Ethereum​ has received a lot of attention since its announcement at the North American Bitcoin Conference in early 2014 by Vitalik Buterin.The natural consequence of its rising popularity has been its constant comparison to Bitcoin, the first virtual currency.It is important for investors to understand the similarities and differences between Bitcoin and Ethereum.Bitcoin, the first virtual currency, was born seven years back.It introduced a novel idea set out in a white paper by the mysterious Satoshi Nakamoto: Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government issued currencies.There are no physical Bitcoins, only balances associated with public and private keys.Over these years, the acceptance of the concept of a virtual currency has increased among regulators and government bodies.Although it isn’t a formally recognized medium of payment or store of value, it has managed a niche for itself and continues to coexist in the financial system despite being regularly scrutinized and debated.

The attempts to understand Bitcoin more closely resulted in the discovery of blockchain​, the technology that powers it.The blockchain is not just the hottest topic in the FinTech world but also a sought after technology in many industries.A blockchain is a public ledger of all transactions in a given system that have ever been executed.bitcoin matrix planIt is constantly growing as completed blocks are added to it.ethereum price predictionThe blocks are added to the blockchain in linear, chronological order through cryptography, ensuring they remain beyond the power of manipulators.ethereum market capThe blockchain thus stands as a tamper-proof record of all transactions on the network, accessible to all participants.nfc bitcoin

The blockchain offers a chance to work at lower costs with greater regulatory compliance, reduced risk, and enhanced efficiency.Blockchain technology is being used to create applications which are beyond just supporting a digital currency.Such applications are often referred to as Crypto 2.0, Blockchain 2.0 or even Bitcoin 2.0.bitcoin faucet miningLaunched in 2015, Ethereum is the largest and most well-established, open-ended decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control or interference from a third party.bitcoin roll scriptEthereum is not just a platform but also a programming language (Turing complete) running on a blockchain, helping developers to build and publish distributed applications.(See also: What is Ethereum?)The potential applications of Ethereum are wide ranging and run on its platform-specific cryptographic token, Ether.

In 2014, Ethereum had launched a pre-sale for ether which received an overwhelming response.Ether is like a vehicle for moving around on the Ethereum platform and is sought by developers looking to develop and run applications inside Ethereum.Ether is used broadly for two purposes: it is traded as a digital currency exchange like other cryptocurrencies and is used inside Ethereum to run applications and even to monetize work.According to Ethereum, it can be used to “codify, decentralize, secure and trade just about anything.” One of the big projects around Ethereum is Microsoft’s partnership with ConsenSys which offers “Ethereum Blockchain as a Service (EBaaS) on Microsoft Azure so Enterprise clients and developers can have a single click cloud-based blockchain developer environment.” While both Bitcoin and Ethereum are powered by the principle of distributed ledgers and cryptography, the two differ in many technical ways.For example, the programming language used by Ethereum is Turning complete whereas Bitcoin is in a stack based language.

Other differences include block time (Ethereum transaction is confirmed in seconds compared to minutes for Bitcoin) and their basic builds (Ethereum uses ethash while Bitcoin uses secure hash algorithm, SHA-256).(See also: Risks and Rewards of Investing in Bitcoin.)However, from a general point of view, Bitcoin and Ethereum differ in purpose.While Bitcoin is created as an alternative to regular money and is thus a medium of payment transaction and store of value, Ethereum is developed as a platform which facilitates peer-to-peer contracts and applications via its own currency vehicle.While Bitcoin and Ether are both digital currencies, the primary purpose of Ether is not to establish itself as a payment alternative (unlike Bitcoin) but to facilitate and monetize the working of Ethereum to enable developers to build and run distributed applications (ĐApps).In sum, Ethereum is an advancement based on the principle of blockchain that supports bitcoin but with a purpose that does not compete with Bitcoin.

