Digital Currency Research Articles

Monetary Reform and Central Bank Digital Currencies: The Impact on Retail Banking

This research aims to clarify the impact of monetary reform on retail banking, with the introduction of private crypto-currencies (CCs) and retail central bank digital currencies (CBDCs). Given the exponential increase in private de-centralized CCs, involving stablecoins and non-backed digital assets, total crypto assets have now developed into a USD 1.04 trillion market capitalization. Governments and monetary authorities were initially reticent, but now a number of central banks are developing their own wholesale and retail CBDCs. By conducting library research, document and content analysis involving secondary data, this research confirms, involving central bank admission, that the current centralized monetary system allows commercial banks to lend the vast majority of deposit money into existence. However, the impact of private CCs and introduction of retail CBDCs will eliminate credit creation, thus rendering the commercial banking model obsolete. This will inevitably involve a structural change in the global financial system, with the separation of the public issuance of money and the private issuance of equity finance and investment. Ultimately, retail CBDCs will have to develop into public stablecoins that are pegged to intrinsic value to satisfy the store of value function of money and provide stability as the common denominator for all economic transactions.

Wholesale Central Bank Digital Currencies in Asia: Current Status and Motivation

Wholesale Central Bank Digital Currencies in Asia: Current Status and Motivation

Unveiling Cryptocurrency Impact on Financial Markets and Traditional Banking Systems: Lessons for Sustainable Blockchain and Interdisciplinary Collaborations

The advent of cryptocurrencies and blockchain technology has sparked a revolutionary shift in the financial sector. This study sets out on a wide-ranging investigation to understand the nuanced dynamics, repercussions, and potential future paths of this shifting environment in the UK and USA. The primary goals of the research are to examine how cryptocurrencies affect financial markets and conventional banking systems; to examine how blockchain technology might be used in the financial sector; to assess policy and regulatory considerations; and to predict and plan for the future. This research digs into how cryptocurrencies have revolutionized the banking and finance sectors. Analysis of adoption rates, market volatility, and integration methods sheds light on the changing position of cryptocurrencies in investment portfolios, reconfiguration of asset classes, and coping mechanisms of conventional financial institutions. When looking at the financial sector as a whole, the transformational potential of blockchain technology becomes clear. The advent of DeFi, smart contracts, and asset tokenization offers new prospects to improve financial transactions, increase transparency, and broaden participation in the investment market. The research analyzes cryptocurrencies and blockchain technology from a policy and regulatory perspective. The delicate balancing act between stimulating innovation and guaranteeing consumer protection, market integrity, and financial stability is highlighted by a comparison of the regulatory methods adopted in the United Kingdom and United States, as well as proposals from international organizations. The research identifies potential future paths for these technologies and their implications. Opportunities and challenges that will influence the future of finance emerge, with a focus on central bank digital currencies (CBDCs), sustainable blockchain solutions, and interdisciplinary collaborations. As this deep dive comes to a close, the transformational power of cryptocurrencies and blockchain technology is highlighted. It sheds light on the forces that are altering the structures of the world’s financial markets, conventional banking structures, and regulatory frameworks. The findings and critical assessment stress the need for well-considered choices, ethical innovation, and interdisciplinary cooperation in order to succeed in an ever-changing environment. To further democratize access, improve transparency, and reshape the economic fabric of our planet, the future of finance resides at the confluence of tradition and innovation, where cryptocurrencies and blockchain technology exist.

So far, Central Bank Digital Currencies have failed

AbstractThis article examines the experiences of Central Bank Digital Currencies (CBDCs) implemented so far. To date, CBDCs have been implemented in two countries (Finland and Ecuador) where they have failed and been abandoned. They have also been implemented in three Caribbean cases and in China and Nigeria; these five cases are ongoing. These experiences can be summarised as a series of abandoned experiments, embarrassing flops and monumental exercises in policymaker hubris, one of which has already produced a major disaster. In each case where data exist to assess the situation, the public demand for CBDCs has been extremely low. Experience suggests that CBDCs do not offer tangible benefits which existing alternatives cannot already deliver. One might speculate that future CBDCs will fail for similar reasons.

