Cryptocurrency and Its State of Research

Cryptocurrency and Its State of Research

Gatot Gunarso and Stephanie

Department of Management, Faculty of Economics and Business, Universitas Kristen Krida Wacana,
Indonesia
Abstract

This article maps the existing academics and working papers about cryptocurrency or digital currency
that uses blockchain. Cryptocurrency is one of the applications of blockchain that can accelerate
economic digitalization within countries, which in the end could improve economic efficiency,
effectiveness, and access for citizens. By the type of issuers, cryptocurrencies can be placed into three
categories: central bank-issued digital currency, private institution digital currency, and peer-to-peer
crypto-assets. The advent of cryptocurrencies requires strong regulatory frameworks to protect the
users, ethics guidelines to direct the development, risk benefits study to identify pitfalls, users’
psychology, law enforcement guidelines to ensure a safe environment, and economic initiatives to
provide society with maximized benefits. This paper shows research findings, methods, and future
research directions in cryptocurrency.

Keywords: cryptocurrency, digital currency, digitalization, blockchain

Author Note
Gatot Gunarso 0000-0001-7447-6931
Stephanie 0000-0003-2704-9552
We have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Gatot Gunarso, Faculty of
Economics and Business, Universitas Kristen Krida Wacana, Indonesia.
Email: [email protected].

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 Cryptocurrency and Its State of Research

Cryptocurrency and Its State of Research

Financial technology (fintech) is an industry that grows rapidly and has a high

compound annual growth rate (CAGR) (CB Insights, 2019). Fintech is the future of the

financial industry, by which consumers and businesses can access financial services and

products digitally, innovative market participants can deploy new innovative technologies,

and existing business models can upgrade their capacities and capabilities to fulfill consumers'

needs. Fintech helps consumers and businesses handle the impact of the Covid-19 pandemic.

To integrate digital technology innovations into people’s lives, users need to feel long-

lasting valuable effects. To sustain this integration, firms must gain sustainable competitive

advantages. Fintech refers to the financial service companies that dominantly use information

technologies in their operation to deliver their products to serve consumers. Fintech

companies offer financial services and products that are entirely or mostly in the information

technologies domain, and those services or products are difficult or impossible to perform in

conventional business because of the limitations in infrastructure.

Authorities see fintech as a means to increase financial inclusion for consumers and

encourage companies to innovate processes, services, and products. Fintech helps reduce

costs, increase the reachability of customers, and manage risks more efficiently. Fintech

companies provide quicker, better quality, more convenient, and cheaper financial services

with a seamless process 24 hours a day, seven days a week, or nonstop, compared to

conventional financial companies.

Fintech uses advanced technologies such as artificial intelligence, machine learning,

and data science to develop solutions for financial needs (Hua et al., 2019). One example of a

development in fintech is cryptocurrency. This paper examines research findings, methods,

and future research directions to identify to map the existing landscape of cryptocurrency. As

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 Cryptocurrency and Its State of Research

cryptocurrency technology is still developing, a comprehensive cryptocurrency literature

review will help researchers to advance research in this particular field.

Cryptocurrency is not a new term that exclusively belongs to this era; in 1983, David

Chaum wrote about the use of cryptography applications for future e-cash. Cryptocurrency,

also known as virtual currency, is an online payment system that may function as real

currency but is not administered or ratified by a central government (Lovell, 2019).

The European Central Bank (ECB) sees cryptocurrency as one type of crypto asset,

which is defined as a new type of “asset recorded in digital form and enabled by the use of

cryptography that does not represent a financial claim on, or a liability of, any identifiable

entity” (Agur et al., 2022). Cryptocurrency is electronic-based money or virtual currency that

exists only on the internet, that may or may not have intrinsic value backed by an institution,

and that uses cryptography to secure the generation, transaction, and storage of its value (Wu

et al., 2022).

Since the beginning of the 21st century, people all over the world have seen a decline

in the use of cash, especially during the Covid-19 pandemic. The ECB recorded that in 2019,

only 48% of the total transactions in Europe used cash (European Central Bank, 2020).

Consumers use commercial bank money, private-issued electronic payment forms of money,

and private-issued cryptocurrency (Cœuré & Loh, 2018).

