Bankovní institut vysoká škola Praha

Katedra financí a ekonomie

The history and the future of

Bachelor thesis

Author: Vladimir Malik

Supervisor: Ing. Petr Musil, Ph.D.

Praha April 2016

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Declaration:

I declare that I processed the final work on my own and I added all used literature in the list.

I confirm that the submission of the electronic form of the work is identical to the printed version, and I am aware of the fact that the work will be archived in the Library BIVŠ and will be made available to third parties through an internal database to electronic works.

Prague, date …………… name and surname of the author………………………..

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Acknowledgements

The author gratefully thanks Ing. Petr Musil, Ph.D. for supervision and active participation in the thesis project consisting of the present study project. Moreover, the author kindly thanks to his family and friends for support while developing and writing the thesis report. The author wishes to acknowledge all the other specialists involved for active advice and support in the entire process.

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Key words

Blockchain BTC Crypto Fiat currencies MMORPG platform Volatility

Annotation

The thesis submitted aims to map and evaluate development of Bitcoin. Firstly, the thesis describes basics and general money theory. Next part has a deeper overview of Bitcoin and topics directly connected to it. And to summarize, the last topic includes theories connected to the topic together with future predictions.

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Table of contents

Acknowledgements ...... 3

Key words and definitions ...... 4

Annotation...... 4

Table of contents ...... 5

List of figures ...... 8

1. Introduction ...... 10

1.1. Problem statement ...... 10

1.2. Research questions ...... 11

1.3. Limitations ...... 11

1.3.1. Geographical limitation ...... 11

1.3.2. Time limitation...... 11

1.3.3. Academic limitation ...... 12

1.4. Materials and methods ...... 12

1.4.1. Methodology ...... 12

1.4.2. Theory ...... 13

1.5. Literature review ...... 15

1.6. Structure of the thesis ...... 15

2. The evolution of money ...... 16

2.1. ...... 17

2.2. ...... 18

2.3. Store of value ...... 18

2.4. Mainstream currencies ...... 20

2.5. Payment systems ...... 20

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2.5.1. Commodity money...... 21

2.5.2. ...... 21

2.5.3. Checks ...... 21

2.5.4. Electronic payment and E-Money ...... 21

3. Bitcoin ...... 22

3.1. The crypto currency ...... 22

3.2. The history of Bitcoin ...... 23

3.2.1. Before Bitcoin ...... 24

3.2.2. The beginning of Bitcoin ...... 25

3.2.3. Bitcoin ...... 27

3.2.4. Bitcoin mining ...... 27

3.2.5. Different meanings of Bitcoin ...... 29

3.2.6. Wallets ...... 30

3.2.7. Spending of ...... 31

3.2.8. Online merchants ...... 32

3.2.9. Brick and mortar merchants ...... 32

3.2.10. Other Opportunities ...... 33

3.3. Pros and cons of Bitcoin...... 33

3.3.1. Pros ...... 33

3.3.2. Cons ...... 35

4. Monetary systems ...... 38

4.1. The Gold Standard ...... 38

4.2. The Austrian School of Economics ...... 39

5. Future Predictions ...... 39

6. Conclusion ...... 40

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7. Bibliography ...... 41

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List of figures Figure 1: Number of transactions per day from 2009 until 2016 ...... 17 Figure 2: Market price for Bitcoin from 2009 until 2016 ...... 19 Figure 3:Bitcoin wealth concentration ...... 19

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1. Introduction Bitcoin was launched in 2009 by , but the crypto currencies represented already a concept for a period of time. In the beginning there were both positive and negative opinions about crypto currency due to the fact that it was launched after the financial crisis from 2007-2008. The acceptance of this currency was relatively slow in the beginning even though the media covered on a high extend the idea of Bitcoin.

Bitcoin is known as an actual and innovative way of doing anonymous transfers without making use of the financial intermediaries. An advantage of using this currency is the decrease in transaction costs together with the opportunity of having privacy. Even though Bitcoin has several benefits, there are also some challenges in increasing its popularity and acceptance. This currency is decentralized which implies that there is no control from the government authorities. Therefore, Bitcoin can also be associated with illicit activities. Several government agencies such as FBI, DHS or SEC are already aware of these aspects. Taking into account the fact that Bitcoin is increasing in diffusion, it should also be mentioned that there is expected an increase in the regulation which destroys the idea of being decentralized.

The user trust in Bitcoin also decreased due to some collapse in 2014 and it contributed to the high level of volatility of the currency. Therefore, the usage of Bitcoin was not very trustworthy. However, there is an increase in number of merchants using crypto currencies for payments. A secure way to achieve a high acceptancy is to fulfill the following money characteristics: medium of exchange, unit of account and store of value.

1.1. Problem statement Due to a high increase in interest for crypto currencies such as Bitcoin, there is a real concern about the ability of this currency to replace the monetary system by overcoming the issues related to it. Several aspects should be considered in order to estimate the ability of replacement. The following research questions are answered throughout the thesis report.

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1.2. Research questions 1. What was the evolution of money? 2. What is the definition of a crypto currency? 3. What is the history of Bitcoin? 4. What are the pros and cons of Bitcoin? 5. What is the future of Bitcoin?

The above listed research questions are answered in the current report by using information from different sources from theoretical publications to newspaper articles and .

1.3. Limitations The current thesis report covers information about crypto currencies in general and about Bitcoin in particular. Several economic topics are taken into consideration while developing the answers to the research questions. They represent the broad view in regards to the sector and Bitcoin idea is considered to be the perspective. The information gathered is selected and delimitations are made in order not to become too wide over the thesis frame.

During the process of developing and writing the thesis report for the present subjects, several limitations should be included. Being a broad issue, Bitcoin currency analysis should also refer to other economic concepts and topics in order to create a perspective through parallel view. No specific limitations are made for time and region due to the fact that Bitcoin is a global scale currency and the analysis runs from past to the future prediction.

1.3.1. Geographical limitation The thesis research information is not limited on a specific region because it is known that Bitcoin is working on a global scale. The tendency it is to focus on the of America due to the high important of the Dollar currency in world besides the Financial Crisis which has a great importance for the United States’ economy.

1.3.2. Time limitation The information gathered in this report covers the ideas about Bitcoin from the inception towards the future of the crypto currency. The evolution of money is a relevant subject to be researched for

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designing the potential of using Bitcoin. For example, the thesis report covers also the parallels made between the Austrian School of Economics and the crypto currency Bitcoin.

