CRYPTOCURRENCY

2. CRYPTOCURRENCY TO REVOLUTIONIZE FINANCIAL SERVICE INDUSTRY
Many people have been surprised by the spike in interest in crypto-assets. India is projected to have over ten million bitcoin
users, with the number rapidly rising. The task is challenging and hard for a wider audience seeking to comprehend this new
world and its lingo. This article aims to shed light on a few topics that have received a lot of attention recently: blockchain, a
disruptive technology on which these assets are built; the role and adoption of crypto assets for payments; and, finally, the
emergence of crypto-assets as a distinct asset class.
Blockchain: A Disruptive Technology
Blockchain, a distributed ledger system, has evolved as one of the most revolutionary and pervasive technologies of our time
over the previous decade. Simply said, blockchain is a distributed network of different users sharing an encrypted digital
database. When a transaction takes place on the blockchain, it is broadcast to all network participants, resulting in an
unchangeable transaction record. Because it provides a platform that enables better transparency, enhanced security,
operating efficiency, and cost savings, this one single attribute has the capacity and potential to revolutionize financial
services. It's an unmatched combination for the future of financial services platforms.
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3. The underlying technology base on which cryptocurrencies are constructed is known as blockchain. There are around 4,000
cryptocurrencies in circulation, with Bitcoin and Ether being the most popular. Ethereum is a digital software platform that uses the
same blockchain technology as Bitcoin, but goes a step further by utilizing tamper-proof and autonomous contracts, as well as its own
cryptocurrency, Ether. The more adaptable nature of Ethereum, according to most crypto analysts, is expected to lead to much more
adoption and usability of the Ethereum platform in the years to come.
The impact on financial services organizations will be more gradual if bitcoins become an asset class. This is because we believe their
future success will be heavily reliant on global regulators and policymakers working together to control and boost market participants'
confidence in these instruments. More crucially, we believe that blockchain technology, which underpins cryptocurrencies and allows
for the establishment of a shared digital transaction ledger, might be a good disruptor for a variety of financial value chains.
Blockchain might have a significant and long-term influence on the speed, traceability, and cost of financial transactions if broadly
used.
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4. A Speculative Bet
Cryptocurrencies, in our opinion, do not meet the basic two requirements of a currency: they are an effective means of trade
and a useful store of value. To begin with, cryptocurrencies are still not generally accepted as payment instruments, despite
the fact that the number of businesses accepting them has grown in recent years. Second, the fluctuation in the pricing of
several cryptocurrencies and their market cap over the last 12 months is the most compelling evidence that they fail the value
storage test.
Bitcoin is the oldest and most well-known cryptocurrency, having evolved as a decentralized peer-to-peer payment tool in the
aftermath of the global financial crisis. By removing intermediaries like banks and central banks from the equation and relying
on end users' own networks, it aimed to restore the payment system's confidence. Bitcoin was created to be used as a means
of payment for transactions, but its reputation was tarnished when it was linked to unlawful activity.
The acid test for digital payments
Every day, billions of transactions and payments are made digitally by banks, e-wallets, insurance and asset management firms,
and other financial institutions. Will cryptocurrencies be considered a far-reaching and frequently utilized payment mechanism in
the future? This is a question that many people ask. In some places of the world, this is already the case.

5. The Bubble of Cryptocurrency
Rather from being an asset class or a currency, cryptocurrency is more akin to a speculative instrument. We believe that the
current version exhibits many of the hallmarks of a classic bubble, primarily for three reasons:
The oldest cryptocurrency (Bitcoin) has a restricted supply of 21 million coins, with approximately 16.9 million already in
circulation. Although one may argue that an endless number of cryptocurrencies could be generated, we believe that this
process will take time since these currencies must earn their trust. As a result, the top ten cryptocurrencies account for nearly
80% of their total market capitalization.
The value of cryptocurrencies has a very high level of volatility. The market capitalization of cryptocurrencies has surged 33 times
in the last year, from $17 billion to $579 billion on January 28, 2018, compared to a 1.4X gain from 2014 to 2016. The market cap
fell by roughly $185 billion in the first ten days of February 2018, hitting $394 billion. The crackdown in some nations, including
China and South Korea, is said to have aided this.
Finally, cryptocurrencies lack the support of cash flows or a trustworthy central issuer, both of which would provide intrinsic
value. Rather, market perception/sentiment determines their value.
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6. Non-Bank Financial Institutions Could Benefit
Non-bank financial firms are both more adept and more vulnerable to the growth of cryptocurrencies and bitcoin as a new
instrument since they have more flexibility than banks. From a commercial standpoint, the growth of Initial Coin Offerings has
had an impact on investment banks and stock exchanges all over the world (ICOs). ICOs allow companies to raise funds to fund,
in most cases, start-ups at an early stage of development. The traditional, standardized capital-raising procedure, which often
needs coordination between underwriters, investment banks, and regulators, provides some revenue protection to non-bank
financial organizations, notably financial market infrastructure (FMI) companies. The uncontrolled nature of cryptocurrencies
and initial coin offerings (ICOs) could jeopardize this.
Blockchain Could Be a Beneficial Disruptor
Whether or not cryptocurrencies take off, we believe the role of banks in the payment industry will alter dramatically in the next
decade. Some market participants are questioning the benefits of blockchain, claiming that the technology was developed a
decade ago and has yet to have a significant impact on the financial system. Nonetheless, we believe that, as a result of this
technology and the expansion of other peer-to-peer services, smaller and more inventive market players will have greater
opportunity to challenge big banking organizations' present product offerings.
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7. Will Banks Need Branches in the Future?
While most conventional Asian banks are scrambling to digitize and reduce their physical footprints, we believe that branches
will continue to play an important role. The rate of change affecting branch networks, on the other hand, differs significantly
by country and bank, and in certain circumstances is rather spectacular. In Thailand, for example, Siam Commercial Bank Public
Co. Ltd. has set aggressive goals to reduce its branch and employee count as part of its transition to a digital strategy.
Traditional banks are burdened by legacy infrastructure and systems, which include a large amount of operations handled
through physical locations. They are typically totally digital from start to finish, from the front-end customer experience
through back-office processes.
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8. How We Are :-
Pukka Partners provide customized intelligence solutions to C-
suite executives and functional growth leaders, along with other
key offerings including market & competitive intelligence,
management & strategy consulting, pre-investment advisory,
real-time business intelligence, and data analytics services
across sectors, globally and locally, on new & emerging
markets and disruptive technologies.
We offer advisory and actionable insights around public
policies, investment tracking along with the obstacles faced by
investors, innovation and strategy impact monitoring,
identification of industry potential, and technology mapping
through comprehensive and standardized research
methodology and tools. We deploy our solutions to solve
prioritized and critical business challenges by leveraging our in-
house expertise and continuous engagement with industry
thought leaders in the business ecosystem.
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