However, the popularity and rising market capitalization of Ether brings it in competition with all cryptocurrencies, especially from the trading perspective.Currently, the market cap of Ether (ETH) is more than Ripple and Litecoin although it’s far behind Bitcoin (BTC).On the whole, Bitcoin and Ethereum are different versions using the blockchain technology, and are set to establish themselves, driven by different intentions.Share Published on Jan 13, 2015 Bitcoin as an Emerging Technology Written Report ... Economy & Finance 0 Comments Statistics Notes Views Actions 0 Embeds 0 1.Bitcoin (Technology and UX Project) 1 Course: Digital Marketing Certificate College: National College of Ireland Module: Technology and User Experience Lecturer: Dermot Bradfield Project Title: Bitcoin Authors: Shane Hickey Barry Regan John Torsney Submission date: November 12th 2014 2.Bitcoin (Technology and UX Project) 2 1.0) Executive Summary Summary of the Technology 2.0) Traditional Currency and Money 2.1) What is Bitcoin?

2.2) How does the Technology work?2.3) Balances 2.4) Transactions, Public and Private Keys 2.5) Finite Supply 2.6) Processing Mining 2.7) Summary The Current Uses of Bitcoin 3.0) Introduction: The Current Uses of Bitcoin 3.1) Acquiring Bitcoin 3.2) Storing Bitcoin 3.3) Making Purchases with Bitcoin 3.4) Investing in Bitcoin 3.5) Bitcoin and the Dark Web 3.6) Bitcoin in Ireland Competition 4.0) Bitcoin Competition: An Introduction 4.1) Traditional Currencies as Competition 4.2) Other Crypto-currencies 4.3) Government/ Privately backed Crypto-currencies 4.4) Online Payment Systems as Competition 3.Bitcoin (Technology and UX Project) 3 The Future of Bitcoin 5.0) The Future of Bitcoin: An Introduction 5.1) Entrepreneurial Rubber Stamping 5.2) Governmental and International Institutional Backing 5.3) MasterCard and Patent Filing 5.4) Circle Bitcoin Bank and Mt.Gox 5.5) Don’t cry for me Argentina 5.6) Conclusion: The Future of Bitcoin, the 64,000 Bitcoin Question Bibliography Appendices Appendix A Appendix B 4.

Bitcoin (Technology and UX Project) 4 1.0)Executive Summary Bitcoin is in simple terms a digital currency.It was originally developed in 2009 by a pseudonymous developer named Satoshi Nakamoto.It is a decentralized peer to peer innovative payment network that is powered by its users with no central authority, banks or middlemen.Bitcoins are transferred directly from person to person via the internet without the need to go through a bank or clearing house.This means there are no transaction fees.The technology behind Bitcoin is open source whereby no one owns it.You can send, trade and purchase Bitcoins from your computer, tablet, smartphone or other device to anyone in the world, day or night.This means you can use them in every country, your account cannot be frozen and there are no pre requisites or arbitrary limits (Bitcoin, 2014).Before we explore the technology of Bitcoin and how it works, it is first worth exploring the concept of traditional currency and how money works in today’s market place.

Bitcoin (Technology and UX Project) 5 Summary of the Technology 2.0) Traditional Currency and Money According to the International Monetary Fund website (2014), money is something that holds value over time, can be easily translated into prices and is widely accepted in exchange for goods or services.Many different things have been used as money throughout history, among them gold and silver.Money gradually took the place of the bartering system when commodities like precious metals became more widely accepted as forms of payment.Because these commodities are rare, they became more valuable.Nowadays, we use paper as money which is commonly known as Fiat money.Fiat money is materially worthless but has value simply because a nation collectively agrees to ascribe a value to it.Once paper became the accepted form of currency globally Governments had to provide a guarantee on the value because the paper itself was worthless.Countries control the printing of money which directly affects the value of the money.

As more is printed, each note is worth less.Therefore, the Government limits the overall supply of money, meaning that the money becomes more valuable (Gobry, 2013).Chris Dunn in his video series on Bitcoin (2013) explores the concept of money further and lists four properties that define what money is.It needs to be divisible i.e.broken down into small amounts.It has to be durable – it needs to be able to stand the test of time i.e.it won’t evaporate into thin air.It must be fungible.The Investopedia website (2014) refers to fungibility as “a good or asset’s interchangeability with other individual’s goods or assets of the same type”.To give you an example, this is where one US dollar is equal to the value of another US dollar.It has to be verifiable.You need to be able to verify that it is real and not counterfeit.So how does Bitcoin compare to that of traditional currency and does it have any similarities or significant differences?In many ways Bitcoin is similar to traditional currencies.

