Cryptocurrency: Value Formation Factors and Investment Risks
Scientific sources demonstrate different attitudes of researchers to cryptocurrencies because they treat them as a category of currency, virtual money, commodity, etc. Accordingly, the relation to the valuation and risk of cryptocurrency as an investment object is different. The purpose of the artic...
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| Format: | Article |
| Language: | fas |
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University of Tehran
2022-09-01
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| Series: | Journal of Information Technology Management |
| Subjects: | |
| Online Access: | https://jitm.ut.ac.ir/article_88896_e30a82b6168d37033bc8d9acf2fbda66.pdf |
| _version_ | 1797903264569622528 |
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| author | Olena Pakhnenko Pavlo Rubanov Olga Girzheva Larysa Ivashko Igor Britchenko Liliia Kozachenko |
| author_facet | Olena Pakhnenko Pavlo Rubanov Olga Girzheva Larysa Ivashko Igor Britchenko Liliia Kozachenko |
| author_sort | Olena Pakhnenko |
| collection | DOAJ |
| description | Scientific sources demonstrate different attitudes of researchers to cryptocurrencies because they treat them as a category of currency, virtual money, commodity, etc. Accordingly, the relation to the valuation and risk of cryptocurrency as an investment object is different. The purpose of the article is to identify cryptocurrency value formation factors and determine the risks of investing in cryptocurrency. Cryptocurrency is simultaneously considered a currency, an asset with uncertain income, and a specific product, the price of which is determined by the energy costs for mining new cryptocurrency blocks. Thus, the paper examines the risks of investing in cryptocurrency from several positions. First, the study identifies the factors of formation of the value and risk of cryptocurrency as ordinary money based on comparing cryptocurrency with traditional money. Unlike traditional money, cryptocurrency is not tied to the economic performance of a particular country; also, central banks do not control or regulate their mining. Instead, the cryptocurrency emissions depend on the computational capacity of the equipment used for their mining. As a financial asset, cryptocurrency can be a “financial bubble” because their value increasing often exceeds the cost of mining. On the other hand, given the emergence of cryptocurrency as a phenomenon of the information economy, the paper analyses the impact of specific technical features (cryptographic hashing algorithm, the complexity of creating new blocks, the technology of verification of mining operations, etc.) on the risk of investing in cryptocurrency assets. |
| first_indexed | 2024-04-10T09:30:11Z |
| format | Article |
| id | doaj.art-b590ffad35494afcb5a823e2d608d02e |
| institution | Directory Open Access Journal |
| issn | 2008-5893 2423-5059 |
| language | fas |
| last_indexed | 2024-04-10T09:30:11Z |
| publishDate | 2022-09-01 |
| publisher | University of Tehran |
| record_format | Article |
| series | Journal of Information Technology Management |
| spelling | doaj.art-b590ffad35494afcb5a823e2d608d02e2023-02-19T06:55:33ZfasUniversity of TehranJournal of Information Technology Management2008-58932423-50592022-09-0114Special Issue: Digitalization of Socio-Economic Processes17920010.22059/jitm.2022.8889688896Cryptocurrency: Value Formation Factors and Investment RisksOlena Pakhnenko0Pavlo Rubanov1Olga Girzheva2Larysa Ivashko3Igor Britchenko4Liliia Kozachenko5Department of Financial Technologies and Entrepreneurship, Sumy State University, Ukraine.Department of Financial Technologies and Entrepreneurship, Sumy State University, Ukraine.Department of Management, Business and Administration, State Biotechnological University, Ukraine.Department of Management and Innovation, odessa I.I. Mechnikov National University, Ukraine.Prof., Dr. of Sciences, State Higher Vocational School Memorial of Prof. Stanislaw Tarnowski, Poland.Department of Accounting and Taxation, Mykolayiv National Agrarian University, Ukraine.Scientific sources demonstrate different attitudes of researchers to cryptocurrencies because they treat them as a category of currency, virtual money, commodity, etc. Accordingly, the relation to the valuation and risk of cryptocurrency as an investment object is different. The purpose of the article is to identify cryptocurrency value formation factors and determine the risks of investing in cryptocurrency. Cryptocurrency is simultaneously considered a currency, an asset with uncertain income, and a specific product, the price of which is determined by the energy costs for mining new cryptocurrency blocks. Thus, the paper examines the risks of investing in cryptocurrency from several positions. First, the study identifies the factors of formation of the value and risk of cryptocurrency as ordinary money based on comparing cryptocurrency with traditional money. Unlike traditional money, cryptocurrency is not tied to the economic performance of a particular country; also, central banks do not control or regulate their mining. Instead, the cryptocurrency emissions depend on the computational capacity of the equipment used for their mining. As a financial asset, cryptocurrency can be a “financial bubble” because their value increasing often exceeds the cost of mining. On the other hand, given the emergence of cryptocurrency as a phenomenon of the information economy, the paper analyses the impact of specific technical features (cryptographic hashing algorithm, the complexity of creating new blocks, the technology of verification of mining operations, etc.) on the risk of investing in cryptocurrency assets.https://jitm.ut.ac.ir/article_88896_e30a82b6168d37033bc8d9acf2fbda66.pdfcryptocurrencydigital currencybitcoinblockchainriskfinancial servicesfinancial assetinvestment |
| spellingShingle | Olena Pakhnenko Pavlo Rubanov Olga Girzheva Larysa Ivashko Igor Britchenko Liliia Kozachenko Cryptocurrency: Value Formation Factors and Investment Risks Journal of Information Technology Management cryptocurrency digital currency bitcoin blockchain risk financial services financial asset investment |
| title | Cryptocurrency: Value Formation Factors and Investment Risks |
| title_full | Cryptocurrency: Value Formation Factors and Investment Risks |
| title_fullStr | Cryptocurrency: Value Formation Factors and Investment Risks |
| title_full_unstemmed | Cryptocurrency: Value Formation Factors and Investment Risks |
| title_short | Cryptocurrency: Value Formation Factors and Investment Risks |
| title_sort | cryptocurrency value formation factors and investment risks |
| topic | cryptocurrency digital currency bitcoin blockchain risk financial services financial asset investment |
| url | https://jitm.ut.ac.ir/article_88896_e30a82b6168d37033bc8d9acf2fbda66.pdf |
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