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3 1 Introduction

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3 1 Introduction

Uploaded by

salihashaheeb1
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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3.1.

Introduction
A theoretical framework is a conceptual structure that provides a systematic and organized way
to approach a research study. It forms the foundation for understanding and interpreting the
relationships among the variables under investigation. Theoretical frameworks are crucial in
guiding the design, methodology, and interpretation of research. Here are key elements and
characteristics of a theoretical framework.

3.2 Understanding Blockchain Technology and the World of Cryptocurrencies

Blockchain technology, a revolutionary concept that underlies the foundation of


cryptocurrencies, has transformed the landscape of digital transactions and decentralized
systems. At its core, a blockchain is a distributed and tamper-resistant ledger that records
transactions across a network of computers. This transparent and secure architecture has given
rise to cryptocurrencies like Bitcoin and Ethereum, which leverage blockchain to enable peer-to-
peer transactions without the need for intermediaries like banks. Cryptocurrencies, as digital or
virtual currencies, offer a new paradigm in financial transactions, introducing concepts like
decentralization, immutability, and cryptographic security. Exploring the intricacies of blockchain
technology is essential to grasp the mechanisms driving the evolution of cryptocurrencies and
their potential impact on traditional financial systems. This dynamic intersection of technology
and finance is reshaping how we perceive and engage with the concept of currency in the
modern era. Cryptocurrencies are significantly different from conventional electronic money due
to peer-to-peer architecture. The entire system that ensures transactions and stores information
is based on a decentralized computer network. Thus, many computers around the world form a
giant automatic electronic system operating around the clock (Caporale et al., 2018). Another
significant difference between cryptocurrency and other types of electronic money is attributed
to the special principles and methods of encryption. In general, the functioning of any
cryptocurrency is mainly determined by the correctness of the algorithm embedded in the
program, since there are no organizations that control this (Bulut, 2018). For example, if the user
has made a mistake and incorrectly indicated the recipient, it will be impossible to withdraw
electronic funds. For the first time, cryptography was used in David Chom's DigiCash system for
confidential payments, but this system was centralized, and its use was short-lived. The term
"cryptocurrency" began to be actively used in 2009 after the emergence of the Bitcoin payment
system, which today is the most popular in the world (Wang. 2018).
Its main goal was to create secure and stable cash on the Internet. Gradually, online stores and
services began to accept cryptocurrency as payment, and its popularity increased. Bitcoin is
based on the blockchain, which is a multifunctional and multi-level information technology that is
designed for reliable accounting of various assets. It is a chain of data blocks that are constantly
growing as miners add new information about the latest transactions (Bulut, 2018). Information
about a specific transaction is encoded, and miners find cryptographic hash to verify it. The
convenience of this technology is that users can see when and for what amount the transaction
was made. At the same time, all personal information about the sender and recipient is not
available.
Blockchain technologies serve as an alternative payment system, which, unlike traditional
payment systems, is not controlled by either the state or banks. A distinctive feature of this
system is that the data storage takes the form of a linear chain, therefore. there is no need to
involve a central controlling body (Caporale et al., 2018). Adding new transactions is carried out
only by network users. Thus, for the digital economy. the blockchain system is a distributed
database consisting of separate blocks in the form of a continuous chain, which stores both
transactions and data of the wallets (Bulut.
2018). This explains the fact that not only cryptocurrency finds its application in the blockchain
system. Each cell of the blockchain includes a timestamp and a link to the previous block, so it
can be virtually endless.
Cryptocurrency can affect existing currencies in the future if it is recognized by the world
society. However, it is still considered a monetary surrogate, since it is not issued by the state
and is a substitute for legal tender. Cryptocurrency is a financial instrument since it can be used
as a tool for generating speculative income (Wang. 2018). Many countries cannot decide
whether it is worth officially allowing cryptocurrency or not since it can be a threat to national
security due to its anonymity and lack of state control.
The role of central banks in its development is extremely important since this technology is
directly related to monetary policy and the functioning of national payment systems (Wang,
2018). There are prerequisites for creating a general structure for regulating this phenomenon by
the world community. although questions arise about the advisability of external influence since
digital currencies are decentralized and independent.
Many cryptocurrency assets are global in terms of distribution, although they provide a narrow
segment of users. Although their scale of emission is insignificant, they are growing at a rapid
pace and changing the demand for existing currencies. With the popularity of cryptocurrency,
part of the capital circulating on stock exchanges began to flow into the new technology. causing
an explosive increase in their rate (Caporale et al.. 2018). However, this factor has generated
inorganic demand associated only with shorterm plans of exchange players to extract high
speculative income. In developed countries, the demand for cryptocurrency is associated with
the loyal attitude of the authorities, the presence of a regulatory framework, and a high income
of citizens ready for such economic experiments (Wang, 2018). In developing countries, the
population tries to escape from national currencies to more reliable ones, regardless of the
position of the national authorities.

