This document discusses Bitcoin and its implications for international business. It provides background on Bitcoin, explaining that it is a cryptocurrency without central control that uses a distributed ledger and proof-of-work algorithm. It then considers whether Bitcoin qualifies as money and examines its energy usage and sustainability. The document also explores whether Bitcoin could support green energy and discusses regulatory issues like the Howey test for determining if Bitcoin is a security. It analyzes risks of using Bitcoin for criminal activities and implications for multinational corporations, including using Bitcoin in foreign exchange reserves or facilitating cross-border transfers.

1. Bitcoin in
International Business
Ilan Alon, PhD
University of Agder, Norway

2. Bitcoin
• A crypto (digital) currency
• No central control, such as a bank
• Distributed ledger
• Most secure crypto (proof of work, hashing)
• Non-sovereign “money”
• Largest share of the market
• www.coinmarketcap.com

3. Is it money?
• Storage of value
• Medium of exchange
• Unit of account
• Controlled by a central bank
• My short explanation
• https://www.youtube.com/watch?v=eCFq13JPkH4
• https://www.youtube.com/watch?v=qS0iYdmlbME&t=78s

4. Bitcoin Power Consumption, Sustainability

5. Power consumption
• Element of security (how to keep the currency secure)
• Uses a PoW algorithm based on the SHA-256 hashing function in
order to validate and confirm transactions as well as to issue new
bitcoins into circulation

6. Bitcoin Energy Consumption, Compared

7. Can Bitcoin Support Green Energy?

8. Bitcoin Energy More Efficient

9. Is Bitcoin a Security? The Howey Test
• Does it involve an investment (money or goods)?
• Is there a “common enterprise” with horizontal and vertical
commonality?
• Is there an expectation of profit?
• Does profit depend on the efforts of others?

10. Can Bitcoin be used for criminal activities?
• Hamas and Iran use Bitcoin to raise funds for illicit activities
• Cyber terrorists and extortionists use it to get paid
• Because records are immutable, addresses of Bitcoin can be traced
through time

11. MNC Implications
• Should MNC carry Bitcoin as part of the reserve currency
• Ex., Micro Strategy and Tesla
• Can cross-border transfer of monies be facilitated by the Bitcoin network?
• Costs of moving money approach 0
• Escapes regulatory oversight
• Can companies get paid in Bitcoin?
• Ex., Meme stock AMC announcement Aug 2021
• Can companies use Bitcoin to manage currency risks?
• Consider getting the money out of Turkey or Argentina during a crisis
• Smart contracts
• Supply chain management
• Oracles - feed vital information into blockchains that smart contracts may need to
execute under specific conditions

12. Vexing theory questions
• Institutions are meant to reduce risks by bolstering trust
• Bitcoin and other crypto are based on trustless transactions
• Decomposition of value-added chain
• Reason of the firm (reduce transaction costs)
• Ex. Helium, BAT

13. Transaction and translation risks
• Losing the “key”
• Bitcoin can lose value quickly (also gain)
• Volatility is still high, but expected to decrease as more participants join
• Unfavorable regulatory environment
• Bitcoin threatens institutions
• Onboarding or offboarding into the legacy financial systems
• Neither Democrats nor Republicans particularly like Bitcoin
• El Salvador, Paraguay, Panama, Brazil, Mexico expressed support as a
reserve currency
• Share dependence on the dollar
• Not endorsed by IMF or WB
• Investment banks are driving ETF and derivative products to consumers

14. Q&A