Cryptocurrencies and their role in traditional financial market

Project leader: Ivan Gržeta, PhD, Assistant Professor

Project: uniri-mladi-drustv-22-19

Duration of the project: 20/12/2022 – 20/12/2023

Funding: University of Rijeka

Project value: 5.405,14 HRK / 717,39 EUR

Abstract

The financial sector is the largest user of digital technologies and the main driver of the digital transformation of the economy. Financial technology (FinTech) aims to compete with and support the established financial industry in providing financial services. Globally, more than $100 billion has been invested in FinTech companies since 2010, and investment continues to grow significantly. Cryptocurrencies and the technology behind them form the backbone of financial technology with the potential to transform the financial sector, from trading to investing, paying and lending. Cryptocurrencies are a recent phenomenon that is receiving a lot of attention. On the one hand, they are based on a new technology whose potential is not yet fully understood; on the other hand, at least in their current form, they perform similar functions to other, more traditional assets. Extensive academic research is focused on developing theoretical models of cryptocurrencies. Cryptocurrencies, the most famous of which Bitcoin was introduced back in 2008, have never been more interesting to the general public. The controversies about cryptocurrencies aim to identify their qualities, advantages and disadvantages in use, and last but not least, their ability to survive over time and become a viable alternative to traditional currencies and investments, taking into account the impact of this technology on the environment. These controversies are the reason for numerous scientific studies in this field, which, although it has existed for more than a decade, still leaves many questions about the application of cryptocurrencies in practice. This research will answer the question about the role and usability of cryptocurrencies in the traditional capital market, as well as the similarities/differences with traditional investment instruments.