Analysis of relationship between bitcoin emission and exchange rates of selected fiat currencies

Abstract

Purpose – to investigate the possible influence of bitcoins and the Blockchain on exchange rates of selected fiat currencies by using quantitative analysis methods. Research methodology – the importance, risks/opportunities are examined by studying scientific literature regarding cryptocurrencies and decentralization. The influence of bitcoins itself is examined by using regression analysis, ANOVA, descriptive statistics, correlation matrix, and VIF. Findings – impart negative relation between Bitcoin money supply and exchange rates (USD/EUR) and a positive relation between Bitcoin inflation rate and exchange rates (USD/EUR). However, the actual influence is too negligible to make any significant affection for the conventional financial sector yet digitalization and decentralization are imminent. Research limitations – only a few analyses have been conducted in a quantitative manner regarding cryptocurrencies impact. The influence of cryptocurrencies increased from 2011; phenomenon lacks long time data and examples to conduct an analysis model that applies to all assumptions without exceptions. Practical implications – enterprises can embrace decentralization and digital money to keep up with the fast-growing market changes, improve transparency, and reduce costs. Close relation with fintech is indispensable; it promotes economic growth and accelerates the development of advanced operating practices. Originality/Value – the interest in digital money and peer-to-peer payments constantly occupy greater importance of financial market and trading manner. Their influence is widely discussed but lacks quantitative researches based on actual historical data.