It is recognised and has value.It can be used to buy things and its value can change according to market variables.Unlike most traditional currencies, however, Bitcoin is not bound to an institution or country.It is not subject to authorities 6.Bitcoin (Technology and UX Project) 6 like banks or governments that are typically associated with other currencies.Despite its complex technology Bitcoin is based on a simple idea – that people all over the world can exchange products, services and credits freely, instantly and easily without the need for intermediary bodies like banks, merchant accounts or payment gateways (Bit Trade Australia, 2014).Bitcoin is an open source peer to peer digital payment network that offers an alternative to regular bricks and mortar banking.Unlike traditional currency such as Dollars, Euros or Yen, Bitcoin is a decentralised digital currency also commonly referred to as a crypto-currency (Ball, 2011).In simple terms it is digital money being transferred and exchanged from person to person over the internet with no central authority, bank or intermediaries involved.

It is like electronic cash that you can use to pay friends and merchants.Exchanges are made via wallet software rather than the traditional wallet in your back pocket (Bitcoin, 2014).According to the We Use Coins website (2014), there are a number of advantages with Bitcoin.The fees are much lower than online banking as you don’t have to pay an intermediary.You can use them in every country, your account cannot be frozen and there are no pre-requisites or arbitrary limits.2.2)How does the technology work?From a user perspective, Bitcoin is nothing more than a mobile app or computer programme that provides a personal bitcoin wallet and allows a user to send and receive bitcoins with them.The Bitcoin website (2014) breaks the technology down into three parts  Balances – the Block Chain  Transactions – Private Keys  Processing – Mining 7.Bitcoin (Technology and UX Project) 7 2.3) Balances Until the invention of Bitcoin in 2009, online transactions always required a trusted third-party intermediary.

Jerry Brito and Andrea Castillo (2013) provide a nice example of this in action.“If Alice wanted to send $100 to Bob over the internet, she would have to rely on a third party service like Paypal or MasterCard, Intermediaries like PayPal keep a ledger of the account holder’s balances.When Alice sends Bob $100, PayPal deducts the amount from her account and adds it to Bob’s account.Without such intermediaries, digital money could be spent twice.Imagine there are no intermediaries with ledgers and digital cash is simply a computer file, just as digital documents are computer files.Alice could send a $100 to Bob by attaching a money file to a message.But just as with email, sending an attachment does not remove it from one’s computer.Alice would retain a copy of the money file after she had sent it.She could then easily sell the same $100 to Charlie.In computer science this is known as the ‘double spending’ problem and until Bitcoin it could only be solved by employing a ledger-keeping trusted third- party” (Britto and Castillo, 2013).

Bitcoin has solved this double spending problem which is one of the reasons why it has gained so much popularity.The way it does this is through its distributed peer to peer network which works similarly to bit torrents.Every transaction that occurs in the Bitcoin economy is registered in a public, distributed ledger, which is called a block chain.Bitcoin protects against double spending by verifying each transaction added to the block chain to ensure that the inputs for the transaction had not previously been spent.In essence, the global peer-to-peer network takes the place of the intermediary (Ramzan, 2013) In other words, the Bitcoin currency is controlled by the consensus of the market participants and to reiterate no one person or one group controls the Bitcoin network.Bitcoin (Technology and UX Project) 8 2.4) Transactions, Public Keys and Private Keys website (2014), “a transaction is a transfer of value between Bitcoin wallets that gets included in the block chain”.

When a user wants to buy, sell and transfer Bitcoin they are given a Bitcoin address.A Bitcoin address is the pairing of a public key and a private key.A public key is a code you share with people to receive money and transfers.A private key is used to protect Bitcoin user’s transactions.Essentially it is a secret number that allows Bitcoins to be spent securely.This key is needed to spend and move available funds in your Bitcoin account.Private keys can be kept on computer files and also if the code is short enough they can be printed on a piece of paper.“The private key acts as a digital signature during a transaction to verify the identity of the Bitcoin user.The signature also prevents the transaction from being altered once it has been issued” (Bitcoin, 2014).The Bitzuma website (2014) provides valuable insights into the important role that Private Keys and Public Keys play in the Bitcoin network.“Imagine Alice wants to pay Bob 10 bitcoin (BTC).

She begins by creating a transaction identifying Bob as the payee and 10 BTC as the amount to be transferred.Alice then broadcasts this transaction to all users of the Bitcoin network.In using this system, Alice faces two fundamental problems.First, she needs a way to identify both herself and Bob in the transaction.Alice can't employ a central authority such as a government registry or email provider because that would conflict with Bitcoin's decentralized, trustless nature.Second, Alice needs a way to prevent others from changing her transaction and forging transactions in her name.Bitcoin solves these problems through a system called public key cryptography.This system uses two pieces of information to authenticate messages.A public key identifies a sender or recipient, and can be distributed to others.A private key is used together with the public key to create an unforgeable message signature.The private key must be kept secret.Public and private keys are mathematically linked” (Bitzuma, 2014).

So in summary the public and private keys are designed to protect the security of Bitcoin users’ transactions.Bitcoin (Technology and UX Project) 9 2.5) Finite Supply Bitcoin was designed as an online currency and commodity that is deflationary by nature.It is modelled on existing commodities such as gold.Therefore, the Bitcoin supply is finite.There will only ever be 21 million bitcoins in circulation and it is believed that at the current rate of creation, the final bitcoin will be mined in the year 2140 (Volastro, 2014).This maintains the value of the Bitcoin currency.2.6) Processing – Mining The process of mining is to add authority, security and value to the Bitcoin network.Mining is how new bitcoins are created.So how does Bitcoin achieve this and how does one mine Bitcoin?The production of bitcoins is called mining with millions of dollars mined or exchanged electronically each day.Every Bitcoin transaction is verified using an extremely complex algorithm and these verifications are done by a large network of mining computers competing against each other (Coindesk, 2014).

When a miner successfully verifies a transaction, he or she is rewarded with a small amount of bitcoin and can also receive a transaction fee.This is also how new bitcoins are introduced into the system (Bitcoin, 2014).According to the Bitcoin website; “Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain.It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system.To be confirmed, transactions must be packed in a block that fits very strict cryptography rules that will be verified by the network.These rules prevent previous blocks from being modified because doing so would invalidate all following blocks” (Bitcoin, 2014).A considerable amount of mining is required to verify a block of transactions.This amount is automatically generated by the network so that the bitcoins are always created at a predictable and limited rate.

Bitcoin (Technology and UX Project) 10 The Bitcoin Wikipedia page states; “Mining is intentionally designed to be resource intensive and difficult so that the number of blocks found each day remains steady.Individual blocks must contain a proof of work to be considered valid.This proof of work is verified by other Bitcoin nodes each time they receive a block” (Wikipedia, 2014) Your bitcoins are stored in your digital wallet similar to an online banking account.When you purchase, transfer or exchange bitcoins an electronic signature is added.After a few minutes the transaction is verified by a miner and permanently and anonymously stored in the network (Bitcoin, 2014).2.7) Summary The Bitcoin technology is highly complex and this section is very much an introduction to how the technology works.Over the next number of sections we will provide a more detailed breakdown of how to acquire bitcoins, how to make purchases with bitcoins, how to invest bitcoins, competitors to Bitcoin and what future we see for Bitcoin.

