“RESEARCH PAPER ON CRYPTOCURRENCY”

SUBMITTED IN PERTIAL FULFILLMENT OF THE REQUIREMENTS OF

BACHELOR OF COMMERCE (PROFESSIONAL ACS) GRADUATE
COURSE OFJAIN UNIVERSITY

Submitted by

RIYA JAISWAL

USN NO: 20BCR00110

Under the Guidance of

Shefali Shukla

Assistant Professor

DEPARTMENT OF COMMERCE

School of Commerce

JAIN (Deemed-to-be University)

Bengaluru

MAY 2022
 BONAFIDE CERTIFICATE

This is to certify that this RESEARCH REPORT entitled “ANALYSIS OF

CRYPTOCURRENCY” submitted to School of Commerce, JAIN (Deemed-to-be University),
is a bonafide record of work done by “RIYA JAISWAL” under my supervision from“1/7/21” to
“12/5/22”

SHEFALI SHUKLA
ASSISTANT PROFESSOR

Place: BENGALURU MS. NEELIMA M

Head of Department
Date: 12/5/2 Commerce Department
 DECLARATION BY AUTHOR

This is to declare that the RESEARCH REPORT is the idea generated by me. No part of the
RESEARCH REPORT is plagiarized from other sources. All information included from other
sources have been duly acknowledged. I aver that if any part of the RESEARCH REPORT is
found to be plagiarized, I/we shall take full responsibility for it.

Place: BENGALURU RIYA JAISWAL

20BCR00110
Date: 12/5/22
 CERTIFICATE BY THE UNIVERSITY

Certified that the RESEARCH REPORT titled “ANALYSIS OF CRYPTOCURRENCY” is based

on an original RESEARCH REPORT conducted by Ms. RIYA JAISWAL bearing Register No.
20BCR00110 under the guidance of SHEFALI SHUKLA. She has attended the required guidance sessions
held. The RESEARCH REPORT has not formed a basis for award of any Degree/Diploma of any University
or Institution.

Place: BENGALURU Dr. Dinesh Nilkant

Director
Date: 12/5/22 School of Commerce
JAIN (Deemed-To-Be) University
 CERTIFICATE BY THE GUIDE

Certified that the RESEARCH REPORT titled “ANALYSIS OF CRYPTOCURRENCY” is based on

an original RESEARCH REPORT conducted by Ms. RIYA JAISWAL bearing Register No.
20BCR00110 under my guidance. This RESEARCH REPORT has not formed a basis for award ofany
Degree/Diploma of any University or Institution.

Place: BENGALURU SIGNATURE OF THE GUIDE

Date: 12/5/22 (ASSISTANT PROFESSOR SHEFALI SHUKLA)

 DECLARATION BY THE STUDENT

This is to certify that the RESEARCH REPORT titled “Analysis of Cryptocurre ncy”
is carried out independently by me under the guidance of Assistant Professor Shefali
Shukla. This work is an original one and has not been submitted earlier to any University
or any other Institution for the fulfilment of the requirement of a course study or any other
credential.

Place: BENGALURU Name of the student: RIYA JAISWAL

Date: 12/5/22 Registration No: 20BCR00110

 UNDERTAKING

I hereby give an undertaking that the RESEARCH REPORT reported is an

outcome of original study carried out under the guidance of Assistant Professor
Shefali Shukla towards the in-house RESEARCH REPORT as a part of the
curriculum of at School of Commerce, Jayanagar 9thBlock, JAIN (Deemed-to-
be- University), Bengaluru, during 2021-2022, is hereby submitted to the
Student Research Development Cell - SHODHA, JAIN (Deemed-to-be-
University), Bengaluru.

Further, this RESEARCH REPORT will not be used for any patent, publication,
conference presentation or for any industrial interaction without a written
approval from the Project Guide and Director, School of Commerce, Jayanagar
9th Block, JAIN (Deemed-to-be- University), Bengaluru.

RIYA JAISWAL

20BCR00110
 ACKNOWLEDGEMENTS

I am deeply indebted to Dr. Chenraj Roychand, President, Jain University trust, Bengaluru,
for having admitted me to undergo the B.com (Professional-ACS) graduation course during
the academic year 2020-2023 in the temple of learning.

It’s my privilege to thank Dr. Dinesh Nilkant, Director, School of Commerce Studies, Jain
University Bengaluru, for having admitted me to undergo the B.com (Professional-ACS)
graduation course during the academic year 2020-2023.

I take this responsibility to express my profound thanks to my guide Assistant Professor

Shefali Shukla, Department of Commerce, Jain University, Bengaluru, for her valuable
guidance and support for the completion of project work.

I am very thankful to my family and friends for their constant encouragement and support.

RIYA JASIWAL

20BCR00110
 TABLE OF CONTENTS

CHAPTER NO. TITLE PAGE NO.

1 ABSTARCT 1

2 INTRODUCTION 2-44

3 REVIEW OF LITERATURE 45-55

4 RESEARCH METHODOLOGY 56-58

5 DATA ANALYSIS AND INTERPRETATION 59-65

6 CONCLUSION 66

7 BIBLIOGRAPHY 67
 ABSTRACT

Cryptocurrency, an encrypted, peer-to-peer network for facilitating digital barter, is a technology

developed eight years ago. Bitcoin, the first and most popular cryptocurrency, is paving the way
as a disruptive technology to long standing and unchanged financial payment systems that have
been in place for many decades. While cryptocurrencies are not likely to replace traditional fiat
currency, they could change the way Internet-connected global markets interact with each other,
clearing away barriers surrounding normative national currencies and exchange rates.
Technology advances at a rapid rate, and the success of a given technology is almost solely dictated
by the market upon which it seeks to improve. Cryptocurrencies may revolutionize digital trade
markets by creating a free flowing trading system without fees. A SWOT analysis of Bitcoin is
presented, which illuminates some of the recent events and movements that could influence whether
Bitcoin contributes to a shift in economic paradigms.

1
INTRODUCTION

2
 WHAT IS CRYPTOCURRENCY?

A cryptocurrency is a form of digital asset based on a network that is distributed across many computers.
This decentralized structure allows them to exist outside the control of governments and central authorities.

The word “cryptocurrency” is derived from the encryption techniques which are used to secure the network.
Blockchains, which are organizational methods for ensuring the integrity of transactional data, are an
essential component of many cryptocurrencies.

Cryptocurrencies are systems that allow for secure payments online which are denominated in terms of
virtual "tokens," which are represented by ledger entries internal to the system. "Crypto" refers to the
various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical
curve encryption, public-private key pairs, and hashing functions.

Cryptocurrency is a form of payment that can be exchanged online for goods and services. Many companies
have issued their own currencies, often called tokens, and these can be traded specifically for the goods
or services that the company provides.
More than 10,000 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a
market research website.
Bitcoin, Ethereum, Cardano, Tether, XRP, Solana, Polkadot, Dogecoin are some among the very popular
cryptocurrencies.
So, if cryptocurrency is all virtual, how does it exist? There have been many attempts to create digital money
in the past, but they have always failed.

The prevailing issue is trust. If someone creates a new currency called the M dollar, how can we trust
that they won't give themselves a million M dollars, or steal your M dollars for themselves?

Bitcoin was designed to solve this problem by using a specific type of database called a blockchain. Most
normal databases, such as an SQL database, have someone in charge who can change the entries (e.g. giving
themselves a million X dollars).
Blockchain is different because nobody is in charge; it’s run by the people who use it. What’s more, bitcoins
can’t be faked, hacked or double spent – so people that own this money can trust that it has some value.

Cryptocurrency is a type of currency that's digital and decentralized. Cryptocurrencies can be used to buy
and sell things, and their potential to store and grow value has also caught the eye of many investors. There
are thousands of different cryptocurrencies available today. Much of the interest in these unregulated
currencies is to trade for profit, with speculators at times driving prices skyward.

Cryptocurrencies have been described as a transformative technology that could revolutionize a number of
industries. Because they cannot be printed or seized, cryptocurrencies may also provide a safe store of value.
It generally only exists electronically. There is no physical coin or bill.

3
 BLOCKCHAIN

Blockchain is a system of recording information in a way that makes it difficult or impossible to change,
hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated
and distributed across the entire network of computer systems on the blockchain. Each block in the chain
contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of
that transaction is added to every participant’s ledger. The decentralized database managed by multiple
participants is known as Distributed Ledger Technology (DLT).

Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic
signature called a hash. This means if one block in one chain was changed, it would be immediately
apparent it had been tampered with. If hackers wanted to corrupt a blockchain system, they would have to
change every block in the chain, across all of the distributed versions of the chain. Blockchains such as
Bitcoin and Ethereum are constantly and continually growing as blocks are being added to the chain,
which significantly adds to the security of the ledger.

The original blockchain was designed to operate without a central authority (i.e., with no bank or
regulator controlling who transacts), but transactions still have to be authenticated. This is done using
cryptographic keys, a string of data (like a password) that identifies a user and gives access to their
“account” or “wallet” of value on the system.

Each user has their own private key and a public key that everyone can see. Using them both creates a
secure digital identity to authenticate the user via digital signatures and to ‘unlock’ the transaction they
wantto perform. Once the transaction is agreed between the users, it needs to be approved, or authorized,
before itis added to a block in the chain. Proof of Work requires the people who own the computers in the
network tosolve a complex mathematical problem to be able to add a block to the chain.

Bitcoin mining is the process of creating new bitcoins by solving extremely complicated math problems
that verify transactions in the currency. When a bitcoin is successfully mined, the miner receives a
predetermined amount of bitcoin. But mining isn’t easy. The mathematical problem can only be solved by
trial and error and the odds of solving the problem are about 1 in 5.9 trillion. It requires substantial
computing power whichuses considerable amounts of energy. This means the rewards for undertaking the
mining must outweigh the cost of the computers and the electricity cost of running them, as one computer
alone would take yearsto find a solution to the mathematical problem.

As prices of cryptocurrencies and Bitcoin in particular have skyrocketed in recent years, it’s understandable
that interest in mining has picked up as well. But the price of bitcoin has been highly volatile, which makes
it difficult or impossible for miners to know what their payment might be worth whenever they receive
it. If a miner is able to successfully add a block to the blockchain, they will receive 6.25 bitcoins as a
reward.The reward amount is cut in half roughly every four years, or every 210,000 blocks. As of August
2021, bitcoin traded at around
$48,000, making 6.25 bitcoins worth about $300,000. Since cryptocurrency has gained so much
popularityin the past few years, let us know where it originated from.

4
 HISTORY OF CRYPTOCURRENCY

The cryptocurrency was invented in 2008 by an unknown person or group of people using the name
Satoshi Nakamoto. The currency began use in 2009 when its implementation was released as software.
Nakamoto’s identity remains unknown.

On 3 January 2009, the bitcoin network was created when Nakamoto mined the starting block of the
chain, known as the genesis block. Embedded in the Coinbase of this block was the text "The Times
03/Jan/2009Chancellor on brink of second bailout for banks".

The receiver of the first bitcoin transaction was Finney. In 2010, the first known commercial
transaction using bitcoin occurred when programmer Laszlo Hanyecz bought two Papa John's pizzas
for ₿10,000.

Blockchain analysts estimate that Nakamoto had mined about one million bitcoins.

"Satoshi Nakamoto" is presumed to be a pseudonym for the person or people who designed the
original bitcoin protocol in 2008 and launched the network in 2009.

Nakamoto was responsible for creating the majority of the official bitcoin software and was active in
making modifications and posting technical information on the bitcoin forum. Satoshi Nakamoto put out
a white paper on Bitcoin called ‘Bitcoin: A peer to peer electronic cash system’.

By now, we are sure that Bitcoin was not the first attempt at electronic cash.
There were attempts to create electronic cash as early as:

1976: Mutual Distributed Ledgers

(MDL) 1983: e-cash
1997: Hashcash Proof-of-Work
1997: b-money
1998- Bitgold

An interesting fact: 21 million is the maximum number of Bitcoins that will ever be in circulation
because of the Halving. Given below is a demonstration of the Halving:

50 New Bitcoins per block*10 Minutes = 7200 new Bitcoins per

day25 New Bitcoins per block*10 Minutes = 3600 new Bitcoins
per day
12.5 New Bitcoins per block*10 Minutes = 1800 new Bitcoins per day
6.25 New Bitcoins per block*10 Minutes = 900 new Bitcoins per day

And so on until we reach 1 Satoshi which cannot be divided further into smaller parts.

5
 CHARACTERISTICS

1. Decentralized (No Central Authority): In traditional fiat currencies, central authorities and banks
control the financial system. However, with Bitcoin and other cryptocurrencies, these transactions can
be processed and validated by a distributed and open network that is owned by no-one. In all cases, that
central authority becomes the central weakness that leads to the demise of the currency. Most
cryptocurrencies are decentralized and distributed networks of computers that are spread around the
world, also known as nodes. Transactions are verified by network nodes through cryptography and
recorded in a public distributed ledger called a blockchain. The transaction is propagated across the peer-
to-peer network and is replicated by everynode, reaching a large percentage of the nodes within a few
seconds. Although we are still figuring out exactly how we use cryptocurrencies and what for, they are
here to stay. Aside from the other major benefits of cryptocurrencies and blockchain technology, solving
the centralized trust issue alone is a big enough innovation to give cryptocurrencies like Bitcoin their
staying power.

2. Irreversible and Immutable (Cannot be Undone): Immutability in regards to blockchain

and cryptocurrency should follow 3 principles:

 It should be highly improbable or difficult to rewrite history.

 It should be impossible for anyone but the owner of a private key to move funds.

 All transactions are recorded on the blockchain (to guarantee the above 2 principles)

The irreversible and immutable features of cryptocurrency mean that it is impossible for anyone but the
owner of the respective private key to move their digital assets and that transactions cannot be changed
once it is recorded on the blockchain. As we have already seen that the elements of centralization and
trust are removed from cryptocurrency, there is no longer a third party for us to trust to do these things.
Therefore, transaction records are made public and unchangeable (immutable). Although it isn’t
impossible to change the transaction ledger, cryptographic security makes it extremely difficult. It
requires you to compromise the entire network of cryptocurrency users.

