japanja
Decentralized trust

Decentralized trust

30-04-2021 | Graph of the week
Bitcoin, the largest and most important cryptocurrency, recently broke through the momentous barrier of USD 1 trillion in market value. Whipped up by Elon Musk’s embrace of the cryptocurrency space and the growing options for using bitcoin as a means of payment or investment object, its value doubled in the first four months of this year.
  • Steef  Bergakker
    Steef
    Bergakker
    Senior Portfolio Manager
Source: CoinMarketCap

There are few topics in the financial world that divide opinions quite so sharply as the subject of cryptocurrency. Some see crypto as the inevitable future for modern payment methods. Others see these digital currencies as reprehensible, energy-guzzling instruments for facilitating criminal activity and satisfying gambling appetites.

Whatever you think about it all, the fact is that the protocol on which cryptocurrencies work – a decentralized validation technology better known as ‘blockchain’ – is being seen by more and more parties as an attractive and potentially extremely disruptive technology.

Graph of the week
If a picture is worth 1,000 words, a chart can say it all. Our Graph of the Week gives the top picks from the Robeco Investment Solutions team.
Graph of the week
Overview

So how does blockchain technology work?

Without going into too much technical detail, it boils down to the following: a transaction between two parties is digitally recorded, together with other transactions, in a public register or ‘block’. The transactions in the block are then validated by solving mathematical puzzles with the help of computers. Puzzle solvers are called ‘miners’.

The miner who solves the puzzle first receives a certain amount of cryptocurrency as a reward. If more than half of the computing power used by the number of connected parties on the blockchain network considers the transactions to be legitimate, they are adopted by every connected party. This is a simple majority vote. The block is then added to the chain of previously validated blocks. This creates a blockchain.

Whoever wants to change the blockchain has to enlist more than half the computing power available in the network to do so. In practice, this is almost impossible, especially when networks are large and global. The bigger the network, the safer it is. The transactions stored in the blockchain are verifiable by everyone in the network and practically unchangeable and are therefore secure and credible.

Disintermediation

Blockchain technology therefore eliminates the need for a central, widely trusted intermediary to validate transactions between parties who do not know each other enough to trust each other. Trust intermediaries such as notaries, custodian banks or other financial institutions should fear for their economic lives if this technology gains more ground.

Decentralized registration and validation not only offer enormous potential for cost savings by eliminating intermediaries, but also for innovative new services and products. Financial services in particular take on a completely different character if this technology is applied on a large scale in combination with so-called smart contracts, contracts that are automatically executed without outside interference. Possibilities include a decentralized peer-to-peer network for lending and borrowing or insurance.

Non-fungible tokens

Non-fungible tokens (NFTs) are perhaps the most intriguing application of decentralized registration and validation technology. These NFTs are non-exchangeable digital proofs of authenticity. This allows property rights, authorship or even your own identity to be conclusively established and, if necessary, traded.

Beeple, a digital artist, recently sold the NFT of his work ‘Everydays: The First 5000 Days’ for USD 69 million at Christie’s. The irrepressible Elon Musk then made headlines by offering a tweet as an NFT for which he reportedly received a bid of USD 1 million (he decided not to take up the offer, by the way).

Cryptocurrencies have so far been the main use case for distributed ledger technology such as blockchain, but they may represent only the tip of the iceberg when it comes to the potential disruptive impact of this technology. Regardless of your opinion on cryptocurrencies, it is recommended that you keep a close eye on developments in this area.

重要事項

当資料は情報提供を目的として、Robeco Institutional Asset Management B.V.が作成した英文資料、もしくはその英文資料をロベコ・ジャパン株式会社が翻訳したものです。資料中の個別の金融商品の売買の勧誘や推奨等を目的とするものではありません。記載された情報は十分信頼できるものであると考えておりますが、その正確性、完全性を保証するものではありません。意見や見通しはあくまで作成日における弊社の判断に基づくものであり、今後予告なしに変更されることがあります。運用状況、市場動向、意見等は、過去の一時点あるいは過去の一定期間についてのものであり、過去の実績は将来の運用成果を保証または示唆するものではありません。また、記載された投資方針・戦略等は全ての投資家の皆様に適合するとは限りません。当資料は法律、税務、会計面での助言の提供を意図するものではありません。

ご契約に際しては、必要に応じ専門家にご相談の上、最終的なご判断はお客様ご自身でなさるようお願い致します。

運用を行う資産の評価額は、組入有価証券等の価格、金融市場の相場や金利等の変動、及び組入有価証券の発行体の財務状況による信用力等の影響を受けて変動します。また、外貨建資産に投資する場合は為替変動の影響も受けます。運用によって生じた損益は、全て投資家の皆様に帰属します。したがって投資元本や一定の運用成果が保証されているものではなく、投資元本を上回る損失を被ることがあります。弊社が行う金融商品取引業に係る手数料または報酬は、締結される契約の種類や契約資産額により異なるため、当資料において記載せず別途ご提示させて頂く場合があります。具体的な手数料または報酬の金額・計算方法につきましては弊社担当者へお問合せください。

当資料及び記載されている情報、商品に関する権利は弊社に帰属します。したがって、弊社の書面による同意なくしてその全部もしくは一部を複製またはその他の方法で配布することはご遠慮ください。

商号等: ロベコ・ジャパン株式会社  金融商品取引業者 関東財務局長(金商)第2780号

加入協会: 一般社団法人 日本投資顧問業協会

本記事に関連するテーマ: