Category Archives: Blockchain

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What Lies Ahead for Blockchain and Cryptocurrencies, Post-Brexit?

A Britain-based CEO has suggested that post-Brexit, cryptocurrencies will benefit the UK as they have key advantages over fiat currencies.

Danial Daychopan of Crypto company Plutus, suggests that due to the pound and euro’s interdependence and the fact that they are both based on other currencies,  allows decentralized cryptocurrencies to offer a “variable and stable alternative” for both consumers and businesses in the post-Brexit UK.

The current lack of direction in Brexit negotiations has led some people to believe that a period of instability is a possibility as both Europe and the UK race towards next year’s deadline. Daychopan sees instability and lack of trust in governments and the global financial system as key to the success of digital currencies. He claims:

“…in economies that aren’t stable, we’re already seeing digital economies developing and thriving. We’re approaching a period of instability and people need to understand that cryptocurrencies are going to be a force for good, not just tokens to be speculated upon.”

In terms of where cryptocurrencies sit once Britain’s departure from the EU becomes a reality, it is still unclear how Brexit will affect the future of blockchain and cryptocurrencies in both zones. The EU including the UK, with the exception of only 6 states, has signed up to the EU Blockchain Partnership which will promote the future exchange of expertise in order to launch EU wide blockchain-based applications across the single digital market.

The EU has called for cryptocurrency regulation at both European and G20 level and would clearly like to regulate the industry from Brussels, a further possible complication for the UK. As current members of the “EU Blockchain Observatory Forum” the UK has already benefited from membership with the EU’s fintech market, now valued at $6 billion.

Kay Swinburne, Member of the European Parliament (MEP), argues that bodies such as the EU Blockchain Observatory Forum are not essential to the UK advancing its fintech impact after Brexit. The UK, with its new crypto haven Gibraltar, having advanced significantly down the cryptocurrency and blockchain route, may be well placed to withstand significant damage to its fintech markets on withdrawal.

As the UK prepares to leave the EU it is also reportedly planning to create its own crypto regulations before 2019. The EU has already passed its own blockchain resolution for a post-Brexit Europe in order to remain a global fintech hub.

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Second Crypto Funded School to Be Built in Rwanda

An NGO and a cryptocurrency platform are planning to construct a school in Rwanda using cryptocurrency funding.

The non-profit organization, Zam Zam Water, in a cooperative project with Peer-to-Peer finance platform provider Paxful is aiming to raise $100,000 for an education center. The project will be implemented in Rwanda’s Bugesera District, complete with full-time teaching staff.

The school building project in Rwanda is not the first of its kind in the region. It follows a similar project which saw the opening of a school for children aged three to six. The new school will be built to complement the first school by catering for children aged six to 15.

The raising of estimated building costs of up $100,000 has been started for the new project with a donation of $20,000 from Paxful. The remaining funds will be raised through online crowdfunding. Cryptocurrency donations via Bitcoin, Bitcoin Cash, Ethereum, Litecoin and Dash will be matched by the crypto platform’s BuiltWithBitcoin initiative until the necessary funds have been raised. Ray Youseff, CEO at Paxful commented:

“The BuiltWithBitcoin initiative is a testament to the growing power of cryptocurrency…We firmly believe in its capacity to improve lives and make the world a better place.”

The second of the two schools will be larger, almost double the size of the first with six classrooms and six full-time teachers. The school will have its own cafeteria, potable well, and sustainable solar panel power system

Yusuf A. Nessary, Founder and President at Zam Zam Water sees education as fundamental in moving countries like Rwanda forward, suggesting:

“Education is a crucial tool for helping those in developing nations increase their standard of living, so we are very pleased to partner with Paxful to serve these bright young students”, adding, “This is only a small glimpse into what we can and will continue to do with the power of cryptocurrency.”

Cryptocurrency is increasingly being used to fund humanitarian projects in developing countries around the world, particularly on the African continent. Global micro-leasing marketplace Powerhive announced a partnership this year to offer decentralized solar power to poorer nations.

