Pan Zhao Engl106-I73 24 March 2020 Can cryptocurrencies become a standard, widely accepted form of payment? Why or why not? Cryptocurrency is a digital asset that is used as a medium of exchange like other currencies. It is used to secure financial transactions. This currency is not controlled by any central agency like other currencies are controlled by financial institutes and banks. Due to decentralized controlling system it is not the ownership of anyone. But it is extensively used by some people and earn good gains from it. This attracts the attention of people because it does not have processing fees, the return of investing in this currency is greater than any other currency. Therefore, people want that it should be accepted as a standard for payment. Cryptocurrency is a new internet-based medium of exchange that uses a cryptographic function for any kind of financial transaction. It is based on blockchain technology that is extensively used to gain transparency, immutability, and decentralization. The distinctive feature of cryptocurrency is that it is not controlled by the central authorities of any country. Its decentralized feature makes it theoretically immune to the old ways of government interferences and control. It can be directly sent between two parties through public and private keys. Hence, only a minimum transfer fee is required to carry out this transaction. This makes it cheap as compared to traditional financial institutions that charge a huge amount on the transfer of even the minimum amount. It is now one of the globally renowned e – currency that brings sheer into the global economic system. But this currency is still a centre of discussion due to its limited use. Critics of cryptocurrency stated that the market of cryptocurrency is going to doomed because of its lack of acceptance. Hence, to investigate this question, the research of different scholars is summarized in this paper. The literature is explored regarding the paper to persuade about the facts of this currency that will educate them on the information on this current. The first article that I choose form literature discussed the aspects of cryptocurrency which makes it violate and create resistance to be used as a standard of payment. (Vejacka, 2014) stated that it is a virtual currency that is based on electronic communication but as per the response of policymakers and economists. Vejačka’s main claim in the paper is that due to high violation and low liquidity characteristics along with its only association with the electronic world makes this currency weak that can’t be used as payment standard. The findings of the author are based on the volatility of cryptocurrency and compared it with the volatility of commodities, main stock indices, and major currency pairs. Hence, the author used past trend analysis for the valuation of cryptocurrency and other commodities. Thus, the findings of this study show that the exchange rate volatility of cryptocurr ...

1. Pan Zhao
Engl106-I73
24 March 2020
Can cryptocurrencies become a standard, widely accepted form
of payment? Why or why not?
Cryptocurrency is a digital asset that is used as a medium of
exchange like other currencies. It is used to secure financial
transactions. This currency is not controlled by any central
agency like other currencies are controlled by financial
institutes and banks. Due to decentralized controlling system it
is not the ownership of anyone. But it is extensively used by
some people and earn good gains from it. This attracts the
attention of people because it does not have processing fees, the
return of investing in this currency is greater than any other
currency. Therefore, people want that it should be accepted as a
standard for payment.
Cryptocurrency is a new internet-based medium of exchange
that uses a cryptographic function for any kind of financial
transaction. It is based on blockchain technology that is
extensively used to gain transparency, immutability, and
decentralization. The distinctive feature of cryptocurrency is
that it is not controlled by the central authorities of any country.
Its decentralized feature makes it theoretically immune to the
old ways of government interferences and control. It can be
directly sent between two parties through public and private
keys. Hence, only a minimum transfer fee is required to carry
out this transaction. This makes it cheap as compared to
traditional financial institutions that charge a huge amount on
the transfer of even the minimum amount. It is now one of the
globally renowned e – currency that brings sheer into the global
economic system.
But this currency is still a centre of discussion due to its limited
use. Critics of cryptocurrency stated that the market of

