Abstract
PurposeThe objective of this study is to examine the nature of cryptocurrencies, risks involved in using it due to its volatile nature, advantages, disadvantages and its functions as money.Design/methodology/approachThis is an inductive approach to a descriptive analysis (Qualitative research). In order to come to an adequate conclusion, we reviewed several studies and articles previously published in this field related to our research questions, and then explored the nature of Cryptocurrencies, their advantages and disadvantages, risks associated with cryptocurrency usage and their user-friendliness in Saudi Arabia.FindingsThe findings of this study reveal that anonymity and concealment are important aspects of cryptocurrencies. This system does not follow a transparent process that can make it parallel to conventional fiat currency.Research limitations/implicationsAlthough this study focuses on the issue of trust, it fails to recognize more technological factors hampering its transaction mechanism instead of enhancing it, owing to a lack of facts and knowledge.Practical implicationsLike conventional transaction system users must sign their crypto transactions that others must duly verify easily. Once a promise is made, one will not be able to back out of it until it is protected from revocation by the signer.Originality/valueIn comparison with reviewed literature, this study focuses more on the issue of volatility, which accounts for the fact that cryptocurrency has not been accepted as a permanent tool of monetary policy. Additionally, the study finds that the Saudi public is largely pessimistic toward such currencies.
Highlights
The growth of e-commerce and apps for ordering taxis or paying for restaurants means that the physical act of paying is already somewhat forgotten
Cryptocurrencies are not backed by a central bank, a national or international institution, money or other forms of credit, and their worth is solely determined by the value that market players put on them by their transactions, which means that a lack of confidence could result in a decrease in value
Few of them have risen to prominence due to their ability to ensure that all purchases are processed with due diligence and authenticity without any intervention
Summary
The growth of e-commerce and apps for ordering taxis or paying for restaurants means that the physical act of paying is already somewhat forgotten. Cryptocurrencies are not backed by a central bank, a national or international institution, money or other forms of credit, and their worth is solely determined by the value that market players put on them by their transactions, which means that a lack of confidence could result in a decrease in value. 6.3 Operational risk From a centralized clearinghouse ensuring a contract’s legality comes the right to cancel a money transaction in an organized manner; with a blockchain, this is not feasible This lack of permeance is further shown by the fact that Bitcoin accounts are cryptographically encrypted, which means that if the account’s “keys” are lost or stolen and removed from the holders, access to the funds in the account is almost definitely lost or stolen as well. Without a central authority backing the value of a digital currency, investors may be left in the lurch Another potential risk associated with cryptocurrencies as a result of their decentralized status has to do with the particulars of transactions. It’s possible that Bitcoin will continue to grow in popularity as a store of value and expand its use as a medium of exchange, the same cannot be said about other digital currencies, which seem to provide little benefits as a store of value or unit of account, and are unlikely to gain traction as a medium of exchange
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
