Abstract

Bitcoin, a digital currency, was valued at more than $500 per unit in May 2016, its highest recorded value since 2014. Bitcoin was invented by a person with the pseudonym Satoshi Nakamoto (Nakamoto) in October 2008. In a white paper titled “Bitcoin: A Peer to Peer Electronic Cash System”, Nakamoto proposed that the cryptographic currency could solve the problem of double spending by generating computational proof of the chronological order of transactions. The currency was decentralized, not backed by any government, and had minimal transaction costs. The case focuses on the benefits, challenges, and potential of Bitcoin as a currency. It also introduces the readers to the history of money, evolution of digital currency, and the origin of Bitcoin.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• To learn about Bitcoin and its evolution as a digital currency and to understand the perspective of Nakamoto behind creating the first crypto-currency.
• To analyze whether Bitcoin satisfies the characteristics of a currency.
• To discuss the benefits of Bitcoin as a currency and how it addressed the shortcomings of the existing monetary system.
• To discuss the challenges that Bitcoin faced in being accepted as a mainstream currency.
• To critically analyze the potential of Bitcoin as an alternate currency.

Keywords

Bitcoin, Blockchain, Satoshi Nakamoto, Currency, Monetary system, Bitcoin Mining, Digital Currency, Digital Signature Technology, Payment Technology