1.3.3. Academic limitation The thesis will be focused on Bitcoin as being the biggest crypto currency and also the one having the highest popularity. The conclusion of the report consisting of the answers to the research questions set up beforehand, can be easily extrapolated also to the other crypto currencies. The pros and cons of the crypto currency Bitcoin are also mentioned in this thesis, but the focus is on the relevant and important once. The adequate ideas are taken into consideration for indicating the positive and negative sides of Bitcoin and also for designing a larger perspective. This general idea will be used in drawing the conclusion of the thesis in regards to the problem statement.

1.4. Materials and methods 1.4.1. Methodology Being a theoretical thesis, the current report is written based on available data and studies in order to define the problem statement and to find the answers for the research questions set up above. In order to find answers to these issues, evidence is found from difference sources and inductive reasoning is made for future prediction. Inductive reasoning is a process of generalizing a specific exiting fact in order to identify a conclusion for solving the problem. On the other hand, the deductive reasoning is a logical pathway to the conclusion. Therefore, the two reasoning options may lead to different conclusions: probable and certain. The main way of reasoning in this thesis report is the inductive one due to the fact that the research is aimed to develop ideas about the future of the Bitcoin crypto currency. This technique is used by collecting information from several sources as evidence for a plausible conclusion in regards to the future of the currency.

Therefore, the conclusion of this thesis is plausible, which means that it can be evaluated as being false due to the fact that the prediction of the future is not a common ability. This way of reasoning is very much used in predicting the moving of the society in regards to money and payment systems.

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During the writing process of this thesis, several studies and data analyses were researched. Being a very current topic, limited studies are done and different opinions are indicated. Some experts are positive about the idea of Bitcoin, but there are also some negative perceptions.

The reasoning types are closely related to the paradigm of Thomas Kuhn who indicates the way humans perceive the world. This concept indicates the fact the new problems and also the improvement in knowledge will change the perception towards the world. For this reason, the literature review used in this thesis for the Bitcoin topic indicates that the opinions might change as more research and observation is done.

The concept of money is susceptible to chance when the crypto currencies and Bitcoin appear. As an example, it can be mentioned the initial paper about Bitcoin concept in 2008 where the electronic cash system is characterized. Short time afterwards the groundbreaking technology of Bitcoin was created and therefore a new paradigm. The parallel can be made with the solving of real life problems. Due to this idea, the literature research contains several contradictory opinions on the topic of this thesis. Therefore, a continuous and objective data collection should be made in order to keep the thesis up to date in regards to the topic.

1.4.2. Theory Bitcoin was created based on previous technology as foundation. In order to design a definition for the crypto currency Bitcoin, it is always compared to the current monetary system. The main central banks in the world are the United States of America and the European Union. A central bank is responsible to manipulating the country’s money supply for reaching the economic goals and to manage the monetary policy. In order to reach the goals, a central bank should set the interest rates which can be called cost of credit. A central bank is not interested in the profit as it is not a commercial bank. It is responsible to provide credit to commercial banks in exchange for government or corporate bonds. This process is called open market operations (OMO) and it is a central bank’s tool to influence the money flow and the credit in the economy. During this process of buying of government or corporate bonds, the bank can increase inflation as the money supply will increase faster than the real output in the economy. In this process the price of the bonds will increase and the interest rate of the bonds will decrease. This is possible to affect the investments and the economic activity of the country. The prices are increasing due to the high difference Page 13 of 43

between the real output of the economy and the increase in the money supply. When there is no lag between the increase in money supply and the output of the country’s economy, the equilibrium is reached so the OMO has no effect on inflation. The inflation is very susceptible to occur with US Dollar or Euro but not with gold or Bitcoin currency.

The central bank has several ways to affect the purchasing power of the currency, for example, it can be engaged in a monetary policy using OMO and sell government bonds to commercial banks and remove the money from the country’s economy. Therefore, the price of the bonds can be decreased and the interest rate increases together with the lowering of the inflation. Practically, the population will be able to buy more with the same amount of money. Moreover, the central bank can affect the money in circulation in the country’s economy by the amount of reserves required to be stored in the central bank. For example, for the Federal Reserve System they consist of net transaction accounts, non-personal time deposits and Eurocurrency liabilities.

When the bank does not have the reserves required, it should borrow from other banks or from the central bank’s discount window. In this way, the bank can affect the interest rate as it does during an open market operation. When the central bank increases the reserve requirements, also the interest rate increase and when the central bank decreases the reserve requirements, also the interest rate decreases. This reserve requirement has a direct effect on the commercial bank profit because it determines a limit for the customers to be able to lend. Moreover, this reserve requirement has a direct effect on the money multiplier in the economy. This term means the rate to which the money supply expands which makes the bank to be able to have higher loans. This issue is critical when it comes to the inflation target of the central bank.

An expansive monetary policy in a country can be done by decreasing the short-term risk free market interest rates. When the interest rates are too low, the expansive monetary policy has no advantage. Central bank has another tool for the moments on the short terms risk free interest rates are close to zero: Quantitative Easing (QE). QE is able to target risk free interest rates with a longer maturity for bringing the inflation back to the target. The central bank is able to increase the money supply through electronic bills and increasing the money supply and providing incentive for banks to generate more loans.

In the case when the central bank floods the financial institutions with easy money, the reserves are increasing and the commercial banks cannot meet the reserve requirements which are decided Page 14 of 43

by the central bank. The risk is present when the central bank does not lend as much as they hope for and they keep the money in the reserves. In this case the QE will lose its effect. Another risk appears when the QE can have a higher effect than anticipated and the inflation becomes larger.

These views of the economic freedom are part of the Austrian School of Economics which is against the mainstream economy. In relation to this theory is also the views in contradiction between Keynes and Hayek about recovery from recession as a result of the great depression. (ANDERSEN, 2016)

1.5. Literature review Due to the fact that the topic of crypto currency is very contemporary and the literature available based on research studies is limited. The non-academic sources offer a large variety of papers in regards to this subject. Several contemporary books were also used in the analysis of Bitcoin currency. Moreover, the news in media were also used as part of literature research together with several academic studies and working papers.

1.6. Structure of the thesis The structure of the thesis report is based on the research questions set up in the previous chapter. Therefore, the first section illustrates the evolution of money in order to introduce the crypto currency. Section two expands on Bitcoin including a definition of crypto currency, the history of Bitcoin and its pros and cons. The report culminates with a discussion and conclusion of the previously mentioned aspects in order to answer the research questions linked to the problem statement.

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2. The evolution of money The specialists in the sector of economy define money as “anything that is generally accepted in payment for goods and services or in the repayment of depts.” In conclusion, money is a medium of exchange and the actual world currency is the best example of money. Before money existed, there was no currency available and people were exchanging goods and services without money. A good example for the bartering system is salt which was so valuable that Roman soldiers were paid in salt.

The first coins were invented in Ephesus in Western part of Turkey. The bartering system requires double coincidence of wants and it is a difficult procedure when the world increases in the level of globalization and the markets emerge. A solution for this issue can be the stockpile of popular goods that are supposed to be traded.

