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Bitcoin is part of a new wave of financial technology – or fintech – innovations. These innovations are disrupting the technical, highly regulated financial industry that has been dominated by large banks and other financial institutions.After three years of trading in relative obscurity, the emergence of bitcoin in 2013 as a viable cryptocurrency is promising both to open up new possibilities to entrepreneurs and incumbent firms and to pose challenges to regulators such as the U.S. Federal Reserve. Rising in value from just $0.05 in mid-2010 to over $1,000 by November 2013, bitcoin is to some people the 21st century version of Tulipmania and to others a viable alternative to fiat currencies. Bitcoin’s popularity has prompted the development of competing cryptocurrencies, the establishment of a foundation to promote its interests and the emergence of legitimate and grey market entrepreneurs looking to capitalize on the currency itself and its features. Its position as a currency concerns regulators around the world, and hackers have already exploited security gaps in service providers such as Mt. Gox, a bitcoin exchange platform, for their own benefit. Looking at recent developments, what will the future of bitcoin be?
The case can be used for undergraduate, MBA and executive business programs as well as courses in political science, public policy and sociology to discuss the following:
- The technological and social dimensions of innovation, entrepreneurship and new business models.
- The history of bitcoin and how cryptocurrency works.
- The emergence of new business segments to exploit the advantages of cryptocurrency.
- The rise of decentralized technology communities and organizations and of piratical and libertarian social movements.
- Issues of Internet governance and state sovereignty.
Information, Media & Telecommunications
United States, Small, 2014
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