IJRTBT

IMPLICATIONS OF CRYPTOCURRENCY: A NEW BUSINESS

PROPOSITION OF TODAY'S ENTREPRENEURIAL HORIZON
Snigdha Basu*, Tapash Ranjan Saha, Swapan Kumar Maity
Institute of Management Study, Maulana Abul Kalam Azad University of Technology, West Bengal, India.
*Corresponding Author's Email: [email protected]
ABSTRACT
Cryptocurrency is in a unique position as a forerunner in a possibly transformative technology to long
standing financial systems. Businesses are beginning to see the value in using cryptocurrencies for
international transactions, especially when transactions need to occur quickly in response to an emergency.
We live in a world where everything around us is becoming digital. Along with the digitalization, money and
investment are getting digitalized too. Crypto currency is the new concept of money and can be termed as
digital currency in which encryption techniques are used to regulate the generation of units of currency and
verify the transfer of funds, operating independently of a central bank. There are approximately 1300 other
crypto currencies that exist in the digital currency market such as Ethereum, Ripple, NEM, Lit coin etc.

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Whereas bit coins are the most sought after Crypto currency in the market. Eight years since its introduction,
bitcoin is today the most widely used and accepted digital currency. Pricing in bitcoin transactions is demand
based, it is exceptionally volatile. Volumes of trading happen every second. The price of a bitcoin is largely
dependent on the trading i.e. demand and supply factors. In the present study the primary objective is to find
out the present scenario of the crypto currency business in India. It also studies the business prospect of
bitcoins crypto currency business in India and to look out if India is ready for the changing form of new
currency business. To fulfill the objectives of the study relevant statistical techniques will be used to find out
the recent trends. Yearly return on investment ratio and future scope of the crypto currency business in India
with special reference to bitcoins will be examined in the recent article. A much-focused SWOT analysis will
also to be done to identify the overall working mechanism of the new business proposition in the today's
entrepreneurial horizon from Indian context.
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Keywords: Virtual currency, Crypto graph, SWOT analysis, Bitcoin Exchanges, Block Chain, Trends.

INTRODUCTION all the people directly or indirectly.

A crypto currency is a digital or virtual currency that A. Classification
uses cryptography for security. They are disruptive
There are hundreds of virtual currencies in the market.
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economic innovations that have the potential to
The leaders of virtual currency world can be classified
revolutionize the current economic structure and
into four major categories.
change how banks and financial institutions are
operating now. If compared with current traditional fiat a. Bitcoin
currency system a cryptocurrency is far more efficient It is first widely accepted virtual currency, being a
in terms of usage and transaction cost. The first trendsetter, it had opened the door of cryptocurrency in
Cryptocurrency to begin trading was Bitcoin back in
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the global economic market.

2009. Cryptocurrency is not only a virtual money or
transaction system, but it is also the monetary aspect b. Ethereum
that is just the tip of an iceberg. Cryptocurrencies are After Bitcoin, second most popular currency is
based on block chain technology. The public ledger, or Ethereum, launched back in 2015.
block chain, means that every user can see every
transaction. By using a cryptocurrency, users can c. Litecoin
exchange value digitally without third party oversight. Litecoin secured third ranking in the crypto market in
Cryptocurrency works on the theory of solving terms of acceptance. It has been launched in 2011 and
encrypted algorithms to create unique hashes that are uses the same fundamental structure as bitcoin
finite in number. Also, according to Oza and therefore often referred as 'silver to bitcoin's gold'.
Mandhanya (2017) the results generated from the
change management of the banking sector could be d. Ripple
utilized by the policy makers, management/owners of Ripple works on consensus ledger which does not need
banks, employees and employers for refining the mining process to be involved, reducing utilization of
overall management of this industry which will profit computing power and network latency.

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IJRTBT IMPLICATIONS OF CRYPTOCURRENCY

Few examples of various Crypto currencies: Interdisciplinarity

1) Currency token- A token pegged officially on the
Japanese Yen. J-COIN
2) Utility token- Decentralized one that runs smart
contracts. - ETHEREUM
3) Membership token- It is a decentralized cloud
storage platform that allows anyone to rent their idle
hard drive space to earn revenue. - STORJ
4) Security token- It is an investment fund designed to
invest in block chain markets. -TaaS.
B. How are they created
With paper money government decides when to supply,

