Bauer Business Focus

Cryptocurrencies: Benefits and Risks

“The growing industry poses inherent risks.”

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Enabled by secure blockchain technology, over 8,000 cryptocurrencies with many of functionalities exist. But Professor Norman Johnson with the Bauer College of Business at the University of Houston says the growing industry poses inherent risks.

“Cryptocurrencies are privately produced monies that exist in an encrypted digital form. They are expected to be a store of value and a medium of exchange, like traditional money. They must also satisfy what is known as ‘the no-questions-asked’ principle, which holds that money must be exchanged without a question about its value.”

“Although technology appears to address the risk associated with cryptocurrency transfer, potential violations of this principle remain a significant risk because some cryptocurrencies are backed by assets, while others are not.”

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