1)Analyze the development of cryptocurrencies and digital exchanges in the past

1. A cryptocurrency (or crypto currency or crypto for short) is a digital asset on a blockchain that can be exchanged or transferred between network participants and hence used as a means of payment—but offers no other benefits.Cryptocurrencies should be able to ease financial transactions through elimination of the intermediaries, reduction of transaction costs, accessibility to everyone connected to the Internet, greater privacy and security. A key development in the rise of cryptocurrencies and other cryptoassets has been the emergence of cryptoexchanges where anyone can open accounts and trade cryptoassets both against each other and against fiat currencies. cryptoexchanges provide extensive cryptocurrency pricing and trading information in the public domain. The emergence of these exchanges has created an entire ‘ecosystem’ of services and participants, seeking to provide liquidity, exploit price discrepancies for profit and to support investment by both retail and professional investors.

cryptocurrencies were an academic concept, largely unknown to the world’s general population. This all changed in 2009 with the creation of Bitcoin. Today, most people are aware of cryptocurrencies, although they may not be familiar with how the system works.

The cryptocurrency market continues to gain traction in various facets of government, business and personal financial activities:

— Governments and large corporations are now looking closely at the cryptocurrency market to evaluate how they can adapt the transaction mechanism, specifically blockchain technology, to exchange value.

— Many companies have initiated blockchain projects to assess the feasibility of integrating this technology into their businesses.

— Where the Internet we know connects people around the world and facilitates the exchange of data, experts consider blockchain technology to be a second type of internet: the internet of value.

Our society is increasingly becoming digitally driven. Financial service providers in particular are looking at the cryptocurrency model to ascertain how they may provide secure services in a more efficient and cost-effective manner. Before we consider the potential growth of the cryptocurrency market, let’s look at where it all started.

2. Some economic analysts predict a big change in crypto is forthcoming as institutional money enters the market. Moreover, there is the possibility that crypto will be floated on the Nasdaq, which would further add credibility to blockchain and its uses as an alternative to conventional currencies.Some predict that all that crypto needs is a verified exchange traded fund (ETF). An ETF would definitely make it easier for people to invest in Bitcoin, but there still needs to be the demand to want to invest in crypto, which might not automatically be generated with a fund.

Although it’s not possible to predict the future prospects of all of the cryptocurrencies, if the success of Bitcoin is any indication, the cryptocurrency market has a bright future.

— In July 2015, the price of Bitcoin was just over $280; this gradually increased until it reached the $1,000 mark in January 2017.

— Since then, the cryptocurrency has recorded phenomenal growth. By early December 2017 the price of Bitcoin had reached $17,000. The price of another cryptocurrency called ‘Ether’ has also continued to rise in recent months.

Initial Coin Offerings (ICOs) have also played a major role in generating interest in the cryptocurrency market. ICOs use coins or tokens that are similar to shares of a company. These are sold to investors in an initial public offering (IPO) transaction. An ICO can be likened to crowdfunding, using cryptocurrencies as a source of capital for startup companies. Many market experts expect a cryptocurrency crash at some point. With this kind of market volatility, it is inevitable that a regulator like the SEC will want to step in to provide guidance and impose enforcement actions where necessary.

3. There is going to be a definite upward trend as far as crypto-currency investment by Omanis is concerned thanks to the symposium, attended by over 700 participants. The interest is definitely there and this could propel an upward trend for crypto-currency investment and adoption, provided there is more support from the government. Omanis are known to particularly strive for new opportunities and to invest in upcoming economies, such as digital currency. Approximately 40 per cent of Omani businesspersons are considered to be as professional investors very well versed in all types of market trading and traditional banking investment methods whether commodities or stocks and so. Hence the cryptocurrency world offers the same potential for growth and shall de facto be an area of interest.

4. The ethical issues with the cryptocurrencies and digital exchanges are as folloews:

a. Can be used for illegal transactions –
Since the privacy and security of cryptocurrency transactions are high, it’s hard for the government to track down any user by their wallet address or keep tabs on their data. Bitcoin has been used as a mode of exchanging money in a lot of illegal deals in the past, such as buying drugs on the dark web. Cryptocurrencies are also used by some to convert their illicitly obtained money through a clean intermediary, to hide its source.

b. Data losses can cause financial losses –
The developers wanted to create virtually untraceable source code, strong hacking defenses, and impenetrable authentication protocols.

This would make it safer to put money in cryptocurrencies than physical cash or bank vaults. But if any user loses the private key to their wallet, there’s no getting it back. The wallet will remain locked away along with the number of coins inside it. This will result in the financial loss of the user.

c. Decentralized but still operated by some organization –
The cryptocurrencies are known for its feature of being decentralized. But, the flow and amount of some currencies in the market are still controlled by their creators and some organizations. These holders can manipulate the coin for large swings in its price. Even hugely traded coins are susceptible to these manipulations like Bitcoin, whose value doubled several times in 2017.

d. Some coins not available in other fiat currencies –
Some cryptocurrencies can only be traded in one or a few fiat currencies. This forces the user to convert these currencies into one of the major currencies, like Bitcoin or Ethereum first and then through other exchanges, to their desired currency. This applies to only a few cryptocurrencies. By doing this, the extra transaction fees are added in the process, costing unnecessary money.

e. Adverse Effects of mining on the environment –
Mining cryptocurrencies require a lot of computational power and electricity input, making it highly energy-intensive. The biggest culprit in this is Bitcoin. Mining Bitcoin requires advanced computers and a lot of energy. It cannot be done on ordinary computers. Major Bitcoin miners are in countries like China that use coal to produce electricity. This has increased China’s carbon footprint tremendously.

f. Susceptible to hacks –
Although cryptocurrencies are very secure, exchanges are not that secure. Most exchanges store the wallet data of users to operate their user ID properly. This data can be stolen by hackers, giving them access to a lot of accounts.

After getting access, these hackers can easily transfer funds from those accounts. Some exchanges, like Bitfinex or Mt Gox, have been hacked in the past years and Bitcoin has been stolen in thousands and millions of US dollars. Most exchanges are highly secure nowadays, but there is always a potential for another hack.

g. No refund or cancellation policy –
If there is a dispute between concerning parties, or if someone mistakenly sends funds to a wrong wallet address, the coin cannot be retrieved by the sender. This can be used by many people to cheat others out of their money. Since there are no refunds, one can easily be created for a transaction whose product or services they never received.