Literature Review

Cryptocurrency, as part of fintech, uses blockchain technology combined with

cryptography or encryption as the core to secure the financial activities related to its currency

function. With blockchain, the participants of a financial system can easily find out the list of

approved transactions by entering the private key into the system. Once verified, the

transaction will become part of the blockchain (Afzal & Asif, 2019).

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 Cryptocurrency and Its State of Research

Cryptocurrencies utilize blockchain technology to enable the remote peer-to-peer

transfer of electronic value where there is no trust between participants, also known as zero

trust architecture. In a conventional system, the electronic representations of money are

exchanged via centralized infrastructures, where one of the more trusted intermediaries

verifies and settles the transactions.

Blockchain is often referred to as a distributed ledger technology that enables

participants within the systems to transact without the need for a centralized trusted authority

that stores peer-to-peer transactions record in blocks that are subsequently appended as new

transactions happen (Mendling et al., 2018; Woodside & Amiri, 2018). In other words,

blockchain is a decentralized cryptography platform that records all information about the

transactions ever executed within the system, using consensus protocols in a digital ledger

stored in every participant’s location that ensures a verifiable, unchangeable, and secure way

to fulfill immutability, transparency and anonymity principles.

Distributed ledger technology (DLT) refers to the algorithms, protocols, and

infrastructures that allow computers or machines in various locations to request a transaction,

validate the transaction, and update transaction records in a synchronized way across a

network. Cryptocurrencies have a distributed database in a decentralized way, where every

transaction is validated using a consensus-based checking procedure and cryptographic

parameters. Transactions are broadcast to the entire set of participants who will validate them

in batches of data known as "blocks," without any centralized authority, or popularly known

as “peer-to-peer.” The ledger of these activities is recorded in separate but connected digital

blocks; thus blockchain is also known as "blockchain technology."

Figure 1 below shows how blockchain works in cryptocurrency, from a transaction

request to the final stage of a transaction. The advent of cryptocurrencies generates many

opportunities such as fast, efficient, anonymous, and unmediated transactions (Arias-Oliva et

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 Cryptocurrency and Its State of Research

al., 2021). However, there are still concerns regarding blockchain and its applications in

society. As understanding the potential consequences of blockchain technology develops,

moral and ethical challenges need to be addressed (Tang et al., 2020).

Figure 1
Blockchain Process from Transaction Request to Final Settlement (World Economic Forum)
User X wants to Online Every computer in Every computer in
transact with Y transaction is the network the network
using converted into receives the receives the
cryptocurrency data “block” broadcasted block broadcasted block

Every computer in The finder of the

The new data “chain” that
the network tries to “key” then convert
represents the successful
get the “key” and the key and the
transaction, is now already
verify the validity of transaction into a
created and broadcasted as
the transaction new block that is
the new “ledger” to each
using certain added to the data
computer in the network.
cryptography “chain” of all existing
transactions

Adapted from “Cryptocurrencies, Blockchain and Regulation: A Review,” by Afzal and Asif

(2019).

There are numerous cryptocurrencies currently in the market, but generally, they can

be categorized into three groups of issuers: Central Bank Digital Currency (CBDC),

commercial banks, and crypto-assets. In the CDBC case, the central banks supply

cryptocurrencies in the form of electronic reserves, which are available only to the banking

sector and are then distributed through financial institutions.

As for the cryptocurrencies issued by commercial banks, they are created by credit

extensions that are backed by a real capital investment of fiat money. As for the crypto-assets,

the cryptocurrencies issued have no centralized technical processing, without the precondition

of trust to any institution, and without preset liability of any party to vouch for the intrinsic

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 Cryptocurrency and Its State of Research

value. Among the most popular crypto-assets are Bitcoin, Ethereum, Ripple, Litecoin,

Monero, Ethereum Classic, NEM, Dash, IOTA, Waves, Dogecoin, and Augur (Milutinović,

2018).

Many countries have their cryptocurrencies issued by private institutions in various

countries, such as Gopay by Gojek, QQ Diamond by QQ, Libra by Facebook, and E-money

by Indonesian government banks. Currently, there are numerous pilot projects and launched

CBDC, including e-Yuan in China, Digital Euro in Europe, e-Krona in Sweden, and DCash in

Eastern Caribbean nations (Bordo & Levin, 2017; Mitschke, 2021). Cryptocurrencies have

attracted the attention of information technology professionals, economists, investors, banks,

governments, and law enforcement agencies (Molling et al., 2020).