Bitcoin (Technology and UX Project) 11 3.0) The current uses of Bitcoin: An Introduction So you now understand the general concept of Bitcoin and how the technology works.In order to see what you can do with Bitcoin we need to examine how you can acquire Bitcoin and then what you can use Bitcoin for.3.1) Acquiring Bitcoin Chris Dunn deals with the first scenario in terms of the acquisition of Bitcoins.Essentially there are three different ways to acquire Bitcoins (Dunn, 2013): 1) Buy (From a person or an Exchange) 2) Barter (Sell product or service for Bitcoins) 3) Mine (Run software to find Bitcoins) Most people will not have the resources to set up as a merchant selling products or services just to acquire bitcoins.Similarly, mining bitcoins requires expertise and very expensive software.Buying is simplest and there are two routes to acquiring Bitcoins; to buy them from a person or from an exchange.Peer to Peer: In order to make a peer to peer Bitcoin transaction you need to set up a Bitcoin wallet which will allow you to digitally send and receive Bitcoin.

As a working example if you want to buy .1 of a Bitcoin from someone, remember it’s a highly divisible currency, you need to physically or digitally pay them in real currency and give them your Bitcoin address.They will send the Bitcoin to your wallet and then wait several minutes for the transaction to be verified by the Bitcoin miners.Bitcoin (Technology and UX Project) 12 Purchase from an Exchange: There are number of online Bitcoin exchanges such as Coinbase (US only) and Bitstamp (Passport/Utility Bill required).They will typically charge in the region of 1% as a fee on the transaction.So if you are purchasing €100 worth of Bitcoin you will pay €1 in commission to the exchange (Weusecoins, 2014). where you can arrange to meet Bitcoin sellers in your local area.For example you can search for sellers within a certain postal code and arrange to meet them locally (Weusecoins, 2014).You can also find sellers of Bitcoin on sites such as EBay but there are a number of security concerns when pursuing this option (Sun, 2014).

3.2) Storing your Bitcoins.Once you have Bitcoins you will need to store them somewhere and there are normally four types of Bitcoin wallet (Dunn, 2014): 1) Software on local hard drive 2) Mobile 3) Hosted Online 4) Paper 3.3) Making purchases with Bitcoin The next decision is what you are going to do with your Bitcoins.You can either spend Bitcoins or you can use them as an investment.If spending, there are a number of retailers that are accepting Bitcoins both online and offline.Bitcoin has been making great strides in terms of receiving worldwide recognition and also increasing numbers of high profile businesses are now set up to accept Bitcoin.These companies include EBay, PayPal, WordPress, Expedia and Dell (Nasdaq, 2014).Interestingly and in some ways unsurprisingly other companies to back Bitcoin include the Richard Branson owned space travel company, Virgin Galactic (Virgin, 2014).Bitcoin (Technology and UX Project) 13 3.4) Investing in Bitcoin In terms of investing in Bitcoin one should take extreme precaution.

Bitcoin has been a very volatile crypto-currency.Since its 2009 introduction, Bitcoin has increased in value by over 10,000% and there have been multiple price crashes of over 50% or more (Dunn, 2014).The first bubble occurred in June 2011 when the price went from 50 cent to $32 and then crashed to $2 over the course of a few months.In November 2013 the price went from $100 to $1242 dollars and at time of writing, is trading at $325 (Forbes, 2013).There have been some incredible stories regarding early investors in Bitcoin.In 2009 a Norwegian man bought $27 worth of Bitcoin which was the equivalent of 5,000 Bitcoin.He did this as part of a research project that he was writing on encryption.He then forgot about them until 2013 when media coverage reminded him of Bitcoin.When he checked the value of his Bitcoin wallet he found that his 5,000 Bitcoin has a value of $886,000 which allowed him to buy an apartment in a wealthy suburb of Oslo (Gibbs, 2013).

to see a graphical representation of what has happened to the price of Bitcoin over the last four years.3.5) Bitcoin and the Criminal Underworld Given the anonymous nature of Bitcoin transactions it has been adopted as the new currency of the criminal underworld.A detailed BBC documentary titled “Inside the Dark Web” highlighted how criminals using Tor, free software for enabling online anonymity, and one of its online anonymous marketplaces Silk Road were facilitating the sale and purchase of drugs.The payment of these drugs was made in Bitcoin which given the anonymity of its users was a perfect match (BBC, 2014).While the Silk Road website was eventually shut down and criminal charges were brought against those involved this has tainted the public’s perception of Bitcoin.Unfortunately given the anonymity of Bitcoin owners and their transactions Bitcoin will always be very alluring currency to the criminal world.Bitcoin (Technology and UX Project) 14 3.6) Bitcoin in Ireland In Ireland, the very first Bitcoin ATM arrived in late 2013 and is located in the GSM solutions store in Upper Abbey Street in Dublin (Irish Bitcoin Foundation, 2014).

