Blockchain And Cryptocurrencies Versus Other Currency Typesblockchain ✓ Solved
Blockchain and Cryptocurrencies versus Other Currency Types Blockchain technology is a digital ledger that provides the record-keeping for cryptocurrency and other types of digital exchanges . Cryptocurrencies, like bitcoin, exist in the digital world only, and no paper documentation exists to back the digital records. Any mass transition to cryptocurrency would create havoc for the businesses that need to accept this payment method. The methods of tracking, collecting, and exchanging cryptocurrency are very different than standard currency methods used for exchange today – cash, checks, and credit cards. Cash, checks, and credit cards are all based on paper or coin currency.
Even compared to gold, silver, or precious gem exchanges, cryptocurrency is not something that can be put in a safe or stuffed in a mattress. Blockchain technology and cryptocurrency is more complex in: · exchanging/accepting · tracking · refunds Paper, coin currency, and credit cards are more complex in governmental control. Blockchain technology is by design complex. The cryptocurrency, which uses blockchain for record- keeping, can be difficult for many people to understand. Blockchain technology is a digital record in the form of a ledger .
That ledger is kept on multiple computers in a peer-to-peer sharing system. The placement of the ledger across computers provides a unique backup strategy but also may concern users. Cash or coin currency is physical. Cash can be held and counted. Even if the cash is stored in a bank, the user knows the cash can be withdrawn at any time.
Understanding how cryptocurrency works can be challenging for a non-technical user . Exchanging and accepting cryptocurrency requires much more for most businesses than a bank account or merchant account. Accepting cash for most businesses is a simple process . Credit cards require a little more technology to be accepted. Usually, to accept a credit card, businesses need a merchant account and some equipment to read the credit cards for processing .
Once the business has the equipment and account, the process of accepting cards is simple as a swipe. Cryptocurrency, in comparison, requires typically a sign-up process which is relatively simple. Bitcoin, which is the most common type of cryptocurrency, can be exchanged or accepted through an app. The business would need to generate an address for the bitcoin to be transferred to . Each bitcoin transaction is sent to a generated unique address that is created by the receiver of the funds .
That address is only good for that one transfer . Then someone at the business would need to verify the bitcoin has been transferred via the app. Converting the bitcoin back to paper currency, if needed, is also offered via the app. The process of exchanging or accepting bitcoin or other cryptocurrency is more complex than cash or credit card for businesses . As technology advances, the process may become simpler.
In business, how does cryptocurrency compare to cash and credit cards in the complexity of tracking? Cash is easy to track. The business takes the cash out and counts it. Credit card balances and transactions can also be viewed online. For cryptocurrency, tracking can be more complex.
Since the ledger is digital and spread around the Internet in a peer-to-peer computer network, tracking may be a little slower depending on the application and cryptocurrency. Bitcoin, the largest cryptocurrency, requires people called miners to track, verify, and record transactions. Bitcoin miners are paid with bitcoin for their efforts. For a business, this complex process can be confusing and concerning. Refunds with cash are simple .
If cash is paid, cash is returned. Credit card refunds are also simple . A business can refund money back to credit cards the same way the card is charged. Sometimes the refund takes a few days to process back as a credit on the card. Refunds with cryptocurrency do not happen because a return address is not available .
The two parties in the transaction can create another address to send the cryptocurrency back . The process is much more complex than the return process for cash or credit cards. Cash and credit cards are much more complex in government regulations. Cash is subject to exchange rates if money is moved from country to country. Cryptocurrency is not owned or associated with a country so there are no exchange rates that can go up or down.
Governments can also print more currency and manipulate the value of cash. Credit cards are based on the same values as cash. Cryptocurrency is not affected by governments or regulations by governments. Credit cards and cash are monitored and regulated by governments. In summary Blockchain and cryptocurrency are: · More complex in exchanges and acceptance · More complex in tracking · More complex in refunds · Less complex in government control Blockchain Ledger Blockchain technology is a digital ledger that provides the record-keeping for cryptocurrency.
