CRYPTOCURRENCY: ARE WE READY

TO DEMONITIZE THE WORLD?

Submitted by

Name of the Candidate: Prarthana Saha

Room Number: 11

Roll Number: 950

Supervised by

Name of the Supervisor: Dr. Jayita Bit

Month & Year of Submission July,2021

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 St. Xavier’s College (Autonomous)

Department of Commerce (Evening)

PROJECT COMPLETION AND PLAGIARISM VERIFICATION CERTIFICATE

Student Name: … Prarthana Saha………………………...………………………....

Room No.: …………11……………………. Roll No.: ………950…………

Title of the dissertation: ……… Cryptocurrency: Are we ready to demonetize the world?
…………………………………………….......

...................................................................................................................................................

The above dissertation was scanned using iThenticate for similarity detection and the

similarity index is as follows:

Similarity Index: ………25%……………

The dissertation may be considered for submission.

Name of the Supervisor: ……Dr. Jayita Bit………………

Signature: …………………………………………………

Date: …09.04.2021……….
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 Student's Declaration

I hereby declare that the Project Work with the title (in block letters) PRARTHANA SAHA
submitted by me for the partial fulfilment of the degree of B.Com. (Honours) at St. Xavier’s College
(Autonomous), Kolkata is my original work and has not been submitted earlier to any
other Institution for the fulfilment of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been incorporated in this report from
any earlier work done by others or by me. However, extracts of any literature which has been used for this
report has been duly acknowledged providing details of such literature in the references.

Signature: Prarthana Saha

Name: Prarthana Saha
Address: 35, J.N. Tiwari Road, Kolkata - 28

Place: Kolkata Room No.: 11

Date: 10/7/2021 Roll No.: 950

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 Acknowledgement
Firstly, I would like to express my sincere gratitude to St. Xavier’s College, Kolkata for providing me an
opportunity to research into such a vast, emerging and relevant topic: Cryptocurrency. I extend my gratitude
to Rev. Fr. Peter Arockiam, Vice-Principal (B. Com Evening), St. Xavier’s College, Kolkata for his constant
motivation to all the students of the college.

I take immense pleasure in thanking my respected supervisor, Dr. Jayita Bit for extending her co-operation,
guidance, valuable inputs and regular encouragement during my project.

I would like to thank the respondents who took their time out for the survey and gave their valuable opinions.
I am grateful to my parents, and my friends and all others who have directly and indirectly helped me in my
project.

Prarthana Saha

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 Contents

1. Background of the Study Page – 6

2. Literature Review Page – 7 and 8
3. Objectives of the Study Page - 9
4. Rationale of the Study Page – 9
5. Sources of Data and Page – 10
Research Methodology
6. Limitations of the Study Page – 10
7. Chapter Planning Page - 11
8. Conceptual Framework Page – 12
9. Analysis and Findings Page – 13 to 18
10. Conclusion Page – 19
11. References Page – 19

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 Introduction

Background of the study

Many activities in our daily lives have been merged online due to the rapid evolution of data and c
technologies. They've become more adaptable and straightforward. A massive increase in the number of
online users has activated virtual world concepts and created a new business phenomenon known as
cryptocurrency.

Cryptocurrency is used to facilitate financial transactions such as buying, selling, and trading. It is a valuable
intangible asset that can be used electronically in a variety of applications and networks such as online social
networks, online social games, virtual worlds, and so on. In recent years, the use of virtual currency as a
medium of exchange has become widespread in a variety of domains.

The purpose of this paper is to examine users' expectations for the future of cryptocurrency. It will delve
deeper into users' trust and willingness to deal with cryptocurrency at a time when such virtual money is not
fully regulated by any authority.

There is no doubt that the age of data and communication technologies has created numerous golden
opportunities in a variety of fields. Finance and business are two of the industries that have made the most of
these technologies and online connections. A growing number of technology users have activated virtual
world concepts, resulting in a business replacement phenomenon. As a result, new types of trading,
transactions, and currencies are emerging. Cryptocurrency is one of the remarkable financial forms that have
emerged in recent years. Cryptocurrency (CC) is frequently defined as any medium of exchange other than
world money that will be used in many financial transactions, whether virtual or real.

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Literature Review

Bitcoin is soaring, and the global cryptocurrency market is now worth more than $1 trillion. Despite the fact
that the majority of the value is held in “altcoins” of uncertain value, it is clear that the decentralised future of
money is gaining traction.

The crypto revolution's origins can be traced back to the 1970s. This review of the literature compiles a list of
the ten most significant developments underpinning the growth of the digital economy. The list includes not
only papers about digital assets, but also concepts and technologies that have applications that go beyond
fintech and decentralised governance.

