Bitcoins and other cryptocurrencies represent as digital money

Cryptoknowmics  |  Jun 6, 2020

Bitcoin trading is a limited process (the limit of extractable bitcoins is 21 million) and decentralized, therefore removed from the control of a central authority. In fact, if in 2009 a normal home PC was sufficient, now it takes much more than a single computer to be able to obtain bitcoins through this operation, given the greater computing power, and therefore electricity, needed to solve these algorithms.

Due to this greater difficulty, nowadays the mining done by single home computers is practically in disuse and is becoming the prerogative of companies since these are the only ones that can afford machines with the necessary computing power.

Juridical, mining represents an absolute novelty, because it is a totally automated process in which the only thing that matters is the computing power of the machine, in which every attempt of "fraud" is made extremely difficult by the proof system ( proof of work) automated. Mining is losing importance because in Bitcoin the number of "pieces" given as a prize is destined to decrease from time to time.

For the other cryptocurrencies it is playing an increasingly limited role, thanks to the greater convenience of the ICOs compared to this.

This operating system for the most part unpublished has led the doctrine and jurisprudence to divide on the question of whether bitcoins and other cryptocurrencies represent (or can represent) a real currency or a financial instrument.

Bitcoins as currency

In recent years, thanks to the evolution of information technology, there has been a huge evolution in the concept of money which has gone from physical form (banknotes and coins) to different forms. This is the cd. "Electronic money" which profoundly innovates the circulation of legal tender money. Start trading today by filling form in the login page which is easy to understand.

In the document "Virtual Currency Schemes - a further analysis" of February 2015, the ECB denies that bitcoin can function as a currency due to the low acceptance that it has with the public and its volatility.

In order for a cryptocurrency to play the role of money with legal value, it must fulfill the three functions of money identified by economists and jurists:

  • Medium of exchange;
  • Unit of account;
  • Reserve of Value
  • Medium of exchange
  •  

    As for the possibility of identifying bitcoin as a medium of exchange, one cannot help but underline the technical characteristics such as anonymity, decentralization, and the presence of a maximum ceiling on the number of bitcoins that can enter circulation. As a medium of exchange, cryptocurrencies are extremely advantaged, given the totally decentralized structure, which reduces the costs and times of operations. To counteract these undoubted merits there are the anonymity and the difficult traceability caused by the "double-key" cryptographic system, a feature that has led bitcoin to be defined as money.

    In fact, one of the first times in which bitcoin was spoken to the general public was in 2014 for the operation that led to the closure of the Silk Road "drug market", where purchases were made precisely through bitcoins, taking advantage of the difficulty in trace the natural persons who made these transitions.

    To address this issue, EU Directive 2015/89 was issued, implemented in Italy with Legislative Decree 90/2017, which in turn amends Legislative Decree 231/2007, which imposes the obligation to transmit to competent authority’s information on transactions in virtual currencies> € 15,000.

    It is easy to guess from what, at the regulatory level, there is a climate of suspicion regarding bitcoin and cryptocurrencies in general, due precisely to anonymity and cryptography.

    Acceptance of cryptocurrencies as a means of payment is exclusively voluntary and therefore restricted. On the other hand, through the data it is possible to note an enlargement; these report that a volume of 170 Euro/bitcoin exchange rates has started on 20/05/2015 to reach one of 1120 on 12/07/2018.

    These data make it difficult to hypothesize a greater acceptance by the public as the subject of these findings is only transactions that took place on the internet. Another cause of difficulty for acceptance is the operating system. This, given its important news, will certainly require a long period of time before it is absorbed by the public

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