Luis Soto

Econ 101

12/12/17

Banking on Bitcoin
I. Purpose
 Bitcoin as a cryptocurrency is gaining popularity.
 Just like international currency, Bitcoin and all other cryptocurrencies are
basically accounting systems.
 Cryptocurrencies cannot be counter fitted and remove the need of a third
party “trusted” handler
o A flaw that current banking systems have.
o Hundreds of thousands of dollars are being transacted without the
need of banks.

II. Affected Groups

 The consumers and society are greatly affected
o Society fears the dangers of Bitcoin usage for drugs on popular online
market “Silk Road”.
o Offers people the opportunity to invest into a currency that is not
regulated by governments.
 Government
o Its relevancy relates from the potential of Bitcoin to take over as a more
trusted currency than tangible currencies.
o New York put up a licensing process for companies to be legally allowed
to convert cryptocurrencies.

III. Significance
 It is a currency that cannot be duplicated due to the complexity of decrypting a
block chain.
 This makes falsifying the currency impossible and thereby making it the most
trustworthy currency.
 The supply of Bitcoin is elastic in that the higher the price is – the more is
produced.
IV. Suggested Improvements
 Because of the freedom that Bitcoin allows, there should not be any need to
“fix” Bitcoin or regulate it.
o It is inherently something intangible and was designed to not be
controlled by any third party.
 As more bit coins are produced the marginal cost of producing the next one
continually gets to be more expensive.

V. Positive Impact
 Bitcoin has the potential to replace all currencies if it is not regulated
o In general people using an international currency should not have any
restrictions as to what the y can and cannot buy
o Thereby bringing a sort of word connection across all countries
 The transfer and sending of cryptocurrencies is instant.
o A better alternative to the currency exchange fee organizations charge.

VI. Negative Impact

 The black market or websites such as the “Silk Road” may encourage deviant
behavior on the internet.
o The buying and selling of drugs.
o The offering of criminal services such as hiring hitmen.