Essay Example on Decentralized Digital Currency









Bitcoin was introduced in 2009 as the first decentralized digital currency that can be used to make person to person payments and purchases where there is no intermediary e g banks involved The transaction is verified by a network of computers and recorded in publicly distributed ledgers called blockchain This currency is different from other currencies e.g dollar euro etc that we know of as it is not backed by any government and its value is highly volatile It has gained in value several hundred times over the last few months In 2017 the price of Bitcoin gained over 1200 starting from just over 1 000 a coin to well over 19 000 at its peak In my view this is a very risky investments for an average investor to put his hard earned money and expect a quick gain as it can lose its value in a matter of hours Chicago Mercantile Exchange and Chicago Board of Options Exchange are the world s largest exchanges for future contracts and have begun listing Bitcoins in belief that success in launching future contracts could confer legitimacy to bitcoin and add a revenue stream for CBOE and CME Meyer and Stafford However by doing so riskier investments will become easily available to US investors leading to greater financial losses for the country should Bitcoins go down in value The fact that Bitcoin is not regulated by any government would lead to an uncontrollable situation if such a situation were to arise with no one to be held responsible unlike Enron or Lehman Brothers where some people went to jail Instead such investments would only fuel the greed of others to conduct limitless international transactions without knowing any limits or regulations

This would lead to a greater risk in their investments that wouldn t be thought of with the simplicity in the trade The other big risk is about the security of our country It is well know that securities agencies will not be able to track anyone who makes the payment or the one who receives the payment These two parties can be terrorists or hackers based in a remote part of the world who are terrorising innocent people on the streets of NYC hackers are using ransomware to blackmail small and big corporations The situation is that even FBI doesn't have an answer against ransomware and advice businesses to make the payment through Bitcoins In 2016 the company my father works in was hacked and made to pay a ransomware through bitcoins At that time FBI was not able to help either the company had to pay 40 000 in Bitcoins to the hackers The anonymity of the transaction and location of hackers proved to be the reason why the company was left with no choice but to give in despite having the FBI's backing With no taxes on the transactions the transfer is instant as there are no intermediaries involved A Bitcoin account cannot be frozen and Bitcoins cannot be lost unless the owner forgets the key A transaction once made cannot be reversed This provides added surety for merchants that payments are final and no risk of a loss Also no risk of sharing personal information with anyone to make or receive payments However on the givers end it is quite a disadvantage

The former chairman of Federal Reserve Bank Mr Greenspan compared the high flying cryptocurrency to 1775 Continental currency that was worthless by 1782 In the in between years however the money allowed patriots like George Washington to buy armaments and other supplies Moyer The British billionaire entrepreneur Richard Branson is perhaps the biggest fan of bitcoin and blockchain technology Branson has gone so far as to refer to blockchain as an economic revolution In 2014 Warren Buffett dismissed Bitcoin as an investment and in 2017 he recommended S P 500 low cost funds instead Another billionaire entrepreneur Mark Cuban Shark Tank called Bitcoin a bubble It is a mystery for most as to how these Bitcoins are produced and whether there is a criteria on how many Bitcoins can be produced or it is unlimited and with no central governance there is no one to answer these questions In a process called Bitcoin mining miners compete to solve the mathematical puzzle associated with the transaction The miner who solves the problem first will get a piece of Bitcoin However it is estimated that mining for new bitcoins will end in the year 2140 Zagaeski By that time all 21 million Bitcoin are approximated to have been mined Zagaeski But like with most technology it is possible for it to end long before 2140 arrives Once the new bitcoins stop being produced the system will depend on commissions on each transaction resulting in the same situation as with the intermediaries banks of today This will lead to a chaotic situation in future that will incur great financial losses for those involved eventually disrupting the

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