Title
One of the most recent development in the global technological environment for the world of virtual community has been noticed in terms of transacting and making settlement by way crypto currency, being the form of the virtual currency. The most unique feature of this currency is the lack of the control over its use by any central monetary authority being present in the global economic world (Bromwich & Scapens, 2016). The aim of this research is to critically analyse the impact of the use of Crypto Currency on the current economic world along with the legal aspects of its use and their consequent effect.
Rationale
The major reason for the selection of this topic is that the emergence of the crypto currency has threatened the future existence of the traditional currency due to the various shortcomings associated with it. On the other hand due to the lack of the central controlling authority for dealings in crypto currency, the financial stability of the global economic world is being threatened too, for which the strict legal and regulatory provision must be in place. The legal issues associated with it are also much controversial and are imposing the legal risk too on the economies which permits its use (Alexander, 2016). Again there are some positive aspects associated with the use of crypto currency by way of giving the thought of ending the monopolistic approach of the various central banks across the world while issuing the traditional currency (Chaudron, 2018). The most popular form of crypto currency known as the Bitcoin is also suffered from the problem of the instability in terms of exchange rate across the world, hence its effectiveness is also a matter of consideration. The present global scenario reflects that the global economy is highly dependent on the US Dollar and any fluctuation in the value of the US dollar significantly affect the entire scenario of the world economy, hence the crypto currency is going to be recognised as a currency that promotes the decentralisation of the financial transactions amongst the various countries of the world. Hence their dependence on the US dollar shall be no more if they opt for using the crypto currency for the settlement of these transaction (Gooley, 2016). Hence it shall also impact the international relations and diplomacy amongst these countries spread across the world. This currency is again going to give an end to the various international and national middlemen who play a key role in the global settlement of payments like the Banks and clearing houses etc. Hence whether it is worthwhile or not that these highly trustworthy organisations are not to be continued. As these currencies have given the concept of the new place of market in which there is no controlling authority.
Research objectives
This research is aimed at providing the necessary inputs into the various financial and legal aspects of the use of cryptocurrency so that it can provide the platform for making the detailed critical analysis while reaching to any conclusion that whether the use of crypto currency is to recommended by replacing the traditional currency slowly and gradually or the use of the same should be to be strictly regulated with the adequate legal and regulatory provision. Further the future hurdles or the issues that are expected to rise as a result of the use of these crypto currencies should be known in advance so that its future adverse effect can be prevented on the functioning of the global economy, for which our research provides the detailed information (Visinescu, et al., 2017).
Research questions
Our research is aimed at providing the answer to the following questions
- Whether the use of crypto currency is the best solution for the future operation of the Global economy?
- What is the relevance of the legal and financial regulation in terms of mitigating the risks associated with the use of the cryptocurrency?
- Whether the use of the cryptocurrency is going to boost up the idea of removing the middlemen in the operation of the global economy?
Literature review
As per the viewpoint represented by the Austrian School of economics it has been suggested that the major reason behind the existence of the business cycle is the intervention of the currency in the economy (Linden & Freeman, 2017). As it is the central banks in the various countries of the world which regulates the circulation of the money in the economy and the expansion and the restriction on the circulation of the money is the primary reason for giving birth to the state of boom or recession to the economy. Hence the cryptocurrency can prove to be a remarkable solution to end the intervention and manipulation caused by this existent system of money supply or in other words it shall remove the monopoly of the central controlling authority.
The same suggestion has been found in the publication of the Friedrich Hayek by advocating the fact that the commercial banks are the Private banks to whom the issue of non-interest bearing certificates be authorised so that to ensure the operation of the most stable currency in the economic system and the same is being found satisfied by these crypto currencies (Goldmann, 2016).
The second major argument in favour of the crypto currency as being given is that there is great need felt by the economy to reduce the various transaction costs associated with the financial transactions. That can be possible by ending the presence of the third party trustworthy entity like banks that demand charges for their services I form of third party, but that give birth the concept of the double spending as was suggested by D.Chaum in the year 1982, Hence it provides the strong basis to implement this new idea by the use of crypto currency (Meroño-Cerdán, et al., 2017).
The reliability of the use of cryptocurrency in form of Bitcoin cannot be denied especially because of the use of the Block chain system and that sort of trust is expected by any economy undoubtedly. There is also no such restrictions associated with the conversion of the Bitcoins into other currencies as a result of which it makes it as an acceptable alternative for the international transactions too (Choy, 2018). The current mechanism of the cryptocurrency says that the world does not consider to as an independent currency but is one of those currencies available in the basket that is linked with each other in some ways.
From the legal aspects if we go for discussing the first major issue that is lying with its use is that it cannot be recognised as a form of legal tender as it is in the case of the digital currency or the traditional currency, it is because there is no issuer of the same (Kewell & Linsley, 2017).
Again if we go for checking the viewpoint of the civil law then the cryptocurrency can be seen as a measure of the value other than the money unless the parties entered into the transaction agree to the fact that the settlement of the transaction in form of benefit shall be transferred by the exchange of the cryptocurrency.
One of the significant issue is in terms of consumer protection as it is found in the dealings and exchange of the digital and the traditional currency when the obligation of the payer and the payee or the beneficiary of the currency is strictly regulated by a specific functional governance system, but such system is not in existence for the Cryptocurrency system (Jefferson, 2017).
As there is no restriction regarding the use of cryptocurrency in buying or procuring any product or service though its use has not been so common due to the limitation imposed on it because of its low capitalisation criteria, now the need has been strongly felt to make the detailed study on the various legal provisions so as to check the central banks monopoly on the issuance of the currency when it is being challenged by the crypto currency (Grenier, 2017).
The same currency is also imposing the threat on the global economy by way of money laundering and financial terrorism both.
Research Methods
The major data collected for our study is sourced from the various national and international publications and the various data made available on the financial and legal websites that widely published their circulation on the topic of the use of the cryptocurrency. At the same time, various questionnaires too have been prepared and sent to the scholars working on this subject so as to have their feedback on this issue and have been requested to share their experience and results of the study too so that our research results should prove to be more logical. The various journals published in the national and international journals along with the publication of the authors too have been considered in this case (Raiborn, et al., 2016).The interview of few of those are using this cryptocurrency significantly in large volume too has been scheduled to gain a level of their understanding and experience on the same. Most importantly the legal professionals have been interviewed, particularly those who are working in the area of cybersecurity have been considered for this purpose.
Conclusion & Recommendation
On the basis of this study there are few conclusions and recommendation which has been suggested hereunder. The legal risk associated with the use or application of the crypto currency are not to be overlooked and without making the sufficient regulatory provision it would be completely a drastic decision to accept the crypto currency as a mode of transacting financial decision (Dumay & Baard, 2017). Furthermore, the idea of removing the monopolistic approach of the central banks across the world to control the supply of money is gaining momentum and is much dynamic too and it is being strongly supported by the crypto currency. Hence it can bring a significant change in the whole way the global economy operates. The existence and the power of the application of the crypto currency as an alternative can never be denied and the same should be considered as a means of the next generation of the money. Lastly, there is a strong need to introduce the relevant changes in our legal and regulatory system to provide the total acceptance to the concept of the new form of money being known as crypto currency.
References
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