The potential impacts of cryptocurrencies have been recognized by government

institutions such as the European Central Bank, the US Federal Reserve, the UK Treasury, the

People’s Bank of China, the Bank of Indonesia, and other related governmental institutions.

Corporate reports, government agencies' working papers, and academic research papers about

cryptocurrencies are answering the challenge to understand cryptocurrencies. Countries such

as China, Europe, and the UK, along with international financial organizations, have produced

policy recommendations, guidance, and principles to apply cryptocurrencies in the current

financial system. This paper maps the landscape of cryptocurrency academic research.

Research Method

We conducted a review of the existing academic and working papers concerning

cryptocurrency or digital currency that uses blockchain. A review is a method to map and

identify key points within existing literature considered suitable for the complex research

area.

To achieve a systematic review, relevant documents about cryptocurrency were

retrieved using ProQuest search. The search keywords were “Fintech” and “Crypto.” We then

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 Cryptocurrency and Its State of Research

selected documents that were available with full text in scholarly journals that had gone through

peer-review, with English as the language of the text. As the result, 19 papers remained.

Figure 2

Framework to Select the Articles

Search data using Proquest website with keywords: “Fintech and Crypto”

The search found: 28.426 documents

Selecting criteria for articles:

Only accept articles that discuss Cryptocurrency in an academic journal
Peer reviewed and only use English papers

The selection reduces the number to 300 papers

Filter the articles that directly discuss fintech and cryptocurrency

Number of articles that have been successfully collected: 19

Identify and categorize the objectives of each paper

Analyze and review the journal to list the conclusion for each paper

Write the Review

In Google Scholar, three relevant working papers from the European Commission and

National Bureau of Economic Research about Digital Currency and Cryptocurrency were also

selected. Thus, in total, there were 22 papers used in the review. The purposes and methods of

the collected documents were then put in a table for future review. The last step was to further

elaborate on the selected papers and provide conclusions for future research suggestions.

Results and Discussion

Blockchain technology has become a popular new technology that brought forth

digital products such as cryptocurrencies, smart contracts, smart identification, and tracking,

among others. Blockchain technology itself is a distribution register consisting of blocks of

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 Cryptocurrency and Its State of Research

interconnected transactions. Transaction blocks are called registry nodes. In general, they

represent a decentralized database designed to store and confirm the reliability of information

(Tsindeliani & Egorova, 2020).

Figure 3
How Blockchain Works

Adapted from various sources, illustrated by the author

When a participant in the system requests a transaction, the request is broadcast to all

peers (computer nodes) in the network, and eventually reaches certain computer nodes that

function as miners. A miner will initiate the process to append the transaction into the global

ledger by including the request in the transactions pool, which the miner then adds the hashes

to the metadata and a nonce to try to produce a hash below a target value (defined by the

complexity of the network).

Once a miner is successful in producing the needed hash, the miner broadcasts the

transactions pool and its associated hash as a new block replacing all the previous blocks in

all active nodes. Included within the metadata in the new block is a reference to the

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 Cryptocurrency and Its State of Research

previously mined block, allowing the acceptance of the miner’s new block into the

blockchain.

Miners are incentivized by two rewards: the fees in individual transactions, and a

system-specific mining reward, for example, 0.01 Bitcoin. These rewards are then collected in

a special coin generation transaction within the new block’s transaction pool.

Blocks serve to generate the money supply through the mining rewards included in

each new block and to provide partial transaction orders that come before the new block is

generated. This algorithm allows all participants in the network to impose a global or partial

transactions order. The algorithm will prevent double-spending by maintaining a list of

unspent blocks and validating a transaction only if its input address appears in this list. The

storage of the maintained list is called a crypto-wallet.