3. Anonymous: Since there is no need for a central authority, users do not need to identify themselves
when transacting with cryptocurrency. When a transaction request is submitted, the decentralized
network will check the transaction and verify it and record it on the blockchain accordingly.
Cryptocurrencies, like Bitcoin, use a private key and public key system to authenticate these
transactions. This means users can create anonymous digital identities and digital wallets to transact on
the decentralized system and still be able to securely authenticate their transactions.

4. Limited Supply and Scarcity: Fiat currencies have an unlimited supply, as the central banks can issue
and/or print as many fiat currencies as they want. Central banks often manipulate the value of the
countries’ currencies as part of their economic policies. Leading cryptocurrencies feature maximum
token supply caps or infinite supply with predefined production parameters. Many top cryptocurrencies
such as Bitcoin, Litecoin and Dash have a maximum supply, making them deflationary by nature. Any
increase in the demand or adoption of the cryptocurrency will cause a corresponding increase in the
price.

6
 FEATURES

1. Cryptography: Cryptocurrencies use advanced cryptography in a number of ways. Cryptography

evolvedout of the need for secure communication methods in the second world war, in order to convert
easily- readable information into encrypted code. It also draws from communication science, physics
and electrical engineering. Two main elements of cryptography apply to cryptocurrencies – hashing
and digital signatures: Hashing verifies data integrity, maintains the structure of the blockchain and
encodes people’s account addresses and transactions. It also generates the cryptographic puzzles that
make block mining possible. Digital signatures allow an individual to prove that they own a piece of
encrypted information without revealing that information. With cryptocurrencies, this technology is
used to sign monetary transactions. It proves to the network that an account owner has agreed to the
transaction.

2. Blockchain technology: A blockchain is the decentralised, public ledger or list of a cryptocurrency’s

transactions. Completed blocks, composed of the latest transactions, are recorded and added to the
blockchain. They are stored in chronological order as an open, permanent and verifiable record. A
peer-to-peer network of market participants manage blockchains, and they follow a set protocol for
validating new blocks. Each ‘node’ or computer connected to the network automatically downloads
a copy of the blockchain. This allows everyone to track transactions without the need for central
record keeping.

3. Block mining: Block mining is the process of attaching new transaction records as blocks to the
blockchain. In the process – using bitcoin as an example – new bitcoins get produced, adding to the
total number of coins in circulation. Mining requires a specific piece of software that is used to solve
mathematical puzzles, and this validates the legitimate transactions which make up blocks. These
blocks get added to the public ledger (blockchain) about every 10 minutes. As the software solves
transactions the miner is rewarded with a set amount of bitcoins. The faster a miner’s hardware can
process the mathematical problem, the more likely it is to validate a transaction and earn the bitcoin
reward.

4. Elimination of a Central Party: This is the most distinctive feature between fiat (naira) and
cryptocurrency. For fiat, the government and financial institutions give it the value it has. You can
use a piece of paper to carry out transactions because the government has placed some value on that
piece of paper. Every owner has their own private key. Other than the owner, no- one can get access
to that private key. These currencies don’t care about the specific location: Cryptocurrencies don’t
care at all about the owner’s physical location. You can send cryptocurrency to your relative down the
street or you can send the same to a friend living in another part of the world. And the transactions
would take the same time and would be treated similarly.

5. Part of Peer-to-peer Network: The cryptocurrency would depend on the peer-to-peer network.
This network will make sure that the transactions are carried out safely. The decentralized network
will avoid fraud and interference of third parties in between. It makes the transactions quick and
secure. This network allows the user to pass the bitcoins or other cryptocurrencies to the other user
directly. Others can see the transactions of two people in the network with the bitcoin address.
When the transaction is completed successfully, it is recorded on the ledger. This ledger is visible
to all the users on the network and is also called a blockchain.

7
 ADVANTAGES OF CRYPTOCURRENCY

1. Protection from inflation: Inflation has caused many currencies to get their value declined with
time. Almost every cryptocurrency, at the time of its launch, is released with a fixed amount. The
source code specifies the amount of any coin; like, there are only 21 million Bitcoins released in
the world. So, as the demand increases, its value will increase which will keep up with the market
and, in the long run, prevent inflation.

2. Self-governed and managed: Governance and maintenance of any currency is a major factor for its
development. The cryptocurrency transactions are stored by developers/miners on their hardware, and
they get the transaction fee as a reward for doing so. Since the miners are getting paid for it, they keep
transaction records accurate and up-to-date, keeping the integrity of the cryptocurrency and the records
decentralized.

3. Secure and private: Privacy and security have always been a major concern for cryptocurrencies.
The blockchain ledger is based on different mathematical puzzles, which are hard to decode. This
makes a cryptocurrency more secure than ordinary electronic transactions. Cryptocurrencies, for
better security and privacy, use pseudonyms that are unconnected to any user, account or stored data
that could be linked to aprofile.

4. Currency exchanges can be done easily: Cryptocurrency can be bought using many currencies like
the US dollar, European euro, British pound, Indian rupee or Japanese yen. With the help of different
cryptocurrency wallets and exchanges, one currency can be converted into the other by trading in
cryptocurrency, across different wallets, and with minimal transaction fees.

5. Decentralized: A major pro of cryptocurrency is that they are mainly decentralized. A lot of
cryptocurrencies are controlled by the developers using it and the people who have a significant
amount of the coin, or by an organization to develop it before it is released into the market. The
decentralization helps keep the currency monopoly free and in check so that no one organization can
determine the flow and the value of the coin, which, in turn, will keep it stable and secure, unlike fiat
currencies which are controlled bythe government.

6. Cost-effective mode of transaction: One of the major uses of cryptocurrencies is to send money
across borders. With the help of cryptocurrency, the transaction fees paid by a user is reduced to a
negligible or zero amount. It does so by eliminating the need for third parties, like VISA or PayPal, to
verify a transaction. This removes the need to pay any extra transaction fees.

7. A fast way to transfer funds: Cryptocurrencies have always kept themselves as an optimal solution
for transactions. Transactions, whether international or domestic in cryptocurrencies, are lightning-
fast. This isbecause the verification requires very little time to process as there are very few barriers
to cross.

8
 DISADVANTAGES OF CRYPTOCURRENCY

1. Can be used for illegal transactions: Since the privacy and security of cryptocurrency transactions
arehigh, it’s hard for the government to track down any user by their wallet address or keep tabs on
their data. Bitcoin has been used as a mode of exchanging money in a lot of illegal deals in the past,
such as buying drugs on the dark web. Cryptocurrencies are also used by some to convert their
illicitly obtained money through a clean intermediary, to hide its source.

2. Data losses can cause financial losses: The developers wanted to create virtually untraceable source
code, strong hacking defenses, and impenetrable authentication protocols. This would make it safer
to put money in cryptocurrencies than physical cash or bank vaults. But if any user loses the private
key to their wallet, there’s no getting it back. The wallet will remain locked away along with the
number of coins insideit. This will result in the financial loss of the user.

3. Decentralized but still operated by some organization: The cryptocurrencies are known for its
feature of being decentralized. But, the flow and amount of some currencies in the market are still
controlled by their creators and some organizations. These holders can manipulate the coin for large
swings in its price. Even hugely traded coins are susceptible to these manipulations like Bitcoin,
whose value doubled several times in 2017.

4. Some coins not available in other fiat currencies: Some cryptocurrencies can only be traded in one
or afew fiat currencies. This forces the user to convert these currencies into one of the major
currencies, like Bitcoin or Ethereum first and then through other exchanges, to their desired currency.
This applies to only afew cryptocurrencies. By doing this, the extra transaction fees are added in the
process, costing unnecessary money.

5. Adverse Effects of mining on the environment: Mining cryptocurrencies require a lot of

computational power and electricity input, making it highly energy-intensive. The biggest culprit in
this is Bitcoin. Mining Bitcoin requires advanced computers and a lot of energy. It cannot be done on
ordinary computers. Major Bitcoin miners are in countries like China that use coal to produce
electricity. This has increased China’s carbon footprint tremendously.

6. Susceptible to hacks: Although cryptocurrencies are very secure, exchanges are not that secure.
Most exchanges store the wallet data of users to operate their user ID properly. This data can be stolen
by hackers, giving them access to a lot of accounts.

7. No refund or cancellation policy: If there is a dispute between concerned parties, or if someone

mistakenly sends funds to a wrong wallet address, the coin cannot be retrieved by the sender. This can
be used by many people to cheat others out of their money. Since there are no refunds, one can easily
be createdfor a transaction whose product or services they never received.

9
 ECONOMIC EFFECTS OF CRYPTOCURRENCY

a. Our modern economy relies heavily on digital means of payments. Trade in the form of e-commerce for
example necessitates the usage of digital tokens. In a digital currency system, the means of payment is
simply a string of bits.

b. Crypto currencies could provide a significant benefit by overcoming the lack of social trust and by
increasing the access to financial services (Nakamoto, 2008) as they can be considered as a medium to
support the growth process in developing countries by increasing financial inclusion, providing a better
traceability of funds and to help people to escape poverty.

c. Essentially, the digital token can be counterfeited by using it twice which is the so-called double-
spending problem.

d. This third-party is often the issuer of the digital currency itself, one prominent example being PayPal, and
the value of the currency derives from the fact that users trust the third-party to prohibit double- spending

e. As seen in the above figure Cryptocurrencies such as Bitcoin go a step further and remove the need for a
trusted third-party. Instead, they rely on a decentralized network of validators to maintain and update
copies of the ledger).

f. This necessitates that consensus between the validators is maintained about the correct record of
transactions so that the users can be sure to receive and keep ownership of balances.

g. The above paragraph and chart shows the changes in day to day transactions after the
introduction ofcrypto compared to the transactions with money.

10
 OWNERSHIP OF CRYPTOCURRENCY

We throughout the course of this project are talking about the Crypto currency and the regulations ,legal
status , different types of cryptocurrency , but in this segment we discuss that who and what the
ownership aspect of crypto currency lies with, not to be mistaken by crypto coins like bitcoin , etherium ,
NFTs etc , weare gonna talk about crypto as a whole.

h. In a June 2018 ING survey on cryptocurrencies, 8% of Americans, 6% of UK residents,

8% of German residents, 6% France residents and 10% Spain residents reported owning
cryptocurrencies.

i. In the 2019 IE survey, there has been an increase in all countries with the exception of
Germany, which remained unchanged. Specifically, there was a 3% increase in
American ownership of cryptocurrencies, a 2% increase in UK ownership, a 1%
increase in French ownership and a 3% increase in Spanish ownership.

j. As of 2021, we estimated global crypto ownership rates at an average of 3.9%, with over
300 millioncrypto users worldwide. And over 18,000 businesses are already accepting
cryptocurrency payments.

k. Diving into the topic of crypto coins , we see that the blockchain technology has
developed by operating autonomously, outside of the jurisdiction of any state. By its
design, a blockchain does not require any traditional legal instruments or intermediaries in
order to transfer crypto assets between users through blockchain applications worldwide .

In conclusion, the practice has shown that within decentralized and pseudonymous systems, the mere
possession of a private key (which can be subsequently protected by new technological solutions) should
beconsidered sufficient to prove crypto assets’ ownership.

11
 CAN CRYPTO BE MONEY

This is the conclusion segment of our project , which states the biggest question In current times and
holds abig impact on the way we see the investment market and money as a whole. Can cryptocurrency
be
considered “MONEY”? To answer this question, let us look into the understanding we have of crypto
after all the research and analysis and information we’ve collected on this topic.
Cryptocurrencies have a potential future and even though they have fluctuating values, these digital
assets might find a way to become an effective means of payment. Crypto currency exchanges are urging
the government to define cryptocurrencies as digital assets and not as currency. As per industry experts,
this would help the government address all its legitimate concerns with regards to financial risks
associated withcrypto.

Paying With Cryptocurrency

Cryptocurrency payments do not come with legal protections:
Cryptocurrency payments typically are not reversible:

Some information about your transactions will likely be public:

As discussed in the previous section, cryptocurrencies have not yet manifested themselves as intended by
their creators, mainly, as a useful form of money, relative to other already established options (physical
and digital). This does not mean that crypto currencies will not become slowly integrated into societies
as their infrastructure improves. For example, Facebook’s Libra aims to widen access to financial
services and lowertransaction costs while ensuring the value of the coin by being fully backed by ‘low -
volatility assets, including bank deposits and government securities in currencies from stable and
reputable central banks’.
Holders of Libra will not be paid interest that the underlying assets generate – the cash flow will be used
for the Foundation. Over the past ten years, attention to money and the financial systems has come under
greater scrutiny by a wider public concerned with current levels of transparency, management,
accountability and fairness.

Unfortunately, in practice, cryptocurrencies are struggling to uphold their creator’s objectives, given that
no existing cryptocurrency has been universally successful in fulfilling the role of ‘money’. This is partly
due to the failure in practice for a decentralized system to work in the presence of large mining
consortiums, a lack of price stability, high transaction costs with large electricity and, potentially lower
degrees of transparent governance. There also exists a general distrust of new currencies issued by new
institutions. While central banks are not perfect, in most advanced economies they have built a trust
premium compared to private sector companies, which makes them better candidates in the opinion of
most citizens for issuing money and managing/regulating financial transactions.

12
 BITCOIN

INTRODUCTION TO BITCOIN

One of the most popular cryptocurrency wallets is Bitcoin which was invented by an unknown person or
group of people using the name Satoshi Nakamoto in 2008. Bitcoin is a cryptocurrency, a form of
electroniccash.It is a decentralized digital currency that can be sent from user to user on the peer -to-peer
Bitcoin network without the need for intermediaries, where transactions happen through a public ledger
called blockchain, handling users’ data anonymously. Twelve years since its introduction, Bitcoin is
today the most widely used and accepted digital currency.

