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Cryptocurrency and Its Instability Issues

In the present day, cryptocurrency attracts more and more attention of people all over the world. Regardless of not being widespread yet among community members, cryptocurrency is used by a considerable number of financial institutions and companies for its potential to influence the financial market in the future. In general, it may be defined as a virtual of digital currency secured by cryptography – that is why it cannot be double-spent or counterfeited. There are currently several cryptocurrencies, and the majority of them are decentralized networks on the basis of blockchain technologies enforced by computer networks. Cryptocurrency cannot be affected by government manipulation or interference as it is not issued by it or any central authority.

The significance of this study is determined by an unknown and controversial effect of cryptocurrency. While it is frequently regarded as a more convenient and stable alternative to traditional money, some experts state that the instability of cryptocurrency will have a devastating impact on many industries in the future (Nova, 2021). That is why the investigation and evaluation of its potential influence will be beneficial for the development of accurate strategies and preventative measures. The purpose of this paper is to examine the nature of cryptocurrency, its characteristics, and impact on the basis of literature review to answer the research question: Is cryptocurrency unstable? The answer will help to approve or reject a hypothesis that lies in the paper’s thesis statement – being a long-lasting uncontrolled bubble, cryptocurrency contributes to financial and monetary instability, a lack of investor protection, the global market’s downfall, and wealth inequity.

According to previous research, a digital currency may be regarded as a highly convenient alternative to traditional money protected from government regulation. It cannot be double-spent or counterfeited, and its use is frequently defined as a future of the financial market. However, this study that incorporates available data related to cryptocurrency demonstrate its instability that may have highly negative consequences for different industries. According to modern studies, cryptocurrency is a long-lasting bubble which value is artificially created. Without proper control, the fluctuations of is value may lead to serious challenges in the financial market and lead to wealth inequities. In the future, more thorough comparison of cryptocurrency and traditional currency in relation to mechanism of its regulation may be required to support this paper’s results.

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