Finacabulary #9- Casino Finance

Meaning: A slang term for an investment strategy that is considered extremely risky.

Casino finance refers to casinos and gambling, where players may have little to no control over the outcome of their bets. It generally refers to high dollar bets in the markets, either involving high-risk investments, and/or high leveraged accounts. Investors who employ these tactics are usually taking large risks in order to attempt to earn large rewards. While most investors prefer a more conservative approach, some investors are comfortable undertaking a large amount of risk, in order to have the opportunity to secure large returns.

Impact of Blockchain Technology on Banking Sector

By Aditya Alamuri & Mounika Duvva 

What is Blockchain?
A blockchain is a chronological and logical sequence of transactions that are recorded in blocks. A block is a sum of all recent transactions and once completed, the block gets added to blockchain in a permanent database. They behave like bank account statements of an individual. Therefore, we can infer that a full ledger of transaction details can be obtained via blockchain of every bitcoin transaction that has ever taken place. Now, what is Bitcoin? Bitcoin a mechanism through which currency is encrypted and is also virtual in nature thus enabling bitcoin to use the Blockchain technology to complete financial transactions.

Advantages of Blockchain technology – emphasis on payment systems of banks

1. The blockchain technology eliminates all the intermediaries in a financial transaction – elimination of sites such as PayBill etc.

2. Transactions authorized by Miners – thus eliminating the threats of hacking

3. Superior Risk Management – counterparty risk, settlement risk etc.

Transactions that might get disrupted

Blockchain technology is evolving from an experimental phase to usability and adaptability phase in the payments world. Payment companies, financial institutions, have started with research on the real-world payment products and services which integrate blockchain technology. If successfully implemented, financial transactions like Domestic Payments, International Payments, Remittances have the highest probability to get affected.

Regulatory concerns and Security issues

If an economy wants to adopt the Bitcoin technology, then it must make sure that the right set of regulations are passed. Also, if countries decide upon using bitcoin as a medium of exchange (Inter country), thus eliminating cash transactions, then appropriate policies and guidelines must be ratified between the same. The primary goal of these regulations is to promote transparency and increase the security of the transaction. The problem with crypto-currency is maintaining anonymity with respect transactions. To what extent can these operations be monitored by the government of any country is a major concern. Uncontrolled transactions might be exploited by money launderers to fund anti-social activities, whereas micromanaging these transactions rules out the very basic characteristic of crypto-currency.

Questions that Industry is still working upon

Though there are several plus points for implementing blockchain technology, questions like what will happen to the current structures such as SWIFT and CHIPS are still left for open discussion until there are regulations put into place by regulatory bodies.

#Fincabulary 8- January effect

Meaning: A seasonal  increase in stock prices during the month of January

Explanation: It refers to a pattern exhibited by stocks, particularly small-cap stocks, in which they’ve shown a tendency to rise during the last several trading days in December and then continue to rally throughout the first week of January. Analysts generally attribute this rally to an increase in buying, which follows the drop in price that typically happens in December when investors, engaging in tax-loss harvesting to offset realized capital gains, prompt a sell-off. Another possible explanation is that investors use year-end cash bonuses to purchase investments the following month.