Bitcoin is an opt-in currency that is controlled by the 'consensus' or will of its users. Instead of relying on
a single trusted intermediary, like a bank or credit card network, Bitcoin relies upon a large number of
competing "miners" to verify transactions. Bitcoins are not physically present, so that only balances are
kept on a public wallet in the cloud.

BITCOIN LOGO

FEATURES OF BITCOIN
1. Control against fraud: It provides users with top level of protection against most common frauds
like chargebacks or unwanted charges. Because of the Security Users can encrypt their wallet and
have complete control over their money. So there is no chance of any type of fraud.

2. Globally accessible: Bitcoin allows any bank, business or individual to securely send and
receivepayments anywhere at any time in a few minutes. All types of Payments in the world
are acceptable.

3. Cost efficient: With Bitcoin transactions can be possible directly without any mid person. The
transaction time and cost is much less as compared to other payment systems.

4. Transparency: All Bitcoin transactions are public and transparent to all users. The Block chain
stores alltransaction details. Where users can verify at any time.

13
WORKING OF BITCOIN

Individuals can use Bitcoins to make payments to other individuals or merchants without involving a
third party, like a bank or financial institution, for the purpose of validation. Instead, transactions are
cleared and validated within the system through the blockchain. Most cryptocurrencies are based on
blockchain technology.
When one creates a Bitcoin wallet to store Bitcoin, the person will receive a public key and a private key.
Public keys and private keys are a set of long numbers and letters; they are like his/her username and
password. People need their public key if they want to send money to them. Because it is just a set of
numbers and digits, nobody needs to know their name or email address etc. This makes Bitcoin’s users
anonymous. But the private key is not disclosed. On the blockchain, a private key is one’s identity.
Privatekey is used to access Bitcoin. If someone sees it, they can steal all the Bitcoins in the account or
wallet.

LEGAL STATUS OF BITCOIN

The legal status of Bitcoin and related crypto instruments varies substantially from country to country and
isstill undefined or changing in many of them.
Countries include where Bitcoin legalised are United States, France, Ireland, Russia, Ireland, Japan,
Switzerland, Singapore, Norway, Germany, South Africa, Costa Rica, Jamaica, Kyrgyzstan, Venezuela,
Brazil, Argentina, Chile, Philippines, Israel, Lebanon, Turkey, Hong Kong, Czec Republic, Venezuela,
Turkey, Uzbekistan, Costa Rica, Mexico, Ukraine, Denmark, Finland, Iceland, Sweden, Bulgaria,
Greece,Italy.
Bitcoins are totally banned and transactions based on Bitcoin are illegal in countries like Nepal, China,
Pakistan, Taiwan, Cambodia, Indonesia, Bangladesh, Iran, Saidi Arabia, Colombia, Ecuador, Bolivia,
Egypt, Morocco and Algeria. But in India, Canada, Jordan, Vietnam and Thailand Bitcoin is legal but
there is a banking ban imposed.

ADVANTAGES OF BITCOIN

1. No boundaries: Payments made in this system are impossible to cancel. The coins cannot be
faked, copied or spent twice. These capabilities guarantee the integrity of the entire system. Every
month the number of online shops, resources, and companies accepting BTC is expanding.

2. Low BTC operation cost: The BTC cryptocurrency works as physical cash, combining the
functions ofe-commerce. No need to pay commission and fees to banks and other organizations.

3. Decentralization: There is no central control authority in the network, the network is distributed
to allparticipants, each computer mining Bitcoins is a member of this system. This means that the
central authority has no power to dictate rules for owners of Bitcoins.

4. Easy to use: It takes approximately 5 minutes to create a BTC wallet and immediately starts to
use itwithout any questions and commissions.

14
DISADVANTAGES OF BITCOIN

1. Bitcoin transactions are irreversible: In the case of Bitcoins, every time Bitcoins change hands and
change wallets, the result is final. Simultaneously, there is no insurance protection for your Bitcoin
wallet. Ifyou lose your wallet's hard drive data or even your wallet password, your wallet's contents
are gone forever.

2. Cannot be Frozen or Audited: Bitcoin wallets cannot be seized or frozen or audited by banks and
law enforcement. Bitcoin wallets cannot have spending and withdrawal limits imposed on them.
Nobody but the owner of the Bitcoin wallet decides how the wealth is managed.

3. Bitcoin is not very easy to use: Private keys, public keys, opening and using a wallet etc. are not
very easy for people who aren’t confident using computers. When we want to send a payment to
someone, we have to type a long set of numbers and letters (their public key) into the computer.
Bitcoin needs to become easy to use so that everyone in the world can use it, just like browsing the
internet.

4. Technical weakness: Bitcoins can be double-spent in some rare instances during the confirmation
interval. While the system eventually catches the double-spending and negates the dishonest
second transaction, if the second recipient transfers goods to the dishonest buyer before receiving
confirmation ofthe dishonest transaction, then that second recipient loses both the payment and the
goods.

CHALLENGES OF BITCOIN

1. Using for Alleged activities: Several incidents have occurred stating that Bitcoins have been
used forillicit and illegal activities around the globe like money laundering, black marketing,
tax evasion etc.

2. No Ombudsman: There is no forum, where a user can possibly reach out for any help or
grievance, as aresult of which Indian consumers are being exposed to transactional and
informative risks.

3. Upcoming entry of India’s own Cryptocurrency: As per business standard report the Indian
government is going to introduce its own Cryptocurrency similar to Bitcoin called “Lakshmi”. It’s
discussionis going on.

4. Deep embedment on local currency: EY’s Global Innovation Leader Paul Brody has indicated
that Bitcoin and other cryptocurrency lack any concrete practical use in the country, given that
local currency isdeeply embedded in the economy.

15
BITCOIN PRICE HISTORY CHART (2009-2021)

16
 ETHEREUM

INTRODUCTION TO ETHEREUM

Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ether (ETH or Ξ)
is the native cryptocurrency of the platform. Amongst cryptocurrencies, it is second only to Bitcoin in
market capitalization. Ethereum was conceived in 2013 by programmer Vitalik Buterin. In 2014,
development workcommenced and was crowdfunded, and the network went live on 30 July 2015. The
platform allows anyone to deploy permanent and immutable decentralized applications onto it, with
which users can interact.
Ethereum is a blockchain-based software platform that can be used for sending and receiving value
globallyvia its native cryptocurrency, ether, without any third-party interference. First proposed in 2013
by Russian- Canadian programmer Vitalik Buterin, Ethereum was designed to expand the utility of
cryptocurrencies by allowing developers to create their own special applications.

ETHEREUM LOGO

FEATURES OF ETHEREUM

1. Ether
Ether (ETH) is Ethereum’s cryptocurrency. It is the fuel that runs the network. It is used to pay for the
computational resources and the transaction fees for any transaction executed on the Ethereum network.
Ether is a peer-to-peer currency. Apart from being used to pay for transactions, ether is also used to buy
gas, which is used to pay for the computation of any transaction made on the Ethereum network.

2. Smart Contracts
A smart contract is a simple computer program that facilitates the exchange of any valuable asset
betweentwo parties. It could be money, shares, property, or any other digital asset that you want to
exchange.
Anyone on the Ethereum network can create these contracts.

3. Ethereum Virtual Machine

EVM is designed to operate as a runtime environment for compiling and deploying Ethereum-based
smart contracts. EVM is the engine that understands the language of smart contracts, which are written in
the Solidity language for Ethereum.

4. Decentralized Applications (Dapps)

A Dapp consists of a backing code that runs on a distributed peer-to-peer network. It is a software
designed to work in the Ethereum network without being controlled by a centralized system.

17
5. Decentralized Autonomous Organizations (DAOs)
A DAO is a digital organization that operates without hierarchical management; it works in a
decentralized and democratic fashion. So basically a DAO is an organization in which the decision-
making is not in the hands of a centralized authority but preferably in the hands of certain designated
authorities or a group or designated people as a part of an authority.

WORKING OF ETHEREUM

The Ethereum blockchain is very similar to that of bitcoin, but it's programming language enables
developers to write software through which blockchain transactions manage and automate
specificoutcomes. This software is known as a smart contract.

The miner consolidates recent cryptocurrency transactions into a 'block’

The block is cryptographically secured and linked to the existing blockchain.

The miner earns a block reward, which they can inject directly back into the market

18
 A fixed number of anonymous parties agree to a set of terms, and a contract is coded into the
blockchain.

The triggering event takes place, and the contract is fulfilled

The terms of the agreement are carried out among the relevant parties.

LEGAL STATUS OF ETHEREUM

In 2021, countries where Ethereum is banned or its payments are banned alongside other
cryptocurrencies (asof March 2021) are: Afghanistan, Pakistan, Algeria, Bolivia, Bangladesh, Republic
of Macedonia, Saudi Arabia, Vanuatu, Vietnam.
Countries where Ethereum is legal
Japan, Gibraltar, Malta, Ukraine, Switzerland, The Netherlands, Lithuania, Estonia, United Kingdom,
Germany, Bermuda, Slovenia, Singapore, Georgia, Belarus, Hong Kong.

Countries where Ethereum is neither legal nor illegal

Albania, Andorra, Argentina, Barbados, Colombia, French Guiana, Gabon, Jamaica, Jordan, Kazakhstan,
Kenya, Kosovo, Kyrgyzstan, Malaysia, Maldives, Mauritius, Nigeria, Panama, Paraguay, Peru, Tunisia,
United Arab Emirates, Tanzania, Uruguay.

19
ADVANTAGES OF ETHEREUM

1. Large, existing network- The benefits of Ethereum are a tried-and-true network that has been tested
through years of operation and billions of value trading hands. It has a large and committed global
community and the largest ecosystem in blockchain and cryptocurrency.
2. Wide range of functions. Besides being used as a digital currency, Ethereum can also be used to
processother types of financial transactions, execute smart contracts and store data for third-party
applications.

3. Constant innovation. A large community of Ethereum developers is constantly looking for new
ways toimprove the network and develop new applications. “Because of Ethereum’s popularity, it
tends to be the preferred blockchain network for new and exciting (and sometimes risky)
decentralized applications,” says Avital.

4. Avoids intermediaries. Ethereum’s decentralized network promises to let users leave behind third-
partyintermediaries, like lawyers who write and interpret contracts, banks that are intermediaries in
financial transactions or third-party web hosting services.

DISADVANTAGES OF ETHEREUM

1. Rising transaction costs: Ethereum’s growing popularity has led to higher transaction costs.
Ethereum transaction fees, also known as “gas,” hit a record $23 per transaction in February 2021.

2. Potential for crypto inflation: While Ethereum has an annual limit of releasing 18 million
Ether per year, there’s no lifetime limit on the potential number of coins.

3. Steep learning curve for developers: Ethereum can be difficult for developers to pick up as
they migrate from centralized processing to decentralized networks.

4. Unknown future: Ethereum continues to evolve and improve, and the ongoing development of
Ethereum 2.0 holds out the promise of new functions and greater efficiency. This major update to
the network, however,is creating uncertainty for apps and deals currently in use.

CHALLENGES OF ETHEREUM

1. Building Future-Proof Architecture: There are many unique challenges associated with this new
evolvingtechnology, and future-proof building architecture is one of them. As Ethetherum is a
decentralized currency and code written on this platform cannot be altered or modified meaning, there
is merely no possibility of backdoors.

2. Difficulties with Smart Contracts: Debugging smart contracts while using the Ethereum platform
is complex, as it is hard to find out where the transaction failed-out. Finding better-debugging tools
is the onlynear solution to build better infrastructure.

20
3. Network Backlogs: Bitcoin networks have always suffered backlogs, and Ethereum is another
platform based on blockchain technology that suffers from the same. Wallet initialization is one of
the prime concerns associated with this platform because if a contract creation transaction is stuck in
between and the user starts sending other transactions at the same time, in that case, it will be
impossible for the Ethereum network to fireappropriate contract events.

4. Connecting Ethereum with the Internet: Connecting Ethereum with the rest of the world requires
manual effort as it cannot be done automatically, which means it adds a burden at the developer end.
Also, Ethereum developers need to set up the whole infrastructure via separate Ethereum nodes and
therefore leading to unseen hazards.

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 NON-FUNGIBLE TOKEN (NFT)

INTRODUCTION
NFTs are one-of-a-kind digital assets that represent real-world items. NFTs are not interchangeable and
are different from cryptocurrencies which are fungible tokens. This means that NFTs cannot be traded the
way cryptocurrencies are. NFTs are managed by a digital ledger and all transactions are done online.
NFTs cannot be traded for each other as they are unique representations of real-world assets. NFT is two
things. First, it’s aunique digital asset created and traded via blockchain technology. Second, it’s proof of
authenticity. Thus an NFT is a digital property and evidence that it’s not fake or counterfeit.

NFT LOGO

An NFT can be most anything digital, such as art, images, videos, music, memes, and tweets. The process
of creating NFTs is “minting,” similar in concept to metal coins that are minted (stamped) to confirm their
legitimacy. Minting an NFT produces a one-of-a-kind token on the blockchain and an electronic certificate
of authenticity. Digital assets such as GIF images and MP4 videos are easy to copy and distribute. Buyers
need to know the seller is the legal owner and the asset is original. Blockchain technology validates both by
storing a record of who created the NFT and each subsequent transaction. These records cannot be forged
because they reside in a digital ledger on thousands of computers across the internet. A hacker may falsify
one record on one computer but not on all the worldwide computers that host the blockchain.
Fungibility” in economics means a good is interchangeable. Examples include commodities, currency, and
common stocks. Thus a non-fungible good is not interchangeable. It’s unique — one of a kind. Creators and
traders of NFTs profit from supply and demand. Creators limit the supply of NFTs while attempting to
increasedemand via social media, traditional media, and trading platforms, such OpenSea, Rarible,
CryptoPunks, NBA Top Shot, and CryptoKitties etc. Most NFT traders are crypto investors. Requiring
cryptocurrency for NFT purchases is wise for those investors as it increases widespread adoption,
increasing demand and value.
When you buy an NFT, you are essentially buying a digital recording of ownership of a token, which can
then be transferred to a digital wallet. The recording (or ledger) where that token is certified as proof of
ownership iscalled a blockchain. This is similar technology to where Bitcoin, Ethereum, Litecoin and other
cryptocurrencies trade. Simply put, NFTs are a way to provide digital ownership.

