Framework and Model for Cryptocurrency Innovation and its Impact on Economic Transformation

Introduction

Perhaps digital finance innovations including FinTech are the blockchain technology’s significant boost. However, financial and banking services are threatened by the development of cryptocurrencies and that will effect on the international economy. Advancement in technology has stirred the need for decentralized and permission-less forms of currencies in the digital world (Bohr & Bashir, 2014). With the evolving nature of buying and selling procedures, consumers and financiers tend to prefer beneficial and convenient techno-oriented form of digital financial transactions provided by cryptocurrencies. “A Cryptocurrency is a modern digital medium of exchange. It is a new decentralized, limited and peer–to–peer payment system. Most cryptocurrencies are created to introduce new units of currency, whose total amount is limited. All cryptocurrencies use cryptography to control the creation and transfer of money…. All cryptocurrencies use public–key cryptography; a pair of public and a private cryptographic key make Bitcoins safe” (Wiatr, 2014, pp. 62-64). Bitcoin is the most known cryptocurrency, but many other cryptocurrencies currently exist. Just like other forms of digital currencies, the Bitcoin is pseudo-anonymous and works through a series of viable online transactions between unidentified dealers. Bitcoin is an example of a commonly used cryptocurrency, so bitcoin will be utilized as an example in this research paper.

“Bitcoin is defined as a digital, decentralized and pseudo‐anonymous currency as all transactions are visible, however the sender and receiver are anonymous’’ (Spenkelink, 2014, p. 8). The cryptocurrency relies on the cryptography and can transfer between any two-person using the internet without any other mediator, and it is decentralized network, peer‐to‐peer, uses the internet network, and uses public‐key cryptography. Since the network is decentralized and the money exists only by default, therefore a system is needed to be under control of who the actual owner of the virtual currency. Back in 2008, Satoshi Nakamoto create up a genius invention of using a chain of digital signatures to sign each processing and give the users a validity to check the processing by verifying the signatures (Spenkelink, 2014). In blockchain system a database is electronic and distributed (ledger) which can include any kind of information as records, events, transactions, and can develop a rule about how this information is updated (Lou & Eldon, 2017). Also, in blockchain is defaulting to change records because once the transaction is posted and confirmed the corresponding entries will be cryptographically sealed (Dai et al.,2017).

Blockchain cryptocurrencies have main characteristics include: decentralization, authentication, and permanence (Schaupp & Festa, 2018). In blockchain can check each party and transactions posted on the blockchain are permanent. There is growing popularity of blockchain cryptocurrency, but it is still relatively new technology and it continues to evolve quickly. Numerous cryptocurrency acceptance models have been presented and explained over the past decade. The commonly used approaches include the Innovation Diffusion theory by Rogers and the Technology Acceptance Model by Davis. By combining theory of the innovation diffusion (IDT) and the technology acceptance model (TAM), this study proposes a conceptual framework and model for cryptocurrency acceptance and continued usage of digital finance which approval as potential business innovations. Eventually, the main platform for operating cryptocurrency is blockchain infrastructure as new technology.