Banking Academy Graduation thesis ABSTRACTS In the development process of the economy of countries in the world, money plays a deeply important role because it is the medium of exchange
GENERAL VIEW OF CRYPTOCURRENCY
The history of money
Money is a crucial invention for human development, serving as a medium of exchange, a measure of value, and a store of wealth Over time, money has evolved from bartering and gold coins to coins, paper money, and electronic currencies, enhancing convenience for users As of 2012, there were 167 different currencies in circulation globally, reflecting the diversity across various countries and territories.
Money serves as a store of value, allowing individuals to save and utilize it later; it acts as a unit of account, providing a standard basis for pricing; and functions as a medium of exchange, facilitating transactions between people In essence, money maintains its value over time, can be easily converted into prices, and is broadly accepted in commerce.
Many different things have been used as money over the history, for instance: cowry shells, barley, peppercorns, gold, and silver
Before money was established as a medium of exchange, individuals relied on bartering to acquire necessary goods and services This process involved two parties, each with items the other desired, negotiating a trade For instance, a mechanic in need of eggs and bananas would seek out a farmer with a malfunctioning machine to facilitate the exchange.
The challenges of bartering in a traditional economy can hinder specialization among farmers and mechanics If a farmer has no repairs needed or can only offer more eggs than a mechanic can use, finding a suitable trading partner becomes difficult This scarcity can lead to starvation while searching for the right person to barter with Additionally, even if a mechanic finds a farmer willing to trade food, discrepancies in perceived value—such as whether a bunch of bananas is worth a fixed machine—complicate the exchange The mechanic would then face the cumbersome task of dividing his services and determining the appropriate amount of goods to accept, further complicating the barter process.
Commodity money emerged as a solution to various economic challenges, serving as a physical good that functions as currency and possesses intrinsic value, meaning it retains worth even when not used as money During economic crises, such as severe depressions or hyperinflation, individuals often revert to commodity money instead of government-issued currency Throughout history, commodity money has been utilized, and it continues to play a role in modern economies Commodities fall into two categories: non-metallic and metallic, with non-metallic money being the oldest form of currency, commonly seen in traditional societies Different regions have utilized various goods as currency, such as beaver pelts and dried corn in American colonial times, or cattle and sheep in ancient Greece and Rome However, non-metallic currencies face challenges like perishability, difficulty in division, and limited recognition, leading to their gradual replacement by metallic money, which includes metals like copper, zinc, gold, and silver, offering significant advantages in terms of durability and transportability.
Non-metal goods, when utilized as money, exhibit key advantages such as quality and weight, which allow for more accurate and easier conversions They also tend to have slower depreciation rates, are easier to divide, and maintain relatively stable values However, through the evolution of trade and currency circulation, only gold and silver have emerged as long-term monetary standards These metals offer unique benefits that other commodities lack, including homogeneity, simplicity, ease of storage, and portability.
Fiat money is a government-declared legal tender not backed by a physical commodity, with its value determined by supply and demand rather than the materials it is made from Unlike historical currencies tied to gold or silver, fiat money relies on the faith and credit of the economy, making it vulnerable to hyperinflation if trust erodes Most modern currencies are fiat, lacking intrinsic value and serving primarily as a payment method The shift to fiat money gained momentum after the 1971 collapse of the Bretton Woods system, which ended the U.S dollar's convertibility into gold While fiat currencies offer flexibility, they also pose risks of economic instability and bubble creation due to their unlimited supply, contrasting with the relative stability of gold-backed currencies.
Electronic money, a product of our digital age, refers to money that has been converted into a digital format, existing solely within electronic environments It facilitates electronic payments through information systems such as computer networks and the Internet, and is stored in databases managed by issuing organizations Typically represented as a balance in a customer's account with the issuer, electronic money operates using electronic signatures, serving as a medium for both transactions and value accumulation While traditional paper money is backed by government guarantees, the value of electronic money is supported by the issuer's promise to convert it into physical currency upon request.