22
FEATURES

1. Indivisibility: NFTs have historically been indivisible when it comes to their utility. For example, a
plane ticket cannot be purchased and used partially — someone must buy it in full because only a
single person canuse the seat.

2. Scarcity : NFTs can be scarce, and that's one reason driving their value. Though developers can
generate asmany assets as they like, it is equally within their power to limit the number of NFT for
scarcity.

3. Uniqueness: NFTs are also unique because no two NFTs are the same — they're not interchangeable.
The metadata of each NFT is an unalterable record that gives it the certificate of authenticity.

4. Ownership: NFTs live on a DLT within an associated account. The original creators of the NFT control
the private key of that account where the NFT lives, and they're free to transfer that NFT to any account.
Therefore, the ideal of transparency associated with NFTs is only partially manifest, and is not applicable
or traceable before an in-depth case-by-case study of current uses.

5. Transparency: Because public distributed ledgers are decentralized and immutable, where records of
token issuance, transfer, and activity can be publicly verified, buyers can trust and verify the authenticity
of a specificNFT.

6. Interoperability: NFTs can be traded, purchased, or sold across various DLTs using a decentralized
bridgeor centralized custodial service. NFTs have the ability of different computerized products or
systems to readilyconnect and exchange information with one another, in either implementation or
access, without restriction.

WORKING OF NFTs
Here we deal with the question of how NFTs work and circulate in the real world market and how people
can invest in NFTs . When an artist chooses to mint their work and turn it into an NFT, they turn it into a
digital collector’s item. So whether you’re minting a one-of-a-kind piece of content or sharing a limited
edition of 25prints, you’re able to create digital scarcity — allowing your work to gain in value. So, if
you’ve minted a digital artwork, someone who has a copy of it they’ve pulled from a Google Image search
may enjoy it privately but they won’t be able to sell it and cut you out of the royalty chain (or claim the
work as their own).Unless their copy is an NFT, it is immediately identifiable as a fake — NFTs can only
have one owner at a time, and each one is unique. Can NFTs be copied, stolen or hacked? Copied? No.
When content creators create a digital asset, an NFT gives them the chance to not only show authenticity but
to then profit from their work. With things like memes that are widely circulated, this could mean a
significant income stream for the creator.
• NFTs are based on and supported by a particular blockchain. The most popular one for non-fungible
tokens iscurrently the Ethereum blockchain.
• You’ll need to have a cryptocurrency wallet, complete with cryptocurrency. The most widely used
one iscurrently ether (ETH).

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ADVANTAGES
Some of the advantages of NFTs that are often stated include:

1. They give artists ownership over digital assets : When content creators create a digital asset, an NFT
givesthem the chance to not only show authenticity but to then profit from their work. With things like
memes that are widely circulated, this could mean a significant income stream for the creator.

2. They’re unique and collectable: Many people enjoy the excitement that comes with collecting
something that’s unique or rare. NFTs provide an extra layer of legitimacy to collectable content,
particularly in the formof digital assets.

3. They’re immutable: Because non-fungible tokens are blockchain-based, they can never be altered,
erased,or replaced. Again, when proving the origin or authenticity of digital content, this is a valuable
quality.

4. They can include smart contracts: Smart contracts are another feature of blockchain technology that
are quite intriguing. Essentially, they can store instructions that are executed when certain conditions
are met. As such, an NFT with a smart contract could give artists a percentage of the profit when the
NFT is sold in future.

5. Smaller files much faster: NTFS is able to write smaller files much faster than a file system like
FAT32. Moreover, the file size is not limited. By intelligently selecting the sectors to be written, the
file system reducesthe problem of fragmentation and minimizes the need for constant
defragmentation. Data is lost less frequently with NTFS, because the file system recognizes damaged
sectors faster and removes the files stored there.
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DISADVANTAGES

1. It’s a speculative market: The big question remains as to whether there’s any true value in NFTs. Are
they a long-term investment? Or simply a passing fad? It’s hard to tell. Currently, the only value is based
on the emotive quality of NFTs.

2. Digital assets can be copied: Just because someone owns the NFT of a digital asset doesn’t mean that
copies of it don’t exist. Art can be copied and pasted, GIFs reposted thousands of times, and videos
posted onvarious websites. Just because you own the NFT doesn’t mean you control the asset – you
simply have a token of authenticity.

3. Environmental costs: A lot has been said about the environmental impacts of blockchain-
based cryptocurrencies such as Ether and Bitcoin. It takes a lot of computing power to enter
records onto ablockchain. There is a big question as to whether assets based on blockchain are
sustainable.

4. They can be stolen: Although the technology behind NFTs is relatively secure, many of the exchanges
and platforms aren’t. As such, there have been several reports of stolen NFTs after cyber security
breaches.

5. NFTs can be Hacked: Unfortunately, yes they can. But that’s only if your NFT platform suffers from
slackcybersecurity measures or user accounts aren’t properly protected with strong passwords. So these
are the advantages and disadvantages of the Non- fungible token (NFTs) in the real world scenarios.

LEGAL STATUS

1. Copyright: When you buy an NFT you are not buying the digital work itself. What you are buying is merely
a collection of code known as metadata, which links to the ‘true’ version of that work. This metadata is written
into the blockchain and contains information about where the original work is located and who owns that
particular version of the work.

2. Smart contracts: Smart contracts govern NFT sales. These are digital contracts where the terms of the
agreement are written in the code and are embedded within the purchase tokens. SMART contracts are usually
programmed to operate automatically when a predefined set of conditions are fulfilled.

3. Money laundering: Given the exorbitant sums which are being spent in the NFT market, and the
widespread use of cryptocurrency, concerns have been raised about whether these transactions are being used
to circumvent the increasingly robust anti-money laundering regulations being implemented around the world.

4. Estate and succession planning: This is an increasingly important question given the number of estates
which now have a digital footprint. This has emphasised the need for thorough estate planning when it comes
to assets like NFTs.

5. Taxation: Another area where the law has not yet caught up with the increase in popularity of NFTs is in
the field of taxation. There is a dearth of legislation and guidance dealing specifically with NFTs globally.

25
CHALLENGES OF NFT
The final aspect in this discussion would turn our attention towards the challenges in the future for NFTs.
While NFTs are financially attractive, they also have many prominent complications. So, let us take a deep
diveinto an understanding of the challenges for NFT, which could restrict their growth.

1. Environmental Impact : One of the formidable NFT challenges comes in the form of the
environmental impact of minting NFTs. The example of one of the most prominent crypto art
transactions in recent times points to the collection of short films by a Canadian music artist known as
Grimes. The artist produced the short films along with her brother. However, the NFT-based videos
were able to achieve a price tag of around $6 million. Although this is a good implication for the future
of NFTs, the event also showcases an important doubt about their environmental impact.

2. Seller Tax: Seller tax is also another prominent challenge of NFT, which could affect its growth in the
future. Buyers and sellers in the NFT landscape might discover the steep taxes as an undermining factor
for joining the NFT revolution. For example, Beeple is apparently supposed to incur taxes in the amount
of almosttens of millions of dollars. Therefore, it is imperative to establish strict and precise taxation
laws with the increasing presence of NFTs. It can improve the integrity of the market while encouraging
the confidence of NFT traders.

3. Ownership Rights: The concerns of ownership rights are also prominently evident as NFT challenges
for the future. How can one of the notable benefits of NFTs present a challenge for their adoption and
growth? The music industry has recently turned into a favourable platform for the popularity of NFTs.
The topic of ownership rights with NFT-based music sales is quite controversial, just like the
environmental impact of NFTs. Even if NFTs provide clear traceability of ownership, they don’t offer
certainty regarding application of rights and ownership of original creators in an NFT-based music sale.

26
 POLYGON

Introduction
Polygon, formerly known as the Matic Network, is a scaling solution that aims to provide multiple tools
to improve the speed and reduce the cost and complexities of transactions on blockchain networks.
Polygon was created in India in 2017 and was originally called the Matic Network. It was the brainchild
of experienced Ethereum developers—Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun, as well as
Mihailo Bjelic. At the center of Polygon’s vision is Ethereum, a platform that is home to a range of
decentralized applications, ones where you can join virtual worlds, play games, buy art, and participate in
a range of financial services. However, this much activity on its blockchain has rendered Ethereum almost
unusable, asthe cost of transmission is rising and traffic is becoming clogged.

LOGO

In a nutshell, Polygon bills itself as a layer-2 network, meaning it acts as an add-on layer to Ethereum that
does not seek to change the original blockchain layer. Like its geometric namesake, Polygon has many sides,
shapes, and uses and promises a simpler framework for building interconnected networks.

Features

1. ETH Compatibility : Industry dominance, established tech stack, tools, languages, standards,
enterpriseadoption

2. Scalability: Dedicated blockchains, scalable consensus algorithms, custom Wasm

execution environments

3. Interoperability : Modular ''security as a service'', provided either by Ethereum or by a

pool ofprofessional validators

4. User experience : Comparable to Web2, “zero-gas” transactions, instant (deterministic)

transaction finality

5. Modularity: High customizability, extensibility and upgradeability, short time-to-market,

community collaboration

27
Working

Polygon is a Layer-2 scaling solution created to help bring mass adoption to the Ethereum platform. It
catersto the diverse needs of developers by providing tools to create scalable decentralized applications
(dApps) that prioritize performance, user experience (UX), and security. Polygon achieves this in large
part due to the underlying technical architecture of its Proof-of-Stake (PoS) Commit Chain and its More
Viable Plasma L2 Scaling solution.
Polygon functions primarily through Commit chains, which are transaction networks that operate adjacent
to a main blockchain — in this case Ethereum. The Commit chains bundle together batches of transactions
and confirm them en masse before returning data to the main chain. Theoretically, Polygon will eventually
have thousands of chains scaling together to increase throughput, with the potential to one day generate
millions of transactions per second (TPS) when attached to a mainchain like Ethereum. Polygon currently
only makes use of Commit Chain connectivity to improve transaction times, but will eventually make use
of other
Layer-2 scaling mechanisms such as Optimistic Rollups.

Advantages of polygon
Polygon has quite a few advantages over its parent chain Ethereum. One of these advantages is the faster
transaction speeds that are also at a lower cost than on Ethereum, making it an attractive chain to use for
decentralized finance applications. Another advantage is that you can stake Matic to ear n rewards from
securing the network. While staking on Ethereum is possible, the barrier for entry is much higher than with
Polygon.
The biggest advantage of Polygon is that it has a lot of potential use-cases, and it is built to scale as user
volume increases, which means that in theory it can be used for mass adoption. Projects have begun
migrating to Polygon, signalling a shift in users towards the newcomer.

- Low transaction fees

- Extremely fast transactions per second
- Can scale and offers staking rewards
- Great for decentralized finance app

Disadvantage of polygon
There are not really any disadvantages to Polygon itself. The main disadvantage would be more
competition arising in the form of other scaling solutions, whether for Ethereum or other blockchains .
Changing their focus to solely helping scale Ethereum rather than any blockchain project could pay off
greatly, but it could also mean that another project comes around that does what Polygon aimed to do when
it was still called Matic Network.
Currently, the Market Cap to Total Value Locked ratio is also quite high (over 1), meaning the value of
the asset outweighs the value of the assets locked into the network. While this does not mean anything this
earlyin Polygon’s history, if over time the ratio remains higher than 1, it may be being overvalued.

- Market Cap/ Total Value Locked Ratio is high (asset may be overvalued when this occurs)
- Competition from other scaling solutions will arise.

28
CHALLENGES

Challenges faced by polygon are that Unfortunately for Polygon, Ethereum announced Ethereum 2.0 on
1stDecember 2020. According to the experts, the upgrade will take effect by the end of 2021 or in the early
months of 2022. The upgrade will move Ethereum from the proof-of-work (POW) blockchain to the proof-
of-stake (POS) network that employs sharding. This will move Ethereum from its current state of
processing 15 to 30 transactions to approximately 100,000 transactions per second (TPS). This will
ultimately surpass the 65,000 transactions per second (TPS) being offered by Polygon.
Once Ethereum can scale relatively faster, existing and up-and-coming decentralized applications will trust
Ethereum 2.0 to host their innovations with no network congestion and relatively higher transaction costs
problems. In the long term, this will cut the number of users on Polygon in half. With time, Polygon may
not have the increasing usage rates it is currently enjoying. This could affect the price of its native token,
MATIC in the long term.
trading and investing in Polygon (MATIC) and other digital assets is risky. Thousands of people have
cumulatively lost millions of dollars.

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 DOGECOIN

INTRODUCTION TO DOGECOIN

Dogecoin is a crypto currency, like Bitcoin or Ethereum—although it’s a very different animal than either
ofthese popular coins. Dogecoin was originally created at least in part as a lighthearted joke for crypto
enthusiasts, and took its name from a once-popular meme. Despite this unusual origin story, it has exploded
in popularity in 2021—as of writing, Dogecoin has become the fifth largest crypto currency by market cap.
Software engineers Billy Marcus and Jackson Palmer created Dogecoin in late 2013. Palmer branded the
crypto currency’s logo using a meme popular at the time that featured the deliberately misspelled word
“doge” to describe a Shiba Inu dog.
“Doge really started to poke fun at Bitcoin,” said Pat White, CEO of Bit wave. In its early days, a
community of enthusiasts arranged publicity stunts to raise Dogecoin’s profile, gathering funds to send
the Jamaican Bobsleigh team to the 2014 Olympics, for instance, or sponsoring a NASCAR driver.
In early 2021, Dogecoin gained cult status on Reddit’s WallStreetBets message board—the prime
instigator behind the GameStop affair in January—where enthusiasts had promised to propel its value “to
the moon” (that was before all discussion of crypto was banned on the sub reddit).
Today Dogecoin is no joke, having exploded in value and gained more than 5,000% in 2021. Among its
boosters is Tesla CEO Elon Musk, who called Dogecoin his favorite crypto currency. Musk also named
Dogecoin the “people’s crypto,” and promised to plant a physical Dogecoin token on the moon. Originally
formed as a joke, Dogecoin was created by IBM software engineer Billy Markus and Adobe software
engineer Jackson Palmer. They wanted to create a peer-to-peer digital currency that could reach a broader
demographic than Bitcoin. In addition, they wanted to distance it from the controversial history of other
coins. Dogecoin was officially launched on December 6, 2013, and within the first 30 days, there were
overa million visitors to Dogecoin.com.
Palmer is credited with making the idea a reality. At the time, he was a member of the Adobe Systems
marketing department in Sydney. Palmer had purchased the domain Dogecoin.com and added a splash
screen, which featured the coin's logo and scattered Comic Sans text. Markus reached out to Palmer after
seeing the site, and started efforts to develop the currency. Markus had designed Dogecoin's protocol based
on existing cryptocurrencies Luckycoin and Litecoin, which use scrypt technology in their proof-of-work
algorithm. The use of scrypt means that miners cannot use SHA-256 bitcoin mining equipment, and instead
must use dedicated FPGA and ASIC devices for mining which are known to be more complex to produce.

