Bitcoin as an Ethical Dilemma closing case (Question below article) Bitcoin is an open-source, peer-to-peer digital currency introduced to the world on January 3, 2009, by developer Satoshi Nakamoto. The cryptocurrency is based on a protocol and software that allows instant peer-to-peer transactions and worldwide payments with minimal costs. In its few years of existence, bitcoin has seen unprecedented media coverage, a rollercoaster ride of epic spikes and epic plunges, and adopters from major retailers to lemon stands (e.g., Amazon, Target, Victoria\'s Secret, and Whole Foods). Bitcoin has also been covered by numerous major news organizations (e.g., ABC, CNBC, Forbes, Fox News, Reuters) as the most popular form of virtual currency. At the same time, ethical concerns exist with this new digital currency. The coupling of no regulations, virtually free movement of value, and a Ponzi scheme–like system have led renowned economist Paul Krugman to suggest that “bitcoin is evil.” At the basic level, Krugman says that “to be successful, money must be both a medium of exchange and a reasonably stable store of value.” He continues to say that “it remains completely unclear why bitcoin should be a stable store of value.” Joining in the discussion, Charlie Stross, the British writer of science fiction, says that “bitcoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states\' ability to collect tax and monitor their citizens\' financial transactions.” What is the difference between bitcoin and normal currency, such as the U.S. dollar? Bitcoin is an unregulated peer-to-peer digital currency that is not backed by any other commodity such as gold or silver. Bitcoins exist almost entirely in the digital, online world, although some bitcoins have actually been privately minted. The U.S. dollar, like many other stable currencies, are paper or coin currency issued by a national reserve–type bank (in the United States, it is the Federal Reserve Bank). This means that dollars are really Federal Reserve Notes that are printed or minted at the U.S. Bureau of Engraving and Printing. The dollar is so-called fiat money, which means that dollars derive their value from the U.S. government regulation or law. Interestingly, the United States decided in 2014 that bitcoins will be taxed as property, not currency, for International Revenue Services (IRS) purposes. The IRS defined bitcoin as a “convertible currency that can be used as a medium of exchange, a unit of account, and/or a store of value.” Technically, Bitcoin with a capitalized “B” refers to the technology and network associated with the currency, while bitcoin with a lower case “b” refers to the actual currency. The philosophy underlying the bitcoin is complete mistrust in authority or control—basically a perfectly stateless, market-based approach, with no country or region-level bank intervention. It is .

1. Bitcoin as an Ethical Dilemma closing case (Question below article)
Bitcoin is an open-source, peer-to-peer digital currency introduced to the world on January 3,
2009, by developer Satoshi Nakamoto. The cryptocurrency is based on a protocol and software
that allows instant peer-to-peer transactions and worldwide payments with minimal costs. In its
few years of existence, bitcoin has seen unprecedented media coverage, a rollercoaster ride of
epic spikes and epic plunges, and adopters from major retailers to lemon stands (e.g., Amazon,
Target, Victoria's Secret, and Whole Foods). Bitcoin has also been covered by numerous major
news organizations (e.g., ABC, CNBC, Forbes, Fox News, Reuters) as the most popular form of
virtual currency.
At the same time, ethical concerns exist with this new digital currency. The coupling of no
regulations, virtually free movement of value, and a Ponzi scheme–like system have led
renowned economist Paul Krugman to suggest that “bitcoin is evil.” At the basic level, Krugman
says that “to be successful, money must be both a medium of exchange and a reasonably stable
store of value.” He continues to say that “it remains completely unclear why bitcoin should be a
stable store of value.” Joining in the discussion, Charlie Stross, the British writer of science
fiction, says that “bitcoin looks like it was designed as a weapon intended to damage central
banking and money issuing banks, with a Libertarian political agenda in mind—to damage
states' ability to collect tax and monitor their citizens' financial transactions.”
What is the difference between bitcoin and normal currency, such as the U.S. dollar? Bitcoin is
an unregulated peer-to-peer digital currency that is not backed by any other commodity such as
gold or silver. Bitcoins exist almost entirely in the digital, online world, although some bitcoins
have actually been privately minted. The U.S. dollar, like many other stable currencies, are paper
or coin currency issued by a national reserve–type bank (in the United States, it is the Federal
Reserve Bank). This means that dollars are really Federal Reserve Notes that are printed or
minted at the U.S. Bureau of Engraving and Printing. The dollar is so-called fiat money, which
means that dollars derive their value from the U.S. government regulation or law. Interestingly,
the United States decided in 2014 that bitcoins will be taxed as property, not currency, for
International Revenue Services (IRS) purposes. The IRS defined bitcoin as a “convertible
currency that can be used as a medium of exchange, a unit of account, and/or a store of value.”
Technically, Bitcoin with a capitalized “B” refers to the technology and network associated with
the currency, while bitcoin with a lower case “b” refers to the actual currency. The philosophy
underlying the bitcoin is complete mistrust in authority or control—basically a perfectly
stateless, market-based approach, with no country or region-level bank intervention. It is also
very technical. Bitcoins are generated through a process called “mining.” The mining process
involves adding transaction records to bitcoin's public ledger of past transactions, which is