During the history of society various types of money have been used. In fact Bitcoin fulfils all the requirements needed for being a respected currency. The theory of money by Pedro Franco indicates that money is “durable, divisible, fungible, easy to transport and impossible to counterfeit.”

The modern mainstream economists indicate that generally there are three different functions of money (Mankiw, 2003). They can be divided into: medium, store of value and unit of account. If all the functions mentioned above are fulfilled, Bitcoin could serve as money. However, the debate whether Bitcoin is or is not a currency is not clear. The specialists who approves Bitcoin would indicate that Bitcoin does not necessarily need to fulfil all three functions to be consider as money, although there is an evidence that these three traditional functions does not have to be bundled.

The Austrian School based in Vienna since the 19th century, describes itself progressive in connection to bitcoin acceptance. Its economists could be described as “progressive” in connection to Bitcoin acceptance (Graf, 2013) (Šurda, 2012). The main sign is that the methods used are based on analysis of an individual.

Money has three main functions in the economy such as: it should work as a medium of exchange, as a unit of account and as a store of value. (Hanna Halaburda, 2016)

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2.1. Medium of exchange Bitcoin increase significantly in its development last years which also implies the acceptance as crypto currency in thousands of businesses (https://coinmap.org/, 2016). On top of a higher acceptance level, Bitcoin reached over 276,000 transactions per day at its peak and currently it stands in approximately 200,000 transactions per day. This level is more than doubled compared to the last year results (Figure 1).

Figure 1: Number of transactions per day from 2009 until 2016. ( info, 2016)

The mainstream opinion among economists is that Bitcoin did not reach the popularity within mass market yet. Therefore, it struggles to develop into the universal medium of exchange where the achievement of critical mass is essential. “Critical mass is the point where the benefits to new users exceed the cost of adopting the new technology.”

For a technology like digital currency it is essential that more users are attracted to its network, so, the more appealing it is for new users, opportunities for transactions will increase. It could be stated that the value of the network increases quadratically with the number of users. This aspect can be explained by the power of the network effect. After the system passes the critical mass

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point, it becomes inevitable that user base will grow enormously. This issue can also be seen in the figure above (Figure 1) as a trend in the number of transactions.

The commodity is able to function in an effective way if it is easily standardized which implies the ability to determine its value. Moreover, it should be accepted on a large scale and it should also be divisible (easy to divide into small pieces for exchange). The commodity should also be easy to carry for the users which implies time and costs, it also not deteriorate quickly (be perishable) which means that the fruits, milk or bread are poor commodities for mediums of exchange. (Franco, Understanding Bitcoin, 2015)

2.2. Unit of account In order to measure the value of goods and services in the economy, money is used. An absence of the measurement unit is not able to make the exchange possible. Therefore, a formula is made in order to describe the number of prices needed when the economy has N goods. (Franco, Understanding Bitcoin, 2015)

2.3. Store of value Money also has a store of value. This fact implies the idea of saving or storing the money for later use when time is available or when the amount of savings can be spent on a product with a higher price. The store of value is not possible to be taken into account when the commodity deteriorates quickly. Any ownership can be used as store of value and some of them are more effective in this aspect comparing to money, as they pay a higher interest rate. However, money is the most liquid of all assets and there is no transaction cost related to money. Money is known to be the best store of value but the attractiveness depends on the price level which can sometimes be affected by a recession. In case of an increase in prices, the value of money drops and this fact can be seen during hyperinflation. (Halaburda & Sarvary, 2016)

Bitcoin can be described very precisely by volatility. As it can be seen in figure 2, the price of Bitcoin has been very volatile over the years and it created a reasonable amount of doubt within the economists in connection to Bitcoin as a store of value. The specialists considered Bitcoin to be more a risky opportunity for investment than a stable store of value.

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Figure 2: Market price for Bitcoin from 2009 until 2016. (Blockchain info, 2016)

Another reason why Bitcoin is not widely spread as a store of value is that a significant amount of Bitcoins is held as long-term investments on dormant accounts. The velocity of Bitcoin is calculated as the daily transaction volume times 365 with the existing amount of Bitcoins. The velocity of Bitcoin is comparable to the velocity of the fiat currencies in advanced economies and much lower than other digital currencies.

Figure 3:Bitcoin wealth concentration.(Blockchain info, 2016)

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The store of value and the medium of exchange are two necessary functions of a currency while being connected to each other. Bitcoin is not able to be used as a medium of exchange in case it is not able to store any value. The logic says that it would have not been used as a store of value if no one would use the Bitcoin system.

In conclusion the three functions of money, medium of exchange, unit of account and store of value, can be fulfilled by money or by barter economy which involves high transaction costs. Barter is not an efficient way to trade because it involves high transaction costs and double coincidence of wants which restricts the aim of the economic progress. (Franco, Understanding Bitcoin, 2015)

2.4. Mainstream currencies Nowadays in the world US Dollar is the most used currency in trade. With 87%, this currency is placed on the top of the list of global foreign exchange made by the Bank for International Settlements. Euro currency is the second one on this list, but representing only 33.4 percentage share. Other currencies follow the stated order: The Japanese Yen (23%), the Pound Sterling (11.8%), the Australian Dollar (8.6%), the Swiss Franc (5.2%) and the Canadian Dollar (4.6%). The foreign currencies are used locally and Euro is used among several countries in the Eurozone consisting of 28 countries. The US Dollar is used officially by 12 other states except the United States of America.

The currency used in a country is always which means that the currency is a medium of exchange recognized by law in order to settle a public dept. When a country has more than one legal tender which means another local currency beside the US Dollar, the phenomenon occurring is called currency substitution or Dollarization. This phenomenon takes place in economies with high level of corruption or without being strictly controlled by the government in regards to its own currency. Therefore, the US Dollar is use due to the high acceptance and popularity besides the high level of credibility among users. (Miller, The Ultimate Guide to bitcoin, 2015)

2.5. Payment systems The form and the function of money can be designed when the methods of conduction transactions in economy are known. Further analysis in regards to payment system development is done.

