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Bank of Korea: CBDC Could Threaten Commercial Bank Stability

CBDC Could Threaten Financial Stability of Commercial Banks, Says Bank of Korea

The Bank of Korea (BOK) has said that the introduction of a state-owned and issued digital currency in the form of central bank digital currency (CBDC) in South Korea could possibly zero-out commercial banks, reports Yonhap News Agency.

According to the source, the BOK published a report expressing concerns with low deposits demands into commercial banks that may result from the implementation of a state-backed CBDC into the financial system.

Kwon Oh-ik, one of the co-authors of the report, wrote: “The CBDC is a kind of a BOK-issued bank account. People trust it more than one in a commercial bank”. This implied that as customers are likely to trust the blockchain-based currency type backed by the BOK as opposed to the legacy form of money transfer and handling, this might lead to low liquidity in such commercial banks as customers withdraw their money. This would invariably shoot up interest rates.

Commercial banks are largely dependent on the loan infrastructure and if deposit services reduce, making it hard for the banks to have access to liquid cash for loan maintenance, then interest rates will then go up. Invariably, that may reduce patronage and consequently reduce the businesses of such banks.

Banks around the world have been discussing different application models for blockchain and cryptocurrencies. One such possibility involves CBDC, and talks about facilitating cross-border payment infrastructures. Banks have identified CBDCs as a government type of cryptocurrency which will constitute the exactness of a fiat currency.

At last, one thing some central banks around the world and crypto-enthusiasts could agree on is that a digital asset built on the blockchain could represent a store of value as well as a medium of exchange, and possibly capable of replacing the legacy fiat currency formats.

A CBDC could play a significant role in mass adoption of cryptocurrency. However, as exciting as that may sound for Seoul-based crypto enthusiasts, the South Korean central bank has a differing opinion.

The bank did say last week that it is not rushing into issuing a CBDC even though many financial institutions around the globe are more welcoming to the prospects of the financial instrument. The report published by the bank further reiterates its stance on the subject of CBDC.


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Credit Suisse Successfully Tests Blockchain for Cross-Border Payments

Investment Bank Credit Suisse Successfully Tests Blockchain for Cross-Border Payments

Swiss multinational investment bank and financial service company Credit Suisse confirmed today that its asset management arm which manages over USD 400 billion has successfully tested a blockchain-based cross-border transaction, as reported by Reuters.

According to the post, parties involved in the test — Portugal’s online bank Banco Best and Luxembourg-based order-routing platform Fundsquare — confirmed that a blockchain-based platform was used “to process an unspecified number of trades”.

The attestation stated that the test showed cross-border payment processing which was distributed over the blockchain and is more efficient, scalable and timely in processing.

According to the source, “the investment fund industry relies heavily on transactions and settlements that are often complex and time-consuming to process”, hence the need for a transition to a more secure and fast system to scale up processes.

As it stands, blockchain much-cited edge as a distributed immutable ledger becomes the preferred choice under the circumstances. The post also notes that because of the quality of the blockchain, fewer checks are needed to ensure entries are secure, which in turns saves time.

While the test was successful, the parent company made no comments on whether future applications of the technology will be expanded.

For banks and many financial institutions, optimizing cross border payment processes through blockchain is increasingly becoming an important use case of the blockchain.

Last December, UK fund processor Calastone said it could save up USD 4.3 billion using blockchain and would be moving its operations by May this year.

Recently, major Swiss exchange SIX said it was ready to launch its SDX trading platform using blockchain.

Saudi and UAE have reportedly been collaborating to develop a cross border payment system basically designed for bank-to-bank transactions only through the blockchain, and currently, have a select few commercial banks participating.


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Facebook “Acquihires” Blockchain Startup Chainspace

Facebook _Acquihires_ Blockchain Startup Chainspace

Despite the prolonged bear market, interest in blockchain technology continues to soar. Acquisitions are growing and now, a common practice called “acquihire” sees companies targeting blockchain startups for either both tech and expertise or to simply recycle their expertise. The latest finds social media giant Facebook in a move to acquihire a small blockchain-startup Chainspace, reports news outlet Cheddar yesterday.

Facebook’s serious endeavors towards developing its own blockchain from scratch have made a new stride. This move is apparently the first scaled interest beyond the research exercise it was into for the most part of 2018.