Virtual currency is a type of electronic money that is typically understood in three ways: first, it is intangible and exists solely in electronic environments, making it unmanageable in physical form; second, it lacks intrinsic value and is not backed by cash, gold, or other valuable assets; and third, it is primarily used for transactions within electronic games, where each game has its own unique currency that cannot be exchanged for one another or used outside the gaming environment for purchasing other goods or services.
The concept of cryptocurrency
A cryptocurrency is a digital or virtual currency that uses cryptography for security
Cryptocurrency's robust security features make it challenging to counterfeit, which enhances its appeal A key characteristic of cryptocurrency is its decentralized nature, as it is not controlled by any central authority, making it theoretically resistant to government interference and manipulation.
Today, there are thousands of cryptocurrencies, with Bitcoin (BTC) being the most prominent The other digital currencies, known as Altcoins, utilize various algorithms while still relying on Bitcoin's foundational technology Notable Altcoins include Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Monero (XMR), DASH, Ethereum Classic (ETC), IOTA (MIOTA), and NEM.
Cryptocurrency has emerged as a legitimate form of money, as it meets key currency criteria It is widely accepted by individuals and businesses for transactions involving goods and services Additionally, cryptocurrencies offer high liquidity, enabling swift and convenient exchanges between different fiat currencies.
The issuance of cryptocurrency adheres to specific regulations designed to control the total supply, preventing excessive amounts that could lead to currency devaluation.
In recent years, numerous countries and organizations, including Germany, Japan, and Switzerland, have embraced cryptocurrency, particularly Bitcoin, as a viable means of payment for goods and services Major companies like Dell, Microsoft, and Apple have also integrated cryptocurrency into their payment systems Additionally, China is preparing to launch its own digital currency, further highlighting the growing trend of cryptocurrency adoption worldwide.
According to legend, Satoshi Nakamoto started his work on the Bitcoin concept in
2007 While he is on record as being Japanese or living in Japan, it is deduced that Nakamoto might be a collective pseudonym for more than one person
In October 2008, Satoshi Nakamoto unveiled Bitcoin, a groundbreaking digital currency, by publishing a white paper on the cryptography mailing list at metzdowd.com The document, titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” outlined the innovative framework for this new form of currency.
The introduction of Bitcoin has raised concerns as it presents a method for transferring funds without relying on traditional financial institutions Satoshi Nakamoto's innovative payment system offers a secure alternative that operates independently of both national and international regulatory bodies.
The blockchain technology, introduced by Nakamoto in the Bitcoin white paper, effectively addresses the issue of double spending, ensuring the security and integrity of digital currency transactions Serving as a decentralized electronic ledger, the Bitcoin blockchain not only underpins cryptocurrency transactions but also paves the way for innovative applications, as seen with Ethereum's ability to support app development In a 2017 Harvard Business Review article, Marco Iansiti and Karim R Lakhan highlighted the transformative potential of blockchain, suggesting it could establish new economic and social foundations, albeit over several decades.
In January 2009, the enigmatic figure known as Nakamoto launched the Bitcoin network by releasing the first Bitcoin software and mining the initial block, known as the "genesis block," which contained 50 coins This pivotal moment marked the beginning of the Bitcoin revolution Interestingly, the genesis block is unspendable due to unique coding features Just six days later, on January 9, 2009, Nakamoto made Version 0.1 of the Bitcoin software available on Sourceforge, introducing a system designed to generate a total of 21 million Bitcoins over time.
2040 Afterward, in 12 th January, the first transaction of Bitcoin currency, in block
In 2009, a pivotal moment in human history occurred with the launch of Bitcoin (BTC), marked by a significant exchange between Satoshi Nakamoto and Hal Finney, a notable developer and cryptographic activist This event catalyzed the global circulation of Bitcoin, transforming the cryptocurrency market and paving the way for future innovations in digital finance.
