The inefficiencies of bitcoins in developing countries

ABSTRACT

Cryptocurrency is an emerging phenomenon set to revolutionize the financial industry. It utilizes blockchain technology, which ensures data is immutable, transparent and reliable. Cryptocurrency is present in different forms like Blockchain and is present in most parts of the world. Developed nations have a significant interest in technology and have put a measure to investigate while developing nations are also following suit. The global interest in cryptocurrency is associated with the fact that the movement of money will be traceable and it will minimize activities such as money laundering and corruption. The paper analyzes a selected period of six years to establish the efficiency of the Blockchain in the markets. A graph and tables are essential in generating more data for interpretation of the events. The tests used in the analysis are the Ljung-box, R/S Hurst, BDS, Runs, AVR test, and Bartels tests. All the tests demonstrated inefficiencies in the Bitcoin trend, especially in the full sample and slightly low inefficiency in the later subsample. The conclusion made is that bitcoin will improve its efficiency over time as it is an emerging industry that needs to grow. Developing countries experience higher inefficiency combined with the prevalent policy challenges and issues like corruption and unemployment.

KEYWORDS:

• Bitcoin
• cryptocurrency
• blockchain
• mining
• monetary policy

JEL CLASSIFICATION:

• G10
• G20
• G30
• E40

Disclosure statement

No potential conflict of interest was reported by the authors.