MINISTRY OF EDUCATION AND TRAINING

UEH UNIVERSITY
UEH COLLEGE OF BUSINESS
SCHOOL OF ECONOMIC MATHEMATICS - STATISTICS

FINAL EXAM
(ASSIGNMENT-BASED EXAM)
(course) BANKING STRATEGY AND MANAGEMENT

Instructor: PhD. PHAN CHUNG THỦY

Student: Vũ Nguyễn Khánh Linh
Student ID: 31211020701
Class code: 23D1BAN50610702
School Year: I/2023

------------ HO CHI MINH CITY ------------

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 PREFACE

I would like to thank UEH University for including the Banking Strategy and Management
subject in the curriculum so that we have the opportunity to absorb valuable knowledge. In
particular, I would like to express my sincerest thanks to Dr. Phan Chang Thuy, who has imparted
knowledge to us with all her heart. Studying your subject is a great time because I not only learned
the theory but also gained useful practical experience. This will be my luggage, so that I can firmly
walk on the path I initially chose.

Banking strategy and management are not only useful but also highly practical. However,
due to limited knowledge and the ability to absorb reality, there are still many surprises. Although I
have tried my best, surely the essay can hardly avoid errors and many inaccuracies. I hope you will
consider and give suggestions to make my essay more complete. Thank you sincerely!

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 TABLE OF CONTENTS

PREFACE.................................................................................................................... 2

PART I: FOUNDATION OF BANKING MANAGEMENT 4

Question 1.................................................................................................................4
Question 2.................................................................................................................5
Question 3.................................................................................................................6
Question 4.................................................................................................................7
PART II: CASE STUDY.............................................................................................9
Case 1: "Wealth Management Crisis at UBS".................................................... 9
Question 1....................................................................................................... 9
Question 2..................................................................................................... 10
Question 3..................................................................................................... 11
Question 4.....................................................................................................12
Case 2: "Bitcoin: Future of digital payment"...................................................13
Question 1....................................................................................................13
Question 2....................................................................................................15
Question 3..................................................................................................... 16
Question 4..................................................................................................... 17
REFERENCES.......................................................................................................... 18
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 PART I: FOUNDATION OF BANKING MANAGEMENT

Question 1: In looking at the future of the banking and financial services industry, does
it appear likely that the influential trends of convergence and consolidation will continue?
Why or why not? Is this likely to occur at the same pace as in the past?
The trend of convergence and consolidation is likely to continue in the banking and
financial services industry. This is driven by various factors such as increasing competition,
regulatory pressures, technological advancements, and changing customer preferences.
 One of the main drivers is increasing competition, as banks and financial institutions look for
ways to differentiate themselves and offer a wider range of products and services to their
customers. Consolidation allows them to achieve economies of scale and reduce costs, which
in turn can lead to lower prices and better service for customers.
 Regulatory pressures are also contributing to this trend, with regulators in many countries
seeking to promote stability and reduce systemic risk in the financial system. This has led to
the creation of larger, more diversified financial institutions that are better able to weather
economic shocks and crises.
 Technological advancements are also playing a role in driving convergence and consolidation,
as banks and other financial institutions seek to leverage new technologies such as artificial
intelligence, blockchain, and mobile payments to improve their efficiency, reduce costs, and
offer new products and services.
 Changing customer preferences are driving the trend towards convergence and consolidation
as well. Customers are increasingly looking for a seamless, integrated experience when it
comes to their financial services, and they want to be able to access a wide range of products
and services from a single provider.
Consolidation refers to the merging of two or more companies to form a larger entity,
while convergence involves the integration of different financial services into a single platform.
Both trends have been prevalent in the industry for a long time and have resulted in the creation of
large financial conglomerates that offer a wide range of services.
The pace of convergence and consolidation is likely to continue at a similar pace as in the
past, although there may be some variations depending on specific market conditions and
regulatory environments. In some regions, such as Europe, there are regulatory initiatives aimed at
promoting competition and preventing excessive consolidation. However, in other regions, such as
Asia, consolidation is expected to continue as banks look for ways to expand their reach and gain
economies of scale.
In Vietnam, the government has been encouraging the consolidation of its banking sector
to create larger, more stable banks that can compete on a regional and global level. The State Bank

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of Vietnam has set targets for mergers and acquisitions in the banking sector, and several large
mergers have already taken place.
Overall, the banking and financial services industry will continue to evolve and adapt to
changing market conditions, and convergence and consolidation will remain important strategies
for companies looking to stay competitive and meet the evolving needs of their customers.

