ASSIGNMENT

GLOBAL BUSINESS ENVIRONMENT

Future of Cryptocurrencies in Global Economics

Submitted By

Name PRN
Hriday Gaddam 19020341015
S Vivek 19020341151
Krishna Chandan Ayyagari 19020341186
Kavya Pandey 19020341239

Human Resource Management Batch

 Block Chain Technology

Blockchain is an innovative system that has been created to record information in a way that makes
it difficult or literally impossible to change, hack, or cheat the process of recording digital
transactions.

The blockchain could essentially be called as the process of maintaining a digital ledger of
transactions that is duplicated and distributed across an entire network of standalone computer
systems to ensure authenticity of transactional records. Each block in the chain contains the record
of a number of transactions and every time a new transaction occurs on the blockchain, a record of
that transaction is added to every participant’s ledger. The decentralised database managed by
multiple participants is known as Distributed Ledger Technology (DLT).Blockchain is a type of DLT in
which transactions are recorded with an immutable cryptographic signature called a hash.

The success and popularity of blockchain is primarily attributed to the creation of a system that
ensures transparency, compatibility and unparalleled security in the recording down of digital
transactions.

The Blockchain technology was initially created by a developer working under the pseudo name of
Satoshi Nakamoto to maintain and legitimize the transactions of a new cryptocurrency created by
him known as Bitcoin. Later, Ethereum became the second largest implementation of blockchain,
wherein, it not only adopts the feature of Blockchain technology over which Bitcoin was built but
also allows for the storage and operation of computer code thereby allowing smart contracts. It built
the foundation for what is today popularly known as Blockchain 2.0.

Bitcoin
Brief History of Bitcoin

The concept of Bitcoin was introduced in this world by Satoshi Nakamoto through a research-style
white paper entitled Bitcoin: A Peer-to-Peer Electronic Cash System in the year 2008. Not only did
the concept of Bitcoin solve the double-spending problem, but also offered many more advantages,
one such advantage worth mentioning here is the anonymity in the transactions. Satoshi who
created the system and did transact few coins on this system is totally anonymous to the entire
world.
It is difficult to imagine that, in this world of social media, when the privacy of each individual is at
stake, the world has still not been able to trace the identity of Satoshi Nakamoto.
What is Bitcoin trying to do?

Bitcoin is an open-source, blockchain-based, decentralized software platform created with an aim to

be used as cryptocurrency. There are no physical bitcoins, only balances kept on a public ledger that
everyone has transparent access to. All bitcoin transactions are verified by a massive amount of
computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual
bitcoins valuable as a commodity. Despite it not being legal tender, Bitcoin is very popular and has
triggered the launch of hundreds of other cryptocurrencies, collectively known as altcoins.

Features of Bitcoin

Decentralized: One of the most direct benefits of Bitcoins is that they are out of purview of
governments, banks and other intermediaries who cannot interrupt user transactions or freeze
Bitcoin accounts. The users experience greater freedom vis-à-vis dealing in national currencies.
There cannot be inflation in case of bitcoins by printing more money as in the case of fiat currencies.
By design, the number of bitcoins that can be minted is limited.

Faster: Bitcoin transactions are relatively faster as compared to bank transfers in traditional
currencies since these transactions are anonymous in nature and verified via a hash key.

Secure: Bitcoin is encrypted and backed with a special system called blockchain. Blockchain uses
volunteers to work together to encrypt the transactions that happen on the Bitcoin system. And in
doing so, they make sure that all personal information is kept hidden away from any spying eyes,
and that even if hackers do manage to get into the system, there’s nothing of value to steal.

As of this moment, Bitcoin is valued at $58,250.60

Pros and Cons of Bitcoin

Pros Cons
Secure Unregulated
Decentralized Limited practical use
Faster Extreme Volatility
 Ethereum
Brief History of Ethereum

Ethereum was founded by Vitalik Buterin in 2015. At an early age of 17, he was introduced to
Bitcoin by his father and hence he became interested and started exploring the concept of
blockchain at a very young age. After proposing improvements to the Bitcoin’s core platform, he
decided that the best way forward would be to create his own cryptocurrency by incorporating all
the suggested improvements and hence launched Ethereum.

What is Ethereum trying to do?

Ethereum is also an open-source, blockchain-based, decentralized software platform. A good way of

explaining what Ethereum is trying to establish is through the following example:

Rahul uses Google Docs for his work and shares it with his colleagues whenever there is a need. He
finds it extremely comfortable and seamless. One day, Google Docs is hacked and Rahul loses all of
his work.

