Author: sarahwornow7

Cryptocurrencies, Such as Bitcoin, Do More Good Than Harm

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Definitions:

Cryptocurrencies-A digital or virtual currency that uses cryptography, or codes, for security. Bitcoin makes up approximately 85% of all cryptocurrencies spent or earned.

Weighing Mechanism:

Whichever side helps businesses or customers more.

1. Cryptocurrencies make it easier to transfer funds between two parties.
Warrant:

The transfers are facilitated through the use of private and public keys that enhance security. The processes involved in fund transfer are carried out with minimal processing fees, between 1 and 0%. As a result, users can avoid the steep fees that are charged by most financial institutions and banks for wire transfers. This makes it easier to transfer their funds between two places. They don’t have to go to a bank and wait, but do it on their own time and when they want to. It is a transaction system, a new and anonymous way to transfer money. It is a way to transfer money instantaneously and nearly free to any person in the world. Bitcoin’s technology could be used to transfer ownership both in other currencies and of any kind of financial asset. This, in turn, would allow the creation of decentralised exchanges which let asset holders trade directly.

2. Cryptocurrencies help businesses.
Impact:

In January 2013, the online retailer Overstock began accepting Bitcoins as a form of payment and brought in $130,000 in Bitcoin sales on the first day of its acceptance. Computer hardware retail giant Tigerdirect has recently followed suit, and according to an interview in the Miami Herald, Director of Corporate Marketing Steven Leeds said that “being first out the gate [to accept Bitcoins] in our particular industry will give us a competitive advantage in showing this community what we have to offer.”According to Coinmap there are currently over 3,100 physically located merchants in the world accepting Bitcoin, a sharp increase from the roughly 500 locations listed in November 2013. The most notable benefit for small businesses accepting cryptocurrency is the ease and low cost of transaction. When a business accepts credit card payments or Paypal, it has to pay a 2 to 4 percent fee for each transaction. With Bitcoin and cryptocurrency merchant services such as Coinbase or Bitpay, the average transaction fee is around 1 percent. If the business chooses to not use an intermediary service and transact directly, then there is no fee at all.  Bitcoin also allows you to reach a range of people from country to country because it is its own type of currency. It allows you to sell internationally at a lower cost, and it allows for one exchange rate all across the world.  An advantage for small business owners using bitcoin is that transactions are final unlike credit card charges, which can be disputed. Most disputed credit card charges get locked up for months, and usually the merchant ends up losing the funds. Bitcoin merchants, however, get to choose when to issue a refund. When a merchant signs up for bitcoin, that business will show up on the bitcoin sites as well as on the bitcoin virtual maps so that bitcoin users know where to find merchants that accept bitcoin. This gets your small business’s name out there basically for free. And bitcoin users have been known to be quite loyal to bitcoin merchants, such that they seek out places where this type of cryptocurrency is accepted.

Bitcoin is a peer-to-peer currency, which means that there is no legal hold or interest on the funds in bitcoin wallets.

3. All transactions are irreversible.
Warrant:

Often times people with foreign credit cards will pay for something, wait for the company to pay for the international transaction fees, and then reverse the transaction, leaving the company to pay for it. With bitcoin, all transactions are irreversible. That means that as soon as money leaves someone’s possession, they cannot get it back. These irreversible transactions insure that a bank cannot meddle with someone’s funds, or a person cannot evade paying a transaction.

4. Cryptocurrencies are impossible to counterfeit.
Warrant:

A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency is that it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.

In brief, Bitcoin allows a distributed network of user machines to create virtual “coins” (really just bits of software), with some certainty provided via both cryptography and computing power that it is impossible or at least very difficult to counterfeit them.

Impact:

The International Business Market stated that as of 2013, there have been no organizations or websites that have created fake Bitcoins or fake cryptocurrencies, because the site simply can’t be infiltrated.

That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together. What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker create counterfeit coins, fake transactions, or take anybody else's money. An attacker's capabilities are limited to taking back their own money that they very recently spent. In the history of Bitcoin, there has never been an attack on the block chain that resulted in stolen money from a confirmed output. Neither has there ever been a reported theft resulting directly from a vulnerability in the original Bitcoin client, or a vulnerability in the protocol. Bitcoin is secured by standard cryptographic functions. These functions have been peer reviewed by cryptography experts and are considered unlikely to be breakable in the foreseeable future.The federal agency charged with enforcing the nation's laws against money laundering has issued new guidelines suggesting that several parties in the Bitcoin economy qualify as Money Services Businesses under US law. Money Services Businesses (MSBs) must register with the federal government, collect information about their customers, and take steps to combat money laundering by their customers.

Also, they are safe. Bitcoin consists of a special feature known as “blockchain”, which contains the transaction history for every Bitcoin in circulation. It is kept up to date with the help of cryptography and copious computing power, provided by a global network of tens of thousands of computers. Again, openness helps the system remain secure: the blockchain is public so every participant can check whether a transfer comes from the rightful owner, but cannot be changed by the public.