...WORLD OF BITCOINS ¬¬¬ CONTENTS Page(s) 1. Introduction 3 2. Features of Bitcoin 4-9 3. Bitcoin Mining 10-11 4. Legality of Bitcoins in different countries 12-13 5. Pros and Cons of Recent Developments of Bitcoin 14-15 6. Legal Aspects of Bitcoin in India 16-19 7. Conclusion 20 8. References 21-23 INTRODUCTION We live in a world where transactions are made by traditional methods using separate currencies. This system has been implemented since the dawn of time. But for a more modern approach, a new form of currency called as crypto currency have been introduced by various organizations around the world. The first crypto currency to be introduced is the Bitcoin. Bitcoin is the creation of a computer programmer named using the pseudonym Satoshi Nakamoto that made its debut in January 2009. This is an open source, peer- to-peer, digital currency that has no physical manifestations. Unlike earlier digital currencies that had some central controlling person or entity, the USP of Bitcoin lies in its network being completely decentralized, with all parts of transactions performed by the users of the system. This is similar to the U.S. dollar so, Bitcoin is a fiat currency in that it is not redeemable for some amount of another commodity i.e. Bitcoin in itself...
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...Bitcoin: Safe For All Users? Abstract Bitcoin is a decentralized digital currency that has been rising in popularity since 2009. It was created by a programmer with the pseudonym Satoshi Nakamoto. It is a peer-to-peer currency that allows individuals to transact without the involvement of an institution, in most cases the central bank. It uses cryptography to verify transactions and also governs the production of the currency itself. The users are kept anonymous as there is no need for personal information, only the two keys are needed (Public key and Private Key) for transactions. Transactions are kept in an online public ledger (Blockchain) which is available for everyone to see as long as they are on the Bitcoin network. The transactions...
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...BITCOINS: A VIRTUAL CURRENCY Submitted to- Professor Dilip Thosar Submitted by- Chidansh Choudhary Rashi Taneja Rashmi Khinvasara Ridhima Agarwal Sahitya Kalidindi Tejal Bhandari Date of submission: 24th December ‘13 EXECUTIVE SUMMARY: Virtual currencies are increasingly becoming a part of not only the virtual world but also in the real world. There are various problems associated with virtual currencies. Due to its similar nature to real currency, a lot of questions have risen regarding its acceptance among the people in the market, and the reliability factor. In the following paper, we have discussed the different types of virtual currencies based on their exchange factor. Bitcoins, a type 3 virtual currency is one of the most popular crypto currencies. We have discussed the characteristics and the process of transacting Bitcoins in detail, emphasizing on the pros and cons of its usage. We have also compared it with the ‘fiat’ money and mentioned its legal aspects. In the end we have mentioned a few areas for further research in relation to Bitcoins. TABLE OF CONTENTS: Sr no. | Content | Page no. | 1.2.3.4.5.6.7.8.9.10. 11. | IntroductionTypes of virtual currenciesIntroduction...
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...Since 2008, bitcoin adoption has been influenced by a diverse range of factors that have made it one of the most volatile currencies in the world. Yet, despite such volatility, more than 100,000 bitcoin transactions are taking place per day and the volume continues to grow due to the ‘permission less innovation’ provided by bitcoin’s underlying technology, the blockchain. A block chain or blockchain is a permissionless distributed database based on the bitcoin protocol that maintains a continuously growing list of transactional data records hardened against tampering and revision, even by operators of the data store's nodes. As the blockchain matures, bitcoin will increasingly resemble traditional financial services, with functions such as retail banking (circles) exchanges (coinbase) and payment processors (bitnet) are being created. But how did it all start off, and where will it go next? Here, we take a brief overview of the major milestones in the cryptocurrency’s brief history and look to where it might be headed in the future. Bitcoin was invented by Satoshi Nakamoto,]who published the invention on 31 October 2008 in a research paper called "Bitcoin: A Peer-to-Peer Electronic Cash System". It was implemented as open source code and released in January 2009. Bitcoin is often called the first cryptocurrency although prior systems existed. Bitcoin is more correctly described as the first decentralized digital currency. 2008 Three individuals, Neal Kin, Vladimir Oksman...
