Cryptocurrencies: a disruptive innovation. Focus on the impact of a potential development of this technology in the economy.

Details

Supervisors

Colmant, Bruno

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion

Abstract

Since their development in 2008, cryptocurrencies have raised a lot of questions and concerns. This new payment method arose in respond to the financial crisis as a solution against mistrust in financial institutions and inefficient processes. The development of cryptocurrencies and their underlying technology bursts in a period characterized with key changes in the environment. The increasing digitalization of money, the changes in customers’ expectations and the emergence of new players on the market have amplified the urgency to come up with new ways of transacting. Cryptocurrencies represent an unprecedented change in the paradigm of payments. The technology has the power to disrupt the whole payment ecosystem and indirectly the whole financial sector by questioning the role of financial institutions. Satoshi Nakamoto’s dream of a revolutionary peer-to-peer payment system promises to offer key benefits allowing to improve the overall efficiency of payments and provide a more convenient way to settle transactions all round the world. However, the technology also has a considerable number of drawbacks and challenges that may have some important impacts if it was adopted globally. The lack of regulation, the anonymity feature and the high volatility of cryptocurrencies are important challenges faced by cryptocurrencies. On top of that, even though the technology seems really promising, it still has some considerable technical limits that may impact the development of cryptocurrencies. Overall, cryptocurrencies are a technology with a strong disruptive power. Depending on how it will be managed, their development will either lead to a more efficient and convenient payment system, or to catastrophic implications on the economy.