Week 2 Flashcards
Why should BoE start looking at CBDC as a serious option
Banknotes are being used less and less over the years.
Cash is a direct claim on what?
Central bank
What are deposit account claims on?
Commercial banks
Where do commercial banks back their deposits account claims
Reserves at the central bank
Where does CBDC fit on the money flower.
What is money laundering?
It is a process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities
What are the 3 steps of money laundering?
What is the technology behind cryptocurrencies
blockchain
What is blockchain
It is a computer protocol enabling distributed ledgers and promising instantaneous and near free value transactions.
What are the properties for DLT
What does blockchain allow for money and assets?
It allows money and assets to be moved without a centralised custodian
Why is blockchain different from current monetary transitions.
Current monetary transactions need to be record in a ledger which are stored on a computer file. Blockchain works with only one ledger.
Based on consensus process, which 2 blockchain systems exist? Elaborate on their accessibility and scalability.
- Centralized blockchain
- De-Centralised blockchain
What did the ICO boom in 2017 allow people and what did it result in>
It allowed anyone who created a digital currency to raise capital without the admin burden of an IPO. This resulted in Altcoins
What is a good indicator to know how a cryptocurrency is performing?
Market capitalization
What was bitcoin created for?
It was created to serve as a viable alternative to fiat money.
What is ‘Mining’?
It is where users, use their computing power to verify and process transactions in order to create the next block in the chain.
To what value will bitcoin diminish to and when and why?
It will diminish to 21 Million by 2140 due to halvening.
What issues does bitcoin technology come with?
- Volatility
- Scalability
- Energy consumption
- Legality
- Security
- Reputation
What is the second largest cryptocurrency by market capitalisation
Etherum
What token is Etherum platform run on and how are the transactions different from BTC?
It runs on Ether and transactions are much faster than bitcoin
What happened to the Etherum network in 2016.
There was a crisis with DAO investment fund hack
What is another cryptocurrency that uses a consensus ledger validation method. What makes it different from other cryptocurrencies.
Ripple and it is more centralised than other crypto currencies.
What is Ripple and what makes it unique from BTC and ETH?
It is a cryptocurrency that uses a digital payment platform called rippling and its tokens were already minted at it’s inception.
It does not require mining which reduces computing power and minimizes network latency. It is also governed by a single body known as Ripple labs Inc.
What are stable coins and what are thier setbacks?
These are cryptocurrencies that are pegged to a paper currency. They are more promising but also have setbacks.
- Looked as assets
- Issuer needs to have enough money to back up the coin
What cryptocurrency is the highest stable coin in terms of market capitalisation and what is it’s value.
It is Tether and it’s value is fixed at $1
What are the different govermtnal response for cryptocurrencies and their consensus on stable coins.
What are the types of digital currencies and their descriptions. Are they blockchain based?
What is Bitcoin Cash?
It split from BTC due to scalability issues.
What is Bitcoin SV?
Split from BTC cash
What is wrapped Bitcoin?
Tokenized version of BTC