Question 2: Based on what you learned from reading this course and from studies you
uncovered on the Web, which of the financial firms listed below are most likely to benefit
from economies of scale or scope and which will probably not benefit significantly from these
economies based on the information given?
Economies of scale and scope refer to cost savings and efficiency gains that a company can
achieve by increasing the scale or scope of its operations. The more a company produces or the wider
its range of services, the more it can spread its fixed costs over a larger volume of output, leading to
lower costs per unit. Additionally, offering a wider range of services can attract more customers and
increase revenue.
 Firm a, the larger size should be advantageous for this bank when economies of scale kick in.
As this company expands over the following several years, it should continue to benefit from
economies of scale. These economies of scale, however, won't last forever, and there is some
evidence to suggest that economies of scale in banking enterprises run out very rapidly.
 Firm b, probably not much of this bank's gain from economies of scope. The trust industry is
small, and since it mostly serves families and small enterprises, it does not appear that producing
these services jointly would be significantly less expensive.
 Firm c, although there may be a few modest economies of scale that continue to persist up until
the size of roughly 10 billion, economies of scale tend to evaporate in this range. The
assumption of economies of scope does not seem to be well supported by the available
information. No known economies of scale exist.
 Firm d, this business seems to be operating outside the scope of any economies of scale. There
does not seem to be much support for any significant economies of scope, and the evidence for
them is not apparent.
 Firm e, the data for economies of scope suggests that there aren't many economies of scope in
this industry, and this business looks to be considerably larger than is required to provide any
economies of scale.
Overall, the financial firms that offer a wider range of services and have a larger volume of
output are more likely to benefit from economies of scale and scope than those that have a narrower
focus or a smaller scale of operations.

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 Question 3: Butell Manufacturing has an outstanding $11 million loan with Citicenter
Bank for the current year. As the loan agreement requires, Butell reports selected data items
to the bank monthly. Based on the following information, is there any indication of a
developing problem loan? About what dimensions of the firm's performance should
Citicenter Bank be concerned?
After analyzing the performance of the company using ratios, there are a few important
points to note:
 Firstly, the company's strong liquidity position is a valuable asset that indicates the company
has enough cash to sustain daily operations. This provides investors with comfort that the
company has the resources to cover any unforeseen expenses.
 Secondly, the fact that the company's share price has been stable and has not fluctuated much
lately indicates that the company has been performing consistently. This can be interpreted as a
sign of market confidence in the company's management and financial.
 Thirdly, the company's equity level is healthy, allowing it to better withstand any losses to
maintain operational continuity. This reflects sound financial management principles.
 Fourthly, with a current ratio above 1, the company is liquid and has enough current assets to
cover its short-term liabilities. This is a positive financial indicator, signaling that the company
can pay its costs on time and has a broadened margin of safety in protecting the value of its
current assets.
 Fifthly, the EBIT has increased over the last three months, which suggests that the company
has been generating increasing profits. This is promising and may indicate that the company
has a promising future as it progresses.
 Sixthly, the ROA, while lower, is still positive. This means that the company has been able to
generate some return on its assets. However, as mentioned previously, the return is not as high
as it could be. Management may be able to implement additional strategies to improve the
return on assets.
 Lastly, the company's sales revenue is positive and is nearing expected sales. This suggests that
the company is performing as projected, which can be seen as a positive sign by investors.
In conclusion, while the company appears to maintain a strong liquidity position and has
enough cash to sustain day-to-day operations, Citicenter Bank has good cause to pay close attention
to asset quality to ensure satisfactory returns and to track EBIT, hoping that it continues growing.

