Category Archives: DLT

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Can the Saudi Kingdom Move with the Times in a Blockchain World?

After Saudi Arabia’s first blockchain meeting, Translating Blockchain KSA 2018, the country is showing signs of incorporating new technologies to diminish the relevance of oil production.

Since 1938, the Kingdom has since become the world’s largest oil producer and exporter, controlling the world’s second-largest oil reserves with the sixth-largest gas reserves and is the only Arab country in the G20.

Also, the country still struggles with bridging the gap between history and modernity, having been projected into wealth by the discovery of oil before the Second World War. The kingdom has drawn criticism from advanced economies over various civil and social rights issues, which it intends to be based under religious laws under the absolute rule of the Saudi royal family.

This is sometimes a huge contradiction coming from a society which would rather present a more advanced and contemporary image. Saudi’s Vision 2030 is key to this change as outlined by Prince Mohammed bin Salman bin Abdulaziz:

“The second pillar of our vision is our determination to become a global investment powerhouse. Our nation holds strong investment capabilities, which we will harness to stimulate our economy and diversify our revenues… Our country is rich in its natural resources. We are not dependent solely on oil for our energy needs… our real wealth lies in the ambition of our people and the potential of our younger generation.”

In keeping with the new Saudi direction and this new image as proposed by Saudi Vision 2030, blockchain has been seen as a pivotal technology. This has resulted in the Riyadh Municipality partnering with IMB this year to strengthen blockchain in order to streamline government services and transactions. Computerized reasoning, IoT, and blockchain are fast becoming a priority in a country which wants to advance its economy and its technological footprint, while also moving away from its reliance on oil by cultivating new business models.

Takreem El Tohamy General Manager, IBM MEA has indicated that the city of Riyadh, the Saudi capital, is already planning to incorporate DLT as a means to enhance and digitalize its current record keeping through working with computerized arrangements supplier Elm.

 

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Sharp Spike in French Blockchain Growth Demonstrates Macron Vision

There has been a sharp spike in startups using blockchain technology innovations in France, and much of this is down to the new French president.

France struggled through the period under President Francois Hollande’s tenure with his popularity rating hitting as low as 4%. President Macron appears to be breathing much needed new energy into the French economy as he takes on the old protectionist guard hanging on to out-moded work practices and attacks the 36-hr working week, although his stance has ruffled feathers in the processes.

Even back in 2016, at the height of Hollande’s dismal reign as President, Macron, then Minister of the Economy, began to make positive sounds towards oncoming legislation for blockchain start-ups. He said then:

“We are going to take advantage of the Financial Regulation Ordinance, which is responsible for updating cash certificates and creating mini-cash, to experiment on the blockchain.”

A significant factor in his approach to the economy has been the way in which the new French government has addressed new technologies such as blockchain and cryptocurrencies. The new approach is already factoring in these technologies as an inevitable factor of French life.

Not only this but under Macron, France want to become a fintech trendsetter. The French government says that is currently preparing to legislate for ICOs, and recently, as reported by Bitcoin News, heavily reduced cryptocurrency tax rates. Also this month, Europe’s leading blockchain startup accelerator, Chain Accelerator launched in Paris.

Anji Ismail, CEO of Varanida, thinks this change of direction means that the French are beginning to subscribe to the American ideal of risk-taking rather than worrying about failing in business. If this is true, then it comes very much from the top with Macron exuding a confidence seldom seen at the heart of the French government in recent times. The risk of failure has caused many a French entrepreneur to balk at the final hurdle, Ismail suggests, an emotion little felt by their American counterparts when it comes down to business. To fail in American business is to learn.

The French government, according to Ismaol, given the right set of circumstances would see unlisted securities on the Paris Bourse. The Cabinet has already passed legislation that allows the transfer of ownership of certain financial securities using blockchain storage as a DLT.

France’s forward-thinking position was made clear recently when the French Minister of Economy and Finance, Bruno Le Maire gave blockchain his official green light. He said:

“The use of this technology will allow fintech and other financial players to offer new solutions for securities trading – faster, cheaper, more transparent and more secure solutions.”

Perhaps less fear and more energy is the new French approach to business. Time will tell.

 

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7 Banks to Form Trade Finance Blockchain Platform in Hong Kong

Seven banks including Hong Kong’s banking regulator are to launch a trade finance platform this September using blockchain.

The platform is reported to be one of the largest government-led cross-bank cooperation globally. It will include UK banking giant HSBC and Standard Chartered PLC. HSBC is the seventh largest bank globally by assets and the largest in Europe; Standard Chartered is a London-based bank with businesses across Asia.

