Every Bank wants to be a Bitcoiner. Do we need Central Bank Digital Currencies?

  TLDR. Bitcoin’s price rebound and the advent of Libra so far this year, has caused many to reconsider and some even to change sides. Debates about Central Bank Digital Currencies (CBDC) are now gathering great attention worldwide. Central banks may have to issue their own digital currencies sooner than expected. A number of central banks, including the People […]

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China’s digital currency could be a response to Libra

Earlier this month, a senior official of the People Bank of China (PBoC) announced that the country was ready to launch its digital currency. The announcement was made at a China Finance 40 (CF40) group discussion and it was revealed that China has been working on this for the past five years. Image Source The […]

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Could the next financial crisis drive Bitcoin to mainstream?

“Bitcoin has no intrinsic value, but neither does government-issued paper money. The market should determine its value, while government should focus on disclosure, education, fraud prevention, and curbing its use to support criminal activities.” – Sheila Bair, who headed the FDIC during the dark days of the 2008 financial crisis Ten years ago, Bitcoin was […]

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Big Investors, Big Confidence for Bitcoin

TLDR. While Bitcoin is a volatile and nascent asset class, Bitcoin has consistently outperformed the Dow, S&P 500, and gold in the last decade. With more regulatory clarity, as well as more transparency from crypto exchanges, the risk of owning Bitcoin diminishes every day, bringing more institutional investors to the market. We are starting to […]

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Bitcoin is an Unstoppable Force

TLDR. During the recent House Committee on Financial Services’ hearing about Facebook’s, Libra, Rep. Patrick McHenry described Bitcoin as an unstoppable force: “The world that Satoshi Nakamoto — author of the Bitcoin white paper — envisioned, and others are building, is an unstoppable force. We should not attempt to deter this innovation, and governments cannot […]

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Blockchain for branding, as banks see little benefits – WEF reports

Image Source Is it a Golden bullet? or just a jewel? When I used to be a developer in banks, I used to get this question all the time – “do we have a golden bullet (tech) that can solve all our problems?”. The question used to be from very senior people in the bank […]

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Bitcoin to the Moon

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TLDR. Bitcoin, Ethereum, Litecoin and many other cryptocurrencies continue to experience massive growth in price, market capitalization, and mainstream adoption. Cryptocurrencies change and improve the way we do things. It is no longer a question of whether cryptocurrencies are disrupting the global economy. The only question is how much and how fast.

On July 20, 1969 we made history. Two days ago, we had the fiftieth anniversary of the Moon Landing, when man walked on the Moon for the first time.

The Apollo Guidance Computer  was the primary computer for the Apollo mission. It was one of the first computers to use integrated circuits, so instead of filling an entire room, it squeezed everything into a box just a couple of feet in size. Today, the A11 chip in an iPhone X can perform six hundred billion floating point operations per second. That’s a million times faster than the computer that put man on the Moon.

In 1969, a 50 year old man was old and was expected to live another 17 years. But today, being 50 isn’t old. I am expected to be around at least another 30 years or so. I’ve seen my fair share of technology revolutions over the last fifty years:

1969 — Arpanet:  Before the entire world was networked, there was the Arpanet, four computers linked together in 1969. It introduced the concept of “packet switching,” delivering messages as short units and reassembling them at their destination.

1977 — Personal Computer: The Apple II, Commodore Pet and Radio Shack’s TRS-80 are introduced in 1977, four years before IBM, soon to become synonymous with the term “PC,” unveils its personal computer.

1978 — GPS: The first satellite in the modern Navstar Global Positioning System (GPS) was launched. It is not until the year 2000, though, that President Clinton grants nonmilitary users access to an unscrambled GPS signal.

1979 — Sony Walkman: “This is the product that will satisfy those young people who want to listen to music all day,” Akio Morita, Sony Chairman, February 1979.

1983 — Microsoft Word: Multi-Tool Word, the precursor to the Microsoft Word text-editing program, makes its debut as free copies are bundled with the November issue of PC World.

1989 — World Wide Web: Sir Tim Berners-Lee creates “hypertext markup language” (HTML) to make Web pages and the “Uniform Resource Locator” (URL) to identify where information is stored. These breakthroughs form the foundation of the World Wide Web.

1998 — Google: It began as early as January 1996 as a research project, by Larry Page and Sergey Brin, PhD students at Stanford University. Conventional search engines ranked results by counting how many times the search terms appeared on the page. Google developed PageRank,  that determined a website’s relevance by the number of pages, and the importance of those pages that linked back to the original site.

2001 — Wikipedia: A multilingual online encyclopedia, based on open collaboration through a wiki-based content editing system. It is the largest and most popular general reference work on the World Wide Web. It features exclusively free content and no commercial ads, which is incredible.