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 Question 4:
1.
In January 2008, Société General, one of France's largest banks, reported losses of over $7
billion due to unauthorized and fraudulent trading activities by one of its traders, Jerome Kerviel.
The incident was a significant operational risk for the bank, as a rogue trader had engaged in
risky trading activities without authorization from his superiors and had concealed his positions
from other employees over a period of three years. Eventually, the bank's risk exposure from the
concealed transactions approached $70 billion, well beyond Société's capital cushion.
It occurred when the trader had used futures contracts to target selected European stock
prices and had repeatedly fended off questions from other employees about his trading positions.
When questioned, he claimed that the positions were mistakes or that he would offset them with
other trades. This allowed him to conceal the bank's real risk exposure and continue his fraudulent
activities for an extended period. Once discovered, the bank worked quickly to unwind the most
damaging positions and limit the monetary losses.
The incident highlighted the importance of effective internal and external controls to
prevent serious exposure. Industry analysts have recommended the complete separation of
recordkeeping functions from the trading function to prevent rogue traders from concealing their
activities. The incident also raised questions about the bank's risk management systems and
controls. The bank was criticized for failing to detect the trader's fraudulent activities earlier and for
relying too heavily on internal controls without proper oversight. Following the incident, Societe
Generale implemented a number of measures to strengthen its risk management systems and
controls, including increased oversight, improved reporting mechanisms, and stronger internal
controls.
2.
- As Vietnamese banks, there are various operational risks that we may face in our day-to-day
operations. These risks may arise from internal factors such as inadequate systems, processes, or
human error or from external factors such as legal and regulatory compliance, market volatility, or
geopolitical events. Examples of operational risks that we may encounter include:
 Fraudulent activities: This can be caused by insider fraud, identity theft, or phishing scams.
Fraudulent activities can result in financial losses, regulatory non-compliance, and
reputational damage. For instance, in 2019, a former executive of BIDV was sentenced for
embezzling VND 25 billion from the bank.
 Technology failure and cyber threats: This can be caused by software glitches, hardware
malfunctions, or cyberattacks. Unforeseen events such as natural disasters, power outages, or
IT system failures can cause significant financial losses. Technology failure can lead to
financial losses, reputational damage, and a loss of customer confidence. For example, in
2020, Tien Phong Bank suffered a cyberattack that resulted in the theft of VND 1.2 billion
from customer accounts.
 Human error Risk is one of the most common operational risks that we face. This can be
caused by a variety of factors, such as lack of training, miscommunication, or carelessness.

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 Human error can result in financial losses, regulatory non-compliance, and reputational
damage. For example, in 2020, an employee at Techcombank mistakenly transferred VND
1.5 billion to the wrong account due to a data input error.
 Reputational risks: negative publicity due to poor customer service, data breaches, or other
operational failures can lead to the loss of customers and damage to the bank's reputation.
- Example: One of the most significant operational risks that Vietnamese banks have recently
faced is the increased cyber threats brought about by the COVID-19 pandemic. As more customers
shift to online banking and remote work arrangements become more prevalent, cybercriminals have
stepped up their attacks, targeting banks with phishing scams, ransomware, and other malicious
activities. According to a recent report by Vietnam's National Cybersecurity Center, there were
4,770 cyber-attacks on Vietnamese websites and networks in the first six months of 2020. This
represents a 104% increase compared to the same period in 2019. Furthermore, a report by
Kaspersky Lab found that the number of phishing attacks in Vietnam increased by 1,200% in the
first quarter of 2020 compared to the same period in 2019.
These cyber threats pose a significant operational risk to Vietnamese banks, as they can result in
financial losses, reputational damage, and loss of customer confidence. Vietnamese banks have had
to implement new measures to address these risks, such as enhancing cybersecurity measures,
providing remote access to IT systems, and increasing customer education on online security.
In summary, the increased cyber threats brought about by the COVID-19 pandemic represent a
significant operational risk for Vietnamese banks. Banks must remain vigilant and take proactive
measures to mitigate these risks to ensure the safety and soundness of their operations.

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 PART II: CASE STUDY

Case 1: “Wealth Management Crisis at USB”

Question 1:
In your opinion, to what extent did the government and national culture play in the scandal?
The role of government in this scandal cannot be overlooked as it was the US Department
of Justice that investigated UBS for tax fraud. The government's investigation led to the bank
having to face the decision of either revealing client information, which would harm the firm's
competitiveness due to Switzerland's strict bank secrecy laws, or face federal indictment for tax
fraud in the US. The government's involvement shows the importance of regulation and
enforcement on preventing corporate misconduct. In the UBS scandal, the Swiss government
supported secrecy between banking institutions and their clients. “Privacy and freedom from
government intervention were central tenets of 19th-century liberalism that had influenced
Switzerland.” (Harvard Business School, p.2)
At the same time, Swiss national culture and history have contributed to the strict bank
secrecy laws and emphasis on privacy and protection of information. This has made the banking
industry in Switzerland particularly appealing to wealthy clients who prioritize confidentiality. The
concept was reinforced by the Swiss government when “the practice was first codified in Article
47 of the 1934 Federal Law on Banking and Savings Banks, which imposed fines of up to CHF
20,000 and imprisonment of up to six months for any banker, auditor, or regulator who
intentionally disclosed account holder data.” (Harvard Business School, p.2). However, this
culture of discretion has also enabled the practice of tax evasion to flourish as clients can hide their
assets and avoid paying taxes.
Corporate culture in the banking industry in Switzerland also played a significant role in
this scandal. The pressure to generate profits and remain competitive likely led to the practices of
helping clients evade taxes. Additionally, the reach of the private banking departments was vast,
making it easier for clients to hide their assets from their home countries' governments. The
emphasis on protecting client privacy and high-end wealth management services also made it
harder for regulators to detect and investigate potential financial crimes. During the financial crisis,
abetting and ignorance were the underlying themes of the British government and its banking
system to maintain “an image of strength and solvency.” (Stanford, p.1).
Overall, the UBS scandal highlights the need for effective government regulation and
enforcement, as well as a corporate culture that puts ethical behavior and compliance with the law
at the forefront. It also serves as a cautionary tale against prioritizing profit and customer discretion
over ethical practices and compliance.

