Bitcoins : A dangerous one-of-a-kind system? What is Bitcoin? Bitcoin is digital money that enables transfers, transactions and purchases from peer-to-peer throughout international online trading websites such as Bitstamp and ICBIT. The Bitcoin system operates independently of a central bank. They are distinguished from other currencies due to the fact that they are not printed like dollars and are produced around the world using computer software by miners.    Bitcoin market        The Bitcoins were established in 2009 and the exchange rate was 0.001USD/ 1 Bitcoin. The current price is approximately 350 USD. The Bitcoin market is extremely volatile, in the past year the price ranged from $100 to $1,240 USD. The unpredictability of the stock price is due to many factors such as large holders of the currency, security breaches, bad press, and inflation and tax rates. The Bitcoin exchange website, ICBIT, has a futures market which makes trading more interesting for investors.  

     

Miners : Contributors who run the network by executing the transactions. ICBIT : Oldest online Bitcoin market. Bitstamp : Based in United Kingdom, it is the second largest Bitcoin exchange company.  

Futures        The chart on the right indicates Bitcoin futures price. It demonstrates a futures contango curve; meaning investors are expecting the futures price to increase in the next few months.    Benefits   There are many advantages when using Bitcoins. First of all, consumers are protected against identity theft and can make anonymous payments and trades. This means that the users personal information cannot be tracked. In addition, the transaction fees for sending and receiving payments are very low. The consumer has the right to determine the amount of the fee, however, a higher fee will result in a faster transaction. Furthermore, Bitcoins are efficient in everyday life. Large amounts are easy to carry around on a phone or memory stick, which is not recommended with paper bills. Also, there is no bank interruption delay, which means your money is accessible at any time.    Risks   As mentioned above, the volatility of the Bitcoin market results in high risk trades. The Bitcoin system is still too new to the financial world and is not yet stable. Regarding untraceable transactions, crimes are most likely to occur because the government has no control over Bitcoin exchanges. These crimes include buying and selling drugs and other illegal substances. Additionally, Bitcoin agreements are irreversible meaning once the transaction is complete; there is no going back. Also, no transaction is guaranteed. Consumers need to be cautious when dealing with unknown parties. There is a fluctuation price risk for small investors concerning the decisions made by large holders.   Bitcoin’s destiny      Bitcoin  has  made  a  lot  of  progress  since  their  establishment  in  2009.  Recently,  there  has  been  an  increase  of  companies  accepting  Bitcoin  as  a  payment  method  and  

most  of  them  are  online  e-­‐commerce  websites.  There  are  an  increasing  number  of  consumers  who  are  interested  in  the  Bitcoin  network  seeing  as  it  opens  doors  to  many  possibilities.  However,  the  system  has  a  reputation  of  not  being  trustworthy  when  it  comes  to  technical  flaws,  exchanges  and  security.  Their  lifetime  is  unclear  as  it  is  still  an  experimental  concept.  Either  way,  Bitcoin  will  never  replace  cold  hard  cash.          

References    http://finance.yahoo.com/news/bitcoin-­‐pros-­‐cons-­‐consumers-­‐merchants-­‐140041526.html  

https://bitcoin.org/en/getting-­‐started    https://orderbook.net/trade    

http://www.coindesk.com/price/      

Club  des  Marchants  Bleu  et  Or  Équipe  Bitcoin    

 Renée  d’Entremont,  Étudiante  B.A.A  concentration  Finance    

 Gabrielle  Surette,  Étudiante  B.A.A.  concentration  Finance