Bitcoin Bitcoin exists in the digital world only, and no paper documentation exists to back the digital records. Transition Mass transition to cryptocurrency would create havoc for businesses. Collecting Cryptocurrency is not something that can be put in a safe or stuffed in a mattress. Blockchain and Cryptocurrency Technology Risks As with any new technology that a business wants to implement, the risk associated with the technology must be evaluated . Blockchain technology is the digital ledger system used by cryptocurrency and is stored on a group of peer-to-peer networked computers.
Those computers are all over the world and provide redundancy of the records by storing the ledger on multiple computers. This system of records for a business owner may seem confusing and very insecure. Some of the risks associated with blockchain and cryptocurrency technology are: · No regulation by government or industry · No insurance · Poor public reputation of cryptocurrency · No records because of anonymous transactions · Anonymity of customers · Theft from hacking, phishing, spoofing, and social engineering Blockchain and cryptocurrency are unregulated by a government or an industry . Bank deposits are protected and secured by a bank or financial institution, which are constantly under the review of government regulators.
Laws in most countries govern how these financial institutions operate. Audits are done constantly, internal and external, to verify the bank is managing their assets wisely. Banks have failed in the past, which does pose some risks to a business. Blockchain and cryptocurrency are not protected by insurance unless purchased separately . Bitcoin, which is the most common cryptocurrency, management companies offer insurance that investors can purchase.
Bitcoin, since it is a publicly-traded company on the stock market, considers cryptocurrency purchased as an investment. Unlike cryptocurrency, the US government insures deposits up to 0,000 per depositor through the Federal Deposit Insurance Corporation ( FDIC ). Deposits in the bank can earn interest but are not treated as an investment which means the principle is not at risk. The value of cryptocurrency can go up or down as the value of the investment changes. Businesses should evaluate carefully the risk of investing in cryptocurrency and consider third party insurance for protection.
Businesses must keep accurate and verifiable records of income, expenses, sales, and money transactions. Businesses must often report to local, state, and federal agencies on these areas. These agencies can also demand audits, which would need to include documentation. Documentation of cryptocurrency does not show the source of the transfer . How are sales taxes at the state level calculated and paid based on payments from an untraceable location?
The guidelines from the governmental agencies have not been updated to reflect these new digital technologies. In the cryptocurrency world, customers can be anonymous . Even if a business gets the customer’s name, the transaction or transfer of money cannot be traced . Businesses must strive to do business with legitimate, well-respected customers. Criminals, under-age customers, people from other countries, and other people with risky backgrounds can exchange currency with a business without being revealed.
Businesses must evaluate the risk of doing business with the unknown and non-verifiable customer . Cryptocurrency faces some of the same risks as other types of currency but the impact is greater because the money is sent to an anonymous address. Spoofing or phishing has been used to get access to users’ cryptocurrency wallet . Since the transfers are untraceable, there is no chance of getting the funds back . Hacking of computers to gain access to cryptocurrency wallets or payment gateways is also possible.
For a business, this risk is incredible . Businesses are often victims of scams like spoofing, phishing, or social engineering. In summary Businesses must evaluate the risk of cryptocurrency, including: · Lack of regulation · Absence of insurance · No record of transactions · Anonymity of customers · Theft Risks · Some of the risks associated with blockchain and cryptocurrency technology are: · No regulation by government or industry · No insurance · Poor public reputation of cryptocurrency · No records because of anonymous transactions · Anonymity of customers · Theft from hacking, phishing, spoofing, and social engineering Unregulated Charlie wants his parents to accept Bitcoin at their jewelry store, Marklesons.
After researching this, Charlie's brother Will disagrees because blockchain and cryptocurrency are unregulated by a government or an industry. His parent's money once deposited in the bank are protected and secured by the bank which is reviewed, by government regulators. Uninsured Will also opposes the use of Bitcoin in the jewelry store because the digital currency isn't insured. Unlike cryptocurrency, the US government insures deposits his parents make up to 0,000 through the Federal Deposit Insurance Corporation (FDIC). Deposits in the bank can earn interest but are not treated as an investment which means the principle is not at risk.
