Bitcoin - the Transition of Transactions

104 Ray D

The Transition of Transactions

        Amid a technological revolution, currency is on the forefront with e-commerce as a catalyst. Growth in the digital landscape and daily integration provides the ability for everyone to take part. The use of technological platforms has created the ability for payments to be completed in seconds. The digitalized world allows banks to spread control among various currencies. Growth in monetary systems includes bitcoin, an encrypted currency developed by a person or group of developers, to create a platform for worldwide transactions. Being the popularized platform bitcoin is, government and regulatory officials have taken notice. Growth of Bitcoin depends on United Nations ability obtain governmental control. In the following pages, the idea of United Nations ability to govern Bitcoin will be proposed and proven through economic strategies and alterations.

        A developer, long debated to be a “group of programmers—operating under the name Satoshi Nakamoto,” created Bitcoin as a virtual currency for worldwide usage (Wiseman). In 2009 the currency began; bitcoin (lowercased when speaking of the monetary unit) provides a currency traded in a peer-to-peer transaction system through an algorithm. Each transaction is processed through “the block chain…a general ledger recording all…transactions,” completed to the destination of a public owner of the bitcoin (Holmquist). The point of the algorithm accomplishes the issue of privacy to the parties involved. This protects the important information and allows all data to be viewed publicly but useless. In a world which internet connectivity is steadily growing, personal data needs more protection. The algorithm of Bitcoin provides encryption to the useful information. Due to the growing leaks in monetary infrastructures through global banks consumers searched for protection. The value of bitcoin fluctuates; yet, the determination of value comes from the users. As the number of users in bitcoin increases so does its worth.

There is no physical backing like gold or even paper that values bitcoin. Rather, the changes in bitcoin’s value comes from the investors. Any person willing to accept the transaction and place ownership in the chain determines usage. One value of earning bitcoin is through “[voluntary participation] associated with ‘mining’ new coins,” which is a process that verifies the code behind the transaction’s block (Holmquist). This provides a chance to earn bitcoin, but the currency is just stored in a virtual wallet as no physical good exists. The wallet is developed through a unique string designed specifically for the owner, available through the software in the owner’s choice of hardware. All the steps of Bitcoin’s transactions are geared to protect the involved parties and to do so quickly. To begin, the currency completed simple purchases like “paying 10,000 bitcoins to get two pizzas…from Papa John’s,” transitioning to purchases for vehicles and even Dell computers (Wallace). The growth is evident with venues to purchase and use bitcoin expanding to everyday usage. Like the vision of Nakamoto, Bitcoin continues to grow. However, the system’s framework for currency connectivity globally demands government guidance.

Due to overall adaptation of technology and the availability of techniques Bitcoin uses, financial officials show intense awareness. This utilization of purchases on an encrypted chain like Bitcoin is susceptible to abuse. The cryptocurrency “provides a secure, low-cost platform” that hides the parties’ data through blockchain and is also layered beneath strings of other trades (Hendrickson et al.). The protection of any illegal purchases using bitcoin can prove as difficult as tracking paper currency in multiple trades. The thumbprint of the customer will not last on paper currency near to the extent a private key to the bitcoin owner does. The proof of what was traded proves trickier. Bitcoin’s system is fluent through multiple uses and to “characterize Bitcoin…for [illegal] purchases is like describing the Internet…convenient to get sport scores,” and labels the monetary structure as limiting (Holmquist). The concept used to form Bitcoin shows the age of current payment systems. Bitcoin provides quick and seamless transactions with the ability to trade with extreme security, a rarity in a seemingly sharing driven world. The privacy enabled by Bitcoin and illegal trading websites like Silk Road coined prove risk. The algorithms used to protect the user’s full identity need slight change for daily utilization to become reality.

The algorithm Bitcoin runs builds upon devices used in chip encrypted credit cards to prioritize consumer privacy. When originated, Bitcoin scaled the address of a user’s information into certain private keys. Enabling the encryption allows “account holders... [to be difficult] to identify” however not impossible (Hendrickson et al.). The information protected provides a shield for hacking and disruption in the system, through tweaking of algorithms just enough information can become available to use daily. United Nations owns the power needed through “[institutions of] the Economic and Social Council (ECOSOC)” to develop a reformed process to allow Bitcoin to become adopted worldwide (Ivanova). Adjusting the algorithm to provide the correct amount of information to sustain everyday purchases normalizes the bitcoin and still allows seamless transfers globally. The data needed to regulate bitcoin is: the private turned public key (formatted to see the owner), the value of the currency as of the date completed along with the previous blockchains created by the miners. All this information lays the groundwork to allow returns and reversed transactions, making the currency friendlier for merchants. To familiarize the public with bitcoin, changes to the scheme needs tweaks. With the help of the United Nations and ECOSOC new goods can be purchased with bitcoin legally. The participation of the United Nations is instrumental to regulating safe and legal transactions. This normalization of bitcoin can lead to further growth and lasting advancements in e-commerce.

The economic development behind bitcoin is substantial. Since creation the cryptocurrency is the most popular among the world with about fourteen million bitcoin in circulation as of July 2014 (Holmquist). Being a currency backed only by the investment put into by voluntary miners and potential customers of those who accept bitcoin, the value can be declared powerful enough to standalone. During the year of creation, bitcoin’s value “stayed below 14 cents [comparison to USD]” and slowly surged in the following months (Wallace). The value as of November 12, 2017, one bitcoin is priced at $6,245.98 (USD); this worth shows the pure growth in value (Coindesk). Through the legalized and popular markets of Bitcoin, the definition of how governments tax varies. The proposal of the United Nations governing bitcoin asks for the main use to be labeled as a form of currency. Declaring bitcoin as a currency allows terms for the taxation deleted and transaction fees applied instead. The ability for United Nations to govern bitcoin does not allow the government to apply intentional inflation or negatively impacting the capital.