25 years: Digital payments specialist
In this video, Sabrina focuses on cryptocurrencies and the technologies that underpin them, such as blockchain. Sabrina explores the concept of digital currencies and their claim to have currency status. She defines what cryptocurrencies are and the potential concerns about the function of cryptocurrencies as a currency. The technology blockchain is defined and explored, with a focus on how it decentralises power away from one source, such as a bank.
In this video, Sabrina focuses on cryptocurrencies and the technologies that underpin them, such as blockchain. Sabrina explores the concept of digital currencies and their claim to have currency status. She defines what cryptocurrencies are and the potential concerns about the function of cryptocurrencies as a currency. The technology blockchain is defined and explored, with a focus on how it decentralises power away from one source, such as a bank.
In order to understand the complexities of the exploration of central banks into cryptocurrencies, it is important to explore the market dynamics of cryptocurrencies. Sabrina dives into the benefits of blockchain, as well as why it is currently viewed as inappropriate for handling payments at scale. One of the key questions tackled is the central concerns of cryptocurrencies being used as a replacement for cash and summarises the key questions around the viability of Bitcoin as a currency. Finally, Sabrina will discuss how blockchain can be used by central banks and why cryptocurrencies may jade some central banks’ willingness to explore CBDCs.
Key learning objectives:
Define what cryptocurrencies are and the central concerns around them
Understand the blockchain as a fundamental concept
Understand how cryptocurrencies and blockchain are directly linked to the development of CBDCs
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It does not qualify as a store of value due to its historical levels of volatility. There are concerns about users hoarding for speculative interests and low levels of acceptance in the real economy mean that it is not currently commonly used as a means of exchange.
Some argue that Bitcoin (one of the leading cryptocurrencies) cannot be trusted, for a lack of accountability, oversight, and anonymity. The latency and lack of scalability limits crypto’s potential for facilitating meaningful volumes of settlement. The consensus protocol places extravagant energy demands, leading to substantial environmental impact during the ‘mining process’. There is a deflationist risk due to the hard-coded ceiling of Bitcoin mining.
Centralised ledger
Decentralised ledger
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