Is it a New Tulip Mania Age?: A Comprehensive Literature Review Beyond Cryptocurrencies, Bitcoin, and Blockchain Technology

2. Cryptocurrencies And Bitcoin

Cryptocurrencies or virtual currencies can be recognized as a technological advance in payment processing (Luther, 2016) and they can be considered as a computer-generated commodity rather than like a monetary currency (Cusumano, 2014). A cryptocurrency, which is an unregulated and digital currency, can be defined as a medium exchange that uses cryptography to secure, validate, and control the transactions (Mikołajewicz-Woźniak & Scheibe, 2015). Some of the main characteristics of these currencies are that they have a higher velocity of circulation, they carry a negative interest rate, and so they cannot be used as a measure of savings.

Cryptocurrencies can also differ from the traditional currency. For example; cryptocurrencies are not generally accepted to be used as a payment method for goods and services (Luther & White, 2014). In other words, although cryptocurrencies can be used as a medium exchange, it is apparent that they are not a common medium of exchange in anywhere. Cryptocurrencies also differ from other digital payments like PayPal by not requiring an intermediate party like a bank and by having no legal tender status (Lee et al., 2015). The main reason is that cryptocurrencies have a decentralized control rather than a centralized control as in the central banking systems. These differences imply that the value of cryptocurrencies is not issued by a central bank and online transactions are sent directly from one party to another without going through a financial institution (Raymaekers, 2014).