BLOCKCHAIN AND FINANCIAL INSTITUTIONS

THE POWER OF THE BLOCKS CHAINED

The powerful tools that are being built to manage and move
money in the BLOCKCHAIN will reshape our world in new
and unexpected ways.
I HATE YOU . I LOVE YOU

Banking was the industry to

recognize the threat of
BITCOIN .
and then the potential of
BLOCKCHAIN to transform
the industry.
THE COST OF CENTRAL BANKING

The banking sector is

highly regulated.
The fees to organize and
operate as a bank are
expensive.
A FAST AND EFFICIENT MONEY

The application of fast, efficient, DIGITAL MONEY that:

does not carry the cost of handling cash
that is traceable as it moves through the financial system
was both a threatening and exciting proposal.
A FAST AND EFFICIENT MONEY

The application of fast, efficient,

DIGITAL MONEY that:
does not carry the cost of handling cash
that is traceable as it moves through the
financial system
was both a threatening and exciting
proposal.
I HATE LOSING CONTROL

The idea that value can be held OUTSIDE THE CONTROL OF

CENTRAL AUTHORITIES irritated the financial institutions and
the governments that back fiat currencies.
ABOUT MONEYS AND THEIR DIFFERENCES
INTERMISSION
FIAT ("LET IT BECOME", "IT WILL BECOME")

Fiat money has been defined variously as:

a) Any money declared by a government to be legal
tender.
b) State-issued money which is neither convertible by law
to any other thing, nor fixed in value in terms of any
objective standard.
c) Intrinsically valueless money used as money because of
government decree.
 Paper money was developed first by the
Chinese, who used stag skins, bark, or
parchment marked with the imperial seal as
"bills of payment.
The penalty for counterfeiting was death.
 Paper money had trouble gaining
acceptance in Europe.
Leather money was used around
1100, but only as a temporary
substitute when silver supplies ran
low.
A Swedish bank issued paper money
in 1661, but they eventually flooded
the market with it, and it lost its
value.
 The use of paper money really caught
on in Europe in the 1700s, when the
official bank of the French government
began issuing paper money.
The idea came from goldsmiths, who often
gave people bills of receipt for their gold.
The bills could be exchanged for the gold at
a later date.
 That's an important fact in the development of
paper money, because it means that the
money represented a real amount of gold
or silver that actually existed
somewhere.
 A piece of money was actually a promise
from the institution that issued it (either a
government or a bank) that the institution
would give the holder of the bill a certain
amount of gold or silver from its stockpile
whenever he wanted it.
Under this kind of system, the money is said
to be "backed by gold."
 With a few temporary exceptions, during wars or
other emergencies, all currency in the world was
backed by a real supply of precious metal until 1971.
GOLD AND SILVER AND GOLD

While gold- or silver-backed representative money entails the

legal requirement that the bank of issue redeem it in fixed
weights of gold or silver, fiat money's value is unrelated to
the value of any physical quantity.
FACE VALUE

A coin is fiat currency to

the extent that its face
value, value defined in
law, is greater than its
market value as metal.
VIRTUAL CURRENCIES

Today financial institutions are embracing BLOCKCHAIN and

virtual currencies.
VIRTUAL MONEY

Virtual currency, also known

as virtual money, is a type of
unregulated, digital money, which is
issued and usually controlled by its
developers, and used and accepted
among the members of a
specific virtual community.
NOT A REAL CURRENCY
In 2013, Financial Crimes Enforcement Network (FinCEN), a
bureau of the US Treasury, in contrast to its regulations defining
currency as "the coin and paper money of the United States or
of any other country that [i] is designated as legal tender and
that [ii] circulates and [iii] is customarily used and accepted as
a medium of exchange in the country of issuance", also called
"real currency" by FinCEN.
ABOUT LEGAL TENDER

