The Phenomenon of Cryptocurrency and its Implementation into Businesses

Abstract: While the popularity of cryptocurrencies has seen a dramatic uptick as of late, the general phenomenon still carries with it a high level of novelty. The inception of cryptocurrencies began with Bitcoin in late 2008, making its first appearance on a cryptographic community forum, posted by a yet to be identified entity carrying the pseudonym Satoshi Nakomoto. The phenomenon has since grown tremendously in its exposure to the public, notably due to the tremendous financial gains seen from early adopters, while spurring the creation of numerous other cryptocurrencies with varying purposes and designs. Cryptocurrency can be defined as a purely digital form of currency built upon cryptographic proofing mechanisms and blockchain technology. First and foremost, blockchain technology is seen as being capable of providing businesses with increased functionality and efficiency. One such advantage is the possibility to transact through decentralized autonomous networks, capable of automatically and cryptographically, validate and facilitate transactions. The decentralized technology could reduce the economic dependency on third parties by getting rid of traditional financial institutions when operating a business. In spite of the widespread recognition of cryptocurrencies, we found there to be a gap in both the literature and public perception of the potential benefits for business adoption. Throughout the thesis, cryptocurrency literature research is combined with the implications of Tesla Inc. and Sharge&Charge Foundation’s implementations of cryptocurrency. These companies were found to have the potential to achieve certain benefits related to their cryptocurrency implementation. Their implementations saw them use cryptocurrency for both investment and operational purposes. For Share&Charge it is argued that implementing cryptocurrency and blockchain technology lead to reduced transaction costs and agency dependency. Tesla was found to have the potential for reduced transaction costs related to their payment method, as well as using cryptocurrencies to combat foreign exchange risk. Furthermore, the thesis ended up answering the research question. The literature, theory, and findings from the cases, gave the insight necessary to draw the conclusion that cryptocurrency implementation for businesses presents the potential benefits of reducing transaction and agency cost in a number of different ways.