ISY10212 Contemporary Issues: Crypto Currency Payment Report

This report provides a comprehensive analysis of crypto currencies as a payment method within the context of contemporary issues in Information Technology (IT). It begins with an introduction to crypto currencies (CCs), defining them as digital tokens and exploring the underlying technology of blockchain. The report then delves into the evolution of payment technology, highlighting how CCs are becoming a viable payment option. Key features of CCs like Bitcoin are discussed, including production mechanisms, maximum supply, storage, and price volatility. The report also examines the disruption CCs pose to traditional payment systems, and identifies key issues such as lack of price uniformity, credibility, transparency, security concerns, transaction delays, and the impact of cybercriminal activities. Public policy implications and the future of crypto currencies are also explored, concluding with a summary of the findings. The report draws on various sources to provide a well-rounded understanding of the subject.

Running Head: IT Write Up
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Communicating with IT
Crypto currencies as a method for payment
(Student Details: )
9/28/2019

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Contents
ISY10212 Contemporary Issues in IT........................................................................................2
Introduction................................................................................................................................2
Crypto currencies as a method for payment...............................................................................2
Crypto-currency and technology associated with it...............................................................2
Crypto-currencies...................................................................................................................3
Crypto currencies as a method for payment: Evolution of payment technology...................3
Key features of CC like Bitcoin.............................................................................................4
Production mechanism.......................................................................................................4
Maximum Supply...............................................................................................................4
Concentration of resource..................................................................................................5
Storage................................................................................................................................5
Trade Unit..........................................................................................................................5
Price volatility....................................................................................................................5
Licensing needs for production..........................................................................................5
Environmental impact of the production procedure...........................................................5
Decentralization.....................................................................................................................5
Disruption of Traditional Payments Systems by CC.............................................................5
Key issues of crypto-currency....................................................................................................6
Lack of price uniformity........................................................................................................6
Credibility..............................................................................................................................6
Transparency..........................................................................................................................6
Security..................................................................................................................................6
Transaction delays..................................................................................................................7
Cybercriminals activities........................................................................................................7
Dump and Pump ICO Schemes..............................................................................................7
Price Manipulation.................................................................................................................7
Trading fees............................................................................................................................7
Public Policy Implications of Crypto-currencies...................................................................8
The Future of Crypto-currency..................................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

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ISY10212 Contemporary Issues in IT
Introduction
This report is based on highlighting contemporary issues in modern information technology
(IT). To do so, a specific domain of IT has been chosen as crypto-currency (CC). In this
context, by identifying, researching and exploring contemporary issues in IT, the world can
sustain into this competitive edge. In general, crypto-currencies (CCs) are modern era’s
digital tokens (Martin, 2018). In other words, CCs can also be seen as a type of digital
currency which allows world to make payments directly to each other with the help of an
online system. It has been researched that CCs are having no intrinsic or legislated value, but
they simply worth what public is willing to pay in the market. Besides, so many types of
crypto-currencies exist in this world, out of which the most well-known is Bitcoin (Infosec,
2012). In this report, the concept of CC will be explained while including how they work, and
what is the utilisation. Most importantly, the major issues related to CCs will be highlighted,
recognized, explained, and explored. In this way, CC as a payment method will be the main
area of research for this research report. While discussing the evolution of payment
technology for identifying the issues which can be raised, different technological innovations
in the context of digital currencies will be discussed. In this way, all contemporary issues in
CC while considering it as a major payment method will be summarized in the later section
of this report.
Crypto currencies as a method for payment
Crypto-currency and technology associated with it
It is well-aware that block-chain is the technology behind the CC. In this context, blockchain
is a specific kind or subset of distributed ledger technology (DLT) (Yao, 2018). It has been
found that DLT can be used to record as well as share data all across the data stores or
ledgers. Thus, block-chain can be referred as a mechanism that uses an encryption
methodology which is often known as cryptography. This method uses a specific set of
mathematical algorithms for creating and verifying a constantly growing data structure (Pay,
2018).

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Crypto-currencies
Being a part of block-chain, CCs refers to a broad array of technological developments which
actually use a cryptography technique. In other words, cryptography as that technique that
protects info while transmitting or encrypting it (Infosec, 2012). This is usually done by
converting it into an unreadable format that can only be decrypted or deciphered by an
individual who is carrying a secret key. In this way, CCs like Bitcoin, are highly secure
through the cryptography technique while utilising an ingenious system containing private as
well as public digital keys.
Crypto currencies as a method for payment: Evolution of payment
technology
In this context, CCs can be used as a method for payment in this modern era with the help of
inventive payments systems like Skrill Quick as well as the Coinbase Debit Card. In addition
to that, some payments service providers who are currently leading the whole industry are
evolving CCs from being a trading commodity into the real world (Tiago & Verissimo,
2014). For example, Paysafe is providing such facilities to this world. It has been found that
CCs can be accepted online or in-store presently. In this context, being a payment innovation,
CCs are being driven by business and customers’ increasing appetite for transacting while
using CCs. Moreover, these CCs will continue to gain as well as evolve popularity in this IT-
enabled world (Wang et al., 2017).

