Digital Currency: Bitcoin an Emerging Challenge to Present Banking Systems: A Case Study

Abstract

There has been large confusion over what Bitcoin is and how it should be classified; a couple of terms used to describe Bitcoin include an online transfer, digital-currency and a virtual payment system. This paper will seek to clarify these misconceptions through an analysis, against the properties of Bitcoin.

Until recently online currencies have failed to achieve widespread adoption, Bitcoin is the most successful of its kind due to its decentralised nature. This means the network is able to remove all third parties like governments and high street banks. Such innovative technology has not been present within our current monetary system, so this has lead the research to evaluate the government as a critical part to the success or failure of Bitcoin.

There was also a curiosity to explore the risks associated with removing government intervention as the network has attracted the attention of nefarious users. Issues such as security and stolen Bitcoins (hacking) were raised as the key factors stemming from its disintermediation.