3010 TYBBI Main File CRYPTOCURRENCY

PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE AND ECONOMICS
CRYPTOCURRENCY Page 1
CHAPTR 1
Introduction
Crypto currencies and Bitcoin are just two of the buzzwords that are all over the news
in recent times. The huge media attention crypto currencies have gotten in the recent
time is just one reason why it has reached its current popularity. The crypto currency
Bitcoin (Nakamoto, 2008) was created in 2009 but most people were not aware of its
existence. Now that new exchanges are coming up that make the trade of Fiat money
to crypto currencies relatively easy and the news has spread through social media it
seems that everybody knows what crypto currencies are, and It is widely unknown that
there are more than 1.500 different crypto currencies that can be traded on different
exchanges . The total market capitalization of all crypto currency has risen within one
year from $83 billion in June 2017 to approximately $300 billion by June 2018 . This
enormous increase in market capitalization was one of the main reasons why crypto
currencies got a lot of media attention. The underlying technology of crypto currencies
is the blockchain and they are only one field of application for this technology. With
the adoption of blockchain technology, it is possible to use the products build on top
of the blockchain. These are namely crypto currencies and similar value-exchange
mechanisms that have the potential to change the way we transact on a day to day
basis (Guzman, 2018). At the same time, such an increase in media attention and
market capitalization has an effect on people and the real economy. This can be seen
in companies that are publicly traded. Making a decision towards blockchain their
share price increases. Longfin Corp. stock price rose over 2000% in one week after it
announced that it had bought a company that empowers global micro-lending solution
using the blockchain technology . All this hype around crypto currencies has a reason.
Using them as a mean of payment can result in advantages compared to Fiat money.
When transferring, a for example, $1 million from New York to Zürich using a bank,
the transaction costs would be high, and it would take long for the transfer to be
completed. If doing the same transaction using crypto currencies the transaction costs
would be a fraction of that of the banks and the transfer would be completed within
one hour. These are just two examples of the advantages crypto currencies have
compared to Fiat currencies . With that kind of impact on the economy, it is time to
take a closer look at the topic of crypto currencies and their economic impact as well
as their impact on its users. The current research in this field is focused on a very
technical perspective. Areas like the usability, privacy issue, and security concerns are
the main focus of researchers . The economic impact of crypto currency worldwide
has not been given much attention and therefore this research paper has the aim to
shed some light on the buzzword crypto currency and show on the one hand how they
emerged and what use cases they have and on the other hand what impact such a fast
increase in market capitalization and adoption has on the economy. In order to assess
the economic impact, the crypto currencies Bitcoin, Ethereum, and Monero were
chosen to be used in this research paper.
Types of Cryptocurrency
The first blockchain- cryptocurrency was Bitcoin, which still remains the most popular
and most valuable. Today, there are thousands of alternate cryptocurrencies with
various functions and specifications. Some of these are clones or forks of Bitcoin,
while others are new currencies that were built from scratch.
Bitcoin was launched in 2009 by an individual or group known by the pseudonym

"Satoshi Nakamoto." As of March 2021, there were over 18.6 million bitcoins in
circulation with a total market cap of around $927 billion.
Some of the competing cryptocurrencies spawned by Bitcoin’s success, known as

"altcoins," include Litecoin, Peercoin, and Namecoin, as well as Ethereum, Cardano,
and EOS. Today, the aggregate value of all the cryptocurrencies in existence is around
$1.5 trillion—Bitcoin currently represents more than 60% of the total value.
CHAPTER 2
RESEARCH METHODLOGY
This research paper will use a case study approach, in order to show the emergence
and slow mainstream adoption of the three selected crypto currencies. The case study
research method enables the exploration and understanding of the topic of crypto
currencies. This approach was chosen in order to select three different cases and
examine them individually and then combine their output in order to come to a
conclusion. One definition of the case study research approach is „as an empirical
inquiry that investigates a contemporary phenomenon within its real-life context;
when the boundaries between phenomenon and context are not clearly evident; and in
which multiple sources of evidence are used”. Researchers have considered the case
study approach to be a robust method when a holistic and in-depth analyze is
important. The case study approach has been used in different research areas, for
example, Johnson (2006) in community-based problems, Gülseçen and Kubat (2006)
in education and Grässel and Schirmer (2006) in sociology research. One reason why
researchers apply the case study method is to overcome the limitations, which can
occur within the quantitative methods. When using a multiple case study approach,
each case will be treated as an individual case and each conclusion will contribute
information to the whole study. Furthermore, while carefully selecting individual
cases with different use cases it will help to gain valuable insights. One advantage of
the case study approach is the ability to gather data from multiple sources. Some
researchers have criticized the robustness of the case study as a research approach .
Therefore, the selection of the right case study design is very important. For this
research paper the crypto currencies Bitcoin Nakamoto (2008), Ethereum Buterin
(2013) and Monero Saberhagen (2013) were carefully chosen. Each crypto currency
will be analyzed for its core features and what different use case they have. Moreover,
the development of each crypto currency will be shown and examined to find out what
led to the popularity of each crypto currency. In a next step, today’s situation is stated
in order to show different selected real use cases for these crypto currencies. A very
important factor to analyze is the economic impact and value of each crypto currency
is generating. It is especially interesting what new innovation these crypto currencies
have triggered and what economic value companies created because of these crypto
currencies. All resources and information for this paper were gathered in the time from
week 16 to week 31 of 2018. Because the academic sources are limited in regard to
this research field additional internet sources were used. For academic papers the
databases Scholar, ABI/Inform, EBSCO Business Source Premier and Science direct
were used and keywords like crypto currency, Bitcoin, Ethereum, Monero, blockchain,
economic impact of crypto currencies, crypto currency mining, proof-of-work, proof-
of-stake, Bitcoin and banks, crypto currency asset class and many more were used to
find and identify relevant literature. For the searches of internet literature google,
bitcointalk.org, Reddit, and other crypto currency related forum and content provider
were used to generate the needed literature.
that were used to find this literature are similar to the keyword used in academic
literature. Additional to these literature sources different books have been used to
generate
hundreds of copies of the ledger stored all over the world. In order for all ledgers to
have the latest and correct version, a blockchain ledger host (node) has to be
connected to the Internet 24/7. When being connected the ledger will automatically
update itself to the newest version that includes all transactions that have ever
occurred on the network. Because of this blockchain ledger, trusted third parties that
process, validate, safeguard and preserve electronic transactions can be substituted
through blockchain ledgers. The next paragraph will briefly describe how a blockchain
works technically. Blockchain uses a cryptographic proof mechanism for two parties
that are willing to execute a transaction using the Internet. In order for the transaction
being protected, digital signatures are deployed. These digital signatures include a
public- and a private key. Each transaction is sent to the public key of the receiver and
is signed by the sender with his private key. These two keys can be compared to a
bank account. The public key would represent the bank accounts IBAN, the private
key would be the pin code to access your bank account and use the funds. One
CHAPTER 3
LITERATURE REVIEW
This section is used to show what existing literature is available today. Furthermore,
this chapter will be used to explain the technology and show the aspects of the
different blockchains. In the first part, the blockchain technology will be analyzed,
followed by cryptocurrencies in general and their underlying technology.
3.1 Blockchain
A blockchain is a chain of blocks of information that registers transactions; of cause,

there is a stringent set of rules that govern how to verify the validity of the blocks and
make certain that the blocks will not be altered or disappear”. Centralized financial
institutions like banks are using a centralized transaction ledger (from now on referred
to as ledger), where all transactions of a certain bank are recorded. Normally, each
bank has its own ledger and when a transaction is made from one to another bank it
has to be recorded in both ledgers. A blockchain is exactly the same with one major
difference, it is stored decentralized. This means that many participants in a network,
individuals or institutions are using the same ledger and every participant has the
possibility to host the blockchain ledger. This results in hundreds of copies of the
ledger stored all over the world. In order for all ledgers to have the latest and correct
version, a blockchain ledger host (node) has to be connected to the Internet 24/7.
When being connected the ledger will automatically update itself to the newest version
that includes all transactions that have ever occurred on the network. Because of this
blockchain ledger, trusted third parties that process, validate, safeguard and preserve
electronic transactions can be substituted through blockchain ledgers. The next
paragraph will briefly describe how a blockchain works technically. Blockchain uses a
cryptographic proof mechanism for two parties that are willing to execute a
transaction using the Internet. In order for the transaction being protected, digital
signatures are deployed. These digital signatures include a public- and a private key.
Each transaction is sent to the public key of the receiver and is signed by the sender
with his private key. These two keys can be compared to a bank account. The public
key would represent the bank accounts IBAN, the private key would be the pin code to
access your bank account and use the funds. One problem is that all transactions using
the blockchain do not come in order in which they were originally generated and
therefore a system was developed that prevents double spending of funds. The
blockchain bundles a number of transactions into one block. Each and every block is
cryptographically and linearly linked to the previous block by including the hash of
that block. Since there are hundreds of copies of the blockchain ledger and hundreds
of transactions a minute the question occurs, what block should be the next one in the
blockchain? The process will be explained by using the Bitcoin blockchain as an
example. The Bitcoin blockchain solves this problem by including a mathematical
puzzle. Only the block that can prove it includes the correct answer to this specific
mathematical problem will be included as the next block in the blockchain. This
process is known as the validation of all transactions included in this block. For
Bitcoin, the consensus algorithm is called Proof-of-Work (PoW). Miners that want to
generate a block need to prove that, while using computing resources they are able to
solve the mathematical puzzle. Once the puzzle is solved and 51% of the miners agree,
the Bitcoin blockchain generates a new block every ten minutes and therefore the
network automatically increases or decreases the difficulty of the mathematical
problem so that it will take approximately ten minutes to solve one of those puzzles.
The difficulty level is adjusted to the total computing resources committed to the
network every two weeks. Furthermore, the network only accepts the longest
blockchain. This increase the security of the network enormously since a fraudulent
transaction, on the one hand, needs to generate a block by solving the mathematical
puzzle and on the other hand, has to race against all other miners to generate all
subsequent blocks in order to be accepted by the network. Trust has a raised as one of
the core features that a blockchain can provide for transactions. Since the release of
the first blockchain in 2009, researchers have identified three generations of

blockchains. Those are blockchain 1.0 (digital currencies), blockchain 2.0 (digital
finance) and blockchain 3.0 (digital society). It can be said that the maturity of
blockchain 1.0 started from 2009 onwards, but blockchain 2.0 and 3.0 emerged around
2015 . It has to be noted that it will take several years for those two to create real and
meaningful economic impact.By today,
different fields of application for the blockchain technology have emerged. The next
paragraph will briefly show some areas of application of Blockchain 1.0 – 2.0 and 3.
Blockchain 2.0 represents digital finance. This field includes asset management,
insurance, loans, predictions markets and much more. Since the blockchain is still in a
very early stage of the technology maturity, these applications only partly exist yet but
are under development. Smart properties like smart contracts and the connection of
IoT to the blockchain can be seen as blockchain 3.0. This field of application has the
widest spread, but at the same time is the least developed generation of blockchains.
The company Mycelia wants to revolutionize the music industry by using smart
contracts. Their plan is to program contracts that automatically take the revenue of
customers listing to music and distribute it fairly to the artists, producers and other
stakeholders . Another application with a huge potential, which is already partly used
is governance. For example, Sierra Leone was the first country that used the
blockchain technology to hold a presidential election . Because of the blockchain
system architecture, the voting process is 100% transparent and tamper proof. The
smart contract feature is also used for payments that enabling automatically and event-
driven payments . Furthermore, identity services using blockchain are gaining
popularity. With those services, everyone can attach identification documents onto the
blockchain and therefore verify his or her identity without been physically present or
uploading the document to all different entities every time an identification is needed.
This application of blockchain can be extended to all other documents that prove
ownership. Land titles, certification of ownership for cars, companies and many more
can be listed as examples. The most known application for blockchain is crypto
currencies, which would represent 1.0 . Over the time different types of crypto
currencies have evolved, differing in privacy, transaction speed and consensus
algorithm
3.2 Crypto Currencies
Crypto currencies are digital alternatives to traditional government-issued paper