The Irish Bitcoin foundation also provides a list of businesses that now accept Bitcoin and these range from bakeries and takeaways to web design companies (Irish Bitcoin Foundation, 2014).Bitcoin (Technology and UX Project) 15 4.0) Bitcoin Competition: An Introduction Bitcoin is revolutionising two overlapping areas; traditional currency systems, and online payment systems.As a decentralised crypto-currency, Bitcoin offers many advantages over traditional currencies.These are listed above.However, as with so many emerging and disruptive technologies, it is very far from being dominant or even secure in either area.Let’s look at currency first.4.1) Traditional currencies as competition.Traditional currencies are the world’s default system for trade and reserves.Over 6,000 years of currency as a system has left it so embedded in our consciousness that it will take a seismic shift in attitudes before bitcoin or any other crypto-currency becomes as universally understood and trusted.

This is not impossible (the move from barter to currency was a far greater leap of the imagination).This does not need to be a long process.The increasingly rapid adaptation of disruptive technologies is well documented.The rapid development of technology from the personal computer to the smartphone has shown that we will adapt to new systems and will do so faster and less warily with each new wave of technology.However we have never had so much of our personal wealth riding on the right decision to adapt or not to adapt.This offers a natural brake to wholesale adaptation of Bitcoin as a fully-fledged and globally recognised currency.So where is Bitcoin in its journey towards its “tipping point “?We’re well past the early adopters, through the mavens and tantalisingly close to widespread acceptance.The trick for Bitcoin is simply that already achieved by traditional currencies – the stability and value of Bitcoin will be assured when enough of us decide collectively that it is stable and valuable.

There are many other crypto-currencies.Here are some of the most prominent; Litecoin is Bitcoin’s closest competitor in terms of market valuation, $3.828 per litecoin vs.$325 per bitcoin at time of writing (Plus500, 2014).The International Business Times (2014) points out that it also has the advantage of offering faster transactions through more efficient mining.Bitcoin (Technology and UX Project) 16 , 2014) but its unique selling point is not having a cap on the number of coins that can be created.Its developers maintain an inflation rate of 1% (International Business Times, 2014).Supporters claim this will ensure longevity and scalability as the inflation balances devaluation by uncapped production of coins.Freicoin has its unique properties too.Its use of proof-of-work blockchain is based on Bitcoin’s but it levels a “demurrage fee” on those holding or hoarding the currency (IBT, 2014).The intention of this demurrage fee is to ensure continuous circulation of currency, stimulating continuous investment and upswing.

The International Business Times (2014) explains that this is to sidestep the boom and bust cycles caused by our current system.Dogecoin is the joker in the pack.It was set up to poke fun at the whole “craze” but has become incredibly popular.To mix metaphors, Dogecoin could be the dark horse of this race to global acceptance as a full currency (Wilmoth, 2014).Valuations at time of writing show it at $0.2438 (Plus500, 2014), but this snapshot belies the fact that it has increased its value since January 2014 from a base of $0.000328 (International Business Times).This currency offers low barriers to entry, low risk and has an aura of “fun” about it that might paradoxically see it overcome security and trust issues for a large enough section of the public and embed itself as a currency globally.4.3) Government/Privately backed crypto-currencies; Many institutions and exchanges are easing the anxiety the public feels about getting involved in this strange world of crypto-currency.