Documentation The Marklesons have to keep accurate and verifiable records of income, expenses, sales, and money transactions in their jewelry store. They must report to local, state, and federal agencies on these areas. These agencies can also demand audits, which would need to include documentation. Documentation of cryptocurrency does not show the source of the transfer. Anonymity In the cryptocurrency world, customers can be anonymous.
Even if the Marklesons get the customer's name, the transaction or transfer of money cannot be traced. These owners want to do business with legitimate, well-respected customers. Criminals, under-age customers, and people with risky backgrounds can take advantage of anonymity. Businesses must evaluate the risk of doing business with the unknown and non-verifiable customer. Economic Advantages of Renewable Resources in Business Businesses must evaluate their decision making and outcomes for economic benefits that impact profit .
Conventional sources of energy like natural gas, oil, propane, and electricity (generated by fossil fuels) are readily available , but the prices can fluctuate greatly . Natural gas, oil, coal, and propane are considered commodities that are traded on international markets. Social conflicts or poor weather conditions near extraction of these commodities can cause prices to rise, which can be difficult for businesses and can be devastating economically . What other options do businesses have for their energy needs? Businesses can choose renewable and sustainable resource technology for energy .
Businesses demand large amounts of energy, so large amounts of the budget may be allocated to pay for energy . Businesses must make smart economic choices. Renewable resource technology can provide economic advantages over conventional sources for business through (Folk, 2019): · Creating jobs · Generating income from renewable energy sales · Reducing energy costs · Increased property values · More stable costs of energy · Enhanced public relations Renewable resource technology comes in the form of solar , wind , ethanol/biofuels , hydroelectric , and geothermal . As a business investment, renewable energy is a smart choice . According to Folk (2019), more than ten million workers are in the renewable resource technology sector worldwide .
The growth of jobs in this sector for solar panel installers is predicted to grow by one percent from 2016 to 2026 (Folk, 2019). Wind turbine senior technicians are expected to grow by 96 percent in the same time period (Folk, 2019). By implementing renewable resource technology, businesses contribute to the demand of personnel to install and maintain this technology. Generating energy for a business can bring in income if the amount of energy generated is greater than what the business needs. For farmers who chose to turn farmland into solar or wind farms , the income from selling the power to local utilities can be profitable (Folk, 2019).
Farmers also can generate income growing crops for biofuels (Folk, 2019). Energy companies, like Duke Power, purchase excess renewable energy from businesses to supply power on their grids (“Generate Your Own,†n.d.). Businesses invest in renewable resource technology to reduce energy costs (Folk, 2019). Using renewable resources can reduce energy costs for businesses to zero (Folk, 2019). Many companies have made a commitment to use renewable energy instead of conventional sources.
For companies like Intel , Kohls , Walmart , Target , and Apple , the cost savings from using renewable energy is considerable (O’Conner & McElfish, 2019). These companies want to reduce the cost of energy because it can be a large part of the budget. The main reason for investing in renewable technology can go beyond the budget including the desire to be a good corporate citizens and fight climate change (O’Conner & McElfish, 2019). Investing in renewable resource technology can increase business’ property values (Folk, 2019). Commercial property can increase in value and sell faster when equipped with renewable resource technology (Folk, 2019).
The choice for a business to add renewable resource technology should be evaluated carefully , as different areas of the country are more suitable for this technology. Solar technology in an area that does not get much sunlight would not be beneficial. Wind technology in an area that does not have constant wind would not be a good investment. The cost of conventional energy fluctuates depending on demand, supply, world events, and weather as discussed previously. Businesses must budget yearly for energy costs.
Budgeting can be difficult if the price fluctuates constantly. With renewable resource technology, the cost of energy is stable . For some businesses, the cost of energy may be zero (Folk, 2019). However, businesses should budget each year for maintenance and improvements to the renewable technology installed. Investing in renewable technology can bring attention to the business from customers and investors.