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2.5.1. Commodity money Commodity money represents a medium of exchange and it can be used either in production or consumption. Commodity money has value itself without acquiring another product. Examples of this type of money are gold, silver, platinum or copper metals. This type of payment system is linked to the function of money called medium of exchange due to the fact that this method is not easy to be handled. (Miller, The Ultimate Guide to bitcoin, 2015)

2.5.2. Fiat money Another development in the payment system is paper money and it started in China in 900 AD. Instead of using heavy products as payment method, merchants used trading receipts. They represented proofs for the goods stored in a deposit. In 1120s the Chinese government started to produce the first world’s paper money. The paper money had the advantage of being lighter than any other metal or good used in trading. A disadvantage can be the fact that it can only be used when there is trust in the authorities, Moreover, this payment system has another drawback which is the risk of being stolen. (Miller, The Ultimate Guide to bitcoin, 2015)

2.5.3. Checks The checks originate from ancient banking system in Venice from 13th century. This payment is based on the instruction from customer to the bank to pay the money transfer to the recipients. This method is known as being efficient due to the speed advantage of processing the payments and settling debts. The check can be made for any amount, but it should have the limit of the balance in the account. (Miller, The Ultimate Guide to bitcoin, 2015)

2.5.4. Electronic payment and E-Money Starting with 1990 the commercialization process on internet brings high economic efficiency. The banks are able to provide their customers with an overview about their financial situation online. Visa and MasterCard developed the e-money (electronic money) which represents the digital form of cash which stored in a device or a sever. The Debit Card was the first form of electronic money but this method developed also into cell phone as payment machine. (Miller, The Ultimate Guide to bitcoin, 2015)

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3. Bitcoin

3.1. The crypto currency In comparison with traditional currencies, the model of is rather new and the phrase was firstly used approximately in 2011. This phrase is firmly connected to the rise of social gaming. These currencies were used in many games of this character.

The crypto currency is a digital currency which is a medium of exchange not widely accepted yet. The crypto currencies are maintained by a community called “miners” which are part of the general public and they process the transactions. When a miner validates a transaction by solving a cryptographic problem called “hash function”, he receives a supply of digital coins. The rate of supply is reducing in time because the supply of the crypto currencies is capped. This is the reason why the hash functions become harder to be solved and therefore the reward is reduced. There are several currencies nowadays, but Bitcoin is the largest and the most accepted one. (Miller, The Ultimate Guide to bitcoin, 2015)

As it is stated in definition of European Central Bank, virtual currency is “a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.” Another definition from a respected source such as the U.S. Department of Treasury is that a virtual currency is “a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency”. (Miller, The Ultimate Guide to bitcoin, 2015)

Another characteristic feature of virtual currency is its form. The virtual currency can exist only without having a physical form which means that this currency is not presented in form of bills or coins. Therefore, this type of currency can be stored and transferred through an electronic way. (Miller, The Ultimate Guide to bitcoin, 2015)

Virtual currencies can be classified into two different types, open or closed. The main feature of the closed virtual currency is that it circulates only inside closed system such as online game. This type of virtual currency does not have any connections with the real world economy and therefore,

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it is able to be used only in specific environment which is made exclusively for users of the concrete application. The second type of virtual currency, which is the exact opposite, the open currency (convertible currency). This type of currency implies that a real world currency can be used for purchase of virtual currency and vice versa. (Miller, The Ultimate Guide to bitcoin, 2015)

Another classification for the virtual currency is: centralized or decentralized. Centralized virtual currency is issued and managed by only one organization, responsible of all necessary actions. The centralized virtual currency model is widely used across many MMORPG games and platforms such as Steam. This currency can be traded for real money and then used for purchasing goods within the game or the platform. (Miller, The Ultimate Guide to bitcoin, 2015)

The opposite type is the decentralized currency, such as Bitcoin. This virtual currency does not involve a main operator and it does not contain any type of central repository. This system is based on multiple number of operators who can buy and sell. In addition, the price is created according to the market and then it is distributed by the network of users. (Miller, The Ultimate Guide to bitcoin, 2015)

The virtual currencies do not represent an official part of the monetary system. Therefore, they are not connected, regulated or backed up by any central bank which means that collecting and trading of these crypto currencies might be unsafe and sometimes even hazardous. (Miller, The Ultimate Guide to bitcoin, 2015)

In conclusion, the virtual currency consists of a type of payment system which cannot be touched but it is used in purchasing of in virtual and even in the real world. This type of currency has a high need of trust among its users and, currently, a virtual currency is not considered a legal tender. (Miller, The Ultimate Guide to bitcoin, 2015)

3.2. The history of Bitcoin The beginning of Bitcoin can be considered to be the date October 31th 2008 when the Satoshi Nakamoto uploaded the paper “Bitcoin: A Peer-to-Peer Electronic Cash System”. However, Bitcoin was not the first virtual currency and many others were created years before, but none of them had the same success. In the beginning of 2009 a software was released in order to make use of Bitcoins as exchange.

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The creation of this crypto currency was meant to provide users the ability to make transactions bypassing the financial institutions which represents the third parties in the monetary transaction. This currency was based on a cryptographic system which provide the parties assurance that the transaction is real. On 26th of January 2016 there were 15 128 400 Bitcoin in circulation and the price of a single Bitcoin is 393.70 US Dollar. The buying process of Bitcoin is accessible by anyone, resembling fiat money which can be exchanged from hand to hand. (Miller, The Ultimate Guide to bitcoin, 2015)

3.2.1. Before Bitcoin

E-Gold

One of the first virtual currencies was “E-gold”, which was founded in 1996. The E-gold system was particularly unique due to the element of being backed up by real gold. The system enabled to exchange the ownership for gold with the advantage of keeping it anonymous. E-gold had, mostly in 2008, five million accounts together with capitalization of 86 million USD. This service became very popular among certain communities, but it was also featured as a relatively uncomplicated way for . Another aspect of this currency was the poorly secured way the system works. This issue meant high vulnerability level in regards to hackers. In 2008 the U.S. government pleaded guilty the management of the company due to money laundering and operating an unlicensed money transfer business. (Miller, The Ultimate Guide to bitcoin, 2015)

Beenz

Beenz was launched in 1998 with the idea of the creation of a virtual currency for internet usage. With Beenz, users could earn a virtual currency while visiting certain websites or looking at specific ads. Afterwards, users could spend their Beenz in various online shops or services. Beenz was closed in 2001 due to the failure in gaining trust from its customers and government authorities. (Miller, The Ultimate Guide to bitcoin, 2015)

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3.2.2. The beginning of Bitcoin

As the paper “Bitcoin: A Peer-to-Peer Electronic Cash System” got uploaded on the internet, the main idea behind this virtual currency was revealed. The paper was uploaded by Satoshi Nakamoto, but it is still unknown who (if an individual or a group of individuals) is behind the idea. On January 9th 2009 the first Bitcoin client was released and on January 12th the first Bitcoin transaction was made in between Satoshi Nakamoto and Hal Finney. The subject of this transaction was a genesis block (the initial block of the Bitcoin block chain) worth 50 BTC.

The first Bitcoin exchange was established on February 6th by member of the “” community dwdollar and by May 2010 the exchange rate reached 0.004 USD/BTC. The exchange rate was very volatile and it was based on user demand together with the supply.