In the era of Industry 4.0, technological advancements have led to the emergence of over 1,000 cryptocurrencies issued by various enterprises and banks worldwide While Bitcoin remains the most well-known, the term "altcoins" is commonly used to refer to all other cryptocurrencies.
Cryptocurrency technology is intricate, necessitating a thorough understanding of advanced technologies and algorithms for its creation and operation It involves decoding cryptographic information, where each decoded unit represents a digital currency unit.
As of late 2010, more than a dozen crytocurrency were born, including Litecoin (LTC) - a replacement for Bitcoin Following the success of Bitcoin, Litecoin is currently priced at $ 100 / LTC (over VND2 million)
By the end of 2012, WordPress became the first company to accept Bitcoin payments, followed by Newegg.com, Expedia, and Microsoft Corporation Among various cryptocurrencies, Bitcoin remains the most widely used due to its flexible liquidity By 2017, Ethereum emerged as a strong contender, experiencing a remarkable growth rate of 400 times Currently, Ethereum fluctuates between $400 and $500, which is equivalent to approximately VND 10-12 million.
Cryptocurrency’s strengths
Cryptocurrency is often compared to gold due to its inherent scarcity Most cryptocurrencies have a predetermined supply, meaning they are limited in quantity over time This fixed supply, established by the original code, helps prevent inflation and devaluation, similar to precious metals.
Traditional currencies face inflation due to price fluctuations in economies and the continuous printing of money by governments In contrast, cryptocurrencies, such as Bitcoin, are less susceptible to inflation because they have a limited supply, with only approximately 21 million Bitcoins set to be mined As global population growth is expected to stabilize at around 10 billion by 2050, the final Bitcoins will be mined around this time, ensuring that no additional Bitcoins will enter the market thereafter.
Cryptocurrency offers a unique advantage over traditional currency, as it allows for the discreet transportation of substantial sums For instance, an individual could theoretically carry billions of dollars in Bitcoin on a single memory drive, although this practice is not recommended.
Bitcoin enables global transactions at any time, unaffected by bank holidays, borders, or bureaucratic processes This cryptocurrency empowers users with full control over their finances.
Investors in startups typically rely on finding a buyer for their equity or waiting for an acquisition or IPO to profit, limiting their control over cashing out In contrast, a successful cryptocurrency ICO, like the 56,000-member Datum network, offers enhanced liquidity, enabling investors to quickly sell their cryptocurrency for ether or dollars.
Cryptocurrency has gained popularity by reducing the dominance of government-controlled foreign currencies It operates independently, free from the influence of third parties like banks or governmental institutions.
In the cryptocurrency community, individuals play a crucial role in monitoring and supervising one another The integrity and value of cryptocurrencies are upheld through a quality management mechanism that relies on mining, where miners and diggers are rewarded for their efforts, ensuring the system's robustness and reliability.
All users’ information, cryptocurrency transactions on the system are anonymous, thus this system provides absolute security and safety for users of cryptocurrency
The decentralized system ensures that data is distributed globally, preventing any single government or organization from exerting financial control over users As a result, users' cryptocurrency accounts cannot be frozen in the same manner as traditional bank accounts, safeguarding their financial autonomy.
High-tech encryption systems and private wallets provide robust security for cryptocurrencies, effectively preventing fraudulent activities This advanced feature eliminates the need for intermediate payment processors like PayPal or VISA, significantly reducing transaction costs Instead, miners serve as alternative payment processors, charging fees of no more than 1% of the total transaction value, which is substantially lower than the 1.5% to 3% fees imposed by traditional payment systems.
International and domestic transactions are processed at the same cost to save a lot of money Normally, the cost of international transfers fluctuates around 10-15% of the total price
1.3.8 Less risk for sellers and buyers
Cryptocurrency transactions offer guaranteed security and irreversibility, ensuring that personal and sensitive customer information remains protected This feature safeguards both sellers and buyers from potential fraud and unauthorized charges Additionally, it enables them to explore new markets where traditional credit card usage is limited or where fraud rates are significantly high.