monies. Cryptography is used to ensure that transactions are secure, to prevent users
from spending the same balance more than once, and to govern the supply of digital
notes in circulation. Some crypto currencies are decentralized, enabling quasi-
anonymous transactions and making it difficult for governments to regulate them.
Moreover, the electronic nature of crypto currencies means they are relatively easy to
use across international borders. In the year of 2008, a whitepaper by a computer
programmer using the pseudonym Satoshi Nakamoto appeared on the internet with the
title Bitcoin: A Peer-toPeer Electronic Cash System . A whitepaper is a document that
contains all necessary information about a solution, product or service. Its main
purpose is to promote this solution and it can be seen as a sales and marketing
document that is used before the point of sale . Since then, the popularity of Bitcoin
has constantly grown and its underlying technology, the blockchain has found
numerous areas of applications beyond finance. Crypto currencies are created by
individuals, groups or entities and not by governments like Fiat money (US-Dollar,
Euro, CHF). Therefore, there are advantages and disadvantages when comparing the
two types of currencies. In the next paragraph, crypto currencies and FIAT money are
compared for certain attributes in order to get a clear distinction between those two. •
National currencies like the US-Dollar or Euro can only be used in a limited
geographic area, whereas crypto currencies can uniformly be used anywhere in the
world. This gives the advantage of not having to change from one Fiat currency to
another when visiting another country . • Depending on what crypto currency is used
the degree of anonymity and privacy is higher compared to Fiat money. On the one
hand, this has the advantage of not being traced and having the freedom of spending
like one prefers it, on the other hand, it increases the ability to do illegal transactions,
launder money or even finance terrorism . • Crypto currency transactions are
completed more efficiently than Fiat transactions. Since crypto currency transactions
are using the same transaction ledger the whole process is faster and the amount of
work going into it is reduced, resulting in lower transaction costs. An example is that it
is possible to transfer 100 million US-Dollars’ worth of Bitcoin from for, example
New York to Zürich in 10 to 120 minutes. This transaction, depending on the capacity
of the Bitcoin network would cost between 3-7 US-Dollars . • Crypto currencies that
are truly decentralized are censorship resistant. No government or other entity can take
money away from a person without the correlating private key or prohibit him from
sending transactions. • Because crypto currencies use as their underlying technology
the blockchain, it replaces the need for trusted-third-parties like banks. Since
governments create Fiat money, entities using it have to trust the government that the
currency will be worth today the same amount as it will be tomorrow. When using
decentralized crypto currencies, the need for trust is obsolete because the price will be
always created by supply and demand. It needs to be noted that at the moment,
because of a lot of speculative investments in crypto currencies the price volatility of
crypto currencies is way higher than of Fiat currencies. The presented attributes of
crypto currencies indicate that they have certain advantages but at the same time
disadvantages over FIAT currencies. Furthermore, crypto currencies have created a
new economic market segment for different business activities. Crypto currencies
disrupted the crowdfunding market by using the ICO method. There, a company that
wants to raise funds for their project is giving out their own digital token, mostly using
the Ethereum ERC-20 token standard, that has some kind of use case in exchange for
crypto currencies like Bitcoin or Ethereum. In 2017 companies collected over $6
billion in funding using the ICO model . The word ICO is by now widely known
mostly because of its recent successes and its gained popularity. Entrepreneurs don’t
have to get their funding’s from business angels or venture capitalist, if they have a
good idea and a supporting community, they are most likely able to get all their
funding from an ICO . With this amount in funding, these companies can create
entirely new markets and create a new economic growth. At the same time, it is
necessary to note that ICO’s and other crypto currency companies can sometimes be
scams. The company Mybtgwallet.com is one example of such a company. It
scammed its user by taking their private key when they tried to get their Bitcoin Gold.
It resulted in users losing over $3.3
million worth of crypto currencies . The ICO Magos was able to raise a total of 3.000
Ether (worth around $1,2 million). It turned out to be a scam and the project is non-
existing and the people behind it have disappeared with the money . One of crypto
currencies advantages is that the transaction costs are very low compared to other
payment solutions. When using crypto currencies, it enables the user to send funds
around the world for a very reasonable price. This will give people a new way of
transacting as well as financial independence. Furthermore, this can also have a
positive impact on companies. This enables them to reduce costs for their financial
operations . At the same time, the acceptance of crypto currencies for payments is
growing rapidly, there are even companies that are issuing credit cards, so users can
spend their crypto currency in every store. With this adoption and acceptance of
crypto currencies it has a real economic impact and at the same time an impact on the
industry as well as its users . Governments can also see crypto currencies as an
opportunity for criminals and ban or impose sanctions on them in their country. Costa
Rica, for example, sanctions criminals using crypto currencies and confers the
elimination of their bank accounts. In general, governments are trying to figure out
ways how to control the new crypto currencies especially in the regard to criminal
activities . As shown by the research of Zhao et al. (2016) the Google trend search
volume of Bitcoin peaked in 2013, following by a sharp decline till mid-2015 and then
picking up to reach new time highs with an exponential growth. When comparing this
to the search term blockchain, it is clearly visible that the trend search for blockchain
is significantly smaller. This and the early age of the technology explains why there
are either very little or highly specialized academic research in this field. Furthermore,
only a little number of peoples are familiar with crypto currencies and there is no
widespread knowledge about them yet . The current research in this field is focused on
a very technical perspective. Areas like theusability, privacy issue, and security
concerns are the main focus of researchers . The economic impact of crypto currency
worldwide has not been given much attention and therefore this research paper has the
aim to shed some light on the buzzword crypto currency and show on the one hand
how they emerged and on the other hand, what impact such a fast increase in market
capitalization and adoption has on the economy. Therefore, this research paper aims to
answer the research question of what impact, if any, crypto currencies have on the
economy. For this, the three crypto currencies Bitcoin, Ethereum, and Monero are
used. In regard to those, each of them has its own blockchain that records all
transactions that were ever made. These transactions can be public view, using a
blockchain explorer that can be accessed via the internet. The three crypto currencies
and their blockchains differentiate themselves by using different specifications and
therefore offering its users different advantages and use cases. All of them use
different consensus algorithms, meaning that the miners or validators have to perform
different tasks in order to validate a transaction. Furthermore, the block sizes differ
and therefore the number of transactions that can be processed per minute as well .
This is an important factor because of the use case as global currencies. Each crypto
currency, that is presented in this paper is a currency and has furthermore a specific
use case. Bitcoin, for example, is considered to be a currency as well as a store of
value, Ethereum with its currency the Ether a decentralized computer and Monero has
a special privacy feature included that makes tracking funds currently impossible.
3.3 Bitcoin, Ethereum, Monero and their underlying

Blockchain Technology
This Chapter will explain the technical differences of the three crypto currencies.
Each crypto currency is running on an underlying blockchain. Depending on the
features of the currency the underlying blockchain differs. Firstly, the Bitcoin
blockchain will be explained followed by the Ethereum’s Blockchain and Monero’s
blockchain. All blockchains need to find consensus in some way in order to validate
the network’s transactions
3.4 The Economic Impact of Bitcoin, Ethereum and Monero
This chapter will investigate the economic impact of crypto currencies especially
Bitcoin, Ethereum, and Monero. The economic impact will be illustrated using the
examples of mining, exchanges, payments, ICO’s and crypto currencies as a financial
asset class. Since 2013 the mining of crypto currencies had gained tremendous
popularity and over the time big mining companies came and went but a few were able
to establish themselves on the market. One example of such a mining company is
Bitmain. It was founded in 2013 in Beijing by Jihan Wu and Micree Zahn. Since then
it has evolved into one of the primary Bitcoin mining companies manufacturing ASIC
chips and mining at the same. Bitmain’s ASIC chips are approximately 50 times faster
than a tradition GPU. It also uses its manufactures chips to build ASIC mining units,
which it then sells to its customers. Analysts estimate that Bitmain has between 70%
and 80% of the overall market share in Bitcoin miner equipment and ASIC chips.
Most of Bitmain’s revenue is generated by selling ASIC miners that are powered by
the company’s chips. In 2017 Bitmain’s operating profits were estimated to be
somewhere between $3 and $4 billion. In comparison, the operating profits of Nvidia
were $3 billion in the same time period. Nvidia is one of the leading GPU
manufacturers for personal computers and gaming consoles and has a history reaching
back almost 25 years . The Bitcoin core developer Song (2017a) investigated how
profitable Bitmain really was in 2017. He found out that Bitmain is able to earn
100.000 BTC per year if they maintain their hashing power at 13.2% of the complete
network. He furthermore stated that the Bitcoin mining break-even point for Bitmain’s
operation was at that time $430 per BTC. This is one reason by Bitmain and other
large mining operation can survive a long period with low and falling Bitcoin prices.
Because of their scope of operation, their break-even points are set at a very low level.
Furthermore, by manufacturing their own mining equipment they make an additional
profit (Song, 2017a). In June 2018 Bitmain announced that it has raised $400 million
in a pre-IPO funding round led by Sequoia Capital China. Based on that funding
Bitmain is valued at $12 billion, which matched Bitmain’s internal estimations.
Bitmain plans to go public in September at the Hong Kong Stock Exchange with an
expected market cap of $30 to $40 billion. This shows what kind of value and
valuations are associated with big crypto mining operations. Their business activities
have a big impact in a financial matter but also in regard to the global energy market.
Running Bitcoin and other PoW mining equipment is an electricity-intensive process.
A new study concluded that the Bitcoin network consumes at least 2.6GW of power
that is almost as much as Island consumes per year. If the Bitcoin network continues
to grow at the current rate it is expected that it could consume more than 7 GW by the
end of 2018. These energy consumptions result in high costs but based on the current
price of Bitcoin every day are Bitcoins created worth over $14 million . Researchers
have estimated that with the current network growth rate it will consume more energy
than the UK by end of 2018, more than the entire US by mid-2019. Today it already
consumes more energy than 159 countries including Ireland and most African
Countries. These estimated are based on the current conditions and the data of power
compare . In January of 2018, the Chinese government announced that it plans to
impose limitations on the power use of mining operations. Chinese officials are
concerned that Bitcoin miners have taken advantage of the low energy prices and that
it starts affecting the normal electricity use. China is not the only country that is
considering energy consumption limits for Bitcoin mining in order to cope with the
huge and rising energy demand from these mining operations . The Bitcoin mining
industry and its recent popularity gain had another economic impact in regard to GPU
mining. The rise in mining using GPU’S had created an unexpected and never seen
before global shortage of GPU’s. It was a usual picture to see empty GPU shelves in
major US retail stores. It is estimated that regular miners had purchased over 3 million
units worth.
CHAPTER 4
DATA ANALYSIS AND INTERPRETATION.
• 73.1% of people have heard about crypto currency

• 26.1% of people have not heard about cryptocurrency
• 26% of people says yes

• 39% of people says no
• 34% of people says maybe
• 47% of people s yes

• 21% of people say no
• 30% of people say yes
• 17% of people have bought some or the other cryptocurrency

• 83% of people have not bought any cryptocurrency
• 26.1% of people think its used for criminal activity

• 13% of people think it is used for extreme volatility
• 26.1% thinks it exists only in computer
• 34.8% of peoples opion is it is accepted by few merchants
• 73.9% of people says it should be regulated by public authority

• 26.1% of people says it should be regulated by private sector
• 56.5% people trusts its technology in long run

• 21.7% people does not trust its technology in long run
• 21.7% people are not sure
• 26.1% people says it will be dominant

• 21.7% people refuses it
• 39.1% would like to invest

• 17.4% would not like to invest
CHAPTER 5
CASE STUDY
Bitcoin Since the introduction of Bitcoin in 2009 it has been constantly updated and
evolved to an asset class that is worth more than $140 billion by today . This chapter
will show the events that led up to the status that Bitcoin has reached today. First, the
events between 2009 and 2013 will be shown followed by the events from 2014 till
today. It is important to note that this research paper points out the most important
events that lead to the development of Bitcoin as we know it today and therefore not
all events ever occurred will be shown. This is also the case of Ethereum and Monero.
The next section will briefly explain what an economy has formed around Bitcoin,
followed by a few selected use cases.
5.1 Bitcoin 2009 – 2013