2. cryptocurrency is going to doomed because of its lack of
acceptance. Hence, to investigate this question, the research of
different scholars is summarized in this paper. The literature is
explored regarding the paper to persuade about the facts of this
currency that will educate them on the information on this
current.
The first article that I choose form literature discussed the
aspects of cryptocurrency which makes it violate and create
resistance to be used as a standard of payment. (Vejacka, 2014)
stated that it is a virtual currency that is based on electronic
communication but as per the response of policymakers and
economists. Vejačka’s main claim in the paper is that due to
high violation and low liquidity characteristics along with its
only association with the electronic world makes this currency
weak that can’t be used as payment standard. The findings of
the author are based on the volatility of cryptocurrency and
compared it with the volatility of commodities, main stock
indices, and major currency pairs. Hence, the author used past
trend analysis for the valuation of cryptocurrency and other
commodities. Thus, the findings of this study show that the
exchange rate volatility of cryptocurrency is much higher as
compared to other commodities (Vejacka, p.78). Cryptocurrency
hardly retain its value in the market. The only advantage that is
related to cryptocurrency is due to their portability and its
virtual character. But its virtual character also makes it non –
existent outside the electronic environment like other tangible
commodities. The Volatility of cryptocurrency is 1000 times
greater than other commodities and currency exchange. Thus,
the (Vejačka, 2014) concluded that all these aspects create
resistance for this currency to be used as standard. He suggested
that it might be used for the medium of exchange for black
market. It will be used as a speculation tool or these speculators
that still dare to trade in this currency. This currency is also not
officially accepted by the global economy thus; it is risky to use
as a standard of payment. (Vejačka)
He supported his argument from data of stock exchange and

3. global reports that are authentic enough to support his claim.
The evidence is quite supportive of his claim but the counter -
argument that came in my mind is that what if this currency can
only be used on online transactions of e-transactions. This
would make this currency widely acceptable because the world
is digitalizing now and most of the people only deal with e-
transaction. This will give a competitive edge to this currency
over others.
Moreover, the analysis of cryptocurrency is mandatory so that
it’s possible to use as a standard of payment can be further
analysed. Devries, Peter. D, in his article presented an analysis
of cryptocurrency through analysis of interconnected global
market.He discussed it through strength, weakness,
opportunities and threat for a better understanding. He defined
cryptocurrency as a digital barter” (Devries, 2016). It is the
only renowned currency that paved the path of digital currency
through a disruptive technology that provides a good alternative
to a traditional financial payment system that is enacted for
many decades. (Devries, 2016) argues that this currency will not
replace “traditional fiat currency”, also bring change in
internet-connected global markets that clear away barriers of
normative national currencies and also bring positive change in
the exchange rate (Devries, 2016). He further argues that it will
also revolutionize the digital trade market by creating a free
flow of currency without any fees (Devries, p.1). . He
supported his claim through a series of report that shows how
cryptocurrency grows in the past few years. Although it is used
for macro payment it is used for micropayments than it will fill
the economic gap and brings economic prosperity globally.
These micro transactions will fill the economic gap that
traditional financial markets and currencies are not able to fil. It
also gives a lot of opportunities to people to build a digital
property like cloud-based infrastructure. Thus, his arguments
supported the use of cryptocurrency as a standard payment as it
is worth from an economic point of view and digitalization. In
this article, (DeVries) does not provide any counter-argument

4. but the counter-argument that can be made is that if there are
unlimited advantages of this currency and easy to use then why
it is still not adopted by major economic powers like America
and Chain to fill their economic gaps. Hence, this aspect is not
highlighted in this article. From this article it is analysed that
what are the strength and weakness of this currency that create
hindrance in its acceptance as a global currency. Thus, it gives a
reader good understanding about the facts of this currency.
In the article, the Krückeberg stated that cryptocurrency
emerges as an important currency that has grown so immense in
a short period. This new technology is an insertion of
technology and finance that is only operated through a digital
network. Hence, there is no physical existence of this currency.
This makes this currency a centre of attraction for the financers
and investors because it gives good returns. This is the concern
of everyone that this should be categorized into a proper asset
class that creates for them to trade on in this currency
(Krückeberg). This currency shows the characteristics of a
distant asset class that is based on strong internal correlation,
and the absence of its correlation with any traditional asset
class makes it different. Moreover, the author claims that it's
high liquidity makes it admirable for everyone to trade on it
that give them significantly and good returns. He claims that the
addition of this cryptocurrency to the traditional portfolio
structure made it a significant and also good for the risk
adjustment point of view. Through its adjustment in the
traditional market, the market will boom and outperform.
The findings of this article is based on recent trends of
cryptocurrency and how many people are involved in it. This
paper is based on the findings of previous years and also the
trend analysis of cryptocurrency makes the findings of this
paper worthy (Krückeberg, 2019). There is no counter-argument
found in this paper. Although a few points in the paper must be
thoroughly researched. For example, the author claimed that the
addition of this currency in the traditional market will be
healthier for overall trading but it did not mention how even

