Understanding blockchain and demystifying crypto currencies

Contributed By : Vivek Rathi, CFA & Chandra Mohan, CFA

IAIP Hyderabad chapter organized an event on “Understanding Block chain and demystifying Crypto currencies” on 28^th April 2018. Ramani ‘Ram’ Ramachandran, CEO and Co-Founder and Gautam Seshadri, CBO and Co-founder of Zenprivex limited were the key speakers for the aforementioned topic.

Block chain and Crypto currencies being the new buzzwords attract a lot of attention. Likewise, the response was overwhelming and the event was well received. The speakers were equal to the task and kept the audience engaged while unraveling the mystery, which crypto currencies are. Both Ram and Gautam stressed on the need for an alternative to the traditional fiat currency and the gold. They explained how crypto currencies could evolve as an alternative asset class while providing the much needed resiliency and transparency to the currency market. This could eventually remove the intermediator and reduce spurious transactions. All the while they backed their analysis with the data, exhibited in a meticulously prepared presentation.

Everyone in the audience participated enthusiastically in the Q&A session that was conducted at the end. The session culminated with the lunch being served where again everyone got an opportunity to interact with the guests and satiate their appetite for knowledge. Overall, it was weekend afternoon that was well spent with everyone left asking for more

Few key facts from the session:

• There are 1500 plus crypto currencies, valued at $400 billion
• Crypto currencies can be considered proxy of digital gold
• Crypto N/W’s don’t need to know the counterparty. Anonymity and privacy of transactions are at the heart of Block chain technology
• Crypto currencies should be considered as technology and not an asset class. The cost of adoption of technology going down
• A user would need 3-4 billion dollar worth of electricity per day to control 51% of crypto network. Economic incentive is to participate rather than hack the network. This is 10 times the amount needed a decade ago and is expected to increase exponentially
• Argentina has a very high rate of Bitcoin adoption. Venezuela banned bitcoin because of heightened mining activity as the electricity is very cheap there
• Crypto currency (Bitcoin) has a very low correlation with any other asset class
• Bitcoin now accounts for roughly 40% of Crypto market cap
• Crypto currency fortify trust in incentives (from trust in people)
• ICO – Initial Coin Offerings. In 2017, $3.9 billion raised through ICO’s

108 token to be launched – Will follow passive Index strategy