Innovating through virtual currencies

: financial institutions' opportunities, opinion and relation with the virtual currency ecosystem

Abstract

Virtual currencies play a central role in what regards to payments and funds transfer innovation. Different Fintech startups have grasped its opportunities and managed to raise over $1 billion to date. The market is at its growing phase. A large group of adopters who currently value the larger virtual currency scheme – Bitcoin – at $6.3 billion, validated the concept. Moreover, traditional Financial Institutions have tapped into the market in order to look for collaborative ways to ease payments and funds settlement processes with this technology. R&D has been constant since 2008 and findings have been evolving ever since. It is now believed that its architecture – blockchain – is an innovation that could reshape the financial industry beyond the payments system. In this sense, the purpose of this analysis is to perceive the development and current state of Financial Institutions’ opinion and participation with the market and technology. This included a review of the literature released by Financial Institutions and an analysis of the current market entry strategies conducted by them. Nonetheless, in order to sustain our research, we were first required to understand why and how this new form of money poses an innovation to the current system and processes. Therefore, we present a detailed analysis about the currency and system themselves to spot the opportunity. This analysis intends to provide a holistic view of the whole innovation: what it is, why it happened now, why it is relevant for Financial Institutions and how they are making it happen.

Date of Award	15 Feb 2017
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Rute Xavier (Supervisor)