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УДК 336.74
BITCOIN - CURRENCY OF XXI CENTURY БИТКОИН - ВАЛЮТА XXI ВЕКА
Зопунян Ю.С. студент,
ЮРИУ РАНХиГС
Zopunyan Y. S. student, South-Russian Institute of Management RANEPA
В статье анализируется феномен биткоина. Рассмотрены основные плюсы и минусы данной валюты. Делаются выводы о возможном становлении биткоина как будущей глобальной валюты
Ключевые слова: валюта; развитие; процесс; стратегия.
In this paper author analyses Bitcoin phenomenon. Author considers main advantages and disadvantages of this currency. The paper presents conclusions about bitcoin becoming future global currency.
Key words: currency, territory, development, process, strategy.
How many times did people loose their savings due to certain country economy's collapse or inflation? How many people have suffered money losses from credit cards hacking or counterfeiting? Every year governments spend millions of dollars on fight against the financial crimes instead of focusing on more important issues. But, in the age of high technologies new type of currency has appeared. Cryptocurrency is a peer-to-peer, decentralized, digital currency whose implementation relies on the principles of cryptography to validate the transactions and generation of the currency itself. Cryptocurrency implementations often use a proof-of-work scheme to guard against digital counterfeiting. Cryptocurrency does not depend on any country's economy. Nowadays there are about 30 different
cryptocurrency specifications and protocols, but most of them are derived from the first fully implemented cryptocurrency, Bitcoin. Bitcoin is an open source peer-to-peer electronic money introduced in 2009 by pseudonymous developer "Satoshi Nakamoto". Nowadays, Bitcoin's popularity is rising very fast and could possibly achieve about a two million users by 2015.
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Image 1. Bitcoin's number of users Many experts start considering Bitcoin as a first global currency. In our opinion, to evaluate Bitcoin prospects as a global currency we should consider its advantages and disadvantages.
Bitcoin as a currency has four major advantages:
To begin with, Bitcoins can't be counterfeited. Bitcoin can't be copied because it doesn't exist physically. You might ask: how this system works? Bitcoin system could be considered as a list of all made transactions. There is no such thing as a "bitcoin" that can be copied. Rather, there is a list of all the transactions that have taken place on the bitcoin network and the order they have taken place.
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Every client has a copy of this list. Essentially, the only way to counterfeit bitcoins would be to spend them in more than one place. This is called a double-spend attack. However, because of the design of the bitcoin block chain (the list of all the transactions) and the way that list is secured by mining, this requires a tremendous amount of computer power or more than 50% of all Bitcoins. 5
Furthermore, Bitcoin has zero inflation risk. One of the biggest problems with modern currencies used around the world is inflation. Over time, all currencies loose purchasing power at a rate of few percent per year due to several reasons. This process is like a small tax on your accumulated wealth. Even making a deposit will not protect you from inflation, because in some time inflation could be simply higher than deposit percent. With Bitcoin, you will forget this problem because the system is designed to make Bitcoins to be finite so that it is deflation by its nature. The release of new Bitcoins is slowing down and it will stop completely within a few decades. Bitcoins' number is limited by system's structure. Threshold number of bitcoins is 21 million and it is hard-wired" into its system. Every block introduces 50 new coins in the system. This quantity (50) halves every 210,000 blocks. So, getting the limit of coins it is possible to generate is quite easy : it's the sum of a geometric series. A pre-defined schedule limits the total number of bitcoins so that they gradually approach a total of 21 million (ignoring those that have been lost through deleted or misplaced wallet files). The limit of 21 million bitcoins is "hard-wired" in to the protocol, and there will never
be more bitcoins than this:
Moreover, there could be no third-party control or seizure over Bitcoin. Bitcoin system is decentralized which means that no third party can affect it. Everyone has a copy of transaction database, so that until there would any three people using bitcoin, system will be alive. What does it mean for bitcoin users? Well, it means that no one, no matter if it is government, any company or
StackExchange. //URL: http://stackexchange.com/ (gaTa o6pa^eHHa:06.04.2013)
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somebody else could control your money. They can't freeze it, can't confiscate, can't even know how much money you do have.
