Transforming financial systems
Author | Bellia, M.; Kounelis, I.; Anderberg, A.; Calès, L.; Andonova, E.; Pólvora, A.; Petracco Giudici, M.; Nascimento, S.; Inamorato dos Santos, A.; Rossetti, F.; Papanagiotou, E.; Nai Fovino, I.; Spirito, L.; Sobolewski, M. |
Pages | 55-65 |
55 4. Transforming financial systems
TRANSFORMING
FINANCIAL
SYSTEMS
4.1. Cryptocurrencies
Blockchain technology s tarted with
the development of Bitcoin, which was created
with the aim of introducing a convenient
alternative form of currency not su bject to the
control of a state authority (Nai Fovino and Steri,
2015; Nai Fovino et al., 2015). It would not need
the intermediation of a financial entity to handle
payments performed o n the internet, and t hus
would not be subject to the risk of being deba sed.
Bitcoin is a DLT for the storage of information
on the exchange of ownership of a digit al
representation of value. In t he case of Bitcoin,
unlike the so-called ‘fiat currency’, its value
is not supported by the status of legal tender.
Instead, it is solely determined by the tr ust that
each person holding it has in the fac t that
the underlying technolog y will not allow double
spending, will not be debased, b ut will be accepted
by other economic actors as a means of payment.
The advantages of blockchain have made such
a payment system very ap pealing for several use
cases. First, blockchain-based cryptocurrencies
do not need a central authority. This enables
users to send transac tions and exchange
crypto coins simply by creating an account.
This process can be done through intermediaries
such as cryptocurrency exchanges a nd custodian
wallet providers.
However, if a person wants to purchase a digital
currency from a third par ty, in some cases
she or he will have to register to a trading site
which, in turn, will most proba bly request personal
data. It should be noted t hat, contrary to po pular
be lie f, Bitcoin does not guarantee full anony mity
but rather allows for pseudonymit y. It may be
possible to associate transac tions to the identity
of the machines performing th em, and it is likely
that someone would be in the position to link
a cryptocurren cy account with its real ow ner.
Yet some cryptocurrencies, such as Monero,
explicitly try to guar antee a level of anonymity
comparable to that of cash t ransactions.
Blockchain
applications in
finance range from
cryptocurrencies
and Initial Coin
Offerings to financial
instruments and
payment systems.
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