The market capitalization of cryptocurrencies was non-existent before February 2010,

virtually very small before 2013, and was relatively stable at less than $20 billion until the

end of 2016 when it became volatile and has been ever since (Fan et al., 2022). At the end of

2017, it rose to over $200 billion, then at the beginning of 2018, the market capitalization rose

to over $800 billion. In December 2018, the capitalization fell to below $130 billion and was

volatile again after the Covid-19 pandemic spread throughout the world in March 2020, when

the capitalization peaked again at over $2 trillion in May 2021. The market cap then fell to

$1.2 trillion in June 2021 after the second wave of COVID-19, peaked all-time-high of $2.9

trillion in November 2021 after the US and European countries relaxed their pandemic

restrictions, fell deep to $1.2 trillion due to the massive selling in March 2022 after the

Russian invasion over Ukraine, then fell deeper to $868 billion in June 2022 due to the fear of

worldwide recession.

The following graph shows the volatility of the market capitalization of

cryptocurrencies, which implies the volatility of the value of cryptocurrencies in the face of

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 Cryptocurrency and Its State of Research

fiat money. Volatility also indicates the popularity, trading volume, and susceptibility of

cryptocurrencies to speculative bubbles, high energy prices, and geopolitical situations among

other factors. Although not directly related, the graph also implies the number of

manipulations, scams, and fraud risks related to the popularity of cryptocurrency.

Figure 4

Total Cryptocurrency Market Capitalization from 2016 to 2022

Adapted from www.coinmarketcap.com

The graph alone represents the growing expectations and hopes of the consumers to

use an electronic representation of money, whether for the real purpose of payment or

speculative purposes. The growth shows the importance of mapping the knowledge landscape

about cryptocurrencies related to the economic condition of countries, including trade,

commerce, law and regulation, security, and safety matters.

There are several benefits of cryptocurrency. First, the government cannot appropriate,

manipulate, or change the value of the cryptocurrency. Second, it is considered a secure

transaction against fraud and identity theft, an immediate and final settlement, and

information-accessible for all participants. Third, it has lower transaction, maintenance,

storage, and circulation fees. Fourth, cryptocurrency is more convenient for the participants to

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 Cryptocurrency and Its State of Research

transact without the need for an intermediary or centralized regulator. Fifth, it offers a higher

degree of freedom to transact due to the anonymous nature of cryptocurrencies.

However, all these perks are not entirely certain. For example, the government can

still confiscate the hardware that holds the digital wallet containing the cryptocurrencies. The

hackers still can steal the digital wallet stored in the cloud server. The device to mine

cryptocurrencies requires very high-performance capability. Additionally, the participants still

need a cryptocurrency exchange platform to trade the cryptocurrency for fiat money, and

there are limited types of goods and services available for trade with the cryptocurrencies.

The disadvantages of cryptocurrencies are price volatility (Todorof, 2019), lack of

market transparency (Commission, 2018; Cumming et al., 2019), low market integrity (Lee,

2020), and lack of investor and consumer protection (Kharisma, 2021), lack of adequate law

and supervision process (Tsindeliani & Egorova, 2020), high demand of high-performance

computing hardware (Ghiro et al., 2021), high consumption of electrical power (Schinckus et

al., 2020), susceptibility to energy prices (Gurrib, 2019), operational weaknesses, popularity

as a tool for illicit payment for illegal transactions (Afzal & Asif, 2019), the technical

vulnerabilities of services and trading venues (European Central Bank, 2020), the difficulty to

intervene the exchange rate with conventional monetary policy (Mitschke, 2021), and the

possibility of using cryptocurrencies for criminal purposes (Șcheau et al., 2020), including

money laundering and tax evasion (Barnes, 2018; Todorof, 2019).

Table 1

List of Papers, Purpose, and Methods

Author Purpose of Articles Method

Scheau et al., 2020 Examines the worldwide operation of cryptocurrencies Literature
and their connections with cybercrime. review and
quantitative

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 Cryptocurrency and Its State of Research