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On the other hand, cryptocurrency may cause issues that are considerable and give more
reasons for staying away from cryptocurrencies such as bitcoins. As mentioned by (Sharma,
2018), recently banks have begun avoiding purchase of cryptocurrency with their debit and
credit cards. For example, Citibank recently mentioned that their debit and credit cards will
not be used for purchasing cryptocurrencies from now. Thus, aforementioned incident is one
over-arching issue which crypto causes. In this way, all of the excellent bits of information is
useful in order to address the issues cryptocurrency causes.
It is anticipated that CCs are going to permanently evolve the way people execute their
payments in this world. In this context, CCs are able to change all of the payment modes
from micro-payments which happen amid two persons, to global financial institutions
transferring billions of dollars instantly. If CC will be used as the payment method all across
the world then time, as well as the cost is taken to execute transitions, will be drastically
minimized irrespective of the place of the transaction in the world (Bohme et al., 2015). CC
is being considered as an efficient payment method because it is a block-chain based payment
system where each of the parties involved, owns a ledger copy over which all the transactions
are recorded. It is worth knowing that every new block on this bloc-chain is typically mined
with network members who are using cryptographic computer technologies. In this way, the
transaction validity in such a block is validated as well as all members in the network update
their ledger copy. In this way, while using CC as a payment method, all involved parties are
having identical records of transactions. Therefore, CC being a payment process is a
transparent system that is able to greatly reduce the possibility of a fraudulent transaction
while making it from the system (Zheng et al., 2018).
Key features of CC like Bitcoin
Production mechanism
In the context of Bitcoin, the production mechanism is known as CC mining which is usually
done while using electrically-powered extraction device. Whenever electricity gets in, digital
commodity gets out (Wang et al., 2017).
Maximum Supply
In the case of CC like Bitcoin, maximum supply is finite as well as known. It has been
observed that supply is presently increasing at C.4% p.a. while hike rate from year-to-year is
always decreasing and thereby it will drop to 0 by 2140 (Lindman et al., 2017).

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Concentration of resource
This feature of CC can be explained as the dynamic concentration which is highly dependent
on world mining power deployed as well as managed every 2016 blocks (Littlejohn & Foss,
2010).
Storage
Storage of CC is inexpensive as compared to conventional currency as it only requires secure
storage for the private keys which are further used to unlock transaction details. The storage
can be online or offline. It is worth knowing that storage can be held via a nominee or
directly (Kokina et al., 2017).
Trade Unit
CC such as Bitcoin usually priced per BTC. It is generally available in quantities ranging
from 1mBTC to 100BTC (Infosec, 2012).
Price volatility
In the case of CCs, price volatility is extremely high as compared to those of traditional
payment methods and currencies.
Licensing needs for production
There are no licensing requirements for production through some specific jurisdictions that
have been imposed on novel commercial operations (Hamida et al., 2017).
Environmental impact of the production procedure
In the context of CC, the environmental impact of the production procedure is viewed as
negative (Maltseva, 2018).
Decentralization
In the last few months, it has been observed that into a decentralized crypto-exchange control
of assets as well as transactional data is private. In this way, exposure to security risks in case
of CC is low (Pay, 2018).
Disruption of Traditional Payments Systems by CC
It is evident that CC is a huge disruption of traditional payment systems as it is replacing the
entire traditional payment industry. In this context, an example of disruption in the modern
payment industry is Ripple (Symantec Corporation, 2019). Besides, the CC of the Ripple is
XRP which is also disrupting traditional payment systems. Here, XRP acts like a digital

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payment network as well as CC that facilitates cross borders’ financial transactions (Martin,
2018).
Key issues of crypto-currency
Although the way of doing payments with the help of CCs, is carrying great security, smooth
functioning, and flexibility, yet there are some issues of CC. Such issues are also highlighted
because of the evolution of payment technology in this era (Tiago & Verissimo, 2014). In this
way, key issues of CC are as follows:
Lack of price uniformity
As we know that price charting is the key part hence developing price charts is essential for
investment analysis as well as for developing trading strategies. This issue of CC suggests
that the price of CC may vary over the distinct exchange platforms. In this way, because of
the extreme price fluctuations, price charting becomes a critically difficult task (Zheng et al.,
2018).
Credibility
As we know that coin offering in the beginning is a great way for attracting investors
however, part of it resulted to be scams. In this way, exchanges require to be strict and careful
enough so as to ensure that the correct assessment is executed (Yao, 2018).
Transparency
In the case of CCs, transparency is essentially important as the majority of ICOs end up
unsuccessful because of this issue. When transparency does not get followed by the firms,
then fraudulent occurs. In this way, lack of transparency, professionalism as well as
accountability from famous institutions may poison the advantages of digital currencies.
Thus, CCs must promote widespread ethical standards as well as professionalism (Gatteschi
et al., 2018).
Security
As of now, the lack of security is one of the biggest issues in the crypto market. Recently,
news of breaches and hackings are making headlines, therefore users are continuously
demanding enhanced protection on their data and assets. In this context, through
remembering that when technology becomes sophisticated the hackers also change
accordingly, this issue can be resolved. In this way, CC exchanges are so vulnerable to