The Chainspace team are reported to be researchers from the University College London and have been specializing in the sharding techniques with blockchain technology to scale transactions through decentralized smart contract systems. They were also exploring applications of decentralization in polling systems.

No figure has been disclosed as of yet, and it remains unknown what price tag the multi-billion-dollar company placed on the startup’s team. However, the team was in the process of crowdfunding USD 4 million to execute their project. The figures may have been worthwhile as they have announced that the project will be “moving on to something new”, according to its website.

Last year, Facebook had shown interest in making its own cryptocurrency but said it would explore blockchain first. Its idea of a cryptocurrency appears to have taken the form of a stablecoin that will be used on its mobile messaging app WhatsApp.

In May of 2018, Facebook formed a blockchain exploration group led by David Marcus who was a former board member of Coinbase. The group was tasked with seeking applicability of blockchain in the company’s business and later that year, blockchain-related job listings appeared on its career page.

Now, more than 40 people are reportedly working in Facebook’s blockchain division, and the company continues to talent hunt for experts in the fields of engineering, product and business development, blockchain, cryptocurrency, and legal.

In yet another acquisition spree, San Francisco-based cryptocurrency exchange Kraken has revealed that it has made a 9-figure move (while undergoing a seed funding round of USD 100 million) to acquire Crypto Facilities, a British trading firm that specializes in derivatives.

This deal for Kraken ranks it first to offer both spot and futures trading in Bitcoin, Ethereum, and Ripple, in an attempt to attract institutional investors.

Both acquisitions, as well as many others, demonstrate a healthy crypto and blockchain ecosystem and affirms that blockchain isn’t going away anytime soon.


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Ethereum 2.0 Nears With Phase-0 Pre-Release Approaching Stable

Ethereum 2.0 Nears with Phase-0 Pre-Release Approaching Stable

The flagship dapp platform Ethereum has been undergoing several upgrades to relaunch as Ethereum 2.0, featuring its Constantinople and Serenity upgrade. Developers have been sprinting for months now to scale to the platform’s next and final developmental milestone.

Notification of the update was released on GitHub. The Ethereum developers’ community explained how this is the first release – dubbed the Phase 0 pre-release – which is approaching stable, and that also, more updates will be released through the month of February.

The Ethereum 2.0 update, as a series of updates is expected to lead to a more efficient, faster and scalable Ethereum. The scaling will feature Sharding, Proof of Stake, and eWasm.

The Constantinople update was scheduled to be released earlier, however, the road to the transition has not been exactly smooth. A failed testnet launch occurred back in October 2018 which caused a minor ruckus in the community as a conflict of interest between miners and investors may have ensued, but the developers are working tirelessly to ensure the upgrade works. Secondly, in January, there was a vulnerability in the smart contract code when it was being audited and the initial release had to be delayed to effect the necessary changes.

Serenity is an important and last upgrade for the Ethereum dapp platform which is essential for it to mark the hallmark of its development as it moves from the proof of work to proof of stakes consensus. Perhaps, Ethereum will see new price gains in its new outlook.

Ethereum has so far suffered a huge price loss from its all-time high of USD 1,400 and now trades at USD 107 at press time. Moreover, it is now ranked as number 2 altcoin by market capitalization with Ripple coin overtaking.

Ether began hitting new levels of low late last year, probably due to a host of scaling problems on the network as well as smart contract and alternate dapp development environments being introduced by competitors. It would seem that there are high expectations of a reversal in the downtrend once the full version has been released. So this is good news for Ethereum-based dapps and supporters.


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Africa, China Mobile Tech Market and Cryptocurrency Revolution

Africa, China Mobile Technology and Cryptocurrency Revolution

Africa may have contributed a great deal to Bitcoin transactions, according to peer-to-peer crypto exchange Paxful. This has been partly due to the increased inflation rate in some countries and the fact that cryptocurrencies appeal to a large number of underbanked and unbanked individuals on the continent.

The quest to venture into cryptocurrency related business relation as the opportunity in this niche currently presents, may not appeal as much to the Chinese tech investors at the moment says Stephany Zoo, head of marketing at BitPesa. She also was of the opinion that cryptocurrency activity for cross-border payments on the continent is not as pronounced as advertised, stating that if it were so, China having a large number of cryptocurrency owners would have influenced its use in Africa since it’s a major trade partner.

