Shreya Maheshwari 6886; SYBA(D)

Research proposal on:

Cryptocurrency Market: India Vs. the world.

Abstract of the Study:

This study will aim to highlight the workings and situation of the Cryptocurrency market in
India and worldwide. There have been technological advancements in the past thirty to forty
years, which have affected our daily lifestyle positively. Technology has made our lives more
comfortable not only in the sense of buying but also in finances and investments. This paper
will explore Cryptocurrency and learn more about blockchain technology, how the market
works, and the Covid-19 impact on the crypto market.
This paper will also include brief analyses of the Cryptocurrencies such as Bitcoin and
Dogecoin and their market in recent times. The study of this market helps us better
understand India's standpoint on this market, and these types of financial aid of other
countries will also be discussed in brief.

Objectives of the Study:

This study will aim to highlight the workings and situation of the Cryptocurrency market in
India and worldwide. This study examines the different types of Cryptocurrencies in the
market and their impact on the economy. The study will further investigate whether or not
this kind of investing is helpful in the long run. This study will also include different
countries' opinions on the topic. The study will also bring out the behavioral pattern and its
impact on the users worldwide, especially in India, as India is one of the few countries not to
legalize or delegalize Cryptocurrency as a whole. This study will also include the market
fluctuations and study the patterns of this new kind of currency.
The study aims at answering the following questions-
 From where did the concept of Cryptocurrency emerge?
 What was the need for the new currency?
 What motivates young entrepreneurs to invest in this currency?
 Will Cryptocurrency be the new currency?
 Are these platforms safe enough to be used by everyone?
 Invest or not invest in Cryptocurrency?
 What the present markets of Cryptocurrency say about the future market
Cryptocurrency?
 What was the Covid-19 pandemic impact on this market?

The Research problem:

With recent years of rising in Internet-based work and employment and different kind of
payment system and the 2008-2009 crisis (which led to the invention of the Cryptocurrency
in the first place) has given new opportunities to the investors in investment. As similar and
as easy to stock market trading as it may sound, the crypto market is not that simple to
operate in. It has its pros and cons. Many people and entrepreneurs favor the new currency or
say the way of creating wealth and earning extra income or investing. However, some great
investors like Warren Buffet, Motilal, and Oswals in India are totally against it. As they
would be because of the risk, it comes with. This study will be focusing on many such
aspects of the crypto market and whether it will be helpful in our country, where an average
household income is RS. 40k to 50k per annum.

Methodology in Brief:

The study would comprise of the statistical data and the data collected by other researchers.
The statistical methodology gives the most relevant market index. This tool used is the
Principal components (CPA); it is a technique to reduce the big statistical data into more
readable and understandable data. This study will also be reviewing investors' and
researcher's experiences about being a part of the market. This study also includes some
secondary data that will help us understand India's market situation and the government's role
and initiative to legalize the Cryptocurrency market. The data will also reflect on the mindset
and understating of people of different age groups. The study will then reflect the response of
developed countries and the initiatives taken by them to make the crypto market available to
its users. The study will also compare two to three different Cryptocurrencies, namely
Bitcoin, Dogecoin, and Ethereum. This study will help figure out the crypto market and
whether it is the new currency of the future or just another kind of an asset for rich people to
hold on to.

Research Proposal on Cryptocurrency.

By Shreya Manoj Maheshwari.

The discipline of the project: Economics

Title: Cryptocurrency market: India v/s the world.

Background and aim of the project:

