Isis Normagne G.

Pascual
Econ 121 Homework: Bitcoin
Bitcoin, which is created and held electronically, is a decentralized form
of virtual currency. It was proposed by a mysterious software developer
whose alias is Satoshi Nakamoto. It has become popular because of its
hassle-free features. No single institution, not even the Central Bank,
controls the bitcoin network. Transacting using bitcoin requires no financial
intermediaries, transaction fees and even real identity.
Bitcoin may not be the same as fiat money, which is regulated by a
central authority and is physically printed, but it qualifies as money. It is
used as a medium of exchange in online transactions. People can buy and
sell using bitcoin. It also serves as a unit of account meaning it provides a
common base for prices. Lastly, bitcoin is a store of value which means that
people can use it later for smoother transactions (Ramasastry).
Acquiring bitcoins can be done in 3 ways. First is by buying them on an
exchange. Marketplaces called bitcoin exchanges allow people to buy or
sell bitcoins using different currencies. Second way is by transferring bitcoins
to another person using mobile applications and computers which is just the
same as sending cash digitally. Third way is by mining where people
compete by solving complex math puzzles in order to create and own bitcoin
(Yellin, Aratary, and Pagliery).
Recently, Mike Hearn, one of the developers of bitcoin,

proclaimed

that the bitcoin experiment has failed. He tendered his resignation and
sparked the Great Bitcoin Schism of 2015 which argues that bitcoin is dead
because it has become too popular. Hearn said that people do not go to
bitcoin networks anymore because they have become busy. His claim was
later disproved by a lot of people who thought Hearn was just a sourgrape.

It is not true that bitcoin is dead. In fact, bitcoin is far from dead as it is still
growing (Evans).
Debates regarding bitcoins future are becoming more prevalent as
the network grows more popular. One of the hottest issues regarding bitcoin
is its regulation. Generally, governments are concerned about the lack of
control over the virtual currency. For some, regulating bitcoin is a terrible
idea because it essentially takes away bitcoins unique selling point. Some
argue that regulation only makes it easy for the government to exploit
bitcoin. However, leaving a fast-growing network unregulated is not entirely
a good idea as well. Some are concerned about how bitcoins are being used
in the dark web which is a growing network of illicit websites used for
commercial

child

pornography,

sex

trafficking,

and

other

criminal

enterprises. The network is not immune to theft as well. There had been
reports of hackers who empty high-profile bitcoin wallets (Eha).
As the unregulated bitcoin network reaches more people, more
avenues of abuse open up. The biggest harm that has to be addressed
immediately is how this paves way for threats against individual and national
security. Threats like these should not be taken with a grain of salt. Leaving
bitcoin unregulated might have benefits, but the detriments are far greater
to completely dismiss the whole idea of regulation.

Works Cited Page

Ramasastry, Anita. Is Bitcoin Money? Verdict. Justia, 9 Sep. 2014. Web. 30
Jan. 2016.
Yellin, Tal, et al. What is Bitcoin? CNN Money. CNN Money, n.d. Web. 30
Jan. 2016.
Evans, Jon. Bitcoin Is Dead (Again), Long Live Bitcoin (Again). Tech
Crunch Network. Tech Crunch Network, 23 Jan. 2016. Web. 1 Feb.
2016.
Eha, Brian Patrick. Why Regulate Bitcoin? The New Yorker. The New Yorker,
18 Nov. 2013. Web. 1 Feb. 2016.