SSF's Journal - Aug'18

Calling the Attention of Financial Gatekeepers
THE GOOD AND BAD OF CRYPTOCURRENCIES
• VAISHALI NAROOLA
Cryptocurrencies are thought of as encrypted
decentralized digital equivalent of paper currency, i.e.
it can be characterized as a set of entries in a
database, which no one can change without fulfilling
specific conditions. This is very similar to a banking
ledger system. Cryptocurrencies attribute a price
accounted to them but the intrinsic value is not
universally seen. As a
contrast, the value of a
federal legal tender such
as United States dollar is
not something about
which anyone needs to
be convinced. It is the
lynchpin of all
international trade.
Cryptocurrency Uses and Use Cases
transactions to international trade finance and even
to non-traditional sectors, such as aid finance.
Adoption of cryptocurrencies will rise if it is backed
by a transparent asset, such as fiat currency. This
would amount to the digitization of real world assets,
which can aid and transform many forms of financial
transactions conducted around the world.
‘
Cryptocurrencies have some legitimate
uses. These uses could span from
distributed trust to authentication
certification to confirmation of transactions
to international trade finance and even to
non-traditional sectors, such as aid finance.
’
Regardless of the limited equivalency to a real
currency, quite a few countries and companies are
planning to release their own version of
cryptocurrency. Recently, IBM announced its
partnership with Stronghold, which is the first digital
currency backed by US dollars traded on the Stellar
Blockchain Network.
Cryptocurrencies have some legitimate uses. These
uses could span from distributed trust to
authentication certification to confirmation of
There are several
business use cases
that a company
can leverage using
cryptocurrency or
blockchain technology,
which is the
technology behind
cryptocurrency. A few
are listed below:
Any process, wherein multiple parties have to
authenticate a transaction.
Any product, whose authenticity needs to be
verified using a ‘multivariate’ approach (an
approach to find patterns and relationships
between several variables simultaneously).,
such as for medicines.
Any financial innovation, which uses derivative
instruments, as long as the absolute native
asset has some intrinsic value. For example, a
company could issue cryptocurrency to allow it
certain rights in company transactions or
decisions. These could be backed by the
company stock, which is eventually backed by
equity in the company, which eventually
translates into a fiat currency depending on
the company’s market cap on a given day.
Any process that can be confirmed only if a
consensus threshold has been met, such as a
decision to put an issue to be brought up to a
vote in a company’s annual stock holder
meeting.
A smart contract implementation. A smart
contract is a digital protocol intended to
digitally facilitate, verify, or enforce the
PROCESS EDGE | AUGUST 2018 |
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