Cryptocurrency is a very new topic or, say, a new area of study that has made it difficult for a
person to understand and operate in it. Most people do not even know what bitcoin is. To
understand the in-depth concept of Bitcoin, we need to see from where it started and what the
need for Cryptocurrency was.
The history of cryptocurrencies begins with Bitcoin and Blockchain technology, the first of
many cryptocurrencies created to date, and a market that represents more than 1,000 different
references available. Pseudonymous article by Satoshi Nakamoto (see Nakamoto (2008)
made the first cryptocurrency-based mathematical proposal for creating a cryptocurrency. In
his document, Nakamoto lays the groundwork for the development of cryptocurrencies,
stating, "A purely peer-to-peer version of electronic cash would enable online payments that
are sent directly from one party to another without a single financial institution run through.
Digital signatures are indeed part of the solution, but the benefits may be lost if a trusted
person or institute is still required to avoid double-spending. We propose a solution to the
double-spending problem using a peer-to-peer network” Nakamoto (, 2008). The mining or
creation of the first cryptocurrency stars (or Genesis Block) in 2009 using a testing or
working method no longer requires you to perform a task or proof of work that the machine
uses to verify information Larime (, 2016). The result of this task is Cryptocurrency.
The first cryptocurrencies created and in circulation were used for financial transactions, such
as the most famous purchase of 2 pizzas for 10,000 bitcoins in 2010. MtGox started its
activities and became the most significant Bitcoin broker. This company had serious IT
difficulties as it caused losses for its investors on around 600 accounts, causing Bitcoin to
drop to one cent of the US dollar after it was previously at a 1: 1 ratio at a Bitcoin ATM in
Vancouver had acted. They were one-sided in their early stages, which meant that they only
electronically exchanged fiat money for bitcoins but did not deliver cash. In February 2014,
broker MtGox went bankrupt after losing 850,000 bitcoins, which was equal to 400 million
dollars. Keeping this in mind, Japan opened its economy to Bitcoin operations and took
serious steps to regulate and formalize this market in 2016. With success seen in Japan, more
and more banking and financing industries worldwide started showing interest in blockchain
technology.
While few people do not believe in the potential of cryptocurrencies, ironically, the same
people believe in blockchain technology as they did in the past when they used other new
technologies like credit cards in the 1960s or 1970s. Because of these developments, human
life is inconceivable without the Internet and is required for various activities today. The idea
of getting an electronic version of money without intermediaries is based on the blockchain
not only to carry out this exchange but also to generate coins. It performs the same task and is
called a playtest. It is worth noting that Kelly Brian notes that blockchain and its relationship
with Bitcoin: "At the heart of Bitcoin is a ledger, or balance sheet, called a blockchain. This
global ledger records every transaction that takes place with Bitcoin. The moment a bitcoin is
minted, all its movements are recorded, and this record ensures that bitcoins cannot be
counterfeited ". More than 1,000 different cryptocurrencies available, as well as many other
projects related to blockchain technology. Blockchain technology is still used to generate
cryptocurrencies using the proof-of-work algorithm, a method known as "Mining." After ten
years of organized development of the cryptocurrency market with ratings of over 2,000% in
Bitcoin in 2017, new strategies and businesses are being born of the Blockchain technology
via innovative cryptocurrencies such as the so-called Ethereum (ETH) or Tangle technology
in the hands of IOTA (IOT). Then the projects that cannot be consolidated and do not offer a
concrete solution for the problem will likely go away.
One of the essential traits of cryptocurrencies is scalability; this is the functionality to
procedure an exceptional quantity of transactions without the gadget disintegrates. Today no
longer all of the cryptocurrencies satisfy with these belongings; however, every day, new
tasks ought to acquire this feature to a destiny occurrence technology; once receives the
scalability, the second feature is the speed, that is, the functionality to generate and watch
transactions in actual time regardless of the region with inside the international transaction
where it finds, in a comparable manner as works an e-mail, however making sure the
individuality and no copies from transaction objects. The 1/3 and remaining feature is
associated with the cash use, decentralization to set up a right away relation among agents,
without any intermediation of government, with low fees in a steady manner (Nakamoto
2008).
This study will highlight the usage and importance of CC in the Indian market and its
drawbacks, and how we can overcome them. CC has been a controversial topic to discuss as
many significant investors and business people do not believe in this concept. However, the
new generation, i.e., Gen Z, is keen to learn and invest more and as soon as possible. This
study will help us understand the market of CC, how it operates, and how it will operate.

Review of literature:

Nakamoto (2008). Cryptocurrency was first introduced by a Japanese group of people or a

single person under the pseudonym of Satoshi Nakamoto. This paper explains how the peer-
to-peer network will help create virtual wealth and convert it into actual money. This idea of
virtual currency came into existence following the market crash in 2008. This economic crisis
made people question their countries' central bank as ordinary people's money was looted. So
to have no control of the centre or state over the hard-earned money of oneself, Nakamoto
came up with the concept of Cryptocurrency and hence the market. The paper released gave
the whole process and how the transaction will take place. Following the success of this
paper, Japan becomes the first country to introduce the cryptocurrency market in the world.

(Harvey, 2015). A cryptocurrency is a digital token created by cryptographic algorithms that

re them transported across cyberspace using protocols such as peer-to-peer networks that
decentralize the system they are made up of. The general discourse about cryptocurrencies
has led to varying levels of support for innovation. Some regulators have been very cautious,
while the financial technology (fintech) community has argued over the inevitable
widespread use of cryptocurrencies. The main advantages mentioned are security features,
ease of use on mobile devices; relatively protocol; and low long-term inflation risks.

