The Valuation and Investment Risk of Cryptocurrency: Evidence from Bitcoin and Ethereum
DOI:
https://doi.org/10.54691/bcpbm.v44i.4853Keywords:
Cryptocurrency; Bitcoin; Ethereum; Valuation; Risk.Abstract
From gold standard currencies to fiat money secured by government credit, to today's cryptocurrencies, the basic form of money and mankind's perception of its value has shifted dramatically. This paper will demonstrate the value and risk assessment of the two cryptocurrencies with the highest market share, i.e., Bitcoin and Ethereum. Although the current technology of cryptocurrencies is not perfect, it will improve over time and their value will increase due to the high demand for them. This aim of the study to give first-time investors an understanding of the valuation and risks of cryptocurrencies, rather than treating them as simple financial assets for investment. According to the analysis, the value and risk of Bitcoin depend deeply on many characteristics that were initially built into it. It also has an impact on the value of other virtual currencies at the same time. On the other hand, Ether is a much more open platform, so its value and risk depend more on the various applications and contracts built into a blockchain than Bitcoin. These results shed the light on guiding the further exploration of solving the safety problem of cryptocurrencies from different perspectives.
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