Through tying it in with established financial instruments they can offer the excitement of an entirely new currency with the safety of insurance against a catastrophic crash.Circle is one such exchange.The Ecuadoran Government has announced a ban on Bitcoin and all decentralised crypto-currencies as it brings in its own version, backed by the Ecuadoran Central Bank.This hybrid could potentially be the strongest competitor and threat to Bitcoin and its alternatives (Perry, 2014).Bitcoin (Technology and UX Project) 17 4.4) Online payment systems; While often compared to Bitcoin, the many varied payment systems available online are not a true threat to Bitcoin as all offer centralised validation of your transactions through a banking system.Apple Pay offers one touch validation through Near Field Communication (NFC) of your purchase (Apple, 2014), Paypal offers a deeply embedded and well established system of online payments.It looks increasingly cumbersome and outdated yet it is trustworthy and backed by the established banking system.

Stripe is making huge inroads into Paypal’s territory, but again services a different requirement to Bitcoin.Rather than competition, Stripe has blogged an intriguing premise – the use of Bitcoin as the “backend” to all financial transaction systems (Stripe, 2014).Bitcoin (Technology and UX Project) 18 5.0) The Future of Bitcoin: An Introduction In order to discuss the future of Bitcoin it is important to be balanced in our approach.There are a number of reasons why Bitcoin should have a bright future such as the lack of transaction fees, the ease of use and the support Bitcoin has received both commercially and institutionally.However, there is also evidence to suggest that the future of Bitcoin may be overshadowed by a lack of consumer confidence, security issues and the fact that its anonymity has been embraced by the criminal underworld.5.1) Entrepreneurial Rubber Stamping The best way to start is with a quote from Bill Gates who regards Bitcoin as a “Technological Tour de Force” (Igotbitcoin, 2013).

Other notable commentators on Bitcoin such as Google CEO Eric Schmidt have remarked “Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value” (Epicenterbitcoin, 2014).Notable business figures such as the Winkelvoss brothers, who famously won a $65 million settlement from Facebook after claiming Mark Zuckerberg had robbed their idea of a Harvard social network are firm believers and investors in Bitcoin.According to the Guardian they believe Bitcoin can be even bigger than Facebook and are said to own 1% of all Bitcoin which has a current market capitalisation in the region of $6 billion (Channer, 2014).It must be noted though that not everyone is backing Bitcoin.Warren Buffet one of the world’s richest men has labelled Bitcoin a mirage and many take the view that Bitcoin is a glorified Pyramid scheme but we must also recognise that Bitcoin is officially recognised by a growing number of International Governments and companies (Forbes, 2014).

Bitcoin (Technology and UX Project) 19 5.2) International Governmental Backing The US has taken a relatively positive stance toward crypto-currencies and Bitcoin.In an interesting twist of fate, the closure of the Silk Road site and resulting Bitcoin seizure has seemingly worked in the favour of Bitcoin.The Wall Street Journal reported that when the United States Marshals office auctioned off the seized bitcoins, the bidders included law firms and major hedge funds thus inadvertently giving institutional and US Governmental support to Bitcoin (Forbes, 2014).In the International community, opinion is divided.China’s Central Bank recently barred financial institutions from handling Bitcoin transactions although private individuals are still allowed to trade in Bitcoin (Bloomberg 2014).Russia has gone further and is drafting a proposal to ban Bitcoin being exchanged into real money given its use by terrorists and criminals (Reuters, 2014).On a more positive note Bitcoin has been recognised by Germany as private money, distinguishing it from a foreign currency or E money, and that it can be used for trading and will be subject to tax (CNBC, 2013).

This is similar to the status that is has in the United Kingdom.For a full list of all countries stance’s on Bitcoin please see the Appendix B.5.3) Financial Institution Reaction Many Financial Institutions though are now instigating research reports into Bitcoin and its ramifications.PayPal’s acceptance of Bitcoin was a massive step forward for the crypto-currency and Forbes have reported that MasterCard has filed for patent allowing them to accept other forms of payment such as Bitcoin and in the same article the suggestion is that “Western Union, Gemalto and Visa have also filed patents to support non-traditional currencies” (Forbes, 2014).Bitcoin (Technology and UX Project) 20 5.4) Circle Bitcoin Bank and Mt.Gox In September of 2014 a new Bitcoin bank was launched called Circle with the objective of competing with PayPal.The company has raised $25 million from venture capitalists in Silicon Valley.Circle is a graduate, like Dropbox and Stripe, of the Y Combinator accelerator programme for technology start- ups.