Cryptocurrency supply information is transparently recorded on the blockchain, enabling anyone to verify and utilize the data The secure encryption of the protocol prevents any individual or organization from exerting control or manipulation This inherent security fosters trust in cryptocurrency, ensuring its neutrality, transparency, and predictability.
Cryptocurrency’s weaknesses
Despite the growing interest in cryptocurrency investment, its practical applications in everyday life remain limited Additionally, the number of businesses and institutions that accept cryptocurrencies as a form of payment is still relatively low, indicating that digital currencies like Bitcoin have not yet achieved the widespread recognition anticipated.
Cryptocurrency ICOs exhibit significantly higher volatility compared to traditional investments like stocks and real estate While hacking incidents that lead to total investment loss are infrequent, substantial declines in ICO values occur regularly, posing a risk for investors.
The limited knowledge surrounding cryptocurrency transactions poses challenges for governments in terms of regulation and taxation, leading to increased criminal activity and investor issues Additionally, concerns about exchange hacks and wallet vulnerabilities contribute to significant uncertainty in the cryptocurrency market.
Cryptocurrency operates outside traditional financial regulations and lacks widespread acceptance as a legitimate currency, primarily because it appeals to individuals and organizations seeking to evade taxes on employee salaries and online sales.
When investors fall victim to online deception, obtaining a refund can be extremely challenging, as miners are solely responsible for processing transactions and do not handle dispute resolution like services such as VISA or PayPal.
One of the main drawbacks of cryptocurrency is its role in enabling black market activities, as exemplified by Silk Road, which utilized Bitcoin for the illegal drug trade, complicating law enforcement efforts to apprehend offenders Ultimately, this led to the arrest of Silk Road's creator.
Bitcoin mining consumes vast amounts of energy, posing significant risks to the environment If the carbon footprint of cryptocurrency continues to rise unchecked, it could lead to catastrophic consequences for our planet.
Bitcoin software remains in beta, with numerous features under active development Ongoing innovations aim to enhance the safety and accessibility of cryptocurrency for the public, although many tools are not yet fully operational As most cryptocurrency businesses are relatively new, they often lack adequate coverage Overall, the cryptocurrency landscape is still evolving and maturing.
Sub-conclusion
Monetary history has evolved through distinct stages, leading to the creation of various forms of currency, each rooted in specific economic and social contexts Regardless of the level of economic development, diversity in currency forms is essential to meet the varied needs of society and individuals.
THE REALITY OF CRYPTOCURRENCY IN THE WORLD AND
Cryptocurrency market in the world
2.1.1 The world’s reaction on cryptocurrency
Launched in 2009, Bitcoin marked the inception of cryptocurrency, which has since expanded significantly with numerous other digital currencies emerging However, the legal status of cryptocurrencies varies across countries due to their decentralized nature and lack of regulation by governmental authorities.
There is now a lot of speculation as to whether cryptocurrency is really a bubble just waiting to explode or maybe something bolder is about to pass the test of time
Western powers like the United States, the United Kingdom, and Canada are embracing new technologies, particularly cryptocurrency These countries have even installed ATMs specifically for cryptocurrency transactions, and the number of these ATMs continues to grow.
Japan has emerged as a notable supporter of digital currencies, actively developing its own called J Coin Led by Mizuho Financial Group and Japan Post Bank, a consortium of banks has garnered backing from central banks and financial regulators to create this digital currency J Coin aims to facilitate payments for goods and enable money transfers via smartphones, encouraging a shift away from cash transactions while addressing the competitive landscape shaped by Alibaba's expansion in Japan.
J Coins can be converted into Yen with the equivalent value, operated by an application on the smartphone and using the QR code scanned at the store Banks
17 will offer this service for free It is expected that the new digital currency will be released on the occasion of the Tokyo 2020 Olympics
The expansion of digital currency is leading to an increase in stores accepting these payments globally In response to rising customer demand, Goldman Sachs is exploring the provision of digital currency services, a move that may influence other banks to follow suit Historically, major banks were hesitant to engage with cryptocurrency due to concerns over its legality and speculative nature.