Over the years, the African continent has been favorable to the Chinese tech market. As reported by media outlet the Financial Times, Huawei and ZTE played an important role in building the continent’s mobile network.

The tech potential on the continent is yet to be fully optimized though, as new companies onboarding the ecosystem have also taken advantages of the latent opportunities. Last year, Quartz Africa reported on how a low profile Chinese handset maker Transsion rose to limelight due to Africa’s mobile market. However, there is fierce competition between Western and the Chinese tech companies for a larger share of the African market.

According to Zoo, Chinese tech investors are still wary about crypto investments because of the associated risks, saying that they prefer to stick to solar, ed-tech, e-commerce and IoT. The emerging market opportunity for cryptocurrency in the continent is currently not fully explored, although Zoo added that as time goes on, there’s a possibility that more Chinese investors will trust the market as they work with Africans.

Leading global smartphone vendor Samsung will reportedly include a native cryptocurrency wallet feature in its upcoming Galaxy S10, which will go a long way to facilitate adoption on the side of smartphone users. However, it would be remarkable for the brand in relation to the African market since it holds a huge stake there.

Although Samsung came in second place to Transsion in terms of smartphone shipments to Africa during Q2 2018, it remains unknown how the alleged cryptocurrency wallet feature will improve its market share, especially in South Africa which accounts for the largest share of shipments (17.4%) in the continent. Moreover, South Africa may be considering a regulatory framework for the industry, however, in December 2018, it did say it was considering crypto as part of its National Payment System (NPS).

A recent ongoing survey by the Financial Times is attempting to gauge the level of awareness and possible adoption potential of cryptocurrency and Africa happens to be one of the focal points. BitcoinNews will keep tabs on the outcome of the survey to understand what Africans with internet enable devices want from digital currencies.


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Is 2019 the Year of the Crypto Bull Market?

Is 2019 the Year of the Crypto Bull Market?

How Long Will the Crypto Market Bull Sleep?

Speculations about the cryptocurrency market continue to weigh heavily on the hearts of crypto enthusiasts as the market is yet to improve from the slump of 2018. The space is now left with dashed hopes, closed crypto exchanges, layoffs, hacks and a whole lot of constructive partnerships by the very few who truly understand what the blockchain is all about.

Reality has become grim for investors who hopped in at the all-time-high, especially shattering the expectations fueled by crypto influencers – the claims of Bitcoin reaching a high of USD 100,000 at the end of 2018. The ‘lambo’ songs that once reigned in many social communities have lost its savor as the lingo is being replaced with more realistic expectations such as measurable development goals and expected platform launch date.

Where are the 1000x’s promises?

Tough times greeted the new year, though still at the beginning of the year, many investors, as well as spectators, are wondering why the market still hasn’t had a bull run even though interest in blockchain has spiked. Some blame it on the delay in the entry of institutional investments.

Ripple CEO Brad Garlinghouse provided his personal opinion in a Blockchain Summit in Europe held at Brussels, saying that he estimates a 5 to 10 years waiting time for mainstream crypto payments.

This may be heartbreaking, as 5 years is indeed a long time to wait before hitting those 1000x’s again. More so, one would wonder if Ethereum’s co-founder Vitalik Buterin was right about his earlier predictions on the end of 1000x’s in crypto space. However, in just under a decade, cryptocurrency has evolved many times over.

The flagship cryptocurrency Bitcoin started its dramatic steep decline in the wake of 2018 and dragged the whole market with it after grazing an all-time-high of USD 20,000 the previous year. The cryptocurrency market with a cap of over USD 813 billion in November 2017 has now dropped to USD 114 billion according to data from CoinMarketCap as at press time. Surely, this drop in market value is enough to make investors wary.

The previous 3 years had seen a steady rise of activity in ICO markets, with 2016 recording an approximate fund collection of USD 93,922,741; USD 6,576,372,746 in 2017;  a reportedly recorded USD 21,576,147,596 in 2018 and now, in 2019 ICOs have raised over USD  126 million and still counting, according to data from CoinSchedule. With these humongous figures, it behooves one to wonder what happened to post-ICOs and why the current conditions appear rather stale.