LOGO OF DOGECOIN

30
FEATURES OF DOGECOIN

1. Peer to peer: Peer-to-peer refers to the direct exchange of some asset, such as a digital currency,
betweenindividual parties without the involvement of a central authority. A strictly peer-to-peer exchange
of currency was the primary goal driving the creation of Bitcoin, the most widely used cryptocurrency.
This is also a part of the feature of a dogecoin.

2. Open source: Open source for blockchain means that it is a very public, transparent way to keep
records.This should all but eliminate any kind of operator tampering or revisions. Dogecoin itself
facilitates transparency by requiring new entries to include a proof of work.

3. Scrypt algorithm: Scrypt is a password-based key derivation function specifically designed to

hinder large-scale custom hardware attacks by requiring large amounts of memory, making it a suitable
ASCI- resistant hashing algorithm. The algorithm was popularized by Litecoin, and is also used in
coins like dogecoin .

4. Unlimited supply: Like a lot of cryptocurrencies, Dogecoin can be mined (see more on mining, here).
Since there is an unlimited supply of Dogecoin tokens, the value of a single token is very low compared
to other altcoins.

WORKING OF DOGECOIN
Dogecoin is a crypto currency that runs on blockchain technology, similarly to Bitcoin and Ethereum.
Blockchain is a distributed, secure digital ledger that stores all transactions made using a decentralized
digital currency.
All holders carry an identical copy of the Dogecoin blockchain ledger, which is frequently updated with all
new transactions in the crypto currency. Like other cryptocurrencies, Dogecoin’s blockchain network uses
cryptography to keep all transactions secure.
People called miners use computers to solve complex mathematical equations in order to process
transactions and record them on the Dogecoin blockchain—a so-called “proof of work” system. In
exchange for processing transactions and supporting the blockchain ledger, miners earn additional
Dogecoin, which they can then hold or sell on the open market.
Dogecoin may be used for payments and purchases, but it’s not a very effective store of value. This is chiefly
because there is no lifetime cap on the number of Doge coins that may be created by mining—meaning that
the crypto currency is highly inflationary, by design. The blockchain rewards miners for their work by creating
millions of new Doge coins every day, which makes it very challenging for speculative price gains in Dogecoin
to hold up over time. As with Bitcoin and Ethereum, Dogecoin uses blockchain technology. This decentralized
ledger records all digital currency transactions that take place using a distributed, secure ledger. The
blockchain ledger is updated frequently with all new transactions, so every holder has identical copies. All
Dogecoin transactions use cryptography, as do those of other cryptocurrencies.
The Dogecoin blockchain is a decentralized database in which transactions are recorded using computers,
known as miners, through complex mathematics. By supporting the blockchain ledger and processing
transactions, miners earn additional Doge coins, holding or selling.

31
LEGAL STATUS OF DOGECOIN
Dogecoin was created in 2013 by the software engineers Billy Markus and Jackson Palmer as a fork of
the source-code of Litecoin. DOGE is a decentralized peer-to-peer crypto currency enabling easy money
transfers – ‘a people crypto’, as some of us like to say. Considering that DOGE was originally developed
to be nothing more than a funny joke (e.g., a meme coin), its current market cap of USD 7.4 billion is
remarkable and fascinating.
As celebrities, such as Elon Musk and Snoop Dogg, currently create a strong hype around DOGE in the
social media sphere, it remains to be seen how far DOGE’s market cap and use case will expand this year.
One could claim that DOGE’s future still depends on the random acts of social media rock(et) stars rather
than the actual characteristics and use case of DOGE, but as with any other crypto currency, one major use
case could ensure DOGE’s permanent foothold in the industry. However, this far DOGE has mainly been
used as a form of tipping on social media platforms and in fundraising – not to mention the wide-ranging
speculation purposes DOGE offers. According to the Financial Crimes Enforcement Network’s (FinCEN)
interpretation, cryptocurrencies such as DOGE fall within the Bank Secrecy Act’s scope of application.
The Securities and Exchange Commission (SEC) has been indicating that it considers cryptocurrencies to
be securities whereas the Commodities Futures Trading Commission (CFTC) encompasses
cryptocurrencies to be commodities as described in the Commodity Exchange Act. Within the EU, DOGE
has a clearer regulatory situation than in the U.S. as the EU cryptocurrency legislation is more coherent
than in the U.S. Being an altcoin, DOGE fallswithin the scope of the EU Fifth Money Laundering Directive
(5AMLD) and is considered a cryptocurrency. Therefore, DOGE is from a starting point subject to
conventional EU regulation on customer due diligence, risk assessments, Fit & Proper as well as other
applicable national legislation. Another question is naturally who the actual subject of the regulation is as
DOGE is – as the majority of cryptocurrencies – decentralized, but luckily for the average Dogenaut
holding DOGE the current regulation does not in any way affect the trading activities.
Nevertheless, as certain EU Member States (e.g., Finland) have implemented stricter cryptocurrency
frameworks than demanded by the EU legislator, forum shopping is also occurring in Europe – typically
to get advantage of lighter capital requirements and compliance standards.

ADVANTAGES OF DOGECOIN

1. Growing Community of Users:

One of the advantages of Dogecoin is that it has an established and further growing community of users
and supporters. It is one of the top ten cryptocurrencies in the world in terms of market capitalization. It
even ranked fourth on one occasion.

2. Decentralized Exchange Compatibility:

This crypto currency can be transacted and traded on decentralized exchanges. Specifically, the Ren Project
has enabled it to work on the Ethereum blockchain platform, as well as access the decentralized finance
network. This means that it is compatible with the emerging decentralized finance movement within the
crypto currency market.

32
3. Positive Side of Volatility:
Cryptocurrencies are extremely volatile by default due to their sensitivity to speculation-related occurrences,
increasing competition intensity, and lack of universal consensus as a collective class of assets. Their
historical performances have experienced extreme highs and sudden price drops within short periods. The
same is true for Dogecoin. However, volatility can have some advantages, especially for day traders or those
individuals who buy and sell assets within one day. Price swings in a given day can allow crypto currency
traders to earn considerable gains through day trading.

4. Day Trading DOGE is Profitable:

One of the pros of investing in DOGE is you can DAY TRADE the crypto currency. You can earn profit by
capitalizing on volatility.
You can buy DOGE when you research crypto currency and get to know its bullishness in the future. If your
prediction comes to pass and DOGE starts increasing, you can convert DOGE to a stable coin such as a USD
coin or Tether.

5. Engaging Social Media Fans:

One of the pros of DOGE is its fans across social media networks such as Reddit, WallStreetbets, Twitter,
and Facebook. Monitoring the feeds and chats of DOGE holders alerts you to get to know where the price of
DOGE is headed. Some of the comments alert you as to a huge price spike in the future.

6. You have some extra cash and are prepared to take a chance with it:
If you had invested $1,000 in Dogecoin on January 1, 2021, you would now have around $85,000. Because
cryptocurrency has been so volatile in the past, it’s anyone’s guess how far the price may rise. By investing
today, you might be able to make some money if you’re lucky. It’s important to remember that Dogecoin is
unlikely to be a good long-term investment. So, if you decide to invest, see it as a fun experiment.

7. Growing Community of Users:

One of the advantages of Dogecoin is that it has an established and further growing community of users and
supporters. It is one of the top ten cryptocurrencies in the world in terms of market capitalization. It even
ranked fourth on one occasion. Cuban and Musk explained that its growing user base makes it an ideal
medium of exchange.

8. Decentralized Exchange Compatibility:

This cryptocurrency can be transacted and traded on decentralized exchanges. Specifically, the Ren Project
has enabled it to work on the Ethereum blockchain platform, as well as access the decentralized finance
network. This means that it is compatible with the emerging decentralized finance movement within the
cryptocurrency market.
In addition, although it cannot interact with smart contracts directly because it runs on its own blockchain
with no built-in smart contracts feature, it can be “wrapped,” thereby locking it in a state interoperable with
acontract until it is later released.

33
DISADVANTAGES OF DOGECOIN

1. Has No Supply Cap

The lack of a supply cap is one of the biggest disadvantages of Dogecoin. Unlike Bitcoin and the crypto
currency of Cardano, which are deflationary in nature because they have a predefined cap on supply to
create scarcity and potentially increase its value in the future, it is deflationary. Cryptocurrencies with no
supply cap are uni deal assets to hedge against inflation.
Furthermore, the continuously growing supply will eventually require more expansive blockchain mining
activities. Because this crypto currency uses a proof-of-work mechanism to achieve consensus, it will
require expanding further its pool of miners and their powerful computers to handle an increasing number
oftransactions in the future.

2. Criticisms of Dogecoin
The mainstream media and financial experts had a hard time taking this crypto currency seriously. A
handful of analysts have also noted that it is an extremely risky investment characterized by pump-and-
dump behaviors and higher sensitivity to speculations and fads driven by herd mentality. Others call it a
pyramid scheme.
In his 2021 article published by Foreign Policy, David Gerard argued that there is no good use for
cryptocurrencies except trading. He argued further that these “assets” have no use cases. Individuals
unfamiliar with what they are doing and simply joining the bandwagon often fall prey to fads relating to
personal finance and investment.

3. Poor Technical Support

Dogecoin has a relatively poor technical support despite its growing community of users and supporters.
The development team is not as big as Bitcoin, Ethereum, and Cardano. Furthermore, the product roadmap
is notas clear as these crypto currency market giants.
There have been no key technological updates and developments since 2015. It is also important to
highlight the fact that it does not offer any unique selling proposition in terms of technology. The
pronounced goals or aspirations of this crypto currency and the entire blockchain platform are not as
ambitious compared to the major players.

4. There are Questions Surrounding Leadership's Belief in the Crypto currency

Leaders are supposed to act by example. Unfortunately, this is not what doge coin is seeing. In 2015,
co-founder Billy Markus sold all the doge coins he was holding to buy a Honda Civic.
Charlie Lee of Litecoin did the same thing in December 2017 which called into question the potential of
the asset if the leader decided to sell his holdings. Not holding a significant amount of your creation raises
doubts as to future innovation and partnerships which could be attained to drive the price of the crypto.

5. Dogecoin Relies On Its Fun Nature and Not Any Real Innovation
Investment stories across several financial news portals are too focused on the meme currency's joke
nature rather than on any breakthrough innovation. Understandably, DOGE was created to poke fun at
other cryptocurrencies such as Litecoin and Bitcoin.

34
CHALLENGES OF DOGECOIN

1. The Technical Problem of Dogecoin

The fact that Dogecoin is so rarely updated scares me. It is not because the project is not very complex.
Due to the close relationship with Bitcoin and Litecoin, Dogecoin also consists of thousands of lines of
code that need a lot of attention — anything else would be negligent.
In the past, there have been repeated problems in the Dogecoin world. In 2013 and 2014, the two wallets
Dogewallet² and Dogevalut³ were hacked — both resulted in many investors losing their coins. To
protect the blockchain from manipulation, it needs a lot of computing power. However, the Dogecoin
network doesnot have this computing power. In the picture, you can see a comparison to the Bitcoin
network, but beware: the graph is logarithmized. You can see the gigantic difference on the Y-axis. The
lack of computers protecting the blockchain is a huge problem. In the event of a 51% attack, the
blockchain could be manipulated, causing many investors to lose their coins.

2. The Flawed Tokenomics

Investors want to know how much their coins will be worth in a few years. Tokenomics is a critical topic
in this context — also because it is one of the few things the crypto currency itself influences. For
example, a maximum supply of coins can be coded into the project. Bitcoin has such a limit. More than
21 million BTC will never exist, which makes the coin a good store-of-value. Other cryptocurrencies,
which are more eager to provide useful features like smart contracts, often don’t have a maximum supply.
The coin is just a means of payment, with no other functions. On top of that, Dogecoin is very inflationary
since there is no maximum supply and more and more coins are distributed. Originally there was a
maximum supply of 100 billion coins, but since a change in 2014, the supply is now growing by about 5
billion coins a year¹.

3. Who is Developing Dogecoin

Most cryptocurrencies have huge teams working on them. Besides the permanent employees, fans also
contribute to the open-source code of the projects. Seeing who is working full-time on Ethereum,
Cardano, Polkadot, and Algorand are impressive. Many intelligent people who enjoy a lot of respect in
the industry contribute to the block chains.
There is a long-term plan for most crypto projects; if ever a problem arises, someone is immediately there
to solve it. This is the reality in most large crypto projects.
Dogecoin is also at the top of the market capitalization rankings right now.
So what about the team behind the meme coin? Well, there is no actual team. If you look at the official
source code of Bitcoin, you can see that the latest changes were usually only a few minutes ago. In
Dogecoin’s official GitHub repository you can see that the last commit was a few months ago. Most of
the source code files have not been changed for months or even years. In case of problems, it is to be
expected that there will be no solution anytime soon — there is simply no real team behind the coin. And
speaking ofproblems, we come to the next point.