Comparative analysis of machine learning techniques for cryptocurrency price prediction

The emergence of cryptocurrencies has revolutionized the concept of digital currencies and attracted significant attention from financial markets. Predicting the price dynamics of cryptocurrencies is crucial but challenging due to their highly volatile and non-linear nature. This study compares the performance of various models in predicting cryptocurrency prices using three datasets: Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH). The models analyzed include Moving Average (MA), Logistic Regression (LR), Autoregressive Integrated Moving Average (ARIMA), Long Short-Term Memory (LSTM), and Convolutional Neural Network-Long Short-Term Memory (CNN-LSTM). The objective is to uncover underlying patterns in cryptocurrency price movements and identify the most accurate and reliable approach for predicting future prices. Through the analysis, it could be observed that MA, LR, and ARIMA models struggle to capture the actual trend accurately. In contrast, LSTM and CNN-LSTM models demonstrate strong fit to the actual price trend, with CNN-LSTM exhibiting a higher level of granularity in its predictions. Results suggest that deep learning architectures, particularly CNN-LSTM, show promise in capturing the complex dynamics of cryptocurrency prices. These findings contribute to the development of improved methodologies for cryptocurrency price prediction.

Analysis of concrete architecture of Bitcoin Core

Bitcoin Core serves as the foundational software responsible for verifying and validating all transactions and blocks within the Bitcoin blockchain, hence upholding the security and integrity of the whole Bitcoin network. This study extensively examines the internal mechanisms, structure, and conceptual framework of Bitcoin Core. This study aims to conduct a comprehensive analysis of the Bitcoin Core architecture, with a focus on evaluating its capacity to fulfill the rigorous demands of a decentralized Bitcoin network. This study not only provides a comprehensive understanding of the essential elements that drive the Bitcoin network, but it also explores the numerous factors that have a substantial impact on the operational availability of Bitcoin nodes. All of these factors are essential for ensuring the efficient operation of the Bitcoin network, encompassing the physical environment, architectural designs of nodes, and maintenance requirements. This study provides a comprehensive analysis of the underlying mechanisms of Bitcoin, shedding light on its inherent robustness and the factors that contribute to its consistent performance within the ever-changing landscape of digital currencies. The objective of this endeavor is to furnish a detailed exposition of the mechanics of Bitcoin, so enhancing its prevalence and familiarity among individuals.

On Digital Rupiah And Islamic Economy: A Comparative Analysis And Ethics

This study aims to explore the meaning of and to conduct an ethical assessment towards Digital Rupiah to Islamic economy by exploring the thoughts of Baqir Sadr and Henry Sidgwick. This research is about an ethics of Digital Rupiah, and it would like to investigate two problems. First, do these retail and wholesale versions of Central Bank Digital Currency (CBDC) or the so called Digital Rupiah cause any harm to some principles in Islamic economy especially the one in Sadr’s thought? Second, is utilitarianism, in the sense of Henry Sidgwick’s thought in ethics, of any help to justify the development and innovation concerning Digital Rupiah in Islamic economy and Islamic economics? This method of this research is a comparative analysis for which case seeking similarities and differences among some CBDC. The result is any potential harm of Digital Rupiah to Islamic economy by which case it relies on the way we understand interest, usury and underlying assets. Sidgwick’s account of rational benevolence and universal happiness could be a good framework for justifying Digital Rupiah in Islamic economy

On the issue of contour transformation of international settlements in the context of increasing geopolitical risks and fragmentation of the global financial and economic area

Subject. Given the increasing geopolitical risks, new approaches are needed to organize the contour of the international payment system, which ensures safety and reliability of international settlements Objectives. The article aims to assess the approaches of the Committee on Payment and Settlement Systems to creating models of international payment systems, propose a model for organization of international settlements for the Russian Federation, identify the specifics of the existing models of national payment systems of the Russian Federation and PRC for organization of interaction within the framework of the international payment system, evaluate prospects for joining the international payment system of other BRICS countries. Methods. The study employs general scientific methods. Results. Based on the specifics of restrictions on international operations of residents of the Russian Federation, the optimal solution to the problem is to create a closed international payment system on the basis of the payment system of the Bank of Russia, and gradually connect payment service providers from friendly jurisdictions to it, the most promising of which is the Chinese payment system CIPS. Creating a separate international payment system based on Peer-to-Peer type payment infrastructures, using digital currencies of central banks of BRICS countries is a promising model of the organization of international settlements. Conclusions. Building a closed international payment system on the basis of the Bank of Russia's payment system will enable to significantly overcome the existing problems, provide Russian companies and banks with a reliable and safe settlement mechanism for foreign trade and financial transactions.

