ISYS100 Research Paper: The Rise of Crypto Currencies and Legal Issues

This research paper, focusing on the ISYS100 course, delves into the rise of cryptocurrencies and the associated legal issues. It begins with an introduction to cryptocurrencies, defining them as digital currencies using encryption for secure transactions independent of central banking systems. The paper then discusses the overview and architecture of cryptocurrencies, particularly focusing on the blockchain technology that underpins them. A significant portion of the paper addresses the legality of cryptocurrencies, examining how different governments regulate or ban them, and the factors influencing these decisions. Key legal issues such as decentralization, the absence of a clear legal framework, volatility, independent wallets, taxation, money laundering, and dark markets are thoroughly analyzed. The report also explores the market factors affecting cryptocurrencies, including internal factors like supply and demand, and external factors such as the crypto market, micro financial market, and political factors. The paper concludes with recommendations and emphasizes the importance of understanding cryptocurrency's potential impact on the financial landscape. The provided paper offers a comprehensive overview of the current state of cryptocurrencies and their legal implications.

Running head: THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
The Rise of Crypto Currencies and Legal Issue
Name of the Student
Name of the University
Author’s Note

1THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
Table of Contents
Introduction............................................................................................2
Discussions.............................................................................................2
Overview.............................................................................................2
Architecture........................................................................................3
Legality...............................................................................................4
Factors affecting market of crypto currencies........................................6
Recommendation:..................................................................................7
Conclusion:.............................................................................................8
References.............................................................................................9

2THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
Introduction
The Cryptocurrency can be explained as the form of digital currencies
which uses the encryption techniques for the purpose of security and the in
order to regulate the generation of the currency and the transfer them to
funds in a verified manner in an independent manner that is without using
any central banking system of any country in the world (Sovbetov, 2018). In
other world it can also be called as a controversial form of digital currency or
digital asset which uses strong Cryptocurrency for securing and transferring
the funds. The Cryptocurrency uses the technique of the decentralised
techniques in oppose to the standard centralised technique which is used
commonly by the banks. The decentralised techniques works well though the
distributed ledger technique, and uses the concept of the block chain. One of
the most common and most used Cryptocurrency is the BITCOIN (Drozd,
Lazur & Serbin, 2018). Although the Cryptocurrency are taking over the
market of the hard cash but many of the governments of countries are
banning them. This is due to the factor that the transaction that are made
though they are hard to them. This paper will discuss about the concept of
the cryptocurrency, some of the major Cryptocurrency in the world and why
many of the governments are banning them and some are accepting them.
Discussions
Overview
The concept of the Cryptocurrency is not new to the world. It
concept first emerged in the year of 1983 when an American cryptographer
David Chaum conceived a anonymous electronic cash called ecash and
named it as Cryptocurrency. Later by the year of the 1995, developed the
system furthermore and implemented tough dig cash (Chohan, 2018). In
order to access the digicash the user would need to have a specific software
in order to withdraw money (notes), through an encrypted system from the

3THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
bank. The method was such that nether the bank nor the government would
be able to trace it down and transferred the money to third party. Like this
after the year of the 1996 many of the other cryptographer tried to utilize
and discovered many of the more Cryptocurrency. Some of the major
changes came in the concept by the year of the 2010. In the year of the
2014 the UK announced a to start looking for to study the concept of the
Cryptocurrency and what role it will play in the upcoming economy of the
systems (Poplavskiy, 2016). The study by the UK government also wanted to
study the impact on whether the government would consider the regulation
of the bit coin or not.
Architecture
In the recent times the entire concept of the Cryptocurrency runs on
the technology of the blockchain. In order to understand the regulation of the
Cryptocurrency, one first needs to understand the concept of the blockchain.
The blockchain can be called as a continuous growing list of records or
blocks which are inter linked and are secured by the cryptography systems.
Each of the blocks in the block chain system is is typically connected to its
previous block, and contains a unique hash pointer used for identifying the
block, a timestamp and a transaction data details. The system is such that
the block chains are resistible to the modification of the data once created
(Kaminskaya, & Petrova, 2018). When there is any traction in between two
parties the details of the transitions are stored in the block chain and cannot
be altered or modified once done, this technique is known as the ledger.
Once the transaction is done, there is no way alter without altering the
subsequent blocks. Block chains are some of the most secured way of
storing details and all the data in the block chain are encrypted. The
cryptography uses this technique for the securing the transitions between
two parties and no one party can change or alter the transaction without
notifying the previous block. The concept of the time stamping helps by
reducing the need of any third party or trusted party like the banks.

4THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
Legality:
As per many of the governments the official currencies of the countries
are transited within legal framework, but the cryptocurrency lacks the
fundamental regulatory frameworks that are needed for the truncations, and
hence possess serious threats pertaining the liquidity of the operation of the
currency (Hayes, 2017). Each of the country in the world have a very and
specific set of rules and regulations for the transitions of the money whether
it a local or foreign currency.It is huge question to the world whether the use
of the cryptocurrency is permeable or not. The legal status of these crypto
currencies varies from government to government and the countries
(Savelyev, 2017). In some countries the use of these cryptocurrency are
permissible for the purpose of the trade and in some these currencies are
totally a crime to use. The first and fundamental issue is to set up the lawful
idea of cryptographic money for the most part three strategies for legitimate
direction can be recognized common law, managerial law, and criminal
law.The definition of the use of the cryptocurrency varies very differently,
like in .the Russia it is legal to buy and sale of the cryptocurrency are fine
but using them to buy goods other than Russian rubble is illegal and
punishable offence (Gandal & Halaburda, 2014). While in the china the use of
the bit coin was banned. In the Irelands the Cryptocurrency are illegal to use
because of the original and old laws followed. Some of the major legal issues
that have come up with time are:
1: Decentralized nature: Unlike the governmental money which have
specified and direct authority control, the Cryptocurrency are decentralized
and cannot be controlled by any of the authorities and also cannot be traced.
2: Absence of well-defined legal framework: Many of the countries in
the world lack an appropriate legal framework to control the value and flow
of virtual currency. Hence creating a hurdle for the government top keep a
follow up of the transaction taking place.

5THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
3: Volatility of the currency: The currency bit the biotins are very much
fluctuating in the nature, like the cost of the bit coin was approx. $.30 in the
year of the 2010 whereas the cost of the bit coin became approx. $4000 in
the year of the 2014 (Karlov, 2018). Hence it can be seen that the value of
the currency are increasing day by day and hence it is becoming difficult for
the government to keep a look and them. The increasing prices are also
creating problems in the taxation systems of the countries.
4: Independent wallets: The wallets that control the cyrptocurrencyes
are created and are regulated by the private organisations and hence have
no regulation to control them due to the lack of the international laws
(Kadyrov, & Prokhorov, 2018).So, the organisations does not have any
responsibility in case of consumer’s loss as well as any type of monetary
crime committed by and through the use of these wallets.
5: Taxation system: This is one of the major concerns of the
governments for the regulation of the cryptocurrency. Many of the countries
sees the Cryptocurrency as the taxation assets (Delmolino et al., 2016). Due
to the feature of the block chain and the pseudo anonymity of the currencies
it can be easily hidden for the purpose of hiding them and task evasion.
Loopholes present in the authorized and tax policy scheme of some countries
permits an individual to apply feature of crypto currencies such as privacy
and absence of or obsolete or improperly implemented systems concerning
crypto currencies.
6: Money laundering: As the transaction of the cryptocurrency cannot
be regulated by the countries governments if there is any case of money
laundering it is nearly impossible for the government to keep up a follow for
the concerning the Cryptocurrency.
7: Dark Markets: Cryptocurrency can also be jumble-sale in provocative
settings in the form of online black arcades, such as the famous Silk Road.
Dark net markets existing encounters in respect to validity (Artemov, et al.,

6THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
2017). In the U.S., bit coins are considered as "computer-generated assets"
or digital assests. This category of abstruse ordering lays compression on
regulation enforcement organizations to familiarize to the unstable drug
trade of dark markets.
Factors affecting market of crypto currencies
The arcade of crypto currencies have been growing with a prompt
speed as many of multinational large organization who are known to control
the economy of the world are investing their money in crypto currencies.
One of such major crypto currencies is the Bit coin, which have become one
of the world’s largest virtual Cryptocurrency and have increased by 1500%
by the year of 2017 (Denis, 2015). Yet, the market place have been much
multifaceted as in other cases. It can be said that the complexity in the use
of the bit coin knowledge have not yet been understood well by any of the
customers and corporations. Consequently, it can be said that there has
been very less amount of information about the Cryptocurrency in the
market. It can also be seen that due to rising price and the complexity of the
Cryptocurrency many of the middle case families are not showing their
interest in this modern day money and it have become the money of the
affordable (Abelseth, 2018). Therefore it can be said that the Cryptocurrency
are bought only by the big organizations and the big businesses who can
afford the same.
The entire market of the Cryptocurrency is based on some of the
market factors, known as the internal and the external factors. The internal
factors include the supply and the demand which deals with the transaction
costs and the reward systems ( Choo, 2015). While the external factors can
be sub divided in three different factors namely the crypto market, the micro
financial market and the political factors. These few external factors
somewhat regulates the use of the Cryptocurrency in the world.

7THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
One of the major driving factor in this case is the political and the
governmental factor. It can be understood that the use of the Cryptocurrency
is banned in some of the countries due high risks associated with the
transaction. Some of this risks are that the there are no any fixed framework
for the regulation of the Cryptocurrency. The Cryptocurrency cannot be
traced by the governmental or the banking agencies and hence possess
huge risk about the authenticity of the currency (Narayanan et al., 2016).
Also these coins are used for the purpose of the terrorism as the government
cannot regulate it. Although some of the countries allow the use of the same
seeing the advantages of the Cryptocurrency. Some of the major advantages
that this government sees are that the transactions done in this system are
instantly settled and there are very less amount of theft while the
transactions are being done. Also the currency is global, other than the
countries barring the use of it.
Recommendation:
IT can be said that the use of the modern day technology is a must do
thing, in the recent coming years it can be said that the Cryptocurrency can
take over the market of the online money or the virtual currency’s. Trades in
the blockchain advancement have been an enormous threats for the money
related researchers (Chuen, 2015). Hence it can be said that the country’s
which bars the use of such currencies can face some of the major problems
with the globalization of the nations. The researchers can truing best to find
out the best possible ways to deal with the ongoing problems that are taking
place with .the Cryptocurrency.
Conclusion:
Thus, concluding the topic, Cryptocurrency is a driven development in
the arcade that is using the option of the digital currency, positioning, and
data association and stimulating control structure retention the true
objective to keep the market running. This progression has helped in

8THE RISE OF CRYPTO CURRENCIES AND LEGAL ISSUE
commencement of virtual money trade between bashes. This development
has been completed in the store business starting late. The market of the
blockchain has been rising wherever all through the world in light of its
ability of automated trade of virtual cash.The virtual trade has no record out
the database and an untouchable vendor to store the information of the get-
togethers.

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References
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Developing a permissioned blockchain network to track Canada's
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Regulation and Control of Virtual Currency: to be or not to
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Chohan, U. (2018). The Narcotized Blockchain: A Potcoin Case Study.
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