Other banks involved are said to be one of Australia’s big four, ANZ, and four Asian banks, BOC Hong Kong Holdings, Hang Seng Bank, Bank of East Asia Ltd and Singapore’s DBS Holdings Ltd.

The financial sector has been increasingly under the microscope both by 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 in 2018.

The cross-bank project has been proposed to alleviate exactly some of these institutional operating issues, as Howard Lee deputy chief executive of the Hong Kong Monetary Authority (HKMA) explained. The main focus will be the digitalization of documentation and automating processes. Lee added that the group will want to “link up with other trade platforms in other jurisdictions to further facilitate cross-border trades”.

It appears that banks, at one time shunning blockchain due to in part to its connection with Bitcoin and Ethereum, are coming around to seeing the advantages of integrating the technology into upgrading financial systems.

The multi-bank platform will not be the first official blockchain encounter for HSBC. Along with Dutch giant ING, the two banks are reported to have made the world’s first trade finance transaction using blockchain earlier in May.

In China, The Shanghai Stock Exchange (SSE) published a research paper on Tuesday, which analyzed the use of DLT in various stages of a security transaction. The SSE is one of the two stock exchanges operating independently in the People’s Republic of China and is the world’s third-largest stock market by market capitalization.

 

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Can Blockchain Impact the Future of Real Estate?

With increasing reports of both Bitcoin and Ethereum being used to purchase property, it appears that digital currency is finding its place in the Real estate sector.

Although a recent Bitcoin News report illustrates that some banks are not prepared to allow customers to use mortgage equity to purchase cryptocurrencies, it is clear that real estate agents are not adverse to taking investors’ digital funds in exchange for bricks and mortar.

A recent article by the Washington Post revealed that in the US, a Miami penthouse listed at the time for 33 Bitcoin carried the stipulation that the client would not take any other form of currency. In the UK buying property using Bitcoin is far rarer. In fact, Bitcoin News recently reported that a Harris survey revealed that 27% of male millennials considered Bitcoin to be a better long-term investment than buying a property, assuming that they were even able to get on to the housing ladder.

It appears that buying property using cryptocurrency is more limited to groups that have made substantial profits trading the digital currency; the crypto “nouveau riche.” In the US the buying of real estate using currencies such as Bitcoin is far more widely accepted and new concepts are beginning to facilitate sales in innovative ways.

Longstanding real estate and private equity firm, Muirfield Investment Partners, have joined with the company in an attempt to use blockchain to introduce more liquidity to the real estate market by developing a token which can be freely traded, whilst remaining compliant with US security laws. Thomas J Zaccagnino, Muirfield’s founder, commented, “By tokenizing a real estate investment vehicle, investors are for the first time, able to freely trade their ownership on regulated secondary exchanges.”

Blockchain itself has become a boon to the industry with numerous applications. According to the Washington Post, in 2016 Goldman-Sachs projected a $2-$4 billion savings in the title insurance industry as a result of using blockchain to verify and store land titling. This said blockchain is not the only solution to finding cheap, speedy, solutions to recording land and property ownership.

The Post suggests that DLT can’t detect a forgery nor will it detect a foreclosure issue, which effectively means that such titles can’t be marketed, indicating that despite DLT’s effectiveness in real estate transactions, it does have its limitations, in that it can’t necessarily offer buyers title insurance.

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Binance Announces Plans to Create First Decentralized Tokenized Bank in Malta

Binance in Malta is backing plans to create a blockchain-based bank with tokenized ownership, according to Crowdfund Insider.

The world’s second largest crypto exchange had already announced its move to Malta in March and has set up a bank account on the island, thus demonstrating that Malta is moving ahead with industry-friendly regulations to facilitate its plans to become a major cryptocurrency hub.

The blockchain-based financial institution which will be known as the “Founders Bank” will become the world’s first decentralized, community-owned bank, and participants will be issued with “legally binding equity tokens” in return for their investment.

The blockchain-based equity fundraising platform Neufund will issue the tokens. The German-based company which has a base in Malta but retains its HQ in Germany, is said to have raised USD 11 million from well-known investors in 2017. Binance and Neufund are also reported to be partnering with one of Europe’s main stock exchanges later this year, although no names have been thrown into the hat as yet.

Binance Tweeted on its plans for the new bank:

“Founders Bank will become the first stable high-tech banking solution, not only focused on founders but also owned by them, bridging the gap between traditional financial world and innovative crypto companies.”