5. though this cryptocurrency is still under the classification stage.
Unless it is classified into a proper asset class how one can
predict the outperformance of the market based on this
currency. For any currency to be used as standard of payment it
must fulfil all requirements of currency so that I can be
accepted as a currency. Thus, this article is effective because it
analyses the dimension of currency for being classified as a
standard currency.
Furthermore, this fact cannot be ignored that many restaurants
are accepting this currency from customers and use them in
their day to day operational functions. (Nova, 2018) who is a
reporter in CNBC news reported that there are many cafes and
restaurants where this currency is readily used in supermarkets
although this currency is still at an early stage. Starbucks
Howard Schultz stated that a new currency is coming that be
used to buy coffer but this can only be acceptable if it is paid
with tax. As per the calculations of the Chainalysis, that tracks
only cryptocurrency data shows that consumer used this
currency for merchant services and monthly average spending
was recoded $190 million in 2017 that was only $9.8 million in
2013 (Nova). Bitwala a financial technology company is
planning to open a cryptocurrency bank through which people
will be to use it as a normal current. Through this bank, people
will be able to convert their cryptocurrency into their desired
currency (Nova). . The arguments that are stated by the author
are based on real figures and the acceptability of this currency
by people shows that how much they are interested to invest in
this currency but lack of support from the side of legal and
financial authorities creates resistance for this new payment
system. I find this article effective because the information that
is presented here is information that shows growth in this
currency and what further initiatives are taking by companies to
promote cryptocurrency among the people.
Concluding the findings of this paper in a nutshell, it is
analysed from the findings of the research paper that there are

6. many positive and negative points associated with this currency
that create resistance for adopting this as a standard payment
system. From the side of the company’s significant efforts are
made to incorporate it into a payment system but lack of
corporation from the side of financial institutes does not
promote the use of this cryptocurrency. The major loophole is in
the standards or regulations that are not comprehensive enough
to support the use of this new digital currency. The standards
are made to support the traditional economy for this currency
new standardization and new formation of monetary policies,
rules and regulations are required. This will help in using this
currency as a standard of payment.
Works Cited
Bech, Morten L. "Central Bank Cryptocurrencies." BIS
Quarterly Review September (2017 ): 1-10 .
DeVries, Peter D. "An Analysis of Cryptocurrency, Bitcoin, and
the Future." International Journal of Business Management and
Commerce 1.2 (2016): 1-7.
Krückeberg, Sinan and Peter Scholz. "Cryptocurrencies as an
Asset Class? In Cryptofinance and Mechanisms of Exchange –
The Making of Virtual Currency, edited by Stéphane Gouette,

7. Guesmi Khaled and Samir Saadi." Springer. (2019): 1-40
Nova, Annie. Bitcoin takes on cash, as more places accept the
cryptocurrency. 2 March 2018 .
<https://www.cnbc.com/2018/03/02/spending-cryptocurrencies-
on-everyday-purchases-is-getting-easier.html>.
Vejacka, Martin. "Basic Aspects of Cryptocurrencies." Journal
of Economy, Business and Financing (2014 ): 75 - 83 .
Pan Zhao
Engl106-73
5 March 2019.
Is Cryptocurrency belonging to an asset class and how it is
linked to other markets?
Cryptocurrency is classified as an emerging technology asset
class. Bitcoin is an old currency that is ten years old but the
role that cryptocurrency play is still not clear in the global
market because its primary use is still not defined. Thus, the
evidence of cryptocurrency with other asset classes is still
unclear. Bitcoin is successfully operating in the market and
daily there are more than 250, 000 transactions in a day of
bitcoin and other cryptocurrencies are also developing but the
relationship of cryptocurrencies with other asset classes is still
developing (Bianchi). Every asset is classified into three main
classes that are capital asset class, consumer asset class, and
store of the value asset class. But the cryptocurrency is still
undefined of which asset class does it belong.
Cryptocurrency is a digital currency that is used under the
encryption technique. This currency is mostly used by upper-
class people. There are limited applications available that store
and send this cryptocurrency. Thus to meet the need of people a
Cryptocurrency application is designed that is an iOS
application and this is capable of storing and sending the
Cryptocurrency. This application also enables the use of
different currencies to store and spend. Hardware is also

