Marco Giorgione Dava English 10 WFX 2

2015-11571 February 23, 2018

Creeping Into the World of Cryptocurrencies

In the ever-progressive and evolving world that we live in these days, technology continues

to flourish and prosper—bringing about positive impacts to and changes in everyday tasks. Thus,

making these tasks easier, more convenient, and human-friendly. Basic human necessities such as

money, for example, are given far more importance than they should get. Money, after all, is created

by the people and for the people. This currency, having inherent value in it, is capable of producing

other and even more necessities.

The evolution of money from paper money to the now-credit and debit cards has

significantly put ease in the daily transactions of people. It has made buying products and shopping

so much easier through the Internet. But with the rise of these advancements in currency came also

the rise of various financial crises in the United States and in Europe. People began to distrust the

government for their handling of money and assets. If the government can do so well in the

financial scene, then why does it have such huge amounts of debt? This led to the creation of what

people deem now as a digitized and safer method of assuring that transactions take place, remittances

and assets are issued properly, and that money circulates in the vast majority of the globe—the

emergence of cryptocurrencies, the likes of Bitcoin.

In 2009, Satoshi Nakamoto created Bitcoin with the hope of circumventing government

interaction. (Douma 2) The invention of a virtual currency sparked controversies but at the same

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 time gained recognition and attention from the public. It meant

that people would no longer have to bring with them paper bills

and metal coins, and instead make use of the Internet-based

money which can be stored in a computer. The currency, called

bitcoins, can be obtained by purchasing them online and by buying

or selling services with Bitcoin. Known to be technologically

https://bitcoin.org/en/

efficient, Bitcoin is set to play a major role in the fields of finance and economics. For one, it has

become a go-to digital asset capable of bringing us to the forefront of financial progression.

(Business Impact)

Bitcoin, like any other cryptocurrency, is a virtual currency that is issued and controlled by its

developers, and used and accepted among the members of a specific virtual community. This goes

to say that it operates in moderation. Only the developer has the right to make changes to the

system and it is independent of any banking industry. This said, the security measures follow

cryptography. Information is kept and held confidential with the use of mathematical equations and

algorithms. (Douma 11) After all, online currency is thought to be better than real cash. Through

Bitcoin, people get to minimize the risk of having debts and economic recessions by offering

diversification. One specific advantage of this cryptocurrency also is the permission to send and

remit amounts of money overseas, across the globe, in real-time. (Turayhi) This allows it to be

efficient both in speed and cost.

Alongside the benefits people get from cryptocurrencies are numerous disadvantages which

they also find problematic in these innovations. Being an online currency entails that it is prone and

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vulnerable to hacking and other criminal activities. (Douma 20) This encouragement is brought

about by the illegality of having to hide people’s money from the government. With the hackers’

underground access to the cryptocurrency system, it is also easier for these hackers to gain

information about the users and tenants who are a part of the virtual community. This would lead to

leakage of unprotected data, identity theft, and the like. Another disadvantage is Bitcoin’s tendency

to be unreliable and inconsistent. There is no fixed market value for each bitcoin and there are no

limits. (Elite Currensea) The numerous disadvantages of Bitcoin only make it less stable and new in

the worldwide scheme. It has yet to establish a stronger foundation to finally get on the levels of

traditional currencies and financial transaction methods.

https://www.express.co.uk/finance/city/914087/cryptocurrency-predictions-2018-bitcoin-news-blockchain-ethereum-ripple

In a wider scope of cryptocurrencies, Bitcoin is not alone. After its emergence, a lot of other

cryptocurrencies came to rise—the five biggest ones after Bitcoin being Ethereum, Dash, Monero,

Ripple, and Litecoin. This shows that developers see the contributory aspect of having to create

more cryptocurrencies, and its direct effect to the public and the users. People are getting more and

more involved and invested in using these virtual currencies. (Hileman and Rauchs 17) So how do

these cryptocurrencies actually operate? What makes it trend and why do people consider making

these online currencies, and even better, why do people use them?

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 The thing about cryptocurrencies in general is that they operate in a vacuum; no connections

to other systems are needed. (Chiu and Koeppl 11) For a user to participate, one must avail of

bitcoins by mining them. That is, having to perform a computational task by downloading first a

digital wallet and creating an account. (Douma 13) This allows the users to protect their data and

information, and availing of bitcoins in the long run. These bitcoins are then the currencies which

the users will be using in buying or selling products, goods, services, assets, and the like. Its major

downfall is the idea of double spending. The virtual world makes it easy for hackers to easily

manipulate, control, and copy information online. Now, if we push for a cashless society and

economy, wouldn’t it mean more distrust and more double spending? Wouldn’t it also mean more

risks?

The world of cryptocurrencies promises a world of independence and no control from the

government. Its concept of decentralization goes against the existing power of politics in centralizing

and taking charge of the world’s money. Perhaps, we have yet to explore up to a certain extent the

capabilities of these cryptocurrencies, and see how far these are able to outweigh the benefits we get

from the traditional finance systems.

We have yet to creep into the system even deeper.

SOURCES:

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“Advantages and Disadvantages of Trading Bitcoin and Cryptocurrencies.” Editorial. Elite Currensea.

Elite Currensea, 19 Sept 2017. Web. Retrieved from https://www.elitecurrensea.com/forex-

and-cfd-blog/education/pros-cons-bitcoin-cryptocurrencies/. Accessed 20 Feb 2018.

Chiu, Jonathan, and Thorsten Koeppl. “The Economics of Cryptocurrencies—Bitcoin and

Beyond.” Chapman. Victoria Universiy of Wellington and Queen’s Univeristy, April 2017.

Web. Retrieved from https://www.chapman.edu/research/institutes-and-

centers/economic-science-institute/_files/ifree-papers-and-photos/koeppel-april2017.pdf.

Accessed 19 Feb 2018.

Douma, Samantha. “Bitcoin: The Pros and Cons of Regulation.” OpenAccess. Universiteit Leiden, 12

June 2016. Web. Retrieved from

https://openaccess.leidenuniv.nl/bitstream/handle/1887/42104/Bitcoin%2C%20The%20P

ros%20and%20Cons%20of%20Regulation.pdf?sequence=1. Accessed 19 Feb 2018.

Hileman, Garrick, and Michel Rauchs. “Global Cryptocurrency Benchmarking Study.” Cambridge

Centre for Alternative Finance. University of Cambridge, 2017. Web. Retrieved from

https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-

finance/downloads/2017-global-cryptocurrency-benchmarking-study.pdf. Accessed 19 Feb

2018.

“The Cryptocurrency Market is Growing Exponentially.” Editorial. MIT Technology Review. Business

Impact, 29 May 2017. Web. Retrieved from

https://www.technologyreview.com/s/607947/the-cryptocurrency-market-is-growing-

exponentially/. Accessed 19 Feb 2018.

Turayhi, Yasmeen. “An Introduction to Bitcoin: What It Is, Why It Exists, and Where To Buy It.”

Hackernoon. 18 Sep 2017. Web. Retrieved from https://hackernoon.com/an-introduction-to-

bitcoin-what-it-is-why-it-exists-where-to-buy-it-6f2b17b548ad. Accessed 20 Feb 2018.