a.

INTRODUCTION
i. Case Study Summary:

The case is describing a special category of alternative currencies which is the

crypto-currency, which represents a digital currency being peer-to-peer, decentralized,
whose circulation is based on the principles of cryptography to validate transactions and
currency generation by one of the most recent publicized such currency, the Bitcoin.
Besides, this case study also identified the relationship between cryptocurrency and
commodities of Bitcoin. Bitcoin is the digital currency called Bitcoin falls into the pattern
of the private currency described by FA von Hayek, except the cyberspace in which it
circulates. The Bitcoin was issued at the beginning of 2009 by an anonymous entity, who
is working under the name “Satoshi Nakamoto” after the same entity in 2008 introduced
the concept in a study. In addition, Bitcoin uses a database, relying on 20,000 nodes of
a network of peer-to-peer with the purpose of the inventory of transactions. Hence, the
crypto-currency is from the term of cryptography because it is used very often and called
as crypto-currency. The goal of using cryptography is to provide the core of the security
functions – this digital currency can be spent only by the one who owns them. The
relationship between Bitcoin and a traditional currency is still not regulated because the
responsibility for the way Bitcoins are circulating on the market lies to the economic
agents who are also using Bitcoin.

ii. Problems Identification:

1. The transactions of Bitcoins are uncontrollable and overwhelming.
Since the Bitcoin transactions are made between accounts, authors remain
anonymous. There is no central authority can authorize Bitcoin transactions and keep
track of them.
2. The used of Bitcoins transaction had increased vulnerability caused by the online
platform.
In terms of security issue, the security breaches can lead to the loss of the savings in
Bitcoin. If Bitcoins are lost or stolen, it will cause an intermediary institution to
reward loss. This is a serious issue because the BIPS was stolen the digital currency
equivalent of $ 1 million.
3. The Bitcoin used in illegal activities and must hold the responsibility.
Bitcoin encourages some users to gamble, tax evasion, terrorism, facilitating
transactions with goods prohibited by law such as drugs and weapons.
Reference:
The issue of competing currencies. Case study – Bitcoin. Retrieved on 21/10/2018
from http://store.ectap.ro/articole/946.pdf