AfricaPowerhive will be the beneficiary of funds generated from the sale of Sun Exchange’s SUNEX rewards tokens through public sale. The money will then be spent on developing solar-powered mini-grid projects in Sub-Saharan Africa. The project will allow for the solar panels used to be sold later to Sun Exchange members who will, in turn, own the cells used in the projects and subsequently profit from a sustained period of “solar-powered money”

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US Senate to Review Blockchain Energy Efficiency

The US Senate is preparing for another blockchain hearing next week, this time to discuss its energy efficiency and implications.

The 23-member Committee on Energy and Natural Resources will hold the “Energy Efficiency of Blockchain and Similar Technologies” hearing on 21August to discuss the issues and practical implications of its widespread adoption on the energy sector.

A specific focus will be placed on the potential increase in energy consumption and subsequent electricity price rises, with the discussion based on estimating the most likely outcomes in the near future as the technology evolves.

The committee will also consider similar decentralized technologies, focusing also on the cybersecurity possibilities for energy industry applications. It will debate considering how blockchain could, in fact, be used to improve the security of computing systems that supply energy across the country.

This appears to be the first committee meeting from the Senate to explicitly discuss blockchains role and future in the energy sector.

The entirety of the hearing will be broadcast live on the committee’s website via webcam, with witness testimony also available on the site from the start of the hearing.

Renewable energy in blockchain

While Bitcoin has received criticism over the accused unsustainability of the mining process as was the case in Washington State recently, there is a significant movement in the community to develop a climate responsible solution to the problems of energy consumption.

A Lichtenstein-based startup called Solareum has developed a decentralized marketplace platform for renewables, with an aim to make solar energy more readily available and affordable to people internationally.

Another blockchain project, HashByte, allows users to rent hash-power from companies to limit wastefulness, as well opening up its own centers across Europe that utilize only renewable energy in their operations.

Unfortunately, the Senate has a poor record when it comes to staying fully up to date and informed on the most recent cases in technology as recently seen in the now notorious interview with Mark Zuckerberg, so blockchain advocates can only hope they have done their research this time.

 

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Hong Kong Unis Scoop Grant of $20 Million for Blockchain Research

Hong Kong universities are set to receive a USD 20 million grant through government funding for research and development projects in blockchain and fintech.

In an effort to drive blockchain into administrative and financial sectors, Hong Kong is asking its universities to delve deep and come up with answers. The major beneficiaries of this round of specific funding are Hong Kong University of Science and Technology (HKUST), along with the Chinese University of Hong Kong (CUHK), and the City University of Hong Kong (CityU).

Through the project, along with research and development tasks, the universities are also required to report on Hong Kong’s current progress in becoming a fintech regional hub. Professor Tan Jiayin, known for his previous research work entitled ‘Strengthening Hong Kong’s Strategic Position as a Regional and International Business Center’, is to head up the multi-university research project.

Hong Kong’s blockchain push is an attempt to catch up with some of the more fintech proactive countries in the region such as Singapore and Japan. Updating aspects of the financial sector have recently become a focus for private companies and government bodies, who are beginning to regard blockchain technology as a way of modernizing record keeping and speeding up payments, in what is often described as an overly paper-driven industry, particularly given the technologies available today.

Work such as professor Jiayin’s which has already explored blockchain technology, network security, and artificial intelligence learning, as it relates to the current economic climate, will be a boost to the shared university partnership. Jiayin has asked Hong Kong’s banking community to participate in the research as part of the grant relates to the creation of digital currencies, although these have been looked on unfavourably by HK banks in the past, discounting the idea of a CBDC. In an announcement on 30 May, the Hong Kong Monetary Authority (HKMA) decided against the idea.

However, the HKMA announced the launch of a blockchain trade finance solution in partnership with 21 regional banks last month. Also, seven banks including Hong Kong’s banking regulator are to launch a trade finance platform this September using blockchain, including HSBC and Standard Chartered. Notably, HSBC’s Monex digital currency concept in 1998 was reportedly the professor’s brainchild.

The push towards integrating blockchain into Hong Kong’s administrative and financial sectors is not the first after a government plan was released in 2017 to produce a blockchain-based trade financing system to increase settlement efficiency and reduce fraud. This after a heightened level of concern around the cryptocurrency space due to high levels of fraud.

Research recently revealed that the percentage of financial crime involving cryptocurrencies was in fact comparatively low, when compared to other methods of, largely organized, crime in the city.

