The increasing globalization of the world economy is accompanied by very rapid digital technology, the need for people to speed, ease and security of financial transactions is increasing. So that a payment system that is quite reliable and easy is needed.
With the existence of Blockchain Technology with the strongest currency called Bitcoin, it was created by Satoshi Nakamoto. Satoshi Nakamoto is a mysterious figure who, until now, even though he has been searched and tracked continuously, his true identity is still unknown. Even so, the uniqueness of this technology is gaining a lot of praise, and there are already thousands of companies that have decided to experiment with this technology. The Hyperledger Project is a joint project that combines companies and banking institutions in the world - including companies like Citibank, Commonwealth Bank, HSBC and Barclays to learn how to Blockchain and apply it to the internal banking system. This project is carried out in order to transform the way banks work in a safer, faster and more efficient way so that they can compete with financial companies that transact using cryptocurrency.
Bitcoin is a virtual currency as a digital asset that has many advantages over ordinary currencies including low transaction costs and even free and anonymous nature. The emergence of bitcoin also broadens economic activities from the mining process, exchange and e-commerce activities using bitcoin. Nevertheless bitcoin is faced with the risk of volatile values and its anonymous nature causes bitcoin to be used for illegal transactions.
One trend in the world of information technology in 2014 is bitcoin. Although bitcoin is just one type of what is called a virtual currency. But along with the increase in value which reached more than USD 1000 for each piece in November 2013, even until February 2018 the value of bitcoin is almost close to USD 6,600, is a fantastic value for digital assets, then bitcoin has become very popular.
Regulators, especially central banks, will also be worried that the volume of bitcoin (or other virtual currencies) in circulation will grow, so that their own national currencies may no longer be an effective tool in managing the country's economy. Without control over virtual currencies, the central bank cannot back up the value of bitcoin and other virtual currencies to control price fluctuations and inflation. High dependence on technology is also one of the weaknesses of bitcoin. Peer to peer networks and the process of making bitcoin require a high level of computing power, and are very dependent on the integrity of the infrastructure that supports bitcoin. Weaknesses in infrastructure can reduce the confidence and confidence of most consumers towards bitcoin. This was proven after an attack by hackers in the place of bitcoin exchange and virtual wallet. Every time a hacking attempt is found in a bitcoin exchange or virtual wallet, the operator will usually delay the exchange process. This interferes with the use of bitcoin, and causes frustration and reduces trust in the place of bitcoin exchange.
The most shocking event was the Denial-of-service (DDoS) attack on the Tokyo-based bitcoin exchange Mt. Gox in February 2014. Hackers managed to take control of several computers, causing losses of around US $ 575 million.
Banks in several countries state that virtual currency, including bitcoin, is not recognized as a legal payment instrument, so it is forbidden to be used as a means of payment in these countries. As in Indonesia, in a press statement, Bank Indonesia (BI) stated that the prohibition was in accordance with the provisions in the Currency Law stating that currency is money issued by the State and every transaction that has a purpose for payment, or other obligations that must be filled with money, or other financial transactions carried out in each region of the country must use the country's currency.
Some of the economic activities that arise with the existence of bitcoin are: mining bitcoin, buying bitcoin in the place of bitcoin exchange and selling services or goods by accepting payment using bitcoin.
Taxation of bitcoin transactions is also of concern to authorities in many countries. The UK has become one of the first countries to confirm how transactions involving virtual currencies will be taxed.
HM Revenue & Customs (HMRC) in the UK has confirmed that revenue from bitcoin mining is outside the scope of Value Added Tax (VAT) on the grounds that mining activities are not an economic activity, and that there is no VAT when bitcoin is exchanged for other currencies . (HMRC, 2014)