In a recent episode, we defined blockchain and outlined the types of questions today's boards should be asking management about this emerging technology. In this episode, PwC's Grainne McNamara returns to explore cryptocurrency, a well-known application of blockchain technology.
At the outset, cryptocurrencies like bitcoin were considered futuristic and unstable--hardly worthy of a board's strategic time or consideration.
[blockquote source="Grainne McNamara, Principal, PwC's Digital Team"]What we're seeing happening [now] is bigger than Bitcoin and the price of Bitcoin. What we're seeing happening is the emergence of a whole new token economy, and there are lots of other facets to this token economy than simply what is intended to replace a currency.[/blockquote]
At the least, boards should be talking about these emerging digital currencies; otherwise, they risk missing out on key market opportunities. Yet, even companies with no intended involvement in cryptocurrencies could face a series of indirect risks:
''...you may have peripheral risk to the sector without intending to,'' explains McNamara. ''Why? Because you're banking in some of the institutions that are players in the space. [And] because you have retail investors that are playing in the space...''
McNamara outlines these risks in further detail, along with several additional aspects related to board oversight in the emerging token economy:
At the outset, cryptocurrencies like bitcoin were considered futuristic and unstable--hardly worthy of a board's strategic time or consideration.
[blockquote source="Grainne McNamara, Principal, PwC's Digital Team"]What we're seeing happening [now] is bigger than Bitcoin and the price of Bitcoin. What we're seeing happening is the emergence of a whole new token economy, and there are lots of other facets to this token economy than simply what is intended to replace a currency.[/blockquote]
At the least, boards should be talking about these emerging digital currencies; otherwise, they risk missing out on key market opportunities. Yet, even companies with no intended involvement in cryptocurrencies could face a series of indirect risks:
''...you may have peripheral risk to the sector without intending to,'' explains McNamara. ''Why? Because you're banking in some of the institutions that are players in the space. [And] because you have retail investors that are playing in the space...''
McNamara outlines these risks in further detail, along with several additional aspects related to board oversight in the emerging token economy:
- What are the three basic asset classes?
- How are traditional financial institutions getting involved with cryptocurrency?
- How have regulators responded?
- What questions should boards be asking of management?
