Prior To Beginning Work On This Assignment Watch Week 4

Prior To Beginning Work On This Assignment Watch Theweek 4 Assignment

Prior to beginning work on this assignment, watch the Week 4 Assignment video above with Brenda Forde, Program Chair of MBA. Research two contemporary finance topics such as cryptocurrency (Bitcoin), microlending, crowdfunding, or green financing. There are several articles and videos in the recommended reading section of the course guide that can familiarize you with these terms and aid in your research. If you would like to choose a different contemporary finance topic not listed, email your instructor to obtain approval prior to starting your paper. In this paper, define and describe the topics, citing real-life examples of their use. Critique the pros and cons of the topics. Assess the popularity of the topics and what type of global companies or individuals use them. Hypothesize the future use of the topics; be sure to support your position with facts. The Contemporary Global Finance Topics Paper must be four to five double-spaced pages in length (not including title and references pages) and formatted according to APA Style as outlined in the Ashford Writing Center’s APA Style resource. Avoid over-dependency on direct quotes. Direct quotes can strengthen your assertions but should not replace original analysis and critical thinking. Review the Ashford Writing Center’s Write On! Avoid Overquoting video for more information. Must include a separate title page with the following: Title of paper, Student’s name, Course name and number, Instructor’s name, Date submitted.

Paper For Above instruction

Introduction

The dynamic landscape of global finance is continuously evolving, driven by technological innovation, changing consumer preferences, and societal priorities. Among the most significant developments are the rise of alternative financial instruments and platforms such as cryptocurrency and green financing. These contemporary topics exemplify shifts toward decentralized, sustainable, and inclusive financial systems. This paper explores two of these prominent topics—cryptocurrency and green financing—by defining and describing their nature, analyzing their advantages and disadvantages, assessing their current popularity among global entities, and projecting their future roles in the financial ecosystem.

Cryptocurrency: Definition, Use, and Real-Life Examples

Cryptocurrency represents a digital currency secured by cryptography, operating independently of a central bank or monetary authority. Bitcoin, the most prominent example, was introduced in 2009 by an anonymous entity known as Satoshi Nakamoto. Cryptocurrencies utilize blockchain technology—a decentralized ledger that ensures transparency, security, and immutability. Their advantages include rapid transactions, lower cross-border transfer costs, and increased financial inclusion for unbanked populations (Yermack, 2013). For instance, in countries with unstable national currencies, Bitcoin is often used as a store of value and medium of exchange (Böhme et al., 2015).

Real-world adoption varies widely. Notably, companies like Tesla and PayPal have integrated cryptocurrencies into their payment systems, enhancing acceptance among consumers and merchants (Nassauer, 2021). Individuals also use cryptocurrencies for investment purposes, with some viewing Bitcoin as "digital gold" for hedging against inflation. Nonetheless, concerns persist over regulatory uncertainty, price volatility, and potential use in illicit activities (Barker & Southon, 2021).

Pros and Cons of Cryptocurrency

The advantages of cryptocurrencies encompass decentralization, which reduces reliance on traditional banking systems; high security, owing to blockchain technology; and the potential for financial democratization. They enable peer-to-peer transactions across borders with minimal fees, facilitating global economic activity (Shah et al., 2020).

Conversely, the disadvantages include extreme price volatility, which deters broader adoption for everyday transactions (Corbet et al., 2018). Regulatory uncertainty introduces risks of bans and restrictions, impacting market stability. Moreover, the technological complexity and the potential for cyberattacks pose security challenges. Environmental concerns have also been raised due to the significant energy consumption of proof-of-work mining processes (De Vries, 2018).

Green Financing: Definition, Use, and Real-Life Examples

Green financing refers to financial investments directed toward sustainable and environmentally friendly projects, aiming to combat climate change and promote biodiversity. It encompasses green bonds, sustainable loans, and investments in renewable energy, energy efficiency, and conservation initiatives. The green bond market has grown rapidly, with countries and corporations issuing bonds dedicated to financing eco-friendly projects (Climate Bonds Initiative, 2022).

An example includes Apple Inc., which has committed to achieving a carbon-neutral supply chain by 2030, financed partially through green bonds (Apple, 2021). Similarly, the European Union has launched the European Green Deal, funded partly through green bonds to finance sustainable infrastructure projects (European Commission, 2019). The adoption of green financing is driven by increasing investor awareness of climate risks and the regulatory push for sustainable development.