In July 2010 the first strictly commercial Bitcoin exchange was created out of a for trading cards from “Magic: The Gathering Online” and it was called Mt. Gox. The value of Bitcoin before Mt. Gox. Opened was 0.008 USD/BTC, but after only five days it increased to 0.08 USD/BTC.

In August of 2010 a vulnerability issue was found in the Bitcoin protocol arose. This aspect caused that certain users were able to take advantage despite the level of security and create a payment with enormous amount of 184 billion of BTC. It created hyper-inflation making the entire currency worthless. Nevertheless, the suspicious transaction was spotted by the Bitcoin authority, the bug was solved and the amount of BTC was reversed. The bug of this character has not been done yet.

On February 9th 2011 Bitcoin reached parity with USD on Mt. Gox. This issue catapulted Bitcoin from niche experiment to stage where it has been considered by broader public. An example for this can be the article from April 2011 about Bitcoin which was pressed at TIME magazine. This article contributed positively to the achievement of the point of 10 million USD of market capitalization. After that moment, Mt. Gox. became the largest Bitcoin exchange method even though other Bitcoin markets were founded in 2011 such as Britcoin, Bitcoin Brazil or BitMarket.eu.

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On 15th June 2011 worst scenario happened when, at the time the largest Bitcoin exchange, Mt. Gox. Got hacked and 478 user accounts received fake sell orders for approximately 25,000 BTC. This accident brought the price of the Bitcoin to the very bottom price of 0.01 BTC/USD. The series of unfortunate events did not stop there as in July 2011 one of the largest Bitcoin exchange- Bitomat publicized that the access was lost for one of the most prominent Bitcoin wallets at the time with over 17,000 BTC on it. Another Bitcoin exchange called MyBitcoin was hacked in August 2011 which had a severe consequence for the exchange. MyBitcoin refunded 49% of deposits and counted a loss in value of over 800,000 USD. (Miller, 2015). For all these reasons 2011 was a turbulent year for Bitcoin and the trust in Bitcoin was in serious question.

On the other hand, in the same year the company Intervex Digital released an application for iOS mobile devices, which was the first application oriented for Bitcoin users. The first Bitcoin conferences happened in USA in New York and in Europe in Prague.

The following year was not an improvement, for the fact that the price of Bitcoin was 13 USD/BTC by the end of the year.

Another round of a criminal activity took place when in March the amount of 50,000 BTC was stolen from an exchange called Linode. This event was followed by another not-enough-secured Bitcoin exchange called Bitfloor, from which more than 24,000 BTC were stolen. Moreover, in August 2012 Bitcoin Savings and Trust was closed and 5,6 million USD were left as a Bitcoin based debt. (Miller, The Ultimate Guide to bitcoin, 2015)

Nevertheless, in 2012 the first Bitcoin exchange, which used to be called Bitcoin-Central (now called Paymium), obtained a European bank license. This fact contributed to a better public opinion by the end of the year. (Miller, The Ultimate Guide to bitcoin, 2015)

In 2013 the price of Bitcoin reached 100 USD/BTC on April 1st after passing the peak of 31,91 USD/BTC from 2011. Bitcoin was finally solid enough to achieve 1 billion USD in market capitalization. Later that year Mt. Gox faced a setback after violating guidelines made by U.S. Department of Homeland Security and, in consequence, 5 million USD was confiscated from US accounts of Mt. Gox. (Miller, The Ultimate Guide to bitcoin, 2015)

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3.2.3. Bitcoin When the Bitcoin software is downloaded by the user in the computer, it will be connected through internet to other Bitcoin users in a decentralized network. The transactions can be done by using two unique key, one public and one private. The private one will be stored safely in the user’s computer while the public one contains an address which is given also to other users in order to send Bitcoins.

A Bitcoin transaction will be done between two public key (addresses) but the private key in the personal computer will be used to de-crypt the Bitcoin in order to use it. The storage place for these transactions is called Block Chain which is a giant database maintained by the decentralized network of miners. (Franco, Understanding Bitcoin, 2015)

3.2.4. Bitcoin mining There are two methods available to acquire Bitcoins. The methods are: the exchange for real world currency or other type of value. The second method is called mining and it requires a user as an active part of the Bitcoin ecosystem.

Mining is a term for adding new blocks into the blockchain. Miners through their computers or computing stations, supply the system with the computing power for the solution of the blocks added to the blockchain. This is not a form of donation. The network evaluates their contribution and based on the results of the calculation the users are rewarded automatically from the fees gathered from the block. The miners solve a mathematical problem which is given by the network using the mining software. The software runs a proof-of-work algorithm which controls the proprieties of each block.

The mechanism of mining helped with the situation where early adopters/miners are compensated for the support brought to the network. Even though bitcoins were worthless in the early stage, the project was interesting enough to gather a sufficient amount of supporters i.e. computing power which was crucial for an early development. Rewards in bitcoins were just a promising beginning which grew into real value in the present. The secondary objective was also achieved by the fact that miners were helping with the marketing of the project by word of mouth which was essential for future development.

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The action of mining also emulates the aspects of a perfect competition market. As long as the profit from the blocks will exist, contestants will enter the market until the time when there will be no profit available anymore. The network model works simply: the more people in the network the higher difficulty it has. The reward from blocks stays the same and it is predicted by mathematical model where block reward is halved every 210,000 blocks or approximately every 4 years.

Anyone with a compatible device can connect to the as the network is a peer-to- peer network. People who desire to enter do not need a special permission and no personal control is existing either. The network is therefore in the state where the profit is lowered by every single new member, therefore users need to increase their hashing power in order to achieve the same profit. This state is similar to the Red Queen Effect, when competitors need to constantly develop in order not to increase their profit, but to simply make it last. In spite of this, there are factors that can help to stay at the position needed for the profit. (Franco, Understanding Bitcoin, 2015)

3.2.4.1. Technological Advantage Innovation regarding devices that can work with proof-of-work algorithm is essential. In case it could be implemented to the chips with better manufacturing process, it could mean significant decrease of costs. (Franco, Understanding Bitcoin, 2015)

3.2.4.2. Hedging Bitcoin volatility Theoretically, it can be taken advantage from the Bitcoin future. The miner who is able to secure himself against volatility of Bitcoin effectively gains significant advantage. Any miner can hypothetically do that, but unfortunately in the time of writing of this thesis the marker is practically not existing. (Franco, Understanding Bitcoin, 2015)

3.2.4.3. Electricity price Every miner has, together with fix price of device used, variable cost of electricity. Therefore, if miner is able to secure himself against the high price of electricity he gains a significant cost advantage. In theory, Bitcoin miming could occupy areas with lower cost of electricity and therefore help to decrease impact to environment because of the fact that areas where cheap electricity is available it is mostly gained from environmental-friendly sources.

