The Crypto Market Ecosystem has emerged as the most profound application of blockchain technology in finance. This textbook adopts an integrated approach, linking traditional functions of the current ...financial system (payments, traded assets, fundraising, regulation) with the respective functions in the crypto market, in order to facilitate the reader in their understanding of how this new ecosystem works.
The book walks the reader through the main features of the blockchain technology, the definitions, classifications, and distinct characteristics of cryptocurrencies and tokens, how these are evaluated, how funds are raised in the cryptocurrency ecosystem (ICOs), and what the main regulatory approaches are. The authors have compiled more than 100 sources from different sub-fields of economics, finance, and regulation to create a coherent textbook that provides the reader with a clear and easily understandable picture of the new world of encrypted finance and its applications.
The book is primarily aimed at business and finance students, who already have an understanding of the basic principles of how the financial system works, but also targets a more general readership, by virtue of its broader scope and engaging and accessible tone.
The new era of encrypted finance Daskalakis, Nikos; Georgitseas, Panagiotis
An Introduction to Cryptocurrencies,
2020
Book Chapter
This introductory chapter links the main counterparts of a traditional financial system, namely the funders/investors, the fundraisers, the financial intermediaries, and the regulatory context, with ...the respective parts of the new area of encrypted finance. Specifically, the chapter briefly discusses the main functions that a traditional financial system performs (payments, fundraising, investment, etc.) and then attempts to link them with the respective counterparts in the area of the crypto market, aiming at the following two objectives: (a) to facilitate the reader’s understanding of this new system by creating the necessary links between the traditional and the crypto financial system, and (b) to familiarize the reader with some of the main terminology of the crypto market. In this context of the created links, the chapter ends by summarizing the remaining book chapters, which analyze in detail each and every link briefly introduced in this introductory chapter.
The infrastructure Daskalakis, Nikos; Georgitseas, Panagiotis
An Introduction to Cryptocurrencies,
2020
Book Chapter
This chapter introduces blockchain as the technological infrastructure of the Crypto Market. It explains in simple terms what blockchain is, how it works, what mining is, and what types of consensus ...mechanisms are available. The chapter also discusses the Ethereum platform as the main advancement in blockchain technology, briefly describing how smart contracts work and are applied in finance. The chapter ends with a reference to other potential uses of the blockchain technology, beyond cryptocurrencies, in areas like governance, auditing, trade, cloud computing, and health care.
This chapter introduces blockchain as the technological infrastructure of the Crypto Market. It explains in simple terms what blockchain is, how it works, what mining is, and what types of consensus mechanisms are available. The chapter also discusses the Ethereum platform as the main advancement in blockchain technology, briefly describing how smart contracts work and are applied in finance. In conventional networks of digital payments, there is an imperative need for an intermediary (usually a bank), which records the transactions, and thus avoid double spending. The way the blockchain works means that there are three main features embedded in the technology: safety, transparency, and irreversibility. Since every piece of information is stored simultaneously in all computers, it is technically impossible for hackers to change any stored information, as they will have to change it in all computers of the network at the same time.
The regulatory framework Daskalakis, Nikos; Georgitseas, Panagiotis
An Introduction to Cryptocurrencies,
2020
Book Chapter
This chapter discusses the current regulatory landscape in the crypto market, focusing mainly on ICOs. It starts by discussing the critical importance of the regulatory approaches for this new area ...and the challenges regulators face in their effort to create a framework for the crypto market. It then discusses the current regulatory status quo of the main global regulators: the United States, Singapore, Canada, China and South Korea, UK, Australia, Switzerland, Japan, and the EU. The chapter ends by performing a comparative analysis of the approaches of all the aforementioned regulators.
This chapter discusses the current regulatory landscape in the crypto market, focusing mainly on initial coin offering (ICOs). It starts by discussing the critical importance of the regulatory approaches for this new area and the challenges regulators face in their effort to create a framework for the crypto market. The chapter then discusses the current regulatory status quo of the main global regulators: the United States, Singapore, Canada, China and South Korea, UK, Australia, Switzerland, Japan, and the EU. Regulatory intervention is a critical survival factor at the early stages of any innovation. Regulation can either destroy or enhance and further develop anything new that has grown enough to attract it. Regulatory authorities of most countries are mainly concerned about ICOs because they carry high levels of risk for investors due to the lack of a clear regulatory framework. Singapore is the first country in Asia where ICOs took place.
“Tokenomics” and valuation Daskalakis, Nikos; Georgitseas, Panagiotis
An Introduction to Cryptocurrencies,
2020
Book Chapter
This chapter discusses one of the most difficult and controversial topics in the crypto market, namely token economics and valuation. The chapter starts by discussing the main barriers to token ...valuation, such as the inherent broadness of the tokens’ nature and purpose, the lack of track record, and the lack of fundamentals. It then explores whether and how some of the most important economic and valuation approaches of traditional economics (supply and demand, quantity theory of money, economics of utility) and finance (discounted cash flow model and technical analysis) can be applied in the crypto ecosystem. The chapter makes a relatively extended reference to technical analysis, as perhaps the only type of traditional analysis that can be directly performed in the crypto market, exactly as performed in the traditional financial markets.
Traded assets Daskalakis, Nikos; Georgitseas, Panagiotis
An Introduction to Cryptocurrencies,
2020
Book Chapter
This chapter introduces the various definitions of digital-, virtual-, and cryptocurrencies and tokens by exploring how global regulatory bodies and organizations approach, define, categorize, and ...distinguish these definitions based on their differences. The chapter also describes how cryptocurrency transactions and digital wallets work by providing simple examples of digital transactions. It also explores the main features of cryptocurrencies (decentralization, safety, transparency, irreversibility, anonymity, etc.), introduces altcoins, and explores crypto market shares and trends during the last five years. The chapter ends by making a detailed reference to stablecoins (definition and types) as one of the most promising type of cryptocurrencies in the market.
Fundraising Daskalakis, Nikos; Georgitseas, Panagiotis
An Introduction to Cryptocurrencies,
2020
Book Chapter
This chapter describes how fund raising is performed in the crypto market. The chapter starts by providing a definition of initial coin offerings (ICOs) and by briefly describing the ICO history ...(from the first ICO of MasterCoin to the $4.2 billion raised by EOS). It then explores the main ICOs features, the main steps of conducting an ICO, and the role of the issued tokens. Particular attention is given to the role of the white paper, as the one key document where all ICO details come together and are synthesized. The chapter ends by comparing ICOs with the two closest alternatives in the traditional markets, namely IPOs and crowdfunding.
