Hermes is researching how digital currency and blockchain can help our clients in there business models. With digital currency, it has no physical form and only exists in digital form. Today, digital currencies include virtual money, cryptocurrency and other forms being developed. This digital money is used limitedly as traditional money to buy and sell goods, but with the allowance of instant transactions and borderless transfer-of-ownership. The possibilities appear endless but we are doing our own due diligence as means to security, structure and liquidity for our clients.
The Blockchain protocol works through a process called “mining” through the blockchain network which is a public ledger of all transactions of that currency that have ever occurred. New transactions are grouped into ‘blocks… the transaction data inside the block being confirmed. By spreading its operations across a network of computers, blockchain allows Bitcoin and other cryptocurrencies operate without the need for a central authority. This not only reduces risk but also eliminates many of the processing and transaction fees.
Digital money can also be decentralized or have a central authority over an emission process, or can be backed by other currency or liquid assets, or work without any backing. Investing in digital currency has become very popular after the explosion of cryptocurrencies due to their volatility, which makes them a great speculation tool.
Although digital currencies are useful and progressive, they are not yet widespread and most banks do not accept them. In many respects there are still significant questions that have to be answered otherwise the risk may far exceed the reward.