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...impacted global finances? Internet and World Currency – Bitcoins and Illegal purchases over the web By Harvey T. Mayorga Panther ID 2191830 FIN6644 Instructor: Dr. Krishna Dandapani ABSTRACT The subject of this project is going to be Bitcoins. I will be researching and going about how Bitcoins work, how good or bad can bitcoins be and its involvement in illegal purchases over the internet. SUMMARY Page 2 Abstract 4 What are Bitcoins? 6 Bitcoins Timeline 7 Bitcoins good or bad? 9 Who is using Bitcoins? – Bitcoins and illegal transactions 11 Silk Road and Bitcoins 13 Bitcoins and the US Economy 14 Income Statement 16 Balance Sheet 18 Cash Flow 19 Bitcoins today 21 Where to Buy Bitcoins? 22 Articles What Are Bitcoins? Bitcoin is an innovative payment network and a new kind of money. It was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Bitcoins is an online payment system introduced in 2009 as an open-source software. It is a peer to peer or P2P system where users can transact directly without needing an intermediary. Transactions are verified by network nodes and recorded in the block chain or public distributed ledger. This ledger uses its own unit of account, bitcoin. The system works without a central repository or single administrator, which has led the US Treasury to categorize it as a decentralized virtual currency. (www.wikipedia.com, 2015) Bitcoins are stored in a digital wallet. This wallet can exists in...
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...tasks in the virtual environment or simply participating for a set period of time, and users can also buy it, converting real currency into virtual, usually at a very favorable exchange rate. Virtual currencies like Bitcoin, Ripple, Litecoin and others have developed rapidly these years. Compared with traditional currency, virtual currency differs in many aspects. However, will virtual currency be able to take over traditional currency in the future? Economists have different idea on this question. The essay is presenting the arguments that virtual currency will replace traditional currency and vise-versa. One argument comes from People.cn: Some virtual currencies have become independent currencies and no longer depend on sovereign currencies. With future development, virtual currencies will replace traditional currencies. (Can Virtual Currencies Strike the Real World? 2013) In this argument, the premise is some virtual currencies have become independent currencies and no longer depend on sovereign currencies. This premise is deniable. Virtual currencies are not independent by now. They still need the support of sovereign currencies. For an example, people use the real money to buy Bitcoin and store it in a digital wallet. Or by mining, people can get Bitcoin, but the real money is still necessary to buy the equipment for mining. In this process, virtual currencies still need to depend on sovereign currencies. So this premise is not very reliable. The conclusion of it is...
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... MEMORANDOM TO: Paul Pascal, President FROM: Melanie Soto, Chief Technology Officer DATE: April 21, 2014 RE: Bitcoin Research Introduction: What is Bitcoin? First to answer that question, Bitcoin is another way the average consumer can sell and buy products. The way bitcoin is used is through any computer with Internet connection. As long as you have a computer you can purchase and sell items. A benefit that this has is that the accounts aren’t managed through third parties or banks therefore you can send and receive transactions with a click of a button. There are two ways that you can obtain bitcoins. One way is through mining. You have an electronic wallet on your desktop, laptop, iPad, etc. . This wallet keeps track of how many bitcoins you have and you can than start mining. Mining is when you allow you join a pool that links with other people who are mining to generate bitcoin money with the help of each other’s servers. The second way is to actually purchase a bitcoin. Problem: There are numerous ways that you can purchase Bitcoins but it all depends on which exchange process you use to purchase them. Overall bitcoin is very easy to maneuver but the actual value is not so stable. Since there is a certain amount of bitcoins that were made the value of the currency fluctuates. Meaning if the coins are in popular demands than they are going to be worth more because more people are trying to...
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...08/15/2014 Yilma Debele Research Paper Draft Bitcoin won’t go far In 2008 an anonymous programmer came up with the creation of a digital currency which he called bitcoin. The programmer introduced himself as Satoshi Nakamoto yet he has never came out to the public. In fact, he is not the first to try the digital currency. There were many attempts before that. For instance, digcash in 1990, E-Gold in 1996 and Beenz yet all were foundered. What made Satoshi’s bitcoin so unique is that it revolutionized the digital currency in a way none of its predecessors did. What is peculiar about digital currency is that the fact that they are decentralized. This means that they are in no control of government interference. You own your bitcoin by yourself and you make exchange with someone who uses a bitcoin like you. All online. Here is how the exchange takes place. As to the programmers each and every user has two keys one is a private key and the other one is a public key. For instance, say I have a bitcoin ledger and someone who lives in another state has his own. So if I buy something from him using bitcoin what I do is I send him a ledger containing a bitcoin. Here inevitably, a question arises. As I send it there is no question that the copy of the bitcoin I sent will remain in my file which means that I can use one bitcoin as many times as I like. This over usage needs to be prevented. That is why the programmers came up with the idea of public key and private key. The public...
