Prof. Giuliano Lemme

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1 Prof. Giuliano Lemme Virtual and crypto currencies: are they money?

2 Functions of money Medium of exchange Measure of value Store of value gg/mm/aaaa Nome insegnamento 2

3 Metallic money and the Sovereign V

4 Fiat money THIS NOTE IS LEGAL TENDER FOR AU. DEBTS. PUBLIC AND PRIVATE I A WashingtonJ>.C mmmg ;uiuiuiuiuigi

5 Complementary currency

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7 ten uojoismu(-/t'sl) ojavoq P;apq

8 Died

9 VMU'S * 'Vi ORTA'OBD- MONTESSORI :» 1 1h low /Wo-MlO /«*0.M1II4I SG S BANCADI SG S

10 Cryptomoney Based on a network of interconnected computers, working on principles of peerto-peer and proof-of-work Main crypto currencies: Bitcoin, Litecoin, Namecoin, PPcoin.

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12 Bitcoin: the origin 2009: white paper by «Satoshi Nakamoto», Bitcoin: a peer to peer electronic cash system No central issuing authority Safe and trustable money Based on blockchain technology Transactions may not be deleted

13 How it works Installation of a client which connects to the network, using a public and a private cryptographic key. Mining Deflactory money: only around 21m Bitcoins may be created May be purchased online May be used online or at selected «physical» establishments

14 Bitcoin Inflation vs. Time Year Inflation Rate(annualized) Bitcoins(millions) Blocks(thousands) Inflation Rate Monetary Base

15 May 2010: Bitcoin

16 November 2017: Bitcoin

17 2,500 USD I I I I I I I I I I I Jun'16 Jul'16 Aug '16 Sep'16 Oct 16 Nov 16 Dec 16 Jan '1 7 Feb '17 Mar'17 Apr'17 May'17

18 Craig Steven Wright

19 The EU position The bitcoin virtual currency, being a contractual means of payment, cannot be regarded as a current account or a deposit account, a payment or a transfer. Moreover, unlike a debt, cheques and other negotiable instruments referred to in Article 135(1)(d) of the VAT Directive, the bitcoin virtual currency is a direct means of payment between the operators that accept it. ECJ, , C-264/14, Skatteverket c/ David Hedqvist

20 Directive 2018/843 virtual currencies means a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically;

21 SEC, Order of This order disapproves the proposed rule change. Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange s rules be designed to prevent fraudulent and manipulative acts and practices

22 Payment Services Act Japan 2010 (amended in 2017) The term "Virtual Currency" as used in this Act means any of the following: (i) property value (limited to that which is recorded on an electronic device or any other object by electronic means, and excluding the Japanese currency, foreign currencies, and Currency-Denominated Assets; the same applies in the following item) which can be used in relation to unspecified persons for the purpose of paying consideration for the purchase or leasing of goods or the receipt of provision of services and can also be purchased from and sold to unspecified persons acting as counterparties, and which can be transferred by means of an electronic data processing system; and (ii) property value which can be mutually exchanged with what is set forth in the preceding item with unspecified persons acting as counterparties, and which can be transferred by means of an electronic data processing system

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24 Utopia or reality? Mil.

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26 Figure 1 Noncash payment growth rates will be slower in high-income countries, where penetration is greater Noncash penetration vs. GDP per capita vs. expected growth (2012) Cash transactions, asa%oftotaltransactions India Indonesia Thailand Philippines _ # Russia South Africa Malaysia ;a Mexico Italy Japan China Noncash payment growth forecast (CAGR, e) 14% 11% 6% Bubble area is proportional to the number of electronic transactions per capita. 100 electronic transactions per capita 0 5,000 10,000 15,000 20,000 40,000 45,000 50,000 55,000 60,000 65,000 GDPpercapita($) Sources: World Bank, Global Financial Inclusion Database; Bank for International Settlements, Committee on Payment and Settlement Systems, Statistics on Payment, Clearing and Settlement Systems in the CPSS Countries("Red Book"); European Central Bank; central bank websites; Euromonitor; A.T. Kearney analysis

27 Scott A. Shay, CNBC, You might think then that the person can always pay cash and remain outside the purview of these technologies. This may be the case for the moment, but we are well on the road to becoming a cashless society. According to a MasterCard study, 80 percent of U.S. consumer transactions are electronic. In Sweden, one observer estimates that only 3 percent of transactions are made with currency. In fact, the decline in cash use has become so pronounced in Sweden that homeless beggars have been given card readers by Situation Stockholm to sell freely distributed newspapers and to receive alms, since potential donors no longer carry cash. Governments and central banks are also subtle supporters of a cashless society as there are indeed costs to producing currency and coins. Monetary policy could also be much more efficiently executed without currency circulating, since it would then be easy to implement negative interest-rate policies. But there is also a sinister risk to a cashless society a cashless society would certainly give governments unprecedented access to information and power over citizens