What’s wrong with Crypto?

Brad has said that the biggest risk in the market is regulatory uncertainty. With the Securities Commission of different jurisdictions like the US SEC breathing down the necks of ICOs for securities compliance and making scapegoats out of defaulters, startups are exercising more caution. Binance CEO Changpeng Zhao had opined that 2018 was a year of correction and expressed his confidence for the future of crypto, however, he also pointed out that lack of clarity from regulators was a major drawback.

An analyst from JPMorgan expressed his skepticism about cryptocurrencies saying that real use for cryptocurrencies will only be in a dystopia – [one that has been duly noted in some hyper-inflated economies] – and that despite the correlation, the crypto market has with traditional assets, it’s of little value because of the prolonged bear market.

Legislation has indeed pegged the growth of the industry to a certain degree – at least from the cryptocurrency market perspective. However, some jurisdictions are opening up to the Idea of regulating the space in a way that innovation isn’t stifled. What’s left is for blockchain projects to live up to the hype that once ruled the space by developing more proof of concepts that are usable beyond the cryptomarket, as the market has so far proved to be a poor benchmark for the healthy state of blockchain enterprise.

For a while, the promise of institutional grade crypto services by elite financial systems such as Fidelity, and Intercontinental Exchange’s Bakkt has held many ‘hodlers’ ransom. Fortunately, as the space continues to mature, it becomes less reliant on external influences and survives on its initial narrative – decentralization.

Amid the market downturn, regulatory uncertainties, organizational restructuring, high expectations of institutional players; immense developments and innovation are driving adoption such as the rise in the numbers of Bitcoin ATM kiosks, use of crypto in charity, banks collaborating for cross-border payments, legacy systems shifting towards blockchain to tackle logistics problems. Perhaps, the market is just one trigger away to the next bull-run.


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Danish State Energy Firm to Examine IOTA’s Tangle in Electricity Supply Chain

Danish Energinet to Use IOTA’s Tangle in Electricity Supply Chain Market

IOTA, an internet-of-things system based on distributed ledger technology (DLT), has announced a partnership with Danish state-owned energy company Energinet, with the hopes of exploring Tangle — the native technology of IOTA — towards an efficient electricity supply chain.

“Energinet has been exploring concepts of digital trust and distributed ledger technologies (DLT),” the blog post reads. This is in tune with the aim of providing a more efficient green energy system with the company as a core entity between energy producers and consumers. As André Bryde Alnor, Market Developer in Energinet, puts it: “We know that we have to bridge the gap between the fast developments in IoT technology, being implemented on both household and industry level, and the centralized systems of the European energy system.”

IOTA is technically not a blockchain but an open source distributed ledger — terms often misconstrued. It combines the concept of blockchain and internet of things (IoT) to form its own technology, the Tangle.

This isn’t the first time both companies would be working together. In November 2017, when IOTA was running a Data Marketplace initiative, Energinet was a participant along with several industrial and IT companies. Now that Energinet has finished testing distributed identities, it wants to move on to applications of IoT in electricity markets through the Tangle technology.

DLT, the term to address all blockchain and non-blockchain systems using distributed consensus algorithms models, continues at a steady pace along with other emerging technologies to restructure the energy markets.

Recently, Japanese Tech giant Fujitsu announced its successful trial of a blockchain-based system for improving energy trading throughputs between consumers and producers.

Many blockchain-based startup companies are currently racing to provide energy efficient solutions that involve transparency, security and smart administration. While some of them may be fortunate to onboard traditional firms to support their vision, sadly adoption may still be a while off. Perhaps, one of the advantages established businesses have over startups in exploring DLT is the robust resources that enhance their research and development, as well as their track records and credibility in other fields of endeavors.

However, it is expected that as the blockchain ecosystem matures, more partnerships will ensue between traditional businesses and startups when they develop proof of concepts that are practical and relevant to today’s economy.


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Banks in India Push for Blockchain in Lending

Banks in India Push for Blockchain Use in Lending Business

Some major Banks in India are reportedly combining resources to harness blockchain technology in the lending business to cater to micro, medium and small scale enterprise (MSMEs) for transparency and reliability of credit data structures.

