Question

Recently, Darren has become interested in cryptocurrency, such as Bitcoin and Ethereum. As most cryptocurrencies are subject to limited regulation, Darren believes this alternative investment is the new ‘wild west’. Before allocating wealth into cryptocurrencies, Darren asks you for a short essay to address several questions about Bitcoin.

Provide a brief introduction about how Bitcoin functions and the risks and benefits of holding and using Bitcoin. (Word limit: 500 words)

Should Bitcoin be considered as an investment or a type of money (currency)? (Word limit: 500 words)

What are governments’ attitude towards Bitcoin, such as legislation and taxation? Your dissertation should cover the considerations/perspectives of the Australian government, and at least another foreign government. (Word limit: 500 words)

Outline some of the challenges that Bitcoin has brought to financial institutions around the globe. How have financial institutions responded to this? How can the financial institutions respond to this going forward? (Word limit: 500 words)

Requirements

The marking of this section will be based on research quality and depth.

Students need to undertake comprehensive research using a number of available resources.

Each group needs to cite at least 10 scholarly references as evidence of their research. Exceeding 10 scholarly references would be more favourable. Failing to reach this minimum level will result in losing marks. Scholarly references include book chapters, articles published by mainstream media (paper press and/or their website resources), and peer- reviewed journal articles. Wikipedia or Investopedia CANNOT be used as academic reference.

Word limit: in-text citation will be counted; students can have +/- 10% leeway in the word limit of each question; failing to follow the word limit of each question will result in losing marks.

Answer 1

Introduction:

Functions of Bitcoins:

Money is supposed to serve three purposes, its functions such as a medium of exchange, a unit of account and store of valeu. bitcoin satisfies the first criterion because a growing number of merchats accepts its as payment but it performs poorly as a unit of account and store of value.

BitCoin is an Investment or Type of Money:

BitCoin is a New Currency that was created in 2009 by an unknown Person using the Alias Satoshi Nakamoto.Transactions are made with no middleman means no banks.

There are only 21 Million BitCoins and as time goes on, They become harder and harder to Mine.

there is no offical bitcoin price, bitcoin price is said by what ever people are willing to pay.

Government Regulations on BitCoin:

BitCoin is a Crypto Currency most of the people seems that one bitcoin can be worth hundreds of dollars. In Germoney will not impose tax on users for using bitcoin as a made of payment. similarly exchange flatforms that buy and sale bitcoin by their brand name will receive tax exemption.

Tax Treatment on Australian Government:

Bitcoin will be treated as many in Australia by july 1st 2017 and will be excempt from good and service tax (GST).

Bitcoin Traders and investors will not be taxed for purchasing and selling bitcoin through regulated exchanges and Trading flatforms.

Response of Australia Government:

Over The past 2years the Australian bitcoin exchange market Significantly fell behind growing markets such as south korea, Japan and Some other Countries.