TThe rapid rise of crypto is changing the global financial landscape forever, creating both risks and opportunities for new and existing players. Underpinned by blockchain or ‘distributed ledger’ technology, crypto disrupts traditional business models by removing the need for trusted intermediaries. The explosive expansion in crypto applications that we are now seeing marks the start of a revolution that no organisation can afford to ignore.
Today’s most visible and high-profile application of crypto is in the form of cryptocurrencies such as Bitcoin, Ethereum and XRP. However, that’s just the tip of the crypto iceberg. The momentum behind crypto is rapidly growing and over the coming years, the impact of crypto technology will reach into virtually every area of life and business.
But what are the implications of crypto for your organisation? How can you seize the opportunities it offers, while being aware of the risks?
Blockchain technology and crypto applications create significant opportunities throughout the value chain. Entirely new asset classes, tokenisation and increased liquidity of existing and previously illiquid assets, efficient transactions and settlement: these are just a few of the use cases. Blockchain reduces the need for a trusted intermediary. How do you take advantage of the opportunities and mitigate the threats this new technology brings?
We have a role to play in the development of the crypto ecosystem. PwC has put together a one-stop-shop offering, which draws on crypto services from across our lines of services. Our goal is to serve your needs in the best possible way to allow you to focus on your business.
We have a broad range of experience in supporting our clients in becoming VASPs or custodians, tokenising assets, developing platforms to mint NFTs and in building their own metaverse. We support both traditional financial services companies as well as new market entrants and FinTechs looking to exploit this technology to disrupt the market. See below for a typical roadmap for our clients and examples of the support that we can provide along the way.
Wherever you are in your journey, we can help you from ideation to execution.
"By rethinking their business model and adopting new technologies, companies can develop and establish new services and products to create lasting competitive advantage and enormous value for the business and their stakeholders."
We have an extensive external network within the Swiss crypto market. We’re active in the Crypto Valley Association and we support clients throughout the value chain: technology, exchange platforms, custodial and financial services firms as well as token issuance vehicles. In addition to its advisory offering, PwC Switzerland is a one-stop shop for crypto, providing assurance, tax and legal expertise under one roof, as well as being able to offer global expertise and the latest market insights by using the scale of the partnership to best advantage.
"Blockchain and crypto has enormous potential to completely reshape the financial services industries, as well as many others. Through targeted investment and a clear understanding of how you can leverage these transformational changes and manage regulatory risks, you can help avoid the same mistakes as Betamax and Blockbuster!"
PwC is an Ecosystem Network Partner to CV Labs. Through our partnership we cooperate with CV Labs to provide thought leadership for events, co-author the Global Top 50 report and contribute to the CV Labs Incubator Program.
Trusted Key Ceremony Guidelines: we joined Crypto Valley Association’s cybersecurity working group and took part in creating the new guidelines on trusted key ceremony best practices. These guidelines aim to improve awareness of the importance of protecting digital assets safely and securely.
Distributed ledger technologies facilitate an environment where there is
Proof of stake and proof of work are both consensus mechanisms used by blockchain networks to achieve distributed consensus.
Proof of work requires ‘miners’ to solve a complex mathematical problem and then order transactions and create new blocks such that the nodes in the network can agree on the state of the network.
Proof of stake requires users to ‘stake’ their coins to become ‘validators’, which perform the same function as ‘miners’ without the need to solve a complex mathematical problem.
Proof of stake has several advantages over the proof-of-work system, including:
DLT or distributed ledger technology is a database distributed on different nodes or computer devices, which individually participate in the network by replicating and saving a copy of the ledger. There is no central authority and no intermediary, and each node works independently. Data is verified by consensus.
Blockchain is basically a special form of DLT. Like DLT, blockchain is managed by peer-to-peer networks; it can exist without any central authority and instead uses a consensus algorithm to validate transactions before proceeding with an update of the database. But what makes the blockchain unique compared with other DLTs is the grouping and organisation of validated information into blocks. It is the blocks that are connected to each other and protected by encryption. Blocks are continuously added to the chain, with data only allowed to be added to new blocks connected to preceding blocks on the distributed database.
Smart contracts, sometimes referred to as ‘programmable money’, are self-executable pieces of code built into the coin itself. The simplest case of a smart contract would be the digital replacement of an escrow agent, in this case a smart contract in which payments self-execute based on some predefined criteria (e.g. the transfer of change of ownership to the buyer in a land registry). Smart contracts can also be integrated with the Internet of Things.
The benefits of smart contracts stem from their programmable nature, making them fast, automated and not prone to random errors. Furthermore, their blockchain nature ensures that they are transparent and secure, thereby removing the need for trust between the contracting parties.
The term crypto wallet is something of a misnomer, as crypto wallets do not actually contain crypto currency. Instead, the crypto currency remains on the blockchain and can only be accessed using the private key. It is this private key that is stored in the crypto wallet. Crypto wallets might therefore be more aptly named ‘private keyrings’.
In general, crypto wallets have public and private keys:
Director, Blockchain, DLT and Token Business Advisory Lead, PwC Switzerland
Tel: +41 79 549 0759