Bitcoin : A Virtual Currency And A Payment System Essay

761 Words Aug 8th, 2015 4 Pages
Bitcoin is a private initiative that has created a virtual currency and a payment system that accelerates the use of a virtual currency based on cryptography and decentralized management, it was launched in 2009 by the mysterious Satoshi Nakamoto. Bitcoin is considered not only an interesting, but also a disruptive technical innovation by many people. A number of regulatory and supervisory bodies propose that Bitcoin’s design presents distinctive risks that differ from other payment methods and stores of value. It can be regarded as speculative assets. In this essay, I will focus on its transaction risk and the characteristic of bitcoin against monetary policy.
Bitcoin is an irreversibility payment which highly creates transaction risk. If payment is sent due to error or fraud, the Bitcoin system could not fix the error unless buyer and seller agree to correct error voluntarily. That led to consumers may use other payment system which allows reversal of unwanted or mistaken charges. Transaction risk also caused when receiving payments, because bitcoin transactions do not clear until they have been added to the authoritative block chain. “It caused a persistent risk that what was once viewed as the authoritative block chain will later be cast aside, canceling any transactions recorded in that version of the block chain”[1]. Another transaction risk is from proposals to blacklist tainted Bitcoins; specifically those obtained through improper way. “Some set of arbiters would…

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