35
DOGECOIN PRICE CHART (2019-2021)

36
 LITECOIN

INTRODUCTION TO LITECOIN

Litecoin is a decentralized, peer-to-peer (P2P) digital currency and payment network supported by an
open- source blockchain protocol. Through Litecoin, users can make payments to anyone in the world at
relatively high speeds and low costs compared to traditional payment channels (i.e., SWIFT, ACH,
FedWire system) and many other digital assets. It was launched in October 2011 by Charlie Lee, who held
positions at Google, followed by Coinbase, until his departure in 2017 to head the Litecoin Foundation, a
non-profit organization committed to accelerating the development and adoption of the technology.
The Litecoin Project emerged as an alternative solution to Bitcoin in light of early concerns over Bit coin’s
wait times in confirming block transactions. By introducing minor technical modifications to the original
Bitcoin source code, Litecoin allowed for faster transaction speeds and even lower processing fees. As one
of the earliest and most successful derivatives of Bitcoin, Litecoin has established its position as the fifth
largest network by market cap in the digital currency ecosystem, complementing and reinforcing Bitcoin
in purpose, function, and utility, and challenging our traditional notions of money By 2011, Bitcoin mining
waslargely performed by GPUs. This raised concern in some users that mining now had a high barrier to
entry, and that CPU resources were becoming obsolete and worthless for mining. Using code from Bitcoin,
a new alternative currency was created called Tenebrix (TBX). Tenebrix replaced the SHA-256 rounds in
Bit coin'smining algorithm with the scrypt function, which had been specifically designed in 2009 to be
expensive to accelerate with FPGA or ASIC chips. This would allow Tenebrix to have been "GPU-
resistant", and utilize the available CPU resources from bitcoin miners. Tenebrix itself was a successor
project to an earlier crypto currency which replaced Bit coin's issuance schedule with a constant block
reward (thus creating an unlimited money supply). However, the developers included a clause in the code
that would allow them to claim 7.7 million TBX for themselves at no cost, which was criticized by users.
To address this, Charlie Lee, a Google employee who would later become Engineering Director at Coinbase
created an alternative version of Tenebrix called Fairbrix (FBX). Litecoin inherits the scrypt mining
algorithm from Fairbrix, but returns to the limited money supply of Bitcoin, with other changes.

LOGO OF LITECOIN

37
FEATURES OF LITECOIN
The crypto currency’s initial efforts have been backed by the implementation of several features that were
also proposed and later on implemented on the Bitcoin network. These improvements often look to help
ensure that the network can scale to accommodate more transactions per second, without sacrificing
decentralization and to ensure privacy while transacting.
Segregated witness (SegWit)

Bitcoin and Litecoin are somewhat similar and as such, both can have the same upgrades. Litecoin
often adopts these first, as a major error on its network would cause less damage than on the Bitcoin
network. Litecoin’s market capitalization has historically dwarfed that of Bitcoin.

One of the first features implemented on the Litecoin blockchain before being added to Bitcoin was
Segregated Witness (SegWit). While SegWit was first proposed for Bitcoin in 2015, Litecoin adopted the
technology first. After no major incidents were seen on LTC, the technology was then added to Bitcoin.
SegWit essentially helps a crypto currency scale by “segregating” the digital signature data on each
transaction (the witness) outside of it, having better usage of the limited space. It was developed to
addressBit coin’s scalability issues.

Litecoin adopted SegWit in early 2017, and because of the success the feature had on its blockchain, its
implementation gained support for Bitcoin. Initially, SegWit was rapidly adopted on Litecoin, much more
sothan on the Bitcoin blockchain. Adoption of it has gradually grown on both networks.
Lightning Network

The Lightning Network is a scaling solution that essentially creates an extra layer on top of a crypto
currency’s blockchain, in which transactions are fast and fees are minuscule. That extra layer consists of
user-generated payment channels. It was originally designed to be implemented on the Bitcoin
blockchain. Like SegWit, the network was first implemented on Litecoin which many used to test
Lightning Network ina real economic environment. The layer-two scaling solution is controversial.
According to critics, it pushes users to non-custodial wallets, on which users would have to run their
own node.

The MimbleWimble protocol is a modified implementation of the proof-of-work (PoW) algorithm,

underpinning a crypto currency’s blockchain. It prevents individual inputs and outputs related to
transactions from being identified, enhancing privacy and obfuscating traceability.
Litecoin has launched a MimbleWimble test net in October 2020, and its lead developer has been
focusing on making it easier for “non-technical Litecoin users” to begin testing it. It’s worth noting that
there is no consensus on which way is the best way to use the MimbleWimble protocol on Litecoin or
Bitcoin.
Some developers believe that merging MimbleWimble with the Bitcoin protocol could lead to
undesirableoutcomes and would be too difficult. As a result, some have suggested it could be
implemented as a side chain to Litecoin or Bitcoin.

38
WORKING OF LITECOIN
Litecoin is a peer-to-peer virtual currency, which means it is not governed by a central authority.
Litecoin's network offers instant, near-zero cost payments that can be conducted by individuals or
institutions across the globe. Bitcoin, Litecoin, and many other cryptocurrencies use the proof-of-work
(PoW) algorithm in order to secure their networks. Basically, PoW requires that one party proves to all
the other participating parties in the network that a required amount of computational effort has been
expended. Litecoins are sent to people by transferring them from your wallet to the recipient’s wallet. For
example, if you want to send
0.5 LTC to Martin, you would copy and paste Martin’s wallet address into your wallet app, type 0.5 LTC
into the quantity text field, and click send! You could also have Martin provide a QR code that you can
scanwith your phone, avoiding the inconvenience of typing a wallet address.
There is a small miner’s fee that goes to Litecoin miners who help to support the network. In the case of a
single transaction (which is not necessarily an entire block, by the way), that fee is a small fraction of a

Litecoin.
Other
Details:
• Your wallet app uses your private key to sign outgoing transactions to confirm that it is you trying
to move coins from your wallet.
• The wallet app broadcasts the transaction to other nodes on the network (yes, it is a node that
initiates atransaction).
• The node broadcasting your transaction to other Litecoin nodes could be Litecoin Core (i.e. your
own full node).
• The nodes must verify that the transaction is legitimate by verifying the hashes to preserve chain
integrity and prevent tampering/theft.
• A minimum number of confirmations (done by nodes) is required for a Litecoin
transaction to becompleted.

LEGAL STATUS OF LITECOIN

The United States is one of the most important examples of arranging crypto currency, such as Litecoin.
Many countries are waiting for the attitude and approach of the United States to the legal regulation of
cryptocurrencies like Litecoin. We can say that America is positively approaching the issue.

Another important example is that Denmark adopts digital currencies in transactions and discards
banknotes and coins in recent times. However, Denmark Central Bank warns individuals/users about the
usage of Litecoin and cryptocurrencies in monetary transactions. The Central Bank remarks that
cryptocurrencies arenot eligible for investment because of its transparency and lack of inspections. The
bank delivered its opinion as “If crypto currency market is more transparent and develops, the sector is
enterable/accessible”.

England makes special treatment to Litecoin, England implements VAT on shopping with Litecoin.
Apart from these, South Korea, Holland, Finland, Canada, Australia are approaching positive for Litecoin,
countries like Iceland, Bangladesh, Bolivia, Ecuador, Thailand are approaching negative for Litecoin.

39
ADVANTAGES OF LITECOIN

1. Litecoin Is an Open-source Network:

One of the main advantages of investing in Litecoin is that Litecoin is open-source, which means that
everyone can see how it works and changes to the protocol can be made by anyone.
Note that changes are usually implemented to respond to the crypto market and its needs.
Being an open-source system also gives flexibility to Litecoin to implement tech innovations, such as
SegWit and the Lightning Network protocol which make transactions faster and more convenient.

2. Litecoin Is Decentralized:
Just like other cryptocurrencies, Litecoin is a peer-to-peer network and a decentralized alternative to fiat
money, which means that users don’t have to rely on third parties, such as central banks or authorities.
Nodes are spread across the globe and the network is open to people from all walks of life. As a result,
intermediary fees are eliminated, and the risks of price manipulation are reduced.

3. Litecoin Is Fast:
Perhaps one of the most important pros of investing in Litecoin is its speed Compared to Bitcoin, Litecoin
isfour times faster.
Litecoin processes transactions within a maximum of 2.5 minutes, while Bitcoin takes up to 10 minutes to
process payments.
Some claim that faster processing times also makes Litecoin more secure because hackers would have less
time to attempt double-spending attacks, for example.

4. Litecoin Is Scalable:
Another major advantage of Litecoin is its scalability. Litecoin can process 56 transactions per second.
In comparison, Bitcoin can handle 7 transactions per second, while currently, Ethereum can process 15
transactions per second.

5. Low Transactions Fees:

Litecoin has relatively low transaction fees, especially when compared to other cryptocurrencies or
traditional payment systems. This is a major factor that can make LTC adoption wider and smoother.

6. Litecoin Has Been Improving Regularly Since It Was Launched:

As stated above, Litecoin is a flexible network that has embraced numerous improvements, such as SegWit
and the Lightning Network protocol to make transactions faster and easier.

7. Litecoin Has An Upper Limit Of Total Coins:

Litecoin has an upper limit of 84 million coins, which is four times bigger than Bitcoin. This means that
the risk of inflation is eliminated, while investors will have plenty to invest in.

8. Straightforward Mining Process:

Just like Bitcoin, Litecoin uses a proof-of-work algorithm to validate transactions and create new coins.
But while Bitcoin uses a SHA-256 hashing algorithm, Litecoin uses the more efficient Scrypt. Compared
to Bitcoin, however, Litecoin’s mining algorithm makes mining more energy-efficient and accessible to
miners, which is also a major pro in environmental terms.

40
DISADVANTAGES OF LITECOIN

Despite its pros, investing in Litecoin has some drawbacks. Investors should be familiar with the cons of
investing in Litecoin to make an informed decision and decide for themselves if it is a good idea to invest
inLTC.

1. Litecoin Has Some Branding Issues:

As a fork of Bitcoin, many people think that Litecoin is the same as Bitcoin, which is one of the major
cons of investing in LTC. Furthermore, though Litecoin revolutionized the crypto sector by improving
Bitcoin, itsuniqueness is kind of declining. To provide an example, Bitcoin has also embraced the SegWit
protocol, chipping away at Litecoin’s advancements and prestige. Plus, the naming similarities can also be
an issue.

2. Litecoin Has Lost Its Credibility Over Time:

Although Litecoin has a trustworthy developer team, LTC has lost some of its credibility.
To be more precise, Charlie Lee sold his holdings near the all-time high of Litecoin in 2017, which made
people question his faith in the coin.
Furthermore, the withdrawal of the defunct Lite Pay service also caused controversy among crypto
enthusiasts.

3. Litecoin Is One Of The Most Popular Coins On The Dark Web:

A study published in 2018 announced that Litecoin is the second-most used crypto on the Dark Web, with
30% of underground vendors accepting Litecoin.
This can be a major drawback for big investors and ordinary users, especially since the Silk Road muddied
the image of crypto currency.

4. Litecoin Is Not As Interesting As It Used To Be:

Increasingly crypto traders are more drawn to DeFi projects with smart applications and transactional
cryptos like Litecoin and Bitcoin Cash are getting left behind.
And this decrease in interest becomes apparent when you look at the charts. Litecoin only just beat its
2017 all-time high in the 2021 Bull Run. Litecoin price. Meanwhile, much of the rest of the crypto scene
was doubling or tripling old records. E.g., Bitcoin reached over $60k - three times its previous all-time
high in 2017.And so, we might assume that over time Litecoin may struggle in the next Bull Run to pick
up the pace. This is further supported by a stagnating number of active wallets. While there has been some
increasein active wallet numbers, it’s not that significant if you compare it to the likes of Bitcoin.

5. Litecoin Mining Profitability Has Plummeted:

Miners are losing interest in Litecoin at a rapid pace. In comparison to several years ago, mining Litecoin
isnowhere near as profitable as it used to be.
As one of the oldest cryptos with one of the longest chains, mining difficulty has increased, and profits
have decreased. In other words, miners need to work harder for less LTC.
And the third factor is that there is a lack of demand for Litecoin, which means creating new coins is less
profitable. Litecoin mining profitability.
While Litecoin could outlast Bitcoin because of its larger supply, BTC has far more interest.
And what makes this worse is that if miners lose interest, there will be no one to secure the network, which
could leave it open to attack.

41
CHALLENGES OF LITECOIN

1. Profit Taking
One major cause that market observers cited was profit taking. The digital asset rallied from roughly $30
atthe start of 2019 to nearly $150 in June, rising more than 375%.Litecoin outperformed the broader
market, which climbed more than 200% in less than six months. The alt coin enjoyed these sharp gains
ahead of the halving, which took place on August 5.

2. Myriad Challenges
Litecoin, which has in the past been called the silver to bit coin's gold, has been struggling with many
difficulties. Litecoin's price action has historically followed Bitcoins, but currently LTC is facing negativity
on multiple fronts. In the absence of new capital flow, transaction volumes have remained tame and the
August halving has failed to push the price higher, In fact, miners have begun to abandon the network after
the reward-reduction, which is why the hash rate is falling and concerns are being raised about the network's
security. In a market where alt coins have consistently underperformed Bitcoin for about 18 months and
given that we have been consolidating for some time, the move is probably more than just traders taking
profits and rotating into assets with historically better yields, but rather due to investors cutting losses while
they have the chance. Traders are taking profits from an asset with no mass appeal, an ever-expanding
competitive landscape, no exciting developments to rally around and a founder with no skin in the game.

3. Litecoin's Weak Sentiment

The sentiment surrounding Litecoin has grown weak lately, LTC's tweet volume peaked in June
alongside market cap and has since seen a decline of over 50% since June highs," he noted.
While price hasn’t quite declined yet to 2019 lows, the 30 day average tweet volume on Litecoin is at
itslowest level this year. He also spoke to lite coin's long-term sentiment score, emphasizing that it was
the lowest of the five major digital currencies.

