A PESTLE analysis of the Cryptocurrency Industry: An investment perspective

Last modified: August 25, 2019
Estimated reading time: 2 min
Project Title: A PESTLE analysis of the Cryptocurrency Industry: An investment perspective
Author: Ms. Shaoxia Li
Advisor: Assoc. Prof. Dr. Jomphong Mongkhonvanit
Degree: Master of Business Administration (International Program)
Major: Financial & Banking Management
Faculty: Graduate Schools
Academic year: 2017

Citation

Shaoxia, Li. (2017). A PESTLE analysis of the Cryptocurrency Industry: An investment perspective. (Independent study, Master of Business Administration). Bangkok: Siam University.


Abstract

Cryptocurrency is a form of digital currency based on a decentralized peer-to-peer exchange, that utilizes cryptography techniques to make online transaction secure without a centralized entity (Crytpcurrencyfacts). Bitcoin, the first and best-known cryptocurrency, surged more than 1,300 percent in value throughout the year of 2017, just to lose over half of its value in the first month of 2018. Early investors have made a considerable profit, despite its high price volatility, the market still attracts many retail investors, with some, have very limited knowledge about the market. This paper examines attractiveness of cryptocurrency investment by analyzing the different elements that impact its growth and adoption using PESTLE model, namely its Political, Economic, Social-cultural, Technological, Legal, and Environmental impacts, it aims to help investors make better investment decisions and the general public who’s interested in understanding the different aspects of cryptocurrencies. The result of the findings of this paper suggests that government regulation can reduce market manipulation and price volatility of the cryptocurrency market, and gradually give investors the confidence to ensure investment protection from price fluctuation and scams. By integrating blockchain technology into the global banking system, it has the potential to reduce massive amount of cost, improve efficiency and transparency. Cryptocurrency plays an important role for those in less developed countries as a real currency and store of value. Many popular features of blockchain technology could be revolutionary for sectors such as finance, e-commerce, health, logistics, real estate and etc., in creating efficiency, confidence, and reliability. However, the anonymous nature of cryptocurrency transactions also attracts a host of illicit activities, such as money laundering, terrorist financing and tax evasion.

Cryptocurrency mining consumes an enormous amount of energy and requires specialized hardware, ultimately leave a massive carbon footprint and cause global warming. Media presence, market participation, and policy changes by the government all play crucial roles in causing major cryptocurrency price volatilities. For the cryptocurrency market to thrive and become revolutionary, growth and massive adoptions are essential. Challenges remain in the government’ร attempt to regulate the industry and to prevent dangerous practices that come along, the ability of the various exchange platforms to improve their cyber securities and to promote the network to be more energy efficient and environmentally friendly. Due to its volatile nature, investors should study thoroughly when investing in cryptocurrencies, knowing their own risk profile, diversify the investment, stay update with the market and find ways to secure the coins from hacking. In the meantime, the cryptocurrency market remains in its discovery phase, investors should always remain vigilant as more regulation and adoption is on the horizon, as to how the market may evolve due to these affords.

 

Keywords:  ESTLE, Investment Perspective, Political, Economic, Social-cultural, Technological.


A PESTLE analysis of the Cryptocurrency Industry: An investment perspective

International Master in Business Administration (IMBA), Siam University, Bangkok, Thailand

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