Bitcoin and Finance

We discussed the characteristics of bitcoin in class, and then I became very interested in the new cryptocurrency and the new financial ecosystem. When I checked the data, I found that bitcoin was born in 2009, which happened to be the time when the global financial crisis broke out. Just looking at the years, one would think that bitcoin's emergence must have been closely linked to the financial crisis. But David yermack, a professor of finance and business transformation at New York University, said, "bitcoin happened to be launched in 2009, but this is the culmination of several decades of creating digital currencies on a peer-to-peer basis."

In addition, the acceptance of bitcoin varies from country to country. For example, in 2013, the Chinese government issued the "notice on bitcoin risk prevention", announcing that bitcoin was not regarded as an effective transaction settlement tool in China. Yet the dramatic rise in the value of bitcoin in 2013 was followed by a bear market in 2014. During an upswing like bitcoin, the Chinese government choose to shut down trading? To avoid financial risk? Christine Lagarde, head of the IMF, said cybersecurity vulnerabilities and cyber attacks on critical financial infrastructure were other sources of risk because they could disrupt cross-border payment systems and disrupt the flow of goods and services. And rapid monetary growth could create new vulnerabilities in the international financial system.

But bitcoin is legal in developed countries like Japan, the United States and Britain. Even Japan passed a law in June 2016, arguing that digital currencies are similar to fiat currencies and can be used as delivery methods. Other developed countries have recognised its legitimacy and in recent years have developed their own tax rules. Bitcoin, for example, is being treated as an asset by the IRS. In Norway, also regarded as a commodity asset, capital gains tax has been developed. Combined with the above, China refuses to recognize the legitimacy of bitcoin, I wonder if it has something to do with China's centralized politics.

On the other hand, it cannot be said that Bitcoin has nothing to do with the financial crisis. Bitcoin is not controlled by the central authorities, when people are increasingly distrusting the central government and banks to manage the economy. People lose confidence in currency as a useful and value proposition for a neutral global settlement system. In times of crisis, people will increasingly use Bitcoin as a viable alternative to their own troubled currency. But the instability of Bitcoin's value, as Christine Lagarde said of the drawbacks of Bitcoin, I think it is a legal risk, speculative risk and money laundering risk loopholes. It may instead lead investors to a new abyss.

In a word, as a new type of cryptocurrency, the existence and value of bitcoin are full of controversy among countries and individual investors. But I still have a positive attitude towards the future of Bitcoin. Because its legal and various aspects of the system is over time and the economy is constantly improving. The drawbacks we fear now may be solved in the future. Just as the New York stock exchange opened in 1817, stocks began in the same way.

reference:
https://www.loc.gov/law/help/cryptocurrency/china.php
http://www.loc.gov/law/foreign-news/article/japan-bitcoin-to-be-regulated/https://www.marketwatch.com/story/bitcoin-wasnt-a-response-to-the-financial-crisis-says-nyu-professor-2018-09-13https://www.thebalance.com/is-bitcoin-the-answer-in-a-financial-crisis-391275https://www.thebalance.com/bitcoin-and-taxes-391236 

https://www.thebalance.com/how-to-invest-in-bitcoin-391272
https://medium.com/cryptoinferno/imf-warn-of-global-financial-crisis-and-bitcoin-b70a6334c130
https://www.quora.com/If-there-is-a-global-financial-crisis-what-will-happen-to-bitcoinhttps://www.tokendaily.co/blog/what-happens-to-bitcoin-in-financial-crisis