LITECOIN PRICE HISTORY CHART (2007-2015)

42
 PARAMETERS

PARAMETERS BITCOIN ETHEREUM NON- LITECOIN DOGECOIN POLYGON

FUNGIBLE
TOKEN
(NFTs)

Definition Bitcoin is Ethereum is a Nfts is a Digital It is a satirical Polygon is a

a digital world digital token currency homage to scaling
money computer that is unique bitcoin solution
and can't be
exchanged

Founder Satoshi Vitalik Butarrn Kevin mccoy Charles Lee Billy Markus Sandeep
Nakamoto and Anil and Jackson Naiwal
Dash Palmer

Hashing Bitcoin Ethereum uses Cryptographi Litecoin use a Dogecoin use Sutherland-
algorithms used SHA- Etash c hash hashing a hashing Hodgman
256 algorithm function algorithm algorithm Algorithm
algorithm called Scrypt called Scrypt

Average Block 10 minutes 10-15 sec 10 seconds 2.5 Minute 1 minute 2 seconds
time

Release Date 9 Jan 2008 30 July 2015 May 3, 2014 October 13, December6, October
2011 2013 2017

Release Method Genesis Prasala - MIT/X11 MIT Network

Block format
Mind

Blockchain Proof of Proof of work Proof of work Proof of work Proof of work Ethereum-
work (Planning for (planning for compatible
POS) PPOP) blockchain

Usage Digital Smart Digital token Digital Property sale Polygon

Currency Contracts Currency token
Digital
Currency

Cryptocurrency Bitcoin(Sa Ether - Scrypt Bitcoin Ethereum

Used toshi) token

Mining ASIC GPUs Biding GPUs FPGA and -

miners (Digital ASIC
medium)

43
Concept Digital World Digital token Digital Satirical Network for
money Computer of a monetary money homage Ethereum
value token

Cryptocurrency BTC Ether - LTC DOGE Ethereum

Token

Turing Turing Turing Turing Turing Turing Turing

incomplete complete complete complete incomplete incomplete

Coin Release Early Through ICO - GIT Hub Early mining -

Method mining

Protocol Bitcoin It uses a Ghost Uses Creation and Dogecoin’s -

still Protocol investors to transfer of protocol
employs bid and digital coins based on
the pool purchase the via an open existing
mining NFt token source, cryptocurrenc
concept offered by the cryptographic ies Luckycoin
creator protocol and Litecoin

44
REVIEW OF LITERATURE

45
 “CRYPTOCURRENCY TAX”

A democratic form of Govt. is always defined as “by the Public, for the Public and to the
Public.” The basic function of a government is to deliver public services to its citizens for which it requires
resources to finance its expenditure. Among others, taxation works as a major source to fund public
expenditure. Developments and Advancements in the technologies, has enabled the Govt. to identify new
ways and opened new platforms to collect taxes. Among them, comes the curious situation of taxation of
Cryptocurrency.

Unlike the fiat currency, Cryptocurrencies are decentralized, relying on a peer-to-peer network
that operates without any third-party intervention like the Central Bank. The purpose of this paper is to
explore Cryptocurrency and the prevailing regulatory structure concerning them.
It studies the different natures of cryptocurrency and analyses
(1) Scheme of existing domestic laws and relates cryptocurrency
(2) Domestic laws affecting taxation of cryptocurrency related activities
(3) Major economies response to cryptocurrency.

In Budget 2022, the government cleared the air on taxation of “virtual digital assets” including
cryptocurrency. The crypto fraternity rejoiced at this development, assuming it to be an indirect legalisation
of cryptocurrencies.
The following law and amendments have been made by the government of India on cryptocurrencies
in Budget 2022:-
 From April 1, a 30 per cent I-T plus cess and surcharges, will be levied on such transactions in the
same manner as it treats winnings from horse races or other speculative transactions.

 No set-off of any loss arising from the transfer of virtual digital assets shall be allowed against any
income computed under any other provision of the Act, and such loss shall not be allowed to be
carried forward to subsequent assessment years.

 While computing the income from transfer of VDA, no deduction in respect of any expenditure
(other than the cost of acquisition) or allowance will be allowed.

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  The Budget 2022-23 also proposed a 1 per cent Tax Deducted at Source (TDS) on payments towards
virtual currencies beyond Rs.10, 000 in a year and taxation of such gifts in the hands of the recipient.

 The threshold limit for TDS would be Rs. 50,000 a year for specified persons, which include
individuals/HUFs who are required to get their accounts audited under the I-T Act.

 The government won’t allow other costs like platform fees, broker fees and internet charges to be
deducted as expenses from the profit, except the cost of acquisition, which is the purchase price. This
is allowed in stocks and derivatives trading.

 The government won’t allow other costs like platform fees, broker fees and internet charges to be
deducted as expenses from the profit, except the cost of acquisition, which is the purchase price. This
is allowed in stocks and derivatives trading.

 The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will
be taxed effective April 1.

 A loss from crypto trading cannot be offset against any other income.

Overall, the government has neither legalized nor banned cryptocurrencies. But it’s made a move to
discourage short-term trading.

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 “CRYPTOCURRENCY AS GOODS OR SERVICE UNDER GST LAW”

Cryptocurrency is a new concept that claims to be a replacement of the fiat currency. Due to the
interest of the people in the cryptocurrency around the world catch the attention of the regulatory bodies. In
a different country, it is treated as different. As far as India is concerned the status of cryptocurrency is under
evaluation period. This research paper tries to find the status of the cryptocurrency in the eye of law tries to
define it and found that it is not a currency or legal tender as per the Indian legislation however it may be
treated as goods.

There has always been confusion as to the nature of 'Cryptocurrency' i.e. whether it is a Currency
or a Commodity or a Security. To make it simpler, if I could divide people into three sets, where one set of
people believes that since cryptocurrency acts like any other currency, so it should be considered as
‘currency’ whereas the other set believes that since cryptocurrencies are bought and sold for fiat money, it
should be considered as ‘commodity’ but the rest believes that since the nature of Cryptocurrency is more of
a ‘security’ that can be traded in the crypto-exchange

CRYPTOCURRENCY AS CURRENCY:
Major characteristics of a currency like mode of exchange, a unit of account, and store of value are satisfied
when it comes to Cryptocurrency.28 It was even recognized as money by the US courts because of its ability
to purchase in exchange for money.29 However, Indian laws don't categorize Cryptocurrency as a 'currency'.

CRYPTOCURRENCY AS COMMODITY:
When we refer to commodities in general, we generally point to the raw material that can be bought and
sold, such as coffee, rice, etc. In terms of Cryptocurrency, a person can buy cryptocurrency from the crypto
exchange by paying fiat money, and then the same can be sold over the crypto exchange instead of the fiat
money. Because of this quality of Cryptocurrency, it is often termed as a Commodity rather than a Currency.

CRYPTOCURRENCY AS SECURITY:
Cryptocurrency is a tradeable commodity that can be bought and sold over Crypto-Exchange. In India,
Crypto-Exchange like Zebpay facilitates the trading.

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 As per the Sale of Goods Act, 1930 "goods" indicates every kind of movable property other
than actionable claims as well as cash; and includes stock and shares, crops in the field, turf, and things affixed
to or creating component of the land which are concurred to be cut before sale or under the contract of sale.
Taxing income from cryptocurrencies does not necessarily and explicitly legalise cryptocurrencies because
income tax is not concerned about the manner or means of acquiring the income. The government has not
made crypto legal under the Finance Bill, but it made the gains from it as taxable.

Cryptocurrency is not specially mentioned as currency or bank note or legal tender in any Indian
law as well as there is no special notification by RBI in this regards, therefore, cryptocurrency will not come
under the definition of "other similar instrument" as well, under section 2(h) of FEMA Act, 1999. From the
above discussion, it appears that while Crypto Currency has numerous attributes of a currency or lawful
tender it is not bank notes and also is consequently illegal tender in India.

From the above discussion in the light of Indian legislation, it could be concluded that the
cryptocurrency may be considered as ‘goods'. Cryptocurrency can be transferred of purchased or sold
anywhere in India and in the world.

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 “CRYPTOCURRENCY: IMPACT ON INDIAN ECONOMY”

Cryptocurrency is an innovative concept of decentralized virtual currency. It has turned out to

be a new avenue of investment instrument in India similar to gold. The government hasn’t formulated any
regulatory body or legislation with regards to cryptocurrency trading and transaction in India.
Cryptocurrencies raises various limitations on its existence in Indian markets. This study focuses on
understanding what cryptocurrency is all about and its impact on the Indian economy. The study also
focuses on the present situation and future prospects of cryptocurrencies in India. In the world of
technological advancements, cryptocurrency is becoming more comfortable for investors who values privacy
and creation of money.

The impact is of cryptocurrencies on the Indian economy is clearly depicted as the prices of
cryptocurrency market are now falling down. Indian government has made it clear with their stand of not
providing a legal status for cryptocurrency in India. The reason for this kind of a decision from government
hails from first, the challenge of monitoring the decentralized transactions in cryptocurrencies are difficult to
trace which could be advantageous for the hackers, criminals and also for terrorist activities. The second
reason being cryptocurrency market could be a leading competitor for the banking service industry.

Cryptocurrency like Bitcoin has become popular in India like other nations as the volume of
Indian rupee being traded in cryptocurrency have been at the highest post demonetization. Researches shows
that the volume generated by the rupee dominated cryptocurrency is the third largest volume traded after
American dollar and yen. The demonetization policy of 2016 may have encouraged the implementation of
cryptocurrencies amongst a substantial share of the population but realities rapidly began to come out that
have subdued the growth of the market in the country. Cryptocurrencies in Indian context portrays few
limitations. They are as follows:

1. Reliability and security: Cryptocurrency for its characteristic of be a digital mode of transaction, it
has become a very common platform for hackers, terror finance, drug transaction, and money
laundering. This has brought tiredness among the population to a larger extent as it brings lesser
security and lack of reliability.

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 2. Speculative and risky: There are various types of cryptocurrencies available in the market and these
cryptocurrencies functions on the speculative market it creates. Speculation becomes the key player
in case of pricing cryptocurrency and hence the risk factor comes in.

3. Taxing trouble: The income Tax rules don’t make it clear on the taxability of cryptocurrency gains.
If an investor makes a capital gain from the investments of cryptocurrencies, it invites tax liability as
long term capital gain or short term capital depending upon the period of holding the cryptocurrency.

4. Lack of regulatory body: Indian government is following a wait and watch policy towards
cryptocurrencies; where as other nations of the world have already responded to the use of
cryptocurrency. There are no regulatory body to look after the transaction of cryptocurrencies. This
has led to increased chances of fraud, threat to investor protection, monitoring of the movement of
money in the economy.

5. Price Volatility and KYC Norms: Cryptocurrency is a highly volatile market as the pricing strategy
depends upon demand and supplies along with speculation, Hence an investor who signs up for a
cryptocurrency transaction have to go under the KYC norms which may take some time for the
approval by the respective wallets.

Crypto-currency is such an invention which has become a global phenomenon. Earlier

RBI warned the Indians from using cryptocurrency that to be associated with money laundering and terrorist
financing. However, cryptocurrency is a modern technology and a tool which needs to look forward for.
Even though there has been no regulatory response from the Indian government, the number of investors in
cryptocurrency is increasing rather swiftly over the last few years. Indian government should take
responsible steps now to regulate such currency as its user in India is rapidly growing. Future of
cryptocurrency in India looks promising and there is ray of hope.

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 “CRYPTOCURRENCY AND IT’S SCOPE IN INDIA”

A cryptocurrency is a digital currency mainly based on block chain technology. Currencies

are issued and regulated by central bank and government of the country in order to combat inflation and
deflation situations. Now a day’s many countries in the world have focusing towards digital currency and
transactions. Even some one doesn’t want to regulate their currencies and transactions. This brought greater
innovation in new currency that is crypto currency, one of the most advanced, ambiguities, regulation free
currency. In this article I made an attempt to study regarding crypto currency and its development and future
prospectus in India.

Over in the recent past crypto currency has been a subject of discussion among the public at
large. In the world of technological advancements, crypto currency is becoming more comfortable for
investors who values privacy and creation of money. With its ongoing and increasing demands and
developments, it draws attention from researchers. In financial system, it is helping the industries to grow
rapidly with its nature of low transaction cost.

POSITIVE IMPACTS OF CRYPTO CURRENCY

 There is no need of middleman. All the transactions are done on one to one basis and it also becomes
easier to establish audit trials.

 These currencies can overcome the problem of social trust and by increasing its access, it can serve
to increase the growth process in developing countries.

 Unlike other traditional payment systems like debit and credit card, crypto currencies have no
processing charge, since those transactions are facilitated through crypto currency’s public network
which is called Block chain technology.

 Credit or debit cards often take two or three days to process. With crypto currencies, transactions
take 10 minutes to clear it. This shows that the speed of transactions in case of crypto currencies is
high.

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NEGATIVE IMPACTS OF CRYPTO CURRENCY
 The price of crypto currencies can change drastically over a short period of time which becomes
trading with it slight difficult for the marketers.

 While the details of users of crypto currencies are held in a public ledger, there can be an issue when
complying with customer’s identification or protection of fraud. This shows the lack of anonymity in
the system.

 Crypto currencies operate digitally and the proof of ownership is limited to the private keys and this
become the prime target to hack it, since many of the businessman are unaware of how to protect this
new kind of digital currency.

 Crypto currencies are considered harm to the planet. This digital currency uses block chain
technology which requires computers all over the planet to solve complex equations in order to
verify transactions. This is called data mining, which can be lucrative. The person involved in it
earns bitcoin as a reward. This procedure of calculations consumes large amount of electricity
impose negative impact on natural resources.

Indian government has made it clear with their stand of not providing a legal status for
cryptocurrency in India. The reason for this kind of a decision from government hails from first, the
challenge of monitoring the decentralized transactions in cryptocurrencies are difficult to trace which could
be advantageous for the hackers, criminals and also for terrorist activities. The second reason being
cryptocurrency market could be a leading competitor for the banking service industry.

