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.