quản trị tổ chức class advanced finance 63d cryptocurrencies do not pose a significant threat to the banking system

CRYPTOCURRENCIES ARE NOT TOO HARMFUL TO THE ECONOMY...9MAIN IDEA: CRYPTOCURRENCIES HAVE A POSITIVE IMPACT ON THE ECONOMY BY OSTERING NNOVATION AND INANCIAL NCLUSION F I F I...93 THE POTE

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATION PROGRAM

-*** -QUẢN TRỊ TỔ CHỨC CLASS: ADVANCED FINANCE 63D

Table of Contents

I INTRODUCTION 3

1 A BRIEF HISTORY OF CRYPTOCURRENCY 3

2 WHAT CIS RYPTOCURRENCY? 4

3 HOW DOES CRYPTOCURRENCY WORK? 4

4 BENEFITS OF CRYPTOCURRENCY 5

II NEWS BRIEF 5

1 INTERNATIONAL NEWS 5

2 DOMESTIC NEWS 6

III DEBATE 7

1 CRYPTOCURRENCIES DO NOT POSE A SIGNIFICANT THREAT TO THE

BANKING SYSTEM 7

1.1 Evolution, not revolution: 7

1.2 New customer base 9

1.3 Collaboration 9

2 CRYPTOCURRENCIES ARE NOT TOO HARMFUL TO THE ECONOMY 9

MAIN IDEA: CRYPTOCURRENCIES HAVE A POSITIVE IMPACT ON THE

ECONOMY BY OSTERING NNOVATION AND INANCIAL NCLUSION F I F I 9

3 THE POTENTIAL OF CRYPTO CURRENCIES THAT LEAD TO POSITIVE GROWTH OF THE ECONOMY THAT CAN OUTWEIGH THEIR FAULTS 13

3.1 Economic Impact of Cryptocurrency Through Use of Blockchain 13

3.2 Economic Impact of Cryptocurrency On Job Markets 15

IV CONCLUSION 19

V REFERENCES 20

I INTRODUCTION

1 A Brief History of Cryptocurrency

The barter system, which involves exchanging goods and services between two or morepeople, was utilized by people in the prehistoric past Due to a few serious shortcomings, thebarter system was no longer widely used:

● Requirements of people must align; if you have something to trade, another personmust desire it as well as what you are offering

● Not all objects can be divided, and you must choose how many of your possessionsyou are willing to exchange for other items There is no standard way to estimateworth A live mammal, for instance, cannot be divided into smaller parts Unlike ourcurrent currency, which fits in a wallet or is saved on a mobile phone, the itemscannot be easily carried

Following the realization that the barter system was not very effective, the currencyunderwent several changes: An official form of money was created in 110 B.C.; gold-platedflorins were introduced and circulated throughout Europe in A.D 1250; and between 1600and 1900, paper money became widely accepted and eventually utilized all over the world.This is the origin of contemporary currency as we know it

Coins, paper money, credit cards, and digital wallets like PayPal, Apple Pay, Amazon Pay,Paytm, and others are examples of modern cash Governments and banks oversee everything,

so there is a single regulatory body that sets restrictions on the use of credit cards and papermoney

2 What is Cryptocurrency?

A programmed string of data that represents a unit of currency is called a cryptocurrency.Blockchains are peer-to-peer networks that act as safe ledgers of transactions as well asmonitoring and organizing bitcoin transactions, including buying, selling, and transferring.Coins with a cryptocurrency can act as a medium of exchange and an accounting system byleveraging encryption technology

A digital or virtual currency intended to be used as a medium of exchange is called acryptocurrency It resembles real money quite a bit, with the exception that it is digital andrelies on encryption to function

New units can only be added once specific requirements are satisfied becausecryptocurrencies function autonomously and decentralized, without the need for a bank orother central authority For instance, in the case of Bitcoin, a miner receives payment onlyupon the addition of a new block to the blockchain, which is the only way that new bitcoins

may be created There will be no more bitcoins created after the 21 million cap has beenreached.

The importance of cybersecurity in the world of cryptocurrencies cannot be overstated in therapidly changing fields of finance and technology An excellent way for people to learn aboutthe nuances of protecting digital assets and transactions in the cryptocurrency space isthrough a cyber security boot camp Through the acquisition of knowledge in cryptographicconcepts, blockchain security, and risk mitigation, participants will be more capable ofhandling the particular difficulties presented by virtual currencies

3 How Does Cryptocurrency Work?

Cryptocurrency is a type of virtual or digital money that is secured by encryption Thissecurity feature makes cryptocurrencies hard to counterfeit Because they are decentralized,cryptocurrencies are not governed by banks or governments

