MULTINATIONAL CORP-EVOL & CUR ISSUE - Essay Example

Introduction Bitcoin is a form of crypto-currency, used in digital transactions. Bitcoin is held electronically and cannot be printed like money. This type of digital currency was established in the 2009 to enhance security and as alternative form of currency. It is managed jointly by its users as it lacks a central command and control centre. Every transaction handled is recorded, and its value is determined by buyers and sellers. The last few years have seen the growth in this payment system and its popularity around the world has greatly increased.

Bitcoin utilizes unique cryptographic technologies which is military grade making it safe and secure to use (Patron 30). It is easy to transact since the system it uses is managed by multiple users which makes it transparent. Bitcoin is unique because it is decentralized hence making it a favorable mode of transaction compared to other currencies that are centralized. The Bitcoin software was created and developed by Satoshi Nakamoto based on mathematical proof as a system of payment. The software employed is open source software; Bitcoin uses a peer to peer system that transacts between two systems (Patron 31).

The users of Bitcoin are mostly individuals that transact or transfer huge amounts of money across borders. Many countries have strict restrictions on the amount of money that anyone can transfer to avoid capital flight. For example, an investor from China may transfer millions of dollars to another country if they used a Bitcoin system compared to hard currency. There have been many individuals that have taken on the Bitcoin, some who prefer an easier secure and unique transactions system. Advantages of Bitcoin Decentralized- Bitcoin is not centrally controlled by any central institution like a central bank.

The payment system is controlled by many individuals mainly its users who form part of a network. Its value is fixed by this network and ensures its stability unlike other forms of currency. Monetary policy from central banks does not affect Bitcoin (Barty). Bitcoin is easy to set up; it takes few seconds to set up a Bitcoin address compared to other transaction payment systems. It does not require application fees or bank account details. Additionally, Bitcoin system of payment is anonymous hence it allows users to own multiple accounts that can be used for transactions.

Bitcoin is completely transparent making it safer and secure. It uses the block chain which is a system of a general ledger used to record all transactions. The transaction information is accessible to all users hence there is no lope hole to hide information about the transactions. Bitcoin system of payments is record fast as transactions can be carried out in seconds and minutes. It eliminates queues that one has to undergo in the banking hall and failure of systems. Also, Bitcoin is cheaper as no chargers are required during transactions and it has a good reputation hence the recipient of the payment will never reject the Bitcoin (Barty).

Disadvantages of Bitcoin Volatility risk- Bitcoin is volatile due to the volume of transactions that can be carried out using Bitcoin. Volatility can make this system to be unreliable as there is no central authority to control its use and value (Barty). Lack of awareness and understanding of how the Bitcoin system works is an impediment of its success. Many people have no idea of how the currency works hence they cannot transact using it (Barty). Bitcoin are not accepted by everyone as it is a new payment and transaction system.

Many institutions around the world and countries like China are reluctant of the Bitcoin payment system. In addition, Bitcoin use is still at its infancy stage hence it has many challenges as many people are still learning and becoming familiar to its uses. Bitcoin system is electronic and so the Bitcoin wallets can be lost through malfunction or virus in the system. It can be distrust as it can disrupt the system and loss of data (Barty). The Future of Bitcoin The emergence of Bitcoin as currency has revolutionized the money transfer between individuals around the world.

The value of Bitcoin is pegged on the volume of transactions and commodity prices; some analyst argued that it is so volatile hence value change many times. The lack of a central control to regulate the Bitcoin use is immensely beneficial to Bitcoin uses because it becomes cheaper and easier to use this payment system. The absence of taxes also lessens the cost considerably. Every currency is valued to a certain number of Bitcoin that can be exchanged. The value of a Bitcoin to the U.S. dollar is around $479; this is subject to the value of transactions (Patron 29).

It is a faster way to move money around compared to other payment systems. It takes days to cash a cheque in a local bank; it’s even longer to transfer funds between different countries. A trader who wants to move a larger amount of money from one country to another will be subject to dozens of laws and regulations, as individual governments control the amount, one can transfer at a time. This limits the trader hence Bitcoin offer the fastest, easiest and most convenient way to transfer money without changing value.

There is a fixed amount of Bitcoin that can ever be produced fixed at $21 million. This will greatly help stability of the value of Bitcoin. As popularity increases on the Bitcoin use, the volatility will reduce hence decreasing the inflationary pressure that is likely to occur. It will be impossible to inflate the value of the Bitcoin because it will be fixed at a certain amount. Many business people have adopted this system of payment, from the banking institution to other financial services.

This will help improve its use and increase popularity (Patron 29). Works Cited Barty Andrew. Bitcoin the currency of the future: Collection of useful information, secrets and strategies. USA: CM, 2014. Print. Patron Travis. The Bitcoin Revolution: How Digital Currency is disrupting the World Economy. Vienna: Diginomics, 2014. Print.