3.3 Merits of cryptocurrency

Cryptocurrencies offer several merits that contribute to their growing popularity in the financial
landscape. First and foremost, the decentralized nature of cryptocurrencies, facilitated by
blockchain technology, eliminates the need for intermediaries like banks, reducing transaction
costs and increasing financial inclusivity. Additionally, the transparency and immutability of
blockchain transactions enhance security, making fraud and manipulation more challenging.
Cryptocurrencies also enable borderless and quick transactions, facilitating international trade
and financial transactions without the constraints of traditional banking systems. Furthermore,
the limited supply of certain cryptocurrencies, such as Bitcoin, introduces a deflationary aspect,
potentially acting as a hedge against inflation. These merits collectively present cryptocurrencies
as innovative instruments with the potential to revolutionize how we transact, invest, and
conceptualize value in the modern era.

3.4 Future of Cryptocurrency in India

Cryptocurrency's future in India remains dynamic, influenced by regulatory developments and


increasing interest from investors and businesses. It may transform the way we make
transactions and buy stuff in future. Avivah Litan, one of the famous analysts, predicted that
Cryptocurrencies will be used for retail payments in upcoming years.

3.5 Factors that affect cryptocurrency through consumer’s satisfaction and perception

1.Market Volatility:
Cryptocurrency price volatility directly affects consumer satisfaction. Sudden price fluctuations
can lead to significant financial gains or losses. Stable market conditions are likely to enhance
positive perceptions, while extreme volatility may create apprehension and impact overall
satisfaction.

2.Educational Resources:
Consumer understanding of cryptocurrencies is essential for satisfaction. Well-informed users
are likely to have realistic expectations and navigate the market effectively. Comprehensive
educational resources contribute to positive perceptions, while a lack of information may lead to
misconceptions and dissatisfaction.
Media Influence:

3.Media coverage significantly influences consumer perceptions. Positive portrayals,


endorsements from influential figures, and informative content contribute to favorable attitudes.
Conversely, negative news, misconceptions, and sensationalism can create doubts and
dissatisfaction among users.

4. Assets Transfers - Cryptocurrency blockchain is compared to a large database of property


rights which can on one level facilitate the execution and enforcement of two-party contracts on
commodities such as real estate and automobiles. Nevertheless, the blockchain cryptocurrency
ecosystem can also facilitate specialist modes of transfer.In addition to incorporating third-party
approvals, cryptocurrency contracts can include references to external facts or can be outlined
to occur at a specific time in the future. As the cryptocurrency holder, you have exclusive control
over your account, which minimizes the time and expense involved in transferring assets.

5. Transaction Fees - Most of you might have read your monthly bank statement or credit card
statement, and baulked at the amount imposed on transfers or other types of transactions.
Performing a lot of transactions monthly can lead to huge transaction fees accumulated over
time.When it comes to cryptocurrency, data miners are compensated by the cryptocurrency
network, meaning transaction
fees are usually not charged to customers. If you choose to engage a third-party management
service for your cryptocurrency wallet, there may be a few external charges, but those charges
are far less than the transaction fees associated with traditional financial systems.

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