 

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Indonesia Knowledge-Sharing Blockchain Hub Launches in Jakarta

The Indonesia Blockchain Hub was launched in Jakarta this week, described as a center for the sharing of industry knowledge, both locally and internationally.

The centee was opened in partnership with the Indonesia Chamber of Commerce (KADIN), Indonesia Blockchain Association (ABI), BEKRAF and HARA, an agritech startup.

The ABI has become instrumental in promoting blockchain in the South East Asian country through accelerating understanding, utilization, advancement and technological inventiveness in relation to the fourth industrial revolution. South East Asia’s largest economy is seeing both public and private sectors investing in applying blockchain technology to address issues surrounding the storage and application of data within the country in a number of sectors.

Banks for one, are looking at DLT with more interest, as discovered by a survey published last year indicating that about 80% of financial institution executives see blockchain impacting future markets. Rico Ustahavia Frans, director of digital banking and technology at Bank Mandiri, Indonesia’s second-biggest bank by assets, said it was currently looking at applying blockchain, once regulators had formulated guidelines for banking and financial institutions.

The launch of the new hub has to be a feather in Indonesia’s cap and signals its intent to become a significant player on the world stage in adopting the new technology. HARA CEO and co-founder of the hub, Regi Wahyu, sees blockchain being integrated into a range of areas of Indonesian society:

“We believe that data transparency as enabled by blockchain technology will help the bottom of the societal pyramid to improve their welfare… [which] will lead to improvement in business and economic performance. Based on HARA’s experience… there remain challenges in explaining the socio-economic impact of blockchain for business, regulators, and the society in general.”

Wahyu added that there is a need in the country for a platform which can extend blockchain knowledge in the community, one of the aims of the new hub. The Indonesia Blockchain Hub along with the IBA is now one of a growing number of bodies set up to support the dissemination of blockchain awareness in the country and share information. Another is the blockchain-focused coworking space Blockchain Space.

A number of government institutions, including the postal service, now utilize blockchain solutions across the country as its deployment spreads to different sectors of society.

 

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South Korean Crypto Circles Criticize Tax Perks Exclusion

The recent decision to exclude South Korean cryptocurrency exchanges from the proposed tax benefits for “New-Growth Technologies” has been met with significant backlash from three leading blockchain associations.

Controversial proposal

The South Korean Ministry of Small and Medium-sized Enterprises (SMEs) has ruled that cryptocurrency trading platforms are to be treated in the same ilk as entertainment or gambling businesses and others. Therefore, they will not be subject to the special tax relief that had been proposed earlier in July.

In total, 157 technologies across 11 areas were included in the “new-growth technologies”. Quantum computing, commercialization facilities and blockchain technologies were part of this list.

The announcement came from the “Revitalization Support System for Investment Promotion” that took place on 18 July. A point of contention, however, was that government wasn’t sure where blockchain technologies were concerned, due to initial coin offerings (ICOs) and digital currencies still being treated as gambling.

SMEs or venture businesses included in the Restriction of Special Taxation Act found themselves relishing in tax cuts of anywhere between 50-100% in their first five years of operation.

Later on, in July, the government concluded that cryptocurrency exchanges did not fit within this new taxation law for SMEs and proposed for the amendment exclude exchanges from the special tax rate. The government justified this saying, “The virtual currency transaction brokerage was not effective in generating added value.”

Backlash

This proposal is now subject to much scrutiny among blockchain groups in South Korea. On 10 August, the Ministry of SMEs formally announced that it would be amending the tax laws and confirmed the aforementioned rationale to exclude cryptocurrency exchanges from them.

The Korea Blockchain Association, Korea Blockchain Industry Promotion Association and the Korea Blockchain Startup Association have banded together to combat the decision in strong opposition.

In a letter to the ministry, the associations have accused the government of stifling innovation within the blockchain industry, arguing that the change is “against the regulatory innovation trend of President Moon Jae-in”.

They wrote, “If this legislation is implemented, domestic companies with the second largest number of blockchain technology patents after IBM will be excluded from classification as venture businesses just because they operate a cryptocurrency exchange.”

Adding, “The investment in research and development by blockchain technology-based companies will be hindered. As such, companies that are not able to receive policy benefits and tax incentives will either fail or move overseas.”

