Bitcoin, The Future Currency In The Era Of Globalization, Essay.

Question:

Explore the literature review on Bitcoin.   
 

Introduction:

The world has globalized and so are the operations and the business carrying out in the market of this world. As suggested by TReid and Harrigan (2013), world is now a global village. The importance of economy and currency cannot be neglected. Where there raised a situation where the business is taking place without any consideration of boundaries and walls, there should be easy availability of currency as well. Several approaches have been made towards making the payment method easier and faster. The concept of e-money and e-commerce has long been used in the market (Mkiers et al. 3013). Contemporary situation has witnessed the importance of mobile wallet and transfer of money using applications in mobile phones. All these things are welcoming an approach towards a kind of money that could be used in the business. One such concept is the introduction of Bitcoin.

The literature review section is done to evaluate the concepts related to the topic of research. In order to gain a lot of information, various academic materials are consulted. The theories and models proposed by eminent scholars are taken into consideration for gaining a fruitful result. All these things are important at the time on conducting a research. Thus, in this paper a literature review will be done on the topic “Bitcoin, the future currency in the era of globalization”.

Bitcoin is a digital currency designed for the recent market scenario. The currency was created in the year 2009. The idea set out behind the creation of the coin is to use the white paper by one of the mysterious individual Satoshi Nakamoto, whose identity has not yet been recognized (Nakamloto 2013). The idea of the named of Bitcoin is that a paper is termed as bit and the currency as the coin. The concept behind the creation of Bitcoin is the easy transfer of the money without paying a large amount of transaction fees. In the view point of Ron and Shamir (2013), the traditional online payment charges some amount of transaction amount that is to be paid to the bank or other financial organization related to the transaction. As pointed out by Jarecki et al. (2016), it must be a clear concept that there is no physical evidence of the Bitcoin. It is shown only as balance in the account of the user of the Bitcoin profile. The balance is maintained keeping all the accounting in mind such as the ledger or the balance sheet. At the time of transaction, a kind of verification is done as to undertake that the transaction of the money has been done without any kind of trouble or mishandling. The coin was available in various denominations as swell such as millibitcoin and microbitcoin. There have been more that 21 millions of bitcoins issued till 2016 (McCallum 2014). 

The Bitcoin operates in the manner as the ATM that includes a string of numbers or letters attached in a particular fashion. A pin is often offered to the user of the Bitcoin account for carrying out any kind of monetary transaction with any person throughout the world (Androulaki et al. 2013). However, in the year 2014, IRS declared that all digital currencies are to be charged with certain amount of transaction charges. Any gain or loss suffered in the Bitcoin will b considered as the gain or loss of the country as a whole. Thus, the transaction is to be included in the GDP of the country. This created an alarm among the users of the digital money system. The miners were the main users of this currency. These miners thought of getting a decentralized authority of the money without any intervention of the government (barber et al. 2012). For the same reason, a new Bitcoin system has been approach. The amount was fixed to the miners but periodically it has been seen that the value of this digital money was declining day by day. There was provision of blocking the payment to the person by the means of options available in the app itself.

Benefits of Bitcoin as a Future Currency

The currency was recognised as the future currency because the transaction was very easy. One has to install an app in their smart phone and the account was automatically created following a limit steps of instructions. Thus, lending and borrowing or in fact making payment has become very easy for the users. As from the view point of Decketr and Wattenhofer (2013), this electronic transfer of money would increase the transparency of the economic condition and the transfer of money taking place. This would reduce the rate of corruption and the ill practices that became very relevant in the society. However, the same concept was not very true and in fact arguments were made by Miller et al. (2014), that the concept of Bitcoin is increasing the chances of creation of more black money in the global market. One of the main advantages that were considered that the whole transaction could be easily recognized by the means of digital transaction became one major reason to worry about the monetary balance of the GDP of the country.