2. called the block chain (i.e., a chain of blocks). Bitcoin nodes use the block chain to identify
legitimate bitcoin transactions. Even in today's high-tech world, the mining process is
intentionally designed to be resource-intensive and difficult. This means that the number of
blocks found daily by miners remains relatively steady. So, basically, in order to “mine” a
bitcoin, a person has to solve a complex mathematical problem using substantial computational
power. There's a twofold reason for this: It controls the supply of bitcoins and incentivizes
people to maintain the underlying infrastructure that keeps bitcoins in place.
A unique feature of the bitcoin is that the number of new bitcoins that are created is intentionally
halved every four years until the year 2140, when it will wind down to zero. So, starting in 2140,
no more bitcoins will be added into virtual circulation and they will have reached their maximum
of 21 million. Perhaps most people will not worry about the year 2140 just yet, but it does mean
that there is, technically, a finite supply of bitcoins. Such a finite number has the potential to
adversely affect the value of bitcoins. Economist John Quiggin argues that this has resulted in
“the finest example of a pure bubble.”
Perhaps more remarkably, bitcoins do not have any real value per se (cf. gold, silver), which
means that the coin's value depends on classical demand-and-supply economics, leading many
financial experts to liken bitcoins to a Ponzi scheme, similar to Krugman's viewpoint. A Ponzi
scheme is a fraudulent investment operation that returns payment to its investors from capital
paid by new investors rather than from profit earned (Charles Ponzi was born in Italy but became
known in the early 1920s as a swindler in North America for his unusual money-making
scheme).
Bitcoins have also been the subject of scrutiny by various governments because of concerns that
they can be used for illegal activities. Some say the cryptocurrency is unethical because it is
allegedly used to buy illegal drugs and guns and to pay for other illegal activities. Additionally,
given its unique code, once stolen, bitcoins cannot be returned, and there is no central bank or
agency that can help catch thieves. But, bitcoins have also attacked the cost of moving money
around and have successfully created a simple measure of value that can be very efficiently
moved around at virtually no cost.
Case Discussion Question (Answer must be no less than 300 words)
4. Do you think that bitcoins were created as a weapon intended to damage central banking and
money-issuing banks?
Solution
Bitcoin is a cryptographic currency that is a form of digital peer to peer money which is basically
designed to pass from hands to hands, just like cash. It requires no central banks to monitor its

3. movements, and is limited inherently because of computationally-intensive way it is "mined."
It is also damaging to civil society. Do you think that our wonderful investment bankers aren't
paying their share of taxes? Bitcoin is designed for tax evasion. Moreover, The Gini coefficient
of the Bitcoin economy is getting worse, to an extent that makes a sub-Saharan African
kleptocracy look like a socialist utopia, and the "if this goes on" linear extrapolations imply that
Bit coin will badly damage the stable government and not to mention redistributive taxation
systems and social security like pension nets if its value continues to soar (as it seems designed
to do due to its deflationary properties).
To briefly editorialize ,BitCoin looks like that it was designed as a weapon that is intended to
damage central banking systme and money issuing banks, with a Libertarian political agenda in
mind—to damage states ability to collect tax and monitor their citizens financial transactions.
Which is fine if you're a Libertarian, but It tend to take the stance that Libertarianism is like
Leninism: a fascinating, internally consistent political theory with some good underlying points
that, regrettably, makes prescriptions about how to run human society that can only work if we
replace real messy human beings with frictionless spherical humanoids of uniform density
(because it relies on simplifying assumptions about human behaviour which are unfortunately
wrong).