While some countries like Singapore and Indonesia allow digital currency to evolve based on public demand, others, such as China and South Korea, are implementing strict regulations These nations have imposed a complete ban on Initial Coin Offerings (ICOs) and are intensifying oversight of cryptocurrency transactions to curb fraudulent activities.
Korean authorities are emphasizing the need for cryptocurrency users to report their activities to avoid potential criminal prosecution Recently, customs officials uncovered several cyber-criminals involved in unauthorized foreign exchange transactions totaling 637.5 billion won (approximately 594.35 million dollars).
In China, the rise of virtual currency speculation is notable, despite the government's lack of support for cryptocurrency Instead, Beijing is focusing on the development of its own regulated digital currency, which will be managed by the Central Bank of China.
Developed financial markets like Hong Kong, Singapore, and Japan have embraced digital currency by swiftly implementing regulations that promote its sale, showcasing their openness to this innovative form of money.
In Hong Kong, the Securities and Exchange Commission considers some types of cryptocurrency as securities These types of digital money will be managed and governed by many other laws
Japan has introduced legal electronic trading licenses and actively addressed illegal activities in the cryptocurrency sector On January 28th, Coincheck Inc., a Tokyo-based virtual currency trading platform, announced plans to recover approximately 46.3 billion yen (around $425 million) in digital currency stolen by hackers, marking one of the largest thefts in the history of digital assets.
The central bank of Indonesia has stated that digital currency is not recognized as a legal payment method, and has issued ambiguous warnings indicating that users of virtual currencies may face consequences.
Many countries are introducing their own electronic currencies as a response to the growing prevalence of cryptocurrencies Governments aim to consolidate control over digital currencies by creating centralized versions, addressing the fragmented nature of existing cryptocurrencies.
Several countries, including Ecuador, China, Senegal, Singapore, and Turkey, have launched their own electronic currencies, signaling a shift towards digital money Unlike Estonia and Japan, which have had longer-standing initiatives, nations like the Palestinians, Russians, and Swedes are also exploring the creation of their own digital currencies This trend reflects a growing movement to replace traditional paper money with digital alternatives, as exemplified by China's advancement in both digital and cryptocurrency solutions.
As countries increasingly embrace their own cryptocurrencies, major global economies are poised to collaborate with developing nations, paving the way for a promising future Central banks are attentively observing the successes and challenges that arise in this evolving landscape, ready to address the issues that emerge.
In early September, during a conference, European Central Bank President Draghi declared that no European Union member country is permitted to issue its own cryptocurrency, emphasizing the requirement to use the euro as the common currency in the region.
Launched in 2016, Numerai is an innovative hedge fund that leverages a network of data scientists to make investment decisions Unlike traditional funds, Numerai enables anonymous developers to create commercial algorithms using its provided data To enhance its ecosystem, Numerai introduced its own cryptocurrency, Numeraire, distributing one million tokens to 12,000 data scientists who can wager on the performance of their algorithms Token distribution is tied to the success of previous algorithms, rewarding effective contributions with Bitcoin and a share of Numerai's equity However, if a data scientist develops an underperforming algorithm, they forfeit their Numeraire shares, which are rendered inactive.
Cryptocurrency market in Vietnam
Many Vietnamese enterprises have started importing computers to mine cryptocurrency, despite the lack of official recognition from the Vietnamese government On July 21, 2017, the State Bank of Vietnam (SBV) issued Official Letter No 5747/NHNN-PC, clarifying that cryptocurrencies are not considered currency and do not qualify as a legal means of payment in Vietnam.
