Bitcoin - Banking and Technological Challenges

Abstract

Indisputable exponential growth of the Internet use in modern banking and stock exchange operations is the basic trend in the financial industry. Important aspects of the bitcoin problem include the area for its use, the factors that influence its price, and regulatory aspects in different countries. There is also a dilemma as to whether bitcoin should be considered money or goods. In technological terms, bitcoin was realized using an open source which is available to anyone and the system is not officially in anyone's possession or under anyone's control. Bitcoin uses peer-to-peer technology that works without the interference of the central bank or commercial banks. Managing transactions and broadcasting of bitcoin is performed by the network itself. The system is not based on trust of the participants, but on the distributed control system. The issue that should be particularly addressed is the security management of a virtual currency. The authors shall propose a new way of encryption which can significantly enhance both the privacy and security segment. Thus, conclusions can be drawn that the use of bitcoin poses new challenges to the banking system, and opens up many dilemmas that the authors shall attempt to process in this paper.