Author Purpose of Articles Method

Lovell (2019) Explores different issues surrounding Bitcoin and how Case study
the U.S. government, specifically the Internal Revenue
Service (IRS), should regulate cryptocurrencies to solve
the issues inherent within Bitcoin.
Chu (2018) Explores experiences of broker-dealers, and the Literature
similarities between the problems confronting review
cryptocurrency platforms today and those that broker-
dealers faced in the late 1960s. Widespread broker-
dealer failures during the late 1960s revealed problems
with mishandled client assets, insufficient capital, and
inadequate protection of customer assets in bankruptcy.
Barnes (2018) Examines the trading and popularity of Quantitative
cryptocurrencies as investments and the susceptibility
of their pricing to speculative bubbles, manipulation,
scams, and fraud.
Afzal & Asif (2019) Addresses various risks associated with an unregulated Framework
cryptocurrency market and, discusses possible avenues building and
of regulation as well as applications of the quantitative
cryptocurrency technology for Pakistan.
Milutinović (2018) Addresses the theme of cryptocurrency and its role in Framework
economic growth. Types of cryptocurrencies are shown building and
as well as their expansion in countries in transition. The quantitative
market of cryptocurrency in Serbia and Switzerland is
discussed.
Molling et al. (2020) Identifies main topics, main discussions, and Literature
controversies on each topic presented in the literature review and
on cryptocurrencies. framework
building
Tsindeliani & Shows the legal status quo of cryptocurrencies in the Qualitative
Egorova (2020) Russian Federation. Describes references to the existing and
and proposed legislation as well as to the statements of descriptive

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 Cryptocurrency and Its State of Research

Author Purpose of Articles Method

several international, supranational, and national
regulatory bodies.
Cortez & Mongrut Determines the best model for predicting the short-term Literature
(2021) log rates of the bid-ask spreads in the three biggest review and
cryptocurrencies—Bitcoin, Ripple, and Ethereum—and quantitative
in the 16 major fiat currencies listed by Bloomberg.
Arias-Oliva et al. Shows empirically that fsQCA provides a Literature
(2021) complementary and enriching perspective to interpret review and
data about the use of cryptocurrencies. quantitative
Kliber & Włosik Investigates interdependencies between leading Literature
(2019) cryptocurrency exchanges (American, European, and review and
Japanese). quantitative
Mazambani & Applies the theory of planned behavior (TPB) to predict Literature
Mutambara (2020) behavioral intention to adopt cryptocurrency. review and
quantitative
Cumming et al. (2019) Explains the regulatory and security issues around Framework
blockchain and initial coin offerings (ICOs) in an building
increasingly decentralized economy. Examines ICO
structures and how this crowdfunding mechanism has
the promise for economic innovation. Explains how
fraud may be carried out within these innovative asset
classes, and the evolving regulatory struggles.
Duma & Gligor (2018) Identifies general insights of payment behavior of the Qualitative
students about cryptocurrencies. Assesses students’
overall knowledge about cryptocurrencies.
Othman et al. (2020) Investigates the long- and short-run effects of Literature
cryptocurrencies’ market capitalization development on review and
the banks’ deposit variability in the Gulf Cooperation quantitative
Council (GCC) region.
Stepanov et al. (2019) Identifies provisions needed for implementing law Literature
enforcement internationally for digitalization-related review
matters, including prosecution process, decision

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 Cryptocurrency and Its State of Research

Author Purpose of Articles Method

making, coordination among law enforcement officers,
and assessment of performance. Comparison of legal
methods, dialectical methods, and analytic methods
within countries concerning digitalization matters.
Tang et al. (2020) Reviews the ethics of blockchain, the main socio- Literature
technical challenges in technology and applications, review
and ethical issues of blockchain. Builds a conceptual
framework for blockchain ethics study.
Hua et al. (2019) Reviews studies in the fintech areas, such as artificial Literature
intelligence, blockchain, and crowdfunding. review
Summarizes the contributions made by all six papers in
the special issue where this paper was published.
European Central Bank Examines the issuance of the Digital Euro as a central Literature
(2020) bank digital currency (CBDC) from the perspective of review
the Eurosystem.
Mitschke (2021) Examines the effectiveness of Central Bank Digital Quantitative
Currency and monetary policies.
European Central Bank Analyzes the digital adoption across the Euro Literature
(2021) area and EU countries, the implications of digitalization review
for measurement, productivity,
labor markets and inflation, and the coronavirus
(COVID-19) pandemic and its implications.
Vasiliev et al. Analyzes opportunities and prospects for the Literature
(2020) implementation of artificial intelligence in the legal review and
system. Identifies possible areas of large-scale digital framework
legal activities. building

Cryptocurrency uses the digitization process of money that has grown in popularity

with fintech adoption that making money movement cheaper, faster, and more secure.

