Digital Currencies for Concept and Progression - myassignmenthelp

Question: Discuss about theDigital Currencies for Concept and Progression. Answer: This structured abstract reviews the concept of digital currencies through the evaluation of the research of Robleh Ali, Florian et al., Reeuben Grinberg, and Gerald Dwyer. Brief Summary of the Concept and Progression in the Field Currency is one of the oldest and most complex aspects of human civilization. It is argued that the development of currency has shaped human civilization over the years (Gilpin, 2014). Today, the concept of currency has evolved, bringing forth the idea of digital currency (CNN). Fundamentally, digital currency refers to a type of currency that is produced and stored electronically. Unlike traditional currency, it permits instantaneous transactions and transfer of ownership and may be used to purchase services and goods. According to Ali (2014), digital currencies represent a new form of currency to the world and a significant innovation in the field of payment systems. In his research, he examines the economics of digital currency and risks associated with the same. From the perspective of economic theory, whether digital currency may be considered as money depends on the degree to which it acts as a unit of account, medium of exchange, and store of value. In his research, Ali notes that although the currency can be used by anybody, its role as money is limited and only few individuals are able to use it so far. At the time of his research, he indicates that this form of currency did not pose any form of material risk to the financial and monetary stability of the banking system. Just like Ali, other researchers found the concept of digital currency as intriguing and, thus, conducted pertinent research on the same. In the view of Dwyer (2014) and Grinerg (2014), technology has made it possible for individuals to transfer digital currencies from one person to another without the intervention of financial intermediaries. Digital currencies such as Bitcoin utilize open-source software and peer-to-peer connectivity. On the other hand, unlike Ali, Florian et al. (2014) argue that digital currencies propose a diversion away from the established design of the traditional financial system infrastructure. Mainly, this is because technological solutions and information systems like cryptographic algorithms and peer-to-peer networks allow for decentralized organization, transparency and operational security that oppose the centrally coordinated and less transparent contemporary monetary system structures. It is evident that the factors that Ali acknowledges within his own research have also been considered in greater detail by other authors in the field. It can be noted that all researchers recognize that digital currency innovations have changed the shape of the financial system. The concept of digital currency has emerged as a fascinating phenomenon of the financial markets. Common findings across the articles Largely, Alis article focuses on the economics of digital currencies and their implications to the banking system. It also explores the potential risks associated with the use of this currency on the monetary and financial stability of an economy, and the extent to which digital currency has been used as a form of money. In its hypothesis, the research seeks to find out the extent to which digital currency such as Bitcoin has been used as a form of money. The findings of his research indicate that digital currency has the status of money. Likewise, Florian et al. (2014) explore the topic from the same angle. In their research, they explore the technical issues and risks that are associated with using electronic currency. The research highlights the fact that the anonymity associated with the use of the currency poses a significant risk to its users. In the same view, Grinberg adds that many users of digital currencies are concerned about the legal status of digital currencies such as Bitcoin as there are possibilities of government crackdowns on its systems. There are many vices that could be linked to the currency among them tax evasion, money laundering and trade in narcotics. Therefore, there are significant risks linked to the same. Different themes across the articles While reading through the four articles, the reader can notice that the research conducted by Ali, Florian et al., Dwyer and Grinberg have various differences in the approach used. While Ali focuses mainly on the economics of digital currencies in terms of the risk that they pose to the monetary and financial systems of a country, the other authors focus on entirely different themes in their research, but on the topic of digital currencies. Dwyer (2014) for instance explains how the use and limitation of the quantity produced may be used to create equilibrium. On the other hand, Grinberg focuses his research on Bitcoin as a digital currency. In his paper, he explains the various risks associated with the use of the currency, among them its legality and safety for use by its users. Lastly, Florian et al., approach the topic from the angle of Bitcoin as a digital currency, and whether or not it is an asset or a currency. Study Limitations and they differ across the various study designs Given that the research conducted by Ali is solely qualitative, the author acknowledges that the data could benefit significantly from validation by way of an empirical study. On the other hand, the study of Florian et al. (2014), a quantitative research notes that its findings are limited by the fact that their analysis was based on a single data set, and believe that it could be conclusive if it included a sample of various data sets to come up with a representative conclusion. Lastly, the study of Grinberg and Dwyer suffer from the lack of empirical and qualitative research. Therefore, they could be improved if the researcher conducted an analysis of either data. Future research directions proposed in the articles In his conclusion, Ali recommends that future research should be conducted on the potential risks on the financial and monetary stability that may arise over time due to the pervasive nature of digital currencies. Florian et al. suggest that further research should be conducted on the same topic using various data samples in order to obtain a representative conclusion on the subject matter. On the other hand, Dwyer recommends that further study be conducted on the possibility of digital currencies to undermine governments ability to control the monetary system and financial stability. Lastly, Grinberg suggests that further research on the measures that governments can undertake to reduce the vices arising from the use of digital currency should be conducted. Reference List Ali, R. (2014). The economics of digital currencie. Bank of England Quarterly Bulletin, 3. pp. 217-286. Gilpin, L. 10 things you should know about Bitcoin and digital currencies. [Online] Tech Republic. Available at https://www.techrepublic.com/article/10-things-you-should-know-about-bitcoin-and-digital-currencies/ [Accessed 27 August 2017]. Glaser, Florian and Zimmermann, Kai and Haferkorn, Martin and Weber, Moritz Christian and Siering, Michael, Bitcoin - Asset or Currency? Revealing Users' Hidden Intentions (April 15, 2014). ECIS 2014 (Tel Aviv). Available at SSRN: https://ssrn.com/abstract=2425247 Grinberg, R. (2011). Bitcoin: An Innovative Alternative Digital Currency. Hastings Science Technology Law Journal, 4. pp. 2-50 Gwyer, G. (2014). The Economics of Private Digital Currency. Munich Personal RePEc Archive, 1, pp. 2-29. Wagner, A. Digital vs. Virtual Currencies. [Online] Bit Coin Magazine. Available at https://bitcoinmagazine.com/articles/digital-vs-virtual-currencies-1408735507/ [Accessed 27 August 2017]. What is Bitcoin?. [Online] CNN. Available at https://money.cnn.com/infographic/technology/what-is-bitcoin/ [Accessed 27 August 2017].