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2018 | OriginalPaper | Buchkapitel

The Digital Transformation

verfasst von : Rosario Girasa

Erschienen in: Regulation of Cryptocurrencies and Blockchain Technologies

Verlag: Springer International Publishing

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Abstract

We commence the text with an introduction to the latest technological innovations in financial transactions, namely, the development of virtual currencies as exemplified by Bitcoin. The question arises concerning the nature of money with a brief historical overview followed by the reasons for the advent and rise of virtual currencies We examine the types of virtual currencies, the key actors that constitute the innovations, and the benefits and risks thereof in substantial detail. We close with the views expressed by two Nobel laureates of economics.

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Nächstes Kapitel Technology Underlying Cryptocurrencies and Types of Cryptocurrencies

Chunka Mui, How Kodak Failed, Forbes, Jan. 18, 2012, https://www.forbes.com/sites/chunkamui/2012/01/18/how-kodak-failed/#6550abbc6f27, and Ankush Chopra, How Kodak and Polaroid fell victim to the dark side of innovation, Betanews, (2009), https://betanews.com/2013/12/12/how-kodak-and-polaroid-fell-victim-to-the-dark-side-of-innovation/

Matt Egan, Facebook and Amazon hit $500 billion milestone, CNN Money, Jul. 27, 2017, http://money.cnn.com/2017/07/27/investing/facebook-amazon-500-billion-bezos-zuckerberg/index.html

World Economic Forum, Digital Transformation of Industries: In collaboration with Accenture, White Paper, (Jan. 2016), http://reports.weforum.org/digital-transformation/wp-content/blogs.dir/94/mp/files/pages/files/digital-enterprise-narrative-final-january-2016.pdf

Prableen Bajpai, Big 4 Accounting Firms Are Experimenting With Blockchain And Bitcoin, NASDAQ, Jul. 27, 2017, http://www.nasdaq.com/article/big-4-accounting-firms-are-experimenting-with-blockchain-and-Bitcoin-cm812018

Ross Intelligence, Forbes Profile (2018), https://www.forbes.com/profile/ross-intelligence/

Peter Chawaga, Legal Field Embraces Promising Use Cases for Blockchain Tech, Bitcoin Magazine, Apr. 11, 2017, http://www.ozy.com/acumen/will-millennials-make-cash-obsolete/81212

Millennials consist of over 83 million persons in the U.S. as of 2015, substantially growing in number each year, and who prefer banking through smartphones. Their usage far exceeds that of baby boomers (post-World War II population), Poornima Apte, Will Millennials Make Cash Obsolete?, The Daily Dose, Oct. 5, 2017, http://www.ozy.com/acumen/will-millennials-make-cash-obsolete/81212

Joy Macknight, RBC CEO Dave McKay looks to stay ahead of technology, The Banker: Transactions and Technology, Feb. 10, 2017, http://www.thebanker.com/Transactions-Technology/RBC-CEO-Dave-McKay-looks-to-stay-ahead-of-technology

David Mills, Kathy Wang, Brendan Malone, Anjana Ravi, Jeff Marquardt, Clinton Chen, Anton Badev, Timothy Brezinski, Linda Fahy, Kimberley Liao, Vanessa Kargenian, Max Ellithorpe, Wendy Ng, and Maria Baird (2016). Distributed ledger technology in payments, clearing, and settlement, Finance and Economics Discussion Series 2016-095. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2016.095

U.S. Federal Reserve System, Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey, Sept. 6, 2017, https://www.federalreserve.gov/newsevents/pressreleases/files/other20170906a1.pdf

Steve H. Hanke, Zimbabwe’s Hyperinflation the Correct Number is 89 Sextillion Percent, (undated), The World Post, https://www.huffingtonpost.com/steve-h-hanke/zimbabwes-hyperinflation_b_10283382.html. The country indicated would be converting its currency to that of the U.S. dollar.