Legal Development Concerning the Creation of Digital Currency in the Financial System

Purpose: This research delves into the legal dimensions surrounding the creation of Digital Rupiah, a digital currency, in response to the evolving landscape shaped by technological innovations and shifting consumer behaviors. The primary objective is to scrutinize the legal development necessary to facilitate the integration of Digital Rupiah within the Indonesian financial system. Theoretical Reference: Grounded in a normative legal research approach, specifically doctrinal research, this study draws on legal theories and frameworks. By examining existing legal principles, the research aims to generate arguments, theories, or new concepts that address the multifaceted challenges associated with the introduction of digital currencies in the financial sector. Method: Utilizing the normative legal research methodology, the study critically evaluates the current legal structures, substances, and cultural aspects relevant to the financial system. This approach enables a thorough analysis of the legal prerequisites essential for the successful implementation and regulation of Digital Rupiah. Results and Conclusion: The study's findings affirm that the strategic plan to introduce Digital Rupiah represents a significant advancement in the Indonesian financial system. However, the realization of this digital currency's potential hinges on addressing various legal considerations. Specifically, the convergence of legal structure, legal substance, and legal culture is imperative to establish a cohesive framework supporting the integration of Digital Rupiah. Implications of Research: This research highlights the pivotal role of legal developments in shaping the trajectory of the Indonesian financial system amidst the rise of digital currencies. The implications extend beyond the financial sector, influencing regulatory policies and guiding future legal frameworks to accommodate the intricacies of digital currencies like Digital Rupiah. Originality/Value: Contributing to both academic discourse and practical insights, this research enriches the understanding of legal dynamics associated with digital currencies in the Indonesian context. The identification of essential elements—legal structure, legal substance, and legal culture—provides valuable insights for policymakers, legal practitioners, and scholars navigating the complexities of financial technology.

ON THE EFFECTS OF INFORMATION ASYMMETRY IN DIGITAL CURRENCY TRADING

We report on two studies that examine how social sentiment influences information asymmetry in digital currency markets. We also assess whether cryptocurrency can be an investment vehicle, as opposed to only an instrument for asset speculation. Using a dataset on transactions froman exchange in South Korea and sentiment from Korean social media in 2018, we conducted a study of different trading behavior under two cryptocurrency trading market microstructures: a bid-ask spread dealer’s market and a continuous trading buy-sell, immediate trade execution market. Our results highlight the impacts of positive and negative trader social sentiment valences on the effects of information asymmetry on observed trading patterns. This includes the spillover effect of volatile social sentiment, and the leverage effect when a cryptocurrency’s value falls or rises in response to changing sentiment. Our results highlight how volatility arises in parallel with investors’ reactions to public information and trade transaction volume. If the price falls beyond participants’ expectations, a negative shock from new information may lead to more volatile social sentiment than a positive shock of the same size does. Our work supports the roles of investment and speculation for cryptocurrency by identifying an immediate impulse and a longer-term effect of economic variables in the presence of sentiment-led information asymmetry.We contribute new knowledge to the interdisciplinary literature on the financial economics of digital currency for a technological innovation that has matured earlier than many observers may realize.

A Sociology of Central Bank Digital Currencies: Digital Ruble, Trust, and Financialization of the Social Life (on the Example of Russian Small Entrepreneurs)

This paper provides sociological account of central banks digital currencies (CBDCs), and digital ruble particularly. The development of digital economy stimulates active attention of governments of different countries. In some of them, including Russia, one of the reactions on these developments is the emergence of central banks digital currencies. From a sociological perspective, money is a social process embedded in social relations. One of the major aspects in this regard is trust. This paper analyzes the problem of trust on theoretical level as a systemic characteristic of social network enabling the shift from monetary mediums to money-as-account. The problem of trust touches the micro level of monetary proliferation. The paper, thus, discovers the narratives of trust, choice and enforcement using 12 interviews with small Russian entrepreneurs. It distinguishes between impersonal, technological, and institutional trust and shows discursive patterns among them. The results the paper presents are that at the level of narrative, technological optimism and skepticism could be distinguished in relation to the perception of possibility of enlarging institutional control. At the practical level, impersonal trust is identified as a major factor of digital ruble adoption. The findings of the paper fits with the literature on monetary proliferation and make a contribution to understanding patterns of new monetary forms adoption at the practical level. Este artículo presenta un análisis sociológico de las monedas digitales de los bancos centrales y, en particular, del rublo digital. El desarrollo de la economía digital estimula la atención activa de los gobiernos de diferentes países. En algunos de ellos, incluida Rusia, una de las reacciones a esta evolución es la aparición de monedas digitales de los bancos centrales. Desde una perspectiva sociológica, el dinero es un proceso social integrado en las relaciones sociales. Uno de los principales aspectos a este respecto es la confianza. Este artículo analiza el problema de la confianza a nivel teórico como una característica sistémica de la red social que permite el paso de los medios monetarios al dinero como cuenta. El problema de la confianza afecta al nivel micro de la proliferación monetaria. Así pues, el artículo analiza las narrativas de la confianza, la elección y el cumplimiento utilizando 12 entrevistas con pequeños empresarios rusos. Distingue entre confianza impersonal, tecnológica e institucional y muestra patrones discursivos entre ellas. Los resultados que presenta el documento son que, en el plano de la narrativa, podrían distinguirse el optimismo y el escepticismo tecnológicos en relación con la percepción de la posibilidad de ampliar el control institucional. A nivel práctico, la confianza impersonal se identifica como un factor importante de la adopción del rublo digital. Las conclusiones del artículo encajan con la bibliografía sobre la proliferación monetaria y contribuyen a comprender las pautas de adopción de nuevas formas monetarias en la práctica.

