Arguement and Research Essay.docx

Arguement and Research Essay.docx - Jimmy Wang Professor...

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Jimmy Wang Professor Wankier WR 1 02 December 2017 Bitcoin: How It Is Beneficial Despite Its Risks “Bitcoin is a technological tour de force.” -Bill Gates Since its inception in 2008, Bitcoin, a peer to peer virtual currency, has both grown in its use and popularity. As of today, Bitcoin has a market cap of $195.9 billion dollars making its market value greater than the GDP of Greece ($194.6 billion) but smaller than Vietnam ($202.6 billion), which would make Bitcoin the 46th largest economy in the world (Bitcoin;GDP). Despite this, people still have a deep misconception and misunderstanding about both Bitcoin’s functionality and its impact to the economy. Bitcoin is one of the greatest invention in the 21st century and it brings many upsides to modern global economy, although some people may argue that Bitcoin fuels many illegal activities, the pros of Bitcoin outweighs the cons and Bitcoin deserves to be recognized as beneficial to the economy. One of the biggest problems most fiat money faces today is counterfeiting;but with Bitcoin, this problem is non existent. To understand why Bitcoin is so secure and immune to counterfeiting, one must first dive into the technology base of Bitcoin. Bitcoin was invented in 2008 by a pseudonymous cryptographer named Satoshi Nakamoto, Satoshi’s whole idea and later creation of Bitcoin is based on the “blockchain” . Intuitively, “blockchain” can be understood as a ledger of transaction. Unlike typical fiat money, Bitcoin are recorded as transactions. For example, some user A does not simply “hold” three Bitcoins. Rather, A
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participates in a publicly verifiable transaction showing that he received three Bitcoins from B. A was able to verify that B was able to make payment because there was a prior transaction in which B received three Bitcoins from C and there was a prior transaction in which B spent these three Bitcoins. In other words, every single transaction of any Bitcoin is recorded, and this record is available to everyone with an internet connection, and all of these information is stored on the “block chain”(Rainer et al, 227). This made it virtually impossible for anyone to counterfeit Bitcoin,, because conceptually it is possible to trace every single Bitcoin back to its original creation. The second reason that Bitcoin is extremely hard to counterfeit is because of the cryptographic algorithms it uses. Bitcoin uses SHA 256 and ECDSA, both of them are well- known industry standard algorithms. With SHA256 being endorsed and used by the US government and major banks in the US (Eha,156). Just like it is very hard to counterfeit credit card transactions or any type of electronic bank transfers, the use of Bitcoin is being protected by the same technology but at the same time doesn’t get bonded by the same strict regulation assets in bank accounts or money market face.
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