Introduction :
In
this article, we will tell you about scientific research conducted by several
scientists in 2018 in India when they talked about “the volatility of Bitcoin and its impact on being a currency”. There are two
important aspects of a country's financial and economic structure, payment
structure and regulation. In fact, an efficient payment system can act as a
catalyst to ensure the circulation of liquidity in the economy. Thus, the
intervention of the state, banks and central authorities plays an important
role in improving the payments and settlement structure in a country
(Goriparthi and Tiwari, 2017). In a dynamic economy, the development of
information technology and changes in the regulatory framework are spurring the
growth of new payment practices known as cryptocurrency, however, Bitcoin is
the most popular in the world.
Goals :
- Observe the volatility of Bitcoin against
the US dollar
- Investigate whether Bitcoin can be considered as a new digital payment method in India.
Problem :
- Is the most popular cryptocurrency in the world
“Bitcoin” volatile?
- Can India accept Bitcoin as a new means of
payment?
Literature review:
In
this research scientists use these articles as a reference to improve
his investigation of bitcoin task
-
The supply of Bitcoin is limited to a certain volume which cannot be modified
(Kurihara and Fukushina, 2017).
-
Holding a small amount of Bitcoin in a diversified portfolio can manage a
profit for investors (Y. wu and Pandey, 2014).-Bitcoin is associated with a
public and private key to verify transactions (Lee, Long, McRae, Steiner, &
Handler, 2015). For this reason, modification of Bitcoin's network is very
difficult as its protocol is cumbersome to modify due to its decentralization
(Rose, 2015).
-
Bitcoin can transform the banking system in developing countries in the future.
However, it is difficult to completely substitute central authorities
(Wongluipiyar, 2016).
-
Bitcoin price stabilizes over time as businesses, media and malls tend to
accept Bitcoin as a form of payment (Report, 2014).
Methodology :
|
Source |
software |
Methods |
Period |
Observation |
|
Bitstamp |
Eviews |
GARCH, ARCHLM |
1/10/2013à31/10/2017 |
1469 |
The model :
The
model used in this research:
The result :
To
solve the problems posed by this research, which are presented as two questions
:
1.
Is
the most popular cryptocurrency in the world “Bitcoin” volatile?
2.
Can
India accept Bitcoin as a new means of payment? ''
Scientists
use GARCH models to study Bitcoin's volatility
against the US dollar. Then, they analyze its acceptance as a new currency
compared to conventional currencies.
In
this context, they find that results :
- Volatility is persistent, another sense,
past volatility influences future volatility in the Bitcoin market.
- The fluctuation in Bitcoin price volatility is
related to good and bad news in the market. On this premise, Bitcoin
cannot act as a medium of exchange.
- Despite the high volatility of Bitcoin,
several countries accept this new cryptocurrency as an investment tool.
While India does not accept Bitcoin as a means of payment.
Conclusion :
Technological development has changed the way we pay, use and invest money. Although Bitcoin is attracting the attention of several investors, its volatility is no longer ignored. The value of Bitcoin against the US dollar is very volatile. For this reason, several countries do not accept this cryptocurrency as an investment tool or a new currency. Precisely, India is not yet ready to accept this kind of technological advancement in its payment system.
Shubhashree Acharya, Asst Professor, Christ University
Andrea Thomas P, Christ University
Bhagyashree Pani, Christ University
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