Being digital mode of transaction, it may be a common platform for hackers, terror finance,
drug transaction, and money laundering. That’s why it is said to be less reliable and secure in India. If an
investor makes a capital gain from the investments of cryptocurrencies, it invites tax liability as long term
capital gain or short term capital. Recently central government of India expressed its intention to introduce a
bill aimed to prohibiting private cryptocurrency in India.

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 “CRYPTOCURRENCY BOON OR BANE”

The present study is focused on assessing the role and impact of cryptocurrency. As India is in
the technical era, techno-Indians speak, invest, and possess cryptocurrency. This paper is an outcome of an
exploratory research on the role of cryptocurrency and its future in the Indian economy. The study answers
the question “Is cryptocurrency boon or bane in India”.

With the industrialization and absorption of technology, digital currencies are gaining much
importance of late. The stakeholders in India have suggested the usage of cryptocurrency will
predominantly have negative impact to the country but it may have a positive impact for the citizens of India
who are rational and have individualistic consumer pattern behavior. It can be in articulated as, even though
Cryptocurrency has its drawbacks like every new technology does. Analyzing the pros of cryptocurrency we
have, protection from investors.

Pros of Cryptocurrency
 Protection from Inflation
 Instant and 24 Hour Accessibility
 Self-Governed and Managed
 Secure and Private
 Ease in Currency Exchange
 Decentralized

Cons of Cryptocurrency
 Used for Illegal Transactions
 No Security in Case of Loss
 Conversion of Cryptocurrencies
 Adverse Effects of Mining on Environment
 No Refund or Cancellation Policy
 Prone to Market Fluctuations

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 For a long time, cryptocurrency has been chastised for its use of vitality. The cryptocurrency
market is only available to those who believe it is a wise – or entertainingly risky – investment. The great
majority of people use the Cryptocurrency market as a way to make money rather than using them as
money. The stakeholders in India have suggested the usage of cryptocurrency will predominantly have
negative impact to the country but it may have a positive impact for the citizens of India who are rational
and have individualistic consumer pattern behavior.

Cryptocurrency has potential to replace the traditional monetary system. Cryptocurrencies are still
in the initial stages and the technology is constantly evolving. So, if cryptocurrencies are evolved in such a
way that the loopholes are solved, they may compete with the formal financial institutions. Keeping in mind,
the decentralized storage and security, it is possible to say without any hesitation that Block-chain technology
is futuristic and revolutionary with the prowess to improve and develop new systems in various fields. It is
highly unlikely that the demand for cryptocurrency will beat the demand for standard currency, because of the
high risk involved. But we can take the best thing in this innovation that every coin has unique code and all
the transactions of every coin will be recorded. This is a wonderful concept to eliminate money laundering in
the economy.

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RESEARCH METHODOLOGY

56
I Title of the Project: “A COMPARATIVE ANALYSIS OF SIX CRYPTO CURRENCIES”

II. Introduction and objectives of the study:

To analyze sundry cryptocurrencies on different parameters and on the substratum of those factors, research,
and survey culling the best among them. Our project provides a focused, systematic literature analysis of
various cryptocurrencies. The ascension of cryptocurrency value on the market and the growing popularity
around the world open a number of challenges and concerns for business and industrial economics. Utilizing
the lenses of both neoclassical and behavioral theories, this project discusses the main trends in the academic
research cognate to cryptocurrencies and highlights the contributions of the selected cryptocurrencies.

Objectives
1. Understanding the various concepts of cryptocurrency
2. Study the general position of various cryptocurrencies and view around the world
3. Analysis of six cryptocurrencies (Bitcoin, Ethereum, NFFT, Dogecoin, Polygon, Litecoin)
4. Understanding and analyzing the other parameters relating to cryptocurrency

III. Problem Statement:

We posit that cryptocurrencies may perform some utilizable functions and integrate economic value, but
there are reasons to favor the regulation of the market. Similarly there are various other questions relating to
cryptocurrency and in this project we are showing a few of them.

In our Project the various issue we are dealing with are :-

1. What are the economic changes of the cryptocurrencies?
2. How to invest in crypto currency? What are the methods of investing in it?
3. Can crypto currency take the place of our day to day transaction medium called “money”? 4. Is crypto
currency safe for investors?
5. Which crypto currency to invest in as per our analysis and research?
6. What will be the future of cryptocurrencies, will it be a rise or a downfall?

IV. Research Methodology and Preferences:

The project is theoretical as well as experienced-based. The methodology includes the overall research
procedures, which a researcher follows during the course of the study. Research also involves going through
the research which has already been done before by scholars.
Data sources include secondary data collected from different materials and databases of research papers.
Various research papers and articles from the leading journals, newspapers, and magazines were considered.
The process our team is using to do this project is (i) Problem identification, (ii) Review of available
literature, (iii) Problem formulation, (iv) Writing a research proposal, (v) Deciding the methodology, (vi)
Sample selection and preparation of tools of data collection collecting the data, (vii) Analysing and
interpreting the data, (viii) Writing the research report

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Sample Size- The number of individuals we included in our project depends on sundry factors, including the
size and variability of the population. The sample size of our project includes professional investors of
cryptocurrency, people from different backgrounds investing in this market, students having cognizance, and
additionally investing in cryptocurrency.
Target respondents- The target respondents in our survey are people who have knowledge of cryptocurrency
and are investing in this market so as to get answers to our questions more accurately.
Sampling Technique- We have utilized the survey sampling method as our sampling technique. We have
circulated a questionnaire survey in the form of google docs to the germane persons.
Data analysis method- Our project includes real-time data, quantitative and qualitative data. The data
analysis process includes: Defining the question, Collecting the data, Cleaning the data, Analyzing the data,
Visualizing and sharing your findings.

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DATA ANALYSIS AND INTERPRETATION

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 SURVEY QUESTIONNAIRE (ANNEXURE)

1. Have you heard about Cryptocurrency?

A. Yes

B. No

2. Do you invest in Cryptocurrency?

A. Yes

B. No

3. In your opinion what is the main reason for investing in cryptocurrency?

A. Speculation (Profit)

B. Anonymity from governments

C. Freedom from banks

D. Others:

4. Which of the following cryptocurrency have you heard the most?

A. Bitcoin

B. Ethereum

C. NFT

D. Polygon

E. Dogecoin

F. Litecoin

5. In which of this cryptocurrency would you like to invest?

A. Bitcoin

B. Ethereum

C. NFT

D. Polygon

E. Dogecoin

F. Litecoin

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6. Which cryptocurrency have more influence in the market currently?

A. Bitcoin

B. Ethereum

C. NFT

D. Polygon

E. Dogecoin

F. Litecoin

7. Should cryptocurrency be legalized globally?

A. Yes

B. No

8. Unlike other form of investments, cryptocurrency requires much less fees to operate. Would this increase
your interest in using cryptocurrency?

A. Yes

B. No

9. How likely are you to invest in crypto this year?

A. Extremely

B. Somewhat

C. Maybe

D. Not so

E. Not at all

10. Which cryptocurrency will be more dominant in 10 years to come?

A. Bitcoin

B. Ethereum

C. NFT

D. Polygon

E. Dogecoin

F. Litecoin
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Best Among 6

Bitcoin
The main advantages of Bitcoin are network effect and proven security. Both are nearly insurmountable
advantages. Bitcoin has a proven usage case as a store of value. It’s instructive that most coins try to carve
out some differentiation based on much smaller use cases, such as prediction markets, buying things
completely anonymously or adding a decentralized name server. The security of Bitcoin has been proven far
more than its much younger counterparts with usage by almost every metric exceeding that of altcoins.
Further, Bitcoin is more accessible, with more exchanges, more merchants, more software and more
hardware that support it. Bitcoin is far more liquid, with much larger volumes than every altcoin. Bitcoin has
the largest developer ecosystem with more software and more implementations than any altcoin. Bitcoin has
the most entrepreneurs creating companies around it with a lot of intellect, dedication and creativity going
toward making it more useful.

Ethereum
Ethereum was developed to augment and improve on bitcoin, expanding its capabilities. Ethereum's higher
risk brings with it potential for higher rewards. Ethereum has a different goal than Bitcoin. Ethereum
operates as a decentralized network on top of which applications can be built. Many cryptocurrency tokens
are actually issued over the Ethereum network. The ability to use the Ethereum platform to change the way
mortgage transfers, securities trading and many other fields work has helped bring about its next
characteristic. Ethereum's utility is limited only by the ingenuity of the world's developers, so there's more
activity surrounding the platform.

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NFT
In my opinion one of the obvious benefits of buying art is it lets you financially support artists you like, and
that's true with NFTs and even though NFTs are still in their infancy from a market perspective, the rapid
growth in popularity has opened a new window of change in the market. Even though NFTs are not very
secure but still promote a healthy and creative way of dealing. NFTs have proven to be a profitable form of
investment owing to some of the following reasons: Creates Value for the Tokenized Asset: NFTs create a
medium whereby physical objects like art works can be tokenized, thus eliminating the duplication of such
art work and limiting ownership to the artist. These are the factors which proves and makes NFTs a better
and safer coin to invest in my opinion.

Polygon
With the use of polygon , it facilitates fast and secure off chain transactions for payments and is a scaling
solution for the Ethereum network. Analysts believe several internal developments and upcoming
partnerships might provide the impetus it needs for faster growth. Polygon solves problems through the
development of a decentralized platform that facilitates low-cost transactions. These benefits make polygon
a strong and safe crypto coin to invest in. These are the factors which proves and makes Polygon a strong
and profitable crypto coin to invest in .

Dogecoin
Dogecoin is the protagonist of a cryptocurrency tale that no one could have predicted beforehand. As the
fame of the meme cryptocurrency grew, its market value dwindled in the last couple of weeks like a candle
flame in the wind. It experienced an unimaginable high and came crashing down soon after. Dogecoin has
gained unprecedented fame in the past couple of weeks. With this, the cryptocurrency market value is
fluctuating like never before. There is a fast transaction speed associated with Dogecoin, that too at very low
transaction fees. This is one of the biggest pluses of digital currency. The reason for this is that Dogecoin
was invented to have fun and not make investors money.

Litecoin
Litecoin was seen as being created in reaction to Bitcoin. Litecoin’s own developers have long stated that
their intention is to create the “silver” to Bitcoin’s “gold.” Litecoin adopts many of the features of Bitcoin.
Its relative speed and cheapness make it ideal for smaller, everyday transactions. Li tecoin can process
transactions quicker than bitcoin, and its quicker block time suggests that it can handle more capacity than
bitcoin. As it has the same features as bitcoin, there is no such difference between these.

According to our project, judgement based on our research, survey and views of people or rather investors
and all other relevant factors we came up with bitcoin as the best coin. All other coins have some advantage
that makes it a better coin than others but bitcoin comes with plenty of advantages, features that makes it a
better investment option. However this result may vary in future but based on current events and economies
of scale we conclude that bitcoin is the best among 6.

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 CONCLUSION

Cryptocurrency seems to have move past the early adoption phase that new technologies experience. Even
motor vehicles experienced this phenomenon. Bitcoin has begun to carve itself a niche market, which
could help advance cryptocurrencies further into becoming mainstream; or be the main cause of it failing.
Cryptocurrencies are still in their infancy, and it is difficult to see if they will ever find true mainstream
presence in world markets. The Bitcoin community is striving to push into the mainstream through
innovation and solving old problems. Other forms of cryptocurrency have already emerged and have gained
followings of their own, and each slightly different from Bitcoin and arguably as valid. Some nations like
Iceland have even begun to start their own national cryptocurrencies (Hofman, 2014). It possible that the
future holds a place for cryptocurrency as a major currency solution, and Bitcoin will be instrumental in
paving the way for those currencies to flourish. The European and Latin America markets are exploding
with Bitcoin transactions, signifying true validity. Further topics to explore regarding Bitcoin and
cryptocurrencies are quite numerous. Extensive studies should be performed on the economic effects of
Bitcoin‟s effect on long standing fiat currency performance, and compare the results to countries that are
beginning to adopt state-sponsored cryptocurrencies. The ability for cryptocurrency to perform micro
transactions may allow it to bridge an economic gap that traditional state sponsored currencies would
not be able to solve, but requires a much deeper market and economic analysis to determine. Also, the block
chain technology that acts as Bitcoin‟s backbone has potential uses in other ways, such as smart contracts
(Hileman, 2016). These contracts are programmed payments that occur when a set condition occurs.
Predetermined payment contracts are normally carried out by an entire accounting department of a
company, making this an extremely interesting topic of further transformation. Lastly, cryptocurrency is a
product of using cryptography to create a digital property. The frontier of digital property was popular ized
by the music industry‟s shift to a cloud-based infrastructure. This frontier is still fairly new and unexplored,
mainly populated by different types of media. Other forms of digital property may become as popular as
music and cryptocurrency. Eight years ago, digital money was completely unheard of, and the creator of
Bitcoin single handedly changed that. Cryptology, the root science beneath bitcoin and all
cryptocurrencies, may be the mechanism behind the frontier for new and exciting digital inventions.

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 BIBLIOGRAPHY

ARTICLES

1. https://www.researchgate.net/publication/316656878_An_Analysis_of_Cryptocurrency_
Bitcoin_and_the_Future
2. https://economictimes.indiatimes.com/news/economy/finance/icai-working-on-research-
paper-on-cryptocurrencies/articleshow/90377701.cms
3. https://www.researchandmarkets.com/reports/5324564/cryptocurrency-market-research-
report-by-type
4. https://www.researchgate.net/publication/324770908_The_Growth_of_Cryptocurrency_in_In
dia_Its_Challenges_Potential_Impacts_on_Legislation

BOOKS

 The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic
Order
by Michael Casey & Paul Vigna

 Digital Cash: The Unknown History of the Anarchists, Utopians, and Technologists Who Created
Cryptocurrency
by Finn Brunton

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