Question

I want an analysis of this case.

In recent years, a number of countries around the world have experienced banking crises, eroding trust in the system. Enter Bitcoin, a form of electronic currency that can be transferred from one person to another via peer-to-peer networks, without the need for a bank or other financial institution as intermediary. This ability to operate outside the banking system has made Bitcoin a favorite of hackers and buyers and sellers of illicit goods and services; but more recently, it has made Bitcoin a darling among many in the technological elite who believe that Bitcoin and the technology behind it could revolutionize the payments industry and challenge the future of paper currency Bitcoin has many unique attributes that differentiate it from traditional currencies. Bitcoins are not physically minted, but are generated by computer software at a predetermined rate. A finite amount of coins are "built into the software," and 16.5 million of a potential 21 million coins are cure rently in circulation. The program that is used to generate Bitcoins runs on a peer-to-peer network and requires powerful computer systems to operate. "Mining" a Bitcoin is the result of these powerful computers solving cryptographic problems in tandem with other similar computers--the computer that hits upon the solution is awarded the coin, and a record of all of the involved computers' attempts at mining the coin is logged. Bitcoins derive some of their initial value because of the time and computational effort required to mine them. There are many reasons to be skeptical of Bitcoin. Although law enforcement has improved its ability to apprehend criminals using Bitcoin, governments are justifiably concerned about the emergence of a new currency whose purpose is to avoid regulation. Bitcoin has been lauded for its democratic structure, under which anyone running the underlying software has a say in making future changes. However, that same democratic structure also leads to volatility and uncertainty. For example, in 2017, Bitcoin experienced a splitting of its currency, called a "hard fork." The split occurred because users disagreed over the best way to improve transaction processing speeds, which have slowed as Bitcoin has become more popular. Unable to compromise, Bitcoin was split into two competing variations: traditional Bitcoin, and a newer version called Bitcoin Cash, which allows for much faster transaction processing speeds. Security concerns have also ravaged some of the largest Bitcoin exchanges, including Mt. Gox and Flexcoin. Hackers stole $425 million and $600,000 in Bitcoins from the two exchanges, respectively, and many of the victims of the theft have yet to be compensated for their losses. 4.Many governments have responded to Bitcoin's increase in popularity with varying degrees of regulation or prohibition. For example, Bolivia, Ecuador, and Bangladesh have banned Bitcoin in their countries, and Russia has similar legislation in develop ment. However, China looms largest as a threat to Bitcoin's ongoing growth, as the Chinese central bank required the country's Bitcoin exchanges to halt all withdrawals and eventually cease operations by the end of October 2017. China's recent crackdown on Bitcoin is especially surprising given that China's share of Bitcoin trading worldwide has been as high as 90% of all trading. As of late 2017, that percentage cratered to a low of approximately 10% of worldwide Bitcoin trading. Despite Bitcoin's uncertainty, the currency continues to gain popularity, and more banks and regulators are recognizing that the underlying technology may be here to stay. Some traditional big banks are still skeptical: the CEO of JPMorgan, Jamie Dimon, predicted in 2017 that Bitcoin was doomed to failure. But Goldman Sachs CEO Lloyd Blankfein tweeted that the company was considering beginning to trade Bitcoin, and in 2015, Goldman invested heavily in a peer-to-peer payment platform for Bitcoin. Elsewhere around the world, lapan and South Korea have warmed to Bitcoin nicking up much of the slack from China. Major Japanese companies like telecom giant DoCoMo and the Bank of Tokyo have thrown their support behind Bitcoin, and Japanese banks have also partnered to introduce a national digital currency using similar technology called J Coin. In 2015, the IRS began taxing Bitcoin earnings, legitimizing the currency in the eyes of regulators, and governments across the world are proposing rules for the regulation and use of virtual currencies. Many startup companies have experimented with digital currency to raise venture capital. Known as an initial coin offering (ICO), a company creates a proprietary currency and exchanges that currency for Bitcoins. in return, investors gain the ability to redeem the new proprietary currency for that company's goods and services in the future. /Needless to say, governments are not thrilled with the idea of any company being able to mint its own new currency, and many governments have banned this practice. 6.Bitcoin exchanges harness the system's decentralized network of computers to enable frictionless and inexpensive movement of currencies across international borders. Bitcoins and Bitcoin transactions are all logged on a public ledger known as the blockchain, which is updated and maintained by all of the members of the network. Contrast this with a bank, which is a central hub where all currency and financial information resides. With the blockchain, there isn't a single point of failure or vulnerability the way there may be with a bank, and no single entity must update and maintain the ledger. In countries where the banking system is less developed than in the United States, such as Argentina and Kenya, Bitcoin has proven itself a more reliable option. A number of high-profile online businesses accept Bitcoin, such as Dell, Microsoft, Expedia, and Newegg, as well as reportedly over 80,000 other merchants around the world. In 2017, Bitcoin's price rose dramatically from less than $1,000 at the beginning of the year to a high of almost $20,000 per coin in mid-December, before dropping sharply to below $11,000 and then rebounding to about $14,000 by the end of the year. The number of Bitcoin users has grown rapidly, with nearly 6 million people maintaining cryptocurrency wallets in 2017, most of which are Bitcoin wallets. Although some analysts believe that Bitcoin is experiencing a bubble that will eventually burst, Bitcoin proponents believe that the world is just now catching on to the usefulness of digital currency. Other rivals to Bitcoin emerged in 2017 as well, including Litecoin, which bills itself as the equivalent of silver to Bitcoin's gold, and Ethereum, a more robust blockchain platform offering more applications than just currency. However, for Bitcoin and other cryptocurrencies to really take off, they must become more than trading commodities and prove themselves to be useful tools to actually purchase goods and services.