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...Question 1 Answer: Money is used in final settlement of a debt and as a ready store of value. Several functions of money are associated with different empirical measures of its supply. Given that most modern economies are government regulated through set monetary policies, the supply of money is broken down into types of money based on how much of an effect monetary policy can have on each. In Australia for example the the Reserve Bank of Australia (RBA) defines the aggregate functions of money into the following categories: M1: currency bank + current deposits from the private non-bank sector; M3: M1 + all other bank deposits of the private non-bank sector; Broad Money: M3 + borrowings from the private sector by Non-Banking Financial Institutions, less the NBFI’s holdings of currency and bank deposits; Money Base: holdings of notes and coins by the private sector plus deposits of banks with the Reserve Bank of Australia (RBA) and other RBA liabilities to the private non-bank sector The different types of money found in most reserve banks are described in the table below. Type of money M0 MB M1 M2 M3 MZM Notes and coins (currency) in circulation (outside Federal Reserve Banks, and the vaults of depository institutions) V V V V V V Notes and coins (currency) in bank vaults V V Federal Reserve Bank credit (minimum reserves and excess reserves) V traveller’s checks of non-bank issuers V V V V demand deposits V V V V other checkable deposits (OCDs), which...
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...Tax Issues Relating to Bitcoins Wipula Kurudugahamada Research in Taxation Professor Richard L. Russell April 9, 2015 Tax issues relating to Bitcoins 1. Introduction What are the flat currencies? The currencies created by a government. Then there is a central regulatory agency responsible for the issue. The accepted characteristics of present day use money are included a store of value, a unit of account, and a medium of exchange. However, the supplies of currencies are governed and authorized by the central bank on behalf of the government. However, after the mortgage crisis in 2008 the money supply increased sharply therefore the confidence in the government issued currency declined among the people. At this point, the paper by Satoshi Nakamoto was published online describing the “Bitcoin” for the first time. In the opinion of Nakamoto, the major problem with conventional currency today and discussed the easiness of bitcoins.1 In a nutshell, Bitcoin is an electronic cash system started in 2009. Therefore, it is new to the market. Still most of the countries have been studying the system and how it operates. But it is not fully accepted in a lot of countries as a legal tender. There are more than hundred thousand vendors in the market today who accepts bitcoins as a currency. There are more than sixty thousand in the USA.2 However, until March, 2014 IRS notice 2014-21 came into operation; the bitcoin was treated as currency in the USA for tax purposes...
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...What is a Bitcoin Worth as a Transaction Mechanism? February 19, 2014 Eric Gravengaard & Matt Kolbe Recent op-ed and research pieces by analysts have centered on Bitcoin, not as 21st century financial asset, but as a 21st century payments and remittances mechanismi. The underlying technology behind Bitcoin is an amazing invention that makes electronic, non-reversible, financial transactions possible across the Internet. That there is no central counter-party able to freeze funds or reverse transactions is possibly one of Bitcoin's most useful features. What does the demand for transactions mean for the future of Bitcoin prices? In this note we try to value Bitcoin by comparing demand for “on-chain” transactionsii of Bitcoin to other payment mechanisms. A Comparison of Payment Systems Visa Visa is a global payments technology company that connects consumers, businesses, banks and governments in more than 200 countries and territories, enabling them to use digital currency instead of cash and checks. Source http://investor.visa.com/ Visa is the market leader in global electronic payments, transmitting almost $7 trillion in 2013. The majority of this is done by consumers and businesses spending money using credit and debit cards with the Visa logo. Visa’s revenue comes in three major categories: Service Fees, Data Processing Fees, and International Transaction Fees. The sum of those fees, less Client Incentives, is what we are referring to as Visa’s Transaction Revenue...
