Course - BUS601

Section – 5

Group 1

Submitted by

Rafat Islam 1735363060

Md. Samiul Haque 1715092660

Zakia Ahmad 1611988660

Md. Tanjil Hossain 1735205660

Kifayat Nahiyan Rafi 1735282660

Md. Aminul Islam 1715093660

Ridwan Haider 1725204663

Cryptocurrency: Its
Variations, Popularity & Submitted to

M. Nazmul Amin, PhD

Legality
February 09, 2018
Question No. 1 - What is cryptocurrency? Explain with example.

According to online article Currency (2015), currency is a generally accepted form of money
issued by a government and circulated within an economy. A digital currency is supposed to be
the alternative of traditional currencies. It is a cryptocurrency. Field (2017) suggests that it is a
digital or virtual currency which uses cryptography for security, where according to What is
cryptography? - Definition from WhatIs.com (2014) cryptography is a method of storing and
transmitting data in a particular form which cannot be read and process without authority. But
there’s no centralized controlling server or authority who monitors the transactions.

Figure: https://blockgeeks.com/guides/what-is-cryptocurrency

In cryptocurrencies, the creation of new coins is created by a system known as ‘mining’. The
individuals who take part in the ‘mining’ process are known as ‘miners’. It’s a peer to peer electric
cash system. Though there’s no authorized server there’s no chance of fraudulent activity because
of “Blockchain.” The blockchain is a public ledger of all transactions that happen within the
network available to everyone. Each transaction is a file containing senders and recipient’s public
keys and amount of coin transferred which is then recorded in the public network through
Blockchain.
Question No. 2 - How many cryptocurrencies are out there and what are they worth? Discuss
with example.

The number of cryptocurrencies available over the internet as of 6 February 2018 is 1514 and
growing (“Cryptocurrency market capitalizations,” 2018).

Bitcoin was the first major usable cryptocurrency; its coins generally trade at the highest cost
($7,421.70 on 7 February 2018) (“Cryptocurrency market capitalizations,” 2018).

Bitcoin has the highest market capitalization ($106,172 Billion) itself on the same day which is
roughly 36% of the total capitalization of cryptocurrency market.
Brief Example of Some Cryptocurrencies

Bitcoin

Bitcoin is defined as a digital currency that is supposed to be the alternative of traditional

currencies. The idea of Bitcoin is to make a cryptocurrency that is free of any kind of central
control like traditional currencies. Satoshi Nakamoto in 2009 was successful to develop this
cryptocurrency. It is a “peer to peer” electronic cash system.

Litecoin
Litecoin has first been launched in 2011 which is often referred to as ‘silver to Bitcoin’s gold’.
Charlie Lee, a MIT graduate, created it. It is based on an open source global payment network
which is not controlled by central authority and uses ‘scrypt’ as a proof of work. Similar to Bitcoin,
Litecoin has faster block generation rate and offers faster transaction confirmation. Developers as
well as merchants accept Litecoin.

Ethereum
Ehtereum has first been launched in 2015. The applications on Ethereum are run on its platform-
specific cryptographic token, ether. Ether is like a vehicle for moving around on the Ethereum
platform, and is purchased by mostly developers. Corporations choose Ethereum for its smart
contract capabilities.
Question No. 3 - Why are they popular? Give reasons to support your arguments.

People’s interest in cryptocurrency can be described from the perspective below:

1. Financial perspective

Cryptocurrency has no fixed value rather it is determined by supply and demand. And it is
traded across numerous exchanges. One of the main reasons for financial interest in
cryptocurrency is that, the investment returns in this market are undoubtedly overwhelming.
Bitcoin has shown an approximate 1,500% increase in 2017, while Ethereum has skyrocketed
over 10,000%. There are also less known, and more risky, crypto currencies emerging now
which offer even higher potential returns (Argiro, 2018). Most cryptocurrencies have limited
supplies in circulation. So investors who think that the cryptocurrencies will be the ultimate
form of currencies in the future. So many of them are buying them in a large amount and
ultimately driving its price to astronomical figures. They are treating cryptocurrencies as an
asset instead of a currency because of its scarcity.