Legal tender is a medium of payment recognized by a legal system to be

valid for meeting a financial obligation.
Paper currency and coins are common forms of legal tender in many
countries.
Legal tender is variously defined in different jurisdictions. Formally, it is
anything which when offered in payment extinguishes the debt.
Thus, personal cheques, credit cards, and similar non-cash methods of payment are
not usually legal tender.
The law does not relieve the debt obligation until payment is tendered.
Some jurisdictions may forbid or restrict payment made other than by legal tender.
For example, such a law might outlaw the use of foreign coins and bank notes or require
a license to perform financial transactions in a foreign currency.
NOT LEGAL TENDER STATUS

FinCEN defined virtual currency as "a medium of exchange that

operates like a currency in some environments, but does not
have all the attributes of real currency".
In particular, virtual currency does not have legal tender
status in any jurisdiction.[2]
. BUT IT CAN BE TAXED

The IRS decided in March 2014, to treat bitcoin and

other virtual currencies as property for tax purposes,
not currency.
MEANWHILE IN EUROPE .

In 2014, the European Banking

Authority defined virtual
currency as "a digital representation
of value that is neither issued by a
central bank or a public authority, nor
necessarily attached to a fiat currency,
but is accepted by natural or legal
persons as a means of payment and
can be transferred, stored or traded
electronically".
CENTRALIZED OR DECENTRALIZED

FinCEN defined centralized virtual currencies in 2013 as

virtual currencies that have a "centralized repository", similar to
a central bank, and a "central administrator".
DECENTRALIZED OR CENTRALIZED

A decentralized currency was defined by the

US Department of Treasury as a "currency (1)
that has no central repository and no single
administrator, and (2) that persons may obtain
by their own computing or manufacturing
effort".[2]
Rather than relying on confidence in a central
authority, it depends instead on a distributed
system of trust.[15]
THE BITCOIN

Bitcoin is the first decentralized digital

currency.
Trust in the currency is based on the
"transaction ledger which is
cryptographically verified, and jointly
maintained by the currency's users".
BITCOIN AS VIRTUAL AS IT CAN BE

The Bitcoin Foundation claims that BITCOIN was "designed

to be fully decentralized with miners operating in all
countries, and no individual having control over the
network.
BITCOIN is "as virtual as the credit cards and online banking
networks people use everyday".[18]
CRYPTOCURRENCIES

A cryptocurrency is a digital currency using cryptography to

secure transactions and to control the creation of new
currency units.
ABOUT CRYPTOCURRENCIES AND LEGAL TENDER

Since not all virtual currencies use

cryptography, not all virtual currencies are
cryptocurrencies.
Cryptocurrencies are generally not legal tender.
THE BENEFITS OF BLOCKCHAIN IN
THE FINANCE INDUSTRY
PERMANENT AND UNALTERABLE RECORDS

The benefit of using

BLOCKCHAINS is that
they are in themselves
PERMANENT and
UNALTERABLE records of
EVERY transaction.
REDUCED RISK AND FRAUD

BLOCKCHAIN technology and

digital currencies would reduce
the risk and fraud.
BETTER CONTROL OF NATIONAL ECONOMIES

A country adopting these

technologies would
Have ultimate control in executing
monetary policy and taxation
The currencies would not be
anonymous and would allow a full and
auditable trail of every digital
transaction made by companies and
individuals.
2B2B

The business - to business market will start using

BLOCKCHAIN much quicker.
2B2B

The business - to business market will start using

BLOCKCHAIN much quicker.
CONFORM TO REGULATIONS

Regulations will benefit from

cryptocurrencies that are not
anonymous:
KNOW YOUR CUSTOMER
(KYC)
Anti-money-laundering (AML)
FASTER, CHEAPER .

Moving money faster,

cheaper, and across
borders by adopting a
BLOCKCHAIN as the
protocol to facilitate
bank transfers and
interbank settlement.
ACROSS BORDERS

Global financial products

Remitances
Border-free payroll
Border-free payments and settlements
Faster and better global trade
ACROSS BORDERS

Global financial products

Remitances
Border-free payroll
Border-free payments and settlements
Faster and better global trade
CRYPTOCURRENCIES GALORE . 700 AND COUNTING
BITCOIN MADE SIMPLE
THE BITCOIN
THE BLOCKCHAIN SECURITY