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print and distribute the money in the economy. But
cryptocurrencies do not have a central government. It is
not issued by any central authority.
C. The King of the Cryptocurrencies-Bitcoins
A bitcoin is a virtual currency first introduced in the D. Bitcoin Pricing
year 2009 by an anonymous group called Satoshi Pricing in bitcoin transactions is demand based,
Nakamoto. Frank Holmes, the chief executive officer at exceptionally volatile. Volumes of trading happen
U.S. Global Investors said that the digital currency every second and largely depends on supply & demand
market rose above $300 billion for the first time on factors. More the demand, higher is the price. Price of
Sunday evening, according to industry website bitcoin in Indian cryptocurrency market has gained
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(Amaro, 2017). It's a peer to peer crypto graphical
remarkably. As per the statistics since 2009 till March
system where transactions happen through a public
ledger called Block Chain. It is a technology to transfer 2017, the number of bitcoins circulation has not only
and store data or information that is generated while increased but reached to an all-time high 1,63,77,437 in
transacting it in a cryptocurrency. number. Bitcoin does not have intrinsic value like gold
in that case it cannot be used to make any physical
Block Chain may be described as a tamper evident objects like jewelry that have value.
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ledger shared within a network of entities, where the
ledger holds a record of transactions between the Bitcoin Exchanges
entities exploiting the cryptographic hash function. The A bitcoin exchange is a platform that facilitates
Bitcoin Block chain often referred to as the ledger of the exchange of bitcoins for another currency including fiat
Bitcoin system.
currency, thereby allowing the users to trade and make
Bitcoin mining is the process by which transactions are profit.
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verified and added to the public ledger, known as the

Service Provided by the Bitcoin Exchanges in India
block chain, and the means through which new bitcoins
are released. Anyone with access to the internet and Ø Storing bitcoin in a bitcoin wallet after deposit/receipt
suitable hardware can participate in mining. of the same in the wallet.
A miner collects pending Bitcoin transactions, verifies Ø Exchange of bitcoin with other currency like a fiat
their legitimacy, and assembles them into what is currency.
known as a 'block candidate.' The goal is to earn newly
created Bitcoin units through this activity. Bitcoin Ø A merchant gateway services used to pay to
mining is permission less. Anyone can become a miner merchants in bitcoins and acceptance by them thereon.
by downloading the respective software and the most Ø Mobile application providing ease of accessing
recent copy of the Bitcoin Block chain. The consensus bitcoin wallets.
among miners is that every miner who receives a block
candidate with a valid fingerprint adds it to his or her Ø Sending bitcoins stored in the wallet to another
own copy of the Bitcoin Block chain. wallet.

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Table 1: List of Major Bitcoin Exchanges in India general, online shopping for individuals accounted for
nearly 23 percent of transactions processed by BitPay
NAME OF THE DATE OF LOCATIONS
in the second quarter of 2015.
EXCHANGES FORMATION

Coin secure 2014 Delhi, India

Kasiyanto (2016) explained that cryptocurrency has the
advantage over traditional card-based for the vendor in
Bitxoxo 2016 Warangal, Tela ngana, India that it eliminates those fees.
Unocoin 2015 Bengaluru, Karnataka, India According to Reuters (2016) cryptocurrencies could
potentially become a big player in the commodity
ZebPay 2015 Ahmedabad, GJ, India market. They have a unique attribute of being
purchased through a direct online mechanism, which
Bitcoin India 2014 Hyderabad, Telangana, India creates easy entry for buyers. If bitcoin continues to be a
valid refuge for inflating currencies, it will gain validity
to investors and push deeper into becoming more
LITERATURE REVIEW mainstream.

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Related Work Objectives of the Study
Kelly (2014) valued the existence for bitcoin because q To explore the cryptocurrency business scenario in
its users have trust that if they accept it as payment, they India with special reference to bitcoin business for the
could use it elsewhere to purchase something they want last five years' time frame.
or need.
q To fit a trend equation to forecast the Bitcoin prices.
Desjardins (2016) stated that due to the limited number
of bitcoins, it will never become inflated from an q To examine the regulatory status of the Virtual
overabundance of bitcoins. Also, bitcoin and other Currency business in India.
cryptocurrencies are generally regarded as being q To design a SWOT analysis framework to find the
protected from inflation originating from national issues concern.
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government changes or restrictions (Magro, 2016).
This creates a 'haven' for investors to put their wealth RESEARCH METHODOLOGY
into, as it generally does not lose value based on Data sources: All the secondary data (such as opening
inflation. The combination of demand for a haven & closing price per day, market capitalization, trade
option and its price volatility helped Bitcoin to become volume, no. of coins in etc.) taken from various online
the best performing currency of 2015 using the US sources.
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Dollar Index. A haven is an investment that is expected
to retain or increase in value during times of market Date period: Daily data ranging from the period of
turbulence. Safe havens are sought by investors to limit March 2014 to March 2018.
their exposure to losses in the event of market Data type: Secondary data collected (Amaro, 2017;
downturns. Kelly, 2014)
South America has seen a huge increase in bitcoin Tools for analysis: MS-Excel.
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transactions, increasing to 510% from 2014 to 2015