2. Technological perspective
Data transparency, integrity, and security are the common reasons for technological interest in
cryptocurrency. Blockchain based applications are open source. There is no need to integrate
online payments gateways like Stripe or PayPal to accept funds from users in this market. Users
in crypto market can send or receive cryptocurrency as a common payment means. Moreover,
the users need not to sign up as they already have an account.
3. Psychological perspective:
The identities of parties in this market are truly kept anonymous. Most of the people don’t want
to be tracked and want to make money with no footprint left. Thus, cryptocurrency is getting
more and popularity in course of time. It protects the account user’s identity online. The
unprecedented investment returns in this industry creates the driving force to invest more and
more.
Question No. 4 - Are cryptocurrencies legal? Discuss considering the global economics.

The legal status of cryptocurrency differs significantly between nations. Many countries explicitly
made it legal while others (Algeria, Bolivia, Ecuador, Kyrgyzstan, Bangladesh and Nepal) totally
banned it (“Legality of bitcoin by country or territory,” 2018).

Bangladesh Bank issued a statement in mid-September 2014 that cryptocurrencies are illegal as it
does not conform to the country’s anti money laundering laws. In December 08, 2017 BB’s deputy
governor SK Sur Chowdhury’s statement seemed as a shift from its previous position as he said
“The matter of the issuance of cryptocurrency by the central bank in the country still needs lots of
research as it has both good and bad sides. We are seriously thinking about it.” (Islam, 2017). But
later in the same month BB again issued a warning against cryptocurrencies citing that it violates
Bangladesh’s Foreign Currency Control Act 1947, Anti-Terrorism Act 2009 and Money
Laundering Prevention Act 2012 (Mowla, 2017).

Because of its lack of regulation, the concern is the possibility of tax evasion and money
laundering. Large companies as well as individual people could easily hide their income and it
would be quite impossible for the regulating authorities to track any of it and could potentially
result in loss of trillions of dollars’ worth of tax (Ali, Clarke, McCorry, 2015).

Additionally, the cryptocurrency history is loaded with a number of unlawful cases. The most
famous of such cases include that of the stealing $534M from Japanese digital currency exchange
‘Coincheck’ on Januray 27, 2018 (“Coincheck: World's biggest ever digital currency 'theft'”,
2018), Mt. Gox’s $473 million USD theft (“Mt. Gox Seeks Bankruptcy After $480 Million Bitcoin
Loss,” 2014), hacking of $31 million USD of Tether Cryptocurrency (“Tether, a startup that works
with bitcoin exchanges, claims a hacker stole $31M”, 2017) and theft of $64 million USD worth
of Bitcoin from cryptocurrency mining platform NiceHash (“More than $60 million worth of
bitcoin potentially stolen after hack on cryptocurrency site,” 2017). Additionally, the role of
cryptocurrency in online black markets is also concerning (Reza, 2015).

The question surrounding the legality of cryptocurrency revolves around the usage of it rather than
the ‘currency’ itself. Most of the countries’ jurisdictions are still struggling to understand what it
really is and how exactly it works, let alone define it in legal terms. Most of their concerns deal
with its decentralized structure and it is quite natural for them to feel this way about a financial
system that cannot be fully controlled.

Word Count – 1034 (excluding questions, headlines, in-text citations and references)
 References

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https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory

Islam, Shariful. (2017, December 9). Bangladesh to expedite introduction of digital currency.
Dhaka Tribune. Retrieved from http://www.dhakatribune.com

Mowla, Golam. (2017, December 27). Central bank issues notice banning Bitcoin in
Bangladesh. Dhaka Tribune. Retrieved from http://www.dhakatribune.com

Dougherty, Carter., Huang, Grace. (2014, March 1). Mt. Gox Seeks Bankruptcy After $480
Million Bitcoin Loss. Retrieved from https://www.bloomberg.com/news/articles/2014-
02-28/mt-gox-exchange-files-for-bankruptcy

Coincheck: World's biggest ever digital currency 'theft'. (2018, Januray 27). Retrieved from
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Browne, Ryan. (2017, December 7). More than $60 million worth of bitcoin potentially
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mining-marketplace.html

Ali, S. T., Clarke, D., McCorry, P. (2015). Bitcoin: Perils of an Unregulated Global P2P
Currency. (Research Report No. CS-TR-1470). Retrieved from ePrint Newcastle
University website: http://eprint.ncl.ac.uk/file_store/production/213785/7FD5FD57-
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Raeesi, Reza. (2015). The Silk Road, Bitcoins and the Global Prohibition Regime on the
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Russell, Jon. (2017, November 20). Tether, a startup that works with bitcoin exchanges,
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