8. designed that will store this Cryptocurrency. This application
also supports the communication between the iOS application
and hardware through this application the trading of
Cryptocurrency will be made possible (Dean).
A cryptocurrency is a digital form of currency so its
synchronization with high technology is important because,
without this, it is not possible to circulate in the digital world.
Therefore, its relationship with new technology is highlighted in
the above section for understanding the basis of this currency.
But the question that is aimed to discuss is the asset
classification of cryptocurrency that is still unclear to investors
and professionals of institutes are not able to classify it due to
its wide-ranging attributes (Michael J. Tyrkus). After the
bitcoin, the development in the blockchain ecosystem continues
to develop but its categorization to the asset class and its
relationship to financial markets is still clear. Therefore,
through this proposal, it is aimed that this ambiguity will be
justified as under the findings that are till now present.
What asset class best fit to cryptocurrency is a highly debatable
question because it changes as the community focuses and
develop different roles of cryptocurrency. It is not classified as
an asset class because it does not generate cash flow and not
generated from holding the asset. Some investing institutes
argue that cryptocurrency fits into a consumable asset class
because it plays the main role in the blockchain ecosystem
(Bianchi). Some financial institutes classified it as an
uncorrelated financial asset. Because they believe that
diversified benefits can be attained from it by adding this as an
uncorrelated asset to their portfolio (ShaenCorbet).
Cryptocurrency is uncorrelated as any other asset class that
makes it an attractive asset for investors. From all these
arguments of financial institutes, the cryptocurrency asset class
is still not developed as it is more correlated with other asset
classes therefore, its relationship is still unclear. Hence, in this
paper, it is aimed to Investigate the relationship of
cryptocurrency to an asset class and how it is linked or traded in

9. other markets.
Cryptocurrency is an emerging field that is booming with time.
Now only billionaires and milliners are the key players of this
market but soon its use becomes common in the market. But it
is still unclear under which category of asset class it is
classified so that its trading can be enhanced accordingly. This
topic is highly debatable because the widespread use of
cryptocurrency does not make it fit into one asset class. So, I
want to analyze this topic and analyze the arguments of experts
of which they categorized it into which asset class along with
its relationship with other markets.
In this highly digitalized world where everything is gone digital
and widespread applications of digital technology gives a new
dimension to everything than how it is possible that money
cannot be dealt with in the digital form. Cryptocurrency is a
digital form of currency that is used for billions and millions of
transaction but the financial system of the world is so vast that
it is important to classified this currency into an asset class so
that investors can know more about this and invest in this to
promote this because after few years the trade transactions and
huge transactions will be through this currency. Therefore, it is
important to explore this topic from the perspective of an asset
class that is the concern of everyone in the financial world and
everyday new interventions in this field make this topic highly
debatable.
As far as my personal experience is concerned to this topic is
that my family background is related to investors so being a
person who belongs to investors it is my core interest to explore
more about cryptocurrency's asset class that will help me to
understand the asset class to which it belongs and how it can be
used in financial market to get good gains. Therefore, for me, it
is important to understand this cryptocurrency from where it
started and what day to day new things are revealed about this
currency. It is estimated that this currency will change the
whole currency system and the way that economies operate. It is
important to sense this change in currency and explore more

10. about this.
Works Cited
Bianchi, Daniele. "Cryptocurrencies As an Asset Class? An
Empirical Assessment." Capital Markets: Asset Pricing &
Valuation eJournal 7 (2018): 1-10.
cryptimi.com. The Cryptocurrency Asset Class & its
Relationship with Other Markets. 2020. 28 February 2020.
<https://www.cryptimi.com/guides/cryptocurrency-asset-class-
and-its-relationship-with-other-markets>.
Dean, Benjamin. "Blockchain Networks Lack Adequate
Governance to Protect Against Attacks." Gale In Context:
Opposing Viewpoints, (2020).
Gorse, Ross C. Phillips and Denise. "Cryptocurrency price
drivers: Wavelet coherence analysis revisited." PLoS ONE 13.4
(2018).
Michael J. Tyrkus, Gale. Cryptocurrency. Michael J. Tyrkus,
Gale. 2018.