Bitcoin Economics
This week’s reading centered around Bitcoin Economics. For this week’s research paper, search the Internet and explain why some organizations are accepting and other organizations are rejecting the use of Bitcoins as a standard form of currency. Your paper needs to identify two major companies that have adopted Bitcoin technology as well as one that has refused accepting Bitcoin as a form of currency. Be sure to discuss each organization, how they adopted (or why they won’t adopt) Bitcoin, and what recommendations you have for them to continue to support Bitcoin (or why they should support Bitcoin).
Your paper should meet these requirements:
Be approximately four to six pages in length, not including the required cover page and reference page.
Follow APA 7 guidelines. Your paper should include an introduction, a body with fully developed content, and a conclusion.
Support your answers with the readings from the course and at least two scholarly journal articles to support your positions, claims, and observations, in addition to your textbook.
Be clearly and well-written, concise, and logical, using excellent grammar and style techniques. You are being graded in part on the quality of your writing.
Sample Answer
Bitcoin Economics
Cryptocurrency is one of the significant business trends. It is referred to as the digital currencies used to buy goods and services, such as Bitcoin. Businesses and individuals use Bitcoin to buy, sell, and exchange directly, without an intermediary like a bank. This digital currency is decentralized, and therefore it is not controlled by any one organization (Porras-Gonzalez et al., 2019). Since its inception in 2009, its value has increased dramatically, and it has also served tens of millions of transactions. It was worth $0 when it was first introduced in 2009. It rose to $ 1 in April 2011. Currently, it values about $ 64 271.82. This crypotcurrency offers various benefits to business, including simple, real-time, and secure money transfers, and also provides an avenue for managing the risks and opportunities of engaging in digital investments (Porras-Gonzalez et al., 2019). On the other hand, this digital currency is highly volatile and potential for significant losses, and it is unregulated (Dumitrescu, 2017). Currently, bitcoin is getting accepted widely by big companies, such as Microsoft and Tesla, Inc. as their payment option (San, 2021). In contrast, other companies like Alibaba have declined to adopt crypotcurrency due to its weaknesses. This paper identifies two major companies that have adopted the Bitcoin currency and one company that has refused to accept Bitcoin as a form of currency.
Microsoft is one of the big companies that have accepted Bitcoin as a payment option (Iglesias de Ussel, 2017). This is one of the giant American technology companies. It provides various IT-related products and services, such as computers, electronics, and computer software. Its customers use the cryptocurrency to purchase particular Microsoft services, including games, videos on Xbox game consoles, and Microsoft software. The company accepted the cryptocurrency in 2014 after conducting a survey regarding the use of bitcoin in making payments for its services like on its Xbox game console online shop (Iglesias de Ussel, 2017). Later, the company suspended the payment option but implemented it again in January 2021. However, the company did not make an announcement to officially support the use of Bitcoin currency in payments in its online services, and the company is open to accepting Bitcoin as a form of payment (Tuwiner, 2021). Besides, Microsoft has made other significant steps towards enhancing Bitcoin technology. For instance, this technology company has partnered with BitPay, a Bitcoin payment processor, LibraTax, a Bitcoin tax Service Company, and Manifold Technology, a blockchain rewards platform, to enhance its services.
Tesla, Inc. is another big company that has accepted Bitcoin as its mode of payment (San, 2021). This is an American vehicle manufacturer that designs and manufactures electric cars, batteries, and solar panels. In January 2021, the CEO reported that the company had updated its investment policy to allow it to diversify and maximize its returns. The policy permitted Tesla to invest a fraction of its income not needed to sustain sufficient operating liquidity in other reserve assets, like digital assets and gold-exchange-traded funds. Later in March 2021, the CEO of this vehicle manufacturing company announced that it has started allowing its customers to use Bitcoin to buy Tesla products. Also, the company had invested an aggregate of $1.50 billion in cryptocurrency under the new rule (San, 2021). Besides, he added that the company is likely to purchase and hold digital assets in the future, both short-term and long-term. However, Tesla suspended vehicle purchases using Bitcoin due to the environmental issues associated with Bitcoin technology. Bitcoin mining and transactions need a lot of energy (San, 2021). Miner uses a mechanism called proof-of-work to power their networks. This mechanism requires a large amount of energy to run, thus raising questions about its environmental impacts. As a result, Tesla suspended the use of Bitcoin in purchasing its products until the percentage of renewable energy usage is most likely at or more than fifty percent (San, 2021). The CEO has promised to start accepting Bitcoin again if this condition is met.
Even if Bitcoin is getting accepted widely by large companies as their payment option, other big companies, like Alibaba Group, have declined to adopt it. Besides, the founder of this company, Jack Ma, supported that company will not use bitcoin at any point in the future. He described Bitcoin technology as an economic bubble that is unreliable and could affect the company’s earnings (Mukabi & Vu, 2019). Currently, the company allows its customers to use Alipay to make payments for the products offered on the site. There are various reasons why this company does not accept bitcoin. The other reason why this company does not accept bitcoin is because of its nature. Alibaba is not only an e-commerce website but also a holding company for 13 subsidiaries (Mukabi & Vu, 2019). Its customers with bitcoin debit cards can only buy goods and services on Alibaba by first converting the digital currency into fiat currency to make the payment.