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 And to what time did corporate culture contribute to the scandal?
There appear to be similarities in the “third” phase of the scandals.
In multiple cases, including the UBS tax evasion scandal, the scandal involved a focus on
the private banking sector and a lack of oversight or commitment to regulatory compliance within
the banks. The scandals also often involved complex offshore structures and hiding assets in
offshore accounts to evade taxes.
Additionally, in all of these scandals, there was a significant focus on client confidentiality
and a desire to maintain secrecy at all costs. This perpetuated a culture of secrecy within the banks
and a disregard for legal and ethical obligations.
Another similarity in the "third" phase of scandals is the government's involvement and
crackdown on these banks and their practices. In all of these cases, the government conducted
investigations and took legal action against the banks, resulting in hefty fines and significant
reputational damage.
These similarities may suggest larger systemic issues within the banking industry that are
being exposed in these scandals. The lack of oversight, focus on profit over compliance, and
emphasis on secrecy and confidentiality are all issues that may need to be addressed in order to
prevent similar scandals from occurring in the future.

Question 2:
Would the scandal have been reasonably uncovered without the Global Financial Crisis, or
would it have lingered? If yes/no, please explain.
The "Wealth Management Crisis at UBS" pertained to the bank's aiding of clients to evade
taxes and hide their assets in offshore accounts. It was a long-running and complex operation that
involved the bank's private banking division and was built on the secrecy of Swiss banking laws and
culture.
While it is impossible to know for sure, it is possible that the scandal may have lingered
without the Global Financial Crisis. The scandal would likely have continued to be concealed by
UBS due to the bank's secretive and nontransparent practices that were deeply ingrained in the
organization's culture. Without the Global Financial Crisis, it may have been difficult for regulatory
authorities to prioritize investigating allegations of UBS's unlawful tax practices. The crisis brought
heightened attention to the financial industry, and UBS could not evade the gaze of regulatory
authorities any longer.
However, it is vital to note that UBS had already been under investigations for several years
before the onset of the global financial crisis, so it is possible that the investigations may still have led
to the exposure of the scandal at UBS. Besides that, it is worth noting that the UBS scandal was not
the first of its kind. Similar scandals had already taken place at other banks, and it is possible that
regulators and law enforcement agencies would have eventually turned their attention to UBS
regardless of the Global Financial Crisis.

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 The financial crisis and the subsequent economic recession created a level of public outrage
and political pressure that fueled a greater appetite for transparency and accountability in the financial
industry. This led governments and regulatory authorities worldwide to tighten their frameworks and
to focus more on detecting financial crimes like tax evasion. As such, if UBS had continued to
engage in unethical behavior, it is possible that regulatory authorities would have been more likely to
uncover it in the aftermath of the Financial Crisis.
Furthermore, the Financial Crisis damaged public trust and confidence in the financial
industry, which brought a greater number of whistleblowers and insiders with information about
illicit activities. With the backing of public scrutiny, these informants may have felt more empowered
to come forward with information about tax evasion and other illegal practices.
In conclusion, while it is uncertain whether the UBS tax evasion scandal would have been
reasonably uncovered without the Global Financial Crisis, it is likely that the crisis brought greater
public awareness and regulatory scrutiny to the financial industry, making it more challenging for
UBS to continue to engage in unethical practices without being caught.