The first such paper, titled “A Certified Digital Signature,” was published in 1979 by Ralph C. Merkle, who is
regarded as one of the fathers of cryptography. It described certified digital signatures, which provided
efficient and reliable data encryption by transforming blocks of information into strings of unique code. This
method of converting information blocks resulted in a space-efficient encoding of blockchain data.

The following paper, titled “Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms,” was
published in 1981 by David Chaum, whose contributions to digital privacy and the introduction of digital
cash led to the formation of the Cypherpunk movement. This movement advocated for the widespread use of
cryptography as a future path to social change.

Stuart Haber and W. Scott Stornetta published “How to Timestamp a Digital Document” in 1991. This paper's
work effectively gave birth to blockchain technology. A "digital safety deposit box" was proposed as a
solution to the problem of data tampering. It could keep a copy of a document for safekeeping and record the
date and time it was created. An unbreakable chain of time-stamp requests would ensure the accuracy of these
records.

Nick Szabo published "Smart Contracts" in 1994. Smart contracts are defined as "computerised transaction
protocols that carry out contract terms." The primary goals were to reduce transaction costs and to fill the
need for trusted intermediaries.

Satoshi Nakamoto published “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008. Bitcoin took the
world by storm, igniting a slew of new scientific research and business developments centred on blockchains,
digital assets, and decentralised economies.

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Vitalik Buterin published “Ethereum: A Next Generation Smart Contract and Decentralized Application
Platform” in 2013. The 19-year-old Russian-Canadian programmer proposed a blockchain with a built-in,
fully functional Turing-complete programming language, allowing anyone with coding experience to create
smart contracts and decentralised applications for various transactions. The transaction fees would be covered
by "ether," Ethereum's internal crypto-fuel.

Eli Ben Sasson, Alessandro Chiesa, Christina Garman, Matthew Green, Ian Miers, Eran Tromer, and Madars
Virza published the paper “Zerocash: Decentralized Anonymous Payments from Bitcoin” in 2014. “It is a
Bitcoin extension with enhanced security and privacy, allowing users to conceal personal information that
may be sensitive in nature.” This privacy model incorporated the use of “zero-knowledge succinct non-
interactive argument of knowledge” cryptography, which allows one party to prove to another that they
possess certain information without actually disclosing that information.

Robert Sams published “A Note on Cryptocurrency Stabilisation: Seigniorage Shares” in 2014. Volatility is
high in cryptocurrencies. The creation of “stablecoins” resulted from increased risk aversion and demand for
stability in the crypto market. They were created with the intention of remaining stable in value against a
pegged external asset class.

Joseph Poon and Thaddeus Dryja published “The Bitcoin Lightning Network: Scalable Off-Chain Instant
Payments” in 2016. This was created as a possible solution to Bitcoin's struggle to establish itself as a viable
alternative to the existing online payment infrastructure. It adds a new layer to Bitcoin's blockchain
technology, allowing two parties to create payment channels for low-value Bitcoin transactions. This helps to
move transactions away from the main ledger and reduces transaction fees.

Hayden Adams, Noah Zinsmeister, and Dan Robinson released “Uniswap V2 Core” in 2020. It prices assets
using a deterministic algorithm known as automated market maker (AMM), which eliminates the need for a
counterparty in order to make a trade and allows anyone to create a market by interacting with a smart
contract.

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Objectives of the Study

The study's goal is to look into decentralised digital currencies that use encryption mechanisms, also known
as cryptocurrencies. The liquidity of this sector is undoubtedly a research challenge, as is an in-depth
examination of the cryptocurrency industry as a whole. This paper's goal was to provide a concise but in-
depth analysis of the cryptocurrency industry. Our focus is also on comprehending the concept and operation
of cryptocurrency, as well as its benefits and drawbacks, as well as where it stands among the general public
in terms of various factors such as risks and profits.

The Rationale of the Study

The digital currency can compete with other forms of payment such as PayPal and credit/debit cards. Bitcoin
and other digital currencies have the potential to have a significant long-term impact on both the currency and
the payment system, but this currency is still in its early stages of development. There are many unanswered
questions about its utility and the potential of digital currency as a cutting-edge technology. ” Bitcoin is the
most popular term among the media, young generation investors, and IT professionals. Is it finally time for
India to go cashless? - If the answer is yes! Is the use of Bitcoin a positive step toward India achieving this
lofty goal?

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Sources of Data and Research Methodology

1. Data Type – The research is based on primary data to have a closer perspective about people’s
understanding of the crypto world. The secondary data sources are derived from online articles,
existing research papers, journals issued by different institutes and various other forms.

2. Sampling Procedure – A questionnaire (in Google Forms) is prepared to understand people’s

knowledge and opinions on cryptocurrency.

