Current Challenges Facing

the ICT Professional: Cryptocurrency

A Briefing paper is a partial

fulfillment of a subject
Principles and Strategies in Teaching Mathematics

October 29, 2022

Written by:

Rhealyn M. Gemoto
BSED MATH 3A
INTRODUCTION
Cryptocurrency is a digital or virtual currency that uses cryptography for security that allows
an individual to perform an alternate form of payment to cash, credit cards and check
through a secure online transaction that are denominated in terms of a virtual token. A
prime example of cryptocurrency is Bitcoin that was introduced by a group under an alias
Satoshi Nakamoto in 2009 to solve the double spending problem by using a peer-to-peer cash
system electronically that can be sent or received by logging the transaction on the public
ledger which is known as block chain that keeps the transaction and balances and it is
decentralized, where no servers and central controlling authority is involved (Nakamoto,
2008).

PURPOSE:
This briefing paper is to identify and characterize cryptocurrency and how does it
work.

MAIN BODY:
Impact of cryptocurrency on government and society

Before cryptocurrency was introduced, fiat money or it is known as money, a currency

that comes in a form of physical dollars that allows people to purchase goods
and services at every store they visit. It is stated to be a legal tender that
has value governed by the supply, demand and other economic factor maintained
by the government who controls the supply, but the value can become worthless in
the occurrence of hyperinflation (Cryptocurrency Facts,2019).

Cryptocurrency was first introduced in 2009 as alternative method of payment that provides
a fast direct transfer and it is decentralized where no authority is involved
during the transactions that is being done between the two parties anonymously
with a given private key. It has given many opportunities for every individual
a new method of investment due to its borderless mean of exchange and instant
direct transfer that can be done anonymously. Not only that, it also provides a
layer of security during the transaction by logging the transaction on the
public ledger that helps to keep transaction and balances.

Due to its fast transaction and stable security, cryptocurrency have helped to solve
problems of humanity that we have on our planet and bringing good cause to save
the unfortunates from global poverty where reduction cost in transaction and
administrative helps to maximize the impact of donations and eradicate crimes
and dangers of carrying cash by utilizing the block chain technology. Venezuela
faced a horrendous currency crisis for too long due to excessive money printing
and shortages of food staple and medicine causing the Venezuelan bolivar to deplete
98% of its value making the citizen to lose their faith on the government who
runs the bank. Hence this have given the cryptocurrency a new hope to the
citizens and other countries a reliable option for a decentralized digital
currency. Other than that, the ministry of finance in Malaysia foresees crypto
currency as a potential digital asset that plays a role in both old and new
industries as an alternative method for entrepreneurs and new businesses on a
fund raising avenue (Swapity.io, 2018).

Potential Threats and Risks of Cryptocurrency

Despite the enormous potential use of decentralized virtual currency, such potential risk and
threats that may concern the government and the security authorities due to its anonymity of
cryptocurrency transaction that is untraceable which allows illegal market to perform in the
process of illegal activities such as financing criminal activities or terrorist
organization (Vejacka,2015).

Ross Ulbricht who ran an underground website called silk road, a popular drug selling site
which dealt with bitcoins have been seized with a collection of 144,000 bitcoins. Process of
transferring bitcoins between two parties too can be jeopardize where the virtual location
that is used to store bitcoins can be compromised where private keys of user can be stolen.
Other possibilities of threat to Bitcoin are the denial-of-service attack where a defected bug
called Transaction Malleability that allows a person to make some adjustment on a bitcoin’s
transaction unique ID before confirmation on bitcoin network that can be hacked through a
minor way where the hash value can be changed and tracked will then be rejected during the
transaction due to bad hash (Subramaniam and Chino, 2015).

Mt.Gox a bitcoin exchange platform based in Shibuya, Japan launched in 2010 who handles
70% of all bitcoin’s transaction worldwide. It is claimed to be the largest transaction
intermediary and world’s leading bitcoin exchange, faced a major security breach in 2014
due to faulty processes of market causing them to lose its customer’s trust in Bitcoin.
Rumors are said to be that causes the faulty processes was so called transaction malleability
where the identification of Mt.Gox could have been changes during the process. The
impostor has claimed that the payment that comes with original identification did not charge
to his wallet. The customer care in Mt.Gox have not established any payment with original
identification and sent in each amount again. This pattern could have been used on
multiple occasion that has led to multiple loss of amount in standard currencies and could
have been prevented through and early changed of procedure (Vejacka,2014).