For brief histories of money see History World, History of Money, http://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyid=ab14 and Mary Bellis, The History of Money, THOUGHTCO, Mar. 26, 2017, https://www.thoughtco.com/history-of-money-1992150

Tyler, What is Counter Trade? Barter News Weekly, Mar. 11, 2010, https://www.barternewsweekly.com/2010/03/what-is-counter-trade/

Irena Asmundson and Ceyda Oner, What is Money?, 49 Finance and Development No. 3, Sept., 2012, International Monetary Fund, http://www.imf.org/external/pubs/ft/fandd/2012/09/basics.htm

The value of an SDR is based on a basket of five currencies (U.S. dollar, euro, Chinese renminbi, Japanese yen, and British pound), International Monetary Fund, Special Drawing Rights, Apr. 21, 2017, http://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/51/Special-Drawing-Right-SDR

The third great wave, The Economist, Oct. 3, 2014, https://www.economist.com/news/special-report/21621156-first-two-industrial-revolutions-inflicted-plenty-pain-ultimately-benefited

Sara Ashley O’Brien, Giant Equifax data breach: 143 million could be affected, CNN Tech, Sept. 8, 2017, http://money.cnn.com/2017/09/07/technology/business/equifax-data-breach/index.html

Steve Tobak, You Have No Privacy-Get Over It, Fox Business, Jul. 31, 2013, http://www.foxbusiness.com/features/2013/07/31/have-no-privacy-get-over-it.html

IBM, Forward Together: Three ways blockchain Explorers chart a new direction, https://www-935.ibm.com/services/studies/csuite/pdf/GBE03835USEN-00.pdf

Underserved and overlooked, The Economist, at 57–58, Sept. 9, 2017.

Internal Revenue Service, IRS Virtual Currency Guidance: Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply, https://www.irs.gov/newsroom/irs-virtual-currency-guidance

Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009, On the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (Text with EEA relevance, http://eur-lex.europa.eu/legal-content/en/ALL/?uri=CELEX:32009L0110)

Bank For International Settlements, Digital Currencies, Nov. 2015, at 4, https://www.bis.org/cpmi/publ/d137.htm

WebMoney, according to its website, is a universal money transfer system used by some 34 million people to keep track of one’s funds, attract funding, resolve disputes, and make secure transactions, https://www.wmtransfer.com/eng/information/short/index.shtml

Dong He, Karl Habermeier, Ross Leckow, Vikram Kyriakos-Saad, Hiroko Oura, Tahsin Saadi Sedik, Natalia Stetsenko, Concepcion Verdugo-Yepes, Virtual Currencies and Beyond: Initial Considerations, IMF Discussion Note SDN/16/03, Jan. 2016, https://www.researchgate.net/publication/298915094_Virtual_Currencies_and_Beyond_Initial_Considerations

Techopedia, What is Digital Currency?, https://www.techopedia.com/definition/6702/digital-currency

For definitions and lengthy discussions, see U.S. Gov’t Accountability Off., GAO-14-496, Virtual Currencies: Emerging Regulatory, Law Ernforcement, and Consumer Protection Challenges, May 29, 2014, http://www.gao.gov/assets/670/663678.pdf

New York Title 23, Ch. I, Part 200.2 defines “virtual currency” as follows:

(p) Virtual Currency means any type of digital unit that is used as a medium of exchange or a form of digitally stored value. Virtual Currency shall be broadly construed to include digital units of exchange that (i) have a centralized repository or administrator; (ii) are decentralized and have no centralized repository or administrator; or (iii) may be created or obtained by computing or manufacturing effort. Virtual Currency shall not be construed to include any of the following:
- (1) digital units that (i) are used solely within online gaming platforms, (ii) have no market or application outside of those gaming platforms, (iii) cannot be converted into, or redeemed for, Fiat Currency or Virtual Currency, and (iv) may or may not be redeemable for real-world goods, services, discounts, or purchases.

There are numerous definitional sources. A primary one relied upon herein is The Financial Action Task Force (FATF), Virtual Currencies: Key Definitions and Potential AML/CFT Risks, Jun. 2014, http://www.fatf-gafi.org/media/fatf/documents/reports/Virtual-currency-key-definitions-and-potential-aml-cft.pdf

Id.