Answer 1

Bitcoin, a form of electronic currency that can be transferred from one person to another via peer-to-peer networks, without the need for a bank or other financial institution as intermediary. Bitcoin was invented in the aftermath of the 2008 financial crisis, and the crisis was a clear motivating factor for its creation. Bitcoin was split into two competing variations: traditional Bitcoin, and a newer version called Bitcoin Cash, which allows for much faster transaction processing speeds. The financial crisis of 2008 highlighted yet another risk of the modern banking system. When a bank goes out and spends the 90% of net deposits it holds in investments, it can often make very bad bets, and lose all that money. In the case of the 2008 crisis, banks in particular bet on high risk subprime mortgages. These were mortgages taken out by borrowers very likely to become delinquent, to purchase houses that were sharply inflated in value by the rampant ease of acquiring a mortgage. Bitcoin might be a plaything for many a fun way to experiment with digital cash or perhaps to buy things online that you’d rather people didn’t know about. But others are seriously viewing it as a haven during a financial storm. Countries that are in the midst of an economic crisis often tighten their financial thumbscrews. In 2017, Bitcoin experienced a splitting of its currency, called a "hard fork." The split occurred because users disagreed over the best way to improve transaction processing speeds, which have slowed as Bitcoin has become more popular. They impose capital controls on their populations that prevent them from doing basic things like taking cash out of the bank in times of financial turmoil. Some people are turning to bitcoin as an alternative form of currency, despite the warnings from regulatory agencies. The number of Bitcoin users has grown rapidly, with nearly 6 million people maintaining cryptocurrency wallets in 2017, most of which are Bitcoin wallets. One of the main deficiencies with bitcoin and virtual currencies is that they are not backed, regulated or guaranteed by a government or system. This means that it will be very difficult to recover funds lost in the event of theft or other losses. Bitcoin is only secured by blockchain, which records ownership and prevents tampering by individuals. bitcoin analysis could essentially help the investor or the trader determine the best and most profitable entry and exit points. When it comes to trading, timing is critical.