Introduction
Cryptocurrency is a digital form of exchange based on encrypted algorithms, allowing for secure, decentralized transactions without the involvement of traditional financial institutions.The term "cryptocurrency" stems from "cryptography," which refers to the method of securing communication to ensure it reaches the intended recipients without third-party interference. The underlying technology of cryptocurrencies, such as blockchain, enables the private exchange of value, making it an increasingly popular alternative to conventional banking systems.
Despite resistance from various governments who view it as disruptive, cryptocurrency has gained significant momentum, with over 15,000 cryptocurrencies globally and a market capitalization of approximately $300 billion (Russell, 2020).
Cryptocurrencies are now integrated into a variety of applications, from ATMs to e-commerce, and even in securing passwords.
The concept of cryptocurrency was first introduced in 1989 by an American cryptographer who developed digital cash. Since then, numerous programmers have enhanced the algorithms that power encrypted digital currencies.
The first cryptocurrency transaction was recorded on January 12, 2009. Over the years, cryptocurrencies like Bitcoin and platforms such as Coinbase have become more user-friendly, even for individuals with limited technical knowledge.
Bitcoin, the world's largest digital currency, has been particularly noted for its stability in exchange rates.
Ethical SWOT Analysis
Initially, cryptocurrencies had little to no value, but over time, they have gained considerable merit, with many individuals now making significant profits through trading.Strengths
Cryptocurrencies leverage blockchain technology, a decentralized, transparent, and secure system that eliminates the need for third-party intermediaries. This allows for faster, more efficient transactions with minimal government interference.Blockchain technology has played a crucial role in alleviating economic uncertainties for many users. Additionally, cryptocurrency transactions are completely anonymous and untraceable (Al-Amri et al., 2019). The system's private network ensures that users’ financial information remains confidential.
Upon registration, each user receives a unique PIN, which changes when the currency is sold, granting access only to the sender and receiver.
This heightened security has attracted a growing number of people to cryptocurrency trading (Billah & Atbani, 2019). The simplicity of transactions and low or zero settlement fees further enhance its appeal.
Weaknesses
In its early days, cryptocurrency transactions were quick and efficient. However, as the market has grown, transaction speeds have slowed, and the blockchain network has become congested.As the market continues to expand, further delays in transaction speeds are expected (Billah & Atbani, 2019). Until this issue is addressed, cryptocurrencies may not fully replace fiat currency. Additionally, the encryption of transactions can make it difficult to recover lost wallet passwords (Al-Amri et al., 2019), resulting in some users losing access to their funds.
The value of cryptocurrencies has also been volatile, raising concerns about their reliability as a long-term investment. With only a decade of existence, the future of cryptocurrencies remains uncertain.
Opportunities
As society shifts towards a cashless economy, cryptocurrencies are becoming more widely accepted. Major companies, including Amazon, now accept Bitcoin as a form of payment, signaling the potential for cryptocurrency to become a global reserve currency (Al-Amri et al., 2019).Recent data breaches in banks and financial institutions have heightened concerns about the security of personal data, prompting individuals to seek safer alternatives. Blockchain's encrypted nature offers a promising solution to protect customer information.
Furthermore, cryptocurrency could streamline international trade by reducing bureaucracy and enhancing efficiency.
Threats
The anonymity provided by cryptocurrencies presents challenges for regulatory authorities and governments, particularly in combating illegal activities.The untraceable nature of transactions makes it difficult for law enforcement to monitor and prevent criminal use of cryptocurrencies. As more criminals adopt cryptocurrency, it could become harder for governments to regulate and enforce laws.
Although governments have started focusing on the potential for cryptocurrency profits, they may impose taxes or create regulations to limit the growth of the market. The rise in the number of competing cryptocurrencies has also led to unhealthy market dynamics, causing instability.
Additionally, environmental concerns associated with cryptocurrency mining have led some countries to ban the activity altogether.
Historical Context and Ethical Considerations
Cryptocurrency originated in 1989, but the first transaction using Bitcoin occurred in 2009. Initially, Bitcoin's value remained low, and its future was uncertain. However, in 2013, Bitcoin's price surged from $1 to $1,250 per coin (Wang et al., 2022).This dramatic increase in value drew attention to the cryptocurrency market, leading to the emergence of various other coins. The market experienced further growth in 2020, partially driven by the COVID-19 pandemic.
The year 2021 saw a surge in cryptocurrency adoption as more financial institutions and pension funds began recognizing its legitimacy. As these organizations profited, the U.S. government began considering taxation on cryptocurrency transactions, estimating a $10,000 tax revenue from crypto trading each month (Wang et al., 2022).
Equity Impact Assessment
Cryptocurrency has had a profound social impact since its inception. It has provided an affordable and reliable method for remittances, benefitting people worldwide (Wilson, 2019).Cryptocurrencies have supported global social impact initiatives, eliminating corruption and inefficiencies. For example, the United Nations World Food Programme uses blockchain to distribute cash-based transfers, saving millions of dollars and benefiting numerous individuals (Wang et al., 2022).
Cryptocurrency also plays a role in political funding, particularly in countries where political donations are not fully regulated. For instance, during the 2016 U.S. presidential election, it was reported that funds were transferred from Russia to the U.S. via cryptocurrency (Ajmi & Arfaoui, 2020).
In Ukraine, government officials have disclosed ownership of large amounts of Bitcoin, further highlighting the influence of cryptocurrencies in politics.
Code of Ethics
A code of ethics is essential for regulating the activities of cryptocurrency companies, ensuring they operate within legal frameworks.Crypto companies must adhere to the laws, rules, and regulations of the jurisdictions in which they operate. They must comply with securities laws, avoid insider trading, and fulfill disclosure requirements.
Anti-bribery laws, payment regulations, and health and safety rules also apply to the cryptocurrency industry (Ajmi & Arfaoui, 2020).
Conclusion
In conclusion, the analysis of cryptocurrency growth highlights its increasing global adoption. While a lack of understanding and regulatory oversight remains a significant challenge, well-implemented policies could accelerate its growth.However, the volatile nature of cryptocurrencies makes them a risky investment for beginners. Despite the potential for profit, traditional investments such as stocks, bonds, and shares are more trusted by institutional investors.
Cryptocurrency offers promising opportunities, but its unpredictable nature and market volatility caution against heavy reliance on it for long-term financial planning.