The journey of Bitcoin started long before the whitepaper of Nakamoto (2008) was
published. One of the first PoW algorithm was proposed by Adam Back in an E-Mail
to the Cypherpunks in March of 1997. It was called Hashcash. By August of 2008 the
official Bitcoin domain bitcoin.org was registered. Less than three months after that
Nakamoto (2008) released the first public version of the Bitcoin whitepaper titled
“Bitcoin: A Peer-to-Peer Electronic Cash System”. The official date of the release was
depending on the time zone on October 31 or November 1st of 2008 . It is not publicly
known who or what group was exactly responsible for creating Bitcoin. All
communications and publication were made using the pseudonym Satoshi Nakamoto.
Hal Finney was the first testers of the Bitcoin protocol. Nakamoto sends him a copy in
November in order to test it and fix some early bugs . On January 3rd, 2009 the
Bitcoin protocol went live with the establishment of the genesis block. The Software
version Bitcoin 0.1 was released just a few days afterward. The first ever transaction
made using the Bitcoin blockchain happened on January 12th, 2009. The transaction
was made by Nakamoto and he sends Finney 10 BTC. A very important event was the
first BTC-USD exchange rate, which was first posted by New Liberty Standard, $1
was worth 1.309,03 BTC. The exchange rate was calculated using the average amount
of electricity that was required to run a computer with high CPU power for an entire
year (1331.5 kWh). This was multiplied by the average residential electric costs in the
US ($0.1136) divided by 12 months. This number was then divided through the
amount of BTC a computer was able to mine over the past 30 days. About a week later
the first Bitcoin to fiat transaction was made, where New Liberty Standard bought
5.050 BTC for $5.02 . By the end of 2009, the software developer MarttiMalmi has
joined Nakamoto for the development of Bitcoin and he was the first developer who
had the full permission to change the codebase. The first software update version 0.2
and the log of changes to the software showed that Malmi was now the main actor.
The first difficulty adjustment took place on December 30th ,2009 . The day of May
22nd, 2010 marked the first Bitcoin pizza day. This was the day when Laszlo Hanyecz
(laszlo) made the first purchase of a good using Bitcoin. He traded 10.000 BTC, which
were approximately $40, for two pizzas. With this transaction, Bitcoin reached a
milestone and proofed it could be used to purchase goods or services . The next
milestone for Bitcoin was the announcement and the later formation of the first big
Bitcoin exchange called Mt. Gox It was announced on July 18th, 2010 by Jeb
McCaleb who later went on and found Ripple. Mt. Gox is known as the exchange that
had the biggest theft of Bitcoins till today. The Bitcoin community grew slowly but
steady and more and more people heard about it. This led to the event on November
6th, 2010. It was the date when the market capitalization of Bitcoin surpassed $1
million for the first time. Roughly around the same time, 1 BTC was worth $0.3. The
first real used cases for Bitcoin was introduced at the beginning of 2011 with the
concept of the Silk Road, that was the first darknet market to use Tor and Bitcoin
escrow. By late April early May of 2011, the final E-Mails from Satoshi Nakamoto
were sent. After that no one has ever heard of him again, leaving the community to
wonder who he is and what he is doing currently. In his last E-Mail, he left Gavin
Andreson in charge of the Bitcoin project. Other consumer services were also
launched in this year. Wikileaks, for example, started to accept donations in Bitcoin.
BitPay, the first payment service provider for Bitcoin was introduced and run on an
App for iOS and Android. This allowed merchants to accept Bitcoin as a means of
payment for their products and services, while in the backend BitPay exchanged the
Bitcoins for Fiat currency and paid the merchants with it. More and more exchanges
opened up allowing users to trade Bitcoin for other currencies . On June 19th, 2011 the
first major hack of a Bitcoin exchange occurred. The exchange Mt. Gox, which was
one of the most used and popular ones at that time, got hacked by a compromised
computer belonging to an auditor of the company. The trading price of popular was
artificially altered from $17 to just one cent and then 2.000 BTC were taken from
customer accounts and sold. Furthermore, another 650 BTC were purchased at the
penny price and never returned . In August 2011 the first Bitcoin improvement
proposal (BIP) was submitted, explaining what a BIP is and what its aim is. BIP are
proposals by the community for improvements to the Bitcoin protocol. Till mid-2012
there where a lot of efforts taken by the Bitcoin community to promote and upgrade
Bitcoin. The first Bitcoin conference took place and more and more people heard
about the new currency Bitcoin. The company Coinbase was founded in June of 2012
and would go on to become one of the major crypto currency exchanges in the US by
2018. Another important milestone for Bitcoin was the establishment of the Bitcoin
Foundation on September 27th, 2012 . By the end of 2012 other merchants like
WordPress.com and Overstock.com are accepting Bitcoin for purchase as well as

upgrades and the trading price for 1 BTC was at around $4 . In early January of 2013,
the Bitcoin startup 21 was founded. The company specialized in producing special
Bitcoin mining chips that would enable any individual to mine Bitcoin efficiently. The
first ASIC chips where delivered to customers by the end of January. A month later
the Bitcoin update 0.8.0 was released, which increased the volume of transactions that
were possible to be processed . The market capitalization of $ 1 billion was passed on
March 28th, 2013 starting a very early slow but steady adoption of Bitcoin. US-
Authorities announced that Bitcoin and other virtual currencies are subjected to anti-
money laundering regulations. Despite the negative news for Bitcoin, the users saw
this statement as a sign of recognition form the authorities and the price rose from
$180 at the beginning of April and broke the $200 barrier short afterward . The
Exchange Mt. Gox went on the be the world’s largest exchange for Bitcoin despite a
lot of struggles behind the scenes. The US Department of Homeland Security
investigated a subsidiary of Mt. Gox in regard to operating as an unregistered money
transmitter, which resulted in the seizure of $5 million from the company’s bank
account. As a result of this, the company was not able to pay out dollar withdrawals
which resulted in delays. Because of this and other factors, Mt. Gox lost its place as
the world’s largest Bitcoin exchange by the end of 2013. In April 2013, the
Winklevoss twins announced that they own 1% of all 21 million Bitcoins.
Furthermore, a few months later they announced that they were launching the first
stock traded Bitcoin fond. Another test for Bitcoin was the closure of the darknet
market Silk Road. US Authorities arrested the person behind the website and seized all
Bitcoins, which had an estimated value of $3 million at that time. At that time
Bitcoin’s, main use case was for the purchase of goods on the website Silk. Road.
Despite this event, the acceptance grew further and at the beginning of November the
first Bitcoin ATM`s were introduced in Canada . On November 18th of the same year,
the US Senate had a hearing in regard to digital currencies. Federal officials indicated
that digital currency networks offer benefits for the financial system with the
acknowledgment that these new digital currencies provide avenues for money
laundering and other illegal activates. This hearing boosted Bitcoin enormously. It was
conceived as a very positive signal that the US Senate is discussing the topic of
Bitcoin not only in regard to money laundering and criminal activities. Shortly after
the price of 1 BTC surpasses $700 . More positive signals came from China when a
subsidiary of the Chinese internet giant Baidu announced that they accept Bitcoin as a
payment. Furthermore, reports about Bitcoin were broadcasted on the state own TV-
program CCTV. The Chinese based demand for Bitcoin pushed the price of 1 BTC
above $1.200. By that time the Chinese Bitcoin exchange BTC-China had surpassed
the daily trading volume of Mt. Gox. At the end of December 2013, Chinas positive
attitude toward Bitcoin changed. The Chinese government forbids private bank from
trading Bitcoin, the central bank of China warns that there are dangers associated with
the unregulated currency and Baidu’s subsidiary stops all activities in regard to
Bitcoin payments. BTC-China also stops all deposits in Yuan and the fear that China
could completely ban Bitcoin pushed the price down, which stabilized at the end of the
year between $650 and $800. Overall 2013 was a huge year for Bitcoin especially that
it gained, in the mind of its community, some sort of legitimization from the US
Authorities.
5.2 Bitcoin 2014 – 2017