2004 — Facebook: Harvard dropout Mark Zuckerberg launched “thefacebook.com,” a social network site originally restricted to his fellow classmates, in February 2004. Today Facebook is used by 2.3 billion people around the world.

2007 — iPhone Steve Jobs introduces Apple’s first smartphone with a prank-call order of 4,000 lattes from a nearby Starbucks. The iPhone was also the first U.S. smartphone without a physical keypad, and goes on to become the best-selling gadget ever, with more than 2 billion sold to date.

2009 — Bitcoin: The pseudonymous Satoshi Nakamoto launches the first popular cryptocurrency, an anonymized peer-to-peer encrypted form of cash. Bitcoin uses blockchain, a decentralize ledger to verify payments, that is nearly tamper proof.

“Bitcoin to the Moon” is a term introduced by crypto enthusiasts denoting an extreme spike in BTC rate. It became part of the crypto lexicon in late 2017, when Bitcoin hit $20,000

What will it take for Bitcoin to revisit the moon again?

When you look at the fundamental developments in the space you will realize that what happened back in 2017, when we had Bitcoin’s crazy rally, will happen again. There are potential catalysts that can lead this market to another 10x, potentially 20x over the next few years.

It’s not going to be altcoins, with 100x returns. It’s not going be institutional money or Bitcoin ETF, either. While they will play a huge role and increase the liquidity of the market, it will have to be something much more fundamental for the industry to the reach the next level.

One potential catalyst is DeFi. Decentralized Finance or DeFi is basically a shared effort to build open source decentralized censorship resistant technology, that opens up financial opportunities to everyone. It tries to cut out the middlemen and provide the best peer-to-peer experience for finance. We are seeing offerings like hedging, shorting, derivatives, and more, without intermediaries, clearinghouses or the need for trusted third parties. Imagine exchanging assets and tokens, opening up markets, for example crypto loans and stable coins, that allow anyone to have the purchasing power and stability of the US dollar. One example is Maker, both a stable coin and a collateralized lending platform. The collateral for the loans, is what stabilizes the Maker stablecoin.

Another important catalyst is programmable applications for Bitcoin. We will have to see Bitcoin adopt smart contracts, that have been so important and successful for Ethereum. Frameworks like RSK are important, because they allow us to lock up Bitcoin in smart contracts and to generate stablecoins like DAI.

Obviously there is more room for adoption. When we look at the most basic metric, ownership, we still have a long way to go. In the last 2-3 months, while BTC has jumped from $3,000 to $12,000, owning some type of cryptocurrency is still so low at 1% global adoption. Even if we just had a moderate jump in adoption, reaching 2-3%, we would see an exponential flow of institutional capital and possible a Bitcoin ETF, that will allow people to access the market in different ways,

Things like this could play an important role for the crypto space overall, but most importantly for Bitcoin’s valuation. These developments would allow Bitcoin to act as collateral, a store of value, and become the backbone for a new wave of stable coins.

The impact of the moon landing is all around us, forever a reminder of spectacular possibilities. Bitcoin is a moonshot. It’s the idea that anyone can be their own bank. It eliminates the middleman, no longer required for authorizing and authenticating any kind of transaction. This is a highly polarized topic, with strong sentiments on both sides of the centralized and decentralized debate. Time will tell how far this revolution will go.

Image Source

Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday and has no positions or commercial relationships with the companies or people mentioned and is not receiving compensation for this post.

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Blockstream satellites, Locha mesh networking and the Bitcoin domesday scenario

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TLDR. Analog Bitcoin fans (aka Gold Bugs) like to talk about domesday scenarios where there is no Internet and so Bitcoin will be worthless. In the real world (as opposed to the talking heads circuit) it is not Bitcoin or Gold it is Bitcoin AND Gold. However nobody wants worthless Bitcoin. This update to The Blockchain Economy digital book describes Blockstream satellites and Locha mesh networking . These ventures and technologies ensure that you can still use cryptocurrencies even in the domesday scenario.

This update to The Blockchain Economy digital book covers:

  • Domesday Scenarios without Internet
  • Blockstream satellites
  • Locha Mesh networks
  • Context & References

Domesday scenario without Internet

The Chapter entitled Why BTC = USD1 million may be possible, but not desirable even for those with Bitcoin describes 4 scenarios that investors plan for, the 4th being what we refer to as the domesday scenario:

  • Scenario 4. Legacy Finance assets suffer a catastrophic decline and Bitcoin goes to zero. In that awful scenario, shelter, food & physical safety become critical and financial assets become only a distant memory and it is the gold part of your tail risk insurance that you rely upon.

