Page 23 - Banking Finance January 2022

COVER STORY
BLOCKCHAIN AND

CRYPTOCURRENCY

Abstract Understanding the term 'Cryptocurrency'

Finance has long been a very conventional field with no Y Before defining cryptocurrency, we must understand the
major breakthroughs happening for many years until the characteristics of currency. A well-functioning currency
introduction of Bitcoin in 2008 by an anonymous person/ should have 3 functions:
group going by the name of Santoshi Nakamoto. Some Q Store of Value: Store of Value means that the value
people look at cryptocurrency as a major technical of a currency should be stable over time. Due to
breakthrough in the field of Finance that has the potential high volatility this criterion is not met by
to change the way we transact, while some look at it with cryptocurrencies.
skepticism since it can lead to increase in underground Q Unit of Account: Unit of account means that
transactions. Through this paper we first try to money should allow us to easily determine the value
understand what does 'Cryptocurrency' mean and briefly for goods and services and allow us to compare
explain how does blockchain works,then whether truly them to each other. The volatility of Bitcoin makes
cryptocurrencies are fool proof with no chance of fraud, it difficult for us to consider it as a unit of account.
and lastly,Reserve Bank of India's opinion on
Q Medium of Exchange: Medium of Exchange means
cryptocurrencies. The universe of cryptocurrencies that money should allow buyers and sellers to make
comprises of various tokens and talking about each one transactions. Bitcoin partially fulfills this criterion
of them is beyond the scope of this paper. In this paper but slow transaction speeds, high volatility poses
we try to focus only on Bitcoin.
some hurdles.
Since cryptocurrencies do not fulfill these criteria
About the author defining cryptocurrency as 'virtual currency' would not
be inaccurate.
Navnit Kumar
Senior Manager (Faculty) Y Now coming to Cryptocurrency, the Inter
Union Bank of India RegulatoryWorking Group on Fintech and Digital
Staff Training Centre, Gurugram Banking set by RBI in 2017, defines cryptocurrency as

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