IT A level 12.1

Question 1

What are digital currencies?

Answer 1

An internet-based currency, that allows instantaneous transactions.

Question 2

What are the impacts of digital currencies?

Answer 2

1) Bank transfers are faster than with real currency
2) movement of money around the world is easier than with real money
3) Easier to use e-commerce so e-business can flourish
4) Leads to increased business activity
5) Currency doesn’t not physically exist so difficult to track
6) If digital currency is lost through file corruption it can be lost forever
7) used for criminal activates
8) values can fluctuate for no apparent reason

Question 3

What are the benefits and drawbacks of using electronic funds transfer system in eBusiness?

Answer 3

Benefits:
1) funds are transferred more quickly than other methods
2) Risk of frauds is reduced compared to other methods
3) Transactions can be carried out at anytime
4) widely accepted as its used by many people

Drawbacks
1) Risk of cyber-crime (hacking)
2) system failures mean no transfers can occur
3) Require internet access
4) Fear of loss of finical data resulting in fraud

Question 4

Risk on economey due to digital currencies?

Answer 4

1) Pensions are lost
2) Risk of money laundry-ing
3) Transactions are anonymous, not tracked or recorded
4) Rise in unemployment
5) values of digital currencies are very volatile and have grant fluctuations that lead to fanatical instability
6) Risk of momentary controls set by gov to regulate economy

Question 5

Effectiveness of digital currencies as a payment method

Answer 5

Effectiveness

1) Transactions can be anonymous
2) transactions fees are lower than with other currencies
3) Funds are received faster than other forms of transactions

Lack of Effectiveness
1) Difficult to understand how to use
2) Transactions cannot be revered in case of error
3) Values constantly fluctuate, leading to uncertainty
4) Not widely accepted by retailers

Question 6

Impact of use of cryptocurrency

Answer 6

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1) Transactions are encrypted for security so privacy is assured
2) Not subject to exchange rates when used internationally
3) Not regulated so is next subject to interest rate changes
4) Cannot be seized as no ownership records are held

• 1) Transactions cannot be cancelled ( revered) hence if transactions sent to the wrong address, value is lost
  2) Value of currency fluctuates widely so can be fanatically unstable, so is a high risk
  3) Encrypted records of currency hold value but not ownership so if lost, no proof of ownership
  4) Some countries don’t allow to use of cryptocurrency, so services cannot be purchased.

Question 7

Why is bitcoin classified as decentralised system?

Answer 7

Payments are made peer to peer, no central regulatory authority to oversee transactions

Question 8

How bitcoin is used?

Answer 8

Bitcoin software is set up to provide bitcoin address to which payments are made, when purchased from a bitcoin exchange and loaded into the wallet . Bitcoin can be transferred directly from one wallet to another by specify bitcoin address of seller to send to. Bitcoin address are complex.

Question 9

What are the drawbacks and benefits of stored value cards?

Answer 9

Benefits:
1) No user authentication because money is stored on cards
2) No network connections needed, translations be proceed offline
3) User is safer and unlikely to get robbed
4) Transactions can be quick as no authentication is needed

Drawbacks
1) No cap no charges because user is not identified and the card is not linked to an account
2) Accepted only for low value transactions to avoid fraud