The progress of change in society through digitization, globalization and the rapid development of technology prompts new and innovative opportunities for companies across the world. Over the past few years, nearly everything is based on smart devices that are able to communicate among themselves. As a result, new technologies have arisen, been published and are able to be used by people around the world. One of the recently released and most popular topics is blockchain.
This term earned its attention through its innovative and unpresented form of technology and has motivated several parties to learn more about this issue, examine it more closely and develop it further. Particularly the range of potential applicability makes it interesting for companies to analyse possibilities for implementation with respect to their own business.
In addition, blockchain is related to another term that has arisen along with this technology, namely cryptocurrency. Especially Bitcoin is the forefather in the world of digital currencies. Over the past few years, Bitcoin has skyrocketed in popularity and value since its founding in 2009. Consequently, this digital currency has gained the attention of many people who are trying to predict the commercial development and future per- formance in the world’s economy. There are many pros and cons and some powerful businessmen have published their own opinions based upon the respective commercial interests. ...
Research question: Is it possible to use cryptocurrencies as a financial instrument in the context of corporate finance?
Structure:
1 Introduction
1.1 Problem description
1.2 Course of investigation
2 Basics and theoretical foundations
2.1 Fundamentals of Blockchain
2.1.1 Transactions and its particularities in terms of Blockchain
2.1.2 How Blockchain works
2.2 Blockchain applications
2.2.1 Basic Blockchain applications
2.2.2 Practical relevance of Blockchain
3 Impacts of Blockchain to the banking industry
4 Implications with reference to corporate finance
4.1 General terminology of corporate finance
4.2 Blockchain-based financing as addition to traditional sources
4.2.1 Bank loans as a sample of debt financing
4.2.2 Initial Public Offering as a sample of equity financing
4.2.3 Peer-to-Peer-Lending as a counterpart to bank loans
4.2.4 Initial Coin Offering as a counterpart to an Initial Public Offering
4.3 Risks of dealing with cryptocurrencies
5 Critical review and deduction
6 Conclusion and outlook
Table of Contents
1 Introduction
1.1 Problem description
1.2 Course of investigation
2 Basics and theoretical foundations
2.1 Fundamentals of Blockchain
2.1.1 Transactions and its particularities in terms of blockchain
2.1.2 How blockchain works
2.2 Blockchain applications
2.2.1 Basic blockchain applications
2.2.2 Practical relevance of blockchain
3 Impacts of blockchain to the banking industry
4 Implications with reference to corporate finance
4.1 General terminology of corporate finance
4.2 Blockchain-based financing as addition to traditional sources
4.2.1 Bank loans as a sample of debt financing
4.2.2 Initial Public Offering as a sample of equity financing
4.2.3 Peer-to-Peer-Lending as a counterpart to bank loans
4.2.4 Initial Coin Offering as a counterpart to an Initial Public Offering
4.3 Risks of dealing with cryptocurrencies
5 Critical review and deduction
6 Conclusion and outlook
Research Objectives and Topics
This thesis investigates the feasibility of integrating cryptocurrencies as a financial instrument within corporate finance, analyzing the relevance and risks associated with blockchain technology for various business processes.
- Fundamentals of blockchain technology and its decentralized nature.
- Practical applications of blockchain in insurance and supply chain management.
- Comparative analysis of traditional financing versus blockchain-based solutions.
- Evaluation of risks associated with cryptocurrencies, including volatility and regulation.
Excerpt from the Book
2.1 Fundamentals of Blockchain
Essentially, this section explains the technical concepts that make up blockchain and examples of business-relevant applications, as well as bridging the gap between a technical and practical explanation.
The blockchain first emerged – largely unheralded – in 2009. Indeed, attention was directed towards the application based on the existence of which blockchain technology was made possible. The focal application and the first to run on this technology was the cryptocurrency Bitcoin. However, this study switches the focus and will introduce the technology of blockchain first.
Simply put, a blockchain is a ledger of transactions of digital assets: of who owns what, who transacts what, of what is transacted and when. From a more technical perspective, “a blockchain is a distributed, transactional database. Globally distributed nodes are linked by a peer-to-peer (P2P) communication network with its own layer of protocol messages for node communication and peer discovery.” P2P networks can be explained as a network with equal parties (peers) that are connected without any centralized intermediaries or regulatory entities. P2P networks can be stated as a special type of distributed systems. They comprise individual computers (called nodes) that make their computational resources (e.g. processing power, storage capacity, data or network band-width) directly available to all other parties of the network without having any central point of coordination. In other words, it is a distributed database that runs on millions and millions of computers as a giant and global spreadsheet.
Summary of Chapters
1 Introduction: Provides an overview of the digitization trend and outlines the research objective regarding cryptocurrencies in corporate finance.
2 Basics and theoretical foundations: Explains the technical infrastructure of blockchain, including P2P networks, cryptography, and various applications like smart contracts.
3 Impacts of blockchain to the banking industry: Discusses how blockchain can revolutionize banking processes, focusing on cost reduction and operational efficiency.
4 Implications with reference to corporate finance: Analyzes traditional financing methods versus blockchain alternatives like P2P lending and ICOs, and examines associated risks.
5 Critical review and deduction: Evaluates the research findings to determine if cryptocurrencies function effectively as financial instruments for companies.
6 Conclusion and outlook: Summarizes the necessity for businesses to adapt to blockchain technology and addresses future challenges like regulation and scalability.
Keywords
Blockchain, Cryptocurrency, Bitcoin, Corporate Finance, Smart Contracts, Decentralization, Peer-to-Peer, Fintech, Initial Coin Offering, IPO, Digital Ledger, Transparency, Security, Risk Management, Supply Chain Finance.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis explores the potential of blockchain technology and cryptocurrencies to serve as financial instruments within modern corporate finance.
What are the primary thematic areas covered?
The work covers blockchain fundamentals, applications in insurance and supply chain management, impacts on the banking sector, and various blockchain-based financing models.
What is the central research question?
The study aims to answer whether it is possible to use cryptocurrencies as a financial instrument in the context of corporate finance.
Which scientific methodology is utilized?
The author employs a qualitative research approach, utilizing content analysis of secondary data to investigate the topic.
What topics are discussed in the main body?
The main body examines technical blockchain concepts, its implementation in industry, traditional versus blockchain-based financing, and the inherent risks of cryptocurrencies.
Which keywords best characterize this work?
Key terms include Blockchain, Cryptocurrency, Smart Contracts, Corporate Finance, and Decentralization.
How does the author define a "Smart Contract"?
Smart contracts are described as computer programs capable of making autonomous decisions when specific prerequisites are met, effectively acting as "if-then" agents for digital assets.
What role does "ETHLend" play in the investigation?
ETHLend is presented as a practical case study for decentralized P2P lending, using ERC-20 tokens as collateral to ensure loan repayment security.
How does the author distinguish between "Fintech 1.0" and "Fintech 2.0"?
Fintech 1.0 refers to the revolution of internet finance, while Fintech 2.0 incorporates blockchain characteristics, such as distributed ledgers, to achieve further automation and disintermediation.
What is the "DAO Hack" mentioned in the text?
It refers to a 2016 security incident where a vulnerability in the source code of a Decentralized Autonomous Organization led to the theft of millions of ethers.
- Arbeit zitieren
- Willi Leibner (Autor:in), 2018, Cryptocurrencies and Blockchain. Relevance and risks for companies in the age of digitization, München, GRIN Verlag, https://www.grin.com/document/418921