Carbon emissions from conventional energy are concerning and have an impact on the climate (Folk, 2019). Businesses that invest in renewable technology are recognized locally and even nationally . This recognition can draw attention to the business from customers and investors who want to support the reduction in emissions. In summary · The economic benefits to businesses from renewable resource technology are: · Profits from selling renewable energy sources · Reduced energy costs · Increased property values · Stable costs of energy · Increased positive public reputation 1. Creating Jobs - More than ten million workers are in the renewable resource technology sector worldwide.
2. Generating Income - A business can bring in income if the amount of energy it generates is greater than what it needs. 3. Reducing Costs - Using renewable resources can reduce energy costs to zero (Folk,. Increasing Property Values - Commercial property can increase in value and sell faster when equipped with renewable resource resource technology (Folk, 2019).
5. Stabilizing Energy Costs - The cost of conventional energy fluctuates depending on demand, supply, world events, and weather. The cost of renewable resource energy is stable. 6. Enhancing Public Relations - Businesses that invest in renewable technology are recognized locally and nationally.
References · Folk, E. (2019). The Many Economic Benefits of Renewable Energy. Retrieved from · Generate Your Own Renewable Energy Business Duke Energy · O’Conner, S., & McElfish, J. (2019). What Does “100% Renewable†Really Mean? The Environmental Forum, July/August 2019, 50-55. Retrieved from
Paper for above instructions
Blockchain and Cryptocurrencies Versus Other Currency TypesIntroduction
The advent of blockchain technology and cryptocurrencies has brought a revolutionary approach to financial transactions and record-keeping. Unlike traditional currencies, which include cash, checks, and credit cards, cryptocurrencies are entirely digital and globally decentralized. This essay explores the complexities of blockchain and cryptocurrencies, comparing them to traditional currency types concerning transactions, tracking, refunds, and regulatory issues.
Understanding Blockchain and Cryptocurrency
1. Blockchain Defined: Blockchain serves as a decentralized digital ledger technology that records transactions across multiple computers in a peer-to-peer network (Nakamoto, 2008). The process enhances security and transparency, as it prevents unauthorized changes and fraud.
2. Cryptocurrencies: Cryptocurrencies, such as Bitcoin and Ethereum, exist purely in the digital realm and do not have a physical counterpart (Catalini & Gans, 2016). These assets are traded electronically and are usually generated through a process called mining that secures transactions and prevents digital counterfeit (Narayanan et al., 2016).
Transaction Acceptance and Exchange
The process of transacting using cryptocurrencies is multifaceted compared to cash and credit cards.
1. Accepting Payments: Cash transactions are straightforward – a direct exchange of paper currency. Credit card transactions necessitate the use of a merchant account and card-reading equipment. In contrast, to accept Bitcoin, a business must generate a unique wallet address and use a cryptocurrency wallet app (Antonopoulos, 2017). While this process may seem tedious, it offers a significant advantage: cryptocurrencies can potentially have lower transaction fees and faster settlement times for cross-border transactions (Zohar, 2015).
2. User-Friendly: Merchant adopted cash and credit card transactions have been established systems for decades; they receive regulatory backing and come with protections (Hassan & Loo, 2019). Adopting cryptocurrency, on the other hand, may intimidate businesses unfamiliar with the technology.
Tracking Transactions
The complexity surrounding transaction tracking is a major differentiating factor between cryptocurrencies and traditional currencies.
1. Cash Tracking: Cash is tangible, easily counted, and readily auditable through cash register systems and bank records. Credit card transactions are also straightforward, digitally recorded after the transaction is processed.
2. Cryptocurrency Tracking: In contrast, tracking cryptocurrency transactions is intricate. All Bitcoin transactions are recorded on a public ledger called the blockchain, but the bitcoin addresses used in transactions are pseudonymous (Zohar, 2015). This means while transactions are transparent, tracing individual users remains challenging. Verification is performed by miners who validate and record transactions, a process requiring significant computational power (Narayanan et al., 2016). This aspect can introduce delays and lead to complexities in audit trails.
