This case study, worth up to 50 points, introduces students to the ethical and social standards required to operate a global business.

Political groups, businesses, and organizations must adapt to changes in digital technologies. In order to attract supporters, these groups often form associations to align with other groups to build a coalition. The target groups are often large and primarily based on race, religion, gender, or political affiliation. Alignments can also cause ethical dilemmas when groups have conflicting agendas, or the organization is seeking the support of individuals with one or more ideas that conflict with one or more of the aligned partys positions. For example, womens public health care providers such as Planned Parenthood offer broad support for womens health, including abortion, which clearly conflicts with any group aligned with Right-to-Life activism. Because women make up about half the human population, it would be smart to have the support of this very large group or at least have the support of a very large portion of it.

Bitcoin is an open-source, peer-to-peer digital currency

introduced to the world on January 3, 2009, by developer

Satoshi Nakamoto. The cryptocurrency is based on a pro

tocol and software that allows instant peer-to-peer transac

tions and worldwide payments with minimal costs. In its

few years of existence, bitcoin has seen unprecedented

media coverage, a roller-coaster ride of epic spikes and

epic plunges, and adopters from major retailers to lemon

stands (e.g., Amazon, Target, Victorias Secret, and Whole

Foods). Bitcoin has also been covered by numerous major

news organizations (e.g., ABC, CNBC, Forbes, Fox News,

Reuters) as the most popular form of virtual currency.

At the same time, ethical concerns exist with this new

digital currency. The coupling of no regulations, virtually

free movement of value, and a Ponzi schemelike system

have led renowned economist Paul Krugman to suggest

that bitcoin is evil. At the basic level, Krugman argues

that money must be both a medium of exchange and a

stable store of value. Krugman argues that it is unclear to

him why bitcoin should be a stable store of value. Joining

in the discussion, Charlie Stross, the British writer of sci

ence fiction, says that bitcoin looks like it was designed

as a weapon intended to damage central banking and

money issuing banks, with a Libertarian political agenda

in mindto damage states ability to collect tax and

monitor their citizens financial transactions.

What is the difference between bitcoin and normal

currency, such as the U.S. dollar? Bitcoin is an unregu

lated peer-to-peer digital currency that is not backed by

any other commodity such as gold or silver. Bitcoins ex

ist almost entirely in the digital, online world, although

some bitcoins have actually been privately minted. The

U.S. dollar, like many other stable currencies, are paper

or coin currency issued by a national reservetype bank

(in the United States, it is the Federal Reserve Bank).

This means that dollars are really Federal Reserve Notes

that are printed or minted at the U.S. Bureau of Engrav

ing and Printing. The dollar is so-called fiat money,

which means that dollars derive their value from the U.S.

government regulation or law. Interestingly, the United

States decided in 2014 that bitcoins will be taxed as

property, not currency, for International Revenue Ser

vices (IRS) purposes. The IRS defined bitcoin as a con

vertible currency that can be used as a medium of

exchange, a unit of account, and/or a store of value.

Technically, Bitcoin with a capital B refers to the tech

nology and network associated with the currency, while

bitcoin with a lowercase b refers to the actual currency.

The philosophy underlying the bitcoin is complete mis

trust in authority or controlbasically a perfectly state

less, market-based approach, with no country or

region-level bank intervention. It is also very technical.

CLOSING CASE

Bitcoin as an Ethical Dilemma158

Part 2 National Differences

Bitcoins are generated through a process called mining.

The mining process involves adding transaction records

to bitcoins public ledger of past transactions, which is

called the block chain (i.e., a chain of blocks). Bitcoin

nodes use the block chain to identify legitimate bitcoin

transactions. Even in todays high-tech world, the mining

process is intentionally designed to be resource intensive

and difficult. This means that the number of blocks found

daily by miners remains relatively steady. So, basically, in

order to mine a bitcoin, a person has to solve a complex

mathematical problem using substantial computational

power. Theres a twofold reason for this: It controls the

supply of bitcoins and incentivizes people to maintain the

underlying infrastructure that keeps bitcoins in place.

A unique feature of the bitcoin is that the number of

new bitcoins that are created is intentionally halved every

four years until the year 2140, when it will wind down to

zero. So, starting in 2140, no more bitcoins will be added

to virtual circulation and they will have reached their

maximum of 21 million. Perhaps most people will not

worry about the year 2140 just yet, but it does mean that

there is, technically, a finite supply of bitcoins. Such a fi

nite number has the potential to adversely affect the value

of bitcoins. Economist John Quiggin argues that this has

resulted in the finest example of a pure bubble.

Perhaps more remarkably, bitcoins do not have any

real value per se (compared to gold and silver), which

means that the coins value depends on classical demand

and-supply economics, leading many financial experts to

liken bitcoins to a Ponzi scheme, similar to Krugmans

viewpoint. A Ponzi scheme is a fraudulent investment

operation that returns payment to its investors from capi

tal paid by new investors rather than from profit earned.

(Charles Ponzi was born in Italy, but became known in

the early 1920s as a swindler in North America for his

unusual money-making scheme.)

Bitcoins have also been the subject of scrutiny by var

ious governments because of concerns that they can be

used for illegal activities. Some say the cryptocurrency is

unethical because it is allegedly used to buy illegal drugs

and guns and to pay for other illegal activities. Addition

ally, given its unique code, once stolen, bitcoins cannot

be returned, and there is no central bank or agency that

can help catch thieves. But, bitcoins have also attacked

the cost of moving money around and have successfully

created a simple measure of value that can be very effi

ciently moved around at virtually no cost.

Sources: P. Krugman, Bitcoin Is Evil, The New York Times, December 28,

2013; U. Goyal, Bitcoin and the Future of Money, Informilo, June 5, 2013;

D. Leger, IRS: Bitcoin Is Not a Currency, USA Today, March 25, 2014.

3. Do you think the bitcoin system is evil as

Paul Krugman suggests? Is it similar to a

Ponzi scheme?The word count is controlled at around 300 words

4. Do you think that bitcoins were created as a

weapon intended to damage central banking

and money-issuing banks?The word count is controlled at around 300 words