International Financial Management Case 2:

Bitcoin as an international digital currency Bitcoin and other cryptocurrencies based on blockchain technology have been around for over a decade now. The former President of the European Central Bank, Mario Draghi, was asked about Bitcoins. He told Debating Europe he would not call Bitcoin a currency for a couple of reasons. One of them was that a Euro today is a Euro tomorrow. Its value is stable. The value of Bitcoin oscillates wildly. Isnt this a big problem for cryptocurrencies like Bitcoin? How can we use them as currency if their value is not stable?

Mr. Josh, who is an owner of a digit currency on the other hand argues for a Bitcoin as follows: Our current system is not so rosy. Just look at what happened in 2008: we placed our money in banks and they failed us. Whats to prevent that from happening again? Do you have a say in the European Central Banks (ECB) or the US Federal Reserves monetary policy? We are already living with a highly volatile system, which could be pushed to the brink should another financial crisis occur. Cryptocurrency offers a possible alternative to our failing financial system. Is it not wiser to start placing trust in algorithms rather than fallible individuals?

Questions:

1. What are Bitcoins? How do they operate as an international currency?

2. There are two opposing views about Bitcoins. Explain the arguments for and against Bitcoins as a currency?

3. Would do you invest in Bitcoins? Why or Why not? Give detail reasons.