|Institution:||University of Iceland|
|Full text PDF:||http://hdl.handle.net/1946/20840|
The goal of this project was to find out what exactly cryptocurrency, such as Bitcoin, is and why it has value, what its future outlook is and if it could become the mainstream currency of the future. Bitcoin is a fully decentralized currency. It has value because its supply is limited and there is demand for its low transaction costs, anonymity, investment possibilities and possibilities for use in illegal activities. Its future outlook is questionable as Bitcoin has a few severe disadvantages such as high price volatility, susceptibility to hacking, no protection from a central bank and no consumer protection. It is therefore unlikely that it will catch on as an established currency to the general public, as its two main strengths, anonymity and low transaction costs are not necessarily what the average consumer demands. However the technology behind cryptocurrency and Bitcoin can be applied to other currency or payment systems which could have a lasting impact on how people spend money in the future.