The Actuarial Significance of Bitcoin

Even if you don’t know what Bitcoin is, you’ve probably heard of it. By now, “Bitcoin” is a word that’s thrown around everywhere from the web to the evening news. But none of these news mentions give a very good explanation of what exactly Bitcoin is. Fortunately, Rui Dong tackles this elusive currency in The Future Actuary. He explains how it works and why the technology on which it’s built is important to the actuaries of tomorrow.

In a nutshell, Bitcoin is a currency that’s poised to shakeup the global financial system. Bitcoin also happens to be the first cryptocurrency. And that’s pretty significant.

In “What is Bitcoin?” Rui answers four important questions:

  • Who “owns” Bitcoin?
  • How are they created?
  • Is Bitcoin money?
  • How is this relevant to actuaries?

Though Rui notes that we may still be years away from decentralized insurance (eg insurance similar to Bitcoin), he elaborates on the changing system:

“With technological advancements, we will see more policies being sold online which are managed by independent brokers, claim adjusters, underwriters and actuaries. With the help of decentralised applications, anyone would be able to write a smart insurance policy, find a third party that is willing to hold the risk, and automatically treat for premiums, payouts, lapses and expiries.”

 

You can read the article in full here.

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Discussion

3 responses to "The Actuarial Significance of Bitcoin"

  • Sam Anderson says:

    Thanks I learned a lot from this, would be interested to see a few more articles like this.

  • Shiraz Jetha says:

    I find the Bit Coin concept very fascinating. Especially in the scenario of total acceptability. I wonder if the “legality/non-legality” issue would impact its utility to users very much. Even if universally illegal.

    Where I have a question mark on it is that it seems to be totally reliant on connectivity.

  • Celesta2581 says:

    We also think that you need to have to have the correct approaches for the suitable market situations.

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