Cryptocurrency works on a peer-to-peer basis to facilitate the creation, transfer, or storage of

funds with or without a centralized ledger. The peer-to-peer basis can be distributed

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 Cryptocurrency and Its State of Research

physically or logically in separated areas, as well as in one area. Cryptocurrency can be

regulated or non-regulated by a government, depending on the initial design.

According to their liability’s bearer, cryptocurrencies can be categorized into three

types: central bank, private entities, and no-bearer. For a cryptocurrency or digital currency

issued by a central bank within a country or region, the same central bank is liable at all times

to ensure the value of the cryptocurrency for buying goods and services does not fluctuate

over time (European Central Bank, 2020). A central bank is accountable to the citizens where

it is located. In theory, a central bank cannot default or fail to fulfill its obligation to the

citizens.

Table 2

Characteristics of CBDC and Other Money-like Assets

Adapted from “Central Bank Digital Currencies and Monetary Policy Effectiveness in the

Euro Area,” by A. Mitschke (2021).

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For a cryptocurrency issued by a commercial bank or private institution, the

commercial bank or private institution holds the liabilities and must comply with the

regulations supervised by public authorities. In theory, the private entity could default and be

unable to fulfill its liabilities or the claims of its customers. Although the customers are

protected by a legally binding regulatory framework within a country, the private issuer is

only accountable within their promises and business limits. The regulator or public authority,

through law and regulations, could require the private entity to be protected by deposit

insurance schemes. The regulator could also provide lending for a troubled private entity in

exceptional situations.

For a cryptocurrency issued by an unknown entity or in the popular term “crypto-

assets,” no entity is liable to ensure anything of any kind. For this type of cryptocurrency,

there is no reliable framework to sustain its value and protect its direct holders. These assets

are unregulated, highly volatile in price due to lack of intrinsic value, and potentially could

result in the loss of the entire amount of assets due to inconvertibility to fiat money.

One of the problems that emerge due to the cryptocurrency application is cybercrime,

which includes the problem of manipulation and fraud that harms the owners of

cryptocurrencies (Barnes, 2018; Cumming et al., 2019; Șcheau et al., 2020; Stepanov et al.,

2019; Vasiliev et al., 2020).

A cryptocurrency exchange platform conducted a survey among 1108 traders between

April 23 and April 30, 2018, and identified the three biggest problems in the cryptocurrency

market: lack of security (40%), high trading fees (37%), and lack of liquidity (36%), where

more specifically the biggest issue is the sophisticated hackers who compromised the

exchange platform (Cortez et al., 2021). Types of crime related to cryptocurrency include

crypto fraud, uncertain regulations, cyber security fraud, fictitious assets, fake investment

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 Cryptocurrency and Its State of Research

funds/advisors, unregulated manipulated crypto exchanges, exchange hacks, social media

identity hacking, ransomware, crypto-jacking, and taxation fraud (Cumming et al., 2019).

Undoubtedly, this problem came about due to a lack of regulation, accountability, and

a desire to create security with the brokerage by the founders, owners, and developers

(Barnes, 2018). There are very few companies that comprehensively assess the risk of

corruption or compromise of data privacy (Șcheau et al., 2020), so there are still many users

who are afraid to invest in this currency because there is no guarantee of asset safety.

In response to the above problems, the US Congress and the SEC enacted the same

application as broker-dealers who failed in the market and operational turmoil during the late

1960s. The need to issue regulations for broker-dealers is explained as follows (Chu, 2018):

• Historical Background – Understanding the regulations and potential applications of

the currency platform will help bring understanding to its historical background.

Congress enacted SIPA in 1970 in response to a series of broker-dealer failures that

occurred.

• Customer Protection Rule - Customer protection rules are intended to separate the

broker-dealer's activities and assets from those of its customers, ensuring that there are

sufficient assets to satisfy the customer's claims in the event of a failure.

• Net Capital Rule - The net capital rule ensures that broker-dealers maintain sufficient

liquidity to meet their customers' claims. However, the purpose of the net capital rule

is not to avoid broker-dealer failure.

• Broker-Dealer Bankruptcy - Securities Investor Protection Act of 1970 (SIPA)

provides further protection for customers. Looking for an alternative to the bankruptcy

code, Congress established the Securities Investor Protection Corporation (SIPC) to

oversee bankruptcy proceedings for broker-dealers.

