In general, this paper is going to consist of an explanation of Bitcoins and the Blockchain-system, followed by the results of the question if Bitcoins could impact the future of online commerce. Additionally, this paper will exhibit the risks of investing or working in this decentralized trading system.To show the procedure of purchasing Bitcoins or other cryptocurrencies, I am going to conduct a self-experiment and procure a cryptocurrency and document the process of doing so.
Cryptocurrencies have been causing major public attention for the last few years. Especially the most prominent one, Bitcoins. In between all this internet activity people seem to overlook the real meaning of Bitcoins, how they work and how they could be integrated in the economic world as it is right now. The goal of this pre-scientific paper is to explain the function of Bitcoins, reveal it ́s risks and to elucidate the possibility of Bitcoins making an impact on the future of online commerce, by detailed literature and internet research.
Table of Contents
Introduction
1. Explanation of Bitcoins
1.1. Bitcoins and their history
1.2. Blockchain system
1.3. How to buy Bitcoins
1.4. Current legal status of Bitcoins and other cryptocurrencies
1.5. Current legal state of Bitcoins in Australia, the United States of America and Europe/UK
1.5.1. Australia
1.5.2. United States of America
1.5.3. Europe and United Kingdom
2. Future of Bitcoins
2.1. Investors
3. Risks behind Bitcoins
3.1. Hackers
3.2. Unregulated system
3.3. Bitcoins and illegal transactions
Conclusion
Objectives & Research Focus
This paper aims to explain the functional mechanism of Bitcoins and the underlying blockchain technology, while critically evaluating whether cryptocurrencies can significantly impact the future of global online commerce and identifying the inherent risks associated with decentralized trading systems.
- Explanation of Bitcoin's decentralized architecture and blockchain technology.
- Analysis of the current global legal and regulatory status of cryptocurrencies.
- Documentation of a practical self-experiment in purchasing cryptocurrency.
- Evaluation of market volatility, investor behavior, and cybersecurity threats.
- Examination of the use of Bitcoin in illegal activities and money laundering.
Excerpt from the Book
1.1. Bitcoins and their history
What are Bitcoins and what makes them so extraordinary? Bitcoins are known as a decentralized virtual currency and can be used as money in the internet. The main difference between Bitcoins and traditional currencies is that there is no central issuer, such as a state or a bank, behind this system. This means that there is no authority behind the issuing of this currency but a mathematically generated system by the computers connected to the network. There is not a central computer or database, which is the reason why it is a decentralized currency.
“Bitcoin is not the only digital currency, nor the only successful one. Gamers on Second Life, a virtual world, pay with Linden Dollars; customers of Tencent, a Chinese internet giant, deal in QQ Coins; and Facebook sells “Credits”. What makes Bitcoin different is that, unlike other online (and offline) currencies, it is neither created nor administered by a single authority such as a central bank.”
The whole structure is built by an anonymous community all over the world. Every single participant is connected to the network with his personal computer and some may give their private capacity to operate various commands.
The Bitcoin and the system behind it was the first legitimate execution of Wei Dai´s initial idea from the year 1998 and was officially published in 2009 by an anonymous person, which works under the name of “Satoshi Sakamoto”.
Chapter Summaries
Introduction: Provides the historical context of trade evolution and outlines the paper's objective to examine the working process, risks, and impact of Bitcoin on commercial intercourse.
1. Explanation of Bitcoins: Details the decentralized nature of the currency, the blockchain system, a self-experiment on acquiring digital assets, and an overview of the global legal landscape.
2. Future of Bitcoins: Investigates the profile of investors in the cryptocurrency market and discusses the factors influencing future investment trends.
3. Risks behind Bitcoins: Enumerates critical vulnerabilities, including potential cyberattacks like the 51% attack, the dangers of an unregulated financial system, and the prevalence of illicit activities.
Conclusion: Summarizes the findings, concluding that while Bitcoin remains too unstable for mass adoption as legal tender, the underlying blockchain technology holds significant promise for future digital transactions.
Keywords
Bitcoin, Blockchain, Cryptocurrency, Online Commerce, Decentralized Currency, Mining, Wallet, Legal Status, Investor, 51% Attack, Unregulated System, Illegal Transactions, Dark Web, Financial Regulation, Digital Assets
Frequently Asked Questions
What is the core subject of this scientific paper?
The paper examines the functionality of Bitcoin, the risks associated with its decentralized nature, and its potential impact on the future of online commerce.
What are the central themes covered in this research?
Key themes include the blockchain technology, legal challenges globally, market risks for investors, and the association of anonymous transactions with illegal activities.
What is the primary objective of the author?
The author aims to clarify how Bitcoin operates and determine if it can realistically serve as a stable influence on global commercial transactions.
Which scientific methodology is employed?
The paper utilizes a combination of comprehensive literature review from digital sources and a practical self-experiment involving the acquisition of cryptocurrency.
What topics are addressed in the main body?
The main body explains Bitcoin history, the blockchain structure, the legal standing in regions like Australia, the US, and Europe, as well as risks involving hackers and money laundering.
Which keywords best characterize this work?
The most relevant keywords include Bitcoin, Blockchain, Decentralized Currency, Regulatory Status, and Cryptocurrency Risk.
How does the author explain the "51% attack"?
The author describes it as a scenario where a group of miners gains a majority in calculating power, potentially allowing them to modify the blockchain and alter transaction data.
What is the author's conclusion regarding Bitcoin's future?
The author concludes that Bitcoin is currently too unstable to replace traditional currency, though the underlying blockchain technology could become a fundamental tool for digital contracts and billing.
What specific wallets were mentioned in the research?
The paper references Bither, Trezor, Electrum, and discusses the use of the Exodus Wallet for the author's self-experiment.
How does the author view the "Dark Web" connection?
The author notes that due to anonymity, Bitcoin is often the preferred payment method for illegal goods on the Dark Web, which negatively impacts public and regulatory perception.
- Citar trabajo
- Christopher Schulz (Autor), 2019, Bitcoin. What is its Impact on the Future of Online Commerce?, Múnich, GRIN Verlag, https://www.grin.com/document/984207
