| Abstract [eng] |
THE RESEARCH OF CRYPTOCURRENCY IN CONTEXT OF FIAT MONEY FUNCTIONS Laura LEVULYTĖ Paper for the Master's degree Finance & Banking Master's Program Vilnius University, Faculty of Economics and Business Administration Supervisor – Assoc. Prof. A. Šapkauskienė Vilnius, 2021 SUMMARY 90 pages, 31 tables, 17 pictures, 69 references The main purpose of this master thesis is to research the three selected cryptocurrencies in context of fiat money functions: medium of exchange, unit of account and store of value and to determine whether these functions are fulfilled. The work consists of three main parts: the analysis of scientific literature, the research methodology and research results, and conclusion and recommendations. Literature analysis reviews the three money functions and discusses if and how the cryptocurrencies fulfill them, scientific literature on alternative views on cryptocurrency and its future perspectives. After the literature analysis research design was set up, research methods and indicators were selected. The main purpose of the empirical research was to determine if selected cryptocurrencies fulfill three main money functions analyzing each one individually. Cryptocurrencies selected were BTC, ETH and XRP along with 11 fiat currencies, 3 indices and 1 commodity. Volatility, hierarchical cluster, correlation and linear regression analysis were applied along with benefit calculation for market participant in FX transaction to analyze cryptocurrency functions in-depth. The performed research revealed that Bitcoin and Ethereum could be beneficial to market user in using them as a mediator for FX transactions. Moreover, volatility analysis showcased Bitcoin being less volatile considering monthly price movements and was clustered together with developing market currencies. Also, cryptocurrency correlations with other financial instruments are weak, nonetheless it was observed that cryptocurrency market moves with a four month lag and is influenced by the movements of fiat currencies. The conclusions and recommendations summarize the main concepts of literature analysis as well as presents specifically for this research designed research methodology and the results of the research. The author believes that the results of the study showcases new and original outlook on cryptocurrencies and Bitcoin's departure beyond the definition of cryptocurrencies. On the basis of this master's thesis a scientific article titled „The Research of Cryptocurrency in Context of Fiat Money Functions“ was prepared and submitted for publication in international scientific journal (ISI) „The Quarterly Review of Economics and Finance“. |
