Bitcoin Currency Methods Of Adapting To The Economic Crisis

BITCOIN currency – methods of adapting to the economic crisis

Negoescu Gheorghe

[anonimizat]

Ovidius University of Constanta, Romania

Florea Andrei-Mirel

[anonimizat]

Dunarea de Jos University of Galati, Romania

Diaconu Aurora Aurelia

[anonimizat]

Dunarea de Jos University of Galati, Romania

Abstract

Given that the global crisis is a cyclical phenomenon that directly affects the company's existence, this adaptation is a condition more than necessary to carry out an activity in a reliable way.

Adaptation involves choosing innovative solutions that can withstand market in the current context, as the use of virtual currency Bitcoin as an alternative method in order to remove barriers, given that Bitcoin, a virtual currency created six years ago is not supported or controlled by any government or central bank and is freely traded, fluctuating depending on demand.

Key Words: Global crisis, innovative solutions Bitcoin, the virtual currency.

J.E.L. Clasification: F61

1. Introduction

Since ancient times financial crisis was a major problem for the economy of all the forms of weather. In general terms the financial crisis is a situation in which monetary capital loses its nominal value in a short time. Since the crisis the Roman Empire from 235-284 when expansion policy, disease and weather events have resulted policies so powerful empire in collapse, until the crisis in Cyprus and Greece when developing policy and banking system led to over indebtedness same result, the crisis proved to be manifest as a cyclical phenomenon, whose prevention is not dependent on political rhetoric on the economy, does not depend on the entrepreneur seeking ideas for his business, but are generated by macroeconomic developments in the economies of other countries interconnected in terms of financial relations.

2. The crisis in Cyprus

Cyprus crisis was caused by the collapse of Laiki Bank, which resulted in money stuck in accounts that depositors order the wealthy to bear the loss and the bank's liquidation.

Two aspects related of Cyprus bank are highlighted in the figure below:

Figure no. 1. Mainly aspects of crisis influences of banks

Source: Own contribution

The causes of this situation

The banking sector drew billion in deposits, including the Russian oligarchs who have established their business in the State insular advantage of the lowest taxes in the EU. Banks have invested heavily in credit and money Greek debt and massive losses when Greece entered the crisis. Cypriot banks have invested heavily also in even the sovereign debt of Cyprus, a fatal situation in which any losses that would force holders of debt as Greece, would be devastated banks

Figure no. 2. Republic of Cyprus GDP evolution in the period 1980-2012 (annual growth rate in real terms %)

Source: International Monetary Fund, World Economic Outlook Database, April 2013

3. The crisis in Greece

In 2010, Greece was supported in the recovery by the emergency aid granted by the EU and IMF. However, in 2011-2013, Greece's economic situation was far from being stable at a pace of GDP growth negatively with unemployment alarming, a high budget deficit and huge public debt

Table no. 1. The main macroeconomic indicators in the period 2011 -2015 Greece

Source: Adapted after statistical information of Greece National Statistical Institute

Greece did not respect in recent years none of fiscal balance and financial criteria imposed by other Member States of the European Union. Greece managed to hide in various forms all well disguised debts you made in the various international financial transactions and more economic fraud and resorted to all sorts of irregular expenditure in legally.

4. Measures of the crisis that affected entrepreneurs in Cyprus and Greece

If the crisis cannot be avoided then the position of entrepreneur you have to adapt to it. As we have seen major institutions affected by the crisis are the banks so that we could perform all transactions in times of crisis without being affected by any restriction imposed by banks, government or other authority.

The effects of crisis in the booth countries over the investors are highlighted on the figure below:

Figure no. 3. Republic of Cyprus GDP evolution in the period 1980-2012 (annual growth rate in real terms %)

Source: Own contribution

If the crisis cannot be avoided then the position of entrepreneur you have to adapt to it. As we have seen major institutions affected by the crisis are the banks so that we could perform all transactions in times of crisis without being affected by any restriction imposed by banks, government or other authority.

