Bitcoin is a structure of cryptocurrency payment whereby a digital encryption is used to regulate the use and generation of the devices of currency. Bitcoin was made public in the year 2008 by a team of programmers known as “Satoshi Nakamoto”. The Bitcoin works by allowing all Bitcoin customers to share a ledger that shows all transactions. Today, Bitcoin Foundation collectively “standardize, protect, and promote” Bitcoin transaction using an open-source cryptographic protocol (Alcorn, Eagle, and Sherbondy). Current customers of the Bitcoin argue that the cryptocurrency mode of payment has advantages such as improved transaction security, transparency, and decrease transaction costs over other types of price like cash. However, Bitcoin has challenges such as lack of government regulation and consumer trust (Alcorn, Eagle, and Sherbondy).
Moreover, the fact that Bitcoin transaction works over a network computer makes it susceptible to attack by malware. The common threat to Bitcoin is ransomware. Ransomware is a kind of cyber-attack that involves hackers taking control of a computer system and blocking access to it until a ransom is paid (McGoogan, Titcomb, and Krol). The most recent ransomware that created panic worldwide was the “WannaCry” ransomware. The ransomware launched a cyber-attack and demanded that the users who were affected make payment before they could take control of their computers and access their files. The relationship between ransomware payments and Bitcoin is that such transactions occur on a computer network and the users are not allowed to overwrite it without the approval and the consent of the “creator”. Because ransomware creates a lot of distrust, it is apparent that many users would not adopt the use of Bitcoin due to the fear of cyber-attack despite its advantages such as lower transaction costs (Alcorn, Eagle, and Sherbondy).
The adoption of Bitcoin as a currency implies that this cryptocurrency should have the characteristics of money and that Bitcoin should be able to perform all the functions of money. The aspects of money are such as; money should be divisible, portable, acceptable, scarce, durable, and stable (Li, Annetta Y). Therefore, money should be able to perform three essential functions which are to serve as a medium of exchange, store of value and unit of account (Moor, Liz). Bitcoin cannot meet all the criteria of currency because of the issues that are linked with its use. Taking the example of the ransomware, Bitcoin is likely to fail due to the frequent cyber-attacks.
In conclusion, the conventional view of Bitcoin as a currency is challenged due to its inability to meet all the characteristics of money. More importantly, a currency should be universally acceptable, instill trust and guarantee authenticity (Moor, Liz). However, because there is a relationship between Bitcoin and ransomware many people have not adopted its use in the same way that many have regarded the ordinary United States currency. There is the fear that Bitcoin may expose the users to cyber-attacks making its use morally and legally challenged (Alcorn, Eagle, and Sherbondy).
Alcorn, Thomas, Adam Eagle, and Ethan Sherbondy. Legitimizing Bitcoin: Policy Recommendations. MIT 6.805/STS085/STS487: Foundations of Information Policy, 2014.
Li, Annetta Y. “Rethinking Money: A Survey On Economic Theories Of Money.” Ida.Mtholyoke.Edu, 2016, https://ida.mtholyoke.edu/xmlui/handle/10166/3753.
McGoogan, Cara, James Titcomb, and Charlotte Krol. “What Is Wannacry And How Does Ransomware Work?.” The Telegraph, 2017, http://www.telegraph.co.uk/technology/0/ransomware-does-work/.
Moor, Liz. “Money: communicative functions of payment and price.” Consumption Markets & Culture (2017): 1-8.