Economic model cryptocurrency

All cryptocurrencies use cryptography to control the creation and transfer of money…. Bitcoin is the most known cryptocurrency, but many other cryptocurrencies currently exist. Just like other forms of digital currencies, the Bitcoin is pseudo-anonymous and works through a series of viable online transactions between unidentified dealers. Bitcoin is an example of a commonly used cryptocurrency, so bitcoin will be utilized as an example in this research paper.

Since the network is decentralized and the money exists only by default, therefore a system is needed to be under control of who the actual owner of the virtual currency. Back in , Satoshi Nakamoto create up a genius invention of using a chain of digital signatures to sign each processing and give the users a validity to check the processing by verifying the signatures Spenkelink, Also, in blockchain is defaulting to change records because once the transaction is posted and confirmed the corresponding entries will be cryptographically sealed Dai et al.

In blockchain can check each party and transactions posted on the blockchain are permanent. There is growing popularity of blockchain cryptocurrency, but it is still relatively new technology and it continues to evolve quickly. Numerous cryptocurrency acceptance models have been presented and explained over the past decade. By combining theory of the innovation diffusion IDT and the technology acceptance model TAM , this study proposes a conceptual framework and model for cryptocurrency acceptance and continued usage of digital finance which approval as potential business innovations.

A digital currency that uses cryptography for security, cryptocurrency and specifically, Bitcoin operates peer-to-peer and without the authority of banks, allowing people to directly pay and receive payments without third party intervention. In the years since that transaction, Bitcoins have increased and decreased in value, survived the hacking of the largest Bitcoin exchange , Mt.

Gox, have been lauded as the future of money, and condemned as the next greatest scam. In the discipline of ethnic studies, interest in cryptocurrency lies in its potential within the international development sector: does cryptocurrency have the potential to be an economic equalizer or will it be another bandage for a problem too large to fix?

In Kenya, for example, in the last decade or so, the push in the development sector has been toward the economic system of microbusinesses. Often the target of these endeavors are women in the rural areas of the country who receive loans from a larger organization to start a business.

For many of these businesses this model is a way for them to access an international community of potential buyers. Take, for instance, a group of women selling beaded jewelry who must utilize a third party in order to exchange money. An individual in the U. Once through the bank, money is given to the business itself. Problems arise when the women who are running the businesses do not have access to a bank account and therefore rely on someone within the community who does, or an outside, often international, source.

These transactions are borderless, secure, private, fast, and require little tech skill or background. Anyone with access to a cell phone has access to the direct transfer of funds, and therefore more control over the finances and business itself. There is currently no large-scale usage of Bitcoin in Kenya, however, the opportunity for usage exists countrywide, especially in rural areas where the direct exchange of funds outside of a formal economy could facilitate increased participation in the local market in addition to controlling the potential for corruption.

In many countries in which there are already ongoing development projects, the use of Bitcoin allows the people of the country to access a financial system that is not in the control of their government. The set number of Bitcoin that will ever exist, just under 21 million, will never change; it is free from the market of inflation or deflation, which has the potential to stabilize economies that are rife with inflation issues and corruption.

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They were also encouraged by a desire to 1 These contrasting positions led us to draw up an initial taxonomy in an avoid major established currencies like the dollar and euro. In such attempt to define what they are and, more importantly, what they are not circumstances, it is natural that the main innovation of the original genuine currencies.

Their possible adoption, and their characteristics when adopted, will need to be carefully considered in order to reduce these risks. Unlike other forms of digital money electronic money in digital wallets, script money in bank accounts , they are not regulated.

In the absence of a trusted third party financial intermediary or bank , the security of transactions is provided by cryptography, that is to say by encryption algorithms. Two criteria are universal, the virtual nature and the cryptographic technique For example, the Bitcoin cryptocurrency, which has been in existence of these assets, whilst one — decentralisation — is common but optional. The whole community of developers has succeeded, according to their main characteristics, and consider the extent to which thanks to the blockchain, in collectively ensuring the security of they are currencies.

Open market operations — The committee can increase or decrease the amount of Qs in circulation by directly buying or selling Qs in return for other currencies. The committee can also sell future grants of Qs, at a discounted rate, to accredited investors. These Qs will then be released as economic activity grows, similar to the Qs reserved for new members. Central banks are bound by the historical limitations of the fractional reserve system — a system that requires them to operate through private banks.

This results in long response cycles and unpredictable inflation. Money supply The money supply must match economic activity to keep purchasing power stable. Therefore, since economic activity has no cap, the amount of Qs should also be uncapped. However, it is extremely important that the money supply only grows in proportion to the growth in the demand to hold Qs, and not for other reasons.

Thus, while theoretically unlimited, the Q supply is controlled in practice. This is done solely through monetary instruments that may be used only for the goals of maintaining currency stability, and promoting adoption. To accomplish this goal, the reward Qs reserved for each member will be released for use gradually, at a rate that matches the growth in economic activity on the network, while maintaining a target exchange rate of one US dollar per Q.

Monetary committee Achieving currency stability requires careful analysis and prediction of economic activity, as well as consideration of mass psychology factors. This is, unfortunately, still beyond the reach of computers, and requires the involvement of human professionals. This is how government currencies are managed, with major currencies today demonstrating far better long-term stability than that of Bitcoin and other cryptocurrencies.

However, Initiative Q could surpass this with more focused and better-incentivized management. To meet this need, Initiative Q will feature a monetary committee that is independent of the Initiative Q corporate entity, to be appointed via voting by all stakeholders in the Q payment network. This committee will be in charge of setting and running the monetary policy: determining how many Qs to add or remove from circulation, and through which monetary instruments.

Members of the monetary committee are financially incentivized to meet their goals by tying remuneration to performance. Since the Initiative Q monetary committee has access to real-time economic data, and has direct control of the money supply, their policies can be more scientific and transparent than current systems.

These will be gradually updated in accordance with new insights, eventually reaching a steady state where the policy is near automatic, albeit with constant monitoring to detect anomalies. As an additional means of instilling trust in the long-term purchasing power of Q, the monetary committee will continuously offer to buy Qs in exchange for USD and other currencies at the target rate of 1 Q per 1 USD.

This will assure sellers they can confidently accept Q as a payment method. The reserve balance will be publically available, assuring members that they can convert to USD at any time, thus supporting Q stability. As Q becomes a global standard, and trust in its long-term value increases, the reserve ratio can decrease.

These reserves are financed through two sources: Selling Q for USD — Buyers looking to benefit from the advantages of the Q payment network need to add Qs in their account, which is done by buying them from the monetary committee. Selling future grants of Q — This option is available to accredited investors who believe in the long-term success of Initiative Q. They can purchase at a significant discount the right to receive Qs in the future, that will be released according to the network growth — similar to the new members rewards.

They may already be registered.