- Internet & the Web
Let's Talk Bitcoins
Bitcoin may be described as the currency of the internet. It is a form of digital currency where encryption techniques are used for the purposes of regulating the generation of units of currency as well and to verify the transfer of funds. Created in 2009 by Satoshi Nakamoto, Bitcoins were created as reward for payment work, where users offer their computing power to verify and record payments in to the public ledger (Mining). Bitcoins may also be exchanged for other currencies, products and/or services. One of the reasons Bitcoins have become increasingly popular is because of the fact that the process allows for bitcoins to be used for purchases anonymously. Moreover, it allows for easy and cheap international payments since the Bitcoins are not tied to any country, institutions or regulations. The recent growth in popularity and acceptance of this system raised significant concerns because of the fact that no one really knows what will become of it in future.
While Bitcoin has been shown to have a number of benefits, its future remains uncertain. For good number of experts, this may very well be the future of online transactions and transactions in general. However, the fact that it is uncontrolled and has fluctuated widely since its inception has raised significant concerns. Currently, in the event that an individual sends their Bitcoins to another person, this cannot be undone unless the other person decides to reverse the transactions. This therefore means that it is almost an impossibility to trace where this currency goes due to anonymity. Given that this technology is increasingly being used, and thus becoming more and more popular, then it is very likely that both governments and financial institutions will get more involved, and find ways of regulating this technology. For a good number of users, the system is a pet project of encryptions wonks that will ultimately rival the likes of Visa.
There have been reports that transactions has been taking longer to clear, at times taking about 40 minutes to process payments. This, for those purchasing things in stores (groceries etc) may be a lot of time to wait around. These little issues will eventually draw financial institutions to get involved, and in the processes of correcting them, end up regulating the entire system. On the other hand, the reality is that there are many people who do not know about Bitcoin let alone how to use it. However, as it continues to become more popular in the public eye due to the strengths it holds (international transactions and anonymity among others) there will be a need to educate people about it in order to prevent possible financial problems for the users. This also means more involvement of financial institutions and ultimately some form of regulations.
Today more than ever, technology is rapidly advancing, with more and more people connecting on the internet through computers and smartphones. As a result, I see many more people becoming familiar with this technology, resulting in a global adoption of the technology for future local and international transactions. This will however be followed regulations and control to manage its use.
Currently, some of the strengths of this technology are also its weaknesses. For instance, one of the strengths of the technology is that it allows for individuals to carry out transactions without having to use their names. Instead of names, people use given ID numbers for identifications. While this sounds like a major strength for a majority of people, it opens a door for a number of problems. A good example is a scenario where a user takes a loan from another user with the promise to repay the Bitcoins within a given period of time. In the event that such Bitcoins are used for such activities as gambling in Casinos, and lost, the original owner may not be able to get to the person they loaned the Bitcoins to, but can trace the money to the casino. Under the Uniform Commercial Code (UCC) of the United States, the original owner is allowed to have their Bitcoins back. This therefore means that the loser is the casino, which did not do anything wrong. The system therefore has the potential to allow some users to get away with such acts, and not facing the consequences of their actions. This therefore may leave innocent businesses serving people without being paid for their services. In such situations, only businesses may suffer while those who committed the crime get away. On the other hand, the fact that the system allows for private transactions means that some people can easily engage in various illicit activities such as transactions involving illegal drugs and even weapons. The other problem with the system today is that it allows for people to continue doing transactions without having to pay taxes since there is no regulation. This proves unethical given that some people get away without paying taxes while others continue doing so. This, for many governments is one of the major issues of the technology.
One of the ways through which some of the ethical issues could be resolved involves education. The advocates of the technology need to establish a way to educate users about this virtual currency in order to avoid using it in the wrong way. It is evident that a good number of people do not fully trust or have confident on the system, which makes education necessary.
While most people would prefer not regulation at all, it is clear that the lack of regulation opens the doors to a number of unethical activities, which may among others include transactions involving sex trafficking. To create a better image, reasonable regulation that will limit abuse while encouraging use and innovation will ensure that Bitcoin becomes the best transaction platform of the future. Given that the number of users is expected to grow in coming years, it will be prove necessary to have mechanisms in place that will not only protect users, but also hold them accountable in the event of criminal activities.