. Arbitrage trading strategies will also be provided that explain certain price constraints that operate in the bitcoin market. The dissertation will also introduce a means to improve the anonymity of a user of bitcoin and will reason that improvements such as these and others will increase the use of bitcoin. Therefore, improvements to anonymity will increase the economic relevance of bitcoin and increase its competitive edge over the traditional banking system. It will be reasoned, based on the possible problems created by bitcoin’s monetary policy, as well as the growth projections implied by the stochastic pricing model, and the increased economic relevance due to improvements in anonymity, that central banks would need to create their own cryptocurrency that conforms to certain requirements – the previously introduced sovereign cryptocurrency. The study will conclude by explaining the technical changes needed for a fork of bitcoin to become a sovereign cryptocurrency, as well as a mathematical model to control the monetary policy of the sovereign cryptocurrency. As its aim, adaptive monetary policy will have stable prices for the economy using the sovereign cryptocurrency to price its goods and services. Please note, that while every effort was made to use published references, the field of cryptocurrencies is very young and changing constantly. Thus, most publications on the subject are simply placed on websites on the internet. This is especially true for the work relating to the founding of the field, and the data sources of the operation of the cryptocurrencies. Therefore a lot of the references do refer to websites on the internet. / Dissertation (MSc)--University of Pretoria, 2019. / Mathematics and Applied Mathematics / MSc / Unrestricted

In recent years, Bitcoin has gained global mass adoption as an asset class. However, due to its characteristics of peer-to-peer direct borderless payment, anonymity and limited supply, Bitcoin has a special application in regions experiencing political and economic turmoil. It serves two functions: store of value and secure channel of transferring assets abroad. In this paper, I will only investigate the correlation between Bitcoin adoption and fiat default in Venezuela due to a limitation on empirical data. Time series FGLS regressions are employed to examine such correlation. The two Bitcoin metrics, Real Bitcoin Price in Venezuelan Bolivar (VEF) and Real Bitcoin Trading Volume in VEF, are included as independent variables. The two economic indicators, the Black Market Exchange Rate (VEF/USD) and Monthly Moving Inflation Rate, are included as explanatory variables. I find a relatively weak correlation between Bitcoin adoption and the well-being of the Venezuelan Economy. The Black Market Exchange Rate has a stronger positive impact on Real Bitcoin Price and Real Bitcoin Trading Volume while Inflation Rate has little impact. In addition, Real Bitcoin Volume responses to the changes the Venezuelan Economy approximately one week slower than Real Bitcoin Price.

1 Legal Aspects of Initial Coin Offering Abstract The thesis deals with Initial Coin Offering (ICO) phenomenon. The Initial Coin Offering is a type of funding using cryptocurrencies, which the current legal literature describes as tokens. The thesis has a goal of describing the basics of cryptocurrencies functionality, the explanation of Initial Coin Offering phenomenon and the legal classification of cryptocurrencies emitted in an ICO. The fother parts of the thesis are dedicated to the comparison of Initial Coin Offering and Initial Public Offering with a special focus on the different economic motivation behind both phenomena. In the beginning the thesis describes the cryptocurrency basics such as what is blockchain, wallet and the difference between coins and tokens. Thesis then contains the descriptions of ICO phases, with a focus on the division of ICO on two parts, the public phase in which the retail investors take part, and the pre-sale phase in which the big investors take part. The next section contains the most important declarations and notices concerning ICO and cryptocurrencies, published by the regulatory bodies with a special focus on ESMA, FINMA and SEC. The description of the regulatory framework in the world is followed by the largest section of the thesis, which is dedicated to the...

Bitcoin has become notorious as the first cryptocurrency to gain widespread media attention, however, despite its many benefits over the existing financial system it remains a volatile fringe currency. This thesis examines the validity of bitcoin as a currency and whether it can play a role in circumventing extractive economic and political institutions in developing countries. The analysis compares bitcoin usage to the level of financial openness, the inflation rate, and the percentage of the population with a bank account in 21 different countries. The correlation is found to be both statistically and economically significant for all of these variables, which suggests that bitcoin is being used in countries with underdeveloped financial systems and detrimental monetary policies. A regression run on these variables indicates that a one-percentage-point increase in inflation leads to a 44.48% increase in bitcoin usage, a one-percentage-point increase in the percentage of people in a country that have a bank account leads to an 8.65% decrease in bitcoin usage and a one unit increase in financial openness leads to a 216% decrease in bitcoin usage. Throughout this analysis the positive and negative implications of widespread bitcoin adoption are discussed with respect to economies in the developing world.

This study analyses the growing area of research that explores the evolution of technology from social and cognition perspective – and how the design and various implementation of technology are being shaped by the factors related to social-constructivism and beliefs systems of individuals. The newly developed technological phenomena of Cryptocurrency – the digital currency for all, provides us with an excellent case to study. We apply social and cognitive processes to understand technology trajectories across the life cycle of cryptocurrency. We thus deepen our understanding by analyzing why and what causes the various technological trajectories in the era of ferment and concluding our research by deriving various technological 'themes'. – that might evolve as the phenomena of cryptocurrency while moving towards the era of dominant design.

