List All Reasons To Persuade The Company's Management

List All Reasons You Will Use To Persuade The Companys Managers To

A List All Reasons You Will Use To Persuade The Companys Managers To

a) List ALL reasons you will use to persuade the company's managers to refuse Bitcoin in their transactions. In your report, describe at least six points as the critical barriers or disadvantages of using Bitcoin( cryptocurrency) in current business transactions. b) What do you consider to be two key benefits associated with Bitcoin? c) Moreover, in the last paragraph, compare and contrast possible advantages with risks and compose your reasoning on why the company should not adopt Bitcoin.

Paper For Above instruction

Cryptocurrencies, led by Bitcoin, have garnered significant attention over the past decade as an innovative form of digital currency. Despite their rising popularity, many businesses remain cautious about integrating Bitcoin into their transaction processes. This paper aims to articulate key reasons why company managers should refuse to adopt Bitcoin, highlighting six critical disadvantages, discussing two principal benefits, and contrasting these benefits with the associated risks to form a rational conclusion on why Bitcoin may not be a prudent choice for current corporate transactions.

Reasons for Refusing Bitcoin

Firstly, one of the most significant barriers to implementing Bitcoin in business transactions is its high price volatility. Unlike traditional fiat currencies, Bitcoin's value can fluctuate dramatically within short periods, creating unpredictability that complicates pricing strategies, financial planning, and profit margin stability (Baur et al., 2018). This volatility exposes companies to substantial financial risks, especially if transactions are settled in Bitcoin without immediate conversion to stable currencies.

Secondly, Bitcoin's lack of widespread acceptance presents a practical challenge. Although increasing acceptance exists, it remains limited compared to national currencies, restricting the ease of use in everyday transactions or cross-border trade. This limited acceptance can hinder a company's ability to transact seamlessly with clients, suppliers, and partners, especially in regions where Bitcoin adoption is minimal (Catalini & Gans, 2019).

Thirdly, the transaction processing times for Bitcoin are considerably longer than traditional banking or digital payment systems. Bitcoin transactions can take from minutes to hours to confirm, depending on network congestion. Such delays can be detrimental for businesses requiring rapid transaction turnover, affecting cash flow and customer satisfaction (Menkveld, 2018).

Fourth, the-energy consumption associated with Bitcoin mining is an ethical and environmental concern. The proof-of-work system that underpins Bitcoin consumes enormous amounts of electricity, contributing to carbon emissions and climate change. As corporate sustainability commitments grow, relying on energy-intensive processes conflicts with environmental responsibility (O’Dwyer & Malone, 2018).

Fifth, regulatory uncertainty surrounds cryptocurrencies globally. Different jurisdictions are establishing conflicting rules regarding Bitcoin use, taxation, and Anti-Money Laundering (AML) standards. This uncertainty can pose compliance risks and create legal ambiguities, exposing companies to potential penalties or operational disruptions (Foley et al., 2019).

Finally, security issues related to Bitcoin transactions and storage pose significant threats. Despite blockchain's robustness, the ecosystem faces risks such as hacking of crypto exchanges, theft of private keys, and fraudulent schemes. These vulnerabilities could lead to financial losses and damage a company's reputation (Li et al., 2018).

Two Key Benefits of Bitcoin

Firstly, Bitcoin offers advantages related to decentralization and limited supply. Its decentralized network reduces reliance on central banks or governments, potentially offering increased resistance to political and economic instability. Moreover, Bitcoin’s capped supply at 21 million coins fosters scarcity, which can preserve its value over time and serve as a hedge against inflation (Nakamoto, 2008).

Secondly, Bitcoin provides the potential for lower transaction costs and faster cross-border payments compared to traditional banking channels. With fewer intermediaries, international transfers can be executed more quickly and at reduced fees, facilitating global business operations and financial inclusion for underserved regions (Katsiampa et al., 2019).

Comparison of Advantages and Risks

While Bitcoin offers attractive features like transparency, decentralization, and potential cost savings, these benefits are counterweighted by significant risks. Its price volatility undermines financial stability; environmental concerns raise sustainability issues; and regulatory uncertainties threaten legal compliance. The security vulnerabilities further exacerbate the risk profile, making Bitcoin an unpredictable asset rather than a reliable transactional currency.

For a company focused on operational stability, customer trust, and regulatory compliance, the drawbacks of adopting Bitcoin outweigh the benefits. Integrating a highly volatile asset without robust safeguards could jeopardize financial health and brand reputation. Therefore, despite its potential advantages, the associated risks strongly advise against immediate adoption of Bitcoin in the company's transaction framework.

References

• Baur, D. G., Hong, K., & Lucey, B. M. (2018). Bitcoin: Medium of exchange or speculative assets? Journal of International Financial Markets, Institutions and Money, 54, 177-189.
• Catalini, C., & Gans, J. S. (2019). Some Simple Economics of the Blockchain. NBER Working Paper No. 24678.
• Foley, S., Karlsen, J. R., & Putniņš, T. (2019). Sex, Drugs, and Bitcoin: How Much Illegal Activity Is

  Surrounded by Cryptocurrency? The Review of Financial Studies, 32(5), 1798-1853.

• Katsiampa, P., Corcoran, M., & Sercu, P. (2019). Volatility spillovers in the cryptocurrency market. Journal of International Financial Markets, Institutions and Money, 63, 101144.
• Li, X., Jiang, P., Chen, T., Luo, X., & Wen, Q. (2018). A survey on the security of blockchain systems. Future Generation Computer Systems, 107, 841-853.
• Menkveld, A. J. (2018). The Economics of High-Frequency Trading. Annual Review of Financial Economics, 10, 49-73.
• Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf
• O’Dwyer, K., & Malone, D. (2018). Bitcoin Mining and its Environmental Impact. Environmental Science & Technology, 52(24), 14258-14266.