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The Downside Of Bitcoins Essay

4001 words - 16 pages

Imagine a world where there are no banks or even a need for wallets. This may sound like a nice freedom at first until illegal activities sky rocket; including the drug and sex trade. The economy will crash and millions of people will be left high and dry with a worthless currency. This type of chaos will not only devastate the United States but will also be seen world wide. With the way technology has been advancing this could be a very plausible future, thanks to Bitcoins. Bitcoins are a new form of digital currency in which the consumer uses and stores all of their money on a computer. This allows for quick trade, not only within your own country but others as well (Ethley par. 2-4). Although there may seem to be great benefits that Bitcoins offer, they are actually more damaging then beneficial. Bitcoin use will have a huge negative effect on the economy, they are filled with security issues, and support criminal activity due to their anonymous nature.
Bitcoins function as a completely anonymous form of digital currency. They allow people to make peer-to-peer transactions without ever making contact with the individual or exchanging any type of personal information (Zetter par. 6). This allows for quick worldwide transactions but also allow for more criminals to access an account. Since Bitcoins are a digital currency, they are kept and traded completely online. This digital currency functions mainly on the “Deep Web”, which is a part of the internet where many hidden illegal activities take place. To access the Deep Web, all one needs is software (Grossman par. 1-5). This is the area in which Bitcoins thrive since it is hard to regulate what happens on the Deep Web.
A Bitcoin account is also very easy to make but hard to trace since no information is required to receive the currency. As stated by an article featured on Wired, all that is needed to use Bitcoins is a free software and then “[t]he currency is stored on the user’s computer in a virtual “wallet.” Users can create as many addresses or accounts that they want” (Zetter par. 7). This nature of Bitcoins adds to the negative factors that they carry. According to the Technology Review, “[m]oney is supposed to serve three purposes: it functions as a medium of exchange, a unit of account, and a store of value” (Yermack par. 2). The only purpose that Bitcoins serve is a way for people to exchange money and nothing else. With the way that Bitcoins are set up, they are destined to ruin the economy, they have poor security, and they support a criminal life style.
Bitcoins have a major negative effect on the economy. According to Newsweek Global, “[w]hile Bitcoin has some attractive features, like the possibility of anonymity and (for now) low transaction fees, it has no intrinsic value. It's still just high-tech monopoly money” (Bernasek par. 2). Many people consider it to be a fake form of currency, just like monopoly money since there is a lack of use. Accepting this form of...

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