MGT5STR Strategic Management of Crypto Currency
Added on 2020-05-11
13 Pages3127 Words62 Views
Running head: STRATEGIC MANAGEMENTGrowing use of Crypto-currencyName of the Student:Name of the University:Author note:
STRATEGIC MANAGEMENT1Introduction Crypto currency is a new phenomenon of currency that has become a big thing in thedigital world. It is a digital asset that is designed to be used as a currency or medium ofexchange. It uses cryptography for securing the transactions and for controlling the generation ofextra units of currency. In a broad sense, crypto currencies are considered to be the subset ofdigital currencies or virtual currencies (Narayanan et al. 2016). However, it is a lesser knownfact that, these digital currencies were invented as a by product of some other invention. The firstcrypto currency was Bitcoin, and invented by Satoshi Nakamoto. This currency is still the mostused digital currency. Nakamoto never intended to invent this coin. In his paper, ‘Bitcoin: APeer-to-Peer Electronic Cash System”, Nakamoto says that, he wanted tobuild a digital cash system with no central entity being present. He observedthat, the for many decades, the trusted third party based transactionsystems failed, hence, he felt a need for decentralized digital cash system(Nakamoto 2008). This resulted in the invention of Bitcoin in 2009, whichuses the peer-to-peer network for preventing double spending. It has nocentral server or authority. Regarding the security issue, Nakamoto saysthat, if there is no third party, the chances of fraudulent activities getreduced automatically. This currency could be accepted by all parties overthe internet across the world. After Bitcoin was introduced, numerous cryptocurrencies emerged. Some of the major crypto currencies other than Bitcoin(BTC) are, Litecoin (LTC), Ethereum (ETH), Zcash (ZEC), Ripple (XRP), Monero(XMR), Dash (DASH) etc. Litecoin was introduced in 2011, second to Bitcoin.
STRATEGIC MANAGEMENT2It is based on open source global payment network. It offers a fasterconfirmation of transaction than Bitcoin. Ethereum is launched in 2015. Thisuses Smart Contracts and Distributed Applications (Granger 2016). These twoare most common crypto currencies other than Bitcoin. As the world isbecoming more digital with a rapid technological advancement, the era ofcrypto currency has just begun. Mining of crypto currenciesMining of the crypto currencies can generate rewards for the miners. It is a process oflegitimizing and authenticating the crypto currency transactions. In the digital world, people canmake some profit by investing some money in the equipment and spend time in mining thedigital coins. Most of these coins are script based. Hence, knowledge of scripting is a foremostcriterion for mining the coins (Eyal and Sirer 2014). The other basic resources are electricity,computers, internet connections and some cash, needed to mine crypto currencies. Miningrequires many specialized servers, which are not suitable for normal computing and lots ofcooling is required too. When more than 1000 people work in a space, things become difficult.Hardware as well as software, both is required for mining. For a small home based miner, mininga few coins using the home system can be possible. But for mining 100 coins per day for a longtime, large commercial users can only afford the equipment and bear the cost of electricity.Bitcoin has to spend $80,000 as a monthly electricity bill. This amount of money is not feasiblefor a small home based miner (Murray 2016). The mining process requires effort, time and money. One should understand the amountof effort needed and then proceed with the mining. Recording every transaction in the ledger,
STRATEGIC MANAGEMENT3making a block, and adding it to the blockchain by authentication is a time taking process. Aproper hardware needs to be selected. These are special computers, known as mining rig. Next, aproper wallet should be chosen to add the coins. After that, downloading the software andjoining the mining pool are required. Technical knowledge is very essential in this work. Fromwriting a script to making a blockchain, requires effort, training and knowledge. Thus, it can besaid that, larger companies have more of the resources and capabilities than the small homebased miner (Kirkpatrick 2017). Figure 1: Mining process of Crypto currencies
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