Investments in cryptocurrencies have generated extraordinary returns and the interest in cryptocurrencies and blockchain technology from the public, companies, investors, and news media has increased substantially in the past years. This has led certain corporations to change the strategic direction towards blockchain technology, as well as changing the corporate name to reflect an association and these name changes has created substantial increases in the price of that stock. Existing literature of corporate name changes has touched upon several aspects of the subject. However, no specific research connected to blockchain and cryptocurrencies has been conducted. The purpose of this research is therefore to investigate the effect of corporate name changes related to the terms blockchain or cryptocurrency on the price of stocks. A standard event study methodology was applied to determine if the name change creates abnormal returns. The method used has a quantitative approach to the research and relies on statistical testing of numerical data to reach a conclusion. An investigation of 11 firms was conducted to examine this topic. However, there were no firms that had included the term cryptocurrency in the corporate name. The findings from this research reveal positive and significant cumulative abnormal returns on the announcement date of a blockchain related corporate name change. Furthermore, over the full event window, a significant and positive cumulative abnormal return was observed. Thus, it can be concluded that name changes related to blockchain has a positive effect on the stock price and today's investors seem to perceive a corporate name change within the context of blockchain as positive.

This diploma thesis deals with the cryptocurrencies in practice of law. The aim of the thesis is to analyse the initial coin offering and the basic tax aspects of the cryptocurrencies, both with respect to the Czech law, and to provide a comparative overview of the cryptocurrency legal regulation in different states of the world. The actual text of the thesis is divided into four parts. These parts are preceded by a general introduction outlining the overall concept of the thesis, its purpose and the reasons why the topic was chosen. The fourth part is followed by a conclusion summarizing the main findings that were made. The first part of the thesis deals with an explanation of the term cryptocurrency and its comparison with the terms virtual and digital currency. It also discusses whether cryptocurrencies can be considered as money or as currencies and what each of these two categories means. The second part is focused on the initial coin offer in the Czech law. There is a brief description of its course followed by an examination of the applicable rules of both public and private law. Particular attention is paid to the rules concerning the initial public offering, payment transactions, collective investment, enterprise and anti-money laundering. The third part of the thesis dissects basic tax aspects of...

Digital currencies (cryptocurrencies) are rapidly becoming commonplace in the global market. Trading is performed similarly to the stock market or commodities, but stock market prediction algorithms are not necessarily well-suited for predicting digital currency prices. In this work, we analyzed tweets with both an existing sentiment analysis package and a manually tailored "objective analysis," resulting in one impact value for each analysis per 15-minute period. We then used evolutionary techniques to select the most appropriate training method and the best subset of the generated features to include, as well as other parameters. This resulted in implementation of predictors which yielded much more profit in four-week simulations than simply holding a digital currency for the same time period--the results ranged from 28% to 122% profit. Unlike stock exchanges, which shut down for several hours or days at a time, digital currency prediction and trading seems to be of a more consistent and predictable nature.

Master of Science / Department of Computer Science / William H. Hsu / Cryptocurrencies are digital currencies that have garnered significant investor attention in the financial markets. The aim of this project is to predict the daily price, particularly the daily high and closing price, of the cryptocurrency Bitcoin. This plays a vital role in making trading decisions. There exist various factors which affect the price of Bitcoin, thereby making price prediction a complex and technically challenging task. To perform prediction, we trained temporal neural networks such as time-delay neural networks (TDNN) and recurrent neural networks (RNN) on historical time series – that is, past prices of Bitcoin over several years. Features such as the opening price, highest price, lowest price, closing price, and volume of a currency over several preceding quarters were taken into consideration so as to predict the highest and closing price of the next day. We designed and implemented TDNNs and RNNs using the NeuroSolutions artificial neural network (ANN) development environment to build predictive models and evaluated them by computing various measures such as the MSE (mean square error), NMSE (normalized mean square error), and r (Pearson’s correlation coefficient) on a continuation of the training data from each time series, held out for validation.

With the explosion of Bitcoin, various cryptocurrencies are beginning to garner incredible amounts of attention from speculators and institutional investors alike. Simultaneously, the rise in the number of occurrences of cyber ransom attacks has proven to be an increasingly relevant part of the conversation in the formative years of the Bitcoin ecosystem, as hackers demand payments be in the form of bitcoin. To test the relative impact of these different ransom events on the price of bitcoin, this paper conducts an event study to quantify the reaction by investors upon revelation of the news. In addition, it examines differences between Bitcoin and two other cryptocurrencies, Ethereum and Litecoin, to control for any liquidity effects of victims buying up large sums of bitcoin. The findings of the study indicate that following the ransom events there is a positive price reaction, supporting the claim that investors in Bitcoin generally perceive these events as good news. This could have a profound effect on the development and further adoption of cryptocurrencies, as regulators try to determine whether or not to intervene.