Question 3:
Does it matter who or what entities could have been impacted by the scandal? What if net/net
there were no losses incurred?
The LIBOR scandal involved several parties, including government officials, central
bankers, and banks. While Bob Diamond may have believed he was following the instructions of his
superior, Paul Tucker, deputy governor of the Bank of England, the United Kingdom’s central bank,
and that “government officials were at least partially responsible” for the decision to manipulate
the LIBOR.” (Stanford, p. 9), it is important to note that manipulation of the LIBOR is illegal and
unethical, regardless of who gave the instruction or who benefited from it. The responsibility of bank
executives is to ensure that their institutions operate in compliance with laws and regulations and
uphold ethical standards, regardless of the instructions they receive from any external party.
Additionally, the complexity of the LIBOR calculations does not excuse banks or regulators
from ensuring that the benchmark rate is determined fairly and transparently. It is the responsibility of
financial institutions to fully understand the financial products they offer, including benchmark rates
like the LIBOR, and to ensure that they are not contributing to any manipulation or misconduct.
While some may argue that the British government abetted the Bank of England and
Barclays in the LIBOR scandal, it is important to note that the manipulation of the LIBOR was illegal
and unethical, regardless of any external entities involved. It is the responsibility of financial
institutions to operate in compliance with the law and uphold ethical standards, regardless of any
challenges they may face in determining if rates are rigged.
The comments of Lord Turner, former chairman of Britain’s Financial Services Authority,
who was responsible for the regulation of the financial services in the UK, highlight the complexity of
detecting and preventing financial misconduct, but they do not excuse institutions or regulators from
their obligations to ensure market integrity and transparency. The financial industry has a

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responsibility to operate ethically and lawfully, and strong regulatory oversight is necessary to ensure
that this occurs.
The fact that Bob Diamond claimed not to know the mechanics of how the LIBOR was set is
concerning, as he was the CEO of a bank that regularly submitted rates, “didn’t even know the
mechanics of how LIBOR was set.”. This is surprising given that the LIBOR was developed in
London and is the benchmark for lending among major global banks. This highlights the need for
regulatory oversight and transparency in financial markets, as well as the importance of strong
leadership and accountability within financial institutions.

Question 4:
Is the next scandal already underway, and are we just waiting for the next recession
to discover what is happening? Please explain.
While Raoul Weil, the former deputy CEO of Global Wealth Management at UBS, may have
been under the direction of Marcel Rohner, the CEO of Wealth Management, it is important to note
that ultimately, individuals are responsible for their own actions and decisions. It is also important to
note that the decision to alter UBS's compensation approach for US cross-border private bankers and
to lure clients into harboring their wealth at UBS was illegal and unethical, regardless of any external
factors or government regulations.
The treaty signed by the US and Swiss governments did create a framework for exchanging
financial information and combating tax evasion, but it did not absolve individual banks or bankers of
their responsibility to operate in compliance with local laws and international regulations. Upon
investigation, UBS claims that the treaty signed by the US and Swiss governments bound the US to
Swiss laws, where the Swiss government actively protects the “privacy and freedom from
government intervention,” ultimately implying that the responsibility lied with the Swiss
government and that they were abiding by the rules. After all, the Swiss banking sector was
responsible for twice the amount of GDP than that of the US and employed roughly 100K people.
While the Swiss banking sector is an important part of the national economy, it is crucial for
financial institutions to prioritize ethical behavior and compliance with laws and regulations. The
impacts of financial misconduct can be significant, and the reputation and integrity of the financial
industry as a whole can be damaged when such misconduct occurs. Therefore, it is important for
financial institutions, regulators, and policymakers to prioritize transparency, compliance, and ethical
behavior in all financial activities.