This paper attempts to find the trend line based on the
(Bitcoin: A New Global Economy, 2015).
market capitalization for the last five years in bitcoin
According to Magro (2016) Argentina is a hotbed for business. Based on the highest R2 value, best fitted
increased cryptocurrency usage due to its extremely trend line & the equation for the trends was derived.
high Inflation rate and high population of unbanked
RESULTS
citizens.
Market capitalization or market cap is the aggregate
The public block chain is shared with all users, which
valuation of a company based on its current share price
means that it is susceptible to attacks due to easy access
and the total number of outstanding shares. In case of
(King, Williams & Yanofsky, 2013).
cryptocurrency sector, market cap is used to determine
As per the reports of (Pricewaterhouse Coopers Report, the relative size of a digital currency or of all the digital
2015) price volatility generates risk, which discourages currencies combined. The cryptocurrency market cap is
both merchants and consumers from holding calculated by multiplying the price by the circulating
cryptocurrency for any significant length of time. In supply. Market cap=cryptocurrency price X

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 IMPLICATIONS OF CRYPTOCURRENCY IJRTBT

Figure 7: Bitcoin- Traded Volume in India

European Union Any exchange of bitcoin for another
currency does not attract VAT/GST

USA Treated as property as per internal

revenue services

Norway No VAT shall be levied on trading of

bitcoins

Japan In 2017, officially recognized bitcoins as

a means of payments

Germany Declared as private money, income

There are about 11 trading platforms in India to buy received from bitcoin sales shall be taxed
Bitcoins. Those include Unocoin, Zebpay, Coinsecure,
Coinmama, LocalBitcoins, and Bitcoin ATMs. There Sweden Trading in bitcoins is exempted from
aren't many avenues to use Bitcoins in India (see fig. 7). VAT

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But e-commerce players such as Flipkart, Amazon and
MakeMyTrip run voucher programmes for people REGULATIONS IN INDIA
using Bitcoin exchanges, but they do not accept
payment in Bitcoins. Bitcoin trading volumes could be q Are the Bitcoins securing?
in the range of Rs 200–250 crore every month. The Bitcoin miners help keep the Bitcoin network secure by
above graph presents the bitcoin traded volume for the approving transactions. Mining is an important and
st
period ranging from the year 2014 to 2018 (1 week of integral part of Bitcoin that ensures fairness while
April). keeping the Bitcoin network stable, safe and secure.
I N T E R N AT I O N A L P R E S E N C E & q Regulatory status in India
R E G U L AT O RY S TAT U S O F B I T C O I N S
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WORLDWIDE Ø The reserve bank of India has neither declared
bitcoins as illegal in India nor has it accepted bitcoins as
· Internationally, cryptocurrencies are regulated as a currency. The finance minister in his budget speech
commodities by several central banks. declared that it is no way illegal to hold these
· According to Hileman & Rauchs (2017), majority of currencies, but it is illegal to transact using them in
bitcoin trade are concentrated in East Asian countries place of legal tender.
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like Japan, South Korea and Vietnam, they together Ø Our finance minister Mr. Jaitly added 'the
account for 80% of bitcoin trading activity as per the government will explore use of block chain technology
research firm Crypto Compare. proactively for ushering in digital economy'.
· Japan allowed the use of bitcoin and several other
Ø Head, block chain & cryptocurrency council of
cryptocurrencies for payments. India, admits that Indian Finance Minister may not
· Australia proposed in budget speech 2017-18 to treat defined it as a legal tender but recognize it as an ASSET.
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bitcoins as money.
Ø RBI issued 3 times warnings to the investors &
· European Union claims it as a convertible players in the bitcoin segments starting from the year
decentralized virtual currency (refer to table 2). 2013, 2017, and in 2018 to restrict banks & financial
Table 2: Status of Bitcoins under Indirect Taxation in institutions from dealing crypto currencies and gave a
Different Jurisdiction three month exist window to them as these medium of
payments are not authorized & there is a heightened
risk of investment BUBBLE.
COUNTRY/REGION STATUS
S TA N D A R D I C O ( I n i t i a l C o i n O f f e r i n g )
REGULATIONS
Singapore Profit on trading in bitcoins in ordinary
course is taxable v Companies can't only rely on a template website and 20
pages of white paper.
Australia Proposed to exempt from taxation by
v International team should be a mix of experts in the
treating it as money
technology and business sphere.