As reported by the Economic Times, a band of 11 banks to include Standard Chartered Bank, ICICI Bank, HDFC Kotak Mahindra Bank, and South Indian Bank are collaborating to launch the country’s first blockchain-based funding system for small and medium enterprises (SMEs).

Abhijeet Singh, head of business technology at ICICI Bank, a founding member-bank of the coalition. was quoted as saying, “The core objective of having such a ledger-network is to ensure transparency in credit disbursement, especially in the underbanked section.”

The credit data system in the region is a far cry from ideal; basically resulting from falsified or inaccurate credit assessments and profiling. This invariably affects the lender’s trust in such data as it exposes them to high-risk situations.

The system to be developed is described as one which will essentially allow participating banks to share data along the supply-chain through the blockchain, thereby ensuring the transparency and credibility of the data.

India has seen its fair share of blockchain activists and crypto sympathizers, however, the government through its regulatory body — the Reserve Bank of India — with its blanket ban on crypto, has made it tough for the crypto side of the industry to develop. This move by the collaborating banks, however, may prove useful to future adoption of blockchain technology in India.

No lost luster in India

Against the odds of the current crypto market, blockchain continues to prove in many ways and in different economic strata that it can ameliorate some of the major crisis ongoing in legacy systems plagued by lack of transparency and accuracy of data systems.

Perhaps Bitcoin and cryptocurrency hype is the problem after all and not blockchain. The government does frown at the idea of an unregulated cryptocurrency and is no longer keen on issuing a central bank digital currency any time soon despite claiming last year that it was considering it as an alternative to minting physical cash which weighed heavily on the government. It is now focused on structuring a formidable crypto legislature for the industry.

It does count as a win for the industry since such a blockchain-based initiative could be carried out by banks and not fintech startups, being the more dominant feature in blockchain space.

On the other hand, cryptocurrencies are also important streams in the balance for blockchain development and adoption, as they provide incentive models to keep certain blockchains decentralized — an essential quality of the technology.

The bottom line is; India may need to step up, as its indecisiveness may prove unfavorable in the long term. Just as reported by a recent Accenture report, noting that India must improve its skills pool with regards to emerging technologies.


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SBI, R3 Venture to Further Adoption of Enterprise Blockchain

SBI, R3 Venture to Further Adoption of Enterprise Blockchain

A notice released today by Tokyo-based financial service firm SBI Holdings has revealed a joint venture with R3 where it holds a major outside shareholder, to further the adoption of enterprise-grade blockchain solutions.

As per the notice, the joint venture is to be sited in Eastern Asia and will take JPY 500 million (USD 4,572,500)  to set up. Expectations include facilitating the introduction of Corda license as well as the adoption of Corda Enterprise — the consortium’s open source blockchain platform for modern-day business.

R3 is a consortium comprising of over 300 partners to include banks and regulatory agencies. It has made headway in getting its product out there, with a recent partnership with Dutch banking group ING granting the firm an operating license to use Corda Enterprise across its services.

SBI Holdings, on the other hand, has been quite active of late into digital asset platforms and blockchain industry as a whole. Bitcoin News previously reported on SBI’s recent USD 15 million investment into blockchain smart card wallet provider Tandem, being the third investment into wallet providers.

The notice further clarified on SBI’s position in expanding its investment role in the digital asset industry, which included “enhancing the ecosystem”. The financial firm has recognized blockchain as “the core technology of next-generation fintech”.

Apparently, mass adoption of blockchain industry has different phases which include the use of cryptocurrency in mainstream spending, institutional grade fintech maneuvering, and other non-fintech applications.

So far, the enterprise-grade framework takes up a bit of the fintech and non-fintech applications, making it an important facet of the industry expedient for the full maturity and mainstream adoption of blockchain-based products.

Large funds continue to flow from traditional firms into the blockchain ecosystem. This suggests that the blockchain quest may have moved from a hype driven hysteria to a conscious state of building sustainable fintech products.

Less than a week ago, Nasdaq was reportedly involved in a series B investment of about USD 20 million into enterprise blockchain platform Symbiont. The investment included Citi, Galaxy Digital, and Raptor Group as reported by Forbes which said that it “marks the latest escalation in an arms race among traditional exchanges looking to capitalize on the technology”.


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