The miners using the currency find it very useful because it does not require any kind of specialized form to make it a currency. This could even save energy that are required for the production of the currency used in the market in the recent scenario. The minders were using efficient processors to keep a check of the things related to the transaction of the money through bitcoin. The easy handling of money and the online transaction could be considered as the strengths of the currency (Velde 2013). However, the fear of creation of the corrupt world and the malpractices arising due to the same the major weaknesses of this new digitalized currency. Like any other money, bitcoin also shows ups and downs in its value of share. It was based on the perception of the buyers and the sellers that the rate of the currency was fixed. No centralized banks would make any approaches towards the acceptance of the money (Yermack 2013). In fact there have been situations when the rise and fall of the value of the currency has been evident. All these situations created a situation of dilemma among the users of the currency. 

There has been introduction of various kinds of money transferring apps and accounts for the sake of making the process of transaction and payment easier. The concept of paytm, paypal and many other such apps and options developed by major successful industries have been considering the introduction of the same technique as an advanced approach to fight against the corrupt practices resulting in the creation of black money that are getting deposited in major bank accounts (Kriostoufek 2013). It must be kept in mind that the concepts behind the creation of these digital account is that some amount of money is stored in the account of these application from the main bank account and the user can use the same money for the sake of purchasing or transferring the money to someone. In the era of globalization, online shopping has become an important component in the present scenario. Thus any means of making payment directly through the online applications is a more welcome feature to be concerned of (Garman et al. 2013). However, the concept of Bitcoin is something different. It requires the complete creation of a new form of money that has no physical evidence at all. All kind of transaction is carried on online and a balance sheet is maintained by the miners that in online as well.

Drawbacks of Bitcoin as a Future Currency

The usage of these apps is increasing day by day. Mostly the teenagers are the major users of these apps who do not like to visit the banks for mere transaction of money. These apps have indeed made life much easier and simpler. However, when the money is transferred from the account of the person to the so called digital bank, for a particular time being, the money remains in the account of the online app (Hirst et al. 2015). It is during this time that the major corrupt practice can take place and the company operating the online sight might fly away with all the money of the user within a blink of an eye. The consumers will even not have any kind of situation of complaining against the site because the terms and conditions are set in respect of their own benefits. These are the situations that are creating trust issues among the users as well the government and the digital form of money is not getting accepted by the people (Beck 2015).

With industrialization and post industrialization, the business and market became wider and far reaching. The advent of open economy and globalization has opened the sphere for the marketer to operate in any part of the world. The same approach has been made by many big and small companies to spread their wings not only in their domestic sphere but also internationally. The companies are taking the opportunity of the market and the population of a particular market and are expanding their business in those markets. With better strategic plan and implementation of certain promotional and advertising efforts the companies are capturing the market where they expanded and in some instances they are becoming dominant towards the other available companies in the same market. As stated by Beck (2015), that it is the companies of the developed nations who take the advantage of their power and popularity and went to the market of the developing countries. Looking at the purchasing capabilities and the market availability, the same product is marketed in the new environment and the companies are benefited. It has also been argued by Fujita and Thisse (2013), that the companies of the developing countries also take the advantage of the market of the developed nations and make approach to sell their products in their market.

Several examples can be given of such situations and companies. Companies like TESCO, McDonald, Primark and many more to name for are taking the opportunity of the market and are going global. In fact, these companies are taking the advantage of merging with the existing companies in the particular country and operate under the name of the same company as one of the sister company or subsidiaries. These scenarios are quiet common and with the passage of time, more and more companies are following the same path for their business expansion. In fact, one of the strategic plans of the companies have been to expand their business in a global sphere. Abiding by the rules and regulations of the guidelines stated by the government, the companies are making better approaches towards the globalization process. In the scenario of globalization, an easy payment method is indeed needed and all this called for the digitalization of money. In fact, the online companies like Amazon, eBay are accepting payment in the form of digital currency. It has become really efficient and easy for the consumers to make payment of what they are purchasing. Apart from purchasing things, other things such as paying the bills of electricity or mobile phones or any kind of payment can be made easily by the means of online payment. All these changing scenarios are welcoming the concept of digital money but at the same time it is creating a situation of trust issue and increasing corrupt practises in the current market scenario. 