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 Case 2: “Bitcoin: Future of digital payment”
Question 1:
One of the arguments given by the persons, not in favor of Bitcoins and other similar "virtual
currencies" is that this lack of supervision and regulation makes Bitcoin dangerous. Do you
agree with this point of view? If not, please explain.
I believe that the statement "the lack of monitoring and regulation has made Bitcoin unsafe"
is partially true, but I do not completely agree with it. While the absence of control and regulation is a
factor that makes Bitcoin risky, there are other objective reasons why it is a risky investment. The
intense regulatory scrutiny that Bitcoin has undergone since the collapse of Bitcoin service providers
and exchanges has led to a positive outcome. This scrutiny has brought attention to the risks
associated with Bitcoin, leading to increased security measures and regulations to prevent similar
incidents from happening again.
The definition of Bitcoin is that it is a new form of electronic cash that operates in a peer-to-
peer network without needing a trusted third party to facilitate transactions. However, relying solely
on the possession of a private key as proof of ownership creates a risk to the security of Bitcoin
transactions because there is no third party to verify their validity or authenticity.
Despite the lack of government monitoring and regulation, Bitcoin is still used for various
purposes. Some individuals may view Bitcoin as a currency favored by those on the political left due
to its decentralization and lack of oversight. However, anonymity in transactions can attract those
seeking to engage in illegal activities, which increases the risk associated with Bitcoin use. Without
proper monitoring and regulation, Bitcoin transactions may be utilized for unlawful purposes,
particularly since it is more difficult to reverse a Bitcoin transaction than with traditional forms of
payment. The value of Bitcoin can also fluctuate considerably, which presents a risk factor that
cannot be ignored. The price of Bitcoin is subject to supply and demand for the currency, as well as
external factors such as global economic conditions and regulatory developments. As a result, the
value of Bitcoin has the potential to change rapidly, which can impact investors, retailers, and service
providers.
The volatility of Bitcoin's value can be a serious issue for businesses operating within the
Bitcoin ecosystem, including service providers, retailers, and exchanges. The bankruptcy of Mount
Gox in 2014 is a prime example of how the fluctuation in Bitcoin's value can negatively impact these
businesses. Mount Gox, a previously dominant Bitcoin exchange, lost almost half a billion dollars'
worth of customer Bitcoin and an additional 100,000 of its own Bitcoin due to the currency's rapidly

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changing value. This has serious consequences not just for the exchange but potentially for its users,
who may have lost a significant amount of money. Bitcoin's value is highly unstable and subject to
rapid and significant fluctuations. This volatility is a characteristic of Bitcoin and is commonly
known as "time deflation." In contrast, traditional currencies experience inflation, where prices for
goods and services gradually increase over time due to rising demand. During economic downturns,
individuals might begin to speculate on Bitcoin's future value and stockpile the currency rather than
spend it. This tendency to hold the currency during difficult economic times can limit business
growth and make it more challenging to price goods and services, thus creating a challenging
economic environment. Because it's unavoidable to ask, "Why should they spend Bitcoin today when
it's worth so much more tomorrow?" According to the research, more than 94% of all bitcoins in the
world are already in circulation, with a total value of over $5.5 billion, yet only 0.33% of all bitcoin
addresses Moreover, it is estimated that 64% of all bitcoins in existence, or around 8.2 million
bitcoins, have never been used or spent, meaning that only 4.5 million bitcoins are currently
circulating. This has led some people to view the practice of hoarding or speculating on Bitcoin as
inefficient and harmful to the economy. By stockpiling Bitcoin for future profits, individuals may not
be spending it on goods and services, which can limit the growth of businesses and slow down the
circulation of the currency. Therefore, it is important to consider the potential economic impact of
hoarding and speculating on Bitcoin.
Bitcoin presents a significant risk of deception due to the potential for hackers to steal private
keys. Hackers can gain access to cloud storage used by Bitcoin wallet service providers, giving them
control of other people's Bitcoin balances. The case of FlexCoin, a wallet service provider that was
hacked and lost 896 bitcoins worth over $500,000 from its customers, serves as an excellent example
of the risks associated with trusting third-party service providers to safeguard balances. This incident
ultimately led to the bankruptcy of FlexCoin.
Bitcoin has been known to facilitate criminal activities such as drug trafficking and money
laundering, leading to calls for its ban by the US Senate following the Mt. Gox bankruptcy. While a
complete ban on Bitcoin in the United States is unlikely at this point, several executives of Bitcoin
companies have been arrested on charges of money laundering. As a result, many people have come
to view cryptocurrency legislation as somewhat dubious. While Bitcoin's decentralization and
transparency can be incredibly beneficial, its association with illegal activities and susceptibility to
theft and deception serve as a reminder of the risks and challenges associated with using and
regulating digital currencies. Therefore, it is necessary to continue to monitor, regulate, and innovate
in the field of digital currency to ensure a secure and prosperous future for this growing industry.
The Silk Road Marketplace, which was established in February 2011 and referred to as the
"eBay for illegal narcotics," is an instance of Bitcoin's commercial application in facilitating illegal
transactions. Bitcoin's capability of conducting transactions anonymously has helped fuel its use in
illegal activities and trafficking on websites like this. The use of digital currencies like Bitcoin in
criminal activities underlines the necessity for regulatory oversight and enforcement against fraud and
illegal activities in this space.
Governments worldwide have scrutinized Bitcoin closely because of incidents such as the
Mount Gox, Silk Road, First Meta, and FlexCoin events. As a result, policymakers have recognized
the requirement for regulatory oversight and control of digital currency payment systems like Bitcoin

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to promote efficiency, speed, and security. Apart from balancing legitimate and illegal uses,
governments must handle additional issues that may emerge. One of Bitcoin's and other "virtual
currencies" drawbacks is that several governments have cautioned users about their potential risks
and have even prohibited them outright.