● Additionally, distributed ledger technology—typically a blockchain—functions as apublic record of financial transactions, enabling the decentralized management ofeach cryptocurrency

● Bitcoin, the most well-known cryptocurrency, was developed in 2009

● The process of mining, which employs computer power to resolve challengingmathematical problems in order to validate transactions on the blockchain—the openledger of all cryptocurrency transactions—is how cryptocurrencies are created.Additionally, miners receive cryptocurrency in exchange for their labors

Trading cryptocurrencies is a sophisticated, speculative activity that carries a high risk Anyday can see changes in prices Only some investors should consider cryptocurrencies due totheir price volatility As a result, investing in cryptocurrencies should be viewed as high-risk.Prior to making an investment, be aware of the dangers and speak with a financial expert

4 Benefits of Cryptocurrency

Unlike fees associated with moving money from a digital wallet to a bank account, forexample, transaction costs for cryptocurrencies are minimal or nonexistent There are norestrictions on the amount you can buy or withdraw, and you can conduct transactions day ornight Furthermore, unlike opening a bank account, which necessitates documents and otherpaperwork, anyone can utilize cryptocurrencies

Additionally, international bitcoin transactions are quicker than wire transfers The money istransferred from one location to another using wire transfers, which take roughly 30 minutes.Transactions involving cryptocurrencies are completed in a couple of minutes or evenseconds

II NEWS BRIEF

1 International news

Article 1: UK regulator to allow crypto-related securities

The UK's financial regulator, the FCA, is softening its stance on cryptocurrencies by allowingthe listing of Bitcoin and Ethereum-backed exchange-traded notes (ETNs) on the LondonStock Exchange (LSE) for professional investors only This decision comes after the FCApreviously banned crypto-related derivatives due to concerns about the high leverage offered

to consumers

Here are the key points:

- FCA approves Bitcoin and Ethereum ETNs: The FCA will allow the creation of ETNsthat track the price of Bitcoin and Ethereum, but only for professional investors

- Listing on LSE: Issuers can apply to list these ETNs on the LSE starting in April

- Reason for softening stance: The FCA believes that with more data available,professional investors can now better assess the risks of crypto-ETNs

- Retail investors still excluded: The FCA remains concerned about the risks for retailinvestors and is maintaining the ban on selling crypto-ETNs to them

- Regulation on ETNs: The LSE requires that the underlying assets of the ETNs are notleveraged and are stored securely in offline vaults

- UK's position on crypto: This move comes despite the UK government's ambitions toposition itself as a center for digital asset markets

- In 2023, global investors earned $37.6 billion from the cryptocurrency market

- This is lower than 2021's $159.7 billion but much higher than 2022's loss of $127.1billion

2 Top 3 countries with the highest profits:

- US: 9.36 billion USD

- UK: 1.39 billion USD

- Vietnam: 1.18 billion USD

3 Characteristics of countries where investors earn a lot of profits:

- Average income from low to middle

- Located in Asia

- Cryptocurrency adoption and exposure rates are high

4 Investment trends:

- Hold virtual assets instead of converting them to cash

- Belief in the price increase of virtual assets

5 Reasons why the cryptocurrency market is vibrant:

- Participation in spot Bitcoin ETFs

- Participation of large institutional investors

6 Profit estimation method:

- Use on-chain data to check in/out flows from major cryptocurrencies

- Estimate the profit amount and distribute it in proportion to the service provider'swebsite traffic

7 Forecast:

- The cryptocurrency market will continue to be vibrant in 2024

This article shows that the cryptocurrency market is gradually gaining acceptance and has thepotential to grow strongly in the future

III DEBATE

1 Cryptocurrencies do not pose a significant threat to the banking system

1.1 Evolution, not revolution:

Cryptocurrencies aren't necessarily a replacement for banks, but rather a new financial tool Banks can adapt by offering cryptocurrency custody, exchange services, or integrating blockchain technology for faster transactions

- Currency is merely a type of money, and what characterizes currency use is simply the perception that it has value

- Almost all major currencies have been free-floating, which means that their value is entirely dependent on public trust in them Cryptocurrencies might do the same

- Traditional currencies are regulated by governments and banks, but cryptocurrencies function on a decentralized system known as blockchain This means that no central authority controls the money supply or transactions This introduces a new paradigm for financial transactions, potentially increasing openness and security

+ To avoid falling behind, banks must find a way to embrace and regard this technology

as a friend rather than an opponent Cryptocurrency adoption has the ability to streamline, enhance, and modernize financial services, and there have been numerous recent industry breakthroughs that can alleviate banks' concerns about the risks while allowing them to focus on the potential benefits

- Potential advantages for banks: Blockchain technology, which serves as the foundation forcryptocurrencies, has the potential to improve banking procedures For example, it can simplify payments and make them cheaper and faster

