CRYPTOCURRENCY

AND THE FUTURE OF

MONEY
ATTY. JONATHAN PAOLO R.
DIMAANO
 OBJECTIVES

• BASIC CONCEPTS
• ADVANTAGES AND DISADVANTAGES
• LEGAL IMPLICATIONS
– THE REPUBLIC OF EL SALVADOR
– PHILIPPINE SETTING
CRYPTOCURRENCY
• It is a form of digital asset based on a
network that is distributed across a
large number of computers
• It allows for secure payments online
which are denominated in terms of
virtual "tokens," which are
represented by ledger entries, also
known as a blockchain, which is
internal to the system
• It is similar to physical coins, which
have value and can be used while
trading, such as purchasing services
and goods online or as a form of
growing investment
• Cryptocurrency transactions are
made peer to peer, and allows for
speedy transactions especially in
cross country transactions
• Cryptocurrencies should not be confused
with the shares of stock of a corporation.
The ownership of the latter represents a
controlling interest or equity in a
corporation, which is not true for a crypto
• It should not also be compared to
traditional currencies as a crypto does not
depend on the strength of a country’s
economy nor in its economic policy
• The value of a cryptocurrency
largely depends on the demand of
the masses in using it as well as
the trust imposed by its
consumers
• Cryptocurrencies are private and
operate independently of
governments.
• Cryptocurrency is created by code. In many
cases, new coins are created when
transactions are confirmed by a process
known as mining.
• How exactly coins are created depends on
what is defined by a given cryptocurrency’s
code. For example, instead of mining or
mining alone, a cryptocurrency may create
some tokens upon launch as developer
rewards, or a cryptocurrency may reward
tokens as interest to holders of a token.
• Cryptocurrency is software. Every function, from how
transactions are recorded to how data is stored, is dictated by
code. Especially for cryptocurrencies whose main function is
to act as money, cryptocurrency transactions are typically
stored in a type of database known as a blockchain
• The code of the cryptocurrency defines things like maximum
supply, mining rewards, etc. Thus, for most cryptocurrencies,
the main way new coins are created is by people all over the
world running hardware that adds transactions to the
blockchain. Otherwise, cryptocurrency tokens are created by
other mechanisms contained in a cryptocurrency’s software.
 ADVANTAGES AND
DISADVANTAGES IN USING
CRYPTOCURRENCY
ADVANTAGES
• Speedy Transactions
• Decentralized
• Anonymity
• Minimal Processing Fees
• Transparency
• Accessibility
SPEEDY TRANSACTION
• Cryptocurrency transactions are
digitally made and is peer to peer
(P2P)
• Since transactions operate in the
internet, transactions are completed
in mere minutes compared to regular
transactions, due to the removal of a
middleman in the transaction
EXAMPLE
• Atty. JP’s wife went to the US to visit
and stay with her relatives for 2 weeks.
While she was there, she saw a Hermès
Bridado Backpack worth $4,825 or 10
bitcoins. She was short on cash and
messaged Atty.JP about it. Though
reluctant at first, he eventually agreed
to send money for his wife to buy his
bag and make her happy
NORMAL TRANSACTION
CRYPTOCURRENCY TRANSACTION
DECENTRALIZED
• Cryptocurrencies exist in the digital world, a realm
outside of governmental regulation nor the policies
formulated by any central bank, especially in terms
of its value
• As mentioned earlier, cryptocurrency does not
depend on the economy or economic policy of a
country
• This feature is also used to provide services for the
world’s unbanked population. For certain categories
of people – refugees or those living in countries with
little to no infrastructure for government credit or
banking – anonymous exchanges can help bring
them into the mainstream economy
• The value of a cryptocurrency depends on the
usual economic law of supply and demand
and trust. Thus, if demand for a particular
cryptocurrency, let’s say dogecoin, is
particularly high, the price will certainly be
jacked up
• No private bank, government or central bank
would be necessary. The contents of any
digital wallet are not known to these
institutions at all, giving the currency owners
more power over their finances
Anonymity and Security
• Through the use of block chains, private
keys and private servers, transactions
involving cryptocurrencies are anonymous
in nature
• Using private keys, you can send a code to
another person in order to secure a
transaction, much like anyone would do
using zoom or a secret conversation in
viber or any online trading tab using
passwords and authenticator codes
MINIMAL FEES
• The removal of the middleman in a cryptocurrency
transaction not only affects the time spent in
completing the said transaction, but also the fees
imposed in generating such a transaction
• In regular transactions, banks would impose
transfer fees
• As to international transactions, other taxes with
respect to changing your own money to the local
currency of the country where you are presently
located will be imposed, as well as other taxes
imposed by that country
CRYPTOCURRENCY TRANSACTIONS
TRANSPARENCY
• All transactions can be transparently
viewed by either having a personal node
or by using blockchain explorers that
allow anyone to see transactions
occurring live. Each node has its own
copy of the chain that gets updated as
fresh blocks are confirmed and added.
This means that if you wanted to, you
could track your crypto wherever it goes.
Accessibility
• Unlike the stock market which has a
definite time for its transactions,
cryptocurrencies can be accessed 24/7
if you have a smartphone, laptop or
tablet, and a stable internet connection
• Apps such as Coins.ph is just one of
the many digital wallets that store your
cryptocurrency and thus allow you to
check your money wherever you are
DISADVANTAGES

