Effect of Cryptocurrency Trade on Select Real Currency and Commodity Trading

Abstract

Cryptocurrency marked its presence with the inception of bitcoin in the year 2009. Bitcoin was created as a medium for peer to peer exchange. Cryptocurrency can be defined as money in digital form which can be used for exchange of goods and services. The cryptocurrency was designed to discover a type of currency which is not government regulated or in simpler terms currency whose demand and supply cannot be regulated by authorities. Cryptocurrency use cryptography to generate and allocate currency. The process of cryptography requires different verification of transactions without involving any king of centralized authority. To verify that no currency unit is spent twice, transaction verification authenticates the amount of transaction as well as the ownership of the currency. This step by step process is known as mining. The transaction record of cryptocurrency is stored in a ledger called blockchain. Blockchain can be defined as a distributed ledger which forms the basis for cryptocurrency market but its implication is not restricted to only cryptocurrency, blockchain technology can be used in financial services, supply chain management, government documentation. Mining algorithms in most of the cryptocurrency are public. Cryptocurrency presence was not felt only because of its concept but the controversies associated with it like the money laundering and terrorism activities being funded through its mechanism. The cryptocurrency market has shown turbulent with significant growth as well as downfalls. Since the main purpose of cryptocurrency was to replace real currency the question arises whether it has been able to impact the value of real currency in any significant way or not. This research aims at studying the correlation between cryptocurrencies namely Bitcoin, Bitcoin Cash, Neo, Ripple, Ethereum, Tron, Litecoin, Dash, Monero, IOTA and real currencies namely Australian dollar, Canadian dollar, Euro, Pound sterling, Japanese yen, Chinese yuan and commodities namely gold, silver keeping united states dollar as base for all conversions.