Yermack bitcoin exchange

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WATCH RELATED VIDEO: How a Cryptocurrency Exchange Works

New York's new pro-crypto mayor Eric Adams invests his first paycheck in Bitcoin and Ethereum

Digital currency is considered a form of currency which is used in the digital world such as digital forms or electronic devices. Several terms are synonyms for digital currency like digital money, electronic money, and cyber cash. Accurate prediction of the digital currency is an urgent necessity due to its impacts on the economic community. The electronic economy is very dangerous and must be approached with great caution, so as to avoid or minimize the risks that occur in such cases.

Deep neural network DNN algorithm was improved to predict the Bitcoin price and then achieve the main goal of reducing financial risks to proceed with electronic business, and good estimation was achieved by using informative data such as transactions and currency return.

The proposed method extracted features of related Bitcoin and used the informative ones. Transaction plan considered building nodes in terms of network. Development of deep learning algorithms opens the horizons for the development of electronic businesses that use digital currency. The proposed method achieved worthy results in terms of accuracy Day by day, digital currency significance increases rapidly due to its importance in the field of electronic trading which is essential in new financial system [ 1 ].

Despite the fact that the digital currency concepts are not new, the use of this kind of currency has grown up remarkably [ 2 ]. Money is not set in banks or safe boxes, but it is available in processors and storage of the cyber world, and it is traded in the form of information. The main purpose of such technology is to increase the payment efficiency [ 3 ]. Till now, the standards for digital currency mechanism are not clear, and therefore its boundaries are not set yet, so the customers communicate together with the absence of regulators.

However, the public acceptance of digital bank transactions allow alternative types of money to be developed; these new types are not related to traditional bank accounts and are fully based on digital environment; therefore, it is called digital currency [ 4 , 5 ].

Prespecified range of supply should be guaranteed for virtual currency, and Bitcoin is an obvious example for this limitation 21 million of Bitcoins is the whole amount issued [ 6 ].

Virtual currency and cryptocurrency are sorts of the digital currency. There was an extreme fluctuation of Bitcoin exchange rate; on January 1 st , , the rate was The strong fluctuation in Bitcoin exchange rate made big opportunity and high risk at the same time to the investors [ 8 ]. In addition to the huge fluctuation, there are other issues in the risk field.

Theft risk exists; in this type of risk was highlighted by Mt. Gox Bitcoin exchange. Bitcoin dealers, especially buyers, also face risks of fraud from some fraudulent sellers, which was confirmed by the US Securities and Exchange Commission. The pricing of digital currency is based on traditional pricing perspective [ 9 ]. However, the main risk in dealing with digital currency is the systematic and fluctuation risk in pricing process; thus, this study will attempt to analyze these two types of risks, while theft and fraud risks will be set aside.

From the perspective of nonprofessional investors, the extreme fluctuation in digital currency price will lead to a risky investment [ 10 ], but those who are professional in the investment field would not put all their eggs in one basket. Therefore, they will try to make diverse purse as much as possible to avoid or at least to minimize risk; they prefer to deal with assets not affected by the market fluctuation to avoid the asset risk called systematic risk assets [ 11 ]; otherwise, they should be called nonsystematic risk assets which are related to the whole marketing process.

Bitcoin is considered as a nonsystematic risk asset, and the sophisticated investors prefer to deal with this type of business [ 12 ]. The popular digital currency is Bitcoin, and it is considered a target for theft or sometimes illegal activities. This problem cannot be solved only when the transaction address is fixed [ 13 ]. More challenges regarding Bitcoins [ 14 ] came from rampant hacking attacks and thefts, so security control of digital wallet is necessary.

Making Bitcoin stand against any hacks, thefts, and frauds needs big secure system and process with cryptocurrency in addition to assets sharing some characteristics according to transition [ 15 ].

Is Bitcoin a currency or not? This is a big question for which people are looking for an answer. Chen and Pandey [ 16 ] make study on Bitcoin to determine whether there is a match between roles of currency and Bitcoin and whether it is possible to invest in it as safely as assets; the correlation between Bitcoin and the major currencies of the world was also examined. The results of their study show that the major currencies of the world were correlated significantly, but the correlation between these currencies and Bitcoin was insignificant.

