In 2009, the world was introduced to its first decentralized cryptocurrency: Bitcoin. This new idea was bold and created by an unknown source. The idea was a currency that could be traded with zero oversight and no government regulation. The new technologies such as the “blockchain” that came with it would set a precedent for other cryptocurrencies in the future (Böhome). People have made millions in actual national currencies by trading this made-up commodity. The deregulation and zero oversight ushers in a wave of crime and security issues, making Bitcoin the wild west of currency. Money invested in Bitcoin can be stolen at a moment’s notice by a hacker and there is no criminal defense for it. Bitcoin is not a currency and cannot be treated as such, it’s a high-risk investment with huge liabilities due to security problems and criminal uses. 

Bitcoin has a complex trading and user system than the regular currency, by running on this new system called a “Blockchain”. This new system is set up in a way so that there is no central authority watching over it, the users themselves are the checks and balances. The way the system works starts with the users. There are two types of users, a trader and a miner. A Bitcoin trader is someone who just buys and sells coins to make a profit. A miner is a little more complex. The term “Miner” is used for this user due to the service they provide for Bitcoin. Miners are how bitcoin sustains itself. These people work on the blockchain system that runs all transactions. A miner is someone with a high-power computer that offers it as a node for transactions (Böhome). When someone trades bitcoin with someone, instead of going through a bank, they post the transaction on a public ledger called the blockchain (Böhome). Then all the “miners” are notified of this post. The transaction is tied with a cypher equation where a computer must continue to put in random number sequences to unlock the cypher (Böhome). Once a miner finds the sequence that works they post that they have found it. Then other miners verify the post saying “yes that is correct”. This large amount of work is what Bitcoin certifies as its verification system. In Listen Money Matter’s podcast “The Newbie’s Guide to the Cryptocurrency Market”, they argue this system is much like a competition (Listen). This large amount of distributed consensus is measured in minutes, being not the fastest service (Baron). “This lag time seems inherent in decentralized systems, where many nodes must agree on a common operational state”, making it not a not completely seamless transaction (Baron). Once its approved by the other users, the Miner that found the code gets awarded a lump sum of Bitcoin and the money is traded to the intended user (Böhome). This system is how new coins are introduced into the network. All new coins minted are given to miners only. Once the trade is verified its added to the blockchain and is encoded (Böhome). A key code for that coin(s) traded on the blockchain is awarded to the receiving end of the trade. The way a person holds Bitcoin is by having a virtual “wallet” which carries keycodes to all the coins traded to said user on the blockchain (Listen). The blockchain is an encoded list of transaction after transactions all with a cypher like when it was originally posted. It is nearly impossible to change these records due to that you must decode each transaction on the chain to get to the desired transaction. And all the encoded blocks change after a new transaction is added, so you would have about only ten minutes (the chain gets updated every ten minutes) to get through the code (Böhome). This is how Bitcoin operates, with irreversible transactions behind random numbers as username; zero regulation and complete privacy.

Even though it is called a cryptocurrency, Bitcoin is equity and not cash. One of these reasons is because you must liquidate Bitcoin to a useable, nationally backed currency. The virtual currency does not meet “the economist’s standard definition of money—namely, an entity that serves as a medium of exchange, store of value, and unit of account” (McCallum). Now a currency must meet all three requirements. Bitcoin meets two of the three requirements to be a tangible currency on a financial statement. The cryptocurrency is a valid medium of exchange where people online prove by conduct of trading for goods and services it can be a medium of exchange. Now, Bitcoin also can be a unit of account, by the fact the whole system is recorded on a ledger system and has a monetary value when traded (Böhome). But, Bitcoin does not carry a store of value (Listen). Bitcoins value can fluctuate volatilely up and down in value within a week (Listen). Nationally backed currency, such as the US dollar, also go up in down due to inflation but in a measure of cents, not whole unit values, especially not multiple units (Listen). This is important for the definition of currency due to that it must be reliable in the future. An owner of cash can reasonably hold the motion that their money will hold its value over time. This makes Bitcoin almost identical to trading common stock (Listen). One argument towards how Bitcoin can fit as a currency are people who trade money across continents (Juels). These people who oppose the equity argument, are using Bitcoin to transfer money from across the world for nearly free, versus using a banking system with extremely high transfer fees (Juels). But again, this argument only works for a unit of account due to holding that value in the moment when traded. It could be possible that after the transfer, the Bitcoin is worth 20% more or less then when originally traded a week ago. The argument why this works is purely because it by passes huge fees and is usually instantly liquidated, but is flawed due that it requires a currency exchange to work. All of this solidifies the argument that Bitcoin is equity and not cash.

Bitcoin trading is extremely risky due to its security, users, and possible theft. The only thing protecting one user from Bitcoin theft is personal privacy, all the private keys are kept on a personal computer. Well, what happens when the computer is hacked and the get ahold of the online Bitcoin wallet? The keys can get stolen and used (Böhome). Critics of Bitcoin have claimed it irreversible and not traceable (Dourado). Because Bitcoin is decentralized, it does not have a backing authority that can enforce or track theft (Böhome). There are now however new websites such as Bitrated.com that provide a version of arbitration with multi-signature authorization so that both parties know the trade is legit and then can be reversed if some type of service or good is not delivered (Dourado). This would introduce the beginnings of “common law” for Bitcoin, a start away from this no authority concept (Dourado). This software is not used widely and does not solve theft for Bitcoin. Another huge problem Bitcoin has is that again as stated earlier it has no store of value (Listen). Bitcoin is not backed by a nation or natural resources such as gold and silver (Böhome). This value is self-place by how its traded in the market, thus the money is a false value. In 2014, this Japanese Website that stored and traded Bitcoin called “Mt. Gox” was hacked and went bankrupt, instantly over $450 million was gone (Böhome). Not only was it gone, but nothing could be done. A medium cannot be so easily taken advantage of if it seeks to be something like a secular currency. Users who use nationally trusted banks know that the bank is not going to get cyber hacked and lose all their money with no recourse. But with Bitcoin, security is up in the air. But the problems Bitcoin have such as no legal recourse and no large centralization are what it was formed on. To solve its problems, Bitcoin would have to form itself to something it’s not. Not only does Bitcoin have a structure problem, it facilitates crime. There is the Bitcoin theft that goes unnoticed, along with Money-laundering, and illegal items on the dark web are bought and traded (Böhome). Since the cryptocurrency offers complete privacy, illegal business can funnel criminal money into Bitcoin so that it cannot be traced when spent and can become clean again (Böhome). And lastly, since transactions do not have stated terms, any item no matter how disgustingly illegal can be traded such as weapons and sex trafficking (Böhome). This just bolsters even further that Bitcoin cannot be made into a currency with its structure as it currently exists today. 

The invention and idea of Bitcoin was bold creative when introduced in 2009 (Böhome). It created a brand new technological ledger called a “blockchain” that in which Bitcoin was based on (Böhome). The idea of a decentralized currency with no governmental incite led straight to criminal activity and high risk. Breaking down the structure and how a blockchain works, what it takes to become a currency, and associated risks when using Bitcoin prove that it cannot be trusted as a well-used medium of exchange. Thus, Bitcoin should be viewed as a high-risk investment with fluctuating equity, not as a solid tradable currency. 
