Crypto Currency: Advantages, Disadvantages, and Legal Issues

Crypto currency is a digital currency designed for use as a medium of exchange. It has advantages such as low cost, legal status, and quick transactions, but also has disadvantages such as data security and acceptance issues. Legal issues include liability, jurisdiction, and data privacy. UAE has adopted the strategy of crypto currency to hold 50% of government share. Regulations of crypto currency vary by region.

Crypto currency

Introduction
Crypto currency is a digital currency which is designed to use as a medium of
exchange. It uses cryptography to prevent and verify all transactions as well as it controls all
the formation of new units of a particular crypto currency. This is a currency which has
limited entries in a database that is why no one can change the currency without any specific
condition. The history is attached besides the formation of crypto currency. There were many
attempts attempt by researchers to formulate a digital currency at the time of 90s technology
with the different system such as Flooz, Digicash and Beenz. Fraud, financial problems,
conflicts between the employees and managers were the reasons of failure in many attempts
(Prusty, 2017). In 2009, this currency was founded and it has been seen that an anonymous
programmer or a group of programmers with the name of Satoshi Nakamoto introduced the
currency. This currency was introduced with the name of Bitcoin and Satoshi described that
this coin is peer to peer electronic cash system. This is system done by the blockchain which
is a public ledger of all the transactions and it is available to everyone. Each and every person
in the network is able to see every account balance (Chang, & Svetinovic, 2016). Bloch chain
contains the every transaction that involves the senders and recipients public keys and the
sum of coins transferred. It is observed that the transaction is spread in the network but it
need to confirmed first.
In a crypto currency network, transactions can confirm by miners by solving a
cryptographic puzzle. After confirming the transaction, the transactions become irreversible
and a miner receives rewards with transaction fee. This currency is based on all the
participants regarding the balances and transactions. If the network is not supporting on a
single balance then the system can easily break. To prevent these issues there are many lot of

rules are pre-built. These preventions build the blind trust of the third parties on this concept
(Zalan, 2018).
This concept is different because this concept is completely decentralized; there is no
central controlling authority or no servers involved. It can be said that this concept is closely
resembles with the peer-to-peer file sharing networks. Researchers face many problems at the
time of formulation of currency but payment network is one of the most problems which can
be solving by using double-spending. It is a fake method of spending the same amount twice.
The solution of this problem is a trusted third party which has a central control and kept the
records of balances and transactions of bit coin (Blakstad& Allen, 2018). This method always
required an authority to control the funds and personal details of a person.
People believe that crypto currency is the hottest investment opportunity which is
currently available. Many of people becoming millionaires because of their bitcoin
investment and it is the most recognisable digital currency to date. The price of bitcoin is
continuously rising; it is observed that bitcoin was valued $800 but in 2017 the price of
bitcoin is exceeded$7000. Crypto currency attracts more interest which becomes harder and
the amount of coins received as a reward decreases (Nowiński, & Kozma, 2017).
Pros and cons
Pros
Security and privacy
Most crypto currencies are constructed from the efforts of miners with the security
and privacy in mind. It can be said that the users can expect transactions to be private and
secure. It is an important advantage for the minors because there are many hackers which can

easily hack the transactions and use for themselves. Formulation of one crypto currency takes
many efforts and time so that security and privacy is a major factor for minors.
Legal
Crypto currency is legal but if it is claimed for tax purpose in a correct manner then it
is mentioned as legal currency. It is useful currency and limited which is beneficial for the
economy. The currency opens many opportunity for transactions that develop the economy
(Kaminskaya, & Petrova, 2018). Legality is an advantage for the minor because if it is
claimed as legal currency than they can easily and openly use this for big transactions.
Cost
It is observed that the crypto currency has low transactions cost as compared to the
other payment methods such as PayPal. This currency is formulated by solving the
mathematical problem which is solved with the efforts of a miner. In the other currency,
mining process if used but in this method the only thing which is used is an effort of a
researcher. Thus, it can be said that crypto currency has less cost.
Process
Anyone can formulate the currency with the help of computer and the internet which
can make money mining coins but in the other case the process of mining is different which
takes times as well hard work which is not access by any one.
Decentralisation
It is decentralised currency which can be deflated or inflated just because of choices
of a central government.
Quick process