Pros and Cons of Green Financing

Green financing offers several benefits, including mobilizing capital for urgent climate action, fostering innovation in clean technologies, and aligning investor interests with environmental sustainability (Kölbel et al., 2020). It can also enhance corporate reputation and compliance with emerging regulations.

However, challenges persist. The green bond market faces issues related to the standardization of green criteria, leading to "greenwashing" where projects are inaccurately portrayed as environmentally beneficial (Cahill & McNicholas, 2021). Additionally, green investments can have higher upfront costs and uncertain long-term returns, which may deter some investors. Furthermore, developing countries face difficulties accessing green finance due to limited financial infrastructure.

Popularity and Usage by Global Companies and Individuals

Cryptocurrency utilization is expanding among tech-savvy and financially innovative companies, as well as retail investors seeking diversification and hedging options. Major corporations like Microsoft accept Bitcoin payments, and institutional investors increasingly include cryptocurrencies in their portfolios (Fang et al., 2020). Individual investors, especially Millennials and Generation Z, exhibit strong interest in cryptocurrencies, often driven by high return potentials.

Green financing has gained popularity among corporations committed to sustainability and among governments implementing climate policies. Many multinational companies, including Unilever and IKEA, integrate green bonds into their sustainability strategies (Reuter & Ziegler, 2020). Governments and institutions worldwide are adopting green financing at an accelerated pace, recognizing its role in meeting international climate targets such as the Paris Agreement.

Future Perspectives and Hypotheses

The future of cryptocurrencies is poised for further expansion, driven by technological advancements, increasing institutional acceptance, and ongoing efforts to regulate and stabilize markets (Yermack, 2013). While concerns over volatility and regulation linger, innovations such as central bank digital currencies (CBDCs) may bridge gaps between decentralized cryptocurrencies and traditional money systems, potentially transforming global financial transactions.

Green financing is expected to experience significant growth as climate change concerns deepen globally. The transition to renewable energy and sustainable infrastructure will necessitate substantial capital inflows, supported by regulatory frameworks and investor demand. Standardization efforts like the Green Bond Principles aim to improve transparency, encouraging broader adoption (Climate Bonds Initiative, 2022). The integration of environmental, social, and governance (ESG) criteria into investment decisions will further accelerate green finance flows.

In conclusion, both cryptocurrency and green financing exemplify innovative responses to contemporary economic, social, and environmental challenges. Their evolving roles suggest a future where digital currencies and sustainable investments become more integrated into mainstream finance, fostering a more inclusive and environmentally conscious global economy.

References

- Apple. (2021). Environmental Progress Report. https://www.apple.com/environment/

- Barker, R., & Southon, G. (2021). Regulatory Landscape of Cryptocurrency. Journal of Financial Regulation, 7(3), 245-262.

- Böhme, R., Christin, N., Edelman, B., & Moore, T. (2015). Bitcoin: Economics, Technology, and Governance. Journal of Economic Perspectives, 29(2), 213-238.

- Cahill, T., & McNicholas, P. (2021). Challenges in the Green Bond Market. Sustainable Finance Journal, 9(4), 180-198.

- Corbet, S., Lucey, B., & Urquhart, A. (2018). Blockchain and Cryptocurrency: Implications for Financial Markets. Financial Analysts Journal, 74(4), 42-52.

- De Vries, A. (2018). Bitcoin's Energy Consumption. Joule, 2(11), 2067-2070.

- European Commission. (2019). The European Green Deal. https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en

- Fang, H., Miller, B., & Wu, X. (2020). Institutional Investment in Cryptocurrency. Financial Innovation, 6(1), 11.

- Kölbel, J. F., Heeb, F., Paantjens, J., & Busch, T. (2020). Can Sustainable Investing Save the World? Organization & Environment, 33(4), 546–568.

- Nassauer, S. (2021). PayPal to Let Users Pay with Cryptocurrency. The Wall Street Journal. https://www.wsj.com/articles/paypal-to-let-users-pay-with-cryptocurrency-11615559288

- Reuter, M., & Ziegler, T. (2020). Green Bonds and ESG Factors. Corporate Social Responsibility and Environmental Management, 27(6), 2655-2667.

- Shah, S., Sulaiman, A., & Bhatti, S. H. (2020). Blockchain Technology and Financial Markets. International Journal of Financial Studies, 8(3), 36.

- Yermack, D. (2013). Is Bitcoin a Real Currency? An Economic Appraisal. Handbook of Digital Currency, 31-43.