Analyzing the Influence of Digital Currency Adoption on Traditional Banking Systems Through Data Analytics: A Study on Emerging Economies

This study delves into the ramifications of digital currency assimilation within traditional banking systems, with a specific emphasis on emerging economies, notably Pakistan. Motivated by the escalating prominence of digital currencies and their potential to disrupt conventional banking practices. The research formulates three hypotheses to scrutinize the interrelationships between digital currency adoption, technological infrastructure, regulatory frameworks, and the operational performance of conventional banks. Employing a structured questionnaire, disseminated amongst professionals in the banking and financial sector, as well as users of both digital currencies and traditional banking services, the investigation unfolds a nuanced understanding from diverse vantage points. The findings elucidate a positive correlation between heightened digital currency adoption and the enhanced performance of conventional banks. Additionally, a robust technological infrastructure and a conducive regulatory environment emerge as pivotal factors significantly shaping the performance of traditional banks in the milieu of digital currency adoption. These empirical results contribute substantively to the extant literature, underscoring the imperative for banks to acclimate to technological progressions and for policymakers to cultivate regulatory frameworks that strike a judicious balance between innovation and financial stability. While the study proffers valuable insights, it remains cognizant of its limitations in scope and propounds directions for future research, advocating for broader geographical representation and the exploration of other nascent technologies within the realm of finance.

Digital Money in the Indian Context: An In-depth Exploration of its Evolution, Implications, and Future Prospects within the Framework of Central Bank Digital Currency

Digital Money in the Indian Context: An In-depth Exploration of its Evolution, Implications, and Future Prospects within the Framework of Central Bank Digital Currency

A literature review on the design and implementation of central bank digital currencies

Within the last five years, research on Central Bank Digital Currencies (CBDCs) has increased with increased momentum. Particular events, such as the growth of private digital currencies, Facebook’s attempt to release a stablecoin, the long-term development of Chinese CBDC, and Covid-19, are the leading causes for this growing significant interest. Most recently, the interest converged in more specific design and implementation directions. Many scholars show particular interest in account-based retail CBDCs with interest-bearing capabilities. In contrast, few others urge caution by favoring a wholesale model that is representative of the setting of the current financial system. Unsurprisingly, the primary source of such literature stems from global financial institutions and their close central banking networks. Academia and research institutions have recently increased their focus on the potential economic and social impacts of such purported design choices. As specific design principles for CBDCs have started to take shape, the policy objectives of implementing different CBDC designs are studied from the perspective of benefits and risks. These trade-offs are either generic or related to macroeconomic and financial stability implications. Evidence exists that purported generic benefits can often be achieved without CBDCs, while the purported monetary and fiscal policy benefits rely on theoretical results that lack real-world data. Some of the risks could be amplified depending on CBDC design choices. Theoretical and alternative literature is reviewed along with the evidence from use-case applications to spot the possible shortcomings in the current stage of the design and implementation literature of CBDCs. The scope is limited to the impact on economic policies and the relevant potential socioeconomic impact. The results show that further research and debate are needed from a multidisciplinary perspective.