Bitcoin can go to zero because a) it was always just a mirage or ponzi scheme or b) it becomes impossible to use because it requires Internet access and there is no Internet.

There are three ways we can be deprived of Internet access:

  • There is a catastrophic disaster from climate change or nuclear war or economic/societal collapse.
  • Your Government orders ISP’s to cut off Internet access for everybody (possibly to prevent a stateless challenge to their Fiat currency).
  • Your Government orders ISP’s to cut off Internet access for you (because you are viewed as an enemy of the state).

We look at the two technological solutions to this domesday scenario – one from above (satellites) and one from your neighbours on the ground (Locha Mesh networks).

Blockstream satellites

The Blockstream Satellite network broadcasts the Bitcoin blockchain around the world 24/7 for free, protecting against network interruptions and providing anyone in the world with the opportunity to use Bitcoin.

Blockstream is a private venture funded business with a lot at stake in Bitcoin. The theory is that even if the Internet is not available, you can still use Bitcoin via satellites. The problem is that as a centralised venture funded business, they are susceptible to pressure from Government.

Locha Mesh networks

This is a more ground up initiative coming out of Venezuela. The best introduction in the English language is this podcast interview. There is a lot about the political situation in this interview; if you want to skip to the tech, go to around minute 15.

101 on mesh networking: Traditional networks rely on a small number of wired access points or wireless hotspots to connect users. In a wireless mesh network, the network connection is spread out among dozens or even hundreds of wireless mesh nodes that “talk” to each other to share the network connection across a large area. Mesh networks use publicly available radio frequencies.

In short, wireless mesh networking is a decentralized, open permissionless network like Bitcoin ie nobody can shut it down.

This is an example of why this chapter describes The Path To Mainstream Adoption Of Bitcoin Is Not Through Legacy Finance Institutions, It Is Through The Excluded

Context & References

Why #GetOffZero Gets Sensible Investors To Look Seriously At Improbable Bitcoin Based Solutions.

Why BTC = USD1 million may be possible, but not desirable even for those with Bitcoin.

The Path To Mainstream Adoption Of Bitcoin Is Not Through Legacy Finance Institutions, It Is Through The Excluded

Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is CEO of Daily Fintech and author of The Blockchain Economy.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).

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The US President tweets about Bitcoin

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TLDR. Last year, when Steve Bannon, Donald Trump’s adviser praised Bitcoin as “disruptive populism” and revealed he was working on his own cryptocurrency. It was evidence of something many people had long suspected: The forces driving the growth of anarchic, get-rich-quick digital tokens are very similar to those buoying Trump and his imitators.

Ten years ago, if you claimed that the President of the United States would be talking about digital money, people would think you were crazy. Well it happened. Last week the President Trump tweeted about Bitcoin and other cryptocurrencies:

The President expressed his opposition to cryptocurrencies, specifically about Bitcoin and Libra. He doesn’t think cryptocurrencies are real money, because their “value is highly volatile and based on thin air.”

Is fiat any better?

Cryptocurrency is volatile. Cryptocurrencies are based on thin air, but so are all the fiat currencies in the world. Bitcoin cannot be debased due to its limited supply, but the US dollar can and continues to be, as large quantities are printed. Cryptocurrencies can be used for illegal things, but so can cash. But on the other hand, Bitcoin transactions can be tracked by authorities, US dollars used for illicit purposes, are often impossible to track.

Trump’s statements about Libra, were along the same lines of other governments. France also appears to be opposed to Facebook’s cryptocurrency plans. An official at France’s finance ministry said the country would not allow a private entity to set up the equivalent of a national currency. China’s central bank is reportedly developing its own digital currency in response to Facebook’s Libra, as it could pose a threat to the country’s financial system.

The market barely reacted after Trump’s tweets. Bitcoin and cryptocurrency markets were completely unaffected by the comments The price of Bitcoin slightly rose, as investors bet that Trump’s mention of Bitcoin will bring greater awareness to crypto and push prices up.

This is possibly, the largest bull signal for Bitcoin, ever. The President’s tweets coupled with the growing institutional adoption and investment, spell out a clear message “buy Bitcoin”.

Trump’s tweets come one day after Federal Reserve Chaiman, Jerome Powell, told lawmakers that Facebook’s plan to build a digital currency called Libra could not move forward unless it addressed concerns over privacy, money laundering, consumer protection and financial stability.

Bitcoin had a huge week. Some in the crypto world have interpreted Trump’s series of tweets as an endorsement of Bitcoin’s growing importance. Trump turned Bitcoin into a hot issue for the upcoming presidential election in 2020.