So Rahul reverts back to using Microsoft Word on his Desktop and starts storing all of his work locally
on his desktop. One day, his desktop crashes. Rahul loses all of his work again.

So Rahul goes back to taking notes using pen and pencil.

The challenge for Rahul while using Google Docs and with his Desktop is the centralized storing of
data (which is prone to hacks and cyber attacks from external entities) and an inability to effectively
have a backup. Ethereum addresses both the challenges of centrality of storage and safety by using
Blockchain (which works on the concept of Decentralized storage).

Features of Ethereum

Because Ethereum isn’t just a digital currency like Bitcoin but is an open-source, blockchain-based,
decentralized software platform, there are a wide variety of Decentralized applications, or Dapps
that can be built on top of the Ethereum platform using the concept of smart contracts, which act as
the backend of the Dapps.

Dapps: Dapps have their backend code running on a decentralized peer-to-peer network. Contrast
this with normal apps where their backend code runs on centralized servers. Dapps use the
Ethereum blockchain for their data storage and smart contracts for housing their app specific logic in
the backend. Dapps can have frontend code and user interfaces written in any language (just like an
app) that can make calls to its backend. Furthermore, its frontend can be hosted on decentralized
storage.
Various types of Dapps are currently being experimented with. One such extremely disruptive use
case of Decentralized applications is DeFi (Decentralized Finance)

Decentralized Finance (DeFi): One of the most disruptive applications using Ethereum platform that
is currently being extensively experimented with is the concept of Decentralized Finance, also know
as DeFi. The objective of DeFi is to provide a decentralized alternative to most of the traditional
financial services such as borrowing, lending, sending, buying insurance, saving, trading etc. by
eliminating the traditional intermediataries, i.e. the financial institutions of today. All the financial
services can be made available to anyone who has a smart phone and an internet connection with
the help of DeFi.

Another use case of Ethereum would be NFTs.

Non-Fungible Tokens (NFTs): NFTs allow users to buy and sell ownership of unique digital items and
help them keep track of who owns them using the blockchain. The use case over which NFTs work is
that as the world becomes more and more digital, there is a need to replicate the properties
associated with items of the physical world such as scarcity, uniqueness, and proof of ownership.
NFTs precisely work towards addressing all these three aspects. Currently one use case of NFTs that
is booming is Crypto Art, which involves registering a piece of digital art as original, by signing it
digitally over a blockchain. An example would be the Nyan Cat GIF by Chris Torres that was sold as a
NFT for a whopping 590,000 USD. Another more recent example would be Jack Dorsey auctioning
away his first tweet as an NFT. The winner of Dorsey’s tweet received a digital certificate of the
tweet.

Screenshot of Nyan Cat GIF by Chris Torres

Pros and Cons of Ethereum

Pros Cons
Secure Extremely volatile
More scalable than Bitcoin Transaction costs are high (GAS transactions)
Strong team of developers behind Ethereum
Number of ETH that can be issued is
theoretically unlimited
Predictive Analysis of the future of Cryptocurrencies

The blockchain technology aims to transform the current financial system to exclude financial
intermediaries which is not going unnoticed by current financial institutions and world economies.

Many financial institutions today disregard the possibility of cryptocurrency adaptation given the
lack of regulation, finite supply and extreme volatility in its value. However, there are few economies
that have legalized the use of cryptocurrency as an alternate currency along with their existing
sovereign currency. This has caused the value of Bitcoin to shoot up to unreasonable levels in the
recent past.

The future of cryptocurrencies would be dependent upon how open economies around the world
manage their stance when it comes to allowing experimentations with the booming world of
cryptocurrencies. Currently, given the limited supply of bitcoins and other largely recognized
cryptocurrencies available in the world, any small increase in the adoption of it would re-rate its
value significantly and has therefore become a gambling counter to investors and an investment
counter to its believers across the world. That said, if there happens to be a clamp down by world
governments owing to the risks and threats discussed earlier along with increasing challenge to
sovereign currency, the value of these cryptocurrencies could crash (as seen in 2018). However, the
blockchain technology which has been introduced to this world through the bitcoin is here to stay
given the wide range of possible real-world applications it has ranging from defence, medical,
payment gateways to logistical and other new age software applications for business purposes.