Madore (2015) pointed out that global financial firms like Citibank are developing their
Cryptocurrency due to these perceived benefits of using the above protocols. The main
problem with this is an early history of Illiquidity, high volatility, and potentially nebulous
usage. Most of the problems associated with successfully adopting Cryptocurrency are
clouded by confusion as to whether they are digital or virtual currencies and how their values
to determined. There have been many virtual currencies worldwide, such as Facebook credits,
Microsoft points, and Amazon coins.

EBC (2012 ) posits that if there is a low level of interaction between these cryptocurrencies
and the traditional money, there is no need for government intervention. However, risks like
price stability, financial stability, lack of regulation, and payment system stability may occur,
which will damage the economy as more money laundering cases will occur. It also states
that if and when this kind of incident happens, the public will blame the central bank.
Therefore it suggests that the implications of central power on the virtual currency are as
crucial as imposing and regulating the traditional paper currency.

Gans and Halaburda (2013) note that there is a need for regulation on the operations of
cryptocurrencies. They argue that the cryptos issued by companies are predominantly
subsidies for buyers, the best example being Amazon coins and Doge coins. They also that
not regulated these currencies can impact the price stability and the economy on a greater
level.

Shailak Jani (2018) gives us a detailed picture of the crypto market with the help of
secondary and primary data, which I have used as secondary data in my paper. The author
also points out the future and how we can regulate the market by using statistical and
historical data worldwide. The author also studies 21 different countries to explain where the
world stands in this discussion of Cryptocurrency and what India can do to come on the same
page as other countries.

Juan Daniel Herrera's (2017) paper examines the self-investment done by the author in the
market and his experience. The paper also explores the different aspects of the currency on
how it is safe and declares that if appropriately regulated, Cryptocurrency can be the next
currency not only for the rich but also for the middle and poor class people.

Edgar Ricardo and Juan Camilo (20190 start with the history and why Cryptocurrency came
into existence. It then goes on to examine today's market that market till 2019. the paper also
explains the method to calculate the crypto index by using the PCA method. It then compares
bitcoin and Ethereum and their market capital. This paper also reflects upon the minable and
no-minable cryptos.

Research questions
 From where did the concept of Cryptocurrency emerge?
 What was the need for the new currency?
 What motivates young entrepreneurs to invest in this currency?
 Will Cryptocurrency be the new currency?
 Are these platforms safe enough to be used by everyone?
 Should one invest or not in Cryptocurrency?
 What the present markets of Cryptocurrency say about the future market
Cryptocurrency?
 What was the Covid-19 pandemic impact on this market?

Methodology:

The Cryptocurrency innovation is still in the early stages of introduction, so there are many
problems to be overcome, especially if a central bank legitimately considers adding, for
example, Bitcoin to its reserve mix. A central bank must decide whether to view Bitcoin as a
currency or as a tradable asset. Most early adoption jurisdictions consider cryptocurrencies to
be assets, and as such, buying and selling them has an impact on capital tax. The presentation
suggests that adding Bitcoin to the central bank's reserve portfolio would not add much
volatility but could provide opportunities to offset the exchange rate depreciation against
major currencies such as the pound and the euro. The only affected currencies are balanced at
the beginning of the period and held for the rest. In addition to hypothetical simulations, the
document also predicts the likely future development of reserves over the next ten years. This
assessment is intended to illustrate the possible effects of adding Bitcoin to the reserve
portfolio by 2025. As in the hypothetical exercise, the simulation assumes that a certain
proportion of the reserves are held in Bitcoin-denominated assets. The simulation considers
both payment shocks and exchange rate shocks trained on historical patterns. It thus provides
an assessment of the probability that an exchange rate and payment shocks can harm the
balances in foreign currency. Haberkorn, Weber and Siering, 2014), a jurisdiction and thus its
central bank that legally recognizes cryptocurrencies as currency, could not only reduce the
already falling transaction costs if their abolition is necessary but could also attract a large
amount of foreign direct investment in the territory for active and hopefully legitimate
participants. Transmission costs have decreased by about 80% over the past year. The
markets for the sale of Bitcoin and other cryptocurrencies are also heavily monitored due to
the anonymity of the counterparties, which is why regulators will continue to express this in
the absence of commercial, financial and central bank recognition l banks actively
participating in the market, or caution, in the case China, an explicit ban on commercial
banks holding cryptocurrencies within the jurisdiction, even though China has the highest
percentage of cryptocurrency users. However, Citibank's intention to create its
Cryptocurrency primarily for transaction services is a model that financial institutions; can
follow, if not central banks (Madore, 2015).