Impact of Digital Currency on Global Economy

Conclusion:

The concept related to the topic of research has been analysed in the literature review section.  However, literature review is not a merely a reading of the various concepts put forwarded by these scholars but it is much more than it. It helps a person to critically analyze the situations and derive a better conclusion of the facts and figures. It helped to create an argumentative approach towards various theories and analysis made on the topic. The information gathered from the various secondary sources such as the books, journals and even news articles related to the topic of discussion made the concept clear.

There is no doubt that in the age of globalization and open economy there is no doubt that the world and the consumers are looking for an advanced and new kind of money or currency. Again with the advent of smart phone connecting with people has become much easier. The number of smart phone users has surpassed the expected number and the same is helping in connecting the world. Better approaches are being made towards making the globalized situation much easier. One approach has to be made towards the currency because no transaction is possible without the means of money. The world is no more dependent on the barter system but all that is required is money. However, with the digitalization of almost everything, complete digitalization of currency can be made possible in future. Thus, it can be concluded saying that the digitalization of the money is not a bad idea and in the present scenario such prospects are really welcomed. In order to create sustainability and a better future of the world and the planet, approaches must be made towards saving energy and resources that might be fulfilled if bitcoin or other such concepts are played in action. However, strict rules and regulations are to be made to make such operations and dealing more trustworthy and less harmful for the nation to be dragged into corruption or mal practices.  

Reference list:

Androulaki, E., Karame, G.O., Roeschlin, M., Scherer, T. and Capkun, S., 2013. Evaluating user privacy in bitcoin. In Financial Cryptography and Data Security (pp. 34-51). Springer Berlin Heidelberg.

Barber, S., Boyen, X., Shi, E. and Uzun, E., 2012. Bitter to better—how to make bitcoin a better currency. In Financial cryptography and data security (pp. 399-414). Springer Berlin Heidelberg.

Beck, U., 2015. What is globalization. John Wiley & Sons.

Decker, C. and Wattenhofer, R., 2013, September. Information propagation in the bitcoin network. In Peer-to-Peer Computing (P2P), 2013 IEEE Thirteenth International Conference on (pp. 1-10). IEEE.

Fujita, M. and Thisse, J.F., 2013. Economics of agglomeration: cities, industrial location, and globalization. Cambridge university press.

Garman, C., Green, M., Miers, I. and Rubin, A., 2013. Zerocoin: anonymous distributed e-Cash from Bitcoin. In IEEE Symposium on Security and Privacy (Oakland).

Grinberg, R., 2012. Bitcoin: an innovative alternative digital currency.Hastings Sci. & Tech. LJ, 4, p.159.

Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.

Jarecki, S., Kiayias, A., Krawczyk, H. and Xu, J., 2016, March. Highly-Efficient and Composable Password-Protected Secret Sharing (Or: How to Protect Your Bitcoin Wallet Online). In 2016 IEEE European Symposium on Security and Privacy (EuroS&P) (pp. 276-291). IEEE.

Kristoufek, L., 2013. BitCoin meets Google Trends and Wikipedia: Quantifying the relationship between phenomena of the Internet era.Scientific reports, 3.

McCallum, B.T., 2014. Bitcoin Issues.

Miers, I., Garman, C., Green, M. and Rubin, A.D., 2013, May. Zerocoin: Anonymous distributed e-cash from bitcoin. In Security and Privacy (SP), 2013 IEEE Symposium on (pp. 397-411). IEEE.

Miller, A., Juels, A., Shi, E., Parno, B. and Katz, J., 2014. Permacoin: Repurposing bitcoin work for data preservation,” online full version: 

Nakamoto, S., 2013. Bitcoin: A peer-to peer electronic payment system.

Reid, F. and Harrigan, M., 2013. An analysis of anonymity in the bitcoin system (pp. 197-223). Springer New York.

Ron, D. and Shamir, A., 2013. Quantitative analysis of the full bitcoin transaction graph. In Financial Cryptography and Data Security (pp. 6-24). Springer Berlin Heidelberg.

Velde, F., 2013. Bitcoin: A primer.

Yermack, D., 2013. Is Bitcoin a real currency? An economic appraisal(No. w19747). National Bureau of Economic Research.