In addition, they found that there is insignificant correlation between the benefit of investment in gold and the benefit of investment in Bitcoin [ 17 ]. Because the behavior of Bitcoin is different from the behavior of both of the major currencies of the world and the gold, researchers claim that Bitcoin can be less used as useful currency [ 18 ].

Bitcoin sustainability will encounter significant risk. Bitcoin users are now enjoying the low transaction fees, and transaction companies and individuals apply very small rates on each transaction to encourage people to buy Bitcoin and increase the price as a result of demand increasing. However, the same companies plan to increase their future profits by increasing the transaction amounts due to increasing the value of each Bitcoin in addition to increasing the exchange rate [ 19 ].

Since all Bitcoins have been already created, and there are no longer any more Bitcoins, the marginal benefits that will result from owning currency will disappear. On the other hand, the cost of marginal transactions will increase, so the benefit of Bitcoin business will decrease compared with the fiat currency.

Recent development in deep learning may support efforts for solving these challenges [ 20 ], as it is known that deep learning and neural network can solve issues in divers fields such as pattern recognition, education, healthcare, and industry.

Deep learning approach shows high performance compared to machine learning approaches; therefore, it proved useful in many research fields, and it can handle data that tend to be messy, even if data includes many variables and includes labeling errors. As is known clearly, neural network aims to mimic the human brain, and deep learning is an advanced form of neural network which mimics the human brain more efficiently [ 21 ].

Explicitly programing everything is not needed to achieve better results. Many researches consider digital currency in terms of prediction and risk management. In this section, we present the most important studies that left impression in this topic.

LSTM system of deep learning was used to learn the chaotic behavior of three cryptocurrencies evidently, achieving better prediction in digital currency market [ 22 ]. Prediction of digital currency price by using decomposition method and optimization algorithm combined with deep learning was done by [ 23 ]. A different model was suggested by [ 24 ] to predict Bitcoin based on huge dataset to improve the performance, and stochastic gradient descent was applied for deep learning techniques to learn the parameters used.

Bitcoin price prediction using scikit-learn library as dataset for training method was presented by [ 25 ] via new strategy based on genetic algorithm with three chosen parameters that directly affect the digital market. Large vector of features was provided by to design neural network system for learning the machine in minimum time period due to system using to predict the price online system in real time issue.

However, due to many features, they achieved better results in online prediction [ 26 ]. All existing methods seek accurate prediction to avoid the risk of financial issue. Digital currency, also named as cryptocurrency or crypto asset, aims to reverse some or all of the traditional uses of money—payment manners, value store, and unit account [ 5 ].

The terminology used to describe it is often misleading and confusing, changing a high range of financial statements with verifying technical, practical, and legal characteristics, ranging from decentralized digital tokens like Bitcoin at one end of the domain to official and sovereign digital currencies supported by central banks in other end.

Bitcoin and many of their similar things, sometimes known as crypto assets, are viewed like a volatile speculative assets. Some people accept it as a method of payment [ 27 ]. The term of digital currency has been given more attention by both by the companies testing the use of the digital money and the governments that insist on applying rules and regulations to stablecoins.

The main reason may be that the system can pay efficiently but that is not always the case. An example is that commercial operations and currency trading have a second aspect [ 4 ]. Many products depend exclusively on the Chinese currency in order to revive the national economy, but in fact it is the promotion of the Chinese currency over the US dollar. One of the reasons is the emergence of hidden companies that are a repository for commercial funds that are held on social media platforms due to transactions between millions of users such as Facebook, as well as some of the bonds traded for major companies that develop the idea of electronic currency to evade tax and exploit the reputation of some international brands in order to collect overlapping funds [ 28 ].

Trading and dealing with digital currency are fraught with a lot of dangers, so it is necessary to know the components and data of the digital currency and how to deal with it so that we can make simulations to avoid the risk arising from dealing with it. Items of digital currency can be classified into three main categories: Bitcoin feeding, transaction, and return [ 29 ]. With Bitcoin being the basis of the currency and due to the technological development, it attracted attention and became popular in investing.

Some traders and investors consider it free money that is easy to obtain, while others consider it as gold prospecting. Mining of Bitcoin refers to the digital process of adding transaction records to blockchain, a publicly distributed ledger which is holding the history of each transaction of Bitcoin [ 30 ]. Transaction refers to sending Bitcoin through any path and anywhere, and these transactions clump together in new term called blockchain which is serial of transaction blocks, recording the history of transactions.

