With a growth in technology in the past 10 years, online marketplaces have experienced a significant economic boom. Although significant in their ability to reach a wide range of consumers, the growth of ecommerce has resulted in unforeseen challenges. Particularly, the creation of the cryptocurrency, ‘Bitcoin’.
What is Bitcoin?
Bitcoin is a form of cryptocurrency which enables payments to be sent between users electronically.
Bitcoins can be used to book hotels on Expedia, buy gaming software and equipment or even shop for furniture.
- Bitcoins have become an increasingly attractive form of currency as it allows consumers to purchase merchandise anonymously.
- By using free software, consumers can buy or sell bitcoins without passing through a central authority, such as a bank or payment gateway. This attracts people who are uncomfortable with the control that banks or government institutions have over their money.
- International payments are also made easier with Bitcoins, as they surpass any country’s regulation and are not subject to any credit card fees.
- Bitcoin is a decentralised system of commerce. This means that no single institution controls the Bitcoin network.
The problem with Bitcoin?
- The operation of cryptocurrency is mostly unregulated
- Governments are concerned about taxation and their lack of control over the currency
- The anonymity of bitcoin has created a currency of choice for people to buy drugs or participate in other illicit activities online
- Bitcoin wallets are not insured by the Federal Deposit Insurance Corporation (FDIC) which means consumers funds are left vulnerable. A consumer who stores their funds in the cloud run the risk of having their servers hacked and funds stored on the computers of consumers can be destroyed by electronic viruses.
- Bitcoin transactions cannot be reversed, unlike electronic transactions as there is no central adjudicator which would authorise this return
If you would like to discuss any issues raised in this article, please do not hesitate to contact our team at Freedman & Gopalan Solicitors, on 02 8999 9837 or fill out the enquiry box and we will get back to you ASAP.