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Crypto Currency and its Susceptibility to Speculative Bubbles Manipulation Scams and Fraud

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  • Paul BARNES

    (Paul Barnes and Associates Ltd Nottingham United Kingdom)

Abstract

It is argued here that because a cryptocurrency has no intrinsic value problems relating to day to day valuation and pricing arise It is shown how these lead to the reversal of the conventional relationship between supply and demand and the susceptibility of the cryptocurrency markets to irrationality and speculative bubbles arising from the herding instinct Also as the cryptocurrency markets are largely free of regulation and the desire for privacy by founders owners and developers is so great accountability and disclosure requirements are either minimal or non existent leading to the manipulation of cryptocurrency prices volume and market capitalisation information Another consequence of their freedom from regulation particularly surprising given the importance placed on their security through the use of blockchain is the magnitude of thefts of cryptocurrency both in terms of frequency and size levels of which would neither be expected nor tolerated in regulated financial markets

Suggested Citation

  • Paul BARNES, 2018. "Crypto Currency and its Susceptibility to Speculative Bubbles Manipulation Scams and Fraud," Journal of Advanced Studies in Finance, ASERS Publishing, vol. 9(2), pages 60-77.
    • Handle: RePEc:srs:jasf00:v:9:y:2018:i:2:p:60-77
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    References listed on IDEAS

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    1. Paul Barnes, 2010. "Stock market efficiency, insider dealing and market abuse: the UK experience," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 5(1/2), pages 38-50.
    2. barnes, paul, 2016. "Stock market scams, shell companies, penny shares, boiler rooms and cold calling: the UK experience," MPRA Paper 71562, University Library of Munich, Germany.
    3. Sean Foley & Jonathan R Karlsen & Tālis J Putniņš, 2019. "Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed through Cryptocurrencies?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1798-1853.
    4. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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    Cited by:

    1. Ji, Qiang & Bouri, Elie & Kristoufek, Ladislav & Lucey, Brian, 2021. "Realised volatility connectedness among Bitcoin exchange markets," Finance Research Letters, Elsevier, vol. 38(C).

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