6 COVER STORY www.captiveinternational.com
benefits, uses—and dangers
—represent a polarising issue
but the captive sector has
good reason to keep a close
watch on their development.
investigates and Tatjana Winter,
head of research at BlockART
Institute, adds her spin on the
issue on the pages that follow.
he rise of cryptocurrencies into the
mainstream psyche in recent years
will not have escaped the notice of
most captives practitioners. Many
sectors are mulling what these once obscure
but increasingly mainstream currencies will
mean; they are increasingly a talking point at
conferences in almost every sector.
Probably the biggest reason they made
headlines originally was their soaring
value, especially of the most mainstream
cryptocurrency: Bitcoin. On December 17, 2017,
the value of one Bitcoin soared temporarily to
more than $20,000; the market capitalisation
of Bitcoin was at more than $330 billion at that
point. But prices remain very volatile. The price
subsequently collapsed and the value of one
Bitcoin halved to around $10,000.
It’s not just Bitcoin creating such a buzz.
Specialist website coinmarketcap.com lists
almost 1,500 virtual means of payment with
a total market value of around $530 billion.
There are many types of cryptocurrencies
directly comparable to Bitcoin but also others
that are complementary. There is Ether, the
digital currency based on the blockchain
network Ethereum; IOTA, which does not use
blockchain technology but a related protocol;
and Litecoin, which is technically almost
identical to Bitcoin.
Most, but not all, use blockchain technology
as the platform they operate on. Blockchain is,
of course, increasingly being embraced by many
parts of the insurance industry. The distributed
ledger concept has vast potential for the way
the industry manages and records information
and it is almost impossible to hack.
Because cryptocurrencies are only possible
because of blockchain technology, the two
terms have become inextricably linked in the
heads of many. They are separate technologies
with distinct advantages and disadvantages,