Their aim is to provide a level of professionalism which is not associated with Bitcoin (Hern, 2014).Clients will be able to deposit money from their own banks into Circle which will convert this into Bitcoin.They are also attempting to alleviate investor fears, by fully insuring deposits.Those fears escalated following the collapse of the Bitcoin exchange Mt.Gox, based in Tokyo, which went bankrupt in February of 2014 when 850,000 Bitcoins went missing.At the time they had an estimated value of $450 million.There was a suggestion that hackers were responsible for the missing Bitcoins (Wikipedia, 2014).5.5) Don’t cry for me Argentina There are many really great advantages to Bitcoin and as to why we it may be a huge success.A real life working example is an excellent way to demonstrate this.Let’s create a scenario where Sergio is a self-employed business man in Buenos Aries.His life savings which have a value of 535,000 Argentinian Peso’s (€50,000) are in a savings account in Banco de la Nacion Argentina.

Argentina has experienced economic crashes and huge inflation wiping thousand from citizen’s savings.If Sergio was to convert his Peso savings into Bitcoin he could arguably avoid the effects of Argentinian monetary policy and protect the value of his savings.Bitcoin has a number of advantages to our modern day currencies and their financially backed institutions including the fact that you do not need to open a bank account in order to purchase Bitcoin making it very appealing in developing countries.A real world example of this was observed during the Cypriot Currency Crisis where consumers fearing for the safety of their deposits in terms of the value being wiped from them and new taxes being introduced turned to Bitcoin as an alternative to having their life savings in a government backed currency (CNBC, 2013).Bitcoin (Technology and UX Project) 21 5.6) Conclusion: The Future of Bitcoin, The 64,000 Bitcoin Question This really is, if you pardon the pun, the 64,000 Bitcoin question.

Opinion is divided across the International Financial, Political and Technology communities.In order to best predict the future of Bitcoin we have looked at some high profile entrepreneurs, governments and Institutions that have made favourable comments and actions.We must also say though that Bitcoin, much like the Internet has been dogged with issues about how it can be abused by the more sinister aspects of society.Bitcoin can be used by criminals and terrorists but these people still use bank accounts and modern day currency so why should we blame Bitcoin and not the governments and institutions who fail to prosecute such activities.The Bitcoin user experience and technology is highly complex.With the current Bitcoin interface, it is difficult to navigate the various Bitcoin online purchase points and ultimately to buy bitcoins.We would be concerned that a competitor such as Apple may be able to simplify the experience and become the dominant player in the emerging digital currency market.

Many of the commentators featured in the documentary film “The Rise and Rise of Bitcoin” believe that Bitcoin will have most success in the developing world where millions of people still have no access to bank accounts and that the Bitcoin will foster trade and stimulate the economies in these regions (The Rise and Rise of Bitcoin, 2014).We think the biggest threat to Bitcoin are its own security issues but once this can be addressed this digital currency which has no borders, no transaction fees, no government intervention and no time delays has a very bright future with a capital B.Bitcoin (Technology and UX Project) 22 Bibliography (Executive Summary) Bitcoin, (2014) “How Does Bitcoin Work”, {Online}.Available from: /en/how-it-works {Accessed 22nd October 2014} Bibliography (Summary of the Technology) Asmundson, I., Oner, C. (2012), Vol.49 No.3, “Back to Basics; what is money”.International Monetary Fund {Online} Available from: /external/pubs/ft/fandd/2012/09/basics.htm {Accessed 28th October 2014} Gobry, Pascal Emmanuel, Forbes, (2013), “All money is Fiat Money”, {Online} available from /sites/pascalemmanuelgobry/2013/01/08/all-money-is-fiat- money/ {Accessed 29th October 2014} Dunn C. (2013) “Bitcoin Basics (Part 1) Explained for Beginners”.

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