Question

• The Emerging Role of Bitcoin - Fact and Fiction

this is the all question 2nd one

you have to given information about bit coin introduction , key points and current issue thats it

Answer 1

BITCOIN

INTRODUCTION:

Bitcoin is digital money that is not issued or controlled by anyone. It is used to securely store and transfer any amount of value anywhere in the world. It is used to buy goods and services, store wealth, or send value to anyone without the permission of a third party. Often regarded as “Digital Gold,” bitcoin that is stored properly cannot be hacked, stolen or seized by a government. Thus giving people full proprietorship much like having a Swiss bank account in their pocket. Unlike physical gold, Bitcoin is cheaper, faster and more efficient to store or send anywhere in the world. Bitcoin is divisible to the eighth decimal place and is digital, allowing the transfer of any monetary value. Opposed to government “Fiat” currencies, which can be manipulated and devalued, there is a finite supply of 21 million bitcoins making it a scarce and valuable asset. Bitcoin is the internet of money and will do for finance what the internet did for communication.

Bitcoin started as an experiment in the depths of the global Financial Crisis of 2008 aiming to build a better financial system. Early on, cryptocurrencies developed a seedy undertone, as they were mainly associated with black market trades: drug deals, ransomware payments, money laundering and tax evasion. Cryptocurrency is described as the most disruptive technology since the internet as well as a fraud or a massive Ponzi scheme.

HOW DOES IT WORK?

The Bitcoin network is a peer-to-peer network that runs on a decentralized distributed self-clearing ledger called the block chain. Units of currency that run on the Bitcoin network are called bitcoins, which are used to store and transmit value among network participants. Unlike most currencies issued by central banks, which can be devalued and manipulated, bitcoins are issued according to a fixed set of rules to create sound money that can’t be manipulated by a central authority or malicious actor. Users can buy or sell goods and services, send money to people or organizations, or even extend credit in a fast, secure and borderless manner. The only prerequisite for access to these coins is an internet connection and a private key that forms a pair with public-facing keys to provide access to the coins stored on the Bitcoin network. Unauthorized access to someone’s private key is analogous to stealing gold from his or her vault.

KEY POINTS:

Bitcoin has several attributes that set it aside from traditional currencies as a pan-global means of exchange. Central banks or monetary authorities do not control the number of Bitcoins; it is decentralized making it global. Anyone with a computer can set up a Bitcoin address to receive or transfer Bitcoins in seconds. Bitcoin is anonymous; the cryptocurrency allows users to maintain multiple addresses and setting up an address requires no personal information. The DLT technology makes Bitcoin completely transparent; it stores complete details by an address of every transaction that ever occurs.

Transfers of Bitcoin are immediate and once made, they are final. At the same time, there are limited fees and international and domestic transfers are not subject to foreign currency exchange rates and fees for transfer. There are no borders when it comes to Bitcoin.

The price of a bitcoin can unpredictably increase or decrease over a short period due to its young economy, novel nature, and sometimes-illiquid markets. Consequently, keeping your savings with Bitcoin is not recommended at this point. Bitcoin should be seen like a high-risk asset, and you should never store money that you cannot afford to lose with Bitcoin. If you receive payments with Bitcoin, many service providers can convert them to your local currency.

A Bitcoin transaction cannot be reversed; the person receiving the funds can only refund it. This means you should take care to do business with people and organizations you know and trust, or who have an established reputation. For their part, businesses need to keep track of the payment requests they are displaying to their customers. Bitcoin can detect typos and usually will not let you send money to an invalid address by mistake, but it is best to have controls in place for additional safety and redundancy. Additional services might exist in the future to provide more choice and protection for both businesses and consumers.

CURRENT ISSUES:

1. VOLATILITY: Bitcoin has been incredibly volatile since its inception. I wrote in September that $10 worth of bitcoin in 2010 would be worth millions of dollars today. Moreover, the volatility is not slowing down -- in fact, since I wrote that article less than two months ago, the value of a bitcoin has more than doubled.

   This environment has made bitcoin extremely popular among speculators who                         buy bitcoin hoping the price will continue to rise, but it is not helping to fuel bitcoin's popularity as a currency. For example, if I plan to go on vacation in two weeks and want to set aside $1,000 in spending money, if I choose to store this money in bitcoin, its buying power could climb or fall significantly by the time I leave. Most people simply do not want to deal with that level of currency risk. Before bitcoin achieves mainstream adoption as a currency, I believe the price is going to need to become much more stable.

2. POTENTIAL FOR THEFT: Security measures exist that make bitcoin virtually impossible to steal, but taking advantage of them involves a somewhat complex knowledge of how bitcoin works and can often require significantly more effort on the part of the user. While true bitcoin enthusiasts do not mind taking extra security measures, this is an example of the ease-of-use challenge I discussed earlier. Moreover, with online bitcoin wallets, there is always some chance that the currency could be stolen. It has happened before and could certainly happen again.

3. REPUTATION OF CRIMINAL ACTIVITY: Bitcoin, especially in its early days, was well known for its use on the Dark Web, in money-laundering activities, or to purchase illegal items. In addition, it makes sense. As the only true anonymous source of payment, bitcoin became the natural choice for people who wanted to buy drugs, illegal weapons, you name it. In addition, to be fair, since it is an anonymous payment source, it will be difficult, if not impossible, to fully solve this problem. Anonymity is one of the positive aspects of bitcoin, but it does create the potential for illicit use.

4. TAX ISSUES: Under current law, the IRS considers bitcoin and other digital currencies to be "intangible property," which means they are subject to capital gains taxes. If you buy bitcoin and then sell it for more than you paid, you will need to report the difference on your taxes. Even worse, from a currency perspective, every time you use bitcoin to buy something, it is a potentially taxable event. For example, if I pay for a $5 cup of coffee with bitcoin that originally cost me $4, that dollar in profit is technically a capital gain. As you might imagine, this situation can create the need for an exhausting amount of record keeping, and bitcoin users have three choices: Keep detailed records of every bitcoin purchase and transaction, risk getting into trouble with the IRS, or do not use bitcoin at all. To be fair, gains resulting from other currencies also can result in taxable income, but this generally is not an issue on a day-to-day basis.