Retracted: Intelligent Digital Currency and Dynamic Coding Service System Based on Internet of Things Technology

Retracted: Intelligent Digital Currency and Dynamic Coding Service System Based on Internet of Things Technology

Bitcoin Volatility in Web 3.0 and Revelation to Digital Currency

In Web 3.0, bitcoin is the first cryptocurrency and one of the most prominent digital currencies. Cryptocurrency is a form of digital currency that operates on blockchain technology which is decentralized, transparent, and secure. Surrounding why bitcoin fluctuates so intensively, the article illustrates bitcoin’s history, explains the running logic and technical principle behind the volatility, analyses a few factors that contribute to its volatility, and explores the essence of bitcoin through the comparison with stock. Stocks represent the ownership of a specific corporation while bitcoin doesn’t. Bitcoin is more like an artwork whose value is bestowed by the market consensus. Further, the article compares bitcoin with digital RMB. Digital RMB is far more predictable than bitcoin and has profound meaning for China. In the future, digital currency is going to play a dominant role across the world. Though bitcoin is on a downward trend, blockchain technology and cryptocurrency will have positive developing prospect. The article aims at introducing abstract bitcoin in a comprehensible way to help crypto and digital market newcomers digest bitcoin and blockchain and access Web 3.0 and digital currencies.

Research on Uncertainty and its Application in Financial Markets

This paper explores the theoretical frameworks and practical implications of uncertainty in economics and decision-making. And also delves into categorical uncertainty, including Economic Policy Uncertainty (EPU), Climate Policy Uncertainty (CPU), and Trade Policy Uncertainty (TPU). These forms of uncertainty can have profound effects on economic activities, market behaviour, and investment decisions. Furthermore, the paper discusses an innovative approach to measuring uncertainty using online big data, particularly Twitter-based uncertainty indices. These indices provide real-time insights into public sentiment and have been shown to impact stock market forecasts, although they are not without limitations, such as potential manipulation and data representativeness issues. The impact of uncertainty on financial markets is multifaceted, affecting different asset classes differently. High uncertainty can lead to increased volatility in stock markets, while oil and digital currency markets are also sensitive to geopolitical and economic uncertainties. The role of technology and algorithmic trading in uncertain markets is highlighted, with High-Frequency Trading (HFT) becoming increasingly prevalent. HFT can provide speed and efficiency but is a subject of debate regarding its impact on market stability. Future research trends may continue to focus on the intersection of technology and market uncertainty, seeking to better understand its implications and potential risks.

The Direction of the Cryptocurrency: Current and Future Perspectives

The development of technology has brought multiple changes in the economy, one of them being how people purchase goods and services. Technology has improved online business and how payments are made through digital means. Initially, people used to make payments using their credit cards, but the invention of digital currency has eased the transaction process. Cryptocurrency has emerged as the newest way for people use to make transactions. The majority prefers cryptocurrency since it is faster and does not require intermediaries like the traditional mode of payment. However, various issues have emerged that may influence its development. Security issues and scamming have become rampant, which has discouraged investors. In addition, cryptocurrency experiences huge volatility, which may discourage people from investing since failure to have previous data may made the investors fail to predict the prices. Fraud and the presence of scammers have discouraged people from investing since they fear losing their fortune from these individuals. The continuous adoption of cryptocurrency has made the organisation invest in cryptocurrency to diversify its portfolio risks.

Will Virtual Currency Replace Classic Money in The Future

Virtual currency is not an entirely new concept. As a special type of digital currency based on internet technology, virtual currencies are believed to have the potential to change the traditional monetary system. However, its applications lack the recognition of many countries. This study aims to explore whether virtual currencies can replace traditional currencies in order to provide theoretical support for the development and application of cryptocurrency. This article first reviews the characteristics of virtual currencies, and analyzes their comparison with traditional currencies in terms of value -formation mechanisms, levels of risk and the direction of currency circulation. Then, it discusses the impact of virtual currencies on monetary policy, including weakening the effectiveness of monetary policy and reducing the accuracy of currency indicators. Finally, measures and suggestions for regulating the issuance and development of virtual currencies are proposed. The study finally finds that virtual currency has both merits and demerits and that it may have some negative effect on classic money. Through in-depth analysis and research on virtual currencies, this article believes that virtual currencies have the potential to replace traditional currencies to a certain extent, but a comprehensive replacement is impossible.

The Development and Implementation of the Digital CNY

With the growing development of digital economic and network industry, digital RMB will become an important element of digital finance in China's digital economy. This paper analyses the design features, research and development motivation and other principles of digital RMB over the years, compiles the development process and operation mechanism, and discusses the future tendency of digital RMB to give some development suggestions. Firstly, the digital RMB needs to speed up the legislative process to avoid the frequent occurrence of crimes. Secondly, as a member of the leading development team, digital RMB can be considered to be promoted to the international market to facilitate cross-border transactions and international communications. Finally, the digital RMB is currently being piloted in a single scene and needs to be transformed into a wholesale digital currency in order to be more likely to avoid international risks and participate in international competition.