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  • BAE

Difference between Bitcoin and traditional money, such as commodity money and fiat money

Section B

Because the share market experienced significant volatility in early 2016, Molly is a bit concerned about the investment for her children’s education and her retirement as a musician. As an IT engineer, Molly always keeps a close eye on cutting edge news in the technology sector. She expresses some interest in Bitcoin, a type of digital currency, which has become popular in recent years. Although she understands the technical details of Bitcoin, Molly needs more explanation about its financial features, as a type of money and investment.

Prepare an essay to respond Molly’s query. Your response should cover, at least, the following aspects:

1. Whether Bitcoin is qualified as a type of money, based on money’s three functions;

2. The difference between Bitcoin and traditional money, such as commodity money and fiat money;

3. The potential of Bitcoin to compete with fiat money;

4. Australian government’s attitude towards the use of Bitcoin (legislation and taxation);

5. Risks and benefits of holding and using Bitcoin;

6. Observable trend in the price of Bitcoin, as an Australian investor, for past three years (Word limit: 1,500) Notes to Section B • Attempts will be marked based on the quality and depth of research.

• Students need to undertake comprehensive research using all available resources. You need to cite at least 8 references as evidence of their research. More than 8 reference is even better. Reference is not counted in the word limit. 1 Hint: you can read textbook ‘Banning Bitcoin is stupid, Non state digital currencies will soon sweep away our monopoly money’ and view website for basics about Bitcoin. Please avoid plagiarism when citing information from web resources.

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