Question 2:
If you were running a business, would you accept Bitcoins for payments for your products/
services? Why or Why not? And suppose Bitcoins were selected as means of payment. What
would you do to protect your business against the risks due to the fluctuations of the value of
Bitcoins compared with traditional currencies and against the risk of fraud?.
As a business owner, I choose to accept Bitcoin as a payment option for my products. This
decision can come with challenges, including integrating the Bitcoin protocol, converting received
bitcoins into traditional currency, and incorporating Bitcoin payments into an online shopping cart
system. However, despite these difficulties, the benefits of accepting Bitcoin payments can be
substantial and long-lasting. By accepting Bitcoin, I can expand my customer base since digital
currency users value the decentralization, transparency, and anonymity that Bitcoin provides.
Additionally, Bitcoin payments often come with lower transaction fees than traditional payment
methods, making them cost-effective for both my business and my customers.
Businesses that choose to accept Bitcoin as a payment method can potentially attract a large
number of new customers. This is because many Bitcoin wallets offer low transaction fees, or none at
all, which makes paying with Bitcoin an attractive option for many clients. By accepting Bitcoin
payments, businesses can tap into this customer base and potentially increase their revenue streams.
Customers are also more likely to patronize businesses that accept Bitcoin since it offers a degree of
anonymity and decentralization that traditional payment methods do not provide. Moreover, Bitcoin
is a globally accepted currency, which means that businesses that accept it can potentially attract
customers from anywhere in the world.
Overstock.com, a renowned online retailer known for its competitive pricing strategies, made
$1 million in bitcoin sales for a particular month. This marks the first instance where a corporation
with yearly earnings of about $1.3 billion has agreed to accept Bitcoin payments from its customers,
indicating a significant shift towards the acceptance of digital currencies in the mainstream market.
Other companies that have started accepting Bitcoin payments, such as Foodler, have reported a
notable uptick in their customer base, with over 60% of new clients engaging in Bitcoin transactions
with the company. Additionally, TigerDirect, a computer electronics company that started accepting
Bitcoin payments, received a sizeable order worth $500,000 within just three days of announcing
their acceptance of Bitcoin. These examples demonstrate the potential benefits that companies can
garner by accepting Bitcoin payments.

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 One of the concerns for foreign business customers is the standard 8.5% fee, which can be
frustrating. Even when using the most extensive money transfer services, such as Union or
MoneyGram, it usually takes days for the payment to arrive for businesses. However, using Bitcoin
as a payment can simplify and speed up the transaction process. Unlike opening traditional bank
accounts or transferring money through money transfer services, Bitcoin does not require
complicated steps. Both customers in Africa and worldwide can send and receive Bitcoin payments
using SMS and feature phones. Plus, Bitcoin transaction fees are neither costly nor free. Overall,
Bitcoin offers a quicker and more accessible alternative to traditional payment and money transfer
methods.
When businesses accept Bitcoin as a payment method, credit card merchants can experience
several benefits, including a reduction in chargebacks and lower transactional costs. Additionally, the
convenience of using Bitcoin for both domestic and international transactions can lead to cost savings
in the long run. By accepting Bitcoin, businesses can avoid costly instances where customers dispute
their charges and request refunds. Such disputes can add up to substantial costs for businesses, and
avoiding them can lead to significant savings in the long term. Furthermore, businesses that are open
to accepting Bitcoin payments can potentially attract new customers who value the anonymity and
security that Bitcoin provides. This can lead to increased revenue streams and a brighter future for
businesses in the digital marketplace.

