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Abstract: 

This article analyzes the development of blockchain technology and two major cryptocurrencies, Bitcoin and Ethereum. Blockchain is a peer-to-peer decentralized distributed ledger technology that makes the records of any digital asset transparent and unchangeable and works without involving any third-party intermediary. Regardless of how it may be used, the technology itself can be considered a positive, or at least neutral, development, and may have a future not just in financial transactions but in international trade. Cryptocurrencies may not have the same future. The value of cryptocurrencies is highly volatile, and the fact that there is no economic power behind these currencies means that it is the trust within the blockchain that makes these cryptocurrencies viable as a medium of exchange or investment instrument. Given recent developments, trust in cryptocurrency is fragile at best, and the analysis here shows that the chances that cryptocurrencies will be used as mediums of exchange in domestic and international trade or as investment instruments are small.

Keywords: blockchain, cryptocurrency, reduced money transfer costs, accounting records

Affiliations:  1: California State University Dominguez.