The year 2014 started out quite well for Bitcoin with its price at around $750. At the
beginning of the February Apple banned all Bitcoin apps from their App Store, which
resulted in protests again that policy . A few days later the exchange Mt. Gox
suspended all withdrawals, which marked the beginning of the collapse of the
exchange. On February 19th, 2014 all trading was suspended and the exchange went
offline. Within a few days, an internal document surfaced that claimed hackers had
raided the exchange and stole 744.408 BTC belonging to the customers as well as
additional 100.000 BTC of Mt. Gox holdings. This led to Mt. Gox filing for
bankruptcy protection in Japan as well as the US. An investigation revealed that the
hack has started as early as September of 2011 resulting in Mt. Gox operating while
being technically insolvent for a period of two-year leading to the complete loss of all
its Bitcoins by mid-2013 . In March Mt. Gox reported that it had found 200.000 BTC
on an old wallet. These Bitcoins are held at a trust while the company remains under
bankruptcy protection. The collapse of one of the biggest exchanges caused a fallout.
The confidence in the market dropped to a new low resulting in a Bitcoin price in
April of $460 . In the meantime, the software version 0.9.0 of the Bitcoin code was
released using the name “Bitcoin Core” rather than “Bitcoin-Qt”. This was done in
order to reduce the confusion between Bitcoin the network and Bitcoin the software .
Approximately at the same time, the Internal Revenue Service (IRS) announces that it
will treat Bitcoin as property for tax purposes. In May the first Bitcoin bank was
launched. Circle insured deposits that hat 0% fees and claimed to maintain 100%
reserves. In June Apple reverses its ban on Bitcoin apps and allowed mobile wallets
applications in the App Store. Japan surprised the world in June when it announced
that it will not regulate Bitcoin and will become a Bitcoinfriendlynation . In July the
NYDFS announced that it will impose a virtual currency regulatory framework
(BitLicense). In a first step, this resulted in exchanges having to apply for a license if
they operated in the state of New York. The regulators expected that other types of
virtual currency companies will apply in the near future . All these new regulations, as
well as the aftermath of Mt. Gox, lead the Bitcoin price of approximately $330 at the
beginning of October . The Belizean company 247Exchange secured an agreement
with over 400 banks in Europe to allow direct Bitcoin purchase for their customers.
This was an unbelievable achievement that did not last long. 247Exchange was a too
small player in the market, punching above its weight and the agreement fell apart
within the following weeks . By the beginning of December Microsoft announced that
it will accept Bitcoin as a payment for apps, games, and videos from online stores. The
payment processing startupBitPay had signed a partnership agreement with Microsoft
to process its payments. Other companies like Dell, Expedia, and Overstock.com had
also begun to accept Bitcoin .Overall the year was a rather dark one for Bitcoin. At the
end of the year, the price for 1 BTC was at $320. The Mt. Gox shock was still present
and the imposing new regulations where party responsible for the price decline in
2014. Within the Bitcoin community, there was still hope that it would recover
especially with the recent news that ten merchants in the US with a revenue above $1
billion would start to accept Bitcoin payments. Furthermore, Coinbase expanded its
operations to support the acceptance of payments for the publisher Time Inc. The
Bitcoin networks adoption had grown to a number of estimated daily transaction of
more than 97.000 and an estimated number of 15.8 million Bitcoin wallets by
December 2014 . 2015 started for Bitcoin with a big bang. The exchange Bitstamp had
announced that six of its employees were targeted in a week-long phishing attempt.
This led to the theft of just under 19.000 BTC with an estimated value of $5 million.
The employees were attacked through the attamed to distribute files contained
malware via Skype and email communications . Coinbase announced in January that it
completed a $75 million series C funding round. This funding round was a huge
success considering investors like the New York Stock Exchange, Fortune 500
financial service group USAA, the Spanish bank BBVA and the Japanese telecom
company DoCoMo participated in the funding round. Coinbase wants to use this
money to grow its employee sizes as well as improving its mobile products. An
important event was the conviction of Ross Ulbricht, not in regard to the direct
development of Bitcoin but rather as an example case from the US authorities for
using virtual currencies in an illegal matter. Ulbricht was sentenced to life in prison for
his creation of the darknet marketplace Silk Road. In addition to that, he was fined to a
massive restitution of more than $138 million. The prosecution had estimated that this
would have been the estimated value of the total sales of illegal goods . The Chinese
attitude of 2013 had eased by now and a report by Goldman Sachs found out that 8 out
of 10 Bitcoin trades, buying and selling involves the Chinese Yuan. The report
estimates the surges is a result of a weakening confidence in the Chinese economy and
the weak Yuan. The price at that time was still below the all-time high of 2013 sitting
at approximately $275 but the trading volume started to increase of which 50% of
Bitcoin transaction where made in China . Late in April, a surprising statement from
the global stock market giant Nasdaq was published. They were exploring how a
blockchain-based solution could change the way shares are transferred and sold
manually. Nasdaq would later reveal that it was testing it in the Nasdaq private
market, a private marketplace that was launched in January 2014. The proof-of-
concept would then be revealed at the Money 20/20 conference in November of 2015.
The New York BitLicense was passed in June. Soon after the Bitcoin exchanges ItBit
and Gemini launched their services in New York, operating with a banking charter.
Later, the Startup Circle was able to secure one of the first and for a long period the
only BitLicense in New York . In July Bitcoin and other virtual currencies were
banned in Ecuador by the national assembly . The software development of the
Bitcoin code was continually maintained and improved. By July 12th the software
0.11.0 was released with upgrades in regards to speed and blockchain size . On August
19th a flash crash occurred on the Hong Kong based exchange Bitfinex. The Bitcoin
market price dropped by 14% in a period of just 30 minutes. The price on Bitfinex
dropped by 29% from originally $214 to $179 . Mark Karpeles the owner of the
bankruptcy Mt. Gox exchange admitted that he had tampered with users balance for
his personal gain. He was later charged in Japan for embezzlement while Mt. Gox
customers were still waiting for a reimbursement of their funds. Adding this news on
top of the already bad Mt. Gox news, which resulted in a major hit for Bitcoin’s health
on a whole. In the meantime, the seized Bitcoins from the Silk Road were auctioned
off by the US authorities. The last batch of 44.000 BTC were sold in November.
Overall the month of November was a good one for Bitcoin. Market shifts caused
huge growth, partly done by the Chinese Bitcoin market. The Bitcoin black Friday was
a major success enabling Bitcoin users to find great deals. The number of transactions,
as well as the volume, spiked up and afterward remained on that level. Another
important event that occurred in December is the continued debate about the block
size. Supporters for both sides advanced where the majority of the miners want to
increase the block size. A larger block size would generate higher transaction fees for
miners. Other argued that an increase in block size and the associated fees will stifle
global adoption .Overall 2015 was a mixed year for Bitcoin. On the one hand,
regulators cracked down on Bitcoin and made an example by sentencing Ulbricht to
life in prison for creating Silk Road. Furthermore, big exchanges like Bitstamp where
hacked and a lot of users lost their funds. On the other hand, the increase in Bitcoin
trading volume, the growing usage in China and the attention that big companies were
giving Bitcoin as well as the blockchain technology helped Bitcoin to continually
grow. Additionally, more and more blockchain based startups were founded and
received huge funding’s from public and private investors. Especially in regard to the
development of the Bitcoin software, it was a year with a lot of progress and
improvements. The Bitcoin price reached a high of $465 at the end of 2015 . Starting
2016 a 1 BTC was priced at around $430 with a total market capitalization of $6.5
billion . On January 25th, 2016 the Bitcoin network exceeded the power of one Exa
Hash. This can be translated into 10.8 ZettaFLOPS per second, making the Bitcoin
network the most powerful network on earth. In comparison to the world`s fasted
supercomputer Tianhe-2, which is able to do 34 PetaFLOPS, the Bitcoin network is
roughly three hundred thousand times more powerful. Having this network metrics
was a very important achievement for Bitcoin because it showed the underlying health
of the distributed currency and its network. Many argue that this health is a more
important indicator than median coverage or value speculation. Over the long term,
the number of miners will increase, regardless of some short-term issues. With the
network power constantly growing one of the network effects – the value of a good
will increase with the number of people using it - will rise as well. Starting in 2015 the
Bitcoin scaling debate continued through 2016 with more traction than before. The
scaling debate had the community and its actors divided. One side wanted to increase
the block size from 1MB to 2MB in order to be able to process more transactions per
second. This scaling solution is called on-chain scaling . The other side was convinced
that the on-chain scaling solution was not a long-term solution and proposed an off-
chain scaling solution called Segregated Witness (SegWit) that was announced with
BIP 141 in December 2015. With current (2016) Bitcoin transactions (non-SegWit)
the needed signatures to unlock the inputs are stored in the hash with the rest of the
transaction data. SegWit transactions are different in two ways. Firstly, the signature
data is not included in the hash, but they are still stored as part of the “witness” data in
the block with the transaction. The second difference is that the block size changed
from 1MB (1.000.000 bytes) to a 4.000.000 “weight” limit. This weight limit is an
arbitrary new metric. A witness byte has a weight of 1 whereas a normal byte in a
transaction has a weight of 4 . On February 10th a hard fork of the Bitcoin network
occurred, and Bitcoin classic was initially released. Bitcoin classic had implemented a
block size limit increase to 2MB. With this hard fork, the on-chain scaling solution
was supposed to be initially tested. The off-chain scaling solution was led by the
Bitcoin core development team. They release the code for SegWit in April to the
community. Since the code was new it needed intensive testing that took place over
the next half year. The debate started to intensify when both sides started to promote
their solution more aggressively (Morgan, 2017, pp. 10-12). Since the value of Bitcoin
and other virtual currency rose over the past years, scammers started more and more to
appear and use the new technology for their advantages and created numerous of scam
projects with the sole purpose of scamming investors out of their Bitcoin and other
currencies. One of those was HashOcean. With was advertise as cloud mining
platform where investors could invest BTC and in return, they would get a daily /
weekly / monthly payout. By the end of June, the HashOcean website was down, its
YouTube and Facebook pages both erased . Three separate online petitions were
started by individuals who lost their investment with HashOcean. The petitions were
seeking to get the interest of several trans-border law enforcement agencies, for
example, the FBI, CIA, Interpol and the MI6. Furthermore, several hackers have tried
to follow the digital path of HashOcean back to its founders but were unable to find
the individuals behind HashOcean. A member of the hacking team claims they were
contacted by a representative of HashOcean offering them 100 BTC if they would stop
trying to get HashOcean . On July 10th the Bitcoin halving event took place. This was
the second time such an event took place. This marks the point where the block reward
is halved. Before this date, miners would get a reward of 25 BTC per produced block,
whereas after July 10th they will receive 12.5 BTC per produced block. The Bitcoin
code is designed that these halving events occur roughly every four years. In the time
leading up to the event, the speculations of what would happen especially in regard to
the price development where abundant. The price rose from the beginning of the year
to an approximately $650 before the halving. The anticipated price shift, however, did
not occur with a price of $675 after the event . The Bitcoin community was shaken
once again when on news circled that the exchange Bitfinex was hacked and roughly
120.000 BTC where stolen with a market price of approximately $66 million. For a
long period of time, there was the common belief that multi-signature wallets were the
best and most secure way to store funds in a hot wallet. The Bitfinex wallet was a
multisignature wallet and showed once again that just multi-signature wallets alone are
not secure enough. By the time the hack occurred Bitfinex was a very big and
established exchange and on the one hand a hack was not expected and on the other
hand, Bitfinex had enough funds to survive the loss of these funds .Bitfinex announced
on April 3rd,2017 that it had reimbursed all its customer with their funds that were lost
during the hack . The US IRS rocked the Bitcoin community when it chose a brute-
face force in the enforcement mechanism for Bitcoin and other virtual currencies. The
IRS demanded all user data in the timeframe from January 1st, 2013 to December
31st, 2015 of the exchange Coinbase. The same summon was already issued in the
UBS offshore scandal in 2009 . Coinbase heavily fought the summons but ultimately,
Coinbase would lose the fight in a San Francisco court in November of 2017 . The
Bitcoin price began a strong rally in late 2016. At the end of October, 1 BTC was
traded at around $700. By end of December, the price would increase to
approximately $960 . The price surge was partly pushed by the Chinese market
because of the devaluation of the Yuan. Furthermore, the isolationist rumbling in the
UK and US and an increasing acceptance by consumer and business pushed the price
of Bitcoin in 2016. Also, the regulators starting to take a clear first stance on the topic
of Bitcoin. The Russian Deputy Finance Minister announced that Bitcoin did not
represent a threat to the financial ecosystem in Russia and therefore the plan to ban
virtual currencies including Bitcoin was put on hold. State regulators initiatives
increased in the US and resulting in states proposing bills, publishing guidance
document and approving companies with a license to operate . The Bitcoin price was
at approximately $1.000 by the beginning of 2017 and had a market capitalization of

