revise

Bitcoin

Name

Institution

The term Bitcoin is a contraction of the words “coin" () and "bit" (binary unit). This term refers to both a payment system through the Internet (Bitcoin) and a unit of account used by the system of payment (Bitcoin).  "Bitcoin" is a unit of virtual account stored in an electronic medium that allows a community of users to exchange them for goods and services without having to resort to the legal currency. "Bitcoin" is a payment method that escapes the decentralized control of states. It is created within an online community called miners who have installed on their computer units connected to the Internet free software. The production of new Bitcoins is done through a mathematical algorithm contained in software running on a PC that connects to a peer-to-peer network. The network then created units of accounts (Bitcoin) that are allocated to these users.  Once the Bitcoin created, the miner may sell and / or exchange on the Internet. People who are not miners can acquire Bitcoins on some internet platforms for buying and selling Bitcoins against the legal tender (Nakamoto, 2008). 

To purchase the goods or services it does not produce itself, an economic agent uses the currency that facilitates exchanges among economic agents and an element of simplification and development transactions. Money is an economic good because it has a purpose and it must be produced by a specific economic agent. Money is also an asset that allows the holder to purchase a good or service. Since Aristotle we know that money has three functions: unit of account, medium of exchange and store of value. 

Although Bitcoin is a unit of account, the Bitcoin is an instrument limited to traders mainly on the internet, who have voluntarily committed themselves to accept Bitcoin as payment for goods and services trade. The "classic" argue that Bitcoin is a currency because it is possible to refuse payment without contravening the provisions of section of the Criminal Code R.642-3 which punishes refusal to accept the tickets and coins denominated in Euros, the lawful currency in France. They add that the Bitcoin is not a payment covered by the European Directive on Payment Services (SEPA) or by the Monetary and Financial Code, particularly the definition of electronic money, as far where Bitcoin is not issued against receipt of funds. The Bitcoin does not thereby benefit from a guarantee of repayment at par in euro at any time at par value (Nakamoto, 2008). 

The Bitcoin is a monetary currency while Bitcoin is a payment system in that currency. In both respects, Bitcoin differs from existing systems since unlike other monetary currencies, Bitcoin is not the embodiment of the authority of any State, a bank or a business. The value of Bitcoin is determined entirely by how floating economic made use ​​of it and the foreign exchange market. The rules governing currency issue are therefore determined solely by computer code. Bitcoin is a payment system. Bitcoin is distinguished by the fact that its operation does not require the use of a centralized infrastructure into the accounts of amounts held to ensure transactions. The role of assurance and verification exists, but is awarded approximately every ten minutes to a computer network selected randomly. Bitcoin protocol is based on a cryptographic including, firstly, the problem said the double payment, which had hitherto prevented the emergence of such a type of currency, and, secondly, ensure the inability to falsify IDs stakeholders and the stock value of Bitcoins contained in electronic wallets.

Bitcoin and other virtual currencies are a currency whose circulation must be regulated and supervised. This is a new Canadian law that has just received royal commitment, measurement, and common in the Commonwealth countries. The new law makes virtual currencies with the rules applicable to money services businesses. It applies to all companies doing trade in Bitcoins, whether Canadian or wherever they are based abroad but working in the country. Thus Robocoin must register if it is to continue to operate its ATMs. These companies must register with Fintrac (the State Financial Supervisory Authority and the fight against clandestine financial circuits) to be able to practice in Canada. They will also engage in a silver and verification procedures AML program if in doubt about the legality of transactions can take place. They will have so many retain documents for at least five years.

The law also prohibits banks from opening accounts to organizations using bitcoins if they are not registered with Fintrac. These new rules are intended to create a traceability virtual currencies to prepare but also very definitely their taxation. At the announcement of the law as being too restrictive, some operators have decided to no longer offer the possibility to pay in bitcoins. Gambling sites like Just Dice and Dice Dog have announced that "the Paris games and virtual currency would no longer be available." Others are already complaining about the cost of implementing the new measures. Businesses for transactions Bitcoins have about six months to come into compliance. And some hope that this will clean up the ecosystem ... and protect future users.

Unlike electronic money the Bitcoin is not subject to any legal guarantee of repayment at any time at par value. This lack of protection relates to the merchant as the buyer, while noting that the Virtual currency is accepted in France by some merchants. The monetary institution denounces guarantee anonymity typical of Bitcoin transactions on the Internet that promotes the sale of goods or services illegal, circumvention of rules related to the fight against money laundering and terrorist financing.

Canada is also concerned the financial risks associated with the use of Bitcoin as an investment medium. They note the high volatility in its price, its lack of backing for a real activity and its currency status unregulated. Bitcoin holders have no recourse in case of computer hacking as noted by a number of people. Finally, it suggests some to oversee the development of virtual currency, which escapes through the issuance of any building regulation. It proposes to use through platforms Bitcoin conversion in legal tender, whose approval would involve the monitoring of these activities by the monetary authorities. The Bitcoin therefore to be considered a currency in countries like Canada would require a lot of regulation and set up of guidelines to govern its use and circulation especially in business.

References

Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. Consulted, 1(2012), 28. Retrieved from http://nakamotoinstitute.org/bitcoin.html/