The transaction of crypto currency is quick, permanents and less risky to fake; these
are the advantages of crypto currency. It has been seen that there are many hackers which can
use the advance technology for illegal work. But in the case of crypto currency, currency is
creating with the security and privacy (Antonopoulos, 2014). It is also a quick transaction
method thus, the miner can easily use without wasting any time.
Cons
Data security
The transaction of miners are secure and private; it is secure from public that no one
can see the transactions but it is not secure from the third parties those are involved in crypto
currency. Third parties are able to see the wallets and exchange transactions because miner
does not secure the data always.
Taxes
The value of crypto currency is change with laws and scarcity of its resources thus it
is difficult for the government to claim tax on this currency. This currency is limited but it is
not clear that how much value the coins have that create confusion which makes difficult for
the government to decide to charge tax value on them. It is a disadvantage for the miners as
well as for government and economy (Sayed, & Abbas, 2018).
Acceptance
Most of people did not accept the crypto currency; there are certain vendors that
accept this currency just because of changing the prices.
Recovery

It is a major disadvantage for miners because there is no way to recover the coins. It
has been seen that if a coin is lost then there is no way to protect the value of a coin in the
account of miner. In this case, miner suffers from loss which is raise due to loss of coin.
Flexibility
It is observed that crypto currency has lack of flexibility of centralised currency just
because of its non-inflationary nature. It has been seen that it is still an emerging technology
which value is not decided because of its fluctuating prices.
Criminal uses
The privacy of crypto currency can be used for legal and for illegal purposes. It has
been seen that Bitcoins opens the door for criminal to take part in these activities like money
laundering, terrorist funding and the exchange of illegal good and services. This currency
supports the many criminals in criminal’s activity (Shafi, Patel, Collins, & Haidermota,
2018).
Crypto currency in UAE
Crypto currency is an application of block chain which is introduced by UAE Crypto
currency strategy in 2011 by Sheikh Mohammed bin Rashid (Shehhi, Oudah, & Aung, 2014).
The main aim of introducing this technology is to attract the 50% share of government
transactions by using this technology (Cayettl, 2018). This technology is first transaction is
globally introduced by Satoshi Nakamoto (whch is a fake name given by a group of people).
Financial Services regulatory authority is the first regulator of this concept in UAE which
regulate and managing the whole activities and issues relating to crypto currency.

Regulations of Crypto currency
In European Union the firm main focuses on data privacy which is the first regulation
of the crypto currency and the firm implementing this regulation by recording the
transactions with the application of block chain. There are many firms which are denies to
implement the rules and decentralised the crypto currency technology to providing the
advantage to the users. It has been seen that in East Asain nations, the firms gives the
importance to business regulation later on this concept (Glotov, & Mihailov, 2018). That is
why the companies are allowed to operate the crypto currency technology without any
restriction. Japan is a country which adopted bitcoin but they are not preparing to hold the
business powered by crypto currency. In South Korea, the community of crypto currency is
increases with the current years which states that this currency is adopted by many companies
of South Korea but this concept is restricted in US.
Effect the economy
Crypto currency is a technology which is used as money which is important for the
monetary transactions. Bloch chain is an application which records all transactions and
allows the representatives to operate the business. Crypto currency helps the nation to reduce
the humanitarian calamities which is caused by transactions. This technology builds the trust
between among the people especially in miners (Loukil, ET AL., 2017). According to world
economy, 10% of GDP will stored in block chain and it can be said that taxes will charge by
using the block chain application in the near future. IBM companies invested $200 million in
crypto currency technology to earn the high interest in the near future or increasing the value
of currency (Park, & Park, 2017).
Legal Issues
Liability

Crypto currency has high level of risk and the main risk is failure of functioning and control.
Jurisdiction
It has been seen that crypto currency has number of problem related to jurisdiction
just because crypto currency cross jurisdictional boundaries (Patel, & Mistry, 2018).
Data privacy
It is observed that data is stored but it has huge risk because this data is enough to
expose the personal details of someone.
Conclusion
From the above analysis, it has been concluded that Crypto currency is introduced as
a medium of exchange. Crypto Currency is an illegal in many places just because the
government confuse to claim the taxes. It was introduced by Satoshi Natamoko in 2009.
There are many advantages of using the crypto currency such as low cost, process, legal and
many others. But it also has many disadvantages which affect the revenue of economy such
as data security, taxes, acceptance in many countries and many others. It has been seen that
Crypto currency technology is increases in South Korea but restricted in US. It also has huge
risk to adopt this currency such as frauds, data security and many others. UAE adopted the
strategy of crypto currency with the main focuses on holding 50 % of government share.
There are also legal issues which are related to crypto currency because it cross the limits of
jurisdiction and it contains the enough data to spread the personal detail of a person. Crypto
Currency technology will develop in near future due to its quick transactions.

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