Until 4 September, the ministry’s proposal will be under review; it can be expected that South Korean cryptocurrency exchange operators and blockchain associations will be challenging this proposal until then.

 

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Hungary Working on Crypto Regulatory Framework

Hungary is reported to working on a framework to regulate cryptocurrency trading through a joint workgroup set up for this purpose.

The county is currently far from being a crypto haven with steep taxation and a lack of recognition by the country’s ministry of finance and banking system. Despite this stance, the country, like a few others, dabbled with a state cryptocurrency in February due for its Swiss ICO back in March.

The blockchain-based cryptocurrency, the Korona, introduced by the Korona development team and led by Jean-Marc Stiegemeier, a former Wall Street financial adviser, seems to have disappeared from the media as a whole. It appears that this new state crypto didn’t quite make the 26 March deadline due the ICO raising insufficient funds.  The most recent position regarding crypto in Hungary is clarified by this recent ministry statement:

“Hungary is currently looking into regulating crypto instruments, and the central bank, the tax authority, the finance ministry and other authorities have set up a joint workgroup to evaluate legal, economic, law enforcement, money laundering and other aspects of cryptocurrencies with an eye to introducing more detailed regulation.”

Taxation of cryptocurrency in Hungary at 15% is in line with many other countries such as France, who recently revised its rates, with a reduced rate if trading is carried out as part of a business venture, in which case it drops to 9% as corporate income tax.

Hungary has rigid tax laws and because of this nationals latch on to various schemes to get around taxation requirements such as investment schemes which reportedly also carry tax burdens and legal risks. As regards cryptocurrency, there is no tax on gifts or loans so working these into cryptocurrency transactions is reportedly an option for investors.

INLOCK describes itself as a protocol enabling cryptocurrency holders to use their digital assets as collateral for a fiat loan in a safe and regulated environment. Company CEO Csaba Csabai, explains:

“According to current law in Hungary, as a consequence of selling or exchanging cryptocurrencies is considered a taxable event… However, using these digital assets as collateral for a loan to finance a temporary liquidity problem is not. The platform we are building is working towards this concept enabling cryptocurrency holders to access the purchasing power of their holdings without being punished by the extremely high tax rates.”

It remains to be seen if the new workgroup is able to smooth the way for investors and traders in the months to come.

 

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China Aerospace Industry Turns to Blockchain for Invoicing Issues

The Chinese State Aerospace Industry is looking to utilizing blockchain technology to update some of its electronic invoicing.

According to a government announcement posted by State Administration of Science, Technology and Industry for National Defence, China Aerospace Science and Industry Corporation Ltd will be fulfilling state plans for using blockchain for invoicing for tax purposes.

The government website article reportedly suggested that 1.31 billion electronic invoices were circulating its system in 2017 and forecast that this would rise to 54.55 billion by 2020. The article claims that the government has issued some 2.5 billion such invoices to date which cover such services as delivery, filing, inspection and tax reimbursement.

With a system which appears to be severely overburdened, it appears to be also suffering from other issues such as over-reporting along with false reports and traceability problems. China Aerospace’s blockchain system for electronic invoices is designed to overcome some of these administrative hurdles and what it has called “pain points” and streamline tax data sharing making it more efficient and cost-effective.

In May, the State Administration of Taxation in China’s fourth-largest city Shenzhen teamed up with tech giant Tencent to deal with a similar issue relating to tax loopholes and accountability. That blockchain system targets efficient circulation and issuance of tax invoices and protects the authenticity of legal documents.

In other news from China, Ripple has suggested that it is targeting the country with a DLT solution to speed up cross-border payments. Jeremy Light, vice president of European Union strategic accounts at Ripple confirmed:

“China is definitely of interest, it is definitely a target… China is definitely a country and region of interest.”

Ripple’s interest in the region is no secret after it struck a deal earlier this year with Hong Kong-based financial services firm LianLian International targeting cross-border transactions.

 

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South Korea’s $4.4B Innovation Plan Gives Blockchain Fiscal Support

The South Korean Ministry of Economy and Finance has announced that the government will be investing KRW 5 trillion (USD 4.4 billion) into innovative industries in 2019, including blockchain technology.

