Bitcoin and portfolio diversification

Abstract

The purpose of this thesis is presenting the main technical and qualitative aspects of cryptocurrencies and especially bitcoin. Bitcoin is a decentralized technology that allows making payments with no control of a central authority. This innovative peer-to-peer system provides cryptographic proof to verify and process transactions and was invented in 2009 by Satoshi Nakamoto. Being an open-source technology, its code is fully disclosed to other developers. The innovative aspects of Bitcoin are based on different topics: cryptography, software engineering, and economics. The following analysis is to prove that this financial assets are useful to improve portfolio decorrelation with the market and to diversify. The financial aspects of bitcoin as a currency will be compared to the gold through correlation analysis.