Information Technology Reference
In-Depth Information
Because the focus of this topic is on government processes and the adoption and
adaptation of information technology and modern communication, this chapter
also discusses the possible implications on such matters as payment mechanisms by
citizens and residents, accounting systems for multiple payment mechanisms, the
valuation and taxation of transactions, and the accurate identification of transac-
tion participants.
Thus, this chapter deals with the unregulated spread of virtual currencies,
specifically bitcoin, and its impact on public transactions. A systematic literature
review is used to place bitcoins within the context of the growing types of virtual
currencies and the case study method is used to analyze where bitcoin can be placed
in this unregulated spread and within the realm of public transactions.
10.2 Virtual Currencies: A Background
For the most part, societies create money for the purpose of facilitating the
exchange of goods and services. Because members of society agree to the value
of money based on the backing by the strength of the economy measured by the
goods and services it produces, there is a tendency to take the existence of such
for granted. In some societies, the creation of money is determined by govern-
ment through a central bank. The designation of the currency can even be con-
stitutionally determined.
In the United States, the controversy regarding the dollar, its value, and its exis-
tence can spark a never-ending debate. Suffice to say, there are those who believe
that so long as people agree, anything can serve as money, even cowry shells as
long as they maintain reasonable purchasing power over time. In this sense, an
official government pronouncement is not necessary to create money. However,
there are those who contend that money creation is constitutionally determined
and look toward sections of the U.S. constitution to reinforce this view. Section 8
permits Congress to coin money and to regulate its value. Section 10 denies states
the right to coin or to print their own money. Some see this as proof that the fram-
ers of the constitution clearly intended to create a national monetary system based
on coinage and for the power to regulate that system to rest only with the federal
government (Rozeff, 2010).
Regardless of perspective, we do know that aside from the dollar, various
forms and names for a medium of exchange have sprouted up in the United States
and all over the world. During the Great Depression of the 1930s, one result of
the Federal Reserve's policy to initially allow the money supply to contract was a
substantial shortage of currency. Because of this shortage, about 150 communi-
ties experimented with printing their own money to grease the wheels of com-
merce and get the economy going again. According to Brian Wesbury (2013) in
The Wall Street Journal
article “How Much Does That Burger Cost in Bitcoins?”
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