Investopedia defines cryptocurrency as “a digital or virtual currency that uses cryptography for security.” http://www.investopedia.com/terms/c/cryptocurrency.asp. The European Union Agency for Network and Information Security (ENISA) defines cryptocurrency as “a math-based, decentralised convertible virtual currency that is protected by cryptography, i.e., it incorporates principles of cryptography to implement a distributed, decentralised, secure information economy.” ENISA Opinion Paper on Cryptocurrencies in the EU, Sept. 2017, www.enisa.europa.eu

Andrew Wagner, Digital vs. Virtual Currencies, Bitcoin Magazine, Aug. 22, 2014, https://www.google.com/search?q= Andrew+Wagner,+Digital+vs.+Virtual+Currencies+(Aug.+22,+2014)+BITCOIN+MAGAZINE,&rls=com.microsoft:en-US&ie=UTF-8&oe=UTF-8&startIndex=&startPage=1&gws_rd=ssl

This segment relies heavily on the comments made by the latest update by the European Central Bank on Virtual Currencies. European Central Bank, Virtual currency schemes – a further analysis, Feb. 15, 2015, https://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemesen.pdf

Vinay Gupta, A Brief History of Blockchain, Harvard Business Review, Feb. 28, 2017, https://hbr.org/2017/02/a-brief-history-of-blockchain

Becky Peterson, Disney built a blockchain, and now its creators are trying to turn it into a commercial platform to compete with Ethereum, Markets Business Insider, Oct. 1, 2017, http://markets.businessinsider.com/currencies/news/disney-blockchain-creators-build-commercial-platform-on-dragonchain-with-ico-2017-9-1002909421

What is Bitcoin Mining? https://www.bitcoinmining.com See, also, Mining, Blockchain, https://www.blockchaintechnews.com/topics/mining/

For a list of companies facilitating Bitcoin transactions, see Sofia, 22 Bitcoin Companies Allowing Merchants to Accept Payments in Cryptocurrency, Let’s Talk Payments, Mar. 11, 2016, https://letstalkpayments.com/22-bitcoin-companies-allowing-merchants-to-accept-payments-in-cryptocurrency/

There are many sites stating the uses and users of blockchain including the following: Blockchain Technologies, Blockchain Applications: What are Blockchain Technology Applications and Use Cases?, http://www.blockchaintechnologies.com and Andrew Meola, The growing list of applications and use cases of blockchain technology in business & life, Business Insider, Sept. 28, 2017, http://www.businessinsider.com/blockchain-technology-applications-use-cases-2017-9

Understanding How a Cryptocurrency Wallet Works, Crytocurrency Facts, http://cryptocurrencyfacts.com/what-is-a-cryptocurrency-wallet/

Stan Higgins, NiceHash CEO Confirms Bitcoin Theft Worth $78 Million, Dec. 7, 2017, Coindesk, https://www.coindesk.com/nicehash-ceo-confirms-bitcoin-theft-worth-78-million/

Samantha Bomkamp, CBOE, CME to jump into bitcoin futures trading, Chicago Tribune, Dec. 1, 2017, http://www.chicagotribune.com/business/ct-biz-cboe-cme-bitcoin-20171201-story.html

Lucinda Shen. Bitcoin Just Surged on Futures Trading. Here’s How That Actually Works, Fortune, Dec. 11, 2017, http://fortune.com/2017/12/11/bitcoin-surge-futures-cboe-cme-price/

Oliver Dale, Best Cryptocurrency Exchanges for Beginners, Dec. 9, 2017, https://blockonomi.com/cryptocurrency-exchanges/ Additional discussions of cryptocurrencies exchanges include: Nitin Thappar, Top 9 Cryptocurrency Platforms, Quora, https://www.quora.com/What-is-the-best-cryptocurrency-trading-platform

U.S. FBI Honolulu, FBI Warns Public About Platform Trading Investment Scams, Honolulu Media Office, Jan. 5, 2015, https://www.fbi.gov/contact-us/field-offices/honolulu/news/press-releases/fbi-warns-public-about-platform-trading-investment-scams

Overlooked and underserved, The Economist, Sept. 9, 2017, at 57–58.

U.S. Commodity Futures Trading Commission, A CFTC Primer on Virtual Currencies, p. 5, LabCFTC, http://www.cftc.gov/idc/groups/public/documents/file/labcftc_primercurrencies100417.pdf

Volatility may be extreme as illustrated by the geometric rise in the price of Bitcoin which then fell by one-third in trading on December 22, 2017, with an estimated loss of some $200 billion or 45 percent of value. Frank Chung, Bitcoin loses nearly half its value in $200 billion wipeout, NZ Herald, Dec. 23, 2017, http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11965200

Id. and Peter Frank, Bruno Lopes, and Adam Taplinger, The Pros and Cons of Digital Currencies, TMI, Aug. 2014, https://www.treasury-management.com/article/1/310/2570/the-pros-and-cons-of-digital-currencies.html. One individual suffered a loss of millions of dollars of Bitcoin to a hacker who convinced T-Mobile that he was the customer and through the use of the individual’s phone number that was transferred to another number thereby enabled the hacking and the loss of bitcoins, Mark Frauenfelder, How One Guy Lost Millions of Dollars of Bitcoin to a Hacker , Boing Boing, Dec. 20, 2016, https://boingboing.net/2016/12/20/how-one-guy-lost-millions-of-d.html

LabCFTC, supra note 46.

