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Understanding Cryptocurrencies from a Sustainable Perspective

Investigating cryptocurrencies by developing and applying an integrated sustainability framework

Written by J.-P. Arps

Paper category

Master Thesis

Subject

Business Administration>Management

Year

2018

Abstract

Master Thesis: Cryptocurrency: Current Status of Research As discussed in Chapter 1, academic research on cryptocurrency has just begun. According to Dallyn (2017), most academic articles focus on technical issues of programmers and cryptographers, including the anonymity of cryptocurrencies, technical failures, and security threats (Moore & Christin, 2013). Several other papers and government documents have studied the obscure legal status of cryptocurrencies (FinCEN, 2013). As mentioned earlier, cryptocurrency has always been an exploratory topic in other broad fields, including computer science (Grinberg, 2011), social media research (Garcia et al., 2014), social network analysis (Meiklejohn et al., 2013), money laundering (Aldridge & Décary-Hétu, 2014), economics (Cheah & Fry, 2015), political economy (Weber, 2016), and philosophical discussions on the nature of money (Maurer et al., 2013). Theoretical physicists Bornholdt and Sneppen (2014) tried to explain the cryptocurrency market phenomenon that cannot be explained by classical economic theory. Fry and Cheah (2016) even studied the cryptocurrency market shock in the bizarre interdisciplinary subject of economic physics. The discipline applies theoretical and statistical physics tools and techniques to model financial systems (Mantegna and Stanley, 1999). Unfortunately, the review and analysis of the aforementioned literature shows that the focus on Bitcoin is strong and one-sided. Basically every paper thinks that it is intertwined with cryptocurrency in some way, take Bitcoin as an example. This is partly because Bitcoin is by far the oldest, and its market share of 52.5% is still the largest, and therefore the most popular cryptocurrency (CoinMarketCap, 2018). In addition, the paper by Ahmad et al. (2013) was published when the market value of cryptocurrencies was much lower. Bitcoin's first-mover advantage and the resulting years of market dominance have led to the term Bitcoin being used as a synonym for general cryptocurrency. However, according to scientific standards, this is incorrect, because Bitcoin is only one of about 2,000 current cryptocurrencies (CoinMarketCap, 2018), Nagpal (2017) described the evolution of cryptocurrencies and reviewed other altcoins, It also shows that despite the existence of alternatives, many recent studies have only focused on Bitcoin. Although almost all published papers on cryptocurrencies discuss Bitcoin at least briefly, an additional search on Ethereum, the second largest cryptocurrency by market capitalization, yielded only about 10 dedicated articles. In the case of the tenth largest cryptocurrency IOTA, there are even fewer discoveries, and only one paper dedicated to Ripple can be found. This strong affinity for Bitcoin is dangerous because there are significant technical and functional differences between different cryptocurrencies. 2.2 Sustainability of cryptocurrencies The core literature on the sustainability of cryptocurrencies can be divided into two categories: one is the papers and studies that specifically focus on the sustainability of cryptocurrencies and discusses one or more sustainability aspects, and the other is different Research that focuses on but arbitrarily or indirectly involves sustainability. In order to fully understand the current state of cryptocurrency sustainability research, it is therefore necessary to conduct the above-mentioned more general literature research, because many aspects of cryptocurrency sustainability can often be found in the interline or short sections of these papers. Although the second group is much larger and more complex, there are fewer papers and studies that deal specifically with the sustainability of cryptocurrencies in the first group. McCook (2015) provides an estimate. Compared with other existing currencies, the relative sustainability of the Bitcoin network is an order of magnitude system. Together with Vranken (2017), he focuses on the energy consumption of the mining process and provides environmental aspects. Important results. Derks, Gordijn, and Siegmann (2017) even went beyond this point and studied the sustainability of Bitcoin mining in terms of energy consumption, efficiency, and profitability from 2012 to 2016. Dierksmeier and Seele (2016) discussed the social impact of Bitcoin on shadow banking and the dark web, as well as the controversial consequences from an ethical perspective. Likewise, Alcantara and Dick's (2017) discussions around the fictitious MazaCoin are morally and socially related, which may be used to promote Aboriginal self-determination and political autonomy in Canada. Many studies, such as De Filippi (2014) and Borroni (2016), have adopted an interdisciplinary approach to supervision and have been processed in parallel with the economic and social sustainability of cryptocurrencies, while Hacker (2017) has formulated Important guidelines, and explained and analyzed their tokens based on the ecosystem, the so-called complex system. Sahoo (2017) investigated the long-term economic sustainability of Bitcoin through empirical research on price fluctuations. Voge (2018) tried to develop a way to internalize external costs to achieve a more sustainable economy through his Viridian project, while Nguyen (2016) discussed the opportunities and risks of cryptocurrency for future sustainable development. To date, the most powerful cryptocurrency research flow is certainly in the field of technology, but many studies, such as those by Baker et al. (2016) Tested the practicality of blockchain technology by designing scientific methods, focusing on individual technical components and ignoring the general terminology of technological sustainability. Most of the research that can be allocated to technological sustainability is aimed at alternatives to PoWand PoS, such as Abramowicz (2016) Read Less