Question 3:
Is it possible if Bitcoins to become the future of digital payment?
What is your opinion on this topic?
Bitcoin has the potential to become the payment method of the future for digital transactions
if it meets the following criteria:
Wide-scale adoption: For Bitcoin to become the payment method of the future for digital
transactions, it needs to achieve widespread adoption and acceptance. This means that more
businesses and individuals must start accepting and using Bitcoin as a form of payment for goods and
services. However, incidents such as the Silk Road, which facilitated illegal drug transactions, have
negatively impacted Bitcoin's reputation. US authorities have also raised concerns about Bitcoin
being used to finance terrorism and facilitate money laundering. As a result, the public's perception of
Bitcoin has been negatively affected, which could limit its adoption as a payment method. To address
these concerns, governments around the world need to establish regulatory frameworks that provide
transparency, security, and compliance for Bitcoin transactions.
Public trust: Unfortunately, the majority of people do not trust or use Bitcoin at this moment
in time. Without public trust, Bitcoin (as well as any other currency) becomes worthless as a means of
payment. For Bitcoin to be widely accepted as a digital payment method, people need to be
convinced that it is safe, secure, and reliable. However, Bitcoin still has some way to go before it can
achieve this. The key to building trust in Bitcoin is to demonstrate its benefits and overcome the
perception that it is associated with illegal activities, such as money laundering and financing. Once
people recognize Bitcoin's potential to revolutionize digital payments with its decentralized and
transparent nature, they may be more likely to embrace it as a legitimate payment option.

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 Security and transparency: Bitcoin's blockchain technology provides robust security
measures and transparency features that users can trust. What sets Bitcoin apart from other
cryptocurrencies is the blockchain technology. Therefore, I believe that blockchain, not bitcoin, is the
future of digital payment systems. due to the fact that there are over 4,000 different cryptocurrencies,
and it is difficult to determine when another digital currency will overtake Bitcoin as the most
popular option. Additionally, Elon Musk recently gave up on Bitcoin and began promoting Dogecoin.
While Bitcoin may not meet traditional currency criteria, such as stability, its blockchain technology
possesses useful characteristics that should be utilized by relevant authorities. If appropriate
regulatory frameworks are put in place, blockchain technology can fully realize its potential. As such,
many nations are exploring the creation of their own regulated cryptocurrencies, such as Central
Bank Digital Currencies, based on blockchain technology. This may be the real game-changer when
it comes to the future of digital payment systems, as it provides a secure and streamlined means of
conducting transactions. While Bitcoin may still have a role to play in the online payment space, the
true potential of blockchain technology lies beyond just cryptocurrencies. It can revolutionize the way
we conduct transactions, provide transparency and security, and empower users to take control of
their financial interactions.

Question 4:
How's the future of Bitcoin in Vietnam? Please explain.
It is difficult to predict the future of Bitcoin in Vietnam with certainty since it is affected by
various factors, such as legal regulations, public perception, and global trends.
The use of cryptocurrencies in Vietnam is not currently well regulated, and the government
has not yet provided a clear stance on digital currencies. This is due to the government's concerns
about the potential risks associated with cryptocurrencies, such as fraud and money laundering. In
2018, the State Bank of Vietnam banned the use of cryptocurrencies for payments and warned against
their use for any other purposes. This has made it difficult for users and businesses to trade or use
cryptocurrencies in the country.
However, the Vietnamese government has shown a growing interest in exploring the
potential benefits of blockchain technology. In 2019, a proposal was put forward by the Ministry of
Justice to develop a legal framework for managing cryptocurrencies and digital assets. If new
regulations were to be put in place, it may help to clarify the legal status of cryptocurrencies and
create a more favorable environment for blockchain-based solutions, which could lead to the adoption
of Bitcoin and other cryptocurrencies in Vietnam.
In addition, there is a growing interest in cryptocurrencies among Vietnamese investors and
traders. Reports suggest that the number of cryptocurrency users in the country is on the rise,
particularly among young adults who are enthusiastic about new technologies. This suggests there is
a potential market for Bitcoin and other cryptocurrencies within Vietnam, should the legal framework
become more conducive to the use and trading of digital assets in the future.

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 In conclusion, while the future of Vietnam remains uncertain, the government is open to
exploring the potential benefits of blockchain technology, and there is a growing demand for it
among Vietnamese investors and traders. The possible changes in regulations suggest there may be
opportunities for cryptocurrencies to grow in the country in the years to come.

REFERENCES

1. Healy, P. M., Serafeim, G., & Lane, D. (2011). Wealth Management Crisis at UBS (A)

2. Meier, H. B., Marthinsen, J. E., & Gantenbein, P. A. (2012). Swiss Finance: Capital Markets,

Banking, and the Swiss Value Chain. John Wiley & Sons.

3. Luther, W. J. (2018). Bitcoin and the Future of Digital Payments.

4. Bank of 2030: Transform boldly. (2019). Deloitte.

https://www.deloitte.com/global/en/Industries/financial-services/perspectives/bank-of-2030-the-

future-of-banking.html

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