Major increase

The press release from 13 August, ‘Growth through Innovation Investment Plan’, reveals the rationale behind a KRW 2 trillion increase in investment from 2018 to 2019. Furthermore, the future plans to spend KRW 9-10 trillion over the next five years.

It writes, “The government decided to focus on two platforms, a digital platform for big data analytics and a supply chain for hydrogen fuel cells, and announced four projects, including an education project to develop qualified human capital needed.”

The developing education program intends to generate a qualified workforce of at least 10,000 strong over the next five years.

The big data facet of “platform economy” investment will focus on promoting big data, AI and developing blockchain technology. The government will financially support small business to utilize big data and push the “development of digital trade platforms for exporters”.

Future-proof

Headlines emerging from South Korea often point toward its relentlessly prudent planning for the Fourth Industrial Revolution (4IR). There is plenty of talk across the globe surrounding the technologies such as AI, the Internet of Things (IoT) and blockchain, that are set to completely disrupt and advance the world we know, but none seem quite as proactively prepared as South Korea.

In recent months, the South Korean government has put out several notable blockchain related projects that give focus to blockchain technologies. A blockchain development program for the younger generations was recently announced, as were recommendations for a blockchain-based stock market, a blockchain-based proposal evaluation system and a bank-backed ID system that utilized blockchain are just the tip of the iceberg.

Recent headlines

Most recently, the self-governing province of Jeju island in South Korea made proposals to turn the island into a blockchain and cryptocurrency development hub. The governor of the island has requested that the South Korean government form a specialist panel to strategize this initiative.

Special tax rules for “New-Growth Technologies” were also announced recently, this would be to incentivize the establishment of innovative startups across many technological fields including blockchain.

However, it had previously been reported that cryptocurrency exchanges would not be included within this new tax law. On 13 August, a press release from the South Korean government confirmed that this would be the case, writing:

“The Small and Medium Venture Business Department [of the MSS] has no intention to regulate cryptocurrency trading and disclosures (ICOs), but as problems such as speculation emerge, cryptocurrency exchanges are not a target for the government to encourage as a venture enterprise.”

 

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South Korea Plans Special Crypto Zone Status for Jeju Island

The South Korean island of Jeju sees itself as a potential crypto haven and has requested that the government allows it special crypto zone status.

The island’s governor made the request at a meeting with Kim Dong-yeon, Korea’s finance minister and deputy prime minister for the economy, and other government officials in an attempt to place the island at the forefront of South Korea’s crypto economy.

Jeju Province, officially Jeju Self-Governing Province, is one of the nine provinces of South Korea. According to Wikipedia, the province is situated on and conterminous with the nation’s largest island of Jeju, formerly transliterated as Cheju, Cheju Do, etc., or known as Quelpart to Europeans.

Governor Won Hee-ryong proposes making the island a hub for the development of blockchain and cryptocurrency technology and has requested that the South Korean government form a panel of specialists to plan a strategy to boost its blockchain profile. At a meeting last week, the governor commented:

“For Korea to become a leader rather than a consumer of this new global industry, we need to quickly allow [the operation of] blockchain and cryptocurrency [firms].”

The request comes on the heels of a statement by central government on Monday that it plans to spend USD 4.4 million on eight tech sectors it regards as critical, citing self-driving cars and smart factories, with an emphasis on blockchain, big data, and artificial intelligence. This spending could increase to KRW 10 trillion over the next five years according to Kim Dong-yeon. If these reports are accurate, then the government would need to train 10,000 specialists to service these new projects.

The ministry said, “The measures will help facilitate the platform economy, which in turn will help speed up innovative growth.”

It appears that the request by Jeju may not be an accident coming so quickly after the government statement of extra funds targeting new technology. Governor Won’s desire to create “Jeju Free International City” is very much in keeping with the government’s drive towards regulating blockchain so that becomes fit for purpose, freeing up current restrictions.

Moves towards deregulating ICOs in South Korea is never far from the crypto news in the Asian techno hub, with announcements in June that Korea’s Financial Convergence Association had plans to build its own blockchain hub.

A startup fund is planned for the end of 2018 with Seoul talking the talk, promising that it plans to use “drastic measures to ease regulations that have been blocking new industries and technologies from moving forward”.

 

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