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In conclusion, the hurdles for users to enter the Bitcoin network are relatively low and almost everyone is able to join. On the other hand, current prices of electricity, low availability of specialized “mining devices” and increasing difficulty of the calculations needed to “solve” will most probably prevent new competitors to join in. In effect of this, the hash rate will stabilize. (Franco, Understanding Bitcoin, 2015)

3.2.5. Different meanings of Bitcoin Bitcoin is a word of many meanings. In order to solve the confusion these explanations are made.

3.2.5.1. Bitcoin as a protocol “The protocol is the specification of how to construct the distributed database (the blockchain), how to parse it, how transactions should be assembled, what constitutes a valid transaction, and so on.” (Franco, Understanding Bitcoin, 2015)

3.2.5.2. Bitcoin as a network “This is the peer-to-peer network to which nodes connect. Nodes in this peer-to-peer network exchange messages containing new blocks being added to the blockchain and new transactions being published.” (Franco, Understanding Bitcoin, 2015)

3.2.5.3. Bitcoin as a currency Bitcoin networks unit of currency is typically spelled with lower “b”. Given by mathematical proof there will be issued approximately 21 million bitcoins which are furtherly divisible. One bitcoin is divisible to 100,000,000 fragments which had been named satoshis. Further divisibility could be achieved by change of the protocol to more than 64-bit integer numbers. (Franco, Understanding Bitcoin, 2015)

3.2.5.4. Bitcoin as an implementation The project, now called Bitcoin Core, is the original open source project which is written in computer language C++. Meaning that the project is open source, it can be downloaded from bitcoin.org (Franco, 2015)

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When it comes to the technological division of Bitcoin Core it can be even more detailed, but for purposes of this thesis division described is sufficient. (Franco, Understanding Bitcoin, 2015)

3.2.6. Wallets The user of Bitcoin cannot operate or transfer his funds in any way without a software which is called wallet. That means Bitcoin wallet could be defined as a software which is used by the user to manage his funds. The wallet itself has several different functions which are essential to the Bitcoin ecosystem.

Wallet is in charge of holding private key of the user, creates transactions and it collects incoming and outgoing transactions in order to show the balance to the specific user. There are many wallets available currently, while the user is free to choose the specific one by his own desire.

The wallet itself takes place in one important task and that is an implementation of cryptographic protocol which signs transaction with the private key. The private key is an essential part of the system because it is required to log into and access the funds. Funds are still safely at the place of the distributed , but without the private key they cannot be accessed. This unfortunate situation could be solved by backup of the wallet, which is a widely accessible function across the modern bitcoin wallets. The private key is a functional solution to funds safety, but it also brings risk issues as well. If the private key is taken away from its user, it can be used to theft. As long as the private key is in hold of a thief, he can use the key to transfer funds to another account under his control.

A possibility to increase user safety regarding the private key is to encrypt it. This solution comes with pros and cons. A pro of private key is that even though a thief gets a private key under his control, it is still encrypted. In order to decrypt them the brute-force method is used, and it requires computing power and time. This time is increased by how well the password was chosen. The disadvantage of this solution is that the user is obligated to decrypt his key every time when the transaction is about to happen.

However, there are methods to store the private key with sureness of lack of any cyberattack. The way to achieve it is to store the private key on physical media such as paper. The same option is

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available for any digital media which are not connected to the internet. This type of storage is cold storage. On the other hand, this type of storage is vulnerable to physical theft.

For users who require different approach regarding the usage of the bitcoin wallet there is another solution and it is a web wallet. Web wallet is very similar, in terms of management, to management of current account. Funds are transferred to a third-party system where they are managed on behalf of the user. Web wallet takes care about private keys and therefore it brings handiness to the user. Nevertheless, it brings the extra handiness for a small fee which also contains inconvenience. When the private key is stored in the cloud of third-party it is entirely under control of that concrete third-party. This means that the user must count on the third-party security system. (Franco, Understanding Bitcoin, 2015)

3.2.7. Spending of Bitcoins As sufficient amount of Bitcoins is gathered within the user base, either by mining or by an exchange. If this is not meant just for an investment purpose, the exchange for goods and services is the purpose desired in the beginning. In this part of the thesis it is described how and where can be Bitcoins exchanged for real world products or services.

Bitcoins are certainly not available everywhere to spent either because of restrictions or problems such as volatility or need of new technology to handle the payments. Bitcoin has not established itself to an everyday currency. Nevertheless, there is a trend which clearly shows that Bitcoin is being adopted and its life span is not over. Big companies, but not all of them, are behind the process of Bitcoin adoption because of the risk. This happens due to the fact that the market is still a niche. Similar situation is currently within the small businesses that are behind the innovation conventionally. (Miller, The Ultimate Guide to bitcoin, 2015)

However, the community of Bitcoin is compact, but hard working. The amount of new merchants accepting Bitcoin is increasing every day and referring to the coinmap.org it is possible to find 7789 venues to the May 2016. Most of the venues are based in United States of America or Europe. In spite of that, merchants can also be found in Australia, eastern part of Asia and South America. (SatoshiLabs, 2016)

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3.2.8. Online merchants The situation regarding acceptance of Bitcoin is dramatically different within the online merchants. When it comes to merchants which are specialized in electronics, technology and products or services related to these it is becoming very likely for an ordinary person to face an option of payment via Bitcoin. However, not only the technology based merchants implemented payment via Bitcoin. In order to prove the point, several examples are referred. (Miller, The Ultimate Guide to bitcoin, 2015)

 Alienware – PC manufacturer which is specialized in high-performance computer builds.  CheapAir.com – reservation system based on low budget.  CoinRX.com – online pharmacy.  Foodler – online based food delivery operating in USA.  WordPress – website hosting and creation. (Miller, The Ultimate Guide to bitcoin, 2015)

3.2.9. Brick and mortar merchants Unfortunately for Bitcoin users, it is challenging to pay for products at brick-and-mortar store. Hardly any national retailer implemented Bitcoin payment in the system and currently it is impossible to pay via Bitcoin in any fast food or supermarket chain.

On the other hand, the trend is increasing and large companies are trying to win their customers by letting customers choose their most desired payment method. (Miller, The Ultimate Guide to bitcoin, 2015)

As an example of a large company adapting Bitcoin, the “Café Punta del Cielo” in Mexico could be stated, this is one of the biggest coffee shop chains in Mexico operating approximately a hundred shops in the whole country and allowed acceptance it in the “Universidad de las Americas Puebla”. (Maras, 2015)

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3.2.10. Other Opportunities Above, only the online and brick-and-mortar retailers were explored, but it is important to say that there are entities which are not absolutely online or the opposite. Companies such as Dish Network or NBA team Sacramento Kings let their customers pay for some of their services.