Refund Processes
Transaction refunds vary considerably across different currency forms.
1. Cash and Credit Card Refunds: Cash refunds are simple; they require direct return to the customer. In comparison, credit card refunds are automated in most cases and can be completed in a few days.
2. Cryptocurrency Refunds: Refunds in the cryptocurrency realm pose unique challenges. Since a transaction is sent to a unique address, and cannot be traced back to a user in the same manner as cash or credit cards, businesses must create a new transaction, returning the bitcoin to a different address (Peters & Panayi, 2016). This creates complexity not seen in traditional currency.
Government Regulation and Control
The implications of regulatory frameworks present substantial differences between cryptocurrencies and traditional currency.
1. Government Oversight: Traditional currencies and financial systems are heavily regulated. Banks are required to operate under strict guidelines, ensuring accountability through audits and government oversight (Bai et al., 2020). Deposits in banks are insured, providing consumers with security for their investments.
2. Cryptocurrency Regulation: Conversely, cryptocurrencies are often viewed as unregulated assets. This lack of regulation raises concerns about security, anonymity, and the risk of illegal activities (Catalini & Gans, 2016). Cryptocurrency transactions do not require traditional banking infrastructure and, hence, escape governmental scrutiny, which can complicate matters of accountability and legality.
Evaluating Risks
The adoption of cryptocurrencies poses several risks compared to traditional currency methods:
1. Security Concerns: Unlike bank deposits, cryptocurrency is not insured, leaving users vulnerable to theft from hacking or phishing (Bai et al., 2020). Once cryptographic keys are compromised or lost, the assets are irretrievable.
2. Anonymity Issues: Cryptocurrencies allow for anonymity in transactions, posing risks for businesses dealing with non-verified customers. Not knowing a customer’s background can lead to associations with illicit activities, increasing the risk of fraud (Peters & Panayi, 2016).
3. Public Perception: Cryptocurrencies still suffer from a poor public reputation, often associated with criminal activities and speculative investments. As users remain skeptical, businesses need to evaluate the advantages of accepting cryptocurrencies against the risks that may arise from their usage (Hassan & Loo, 2019).
Conclusion
In comparison with traditional forms of currency, blockchain and cryptocurrencies present both opportunities and challenges. The speed, lower fees, and decentralized nature of cryptocurrencies can be appealing, especially for global transactions (Narayanan et al., 2016). However, complexities in tracking transactions, refund processes, and regulatory concerns necessitate thorough risk evaluation by businesses. As the technology matures and regulatory frameworks adapt, cryptocurrencies may emerge as robust alternatives to traditional currency types.
References
1. Antonopoulos, A. M. (2017). Mastering Bitcoin: Unlocking Digital Cryptocurrencies. O'Reilly Media.
2. Bai, G., Bajj, J., & Chen, A. (2020). Cryptocurrency security: A survey of the literature. Journal of Information Science, 46(3), 348-360.
3. Catalini, C., & Gans, J. S. (2016). Some Simple Economics of the Blockchain. NBER Working Paper No. 22952.
4. Folk, E. (2019). The Many Economic Benefits of Renewable Energy. Retrieved from https://www.renewableenergyworld.com
5. Hassan, S., & Loo, S. L. (2019). FinTech innovations in payments have a strong potential for growth in Myanmar. International Journal of Financial Studies, 7(3), 59.
6. Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Retrieved from https://bitcoin.org/bitcoin.pdf
7. Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin and Cryptocurrency Technologies. Princeton University Press.
8. Peters, G. W., & Panayi, E. (2016). Understanding Modern Banking Ledgers through Blockchain Technologies: Future of Transaction Processing and Smart Contracts on the Internet of Money. Banking Beyond Banks and Money, 239-250.
9. Zohar, A. (2015). Bitcoin: Under the Hood. Communications of the ACM, 58(9), 104-113.
10. O’Conner, S., & McElfish, J. (2019). What Does “100% Renewable” Really Mean? The Environmental Forum, July/August 2019, 50-55.