Bitcoin : Anarchist money or the currency of the future?

Abstract

In January 2009 the Japanese software-designer SATOSHI NAKAMOTO invented a virtual currency named Bitcoin and released software for managing transactions in the new money.It consists solely of bits and bytes, but we cannot see it as a coin or banknote on the market.There is no cover in terms of gold or stocks, for example -in fact, nothing but the source code of the software which consists of thirty-one thousand lines of code.NAKAMOTO wanted to create a currency immune to potentially predatory bankers and politicians and so the currency and the mechanism to acquire Bitcoin were controlled entirely by software.The payment system is completely decentralised and so contains no central organisation which monitors transactions.Many people use this new currency to pay for services or products on the Internet, since it is no less safe than traditional payment systems.In this paper I will first introduce the basic parameters and functions of the alternative currency, and will deal especially with security and privacy issues relating to the virtual money.After that I will examine the value of Bitcoin on the online market, especially answering questions such as how we can acquire it.After this the legal background will be presented and suggestions made for its possible regulation, whilst its likely role in criminal behaviour is suggested.The paper was written in order to stimulate interest in this special, new currency, its working mechanisms, advantages and possible dangers, and because it represents a unique paradigm-shift, not simply in cyberspace, but in real-world payment systems also.