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hacking as they centralise the critical cyber risks. Thus, lack of security is really a weighty as
well as urgent matter in case of CC transactions (Farhadi et al., 2012).
Transaction delays
It has been found that the CC market is usually plagued with a lot of delays all across the
transactions. The system of CC seems quite slow throughout the process of opening a trading
account to validating one’s identity as well as being able to create deposits and thereby
withdrawals. In this way, traders end up missing out their favourable positions as the
transaction does not get posted on time (Fanning & Centers, 2016).
Cybercriminals activities
It has been found that CC has generated a huge number of high-profile CC heists and hacks
which have further resulted in millions of dollars being stolen. Subsequently, investors and
traders have lost funds as well as few platforms which have already ceased to function. This
is the reason that the price of CCs has dropped drastically due to the activities of
cybercriminals (Fanning & Centers, 2016).
Dump and Pump ICO Schemes
As we know that ICOs have emerged for becoming a key part of the current CC market,
hence Dumping and Pumping ICO schemes has become an issue. In addition to that, so many
tokens arrive into the market through ICOs while investors purchasing such tokens in
exchange for fiat money. In this way, this issue of dump and pump ICO schemes will
continue to be an issue for the whole international market because of the lack of regulations
(Couldry, 2012).
Price Manipulation
In this context, many researchers have found that excessive volatility is the biggest issue in
the CC market worldwide. Additionally, the prices of CC on exchange platforms rise as well
as fall dramatically in a short span of time. It is worth knowing that price manipulation in CC
is a huge issue as dropping off a tradable asset by 49% in less than 24 hours, depicts that
volatility of the global market is high which is not favourable (Chaney & Martin, 2019).
Trading fees
Apart from this, there is some vulnerability associated with CC, which can be explained as
follows:

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1. Low scalability
2. High volatility
3. Liquidation Issues
4. Absence of Regulations (Cai et al., 2018).
5. Cyber-security Concerns
6. The Other Side of the Bitcoin
Public Policy Implications of Crypto-currencies
It has been found that policymakers must care about CCs while responding to the
development of digital currencies (Bohme et al., 2015). It addition to that, CCs overlap with
the main elements of the global financial as well as monetary system. In this context, rapid
growth of CCs requires that policy regulators and policymakers consider whether to fit them
into already existing systems while revising those systems for the novel IT-driven world
(Berger, 2018).
The Future of Crypto-currency
From a future perspective, great economic analysts have predicted a huge change in crypto,
which is forthcoming as soon as institutional money enters the market. Moreover, there is a
possibility that CC will be floated on the Nasdaq (Austin & Pinkleton, 2018). Some people

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are predicting that cryptography will need a verified exchange-traded fund (ETF).
Furthermore, an ETF would definitely make it simpler for people to invest in Bitcoin, but
there still needs to be the demand to want to invest in crypto. It has been observed that hybrid
crypto exchanges can represent a viable option that bridges the gap between the benefits of a
centralised exchange and those of a decentralised exchange (Advids, 2018). Subsequently, it
is the way to acquire the trust of numerous users as well as the cooperation of huge investors,
while eliminating the element of subordination to a third-party. CC will be a way to ensure
reliable storage (Agwu et al., 2017).
If there is one thing we can learn from the recent developments and news, it is to look at the
shortcomings of the so-called transparent crypto sphere, realize there is plenty of work to be
done in this realm, and use the combination of technology, knowledge, and accountability to
fight these flaws. Apart from this, for the block-chain & crypto revolution to produce its best
outcomes, it is vital to address the factors which undermine their integrity (Agwu et al.,
2017).
Conclusion
In whole, with the help of this research report, several aspects of crypto-currency have been
explored in detail. The main technology associated with CC has been identified, explained
and explored well. In this way, block-chain technology has been defined with so many
examples of digital currencies like Bitcoin. In addition to that, this paper has analysed issues
related to CC as a payment method. Moreover, how CC can be used as a payment
methodology presently as well as in the future has been discussed well. Apart from this,
while discussing several issues in crypto-currencies, this research has demonstrated essential
features of crypto-currency. Besides, evolution of payment technology while covering
different technological innovations, this paper has successfully researched several issues
related to crypto-currencies such as security, transparency, privacy, transaction delay and
many more. In a nutshell, this study is useful for the readers, leaders and IT experts of present
as well as the future in relation to understanding contemporary issues in IT effectively.

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