USDT (tether) is a cryptocurrency asset that is issued on the Bitcoin blockchain, each unit of which is secured by a U.S. dollar held by Tether Limited Reserves and redeemable through the Tether Platform. It is transferable and can be stored and spent like Bitcoin and other cryptocurrencies. Antonio Madeira, What is USDT and how to use it, Cryptocompare, Sept. 28, 2017, https://www.cryptocompare.com/coins/guides/what-is-usdt-and-how-to-use-it

Tether Critical Announcement https://archive.fo/ZFDBf which was cited by Stan Higgins, Tether Claims $30 Million in U.S. Dollar Token Stolen, CoinDesk, Nov. 21, 2017, https://www.coindesk.com/tether-claims-30-million-stable-token-stolen-attacker/

U.S. Consumer Financial Protection Bureau, Risks to consumer posed by virtual currencies, Consumer Advisory. Aug. 2014, http://files.consumerfinance.gov/f/201408_cfpb_consumer-advisory_virtual-currencies.pdf

Lily Katz and Julie Verhage, Bitchin Exchange Sees Complaints Soar, Bloomberg, Aug. 30, 2017, https://www.bloomberg.com/news/articles/2017-08-30/Bitcoin-exchange-sees-complaints-soar-as-users-demand-money

European Parliament, Virtual currencies: what are the risks and benefits? News (Jan. 26, 2016), http://www.europarl.europa.eu/news/en/headlines/economy/20160126STO11514/virtual-currencies-what-are-the-risks-and-benefits

U.S. Office of the White House Press Secretary, President Donald J. Trump Announces Nomination of Jerome Powell to be Chairman of the Board of Governors of the Federal Reserve System, Nov. 2, 2017, https://www.whitehouse.gov/the-press-office/2017/11/02/president-donald-j-trump-announces-nomination-jerome-powell-be-chairman

Richard Leong, A Top Fed official warns on the risks associated with Bitcoin and other digital currencies, Reuters, Mar. 3, 2017, http://www.businessinsider.com/jerome-powell-warns-on-risks-of-Bitcoin-and-other-digital-currencies-2017-3 and Pymnts. Federal Reserve Warns n Digital Currency Mar. 6, 2017, https://www.pymnts.com/news/Bitcoin-tracker/2017/federal-reserve-warns-on-digital-currency/

U.S. Government Services Administration, Blockchain, https://www.gsa.gov/technology/government-it-initiatives/emerging-citizen-technology/blockchain

U.S. Securities and Exchange Commission, Investor Bulletin: Initial Coin Offerings, Jul. 25, 2017, https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings

U.S. Securities and Exchange Commission, Investor Alert: Public Companies Making ICO-Related Claims, Aug. 28, 2017, https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_icorelatedclaims

European Union, General Data Protection Regulation, Regulation (EU), 2016/679.

European Union Agency For Network and Information Security, ENISA Opinion Paper on Cryptocurrencies in the EU, Sept. 2017, https://www.enisa.europa.eu/publications/enisa-position-papers-and-opinions/enisa-opinion-paper-on-cryptocurrencies-in-the-eu

Ceri Parker, Robert Shiller, Bitcoin is just an ‘interesting experiment’, Jan. 25, 2018, World Economic Forum, https://www.weforum.org/agenda/2018/01/robert-shiller-bitcoin-is-just-an-interesting-experiment/

Bloomberg, Stiglitz and Shiller Slam Bitcoin, Dec. 3, 2017, Wealthadvisor, https://www.thewealthadvisor.com/article/stiglitz-and-shiller-slam-bitcoin

Titel: The Digital Transformation
verfasst von: Rosario Girasa
Verlag: Springer International Publishing
Buch: Regulation of Cryptocurrencies and Blockchain Technologies
Print ISBN: 978-3-319-78508-0

Electronic ISBN: 978-3-319-78509-7

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-3-319-78509-7_1