Returns of Bitcoin are the interest on cryptocurrency when Bitcoin increases during investing after a period of time; mining of Bitcoin for some time can be returned to end user with transaction history record to value this Bitcoin.

For this purpose, we can extract the features from digital currency to develop supervised machine learning technique through its network for prediction and reduce the risk association with it. Features improved the time frame within hour, day, week, and month prior prediction. The main goal of using deep learning to forecast digital currency is to predict Bitcoin price of USD at least one hour in advance [ 31 ]. Some of these features are directly related to the price of Bitcoin and others are indirectly related [ 32 ].

For each node, we can collect some extra features such as the following: i Bitcoin passing through the node ii Weight of flow Bitcoin iii Transaction number iv Nearest centrality to the node.

The purpose of getting these features is not only to classify or cluster certain Bitcoin and its flow, but also to get general idea regarding how the important players in the market of Bitcoin affect the valuation and how they control the market. One of the best information items gained from features is the activity of different addressing and balancing of the net, as shown in Figure 1. An important part of feature extraction is to first choose which one should be used during classification or regression.

Reducing features in calculation process that take the mutual data among the features and output results will be the pure features that illuminated or pruned insignificant features. Mutual information is produced by the following equation: where A is extracted feature, B output data, and I mutual function.

Through this equation, we can put the rule of given information, that is, which feature is informative and which is uninformative and can be normally discarded. For such research informative features can be changed within the time but still filtered according to their importance; however, some features are still informative in a specific process, such as the following: i Mined Bitcoin for the last hour ii Transaction number through new addresses for the last hour iii Mean of the node degree for the last hour iv The net flow for the last hour.

Informative features help to predict the right current price then can avoid the risk of digital currency issue. Another important process for the features is Union Find which is the algorithm of determining the contiguous subnets through the network. It is preprocessing technique to find the relation of multiple accounts belonging to a single owner.

This algorithm carries out many iterations to find out the union and finding function. Second, find the function by checking other parts and find out whether the subnet belongs to the same merged subnet.

Current studies focus on automation and prediction of Bitcoin behavior to avoid digital currency risk in the market. Making the machine touchable is not easy and requires powerful processors and high-performance computers.

The development in data science and modern technology, such as big data and high-performance computers, provided an opportunity for machine learning to understand data and its behavior through complex systems. Machine learning gives the machine ability to learn different algorithms without strict orders from certain programs or limited instructions [ 33 ]. Deep learning can be defined as technique of machine learning used to learn useful features directly from given Bitcoin transaction, paths, and subnet domain.

Many layers are exploited by deep learning for nonlinear data processing of unsupervised or supervise feature extraction for classification and pattern recognition [ 34 ]. Deep learning motivation is greatly reduced by Artificial Intelligence AI area, which simulates the human brain ability to analyze data, make decision, and learn.

Deep learning goal is to emulate the approach of hierarchical learning of extracting features by human brain directly from unsupervised data. The core of deep learning is the hierarchical computation of features and representation of information, such as defining features starting form low level to high level. With cryptocurrency, the standard techniques of machine learning do not work well when running directly due to ignoring nature of blockchain.

Here’s what you need to know about cryptocurrency, Eric Adams and New York City

Digital currency is considered a form of currency which is used in the digital world such as digital forms or electronic devices. Several terms are synonyms for digital currency like digital money, electronic money, and cyber cash. Accurate prediction of the digital currency is an urgent necessity due to its impacts on the economic community. The electronic economy is very dangerous and must be approached with great caution, so as to avoid or minimize the risks that occur in such cases.

Similarly, Yermack () found that Bitcoin is much more volatile than fiat currencies and uncorrelated with them. Dyhrberg (), however, found that.

Cryptocurrency framework

Larger investors are taking the digital currency more seriously now, which has helped drive up its price. Market valuations can be overly simplistic. So in all likelihood, if a huge amount of Bitcoin flooded the market, the price would end up dropping. Yermack said the coverage could draw people in and perhaps create a new wave of investment. He added that when more traders come into the market, you get lower costs of trading, which would be a positive side effect. There are also pending regulatory decisions about whether exchange-traded funds with Bitcoin should be allowed in the U. Trading, lending, insurance, payments, collectibles, art — all of these use cases are moving on-chain to some degree.

