Financial analyses regarding the current state of blockchain based crypto currencies and their future

The aim of this study is to evaluate the current situation and the future of cryptocurrencies using blockchain infrastructure or its variations. For this purpose, the evolution of the technological infrastructure and the economic models of various cryptocurrencies are discussed. Research questions regarding the market efficiency, price bubbles and market manipulations in cryptocurrency markets have been formulated accordingly in each chapter. For the purpose of testing the market efficiency in cryptocurrency markets, volatility structure for eight separate cryptocurrencies in regards to market volume is analyzed. Due to the long memory characteristics of the series, asymmetrical GARCH (FIGARCH, FIAPARCH, FIGARCH CHUNG, FIEGARCH, FIEGARCH BBM) models have been used. Results of the analysis in chapter two indicate that as market volume increases so does the efficiency of the market. Following these findings, the existence of the price bubbles in 8 major cryptocurrency markets has been analyzed using the SADF test. Results of the analysis present no support on the existence of price bubbles in the market. With the purpose of analyzing the nature of the price jumps within the cryptocurrency market, a two-step analysis has been conducted. In the first step, the prevalence of dump & dump schemes has been discovered with an experimental case study involving real-time market transactions. Section two focuses on empirically measuring the price jumps in the market by using jump-diffusion analysis on cryptocurrencies market using a data set with 1,162,887 observations in one-minute interval frequency. Findings of the Jump analysis reveal that markets become immune to manipulations once outstretching a certain degree of depth. Collectively, research findings indicate that, with higher risk-adjusted return rates, investors and users of cryptocurrencies are clustering in older coins rather than switching to newer coins that have higher technological and economic capabilities. Therefore, it is concluded that the structural design for the development of existing cryptocurrency market is in conflict with rational market dynamics. Speculative price inflations in cryptocurrency markets are expected to be transient unless they are supported by areas of use that appreciate the intrinsic value of these cryptocurrencies. Additionally, the study forecasts that a multilayered system of integrated and synchronized blockchain structure will dominate the cryptocurrency markets in the future. This study contributes to the literature of one of the most controversial topics in contemporary finance by estimating the potential of cryptocurrency markets by conducting a series of financial tests within a conceptual framework.