roughly $16.5 billion . The price dropped between January 4th and January 6th from
$1.139 to $752. This was because the Chinese central bank announced that it had
launched investigations into the some of the biggest Chinese exchanges in regard to
money laundering, unauthorized financing, possible market manipulation and other
issues. Following these investigations, these exchanges suspended withdrawals of
Bitcoin. In March the Security and Exchange Commission (SEC) denied two requests
for a Bitcoin exchange-traded funds (ETF). It based its decision on the unregulated
nature of the Bitcoin market and that without regulatory mechanisms in place the risk
for investors would be too high. In the meantime, Bitcoin reached for the first time
ever a price of $1.268 . On April 1st a law was put in place in Japan that would
recognize Bitcoin as a legal method of payment. The new law included that exchanges
and other Bitcoin companies must apply strict KnowYour-Customer (KYC) and Anti-
Money-Laundering (AML) rules for their operations. Furthermore, it included capital
requirements, cybersecurity and operational stipulations for exchanges . The world
was shocked in May 2017 when the WannaCry computer virus attack occurred. The
virus infected Windows computers and encrypted all relevant user data and demanded
a ransom that had to be paid in Bitcoin. The virus attacked the network of the
telecommunication company Telefonica as well as computer across the globe and the
data could only be unlocked for $300 worth of Bitcoin. In total 200.000 computers
were infected worldwide. Microsoft shortly afterward released a patch that would stop
the WannaCry virus from infecting other computers in its network. An IT-Security
researcher found a kill switch for the WannaCry virus shortly afterward. By
registering a specific domain, the WannaCry virus could access this domain, which
was not possible before and with this connection the virus stopped spreading . The
scaling debate was in 2017 one of the main discussions in the Bitcoin community. On
the Consensus Conference in New York, an agreement was formed between the 50
leading Bitcoin companies, including exchanges, miners, and other important
stakeholders. The aim of the New York agreement was to propose a scaling solution
together. This proposal was a two-step plan. In the first step SegWit would be active
through a user-activated-soft-fork (UASF) and in a second step, a hard fork would
occur where the block size is increased to 2MB. Opponents to this agreement saw it as
a corporate overtake of Bitcoin, especially the second step . For the original SegWit
proposal (BIP141) it needed 95% of the network agreement but because of the BIP91
the agreement level was lowered to 80%. Once this threshold was reached the
proposal is accepted and locked in the network. For SegWit this threshold was reached
on July 20th, 2017 (Song, 2017b, p. 1). The Hong Kong based exchange Bitfinex
announced on July 28th that a minority of Bitcoin miners would be hard forking the
Bitcoin blockchain to create a new version Bitcoin on August 1st called Bitcoin Cash.
Bitcoin holders will be credited with the same amount of their Bitcoin holdings in
Bitcoin Cash . Bitcoin Cash can be compared to Bitcoin Classic that was launched a
year before. It differentiates itself in two ways from Bitcoin. One the one hand the
code for SegWit was removed and on the other hand, the block size was increased to
2MB. Later that year Bitcoin Classic would announce that it would stop its operations
because Bitcoin Cash was the adequate solution for the scaling debate. The Bitcoin
Cash hard fork would split the Bitcoin community in two, on the one side, there is the
Bitcoin community and on the other side there is the Bitcoin Cash community. At the
time of the hard fork, the USFA took place and SegWit was activated. This was the
first step proposed by the New York Agreement. Before August 1st there was a lot of
uncertainty in the market in regard to what would happen with the UASF and the
Bitcoin Cash hard fork. Surprisingly everything went very smooth, which was also
represented in the Bitcoin price development. On August 13th it reached its new all-
time high of $4.000, which was broken by a new all-time high on September 2nd
where the price of Bitcoin reached $5.000 on some exchanges (Bergmann, 2017).
Shortly afterward China announced that it would ban all ICO’s. On September 8th
documents surfaced the Chinese government is planning to shut down all exchanges in
the country and this time for good (BEG, 2018, p. 8). Despite that the news was untrue
the Bitcoin price crashed to $3.500 by the end of the month (Coinmarketcap, 2017, p.
4). With the price at a low, good news came from IBM that partnered with a
blockchain company and had started developing a network of banks to use digital
currency and blockchain to move money across borders throughout the South Pacific .
Despite the tighter regulations from China and the signaling of the SEC that ICOs
might all be considered to be unregistered securities, Goldman Sachs announced that it
would support its customers with buying and selling Bitcoin and other virtual
currencies. Furthermore, Goldman Sachs was probably the only banking giant that
issued price targets . At the end of October beginning of November, the Bitcoin
community prepared for the upcoming SegWit2x hard fork. This was the second step
that was proposed by the New York agreement. The SegWit2x hard fork would
improve the longproposed code optimization as well as increase the block size to
2MB. SegWit2x was supported by the large mining pools, exchanges like Coinbase
and BitPay. The plan was opposed by many Node operators, nearly all developers
from Bitcoin Core and a large portion of the community . On November 8th BitGo
CEO, Mike Belshe published a statement that said the SegWit 2x hard fork schedules
for this month will not occur due to a lack of community support. After the
announcement, the price quickly settled at a new high of $7.900. Belshe further stated
that keeping the community together was more important than to scale, but he is still
convinced that an increase in block size is deeply needed . Big news came from the
Chicago Mercantile Exchange on December 1st, 2017. It announced that it has self-
certified the listing if Bitcoin futures contracts and that they would launch on
December 18th . This news uplifted the spirits of investors and the price of Bitcoin
reached its all-time high on December 17th with a price of 1 BTC at $19.783,06. The
announcement of the Bitcoin future was definitely one reason for this massive price
surge (Morris, 2017, p. 1). Overall the year 2017 was a very good one for Bitcoin,
especially for the price development. It started in January at $1.000 and climbed it
way up to $3.000 but the uncertainty in regard to the upcoming hard fork in August
dropped the price down to approximately $1.900. Before the China announcement
described above the Bitcoin price was able to reach its all-time high of $5.000 before
crashing down to $3.200. Shortly afterward Bitcoin picked up hitting $5.000 by
October 13th. By November 8th the price was close to $7.500. After the CME
announcement in December, the price rallied from $10.000 and closed the year 2017
at December 31st at around $14.000 . The price decrease was partly due to the
announcement of the South Korean government that it would impose further measures
to regulate speculations in crypto currency trading within the country. By that time
South Korea developed into an important player in the Bitcoin and crypto currency
markets. This announcement would unleash a negative impact on the Bitcoin price
across the globe . This was one of the first announcement of many that would come
the following months. That resulted in such a high market uncertainty in combination
with regulatory uncertainty and with other factors, the price of Bitcoin crashed to
$10.000 and that would mark the start of a long bearish market period in 2018.
5.3 Bitcoin Use Cases
This chapter will show two different use cases for Bitcoin in order to illustrate its
different use. The use cases are Bitcoin as a store of value and Bitcoin as a payment
network. The value of Bitcoin has different origins, one of it being that Bitcoin has
value because individuals accept it. Money is a medium of exchange and as soon as
someone is willing to accept it for a purchase of goods or services it has value, at least
for the two parties doing the exchange. At the same time money is also a store of value
and a unit of account. Money can have different forms like paper (notes) and rock
(gold) or digitally (Bitcoin). Bitcoin has all three attributes and therefore has value .
Gold has been established as one of the best stores of values compared to fiat
currencies. Since the emergence of Bitcoin and its constant growth, one of its use
cases is the ability to be used as a store of value. Hougan (2018) argues that a new
store of value needs to have a certain volatility. Furthermore, he argues that two things
are expected of a new store of value. First, a rapidly appreciating price that is slowing
down over time. This is usually because in the beginning only a few people know of
its existence and there for the demand and price is low. The price would then start
increasing exponentially as it establishes itself. Over time this increase would slow
down as it reaches its steady state. The second thing is that is has a high but over time
declining volatility. Here the same trend emerges. In the beginning, the volatility is
high as its long-term sustainability is questionable. Over time when is sustainability is
clearer, the volatility would decrease as the asset becomes more established. The value
of gold is $1.300 per ounce because people are willing to pay that amount. If
compared, the current market cap of Bitcoin is at $143 billion but the market cap of
gold is at $7.5 trillion. This illustrates that Bitcoin is just in the beginning of its
existence and therefore the volatility is still high, but as it matures it will decrease and
the use case as a store of value can establish itself further. When comparing Bitcoin to
gold as a store of value Bitcoin has certain advantages. For example, Bitcoin is very
portable. If someone wants to store a large amount of money using Bitcoin he can take
and also transfer them anywhere in comparison to gold that is heavy and hard to
transport. Additionally, the verifiability, divisibility as well as the scarcity is higher
with Bitcoin compared to gold. Bitcoin can be easily verifiable proofing its originality
and ownership using the private key. Also, the Bitcoin protocol is designed that only
21 million BTC will be ever in existence. This number cannot be changed so the
scarcity is definitely higher compared to gold . Of those 21 million BTC at least 75%
have already been mined. When compared to gold its scarcity is limited because every
year approximately 32.000 metric tons are mined adding 1.7% to the total supply per
year . Ruderman (2018) investigates what crypto currencies can be used as a store of
value. He concludes that Bitcoin is the clear winner in regard to crypto currencies as a
store of value. He argues that Bitcoin is the oldest crypto currency running for almost
ten years, which results in a head start for the Bitcoin ecosystem where most projects
are just a few years old. Anyone switching from paper money to crypto currencies will
encounter Bitcoin and sees a clear value proposition despite its lack of features
compared to newer projects. He further argues that in general, all crypto currencies
could be stores of values if they are aged, possess value as well as has the right
monetary policy. These things allow people to come to a consensus about the
durability, scarcity and intrinsic value of an asset . By 2014 at least 22.000 merchants
accepted Bitcoin as a payment for goods and services. Within this group of merchants,
companies like Virgin Airlines, Zynga, Overstock.com, Bloomberg, Microsoft were
using the payment provider BitPay to process the Bitcoin transactions .BitPay allows
companies to accept Bitcoin while not being exposed to the volatility. BitPay accepts
the customer’s payments, exchanging them to fiat currency and then transferring the
fiat money to the company’s bank account. By 2015 over 100.000 merchants accepted
Bitcoin as a payment and around 60% of them used BitPay to process them. Of these
IT services, marketplaces and financial services made up more than 50% of the
industries using BitPay’sservices . Hileman and Rauchs (2017) found out that Latin
American and Asian-Pacific payment processing companies are primarily focused on
local users, whereas North American and European companies have a global focus and
therefore a significant number of users from non-local countries. Furthermore, they
found out that 86% of the survey participants are using the Bitcoin network as the
main payment for cross-border transactions. With the fast development of merchant
adoption using the Bitcoin network for payments another use case for Bitcoin are
payments transactions, especially cross-border transactions. Cross-border payments
accounted for around 40% of the global payment transactional revenues in 2016 with
payment flows of $135 trillion. The system that is currently used has some
shortcomings. It is not possible to fixate the exchange rates until the funds have
arrived, and the involvement of many institutions result in delays. The current system
uses for cross-border transaction multiple financial institutions that results, in a
complex web that can lead to delays and inaccuracy. Furthermore, at each step of the
transaction fees are charged that result in high transaction fees for cross-border
transactions. In order to overcome the weakness of the current system, banks and
financial institutions are exploring the option of using the Bitcoin network for cross-
border transactions. It offers higher security, lower costs and has a higher reliability.
Another payment use case is that Bitcoin is used by people who work or live abroad
and send part of their earnings back home to their families. Traditional payment
processors charge high fees for cross-border transactions, reducing the amount that for
the family. These people are starting now to use the Bitcoin network to send money
back home to their families. While using the Bitcoin network they can be sure that the
money will arrive within hours, it is tamper proof and the transaction fees are a
fraction of that of the traditional payment processors . The Digital Currency Group
states that the cross-border paymentsthat were settled using Bitcoin has grown from $5
million to over $40 million in the timeframe from January to October 2016. Unbanked
countries like India and Kenya have realized the potential benefit they can gain while
using Bitcoin. It has proven to be cheaper and a more effective alternative to other
mobile payment networks. South Korea has strengthened its regulations in regard to
bank account opening. Customers of South Korean banks are now required to spend at
least $400 per month to create a bank account. The tighter regulations had led users to
use alternatives like Bitcoin for their transactions . In order to make faster and cheaper
transaction for the Bitcoin network possible, developers have introduced the lightning
network. This solution enables users to open payment channels and then transacting on
those for instant transactions. This lightning network is currently in a live and running
test phase. Using this solution for cross-border payments would enable users to
instantly send funds while paying nearly no transaction fees . The two presented use
cases, Bitcoin as a store of value and Bitcoin as a payment network are only two
possible fields of application for Bitcoin. With the growing maturity of Bitcoin, the
real use case will eventually emerge. Also, the extreme volatility of Bitcoin will ease
with further adoption and as soon as the confidence of Bitcoin’s substance has been
gained. In the end, the community will decide what direction the protocol will be
developed and for what use cases Bitcoin can be used.
Case Study Ethereum

Ethereum is an open source software platform based on the blockchain technology.

The platform uses its own currency called Ether (ETH) in order to pay its transaction
costs. It is designed that developers can use the programming languages C++, Go,
Python, Java, JavaScript and others in order to create dApps for the Ethereum
ecosystem. An example here for can be wallet applications, decentralized exchanges
or smart contracts based dApps. One feature of Ethereum with which it can distinguish
itself from Bitcoin is the ability to write and execute smart contracts. In the first part of
this section, the history of Ethereum and its currency Ether will be shown, which is
followed by two different use cases for Ether and Ethereum
Ethereum 2015 – 2017
The journey started when 19-year-old Russian-Canadian programmer VitalikButerin

had the idea that led to the development of Ethereum. Unlike Bitcoin, Ethereum has a
real name attached to it. Buterin came in contact with Bitcoin in 2011 and was
previously known as a co-founder of the Bitcoin magazine. Instead of going to
university he decided to create Ethereum full time after he received the
Thielfellowship . The Ethereum project was officially announced by Buterin in
January 2014 at the North American Bitcoin Conference in Miami. He was soon
joined by Dr. Gavin Wood who published the Ethereum Yellow Paper in April that
was used to describe the technical specification of the Ethereum Virtual Machine
(EVM) . Aside of developing the software, the ability to launch a new crypto currency
requires a lot of resources. In order to fund all of thoseactivities, Ethereum announced
a crowed sale of their currency ETH. In order to comply with legal requirements, the
Ethereum Foundation was founded in Zug, Switzerland. The pre-sale took place at the
beginning of June 2014 for a period of 42-days. In total 31.591 BTC were raised in
exchange for 60.102.216 ETH. At the time of the sale, Ethereum raised over $18
million. This money was used to pay back the mounting legal fees as well as the
developing effort . After the pre-sale Buterin and the community start actively
working on the development of Ethereum. For this, the Ethereum developer team
(ETH DEV team) was established in order to push the development of the platform. In
July 2015 the first version of Ethereum was released under the name Frontier. It was a
test network that enables developers to create smart contracts and dApps. This enabled
exchanges for the first time to display ETH as a crypto currency. With the continued
updates of features and engaging actively the community, Ethereum was able to keep
its momentum. With increasing traffic and a growing user numbers on the Ethereum
forum as well as on the subreddit, proof that the platform was attracting a fast-growing
developer community. The first major success reached Ethereum when Kraken
announced that it will launch ETH trading pairs. In November the ETH DEV team
hosted the first Devcon-Event. It was designed to bring Ethereum developers from all
over the world to Berlin in order to discuss the future of Ethereum . In March of 2016,
the second update of Ethereum was released under the name Homestead. It included
several protocol changes as well as the foundation for future network upgrades . The
market cap of ETH grow constantly and it surpassed the $1 billion mark for the first
time on May 19th, 2016 . Christoph Jentzch founded a decentralized autonomous
organization (DAO) in 2016. A DAO is a complicated smart contract and is designed
to create a decentralized venture that is able to fund various dApp development
projects. This announcement gained a lot of interest especially because the DAO
would eliminate the need to trust humans and that it was able to function
autonomously. If someone wanted to influence the DAO he needed to purchase ETH.
The higher the percentage of ownership of ETH was, the more weight once vote has.
Developers submit proposals and all ETH holders vote on them, it was required to
secure at least 20% of all votes of ETH holders. This was a completely new concept
and found a lot of support in the Ethereum community. In total, the DAO raised over
$150 million at its crowd sale. There was just one major problem. The smart contract
designed to run the DAO had a loophole that was exploited on June 17th, 2016. The
hackers were able to drain approximately $50 million at that time of the ETH funds
that the DAO had previously raised. This event was a huge blow for the community
and especially for the very young technology and the DAO principal. The Ethereum
community agreed on a solution that would erase the attack . This included hard
forking the Ethereum blockchain, reversing the hack and continue with the new chain.
It can be compared to a refund smart contract where investors could request a refund
for the lost ETH. Despite the refund of the hack victim’s funds, it sparked a heated
argument in regard to the concept of the immutability of Ethereum. For many, this was
something standing in conflict with the core principals of the blockchain concept. It
furthermore included the concerns to censorship resistance of Ethereum. The vote
concluded with 89% for the hard fork, that the Ethereum blockchain would fork at
block 1.920.000, which was on July 20th, 2016. This resulted in the creation of
Ethereum classic that shares the same data with Ethereum until block 1.920.000. On
the Ethereum Classic blockchain, the hack had occurred, and it continued, whereas the
Ethereum blockchain reversed the hack, returned all stolen funds and continued
without the hack ever occurring. Since then, the two blockchains have remained
divergent and are two crypto currencies that shared the same beginnings . After the
hard fork, Ethereum argued for decentralized-decision making, conflict resolution, and
extra protocol. Ethereum Classic took a very different approach and argued for the
blockchain immutability and that code is law. In the meantime, developers started to
develop dApps using the Ethereum platform. In order to fund their projects, they
issued their own token in return for an ETH investment. On September 28th, 2016 the
project Iconomi launched its ICO. It raised $10.1 million within 24 hours. Iconomi is
an open fund management platform with the aim to disrupt the fund management
industry. By creating a new financial service category for the imminent decentralized
economy Iconomi promised to revolutionize the investment industry. Another
successful ICO in 2016 was the project SingularDTV. It is a blockchain based
entertainment studio platform that produces, partly its own partly buys, content for its
video-on-demand service. Furthermore, it gives artists the possibility to tokenize their
work and use this way to fund their projects. This is possible because of the smart
contract based, rights management function. This project raised $7.5 million.
Developing project on the Ethereum platform and get funded using the ICO method
became more and more popular and the first real use case for Ethereum and its
currency ETH emerged . By the end of 2016, the price for 1 ETH was approximately
$8 and it had a market cap of roughly $710 million . In February 2017 the formation
of the Enterprise Ethereum Alliance (EEA) was announced. The EEA has the aim that
companies join forces to enhance Ethereum and the systems that surround for
enterprisegrade application solutions. The first members of the alliance included
Thomson Reuter, Intel, Microsoft and BP . By July the EEA had grown to a 150-
member organization, which made it to the largest open source blockchain initiative.
The members are originating from industries such as technology, government, energy,
banking, insurance, pharmaceuticals as well as a number of fast-growing Ethereum
startups (EEA, 2018, p. 1). Big announcements also came from the Ethereum Dev
Team in 2017. Throughout the year the planned move from Homestead to the new
update Metropolis started its first updates. Metropolis enables the Ethereum platform
to be faster, lighter and more secure. The updates were broken down in two peaches.
The first update, Byzantium took place in October 2017 and was done through a hard
fork. The second part of the update is called Constantinople and its release date was
not announced yet. With this hard fork, Ethereum will update to Metropolis (Ray,
2017, p. 1). The Metropolis includes a set of updates in regard to the ability of the
platform. By using the Zero-Knowledge-Proof (zk-SNARKs) Ethereum enables
anonymous transactions. Furthermore, the updates enabled easier programming for
developers, increase wallet security, more predictable transaction fee prices as well as
other features. All updates result in faster blocks as well as lower transaction fees for
users (Karnjanaprakorn, 2017, p. 2). The planned switch from PoW to PoS was
postponed till Constantinople will be activated. The switch will not happen instantly,
in a first stage a hybrid of both will be used, as described in the Casper Basic paper
(Virgil, 2017, pp. 2-4). The Ethereum PoS protocol is named Casper, currently
existing in two different proposals. One is developed and led by Vlad Zamfir who is at
the forefront of the Ethereum development. The other proposal is led by