In conclusion, it is clear that more companies are taking their step in new technology of Bitcoin and it is likely that the amount of companies will increase over time. (Miller, The Ultimate Guide to bitcoin, 2015)

3.3. Pros and cons of Bitcoin Bitcoin itself has many features different from current mainstream used currencies such as fiat money and it is difficult to keep in touch with a commodity/currency that is being developed at such a tempo. Developers update the source code on daily basis and long term evaluation is still far from being possible when taken into the consideration that Bitcoin is tradable only since 2010.

Another point of view is crucial when pros and cons differ dramatically, whether we focus on government, commercial bank, business or end user.

In order to be able to reach a conclusion related to questions set up above, pros and cons of Bitcoin will be taken into account.

3.3.1. Pros The main driver for development of this currency is the lack of innovation at traditional currency systems. The transfer value via Bitcoin is not only cheaper and faster, but also because of enormous computing power behind Bitcoin ecosystem, enormously safe in regards to the currency itself.

Bitcoin transactions, using the blockchain technology, do not need to be validated by third party and, paradoxically, even without an extra validation, the mechanism is, under relatively standard circumstances, enormously secure.

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Security

The end user protection is one of the features of Bitcoin where it is really successful. The system itself has never been hacked. Constant development together with enormously powerful user based computer net protects the end user from frauds caused by information leakage well known to a significant percent of credit or debit card users.

Making use of the Bitcoin technology, there is no third party member of the transaction who needs to validate, authorize and form each payment. When bitcoin payment is processed no other state of payment is possible from sent or not sent. The payment is done instantaneously from one wallet to another and therefore every kind of information leak is impossible. (Halaburda & Sarvary, 2016)

Price

When it comes to a traditional currency, it is not essential to know which of mainstream services is used for payments because there is always a fee that is used as a cover for cost of the system used. For a bank transfer (PayPal) when it comes to over the border payment, there is always a significant fee and it is needed to be paid in order to cover costs of large credit card companies or PayPal. As it was described in the security part, there is no third party involved in Bitcoin payment system, so the fee varies from 0.04 USD to 0.07 USD. (Halaburda & Sarvary, 2016)

The Blockchain

The blockchain is a crucial innovation that was a missing part of the chain when it comes to distributed peer-to-peer digital currency. “The blockchain is in essence a distributed database holding all the Bitcoin transactions since the beginning (January 3, 2009) and a method to secure this database.” (Franco, 2015) All the transactions processed in the Bitcoin ecosystem are encrypted in the blockchain, but they are not directly accessible. Software such as bitcoin wallets or mining nodes can extract and use information stored in the blockchain to further actions.

The essential principle which is used in the blockchain is proof-of-work to secure the database which is distributed. In other words, this principle secures the database by the amount of computational power which has been used to its creation. This means that if someone would have wanted to make a change in the blockchain, there will be a need to use the same amount of

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computational power that has been used from the beginning to the present. (Franco, Understanding Bitcoin, 2015)

3.3.2. Cons Besides the advantages of using Bitcoin, it should also be mentioned that the more popular it becomes, the more likely it is to attract the attention of government. This fact might result in increasing the regulation of using it and this might not match to reason of existence.

Lack in trust

The intrinsic value of Bitcoin can be seen in the value itself. For example, fiat money is a monetary system based on true due to the fact that the issuer is the European Central Bank and the Federal Reserve. Bitcoin has no intrinsic value, but it has no central authority which is responsible to issue the currency. The trust is therefore in a decentralized network and not in a central authority. This is a reason why the trust in this currency relies on the users’ opinions and also on the collective trust in the system. (Franco, Understanding Bitcoin, 2015)

Double-Spending

The double-spending problem is a major problem. When it comes to a digital currency that has its specifics diametrically different from fiat currency. Nor bills and neither coins are used. The physical entity of notes and coins is very efficient against counterfeiting. It is difficult and almost impossible to make a perfect copy of a note or coin and therefore the fight against counterfeiting is reasonably efficient. On the other hand, when it comes to digital currency, it is just an information, line of code or set of ones and zeros. A fully digital information is easy to copy, it can be reproduced without any quality loss and how many times it is desired without leaving a mark on the original information. (Hanna Halaburda, 2016)

However, Bitcoin system does solve a possibility of spending same bitcoin twice, double-spending problem in other words, by implementing block chain which verifies, and stores under heavy encryption, every single payment made in the Bitcoin system. Therefore, after an authentication of a payment it is recognized as processed and no longer available for another payment. (Ross, 2015)

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Volatility Bitcoin is based on a decentralized system without having any authority in the background. Therefore, the currency can have large fluctuations. The supply is steady and it is known by every user, but the demand has a direct effect on the exchange rate. The demand is affected by several aspects such as low level of trust. In 2015 the value of Bitcoin was doubled in a single month which means a high volatility and a high risk of value plunging. (Franco, Understanding Bitcoin, 2015)

Hacking

Another disadvantage is the risk of hacking which also contributes to the low level of trust in this currency. An example for this can be the American entrepreneur Jed McCaleb who had serious complications in the spring of 2013 by using Bitcoin. He suspended his trading activity two times in a month because of the price decrease. Due to this problem, several customers were not able to access their funds. The problem culminated on 7th of February 2014 when Mt. Gox collapsed. Karpeles announced that the exchange was attacked and the but altering the hashes was blamed. This bug was supposed to allow the completed transactions to appear to fail and the hackers can set themselves up for double spending. A document declared later that hackers had been skimming money from the exchange system for years. On 1st of August 2015 Mark Karpeles was arrested by the Japanese police due to 1 million US Dollar worth of Bitcoin. (Franco, Understanding Bitcoin, 2015)

Competitors

Releasing the technology as Block Chain in open source means having a risk of demising of Bitcoin. It is very easy for a programmer to create a better crypto currency by using the same technology of Block Chain.

Other crypto currencies such as Litecoin, Namecoin or Anoncoin failed to take the market share even in this conditions. Bitcoin aim to improve the functioning problems such as security or transaction speed of Bitcoin. Bitcoin is still able to keep its first mover advantage and to keep all these competitors away from the market. However, this cannot be a permanent statement as it

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would be very easy for a competitor to increase the performance of his crypto currency by using the same technology as Bitcoin uses. (Franco, Understanding Bitcoin, 2015)

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4. Monetary systems 4.1. The Gold Standard The Gold Standard is a monetary system which uses the unit value in order to express prices in an economy as a specific amount of gold in a free gold market. From 1792 until the Civil War, in the United States the coins were composed of gold and silver as a legal tender. The money system collapsed in the beginning of the Civil War and then the United States used a paper money standard with depreciation. On 2nd of January 1879 paper money became redeemable in gold with the agreement of the Gold Resumption Act.