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 Cryptocurrency and Its State of Research

Currency digitalization requires the solution of optimizing the decision-making

process based on data collection, coordinating of actions of a large number of law

enforcement officers, and permitting criminal cases to be conducted in an electronic form

(Stepanov et al., 2019). The future of legal regulation is related to the implementation of

criminal jurisdictional activities.

Future study is needed to assess the large-scale digital revolution that affects all

spheres of society, including the area of legal activity, such as the initiative to use robot

lawyers in legal corporations, automation of legal processes, use of smart contracts,

application of blockchain technologies, and the proliferation of cryptocurrencies, including

law enforcement about cybercrime (Vasiliev et al., 2020).

Cryptocurrencies are partly considered a threat to the banking sector, especially

commercial banks, the central banking system, and the global financial system. With their

continued use, appreciation of value, and speculative bubbles, cryptocurrencies threaten the

economic stability of the foreign exchange market (Barnes, 2018; Othman et al., 2020).

Digital payments dominate the market related of the activities of buyers who make online

payments, and their money stored in an e-wallet is maintained. The literature (Duma &

Gligor, 2018) includes research on some Romanian citizens, especially those who focused on

Generation Z, as well as Gen-Tech or iGen who grew up with internet technologies.

The future of cryptocurrencies seems secure given the global push toward the Internet

of Things. Institutional innovation and adoption of cryptocurrencies are in overdrive as they

predict an increase in the use of digital currencies. There are shining accounts that can be

changed by the widespread use of digital currencies and the democratization of the economy,

especially in developing countries (Mazambani & Mutambara, 2020).

Bitcoin, Ethereum, and other non-CBDCs are now mostly considered digital assets

that are used only for speculative investing. Meanwhile, DCash, e-Yuan, Digital Euro, and

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 Cryptocurrency and Its State of Research

other CBDCs from central banks of established countries are in the course to complement

legal currency used for real-life transactions in their respective countries. Gopay, Wechat pay,

Alipay, Samsung pay, Apple pay, Libra, and other various digital currencies are widely used

in society's daily lives in various countries.

Bitcoin, as one of the non-CBDCs, is one of the most demanded cryptocurrency

products in the market. Research from (Kliber & Włosik, 2019) says that the price

interdependence between markets that allows Bitcoin trading in the same traditional currency

(Euro and US dollar), is slightly higher than the spillover between Bitcoin market quotes in

different fiat currencies. The problem of price determination and stability becomes one of the

problems facing non-CBDCs. The problem will bring difficulties for the market in using

cryptocurrencies as a stable and reliable currency.

Conclusion

This article shows that cryptocurrency is a very important innovation to the digital

world of financial transactions, enabling its entire network to control multiple spending

without the need for a central authority to permanently monitor and validate financial data.

Cryptocurrencies will develop, along with their benefits and disadvantages, driven by

technology and their need among consumers and financial institutions.

It should be noted that modern technology development will always precede

regulations and all regulations have loopholes for criminal acts to enter. Therefore, the

government must as soon as possible provide legal frameworks and standards for digital-

based security to protect digital assets use, including the use of cryptocurrency. The modern

stage of digitalization of justice requires the proactive introduction of modern technical means

to achieve the objectives of market integrity, investor protection, and market sustainability

with high effectiveness and efficiency (Stepanov et al., 2019).

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 Cryptocurrency and Its State of Research

Regulations that will be or are being made must facilitate safe and open financial

markets and be adaptive enough to accommodate future developments in cryptocurrency. By

adopting the principles of technology-neutral, a strategic framework for ethical

cryptocurrency adoption, and clear law-making objectives, the government can design a legal

framework that can minimize the adverse effects of using cryptocurrency as the complement

for fiat money.

Future research direction should be aimed at identifying how to accelerate the

development and adoption of cryptocurrencies within society. Research could also be aimed

at identifying problems concerning cryptocurrency and its effect on productivity, the labor

market, inflation, and monetary policy. There are also concerns about cryptocurrencies

created by private entities would jeopardize the sovereignty of nations, thus deserving further

investigation.

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 Cryptocurrency and Its State of Research

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