VitalikButerin but until now no consensus was found in regard to what version will be
used. Casper will eventually pave to way for Ethereum’s scaling in order to achieve
mainstream adoption (Karnjanaprakorn, 2017, pp. 7- 8). At the Beyond Block Taipei
2017 conference in November, Buterin presented the Ethereum Roadmap 2.0. The aim
is that Ethereum will evolve over time and 2.0 will lay the foundation for what the
protocol will look like in the future. This is supposed to be done by introducing
sharding. Buterin described it as creating a blockchain with a hundred different
universes with different account spaces in each universe. These universes are systems
that are connected to each other and share consensus. This will enable Ethereum to
quadratic scalability. Throughout the whole year, Ethereum continued to grow in value
and more important in popularity with the community and developers (Marcom, 2017,
pp. 1- 2). Despite all the hacks and other security issues, 2017 can be described as the
year of ICO’s. Because most ICO’s used the Ethereum platform to develop their
dApps, Ethereum and its currency ETH profited enormously from the ICO boom. All
newly created Ethereum based tokens were issued using the ERC20 token standard.
Different projects were able to raise millions during their ICO and sometimes even in
minutes (Nation, 2017, pp. 1-2). Fabric Venture and TokenData conducted a study in
regard to ICO’s in 2017 and concluded that out of a total number of 913 ICO attempts
435 were successful resulting in a 48% success rate. The average successful ICO
project raised $12.7 million but the 10 largest sales of 2017 raised over $1.4 billion,
which represents roughly 25% of the total capital raised in 2017 using the ICO
funding method. Filecoin was the project that was able to raise the most funding in
2017. Their project aims to build a decentralized data storage solution using the
blockchain. The ICO took place in September and was able to raise $257 million
(Williams-Grut, 2018, p. 1). Regulators, especially in China, saw risks in the ICO
funding method. They are vulnerable to money laundering and terrorist financing due
to the anonymous nature of the funding transaction. Other concerns included the
ICO’s are financial scams as well as pyramid schemes. For this and other reasons, the
Chinese Central Bank announced on September 4th an immediate ban on ICO