3. Sample size – The sample size in primary survey was taken to be 50.

4. Area of study – The area of study of the primary data was across various cities in India.

5. Analysis Tools – Quantitative methods including various graphs and charts created with the help of
Ms-Excel.

Limitations of the Study

There are various limitations to the study:

i. An honest attempt has been made, to the greatest extent possible, to collect data from primary sources and
reliable secondary sources. However, there is a chance that incorrect data has crept in.

ii. A critical factor limiting this study is a lack of subject matter knowledge.

iii. The study is also limited to the data available on a specific date because the topic is variable and people's
responses may vary depending on economic factors.

iv. A primary survey was conducted in April 2021. Today, the same respondents may have differing
perceptions and responses.

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Chapter Planning

For the purpose of simplicity and interpretations, the entire study has been divided into various chapters as
follows:

1. The first chapter of the study deals with the basic understanding of the topic, appraisal of various
literature review on the topic, scope of the study and the inherent limitations to the study.
2. The second chapter of the study deals with a brief knowledge on the understanding of cryptocurrency
and the technology behind it.
3. The third chapter deals with the data analysis and interpretation of the study. Various factors such as
age, city, and multiple other such questions to interpret the understanding of current cryptocurrency
concepts and the trends in near future.
4. The last chapter closes with a brief summary of the conclusions and recommendations of the study.

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 Conceptual Framework

Cryptocurrency markets are still distributed, which means they are not issued or supported by a central
authority such as the government. Instead, they fall into the computer network. However, cryptocurrencies
can be bought and traded on exchanges and stored in ‘wallets. Unlike traditional currencies, cryptocurrencies
only exist as a shared digital ID, which is stored in a blockchain.

Blockchain is nothing but a shared digital register of recorded data or a ledger of cryptocurrencies. It keeps
track of transactions across all trades, and shows how ownership has changed over time. Blockchain works by
recording transactions in ‘blocks’, with new blocks being added to the front of the chain. Blockchain
technology has different security features that do not have standard computer files. It does this through
network compatibility, in which case the file is stored on multiple computers across the network - not in one
place - and is usually read by everyone within the network. This makes it obvious and very difficult to
change.

When a user wants to send cryptocurrency units to another user, they send them to that user's digital wallet.
Actions are not considered final until they have been verified and added to the blockchain by a process called
mining. This is also the way new cryptocurrency tokens are often made. It has two functions:

1) Transaction Check: Mining computers select pending transactions in the pool and check to ensure that the
sender has sufficient funds to complete the transaction. This includes looking at transaction details and
transaction history stored in the blockchain.

2) New Block Creation: Mining computers incorporate legitimate transactions into a new block and then
attempt to generate a cryptographic link to the previous block by finding a solution to a complex algorithm.
When a computer successfully generates a link, it blocks a block in its blockchain file version and distributes
the update across the network.

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Analysis and Findings

1. On the basis of Age – Among the 50 respondents to the questionnaire, we can see the age range being
between 20 years to 49 years. However, the topic of cryptocurrency is seen to be most popular among
young adults, ranging from 21 years to 24 years, with top three being - 26% responses from people
aged 21 years, 16% responses were from people aged 22 years, and 18% responses from people aged
24 years.
About 6% of the people were aged 20 years and 31 years each, 8% were of the age 23 years and 26
years each, 4% were aged 25 years, with 2% responses from the rest of the age.

2. On the basis of city - Among the 50 respondents to the questionnaire, we can see that the data has
been collected from various cities across India. It is difficult to assume which city has more interest in
cryptocurrency as the data is collected from peer networking.

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3. The third question was to determine the popularity of cryptocurrency among people. Among the 50
respondents, 36% had a lot of knowledge about cryptocurrency, 40% had some knowledge about
cryptocurrency, 18% did not have much knowledge about cryptocurrency and there were none who
had not heard about cryptocurrency.

4. The fourth question helped us in understanding where our respondents had any interest in purchasing
cryptocurrency in the future. Among the 50 respondents, 30% said they were planning to purchase
cryptocurrency in the future, 30% said they were not planning to purchase cryptocurrency in the future
and 40% said they were unsure about planning to purchase cryptocurrency in the future,

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5. In the fifth question, we get to know the percentage of respondents who own cryptocurrency. Among
the 50 respondents, 14% of the people said they owned cryptocurrency while 86% of the people said
they do not own cryptocurrency.

6. In the sixth question, we condition the respondents that if they were provided with the knowledge to
invest in cryptocurrency, how likely were they to do so. Among the 50 respondents, 24% were
extremely likely to invest in cryptocurrency if provided with the knowledge, 48% were somewhat
likely to invest in cryptocurrency if provided with the knowledge, 22% were not so likely to invest in

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 cryptocurrency if provided with the knowledge and 6% were not interested to invest in cryptocurrency
if provided with the knowledge.

