THE PROSPECTS OF USING CRYPTOCURRENCY BITCOIN AS A FINANCIAL INNOVATION IN THE INFORMATION ECONOMY OF UKRAINE

Abstract

We have established that a relatively new market of cryptocurrency is the subject of great interest for research under the current conditions of financial innovations in payment services. Our findings have revealed objective prerequisites for creating cryptocurrency as an innovative means of information-based payment. Cryptocurrency poses a challenge to the financial system of Ukraine since both the central bank and other state regulators can not control its emission and circulation. They show the growth dynamics in cryptocurrency market capitalization where Bitcoin predominates. Although cryptocurrency is not included in the National Register of payment systems and it is officially prohibited for circulation in Ukraine, our country ranks among the world’s top five countries by number of users of different bitcoin-wallets. We have examined the strengths of Bitcoin that have made this cryptocurrency a convenient means of international payment with a high investment potential. The results show disadvantages to using cryptocurrency for both the whole country in general and ordinary consumers in particular. We have defined main threats that national governments can face in case of an unregulated spread of cryptocurrency. Also this study, based on the works of leading foreign scientists and financial market experts, systematizes factors that influence the price of Bitcoin. It substantiates opportunities and prospects for the cryptocurrency market development in Ukraine. The study has shown that cryptocurrencies have their own niche in payment systems; they are quite competitive and reliable financial instruments. The growth dynamics of cryptocurrency market capitalization in the world makes Bitcoin the most successful example of the use of virtual currency in the information economy. As the modern society is being inevitably virtualized, our country’s economy should follow the path of innovations by finding solutions to a number of technical, economic and legal issues on the cryptocurrency market development in Ukraine through involving the experience of the leading European countries.

Keywords

• bitcoin
• cryptocurrency
• virtual currency
• payment system
• financial innovation