One of the newly introduced investment vehicles in the financial markets across the globe is the bitcoin. It is believed to be one of the fastest medium of growing one’s investment in the financial world. Although many investment pundits have hailed the digital currency as a useful investment tool, it is fraught with many challenges; investors in the digital currency markets are prone to risk inherent in technological challenges. In recent years, it is uncommon to hear of a hack into the system of a digital currency company by predatory hackers, resulting in loss of huge sums of money often quantifiable in the United States dollars, to the hackers. Sanger (2012) and Kasner (2015) note failure on the part of management of digital currency markets to identify and develop strategies that would protect their systems would have dire consequences for the industry and investors. This corroborates Baboo and Kumar (2013) who found the absence of adequate security measures could have strong negative implications for firms in the virtual currency industry. For instance, in 2016, the system of Bitfinex, one of the Bitcoin Exchanges in the world, was hacked into and bitcoins worth tens of millions of dollars were loss to hackers. Also, 2018, the system of Coincheck, a Japanese digital exchange, was hacked into, resulting in the loss of investments worth US$530 million. The target, however, was the Singaporean-based NEM coins exchange.
The general business problem is the inability of Bitcoin Exchanges in the digital currency markets to develop and implement measures that would curb, significantly, security breaches; and ensure the valuable investments of investors are adequately protected. Bertot, Jaeger and Hansen (2012) believe firms in the virtual currency industry require novel strategies to effectively avert the activities of predatory hackers who periodically hack into their systems to deny investors of their valuable investments. Though evidence of the problem exists, there are no studies to clearly establish the financial implications of bitcoins for economies.
The specific business problem is the level of employee skills and training needed in information technology digital currency control application for various Bitcoin Exchanges in the cryptocurrency industry to minimise the incidence of huge investment losses to hackers. The present study sought to examine how the activities of digital currency markets affect the financial development and growth of economies, including Ghana.
The main objective of this research was to assess the financial impact of cryptocurrency, specifically bitcoin, on the Ghanaian and other economies across the globe.
Specifically, the research sought to achieve the following objectives:
- Examine the measurement module and value of bitcoins.
- Evaluate the economic benefits and challenges associated with use of bitcoins.
- Analyse regulatory measures on bitcoins.
- Make recommendations for successful adoption and implementation of the bitcoin for rapid socio-economic development and growth of the Ghanaian and other economies.
A study involving digital currency is virtually a new phenomenon; there is limited available expertise in this research area to provide reliable information about the phenomenon. Stated differently, it is quite challenging to access reliable primary data to complete, successfully, a study on cryptocurrency, especially in Ghana. Thus, the most reliable means of gathering relevant data for the current research was secondary sources. Therefore, data required for the conduct of this research were obtained mainly from secondary sources. These included text books, journals, news paper publications, and digital currency markets.
The systematic exploratory technique, an example of the mixed methods approach to scientific inquiry, was adapted for this research. That is, the research was conducted with strong qualitative leanings though elements of both qualitative and quantitative methods were present.