It looks like Trump is hammering potential threats to the dollar’s status as the world’s reserve currency. But, this doesn’t matter, because the value of Facebook’s coin is also pegged to the value of a dollar, they are essentially just dollars on a blockchain. For me, that’s more interesting. Not that long ago, the world’s reserve currency was gold, where the value of a dollar was pegged to the value of gold. But one day the US decided to unpeg the dollar from gold, paving the way for the dollar to replace gold as the world’s reserve currency. Could Libra or another cryptocurrency, do the same thing to the dollar? It’s possible.

But, I think the dollar and crypto can coexist, and will coexist for a long time. Currency competition is inevitable, but the dollar doesn’t need to fail in order for Bitcoin to succeed.

Image Source

Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday and has no positions or commercial relationships with the companies or people mentioned and is not receiving compensation for this post.

Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research)

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The Rise of India Blockchain, Cryptos lagging – Mistake or Opportunity?

It’s an emotional week for Indians – for most of them atleast. It’s a week when India crashed out of the cricket world cup, that they were favourites to win. While I was looking for “India news” to cheer myself and my family up, I spotted an important trend worth talking about.

The rise of Blockchain in India doesn’t come as a surprise to me. It is the third most active innovation ecosystem in the world, next to the US and China. 2018 had $35 Billion of PE/VC investment in the country, and that has risen over the years at a rapid pace. However, with Blockchain, most of the initiatives have a public sector organisation driving it.

Blockchain-India-Infographic

Image Source

Most Indians would admit  that public sector organisations in India are super dysfunctional. So, this is indeed a sign of new times. Perhaps, the state governments are taking inspiration from the centre’s initiatives with payments and other technology innovation. Let us look at the three key trends that we have identified across the states.

  • Land Registry – This is such a critical use case for Blockchain in India. The real estate industry is fraught with corruption, and a system to bring integrity to the value chain is most welcome. Blockchain could add so much value to this space.

 

  • Farm Insurance – I am quite glad that this is a key trend. Less than a year ago, I wrote an article asking for exactly this. A violent storm that hit my home state, affected coconut farms and many farmers lost their 10 years of hard work. A smart contract based insurance mechanism is critical for farmers to protect their livelihoods. In a country that depends on two monsoons for agriculture, a flood or a drought could kill the crops.

 

  • Digital Certificates – There is a saying in India – You can’t go wrong with a food or an “education business”. Education has been commoditized in the country so much that, every year there are 1.5 Million engineers being produced. It is also a market where counterfeit certificates and CVs are not uncommon. Blockchain based digital certificates to maintain the integrity of the education process is yet another useful application.

The map also identifies several other use cases like Organ transplants (as the black market in India is thriving), IP Protection and Cybersecurity. I am surprised that there is no line item for Self Sovereign Identity. India has the world’s largest citizens’ database in Aadhaar. Loading it up on a permissioned Blockchain, and providing citizens the ability to share their data in a controlled fashion would be a major building block.

But that initiative needs to come from the central government. It cannot be a state government driven agenda. Also, despite all these developments, the action from the central government around Blockchain initiatives is missing. The central government needs to intervene to standardise state government based initiatives across the country.

The other elephant in the room is the cryptocurrency ban in the country. I believe, this has pushed India behind its global competition by a few years when it comes to Blockchain innovation. The country has a buzzing startup ecosystem. The centre has taken several steps even in the most recent budget to support innovation.

But when it comes to cryptocurrency, the Reserve Bank of India has taken a very binary approach. I spoke to Lizzie Chapman (CEO of ZestMoney) a few weeks ago on lending fintechs in India. During that conversation, she mentioned that the Indian regulators have been quite collaborative in setting policies for the industry. That approach seems to have been lost somewhere with Cryptos.

The challenge that India has is that of talent. With lack of innovation happening in this space, Blockchain skills will start running out pretty soon. Yes, the big tech consulting firms looking to build Blockchain skills can do so. But that doesn’t necessarily translate to leadership within Blockchain innovation.

The other challenge is global competition. China and other top economies have allocated $ Billions towards emerging technologies such as AI, Quantum computing and Blockchain. China and US fight it out for the top place in the world’s patenting charts across these technologies. India is only in 6th position in the world for the number of Blockchain patents, and without private sector innovation, will soon risk being left behind.

In essence, the centre needs to wake up to this new era in the country. It’s time for leadership at the top, much like they did with payments. They should get initiatives kicked off on Blockchain and its standardisation across states. They should ensure that the regulations are clear for the crypto community.

With just those two steps, the country should be back on the map in a much bigger way with Blockchain. The mistake (crypto ban) could be turned into an opportunity. Onwards and Upwards!! Cheer up India!!


Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).


 

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