The State Bank of Vietnam (SBV) defines digital money as managed currency, means of payment, virtual property, and goods involved in exchanges Despite the global popularity of cryptocurrency, most countries refrain from recognizing it as a legitimate means of payment due to concerns over its use in criminal activities such as money laundering and drug trafficking Additionally, the inherent risks of hacking and data manipulation, combined with the volatile nature of cryptocurrency values, pose significant threats to investors Participants in the cryptocurrency market face uncertainties, as their rights are often overlooked, leading to potential financial losses when purchasing digital coins.
The State Bank of Vietnam (SBV) has rejected the acceptance of cryptocurrency for two main reasons: it would undermine national sovereignty over currency and hinder the effectiveness of monetary policy, as cryptocurrencies operate outside the central bank's management and regulation Additionally, the acceptance of virtual currencies could enable unauthorized tax evasion and facilitate illegal transactions due to the anonymous nature of digital currency payments.
The State Bank of Vietnam (SBV) has proposed to the Government the issuance of Decree 80/2016/ND-CP, which amends certain articles of Decree 101/2014/ND-CP regarding non-cash payments This decree will enhance regulations by specifying legal means of payment in Vietnam, explicitly excluding bitcoin and other virtual currencies, while also reinforcing the prohibition on the issuance, supply, and use of illegal payment methods.
On October 17, 2014, the State Bank of Vietnam (SBV) proposed Decree 96/2014/ND-CP to the Government, aimed at enforcing administrative sanctions within the monetary and banking sector This decree focuses on imposing penalties for the distribution, supply, and use of improper payment methods.
The bank's new currency law is scheduled to come into effect in the first quarter of
In 2018, Vietnam declared Bitcoin and other cryptocurrencies illegal, implementing a ban on their domestic use The legislation specifies that only payment methods issued or regulated by the State Bank of Vietnam are authorized within the country.
The State Bank of Vietnam (SBV) has implemented a ban on virtual currencies amid Bitcoin reaching record trading highs While this new law is anticipated to influence the use of digital currency in the country, it is expected to have minimal impact on individuals wishing to engage in transactions with these currencies The government's primary recourse may be to initiate campaigns against companies that promote the use of digital money.
The central bank's decision to declare digital money illegal is viewed as a setback for innovation in the financial sector This law reflects the government's intent to align with global trends, yet there is optimism that the ban could be lifted in the future if concerns about fraud associated with digital currencies are addressed effectively.
Trinh Minh Phuc, co-founder of Bitcoin Vietnam, emphasized that the existing law, established in 2012, merely reiterates that Bitcoin is not recognized as a legal currency in Vietnam He noted that all transactions for goods and services within the country must be conducted in the local currency, VND Therefore, pricing goods in USD, BTC, or any other digital currency contravenes this regulation.
According to lawyer Nguyen Anh Thom (Nguyen Anh office), users only need not list prices of products by Bitcoin, they are absolutely not illegal
Nguyen Duy Hung, Chairman of SSI Securities, advocates for Vietnam to implement a centralized trading platform for Bitcoin and other virtual currencies This initiative aims to enhance state oversight, facilitate tax collection, and combat fraudulent activities within the cryptocurrency market.
Bitcoin's recent price surge indicates a growing demand, with an increasing number of individuals interested in purchasing it as an investment asset Despite negative information surrounding Bitcoin, its affordability enables people to sell it, presenting significant challenges for countries with stringent foreign exchange regulations.
The president of SSI maintains independence, with states and financial institutions holding the exclusive authority to accept or reject this independence As of August 2017, Bitcoin's market value reached $71 billion The United States, Japan, and Sweden were among the first countries to permit Bitcoin transactions.
The SSI President emphasized the need for Vietnam to establish a legal framework that recognizes cryptocurrency as a commodity This framework should mandate trading through a central exchange to ensure state supervision, facilitate tax collection, and combat fraudulent activities that exploit user curiosity.
Mr Hung emphasized that despite recent negative news, Bitcoin and Ethereum will remain unaffected due to their robust technology He noted that miners will persist in their operations, and developers will continue to innovate, reinforcing the resilience of these digital assets Ultimately, the global initiative behind these cryptocurrencies and their ecosystems will endure.