funding. Furthermore, 60 crypto exchanges were put to subject of inspections (Russell,
2017, pp. 1-2). The news spread like a wildfire in the community and the crypto
currency markets started a four day long sharp decline. Within these four days, the
market cap dropped by $35 billion. The market eventually stabilized again but this
event was important because on the one hand it showed how big and important the
Chinese market was and on the other hand, it shows how easy uncertainty can be
spread among market participants (Acheson, 2017, p. 1). With the rising popularity of
Ethereum the amount of ICO’s that turned out to be scams as well as hacks increased.
Not even one hour in the CoinDash ICO hacker was able to change the smart contract
address and replace it with one of which they possessed the private key. CoinDash has
raised $7.3 million before the hack occurred and it released a statement that it would
give out its token to the investors who send their investments to the changed address
(Nikhilesh, 2017, p. 1). Another big security lack is known as the Parity hack. Parity is
a wallet provider based on Ethereum that also offers multi-sig wallet. These types of
wallets are often used by ICO project to store their raised funds. Hackers were able to
exploit a vulnerability in the wallet software resulting in the loss of 150.000 ETH,
which had a value at that time of $30 million, but the value would rise closer to $100
million by December 2017. The problem was initially reported by Parity since the
targeted multi-sig wallet smart contract was part of the Parity software suit (Palladino,
2017). In November of 2017, one of the biggest security incidents took place. A Parity
user accidentally found a vulnerability in the software code that resulted in freezing
513.774 ETH. After this incident happened reports surfaced that Parity was already
informed about that problem by a user in August, but developers classified it as a
possible problem and resolved the issue “a fix at some point in the future”. With the
immutability of the Ethereum blockchain, it is not possible to reverse the transaction
and Parity is still looking at how to free the funds, but there was and still is not an
immediate solution. One idea was to hard fork the Ethereum blockchain again and
reverse the transaction. For this Parity considered to submit several Ethereum
improvement proposals (EIP) to the community (Pauw, 2018; Thomson, 2017, p. 1). It
eventually did so in April 2018 that resulted in a community vote. The EIP-999 would
allow the users to regain access to their funds. The vote ran from April 17th till April
24th resulting in 55% of “no” votes. The funds were not stolen or lost but they were
stored exactly where they were supposed to be, the problem was that the access to
these funds has been destroyed. Till today the funds are frozen and there is no solution
to unfreeze them (Pauw, 2018, p. 1). These incidents and hacks were just a few that
took place in 2017. Bacina (2018) estimated that the value of all ETH funds taken by
hacks and lost in incidents is close to $1 billion by January 2018 (Bacina, 2018, p. 1).
ETH had a price of approximately $8 and a market cap of roughly $710 million. By
end of March the price has risen to $50 and a market cap of $3.9 million. The extreme
price increase continued, and on May 19th ETH broke for the first time in its 4-year
history the $100 mark. Within one month the price tripled to over $370 and a market
cap of approximately $34 million. For the next months, the price ranged between $200
and $350 on average. Towards the end of the year, another price rally had started. The
ETH price jumped on November 22nd within the next 24 hours from $381 to $425,
breaking the $500 mark for the first time on November 29th. ETH reached its all-time
high of 2017 on December 21st with a price of 1 ETH at $880,54 and closing the year
off at around $760 (Coinmarketcap, 2018h, pp. 3-18). The overall price performance
in 2017 was an unbelievable one for ETH in 2017. Starting off at around $8 and
closing 2017 at around $760 means it gained close to 10.000% in one year. One reason
for this growth was the ERC-20 token standard that all Ethereum based ICOs used for
their own tokens. All ICOs accepted ETH as a payment for their own new tokens,
resulting in an increased demand. At the same time, all transaction fees are paid in
ETH meaning the more the network gets used the more ETH will be used. By the end
of 2017, there were more than 250 Ethereum based dApps that were running live and
over 500 projects that were between the concept and demo phase. These dApps were
the biggest driver for Ethereum and ETH in 2017 and the more popular it becomes to
develop dApps on Ethereum the higher the value of the ETH
Ethereum Use Cases
One big difference between Bitcoin and Ethereum is the smart contract function that is
native to Ethereum. The smart contract function can be used for many different use
cases and represents the main use case of Ethereum. On a very basic and abstract
level, smart contracts can be compared to vending machines. Money is put in and the
preselected item will be automatically and without the need for a third party released.
Smart contracts operate fairly similar, but they can be used for a variety of different
scenarios across different industries. By using smart contracts, the middleman in these
business transactions is eliminated. The contract uses the programming language
Solidity and enables developers to create dApps using a smart contract. For
developers, it is a lot easier to use the existing Ethereum infrastructure to create their
dApp. This means that all transactions are processed as well as stored on the Ethereum
Blockchain. Furthermore, all payments are processed on the Ethereum Blockchain
meaning that no third party like a payment provider is involved in the value transfer.
Ethereum’s complete frontand back-end software code is open source and can be
verified easily . The Ethereum platform is designed to make the development of
dApps relatively simple by providing the necessary tools. All starts with the Ethereum
smart wallet that acts as a gateway to the dApps. The project tokens can be designed
using the smart contract and they can be used as a currency, a virtual shape, a proof of
membership, a representation of an asset or anything else. The ERC-20 token standard
allows the compatibility with any Ethereum wallet, exchanges or other contractors. In
order to kickstart the project, it can host a trustless crowd sale, where the newly
created ERC-20 tokens are sold in order to receive funding for future development.
The ultimate goal advertised on the Ethereum website is the formation of a DAO. Here
all decision and business transactions are executed by the smart contract but the DAO
hack showed Ethereum and the community that smart contracts in general and its
programming language has yet been developed for such a sophisticated use . One use
case for a dApp would be as notary service. Most of the world’s ownership records are
stored offline or on paper at a centralized location. This results in the problem that the
records can be easily tampered with or altered. Using the blockchain tampering is not
possible. If a user enters their proof of ownership data through a dApp onto the
Ethereum blockchain the data can only be changed by the person that owns the
matching private key. It is not possible for a third-party to alter the entry without the
private key. This use case can be achieved without third party intermediaries, which
simplify transactions and also reduce its cost. Another field of application is the
supply chain management. The blockchain has the ability to be a tamper-proof
database and therefore can be used to store supply chains transactions as well as
transfer of ownership. The advantage of this is that it is stored decentralized and in a
transparent matter so that everyone has access to it. With this, it is possible to prove to
the consumer that a product is real and contains what was advertised. Furthermore, the
individual steps the product had during its production process can be displayed as well
giving the consumer complete transparency over the production process. This can help
to fight product piracy and stop sellers from distributing them. It is also possible to
record the transfer of ownership on the blockchain giving the consumer a proof of
purchase as well as a proof of ownership and originality making the resale process
much easier. These were just two possible industries where the Ethereum blockchain
can be deployed. All these projects need to have some kind of entity in the
background. The Crypto Valley in Zug, Switzerland positioned itself with attractive
regulations that it would be an ideal place for blockchain companies to be. For this
reason, the Ethereum Foundation was established in mid-2014 in Zug, Switzerland.
This was done to use the ICO friendly regulation in Switzerland (Gerring, 2016, p. 4).
Because of Ethereum and other big industry players, the region became known as the
Crypto Valley. Till today more than 350 projects have used the location of Zug to
have its companies residing there. It is estimated that in 2018 an additional 200
companies will be established in the Crypto Valley . Using the ICO fundraising model
all these different use cases for Ethereum smart contracts, they are able to develop
their envisioned product. Sadly, some projects are shady from the start and others use
celebrities to promote their product to uneducated investors. One of those celebrities
was Floyd Mayweather. In 2017 he promoted a total of three ICO’s one of which is
facing a class action lawsuit in regard to violating US securities law. The Tezos
project also got into trouble facing four different class action lawsuits in regard to
selling unregistered securities. On the other hand, other, serious projects use this
funding method to successfully raise funds and do develop their promised products .
Most of the financial value that is transferred during an ICO is done by using Ether.
Within the year of 2017, a total number of 913 ICO’s opened while 537 closed and
over $6 billion were raised. Not all ICO’s used Ethereum to launch their project but it
can be said that the majority did so. It is believed that the trend of ICO’s will continue
to grow over 2018 (Gibson, 2018, p. 1). The Ethereum blockchain is not capable of
handling a big volume of transactions per second. Currently, it supports roughly 15
transactions per second, which is quite small compared to Visa’s 10.000 transactions
per second. The scaling problem Ethereum is facing is that it requires a network of
nodes on which the entire history of transactions, state of account balances and
contracts need to be stored. The fear is that eventually the size of this data package
will be too large for regular users and only a few big companies have the resources to
host a complete Ethereum node. If the block size would be increased the problem
would not be solved because the bigger the blocks will get the bigger their amount of
data that has to be stored. Despite that, hosting a node is the most private and secure
way to use the system. Additionally, it would weaken the security of the whole
network because there would be fewer nodes to verify transactions. The Sharding
solution is one of which could solve this scaling problem and enable an enterprise- and
user adoption .
Case Study Monero
This Chapter will give an overview of the privacy currency Monero. Since Monero is
a community funded as well as driven project and has its prime focus on privacy the
information available is limited. In the first part, the creation of Monero will be
described followed by its development and important events that led to Monero
becoming a privacy-focused crypto currency with a market cap of $2.2 billion
Monero 2014 – 2017
Monero (XMR) was created in April 2014, is a privacy-focused crypto currency with
its focus on decentralization, scalability and is open sourced based. A significant
algorithmic difference in regard to the blockchain obfuscation can be achieved
compared to Bitcoin by using the CryptoNoteprotocol . The first version of the
CryptoNote whitepaper was released in December of 2012 describing the Bitcoin
privacy issues and proposing ring signatures to increase privacy. By October 2013 the
second version of the whitepaper was released followed by the code release and the
beginning of Bytecoin . By 2014 Bytecoin began to gain traction, even without anyone
knowing who the developer Nicolas van Saberhagen really was. Since Bytecoin was
designed for privacy it did not matter to its users. It was also clear that the currency
had one important problem. That being 80% of all coins had been already mined by
the time users started to pay attention. A user that is only known by the username
thankful_for_today forked the Bytecoin code and created Bitmonero that did not have
the pre-mining issue. Because of disagreements, by April 2014, seven users took the
Bitmonero code and forked it off to Monero. Only two of the developer’s identities are
known that of Riccardo Spagni aka Fluffypony and Francisco Cabanas. Spagni acts as
the main developer and face of Monero . The rest of the developers followed to the
currencies ethos and stayed anonymous. They are only known by their pseudonyms
smooth, othe, NoodleDoodle, binaryFate and luigi1111 and form with the other two
the Monero core team. The core team, who serve as guides, comprises of members
with areas of expertise in applied cryptography, coding, public relations, software
architects and economic development. The Monero builds on the back of its
community out of contributors, volunteers, and donations. Till today more than 240
developers have worked on Monero and contributed to the project including 30 core
developers. It has organized itself into five different section. There is the research and
academic arm, Monero’s Research Lab, Monero.org, MyMonero the core
development team and the community developers. Governance guidelines were
needed in order for such a complex community to function effectively. The core team
argued at that time that in regard to crypto currency projects the term governance is
quite a sensitive topic. But it is also known that a lack of governance, especially in
regard to decision making, can be the death to any open source project. Therefore,
governance guidelines were issued in 2015 that would help to manage the decision-
making process among the community. The Monero user forum is using the direct and
indirect trust mechanism. Posts that get comments by direct or indirect trusted people
will appear more often at the top compared to posts where people with no trust
relationship commented. By using this mechanism Monero eventually bypassed
trolling and shill posts .Monero uses the forum funding system in order to pay for the
development and other expenses. In this system, anyone can request funding for a
Monero based project and the users can decide if in their opinion this project would be
good for Monero and fund it accordingly. This is completely voluntary and not
connected to any consensus rules. Some developers build Monero related services that
will financially benefit from the growth of the Monero network and finance
themselves this way. Others donate to the core developer 6.1 Monero 2014 – 2017
Monero (XMR) was created in April 2014, is a privacy-focused crypto currency with
its focus on decentralization, scalability and is open sourced based. A significant
algorithmic difference in regard to the blockchain obfuscation can be achieved
compared to Bitcoin by using the CryptoNoteprotocol . The first version of the
CryptoNote whitepaper was released in December of 2012 describing the Bitcoin
privacy issues and proposing ring signatures to increase privacy (Saberhagen, 2012,
pp. 6-8). By October 2013 the second version of the whitepaper was released followed
by the code release and the beginning of Bytecoin (Saberhagen, 2013, p. 1). By 2014
Bytecoin began to gain traction, even without anyone knowing who the developer
Nicolas van Saberhagen really was. Since Bytecoin was designed for privacy it did not
matter to its users. It was also clear that the currency had one important problem. That
being 80% of all coins had been already mined by the time users started to pay
attention. A user that is only known by the username thankful_for_today forked the
Bytecoin code and created Bitmonero that did not have the pre-mining issue. Because
of disagreements, by April 2014, seven users took the Bitmonero code and forked it
off to Monero. Only two of the developer’s identities are known that of Riccardo
Spagni aka Fluffypony and Francisco Cabanas. Spagni acts as the main developer and
face of Monero . The rest of the developers followed to the currencies ethos and
stayed anonymous. They are only known by their pseudonyms smooth, othe,
NoodleDoodle, binaryFate and luigi1111 and form with the other two the Monero core
team. The core team, who serve as guides, comprises of members with areas of
expertise in applied cryptography, coding, public relations, software architects and
economic development. The Monero builds on the back of its community out of
contributors, volunteers, and donations. Till today more than 240 developers have
worked on Monero and contributed to the project including 30 core developers. It has
organized itself into five different section. There is the research and academic arm,
Monero’s Research Lab, Monero.org, MyMonero the core development team and the
community developers. Governance guidelines were needed in order for such a
complex community to function effectively. The core team argued at that time that in
regard to crypto currency projects the term governance is quite a sensitive topic. But it
is also known that a lack of governance, especially in regard to decision making, can
be the death to any open source project. Therefore, governance guidelines were issued
in 2015 that would help to manage the decision-making process among the
community. The Monero user forum is using the direct and indirect trust mechanism.
Posts that get comments by direct or indirect trusted people will appear more often at
the top compared to posts where people with no trust relationship commented. By
using this mechanism Monero eventually bypassed trolling and shill posts (Hunte,
2018, pp. 3-5). Monero uses the forum funding system in order to pay for the
development and other expenses. In this system, anyone can request funding for a
Monero based project and the users can decide if in their opinion this project would be
good for Monero and fund it accordingly. This is completely voluntary and not
connected to any consensus rules. Some developers build Monero related services that
will financially benefit from the growth of the Monero network and finance
themselves this way. Others donate to the core developer team for instant most of the
Monero mining pools include small donations to the core development team. There is
even a community hall of fame for members that donated more than 20.000 XMR to
the core development team in either the direct way or using the forum funding system
(user26303, 2016, p. 1). Once a project is proposed, explained why the developers are
suited for the project and a cost projection was presented to the community, the core
development team decides which candidate or team is developing the task and creates
a funding request. The community members can decide if they want to fund a task or
project. If they do so they can reach status levels and earn badges the more project
they funded. A project only starts if at least 60% of the funding was raised. Once this
threshold is passed the task is moved to “work in progress”. Developers can request
payments once a week but the funds are only released if there is general agreement in
regard that the work is being done (Hunte, 2018, p. 6). The strong privacy is achieved
using ring signatures that make transaction untraceable. Anyone who uses the Monero
network owns a piece of Monero and with every transaction, the network hides that
piece between others in a ring of that public address so that it cannot be found easily.
Furthermore, all Monero coins are fungible meaning they cannot be tracked. The
security for the network is provided by the miners. In order to incentive, the miners to
continuously secure the network, Monero’s block reward will never go lower than 0.3
XMR (Kabessa, 2018, pp. 5-6). In 2016 the Monero core development team and the
other structural parts of the project released important updates for the network and the
community. The first update was launched in January called the Hydrogen Helix that
fixed important bugs. Till September the fifth Monero research lab paper was
published, the network configuration was changed to a minimum ring size of 3 on all
transactions (Monero, 2018, p. 1). On September 18th, 2016 the software update
Wolfram Warptangent was released that included the necessary modifications of the
dynamic block size limiter algorithm. This enables Monero to be used on a more
scalable level (Fluffypony, 2017, p. 1). This update was deeply needed because
Monero started to get used for its first use case as currency on the dark web
marketplace AlphaBay. On June 10th 1 XMR was approximately worth $1, by mid of
September the value of 1 XMR increased to more than $10 (Coinmarketcap, 2018j, p.
1). By September 1st AlphaBay and Oasis, the two largest darknet marketplaces
announced that their users are able to purchase goods on their websites using the
crypto currency Monero. This decision was based on the newly gained popularity of
Monero among users of the dark web as well as on this ability to make transactions
untraceable and therefore provide a certain level of security to the marketplaces and its
users. By that time Monero was still in a very early stage and no graphical user
interface (GUI) wallet existed and it as only possible to access Monero using
command line or web-based wallets. The adoption of Monero through the darknet help
Monero to grow and soon Monero would account for 2% of AlphaBay’s total sales
volume (Greenberg, 2017a). XMR ended the year 2016 at a price of $13 with a market
cap of approximately $177 million . Through 2016 it gained so much popularity and
had an actual demand that by November 2016 XMR was listed on the Bitfinex
Exchange. In January 2017 the crypto currency exchange Kraken announces that it
will list XMR with multiple trading pairs enabling the trading of XMR on the widely
used exchange . On January 10th Monero announced RingCT an updated version of
the older sing signatures. It will enable Monero to better obscure transaction outputs,
making it impossible for outside parties to view the transaction details. It builds on the
existing privacy features including hidden transactions, hidden accounts as well as
trustless coin generation. It is scheduled that the RingCT feature is updated through a
hard fork occurring in September 2017 and making the use of it mandatory from this
point on . In September the Monero network had major updates scheduled that would
enhance the currency’s privacy function further. In a first step, the Helium Hydra 0.11
was launched and designed to increase the minimum size of ring signatures to 5,
blacklisting of duplicate members within a ring and enabling the launch of the RingCT
signatures. Furthermore, it introduced the “Fluffy Blocks” that are the optimal
compact blocks designed to reduce the bandwidth requirements for the node operators.
From that update on it was possible to host a full node on the operating systems
Android and iOS with full support (MinerGate, 2018, p. 1). The case that scams and
hacks increased as the value of the crypto currencies increased was already described
in the previous chapters. The same happened with Monero, but it played a more
important role in these events because of its privacy feature. The criminals behind the
WannaCry virus used their gained Bitcoins and laundered them using XMR. Using
XMR enabled them to hide their transaction and use the money to their preferring
(Orcutt, 2017b, p. 6). Beginning in May 2017 and ongoing throughout the whole year
a Monero mining virus was deployed to mine XMR using a security flaw in the
Microsoft operating system. Hackers used the mining software and modified it and
used the security flaw IIS 6.0 to install it on different servers. Over a period of time,
they were able to build a botnet of infected servers that mined XMR for them. The
advantage of mining XMR, in this case, was that it uses CPU and GUP mining, which,
if done by big servers is more effective as well as because of its privacy feature
(Kalnai&Poslusny, 2017, pp. 1-2). The widespread of the mining virus was possible
using EternalBlu, the same NSA exploit that was previously leaked by the Shadow
Brokers and also used for the WannaCry virus. Within a few months the virus spread
to over 526.000 windows computer. The highest number of infections were seen in
Russia, India, and Taiwan and at least 25 computers were used to constantly scan for
new vulnerable computers. With this network of miners, the hackers were able to mine
approximately 24 XMR per day over a period of months. Different versions of the
virus were used by multiple groups and organizations, resulting in multiple different
Monero mining viruses all of which use the EternalBlu exploit. Microsoft released a
patch for the security flaw but machines that have not been updated are still vulnerable
(Khandelwal, 2018, pp. 1-2). A similar mining virus was discovered in the second half
of 2017. The VenusLocher ransomware war modified from its original version to mine
XMR (Salvio, 2017, p. 1). This kind of virus attack became known as crypto jacking.
The number of attacks rose by 8500% in the fourth quarter of 2017 according to a
report from Symantec (Symantec, 2018, p. 1). The report states that mining other
user’s CPU is far easier than using other methods. This is done in a way that the extra
computational power that is consumed is kept so low that it will not show up on the
power bill. This occurred during the timeframe of the Bitcoin and general price spike
making illegal activities much more lucrative (Shannon Liao, 2018, pp. 1-2). The
XMR price had an impressive development in 2017, starting the year at $15 with a
market cap of $188 million. By August 2017 the price had more than tripled to $50,
the market cap had grown to $600 million. Monero reached the first time $100 on
August 25th and remained above it for three weeks, dropping below only for a short
time. For the next months, the XMR price would stay around the $100 mark, breaking
this resistance level in November. From November to December the XMR price
continually increased to $200, $300 and even $400 for 1 XMR. The all-time high was
on December 20th with a price of $476. XMR’s price at the end of 2017 was $356 and
it had gained a market cap of over $5 billion . A study by Möser et al. (2018)
investigated the traceability of transaction in the Monero blockchain. More precise
they have investigated the weaknesses in Monero’s mixing sampling strategy. They
found out that about 62% of the transactions using one or more mixing processes are
vulnerable to chainreaction analysis resulting in the traceability of the real input by
elimination. Another problem they found in their tests was that the mixing process
sampled coins in a way that they can be distinguished. They claim that they have
developed a heuristic that can guess the real input with 80% accuracy overall
transactions with one or more mixings. They applied this heuristic to the transaction
history of the timeframe of AlphaBay’s high times, removed all mining pool activity
and found a large amount of potentially privacy-sensitive transactions . There were
also other publications calming that Monero’s transaction can be traceable now and
for sure in the future. Monero fixed that problem of traceability with its updates of the
RingCT. Until now law enforcement agencies are still not able to link XMR
transactions to individuals, which limits the ability to identify suspects . A recent
threat to the Monero community came from the Bitcoin mining and chip manufacturer
Bitmain. Monero uses the PoW consensus algorithm, which is from the basic principle
very similar to the one Bitcoin uses. The Bitcoin mining company Bitmain announced
at the beginning of March 2018 that it would sell Antminer X3 an ASIC miner
specially designed to mine Monero. The core developer Spagni had previously
announced that he would do everything in his power to help the community to prevent
centralization including ASIC’s on the Monero Network. Many community members
feared that the use of the powerful ASIC miners would lead to the centralization of
Monero and that would undermine the main value proposition of it, security. When
ASIC miners are deployed in the Monero network it will make mining inaccessible for
most people and centralize the computing power of the network in the hands of a few
large mining operations . On March 28th Monero announced that it had scheduled a
major upgrade, which would result in the network undergoing a hard fork. The update
had two primary reasons. The first reason was to modify the PoW algorithm in a way
that it would become resistant to ASIC miners in order to prevent the centralization
danger. The Second reason was to increase the ring size to 7 to strengthen the privacy
afforded by Monero. The hard fork occurred on April 6th and followed the scheduled
proceeds. Another hard Fork occurred around April 30th when a group of developers
forked from the Monero code to create MoneroV. MoneroV is from the concepts very
similar to Monero, both using a block interval of around 120 seconds, have stealth
addresses and use ring signatures. It aims to solve the issue of the inflated Monero
blockchain, infinite supply of XMR, high transaction fees and the centralizeddecision
making process. Furthermore, MoneroV claims that Monero is discouraging normal
miners by increasing the hash rate based on the bulk usage of automated miners and
other possibilities for stealth mining. Stealth mining or crypto jacking describes the
process of a user’s browser mining without the user’s knowledge. MoneroV uses a
different privacy-oriented protocol, the Mimblewimble. It is a modified version of the
Bitcoin protocol that is expected to significantly increase the privacy and fungibility of
the crypto currency network leading to higher scalability potential .
Monero Use Cases
This chapter will show the main use case of Monero. As it is a currency its main use
case is to be used for a value transfer of products or services. For Monero the optimal
use case is users that have a strong preference for private transactions that cannot be
traced. These users are most likely involved in some kind of illegal activity. Therefore,
Monero has the reputation to be the drug dealer’s crypto currency. With its strong
privacy settings and a focus on true decentralization, Monero provides the features that
were needed the most from one special community, the darknet black market
community . With the growing popularity of Monero amongst this community, the
darknet marketplace Oasis announced in August 2017 that it would officially accept
payments made in XMR. A month later the leading darknet marketplace AlphaBay
announced its support for XMR as well. For this point one user of darknet
marketplaces could by illegal substance, paying for them using XMR that enabled
them to be undetectable by authorities. Previously this was mostly done by using
Bitcoin . The Monero price increased approximately 200% the month following the
acceptance on AlphaBay and Oasis. One of Bitcoin’s first use case was as a means of
payment on the SilkRoad.
CHAPTER 6
Discussion and Conclusion
This chapter is used to analyze and discuss the findings of this research paper.
Furthermore, this chapter will include the limitations of this research paper, the
recommendations for further research as well as the research paper’s conclusion.
6.1 Discussion
Since the creation of Bitcoin in 2009 different crypto currencies with different use
cases and functions have emerged over time. After a few years of testing Bitcoin,
different users had identified shortcomings and decided to develop new projects that
addressed these shortcomings. Monero with its prime focus on privacy and
decentralization started in 2014 and enables by to today its users to perform
untraceable transactions. By 2015 the Ethereum began to operate and enabling any
developer to develop his own dApp utilizing the existent Ethereum infrastructure. The
real engagement and development of different projects based on the blockchain
technology started after Ethereum offered the proper tools to easily develop and
execute projects. Bitcoin is the largest crypto currency and it can be said that more
people know about Bitcoin than about any other crypto currency. Most people
encounter it sooner or later when they are trying to buy crypto currencies because
most coins have trading pairs with Bitcoin. Furthermore, most merchants and other
enterprises accept Bitcoin as a payment method enabling its customers to easily spend
their Bitcoins as shown in this research paper. It also is from the community sounding
it the largest and probably most engaged and has the widest developer community as
well as the strongest foundation. The same can be said for Monero, since it is
completely community driven and funded, except it is much younger than Bitcoin and
therefore has fewer developers and overall less experience. Monero has its own user
base that values Monero because of its privacy. It will always give privacy focuses on
individuals that will use currencies like Monero and therefore it can be expected that
privacy coins are will continued to be used and will continue to have an economic
impact. Ethereum, on the other hand, has a central figure representing the platform,
VitalikButerin. Ethereum enables many developers to try and build something with the
blockchain technology, which is helping the adoption of Bitcoin, Ethereum, Monero
and more importantly the blockchain technology. With the existence and more
importantly the usage of Bitcoin, Ethereum and Monero, industries have formed
around them, providing the users all the services they require in order to join the
industry and be a part of the blockchain movement. The mining industry grew so big
and powerful, that the announcement of one chip manufacturer leads to the change in
the consensus protocol of a currency. Mining companies are worth billions of dollars,
planning IPO’s and have positioned themselves so good in the market, that they have
multiple business ventures generating profits independently from each other. By
differentiating their operations, they are able to survive long bear markets, because
their price per Bitcoin or price per unit is so low, that other companies are not able to
compete. The same can be seen with exchanges except that here users can actively
choose which exchange they are using. If a more competitive exchange comes long,
most of the users will switch to that exchange because it is better in some way or
offers cheaper transactions. This nomadic behavior of crypto currency users can not
only be seen in regard to exchanges but also in regard to wallets and projects. The
industry is young and with the uncertainty already being very high, the community
gets easily cared. One of the biggest economic impacts of crypto currencies can be
seen in the payment industry. Transferring value using Bitcoin has advantages in
comparison to the traditional financial system as shown in this research paper.
Transactions are cheaper and a lot faster resulting in a higher financial flexibility for
its users. Furthermore, the current monetary system was not designed to be used on the
internet. Bitcoin, Monero, and Ethereum have proven themselves of having a clear
advantage when used on the internet. Sonner or later most of all payments that occur
on the internet will be done using crypto currencies
6.2 Conclusion
Over the last nine years, the crypto currency industry developed itself, at the
beginning very slow with an exponential growth that is still occurring today,
sometimes stronger and sometimes weaker. With the technology only existing nine
years it is very early to determine an exact economic impact but as this paper presents,
by today the economic impact of crypto currency is slowly starting to appear on the
surface of the overall global economy. On a more regional level, it can be said the
economic impact is relatively big. Regions transforming themselves into new hotspots
for crypto business generating jobs and other economic value, while giving these
businesses the room to grow. The same can be said for the mining and exchange
businesses that formed around the crypto currency industry. Just the announcement
that companies starting to accept currencies or forming partnerships would drive the
price up and also down. Longfin Corp. announced that it would engage in a
partnership with a blockchain technology company and the stock price rose by 2000%
. An economic impact can also be seen in the regard to the electricity consumption the
mining operations require. These have started using so much energy that other
businesses and communities had electricity shortages. With the global electricity
consumption already rising the additional power that crypto currencies require need to
be produced. With today’s growth and practices, this will not be sustainable for long.
Even governments have started to limit to the energy consumption of mining
operations. Different solutions have been proposed to solve this energy consumption
problem one of which the switch from PoW to PoS is. Ethereum wants to try to
upgrade their network to run with PoS and it is anticipated and feared at the same time
that the migration process will result in issues for the network. Another anticipated
solution is to locate mining operations next to power plants in order to use their energy
surplus that otherwise would have been wasted. It is clear that the community needs to
find a solution in order to scale the systems and reach the mainstream adoption. The
whole industry of crypto currencies and the blockchain technology needs to be
observed and further developed. Within the next ten years, many new business and use
cases will be developed based on crypto currencies and the blockchain technology.
With the future development and adoption, the economic impact of crypto currencies
will also grow and gain importance.
WEBLIOGRAPHY
https://www.investinblockchain.com
https://www.coindesk.com
https://github.com
https://www.mycryptopedia.com
https://coincodex.com
https://weeklyglobalresearch.wordpress.com
https://bitcoin.org
https://bitcoin.org
https://www.bitfinex.com
https://bitfury.com
ANNEXURES
1} Have you ever heard about cryptocurrency?