5. Peer to peer lending markets

Companies in the financial sector network offers profitable alternative debtors, creditors, investors and others involved in traditional financial relationships. For example peer to peer lending markets allow people to provide and obtain loans of money between them without resorting to banks. Through social loans, debtors and creditors get better interest than for the traditional banking model. Barter of goods and services is another alternative financial transaction, which is gaining popularity among consumers.

Due to the global proliferation of the phenomenon of social networking, social lending is beginning to take proportions: p2p appeared credit markets in Japan, Austria, United States, Italy and the Netherlands. The system works just like when you take out a loan or give to family and friends, the only difference being that there are thousands of people willing to agree to your conditions.

6. BITCOIN currency – methods of adapting to the economic crisis

Bitcoin is a decentralized electronic payment system and digital currency Bitcoin created in 2009. The name also refers to the use of open source software for these currencies, as well as peer-to-peer network on which it is formed.

The Internet has changed the way we communicate, Bitcoin currency changes the way money works, and it was created to provide an alternative to the banking system. Unlike other currencies Bitcoin is issued according to a set of fixed rules.

Bitcoin uses a distributed database across nodes of a network of peer to inventory transactions and uses cryptography to provide basic functions for security such as ensuring that the coins Bitcoin can be spent only at you it owns only once.

Bitcoin is a decentralized digital currency first, that can be transmitted over the Internet. Compared to other currencies Bitcoin payment mechanisms have a number of advantages. They are transferred directly from one person to another without going through a bank or other institutions, which means that the fees are much lower, the money can be used in any country, thus avoiding blocking accounts.

7. How does Bitcoin?

There are several currency exchange services where you can buy and sell units Bitcoin for dollars, euros and other currencies, Bitcoin network is secure people called miners digital units can be stored in digital wallet on your computer or mobile phone. To check transactions Bitcoin miners are rewarded with freshly generated.

Bitcoin uses a distributed database across nodes of a network of peer (peer-to-peer) to inventory transactions and uses cryptography to provide basic functions for security such as ensuring that Bitcoin cannot be spent only one who holds and only once. Construction currency Bitcoin allows anonymous transfer of ownership and value.

Once the transactions are verified they are registered in a public registry transparent.

Bitcoin is a good method in time of crisis to reduce transaction fees. The costs are minimal and user den ease of implementation and use is an important advantage in selecting this option.

Figure no. 4. Bitcoin currency features

Source: Own contribution

8. Conclusions

Bitcoin is a revolutionary technology that enables a new model to send online payments, is a transparent accounting system where thousands of computers worldwide working together to keep track property called Bitcoin digital chips. Most currencies are issued by a central authority that controls the money supply. Bitcoin is a peer to peer system so there is no central authority.

It's the first currency of the Internet and everyone is free to use, while the global crisis affecting the banking institutions, business entrepreneur can proceed without restrictions.

9. References

Matiș, D., Nagy, Á., Petru, T.P., Benyovszki, A., Entrepreneurship in Romania, 2010 Country Report, Global Entrepreneurship Monitor, BABEȘ-BOLYAI University of Cluj – Napoca, 2010, pp 17-18

Negoescu, G., Radu, R.I., Lupasc, I., Some Considerations on the Measures to Counter the Risk of Bankruptcy for Small and Medium Enterprises during the Financial Crisis, Ovidius University Annals, Economic Sciences Series, Constanta 2010, vol. X, issue 1, pp 1735

Collins, J., Excelența în afaceri, Curtea Veche Publishing, Bucharest, 2010, pp 25-35

Tănăsoiu, O., Iacob, A.I., Econometrie studii de caz, ASE Publishing, Bucharest, 1998, pp 183-190

Barta, P., Spirea, N., Modreanu, I., Piti, M., Promovarea antreprenoriatului ca factor cheie pentru dezvoltarea economică, Fundația post-privatizare, Bucharest, 2012 pp 62-63