2.2.2 Well-known cryptocurrency scandals in Vietnam
BITKINGDOM launched its operations in Vietnam in November 2015, positioning itself as a global community center dedicated to providing a professional, mission-driven trading system With the slogan "Empowering community - Ending poverty," BITKINGDOM required investors to contribute a minimum of 1 bitcoin, valued between 10 to 22 million VND, to join the platform Members could expect daily profits of 1%, monthly returns of 30%, and potential earnings exceeding 1 million VND after 3.5 years.
Figure 2.2: The valude of 1BTC from 2013 to 2017
Source: https://news.zing.vn/2017-nam-cua-ky-luc-bitcoin-post790557.html
Sub-conclusion
In today's fast-paced world, many individuals seek quick financial gains with minimal effort, often leading to gambling, where losses outweigh the rare big wins, similar to lottery odds The rise of cryptocurrency presents a modern-day lottery for investors, yet this market is fraught with risks such as hacking and fraud, which undermine trust in digital currencies New investors, lacking essential precautions, frequently face severe repercussions To navigate this volatile landscape, it is crucial for investors to acquire the necessary knowledge and skills while staying informed about market developments.
RECOMMENDATIONS
Recommendations for the Government
Satoshi Nakamoto envisioned Bitcoin as appealing to libertarians, while early cryptocurrency pioneers, primarily cypherpunks and crypto-anarchists, sought to break free from government control over money However, escaping state influence proves challenging, as many blockchain applications can benefit government operations In fact, proactive government support may accelerate the blockchain revolution The decentralized nature of blockchain not only transforms economic activities but also redistributes economic power globally Crypto-friendly governments that adapt their regulations to support the blockchain economy can attract significant international investment Several smaller nations and autonomous regions are positioning themselves as crypto-friendly hubs, while countries like Great Britain and Australia have published government reports on blockchain's potential Additionally, nations such as Estonia and city-states like Singapore have integrated blockchain into their digital governance and investment strategies.
The debate surrounding the nature of cryptocurrency and its acceptance in payment transactions continues, with no consensus reached globally Associate Professor Dr Nguyen Khac Quoc Bao from the University of Economics of Ho Chi Minh City notes that the State Bank of Vietnam currently opposes cryptocurrency, but its future stance remains uncertain The Vietnamese government has tasked the State Bank with developing a legal framework to manage cryptocurrencies, reflecting a growing trend where some countries are beginning to embrace this digital currency A crucial first step for governments is to define whether cryptocurrency should be classified as a commodity or a currency.
Establishing a legal framework for the management, taxation, and regulation of new technology trends is essential, rather than prohibiting them outright This approach will help mitigate risks and improve the management of transactions involving digital currencies, ensuring appropriate behavior among all parties involved.
A government digital currency offers significant advantages for investors and users by reducing costs and minimizing risks associated with trading exchanges, such as fraud and hacking incidents.
Recommendations for exchanges
Banks are frequent targets for hackers due to the potential for significant financial gain through online theft However, successfully stealing money from a bank is challenging, as these institutions employ advanced security systems and tracking measures Consequently, many cyberattacks on banks focus not on financial theft, but rather on disrupting operations and extracting sensitive information.
In recent years, the surge of cryptocurrency and pre-coding has attracted the attention of hackers, shifting their focus from traditional banking to pre-encrypted trading exchanges and cryptocurrency investors While digital currency has transformed perceptions of transactions and banking, the past nine years have seen it face numerous attacks and security breaches.
Blockchain technology offers numerous benefits, yet security remains a significant concern Hackers can effortlessly transfer funds from electronic wallets using only basic information, leaving no trace of their actions Ironically, digital trading exchanges, which hold substantial amounts of investors' money, often lack even the most fundamental security measures, making them prime targets for cybercriminals Current security protocols are limited to basic access control, user password storage, and inadequate user protection, highlighting the urgent need for improved security integration in the industry.