What’s the significance of Bitcoin’s $1 trillion valuation?

yermack bitcoin exchange

Bitcoin and other prominent cryptocurrencies have gained much attention since the last several years. Globally known as digital coin and virtual currency, this cryptocurrency is gained and traded within the blockchain system. The blockchain technology adopted in using the cryptocurrency has raised the eyebrows within the banking sector, government, stakeholders and individual investors. The rise of the cryptocurrency within this decade since the inception of Bitcoin in has taken the market by storm. Cryptocurrency is anticipated as the future currency that might replace the current paper currency worldwide.

The city noted in its news release that federal labor rules bar the city from paying employees in cryptocurrency, but that any worker paid in U. Adams has suggested that cryptocurrency and blockchain technology, a digital ledger where cybercurrency transactions are recorded, should be taught in schools.

Bitcoin in the economics and finance literature: a survey

Edition: Available editions United States. Become an author Sign up as a reader Sign in. The tax treatment of Bitcoin has been holding back the industry in Australia, but gradually the rules are changing. The technology behind Silk Road is still sound, but with the potential for a life sentence it would take faith to deploy them. Regulating bitcoin and digital currencies is hard, but tackling currency exchanges may be the answer.

Are suspicious activity reporting requirements for cryptocurrency exchanges effective?

This Bachelor Thesis will deal with the question of whether Bitcoin shows the tipical characteristics of a currency or rather an investment asset such as stocks or commodities. The answer to this question is highly important for assessing the disruptive potential of Bitcoin and its influence on major currencies. This makes the foreign exchange market the largest and most liquid market in the world. The starting point of this Bachelor Thesis is that by comparative analysis of liquidity in the Bitcoin market with the foreign exchange market and the stock market it is possible to develop a hypothesis for the classification of Bitcoin as a currency or an asset. Liquidity and transaction costs are considered to "represent two sides of a coin" Gomber and Schweickert, , p. The higher the transaction costs, the lower is liquidity in a market. That is why the focus of this analysis is laid upon the bid-ask spread in the Bitcoin market as it is considered a measure for transaction costs and thus, also liquidity. The bid-ask spread is the difference between the highest price sought and the lowest price offered for a security.

the same as a stock market, the cryptocurrency exchange market is a virtual place to rather than as a medium of exchange (Yermack, ;.

Is Bitcoin a Real Currency? An economic appraisal

A bona fide currency functions as a medium of exchange, a store of value, and a unit of account, but bitcoin largely fails to satisfy these criteria. Bitcoin has achieved only scant consumer transaction volume, with an average well below one daily transaction for the few merchants who accept it. Its volatility is greatly higher than the volatilities of widely used currencies, imposing large short-term risk upon users.

The volatility of Bitcoin and its role as a medium of exchange and a store of value

Nowadays, the use of virtual currencies is more frequent in the financial transactions and bitcoin has been defined as the most important world cryptocurrency due to its high market capitalization and its technological infrastructure. Several studies have been conducted to discuss bitcoin advantages and disadvantages; however, few papers in literature have examined its connection and influence on the stock market. The objective of this paper is precisely cover this gap. In that context, this manuscript examines the definition and function of bitcoin in the global world and its presence in Ecuador. Besides, exploratory and visual analyses are provided using the evolution of bitcoin and other market indexes.

Financial Innovation volume 7 , Article number: 78 Cite this article.

Should Bitcoin Be Classified as Money?

The Discord servers and subreddits are a frenzy of graphs, memes, and speculation about the next bull market. The organizers did not respond to a request for comment. The value of digital currencies fluctuates wildly at the whim of erratic billionaires, rumors, and the machinations of unregulated online exchanges. Reliable numbers are hard to come by, but industry surveys estimate that anywhere from 8 to 14 percent of Americans own cryptocurrency. And over the last year alone significantly more professional financial advisers say they are encouraging clients to invest in digital currencies, according to an annual survey by the Financial Planning Association. The Markup interviewed behavioral economists, industry analysts, and investors.

Bitcoin is designed as a peer-to-peer cash system. To work as a currency, it must be stable or be backed by a government. In this paper, we show that the volatility of Bitcoin prices is extreme and almost 10 times higher than the volatility of major exchange rates US dollar against the euro and the yen. The excess volatility even adversely affects its potential role in portfolios.

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  1. Jeramie

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  2. Daly

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