7. The seventh question compared investing in stock market and investing in cryptocurrency on the basis
of risk involved. Among the 50 respondents, 2% had the opinion that investing in stock market was
riskier, 68% had the opinion that investing in cryptocurrency was riskier, 22% had the opinion that
investing in cryptocurrency and investing in stock market were equally risky and 8% had no opinion
in this regard.

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8. The eight question compares investing in stock market and investing in cryptocurrency on the basis of
profit. Among the 50 respondents, 50% were of the opinion that investing in stock market was more
profitable, 28% were of the opinion that investing in cryptocurrency was more profitable, 14% were
of the opinion that investing in stock market and investing in cryptocurrency were both equally
profitable and 8% did not have any opinion in this regard.

9. The ninth question wanted to know about the opinion of people regarding the worth of cryptocurrency
in the future. Among the 50 respondents, 28% had the opinion that in 5 years the value of
cryptocurrency will be significantly more than today, 38% had the opinion that in 5 years the value of
cryptocurrency will be somewhat more than today, 20% had the opinion that in 5 years the value of
cryptocurrency will be about the same as that of today, 6% had the opinion that in 5 years the value of
cryptocurrency will be somewhat less than today and 8% had the opinion that in 5 years the value of
cryptocurrency will be significantly less than today,

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10. The tenth question tells us about the opinion of our respondents regarding cryptocurrency as a
medium of monetary exchange. Among the 50 respondents, 6% of the people consider cryptocurrency
to be related to criminal activity, 28% of the people consider cryptocurrency to exist only in computer,
40% of the people had the opinion that few merchants accept cryptocurrency as a medium of
monetary exchange and 26% had no opinion in this regard.

11. The eleventh question wanted to know about the common man’s trust behind the technology of
cryptocurrency. Among the 50 respondents, 38% trusted the technology behind cryptocurrency, 28%
did not trust the technology behind cryptocurrency and 34% had no opinion in this regard.

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Conclusion

Cryptocurrency provides an effective, new and attractive mode of payment that can increase the revenue of
companies. It also provides an alternative method for payment, which can bring a positive change in the e-
commerce sector. However, there is still not much knowledge and trust regarding cryptocurrency. Until it is
regulated and controlled properly, numerous challenges, concerns and issues will continue to exist, due to
which users will need to take extra precaution while handling such virtual currency. Therefore, the lack of
legislation is one of the main concerns in cryptocurrency system in India, and the silence of RBI may prove to
be damaging. Since an industry has grown around cryptocurrency, with traders and merchants accepting
digital cash as payments, it is important to get this industry regulated.

References:

1. http://ijrar.com/upload_issue/ijrar_issue_20543250.pdf
2. https://www.forbes.com/sites/ninabambysheva/2021/02/13/satoshi--company-the-10-most-important-
scientific-white-papers-in-development-of-cryptocurrencies/?sh=c30298920571
3. https://www.moneycrashers.com/cryptocurrency-history-bitcoin-alternatives/

Cryptocurrency - Are we ready to demonetize the

world?
This form is for research purposes. Please fill in your details. * Required

1. Your Name *

2. Age *

3. City *

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4. How much, if at all, have you heard or read about cryptocurrencies such as Bitcoin or Ethereum? *
Mark only one oval.

A lot

Some

Not much

Just hearing about it in this survey

5. Are you planning to buy cryptocurrency in the future? *

Mark only one oval.

Yes

No

Maybe

6. Do you own Cryptocurrency? *

Mark only one oval.

Yes

No

7. If provided with the knowledge, how likely are you to invest in cryptocurrency? *

Mark only one oval.

Extremely likely

Somewhat likely

Not so likely

Not at all

8. In your opinion, which is more risky, investing in stock market or investing in cryptocurrency? *

Mark only one oval.

Stock Market
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 Cryptocurrency

Both are equally risky.

No opinion

9. Which do you think will be more profitable, investing in stock market or investing in cryptocurrency?
* Mark only one oval.

Stock Market

Cryptocurrency

Both are equally profitable

No opinion

10. In 5 years, do you think cryptocurrency will be worth more or less than today? *

Mark only one oval.

Significantly more

Somewhat more

About the same

Somewhat less

Significantly less

11. What is your opinion about cryptocurrencies as a medium of monetary exchange? *

Mark only one oval.

Criminal activity relation

Exists only in computer

Few merchants accept it

No opinion

12. Do you trust the technology behind cryptocurrency? *

Mark only one oval.

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Yes

No

No idea

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