As Japan's largest trading platform, 45 faces significant security risks due to its lack of multi-signature security for pre-encrypted wallets Additionally, the platform's decision to store digital currency in a hot wallet, rather than a cold wallet, increases vulnerability to hacker attacks.
Exchanges have limited options to safeguard cryptocurrencies from hackers, prompting investors to take self-protective measures To enhance security, it is advisable to store digital assets in cold wallets instead of hot wallets and to keep these wallets disconnected from the Internet.
Recommendations for investors and users
The rapid decline in digital currency prices has led to significant losses for investors, with some cryptocurrencies plummeting over 90% in just days, leaving many in a state of despair This downturn, which began earlier this year, is expected to persist as investor confidence wanes due to past scandals and hacks Bitcoin, often seen as the benchmark for the cryptocurrency market, has seen its value drop from around $20,089 at the end of December 2017 to a low of $9,400, marking a staggering 50% decrease in a month The initial surge in Bitcoin prices attracted numerous investors, but the subsequent devaluation has resulted in substantial financial losses, particularly for speculators While many view digital currencies as a quick path to wealth, the reality is that not all investors profit; a lack of understanding has led many to lose everything overnight.
Figure 3.1: Bitcoin valuation from 8 th February 2017– 8 th February 2018
Source: https://xosomega645.com/bitcoin-btc-la-gi-co-nen-dau-tu-vao-bitcoin- hay-khong/
Investors often grapple with the question, “Which one should I invest in?” This uncertainty signals a potential risk of losing some or all of their investment due to a lack of knowledge, research, and skills to navigate the market Consequently, they may be swayed by the belief that it is possible to achieve returns of double or even 100 times their initial investment, often following the crowd rather than making informed decisions.
Investors must prioritize learning about cybersecurity to safeguard themselves against cybercrime, fraud, and misinformation, particularly on social media platforms like Facebook, Twitter, and Instagram With the vast possibilities of online threats, it is essential for investors to acquire fundamental security knowledge to ensure their actions are informed and safe Enrolling in security and trading courses, as well as cryptocurrency investing programs, is an effective way for investors to make prudent decisions before entering this complex landscape.
Opportunity is when others are confused while some deeply understand and know how to seize it Otherwise, investors will be as vague as anyone else and invest
47 without purpose Investors should become smartly, have a cold head and a warm heart to start making money with this risky but potential market
RECAPITULATIONS AND CONCLUDING REMARKS
The thesis successfully outlines the evolution of money and examines cryptocurrency cases globally and in Vietnam Through extensive research, it identifies significant limitations within the cryptocurrency landscape, particularly concerning security vulnerabilities that allow hackers to access wallets easily In Vietnam, the primary challenges stem from a lack of knowledge, which can lead to fraud To enhance security for traders and investors worldwide, exchanges must strengthen their systems, while in Vietnam, it is crucial for investors to improve their understanding and skills to make informed decisions and reduce the risk of falling victim to scams.
IMPLICATIONS
The unpredictable nature of cryptocurrency development persists despite its soaring value For cryptocurrency to advance, developers must prioritize system security, a key factor attracting potential investors Utilizing blockchain technology, virtual currencies foster a decentralized economy that safeguards user identities, making it challenging to target hackers effectively.
In addition, raising awareness of investors is also needed because once the fraud happens, it will lower the believe feeling of people in cryptocurrency
LIMITATIONS AND PROPOSALS FOR FURTHER STUDY
Despite successfully crafting a substantial thesis, the researcher faced inevitable limitations due to time constraints and limited resources The thesis grapples with issues of generalization and narrow applicability, as it encompasses a broad spectrum of cases within the cryptocurrency field, making it challenging to provide an in-depth discussion within the available chapters Nonetheless, the primary issues have been thoroughly examined While the thesis does not concentrate on specific enterprises or individuals, the proposed solutions are designed to be applicable across various situations Therefore, future research should focus on a broader examination of cryptocurrency realities, incorporating a wider array of cases.
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