For the design of the index, the closing prices of the first 20 cryptocurrencies with the highest
market capitalization were examined, the data of which is consolidated daily via the website
coinmarket.com; this list contains the acronyms and names of the cryptocurrencies, both
degradable as non-degradable and market share. The trading volumes of the first two
currencies (Bitcoin - BTC, and Ethereum - ETH) make up just over 50% of the market share;
In contrast, the first 10 represent 58.2% and the 20 cryptocurrencies 67.1%, which shows the
marginal representation of the remaining cryptocurrencies compared to the recognized
popularity of Bitcoin (BTC) and Ethereum (ETH)—provided information about the agents'
preferences for one or the other, as demonstrated by the high market valuations of some of
these cryptocurrencies in late 2017. The initial review of the 20 cryptocurrencies resulted in
the finding that only ten cryptocurrencies were enough to explain about 84% of the total
variability of cryptocurrencies; that is, the ability to explain and predict the price movements
of cryptocurrencies; while the analysis of the 20 cryptocurrencies only explained about 80%
of the variability. This means that it only took a smaller number of high market share
cryptocurrencies, as previously believed, to get a more than acceptable explanation.

A study was conducted in 2018 to collect data on various aspects of cryptocurrencies. This
survey aims to measure cryptocurrency scope to obtain a clear picture from a practical
perspective. In addition, the survey also investigated the confidence of participants in using
Cryptocurrency when the use of Cryptocurrency is not fully controlled or regulated. The
survey also surveyed participants' expectations for the future of cryptocurrencies. The survey
was helpful to answer the questions like use of loyalty points by the crypto users in social
games in use of crypto in peer to peer networks and the usage till date, and how people would
be willing to invest in Cryptocurrency.

Implications of the project:

The study will try to explain the history and why the new currency has come into existence in
the first place. The study will also try to use and bring comprehensive data to simple,
understandable data on Cryptocurrency so that a typical 9 to 5 job person would understand
the usage of this. The study will also help understand the pros and cons of crypto in the
Indian market and whether it will succeed in developing or underdeveloped countries like
India, Bangladesh, Bhutan, etc. This study will also help us understand the working and
statistical tools to understand the market.

Bibliography:

1. Madore, P. (2015, July 7). Breaking: Citibank Developing its Cryptocurrency.

Retrieved July 10, 2015, from Cryptocoinsnews:
https://www.cryptocoinsnews.com/citibank-developing-cryptocurrency/
2. Harvey C. (2015, March 1). Do Cryptocurrencies Such as Bitcoin Have a Future?
Retrieved July 10, 2015, from Wall Street Journal: http://www.wsj.com/articles/do-
cryptocurrencies-such-as-bitcoin-have-a-future-1425269375
3. ECB. (2012). Virtual Currency Schemes. Frankfurt: European Central Bank.
4. Gans, J., & Halaburda, H. (2013). Some Economics of Private Digital Currency.
Economic Analysis of the Digital Economy. University of Chicago Press.
5. Satoshi Nakamoto(2008) : Bitcoin: A Peer-to-Peer Electronic Cash System;
https://bitcoin.org/en/bitcoin-paper

6. Jimenez-Mendez, Edgar Ricardo and Santana Contreras, Juan 2019/02/04

A Proposal for a Cryptocurrency Market Index: Crypto-10 2 10.13140/RG.2.2.16543.20645:
https://www.researchgate.net/publication/332211322_A_Proposal_for_a_Cryptocurrency_M
arket_Index_Crypto-10_2

7. Jani, Shailak. (2018). The Growth of Cryptocurrency in India: Its Challenges &
Potential Impacts on Legislation. 10.13140/RG.2.2.14220.36486. :
https://www.researchgate.net/publication/324770908_The_Growth_of_Cryptocurrenc
y_in_India_Its_Challenges_Potential_Impacts_on_Legislation

8. Juan Daniel Herrera December 19, 2017, Final Project Proposal: Blockchain +
Cryptocurrencies Major Studio 1 - Anthony Deen

9. The Basic Income Experiment September 22, 2017:

http://www.npr.org/sections/money/2017/09/22/552850245/episode-796-the-basic-
income-experiment

10. Andy Greenberg April 20, 2011:

CryptoCurrency:https://www.forbes.com/forbes/2011/0509/technology-psilocybin-
bitcoins-gavin-andresen-crypto-currency.html#1bafc97b353e

11. Blockchain gang February 10, 2017:

https://www.npr.org/sections/money/2017/02/10/514577243/episode-753-blockchain-
gang