+ Trust and Security: Unlike traditional currencies regulated by governments and

banks, cryptocurrencies rely on a decentralized technology known as blockchain Thismeans that no central authority controls the money supply or transactions

Cryptocurrencies operate in a new and somewhat unregulated environment, creating a great deal of uncertainty for investors and users There have also been some high-profile incidents of cryptocurrencies and cryptocurrency exchanges being fraudulent, such as the ongoing case involving FTX's creator Sam Bankman-Fried, which has harmed public trust in bitcoin significantly This improves transparency in the banking system Banks may use blockchain to track transfers and ownership more effectively, eliminating errors and fraud

+ Reduced intermediaries: Traditional financial transactions frequently involve several

intermediaries, including banks, correspondent banks, and payment processors Each intermediary costs fees, which might accumulate Cryptocurrencies run on a blockchain, which eliminates these intermediaries and potentially reduces overall transaction fees

+ 24/7 operation: Unlike traditional banks, which have limited hours of operation,

bitcoin networks are open 24/7/365 Transactions can be begun and resolved anytime, anywhere in the globe, with no geographical limitations or delays due to bank holidays

+ Faster settlement: Traditional transactions might take days to complete due to the

involvement of several intermediaries and verification processes Cryptocurrencies rely on blockchain technology, in which transactions are organized into blocks, cryptographically secured, and authenticated by a network of computers Distributed validation can reduce settlement times to minutes or even seconds Therefore, it gains

a big number of customers

Examples: Here are just a few examples of digital currency adoption recently seen in the

industry:

+ JP Morgan has taken on two cryptocurrency exchanges (Coinbase and Gemini) as banking customers

+ Fidelity Digital Assets is creating a crypto fund

+ PayPal is now allowing cryptocurrency transactions on their network

1.2 New customer base

Cryptocurrencies can attract a new generation comfortable with digital assets, expanding thepotential customer base for banks.expand

- Overall, millennials and Generation Z are pushing big changes in a variety of businessesbecause they are more tech-savvy, socially conscious, and focused on job advancementthan prior generations As these generations gain economic power, firms will need toadjust their marketing and product strategies to fit their demands and tastes

- Millennial and Generation Z Engagement: Younger generations, such as millennials andGeneration Z, are especially drawn to cryptocurrencies because of its digital character andcompatibility with their tech-driven lifestyles

- Fiat on/off ramps: Traditional fiat currency (USD, EUR, etc.) and cryptocurrency arefrequently not easily converted between on cryptocurrency exchanges due to a lack of

infrastructure Banks may close this gap by giving cryptocurrency consumers simple and off-ramps for purchasing cryptocurrency with fiat cash and selling cryptocurrency forfiat currency.

on Antion Money Laundering (AML) and Know Your Customer (KYC): Becausecryptocurrencies are anonymous, they may be used to launder money Cryptocurrencycompanies can use banks' strong KYC and AML compliance systems to guaranteeresponsible transactions

===> Main idea: The future of cryptocurrency and banking likely involves a coexistenceand potential collaboration By embracing innovation and adapting to customer needs, bothsystems can thrive

2 Cryptocurrencies are not too harmful to the economy.

Main idea: Cryptocurrencies have a positive impact on the economy by Fostering Innovation and Financial Inclusion

Explanation: Digital currencies can challenge traditional financial institutions, leading to

increased competition and innovation in the financial sector This competition can drivedown transaction fees, improve service quality for consumers, and potentially lead to moreefficient financial products

○ Promoting Business Development:

Bitcoin and other cryptocurrencies and digital assets are being used by a growing number ofbusinesses globally for a variety of operational, transactional, and investment reasons.Merchants are adopting digital currency payments in the hopes of getting a competitive edge

in the market and in the idea that the use of digital currency will continue to grow, according

to a survey conducted among 2,000 senior executives at US consumer enterprises

- In the travel industry, cryptocurrencies can be used to enhance transaction security,efficiency, and convenience Cryptocurrency use in the travel and tourism sector hasadvantages for both travelers and travel agencies Decentralized transactions—which arenot reliant on middlemen like banks—are made possible by cryptocurrencies This canresult in quicker and less expensive transactions, which is particularly helpful for thetourism industry because transactions usually involve cross-border payments and currencychanges Another benefit of using cryptocurrencies in the travel industry is increasedefficiency With the use of cryptocurrencies, many of the laborious tasks connected toconventional payment methods—such as invoicing and reconciliation—can be automated.This may result in faster and more effective transactions as well as lower running costs

- In terms of sports-based corporations, because it enables users to utilize theircryptocurrency in practical, tangible ways, sports teams are willing to take cryptocurrency

as payment Encouraging supporters to interact with their teams even more by providingthem with reward tokens and NFTs of game-winning plays Giving athletes the option to

receive payment in cryptocurrency can also be advantageous because the cryptocurrencythey receive may be appreciated over time They can hang onto the remaining funds orliquidate the ones they require immediately.

