Case Study: Bitcoin
Q1. Summarize the Case.
Introduction
Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions can be made with no middle men or third party – meaning, no banks! There are no transaction fees and no need to give your real name. Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Mt. Gox is the largest bitcoin exchange.
How does Bitcoin work?
Unlike traditional currencies, which are issued by central banks, Bitcoin has no central monetary authority. Instead it is underpinned by a peer-to-peer computer network made up of its users’ machines. Bitcoins are mathematically generated as the computers in this network execute difficult number-crunching tasks, a procedure known as Bitcoin “mining”. The mathematics of the Bitcoin system were set up so that it becomes progressively more difficult to “mine” Bitcoins over time, and the total number that can ever be mined is limited to around 21 million. There is therefore no way for a central bank to issue a flood of new Bitcoins and devalue those already in circulation.
The entire network is used to …show more content…
In contrast, bitcoin’s value was $620.92 on the same day, and the total circulation of bitcoin was worth US$8.1 billion. On December 2, 2015, the total value of bitcoin was $5.3 billion. Litecoin offered bitcoin users an alternative cryptocurrency. The third competitor, had a currency worth $0.045 per unit and a total value of $44.7 million.46 There were others as well — Peercoin, Darkcoin and Ripple — with each alternative trying to capitalize on bitcoin’s
Introduction
Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions can be made with no middle men or third party – meaning, no banks! There are no transaction fees and no need to give your real name. Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Mt. Gox is the largest bitcoin exchange.
How does Bitcoin work?
Unlike traditional currencies, which are issued by central banks, Bitcoin has no central monetary authority. Instead it is underpinned by a peer-to-peer computer network made up of its users’ machines. Bitcoins are mathematically generated as the computers in this network execute difficult number-crunching tasks, a procedure known as Bitcoin “mining”. The mathematics of the Bitcoin system were set up so that it becomes progressively more difficult to “mine” Bitcoins over time, and the total number that can ever be mined is limited to around 21 million. There is therefore no way for a central bank to issue a flood of new Bitcoins and devalue those already in circulation.
The entire network is used to …show more content…
In contrast, bitcoin’s value was $620.92 on the same day, and the total circulation of bitcoin was worth US$8.1 billion. On December 2, 2015, the total value of bitcoin was $5.3 billion. Litecoin offered bitcoin users an alternative cryptocurrency. The third competitor, had a currency worth $0.045 per unit and a total value of $44.7 million.46 There were others as well — Peercoin, Darkcoin and Ripple — with each alternative trying to capitalize on bitcoin’s