Last but not least, is Bitcoin's lower collapse risk. Regular currencies depend on governments which may have economic problems because of poor financial policy. Having your savings in some currency means that your future is completely dependent on country or union that controls it. There are lots of examples of hyperinflation or a complete collapse of currency in past decades, which had wiped out people's savings of a lifetime in day. In this way, centralized currencies have more serious destabilization risks than those of decentralized currencies. For example, corrupt governments, wars and financial meltdowns have thrown entire nations into poverty due to collapsed centralized currencies. Decentralized currencies in common and Bitcoin in particular are resilient to those kinds of threats, as they are not regulated by any government and depend only on system's users all over the world. This means that Bitcoin currency could be influenced by global financial crisis, which would touch everyone, but certainly would stay strong against some certain country's default.
However, Bitcoin also has some significant disadvantages: Firstly, learning curve: Using Bitcoins for payments requires a user to acquire certain knowledge about using Bitcoin and especially about keeping the Bitcoin wallet secure. This includes knowing how to create a wallet, to keep it secure, to keep the identity of the owner of the wallet private and secure, to use different addresses for different transactions, and so on. So that nowadays it could be a little bit difficult to use Bitcoins for new users.
Secondly, complete virtuality. Bitcoin is very convenient to use via Internet, but nowadays it is simply impossible to make all payments cashless. In some situations, it could be problematic to use Bitcoin. If you don't have a computer or cell phone with internet access your money is just a number of symbols that couldn't be used to pay for something. However this problem is now almost solved in two different ways:
1. Bitcoin ATMs can provide an automated 2-way exchange for bitcoins and cash and quick convert between currencies. Furthermore, using these ATMs you can also send money to any Bitcoin address you want without necessity of having Internet accessing device.[6
2. Printed QR code. Bitcoin address simply could be printed as QR code and scanned by smartphone in any modern store to pay for goods.
Thirdly, high volatility level. Today, Bitcoin exchanging rate depends on such factors as:
• Mainstream media attention;
• Widespread acceptance;
• Government acknowledgement;
• Understanding of e-money;
• Commercial interest;
• Bitcoin exchange speculations;
• Economic problems in real world that affect savings.
First four factors affect Bitcoin only because it is a startup currency. It makes sense that a startup currency would be highly volatile because people are still experimenting with the currency to figure out how useful it is. But over time, as we learn more about the Bitcoin platform's potential, the uncertainty will diminish and as a result volatility will decline. Still, Bitcoin's will have higher volatility than conventional currencies for the foreseeable future. That's clearly a disadvantage. The question, then, is not whether people would want to use a volatile currency for everything. Rather, it's whether there are situations when people would consider the volatility to be a reasonable cost to pay in exchange for Bitcoin's unique benefits.
Fourthly, no valuation guarantee. Since there is no central authority governing Bitcoins, no one can guarantee its minimum valuation. Bitcoin valuation is guaranteed by its users by it is that case when everyone means no one.
6Genesis Coin Inc. //URL: bitcoinatm.com/ (дата обращения:06.04.2014)
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Finally, Bitcoin is still not widely accepted in «offline» world. Nowadays Bitcoin is accepted almost only in online stores. Of course, some offline stores start accepting Bitcoin, but these are small shops, which nine times out of ten want rather to be promoted than to transfer all their business to Bitcoin basis.
Considering Bitcoins pros and cons reveals that Bitcoin could really become first really global currency. In our opinion, all its risks could be overcome by time with benefits making it look very attractive for personal and commercial use.
In conclusion, we would like to say that after considering all advantages and disadvantages we can state that Bitcoin within a decade could possibly become global internet currency and start being accepted offline in most countries all over the world. Furthermore, Bitcoin is the first digital currency that is becoming widespread. On one hand, it is step in future, micro-revolution in global financial system. But on the other, some of its benefits, e.g. untraceability and no-third party control, make it very suitable for criminal purposes such as money laundering and tax evasion. However, Bitcoin is only an "instrument" and it depends on us how we will use it.
To sum up, in our view, Bitcoin is the greatest breakthrough in global financial system since credit card invention. Most of Bitcoin risks are linked with its startup nature so that its popularity will increase over time. We believe that in future perspective, Bitcoin could solve one of the biggest problems of anyone who have some savings - money safety.
Список литературы:
1. Genesis Coin Inc. [Электронный ресурс]. - Режим доступа: http:// bitcoinatm.com/, свободный (17.05.2014).