○ Financial Inclusion:

By giving the unbanked and underbanked population access to financial services,cryptocurrencies can advance financial inclusion by providing access to financial services,ceasing the cost of transactions, and offering a stable store of value

- With the use of cryptocurrencies, people can send money to relatives who live abroad.They can also lower the cost of financial transactions, which enables low-income peopleand small enterprises to afford them more easily For cross-border transactions, traditionalbanking institutions frequently impose exorbitant fees, which can be a major obstacle forindividuals residing in underdeveloped nations However, consumers can send and receivemoney anywhere in the world thanks to cryptocurrencies, which can enable borderlesstransactions at low prices

- Because of its accessibility, cryptocurrency has often been positioned as a tool forfinancial inclusion a significant barrier to typical financial services for a sizablepopulation is lacking credit history or government-issued identity documentation.Cryptocurrencies offer an alternative because they use permissionless blockchaintechnology Anyone can create an address using a phone and an internet connection,negating the need for KYC procedures and enabling instantaneous cross-border settlement.For example, in regions of Southeast Asia and Africa where traditional banking isuncommon, people can now participate in financial activities like saving, lending, andinvesting thanks to cryptocurrencies

- For people who reside in nations with high rates of inflation or unstable economies,cryptocurrencies can also be used as a means of storing value The value ofcryptocurrencies is set by supply and demand and is not regulated by any financialinstitution or government This implies that they can shield investors' funds from inflationand other economic turbulence by acting as a reliable store of value in erratic markets.Cryptocurrencies could support financial inclusions in several ways

- One method cryptocurrencies are being used by financial inclusion projects is by offering

a universal basic income (UBI) in cryptocurrency One instance is GoodDollar, whichgenerates returns from DeFi deposits by utilizing the ideas of social investing Thesecontributions are subsequently converted into tokens, which serve as a universal basicincome for users in low-income countries

- Moreover, similar services can also be rendered by cryptocurrencies via decentralizedapps (DApps) running on blockchain networks DApps such as AAVE, Compound, andMakerDAO, for instance, let users borrow against or earn interest on their cryptocurrencyholdings without requiring a typical bank account As a result, borrowers don't have to

worry about fulfilling conventional banking regulations while taking out loans using theirbitcoin as collateral.

○ Central Bank Digital Currencies (CBDCs):

A type of digital currency that a nation's central bank issues is known as central bank digitalcurrencies, or CBDCs They resemble cryptocurrencies, but they are equivalent to the nation'sfiat currency and have a fixed value set by the central bank Many central banks are exploringCBDCs, which offer the potential for a stable and inclusive digital payment system whileremaining under central bank control

The properties of CBDC as central bank money are distinct

- Flexibility: For quicker settlement, CBDC offers direct access to central bank accounts.

Fast payment systems can improve speed and efficiency while reducing settlement costs,but because they rely on intermediaries, transaction fees may still exist The potentialefficiency advantages are typically greatest for cross-border transactions (remittances, forinstance) Meanwhile, according to central banks' reports in the 2022 BIS survey (Kosseand Mattei 2023), CBDC may give extra capabilities that other systems might not, likeprogrammability and offline payments In response, more than 80% of central banks saidthat having a CBDC and a quick payment system may be beneficial The central bankmight be more willing to supply these services than other providers who might not bemotivated to do so, even though CBDCs might not have the special capacity to do so.Furthermore, unlike CBDC, quick payment solutions could need customers to have a bankaccount

- Security: The safety of central bank funds is offered by CBDC Private financial

institutions' liabilities are susceptible to failures and credit and liquidity risks Conversely,CBDCs do not carry these risks because they are a direct obligation of the central bankand are hence just as safe as cash

- Legal status: Legal tender status may be extended to CBDC Private currency is typically

not granted legal tender status Given that CBDC is issued and supported by the centralbank, much like currency, it may be granted legal tender status The status of legal tenderwould increase adoption and acceptance

An example of central bank digital currency is given to comprehend the concept better:

One of the first CBDCs in the world, Project Bakong is the National Bank of Cambodia'sblockchain-based national payment system, which debuted in October 2020 The Bakongsmartphone app is helpful for transferring money and making purchases at stores A bankaccount is not necessary for Bakong registration unless the user has a mobile phone number

in Cambodia

By entering the recipient's phone number or scanning QR codes, users can send money toothers Additionally, US dollars or Cambodian riel can be used for Bakong app transactions