• Anonymity
• Instability
• Accessibility
• Decentralized
ANONYMITY
• Cryptocurrency transactions makes
them well-suited for a host of illegal
activities, such as money
laundering and tax evasion
INSTABILITY
• As mentioned, the value of a cryptocurrency
does not depend on the economy or
economic policy of a country, but rather on
the law on supply and demand, as well as
trust
• Thus, it has no intrinsic value apart from
what a buyer is willing to pay for it at a
point in time. This makes it very susceptible
to huge price swings, which in turn
increases the risk of loss for an investor
• Last May 13, 2021, Elon Musk,
the owner of Tesla Inc.,
announced that Tesla would no
longer accept Bitcoin (BTC) as
payment for its environmental
impact. This caused a collapse in
its price, losing 15% in value in
less than 24 hours
• Musk's tweet started a downward
streak, fueled by news that China
would ban its financial institutions
from operating cryptocurrencies .
Last May 23, 2021, all digital
currencies suffered a sharp
crash and Bitcoin fell to $ 31,227,
from $35,948
ACCESSIBILITY AND SECURITY
• Not every person in the entire world has
equal and stable access to the internet, let
alone smartphones. Third world countries
are still behind with respect to accessibility,
as well as their adaptability, in conducting
online transactions
• For those who are privileged to be connected
to the digital world, issues of hacking digital
wallets and other cybersecurity threats
infest cryptocurrencies
DECENTRALIZED
• Although mainly considered as one of the
best advantages of using cryptocurrency,
the decentralized feature of cryptocurrency
also works as its Achilles’ heel
• In case of loss, fraud, or any other event
which will render the cryptocurrency
worthless, no exact legal remedy can be
availed of by the consumers to restore
their lost investment and will only treat
the same as such, a BAD INVESTMENT.
 LEGAL IMPLICATIONS OF
CRYPTOCURRENCY
THE RECOGNITION AND APPLICATION OF
CRYPTOCURRENCY IN THE REPUBLIC OF EL SALVADOR
• On June 8, the legislative assembly of El
Salvador enacted its “Bitcoin Law,” making
the country the first to adopt bitcoin as a
legal currency usable for all payments within
the country
• President Nayib Bukele has touted the use of
bitcoin for its potential to help Salvadorans
living abroad to send remittances back home,
while saying the U.S. dollar will also continue
as legal tender. In practice, El Salvador does
not have its own currency.
• As stated by President Bukele, the
use of bitcoin will be optional for
individuals and would not bring
risks to users, with the government
guaranteeing convertibility to
dollars at the time of transaction
through a $150 million trust
created at the country's
development bank BANDESAL
• The purpose of enacting a law accepting
bitcoin as a currency is to regulate bitcoin as
unrestricted legal tender with liberating
power, unlimited in any transaction, and to
any title that public or private natural or legal
persons require carrying out with the
exchange rate to be established by the market
• The law allows for bitcoin to be used as
payment for any good or service, including
tax contributions, with bitcoin not being
subjected to capital gains tax
• The law also provides US Dollars as
reference currency for bitcoin. Thus
somehow resolving the issue of its value
and stability
• The law also prohibits sellers to refuse
payment of bitcoin if the consumer offers
to pay using this currency. However,
this does not compel its citizens to pay
using bitcoin. It merely allows bitcoin as
an alternative to payment
• In the Philippines, there is no law yet regulating
the use of cryptocurrencies in the market.
Though cryptocurrencies are prevalent in our
country, they are merely purchased for
investment, and not as a mode of payment for
goods or services
• Key agencies, such as the Bangko Sentral ng
Pilipinas and the Securities and Exchange
Commission, issues advisories informing and
reminding the public of the use of
cryptocurrencies, as well as corporations who are
duly registered to sell cryptocurrencies
CONCLUSION
• As of date, cryptocurrency can not yet be considered as
a substitute for money due to its instability and extreme
volatility
• Though cryptocurrencies allow users greater control of
their finances, the risk of losing huge amounts of money
is still high. In case of loss, consumers are left with little
to no recourse to recover their lost investment
• Regulation to stabilize the value of a cryptocurrency, as
well as improvements in the security of cryptocurrency
transactions should still be looked at. Thus, the SEC,
BSP, PSE and the Philippine Congress should formulate
rules with respect to the use of cryptocurrencies as an
alternative mode of payment
RESOURCES
• https://www.flatworldsolutions.com/IT-services/articles/bitcoin-cryptocurrency-fu
ture-money.php
• https://www.investopedia.com/articles/forex/091013/future-cryptocurrency.asp
• https://www.investopedia.com/tech/pros-and-cons-investing-bitcoin-iras/
• https://www.nerdwallet.com/article/investing/cryptocurrency-7-things-to-know
• https://www.nerdwallet.com/article/investing/cryptocurrency-7-things-to-know#:
~:text=A%20cryptocurrency%20(or%20%E2%80%9Ccrypto%E2%80%9D,at%20tim
es%20driving%20prices%20skyward
.
• https://www.investopedia.com/terms/c/cryptocurrency.asp
• https://www.forbes.com/sites/roberthart/2021/06/25/adults-in-el-salvador-to-get
-30-in-bitcoin-as-nation-unveils-details-to-make-crypto-legal-tender/?sh=6afda7d9
109c
• https://freopp.org/el-salvadors-bitcoin-law-full-proposed-english-text-9a2153ad1
d19
• https://learn.tradimo.com/cryptocurrencies/what-is-crypto
• https://www.cbiz.com/insights/articles/article-details/the-positives-negatives-and
"You are only ever as good to
me as the money you make!“
~Kevin Spacey – 21~
• Feature 1
THANK YOU!
• Feature 2
• Feature 3