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IJRTBT IMPLICATIONS OF CRYPTOCURRENCY

v Backers as high-quality board of advisors and · Bloomberg – Online newspaper.

institutional investors are also to be considered as an
· Braintree – A Research firm.
important factor.
· CVS – A pharmacy mall.
v Community being at the core of the block chain.
Strong media interactions are crucial. · Dell–US-based Global computer Technology
Company.
v ICO process should be transparent and meet
standards. Standing threats in bitcoin business are Governments
Rules and Regulations & security measures. Bitcoin
Table 3: SWOT Analysis- Bitcoin Business in India
transactions are illegal in many countries. Very few
STRENGTH WEEKNESS countries approved bitcoin.
Ø Peer to peer Ø Volatility IMPACTS OF BITCION ON ECONOMY,
Ø Anonymity Ø Transaction cost
Ø Fast Ø Transaction times BANKING & FINANCE
Ø Safe Ø Virtual money
q Power to the Dark Web: By using cryptocurrencies
OPPORTUNITY THREAT like Bitcoins people can make illegal transactions

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Ø Large market Ø Government rules & regulations without giving any information about them.
Ø Internationalization Ø Securitymeasures.
Cryptocurrencies like Bitcoins are a way to empower
such transactions across the globe which will
Since Bitcoin is a digital currency of new era the table 3 ultimately result in increased cybercrime.
tends to explore and identify the strength, weakness, q Speculation: Due to the extreme highs and lows
opportunity & threat for the future of bitcoin business. Bitcoins present a massive possibility for speculation.
As far as the Strengths are concern, Bitcoin is using the Just like trading in shares, trading in Bitcoins is massive
peer-to-peer network that is called Block chain. In this and seeing the rise in transaction around cryptocurrencies
network, only the sender and the receiver know about is probably to grow further.
the transaction and when it's taking place. There is no
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q Politicization of Money: Now with digital
third-party involvement in this transaction. Bitcoin currencies, this economic power can be challenged by
consists of a unique pin number that indicates the owner
people. This has led to the creation of a new
address. When a transaction is done, the pin number is
autonomous body which can facilitate transactions.
altered. The bitcoin transaction is very fast and there is
The power that was vested in the governments and
no objection to it. Bitcoin cannot be stolen from
central banks is shifting to the masses. This
anyone's wallet. As the only owner can change the pin.
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revolutionary change in transaction handling has the
When it comes to weaknesses for this virtual currency power to change the economic structure.
there are many arguments about the volatility of
q Apprehension among the Central Banks: Central
Bitcoin. Maximum people tend to make judgments by
the publicity in the media. People are now paying $28 banks across the world have been wary of Bitcoins as an
on average to make a deal using the digital currency, as uncontrollable and unpredictable form of currency.
BitInfoCharts. Bitcoin miners are enjoying the Cryptocurrencies are leading to loopholes in the current
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transaction fees. For bitcoin trading it takes 78 minutes bank's data about the money transactions leading to
on average to confirm a bitcoin transaction, as stated by inability to track economic activities.
Browne, (2017) published in CNBC. This is a virtual q The Emergence of New Markets: Cryptocurrencies
payment or transactions network. have led to the emergence of new markets. Currencies
The Opportunities in SWOT analysis of Bitcoin like Bitcoin and Ethereum have opened gates for a new
business are discussed. Cryptocurrency is a big market. kind of market which unlike present money market is
Bitcoin is for all. Recently KFC Canada has introduced controlled by no one. Cyberspace will rise as the
Bitcoin as one of their payment systems. Here some managing body that will handle and maintain such
global brand companies disruptive markets.
· Amazon – An online product service Marketplace. CONCLUSION
·Apple's App Store – Buy Apple's service through To sum it up in a nutshell, 2018 is looking very promising
AppStore with bitcoins. with great new opportunities in cryptocurrency business.
However, to maintain the ethos of free spirit and remain a
· Bing by Microsoft – 2ndsearch engine after Google. self-regulated market, several associations in the world,

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 IMPLICATIONS OF CRYPTOCURRENCY IJRTBT

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