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...BITCOIN CASE STUDY CONTRABAND AND DRUG MONEY – NEGATIVE IMPACT UK BANKS WONT ACCEPT BITCOIN BUSINESS MODELS MORE PEOPLE ARE OPTING FOR BITCOIN POOR COUNTRIES – LARGE FX TRANSFERS CASE FACTS CHEAPER AND FASTER THAN CONVENTIONAL CURRENCY HAS RISKS AS NO SINGLE RESPONSIBLE ENTITY NO INTERNATIONAL STABILITY DIGITAL CURRENCY NEGATIVE POSITIVE Research about legislation regarding the Bitcoin and other crypto-currencies EUROPEAN COMMISION WILL CHECK BITCOIN FOR MONEY LAUNDERING AND FINANCING TERRORIST ORGANISATIONS AFTER MT GOX TRAGEDY JAPANESE GOVERNMENT WILL REGULATE BITCOIN ACTIVITY US FINCEN IS WORKING WITH IRS TO DEVELOP PROGRAMS FOR TAX EXAMINERS TAIWAN FINANCIAL SUPERVISORY COMMISSION WILL REMAIN NEUTRAL TOWARDS BITCOIN WASHINGTON STATE DEPARTMENT OF FINANCIAL REGULATIONS HAS ISSUED NEW WARNING TO POTENTIAL BUYERS OF DIGITAL CURRENCIES RUSSIA PLANS TO PENALISE THE CONVERSION OF DIGITAL CURRENCIES INTO THE ROUBLE Other new forms of virtual economy Digital currencies such as bitcoin are known as "decentralized digital currencies," meaning that there is no central point of control over the money supply. LITECOIN DARKCOIN PEERCOIN DOGECOIN PRIMECOIN The table below shows the market capitalization and price of the digital currencies NAME MARKETCAP PRICE BITCOIN $4,754,296,898 $349.81 LITECOIN $121,860,749 $3.53 DARKCOIN $20,112,825 $0.00 PEERCOIN $14,882,010 $0.68 DOGECOIN $11,066,538 $2.24 PRIMECOIN $961,543 $0.12 Would you accept to be paid in...
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...Bitcoin as an Accounting Innovation Name Institution Appendix 1: Interview Research question: Are you aware of Bitcoin as an accounting innovation? Participant’s profile: Gender: Age: Date and time collected: Date: Time: Place of interview: Comments: Issues Emerging from the interview Question | Response | Preliminary Analysis | 1. Tell me about Bitcoin? | Bitcoin is an innovative accounting product that allows users to trade with globally accepted mediums. The medium is fully independent of changes seen in the financial systems such as currency fluctuations and manipulations. | The currency is a globally accepted system and presents advantages over other currency systems. It is not subject to currency fluctuations and value manipulations. | 2. Do you consider it as necessary? | Yes. Bitcoin as an innovation does away with the traditional double-entry entry system of accounts. Instead, it uses a triplicated cryptographic digitally signed receipts as evidence that a sales contract existed. | The product is in the initial stages of development. Its adoption should be supported till it has been implemented. As the world is advancing in technology, bitcoin is bringing innovations in the accounting field. This will replace the traditional form of accounting. | 3. What problems has it addressed? | The system that have been in existence has been unreliable. The currencies used such as the dollar, euro and pound were affected by shifts in the financial influences...
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...Blockchain is a peer-to-peer public ledger maintained by a distributed network of computers that requires no central authority or third party intermediaries. It consists of three key components: a transaction, a transaction record and a system that verifies and stores the transaction. The blocks are generated through open-source software and record the information about when and in what sequence the transaction took place. This “block” chronologically stores information of all the transactions that have taken place in the chain, thus the name blockchain. In other words, blockchain is a database of immutable time-stamped information of every transaction 1 that is replicated on servers across the globe. This technology is the foundation of bitcoin, a crypto currency. In traditional transactions such as money transfers or foreign currency, there is usually an...
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...Privacy Regulation 1. Anonymous Electronic Payments According to the statistics, more than $5 trillion worth of online transactions happened in 2013. In general, there are five payment methods: credit card, debit card, direct deposit and direct debit, online payment services, and electronic bill payment services; in which credit card is the most popular one. Sensitive personal information is required to provide when using these methods, such as names, address, credit card numbers, secure code, and other account numbers. This information is accessed by sellers, credit card companies, banks and other related financial institutions, and easy to become the target of identity theft or cybercriminals. Thus, US government has regulations to protect the personal information of customers. The Fair and Accurate Credit Transaction Act (FACTA), amended in 2003, is aimed to reduce the identity theft by allowing customers to obtain free credit report every twelve months and set alert on their credit histories. However, sometimes people need anonymous online transactions, because we don’t know whether the website is trust-worthy or they will sell our personal information to third parties. There are several anonymous methods for online transactions. * Mask Me, disposable credit cards provided by an company, Abine. With this service, when credit card information is requested at checkout, you can choose “Mask My Card” and add the price to a card, and then you will get a virtual credit...
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