The usage of gold as a monetary standard was based on the opinion between economists who believed that deflation and inflation are not desirable. They wanted to use a stable unit of value and gold was not an option for this. Gold had a better historical record in comparison to paper money and therefore gold became the monetary standard for the late 19th century.

In late 1932 there was a distrust in the economy due to bank failures and people started to hoard gold. In March 1933 Roosevelt restricted completely the pay out and export of gold and therefore the gold standard was suspended. Another version was created and it was called gold-bullion standard and the public could not exchange gold for dollars. There was only external conversion and therefore the government and foreign central banks demanded and acquired gold coins.

Many supporters of the Gold Standard are now believing in the Austrian School of Economics. The opponents have trust in fiat currency system and monetarism. The most common argument against Gold Standard is the fact that one cannot react upon the general business cycles of which an economy experience. The government cannot react on a recession with the use of monetary policy without increasing the mining of gold which is not a solution. The supply of money is fixed and in the moment of an economic shock the prices and the demand is negatively affected. The governments tend to increase the monetary supply to a high level and therefore the inflation increases too. This is a reason why the absence of monetary supply control is a positive thing. (Kemmerer, 2013)

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4.2. The Austrian School of Economics The Austrian School of Economics gained an important role in the economic theory sector in the last years. It provides valuable knowledge in the world of economic issues. St. Thomas Aqunias who was a philosopher from 13th century at the University of Salamanca in Spain explained the human interaction and social organization. His followers discovered the laws of supply and demand and what are the causes of inflation and the nature of the economic value. The founder of the Austrian School of Economics was Menger due to the development of the previously mentioned core principles.

Some of the supporters of Bitcoin match the profile for the Austrian School of Economics way of thinking. Both gold and cryptocurrency communities find common idea in the dislike of fiat currencies which are issued by the government. (Mises, 2016)

5. Future Predictions In regards to the idea of replacing a conventional fiat currency with Bitcoin crypto currency, it can me mentioned that this process is similar to going back to a pseudo gold standard. The strong point of a medium of exchange is that it meets the society’s demand. Bitcoin can be hardly flexible in reacting to different shocks to the economy. The monetary needs of the society are determined by the elected official who are able to control the monetary policy. Therefore, the future might imply an increase in popularity and acceptability of Bitcoin, but this crypto currency might also be a subject of strict regulation made by the international monetary organizations. It is predicted by the author of this thesis that there is a low change that Bitcoin will become a crypto currency which is free and globally accepted and not being controlled by the government.

Moreover, it can be said that the innovation of Bitcoin using the Block Chain technology will lead to a titanic future. A possible prediction for the future can be the creation of a crypto currency made by various governments in order to be able to compete with the conventional monetary system. The advantage of this crypto currency might be the ability of the authorities to fully control it.

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6. Conclusion The evolution of money and also of the payment system are linked. Together with the digitalization process, the digital currency also became more and more important.

Bitcoin entered the game in 2009 being a very innovative crypto currency. In the past years Bitcoin became the most popular and accepted virtual currency on the market. Bitcoin has several benefits such as the ability of making anonymous transaction with any user in the world without making use of a third party. However, it also has some disadvantages, like the risk of hacking or being collapsed due to competition, also the volatility of this virtual currency and the deflationary nature which makes it difficult to become a unit of account. The most important con is the fact that Bitcoin is becoming more and more popular and therefore there is a high exposure to the government regulation.

The future prediction for this crypto currency is difficult to be made. There are several similarities between Bitcoin and fold and there are supporters of the Austrian School of Economics agreeing this idea.

Bitcoin as a legal tender and also as a national currency can be associated with the fold standard which was difficult to counter. Therefore, it is difficult to imagine a return to a fold standards when the central banks and governments have no power in case of an economy shock.

In conclusion, it is not very possible that Bitcoin will become a mainstream currency challenging Euro and the US Dollar. However, the Block Chain technology have a high potential of growth in this sector.

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7. Bibliography

ANDERSEN, C. B. (2016). THE POTENTIAL AND FUTURE OF THE MARKET. AARHUS UNIVERSITY. Franco, P. (2015). Understanding Bitcoin. Chichester: Wiley. Halaburda, H., & Sarvary, M. (2016). Beyond Bitcoin. Palgrave Macmilian. Kemmerer, D. (2013). Retrieved from http://www.encyclopedia.com/topic/Gold_standard.aspx Maras, E. (2015). Cryptocoinsnews. Retrieved from https://www.cryptocoinsnews.com/mexican- coffee-chain-begins-accepting-bitcoin-university-coffee-shop/ Miller, M. (2015). The Ultimate Guide to bitcoin. Indiana: Pearson Education. Mises. (2016). Retrieved from https://mises.org/about-mises/what-austrian-economics Ross, S. (2015). Investopedia. Retrieved 2016, from http://www.investopedia.com/ask/answers/061915/how-does-block-chain-prevent- doublespending-bitcoins.asp SatoshiLabs. (2016). Coinmap. Retrieved May 2016, from https://coinmap.org/#/world/35.88905008/-19.16015625/2 MANKIW, N. G., REIS, R., WOLFERS, J., 2003. Disagreement about Inflation Expectations. NBER Macroeconomics Annual 2003, volume 18. SURDA, P., 2012. : is Bitcoin an alternative to fiat currencies and gold? http://dev.economicsofbitcoin.com/mastersthesis/mastersthesis-surda-2012-11-19b.pdf GRAF, K., 2013. On the Origins of Bitcoin. Stages of Monetary Evolution. Creative Commons 3.0.

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Vysoká škola: BANKOVNÍ INSTITUT VYSOKÁ ŠKOLA, a. s.

Oborová katedra: Seznam kateder

Akademický rok:

Student:

Studijní obor: Téma práce:

Topic work:

Cíl práce: Analýza, návrh a programová realizace rozvrhu vyučovacích hodin na vysoké škole.

Metoda: Popisná, analytická

Rozsah práce: Min. 60 stran

Struktura práce: Teoretický úvod Analýza problému Návrh řešení Programová realizace a testování

Základní prameny a odborná literatura: JIRÁSEK, Alois: Programování rozvrhů. SNDK Praha, 2000. JIRÁSEK, Alois: Programování rozvrhů. SNDK Praha, 2000. JIRÁSEK, Alois: Programování rozvrhů. SNDK Praha, 2000.

Souhlasím se zadáním (podpis, datum):

......

student

…………………………….… …………………………… ………………………..……. doc. Ing. František Pavelka, CSc. vedoucí práce vedoucí oborové katedry rektor

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