a) Yes
b) No
2} Is bitcoin and cryto same thing?

a) Yes
b) No
c) Maybe
3} Can I transfer bitcoin with cash?

a) Yes
b) No
c) Maybe
4}Have you bought any kind of cryptocurrency?

a) Yes
b) No
5}What is your opinion bitcoin/cryptocurrencies main constrait as a mean of

currency?
a) Criminal activity relation
b) Extreme volatility
c) Exists only in computer
d) Few merchants accept it
6} Do you think currencies should be regulated by?

a) Public authorities
b) Private sector
7} In the case of bitcoin do you trust its technology in the long run?
a) Yes
b) No
c) Maybe
8} Do you think bitcoin will still be the dominant currency in the near future?
a) Yes
b) No
c) Maybe
9} Will you invest in cryptocurrency?

a) Yes
b) No
c) Maybe

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PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE AND ECONOMICS

Bitcoin was launched in 2009 by an individual or group known by the pseudonym

Some of the competing cryptocurrencies spawned by Bitcoin’s success, known as

A blockchain is a chain of blocks of information that registers transactions; of cause,

the first blockchain in 2009, researchers have identified three generations of

3.2 Crypto Currencies

Crypto currencies are digital alternatives to traditional government-issued paper

3.3 Bitcoin, Ethereum, Monero and their underlying

3.4 The Economic Impact of Bitcoin, Ethereum and Monero

• 73.1% of people have heard about crypto currency

• 26% of people says yes

• 47% of people s yes

• 17% of people have bought some or the other cryptocurrency

• 26.1% of people think its used for criminal activity

• 73.9% of people says it should be regulated by public authority

• 56.5% people trusts its technology in long run

• 26.1% people says it will be dominant

• 39.1% would like to invest

5.1 Bitcoin 2009 – 2013

WordPress.com and Overstock.com are accepting Bitcoin for purchase as well as

5.2 Bitcoin 2014 – 2017

at approximately $1.000 by the beginning of 2017 and had a market capitalization of

5.3 Bitcoin Use Cases

Case Study Ethereum

Ethereum is an open source software platform based on the blockchain technology.

Ethereum 2015 – 2017

The journey started when 19-year-old Russian-Canadian programmer VitalikButerin

the forefront of the Ethereum development. The other proposal is led by

Chinese Central Bank announced on September 4th an immediate ban on ICO

Ethereum Use Cases

Case Study Monero

Monero 2014 – 2017

Monero Use Cases

Discussion and Conclusion

1} Have you ever heard about cryptocurrency?

2} Is bitcoin and cryto same thing?

3} Can I transfer bitcoin with cash?

4}Have you bought any kind of cryptocurrency?

5}What is your opinion bitcoin/cryptocurrencies main constrait as a mean of

6} Do you think currencies should be regulated by?

9} Will you invest in cryptocurrency?

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