Other potential factor that can cause the instability value of cryptocurrency which will lead a
significant risk for the investors who deals solely on bitcoin through the process of mining can
be a hectic work that requires most of the time keeping track on the price changes on the market.
Cryptocurrencies are extremely volatile, and the value may change in a minute because the
aspect that will cause the price of cryptocurrency to differ and change over time and the
difficulty of mining process will require skills to solve a complex mathematical problem in
order to validate transaction (Dubinsky,2018).

Regulation on Cryptocurrency to Eradicate Criminal

Global regulation is set to reduce the criminal usage of cryptocurrency. Due to its
decentralize nature of cryptocurrencies where no authority is involved to keep track of
transaction have brought the attention to the worldwide regulators to be more aware and set
to regulate the usage of cryptocurrencies by issuing out warnings, banning banks from
buying and selling cryptocurrencies and many more (J. Everette,2017).

New York Department of financial Services have released a draft published by Davis Polk of
a proposed “Bit License” in July 2014 to regulate the use of bitcoin exchange to offer new
applications of the block chain protocol for micro amount of payment that covers cyber
security program that is approved by the cyber security policy and program to protect the
electronic systems and sensitive data, anti-money laundering, consumer protections and
many more which then later have been finalized and issued the final Bit License framework in
2015 that brought many satisfactory with the changes that has been made in to the new
framework (Subramaniam and Chino, 2015).

Recently in early 2019, Malaysia have set a regulation on cryptocurrencies and initial coin
offering which requires authorization from the securities commission. Without SC’s
approval, punishment will be set on conviction with imprisonment not exceeding 10 years
and a fine of less than RM10 mil. This helps to build a base that will determine fit and
properness of issuers and exchange operators, disclosure standards and best practices in
prices discovery (Bitcoin News,2019).

CONCLUSION
In this briefing paper i have discussed how cryptocurrency works in technology and how
cryptocurrency have help people in the world from falling into major crisis in the world of
economy making the people to trust on investing in a decentralized digital currency. Despite
the positivity of using cryptocurrency as an alternate medium of payment, there are many
potential risk and threats that can harm an individual or providing an access for an
individual to perform such illegals activities due to its decentralized nature which brings a
major concern to the government and authorities due to anonymity. Hence the regulation is
proposed worldwide to regulate the practice of using cryptocurrency. This method
can be adapted on those who wishes to understand better on how blockchain works on
cryptocurrency but also to be mindful on the factors that may cause severe damage on the
value in the cryptocurrency market that may cause inflation. Unlike for the central banks,
they can stabilize their currency value by controlling how much currency to be
printed. Cryptocurrency can be inconsistent due to its decentralized nature were no
authority is involved or take charge to maintain the value.
REFERENCE

Bitcoin News. (2019). Malaysia Starts Regulating Cryptocurrencies Today - Bitcoin News.
Available at: https://news.bitcoin.com/malaysia-regulating-cryptocurrencies/ [Accessed 10
Apr. 2019].

Cryptocurrency Facts. (2019). The Difference Between Fiat Currency and Cryptocurrency -
Cryptocurrency Facts. [online] Available at: https://cryptocurrencyfacts.com/the-difference-
between-fiat-currency-and-cryptocurrency/ [Accessed 12 Apr. 2019].

Dubinsky, J. (2019). 8 Factors Affecting Cryptocurrency Price - Hybrid Block News. Hybrid
Block News. Available at: https://blog.hybridblock.io/8-factors-affecting-cryptocurrency-
price/ [Accessed 10 Apr. 2019].

Everette, J. (2017). Risks and Vulnerabilities of Virtual Currency Cryptocurrency as a

Payment Method. 2017 Public - Private Analytical Exchange Program.

Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash Sy Nakamoto, S. (2008).

Bitcoin: A Peer-to-Peer Electronic Cash System. Consulted, 1–9. Journal for General
Philosophy of Science, (1).

Subramaniam, R. and Chino, T. (2015). The State of Cryptocurrencies, Their Issues and
Policy Interactions. Journal of International Technology and Information Management, 24(3).

Vejačka, M. (2014). Basic Aspect of Cryptocurrencies. Journal of Economy, Business and

Financing, 2(2).