The bank’s first step will be to seek a licence from Maltese regulators. Malta has already approved three DLT and crypto-related bills which pave the way for new businesses to the island. Silvio Schembri, Junior Minister for Financial Services, Digital Economy and Innovation within the Office of the Prime Minister of Malta, stated that the island “is honoured to be chosen as the location of the first global community-owned bank”. He added:

“We welcome Founders Bank with the utmost excitement and hope that their Fintech solutions will attract even more world-class companies to our Blockchain Island.”

Schembri is known for being the leading advocate on Malta for pursuing an innovation economy build on blockchain and Fintech development.

Binance also recently opened a new crypto-fiat trading platform in Uganda, which supports the Ugandan shilling, alongside major cryptocurrencies.

 

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Shanghai Stock Exchange Looks to DLT to Further Regulation

The Shanghai Stock Exchange (SSE) published a research paper on Tuesday, which analyzed the use of DLT in various stages of a security transaction, writes Coindesk.

The SSE is one of the two stock exchanges operating independently in the People’s Republic of China and is the world’s 3rd largest stock market by market capitalization. The other is the Shenzhen Stock Exchange.

The newly-released paper examined blockchain’s workability in security transactions, such as pre-trading customer registration, securities issuance and trading, and post-trading settlement.

The paper highlighted areas where DLT operating in the country’s financial system was successfully adding value. It praised its successes in replacing the T+1 model, under which a transaction can only be settled one business day after an order is executed.

The SSE research paper referred to former research conducted by stock exchanges regarding DLT operating in other financial markets including Australia and Hong Kong and suggested that two areas would be particularly beneficial in China. It stated:

“A general worldwide consensus is that DLT will be a new revolution for the financial industry. The first application use cases will be over-the-counter securities issuance and trading, as well as order book post-trading settlement.”

The paper went on to point out that any potential integration at the SSE would be subject to further regulation given that it conflicts with current regulatory systems, particularly as the use of DLT would eliminate the SSE system of using a third-party intermediary as custodian and for settling post-trading transactions.

This would require establishing a new legal framework issued by regulators and central government agencies. The SSE’s findings clarified this need for further laws to govern the development of DLT in its sector stating:

“Regulation should adapt to the evolving technology. We suggest regulators treat the topic of DLT as a crucial study area moving forward… in order to develop a solid regulatory framework for embracing the financial innovation.”

 

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Chinese Hodlers Now Estimated to Have Reached 3 Million Despite Ban

Speaking at “New Financial Trends and 2018 Financial Technology Summit” in Beijing, researcher Li Honghan estimated that are now over 3 million investors in China holding on to cryptocurrency assets, reports Bitcoin.com.

Li Honghan, a researcher with the International Monetary Institute of Renmin University of China was discussing the current state of cryptocurrency in the country.

It appears if Li’s figures are correct then China’s prohibitive stance on the trading of cryptocurrencies have had little effect. China is still a major Bitcoin player with 50 to 70 per cent of global mining taking place in the country, although this number is not comparable with its far more significant figures before the ban was actually put in place.

Given that China is not one of the 91 countries worldwide that is unrestricted in trading in cryptocurrency, it does demonstrate a large following despite the legal ramifications that go with ownership. Li’s estimates would suggest that 0.2174% of Chinese citizens own bitcoin.

Li has predicted that DLT will revolutionize many aspects of the financial sector in the future, a view held by many financial experts in the country. Recent comments by China’s president Xi Jinping that the “blockchain was 10 times more valuable than the internet” clearly highlights the direction that the Chinese government is taking regarding the future of blockchain technology in the country.

In other news from China, a leak of an audio recording reported to be of Li Xiaolai, a renown Chinese Bitcoin tycoon has been released, attacking China’s crypto sector, calling some of the industry’s leaders ‘cheats’ and ‘liars’.  Xiaolai, the founder of Bitfund, also attacks a number of cryptocurrencies and refers to some investors as inexperienced traders, claiming that prominent crypto figures should amass a large social following during a bear market then capitalize during bull upturns.

Jon Ostler, CEO of finder.com has said that “China lifting its ban on cryptocurrency would likely have a significant impact on prices…It is such a big potential market that even murmurings of the ban lifting would probably push value up in the short-term.”

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40% of UK’s Latest Regulatory Sandbox Companies Blockchain, Crypto Related

Out of the 29 firms released by the UK Financial Conduct Authority (FCA) this week to the fourth cohort of the regulatory sandbox, ten are blockchain and crypto asset firms, according to the EconoTimes.

The FCA’s regulatory sandbox was created so that prospective companies would be able to test innovations and services in a live, protected, business market. The current round is the fourth since the project was announced in 2016.

As this latest round illustrates, 40% of the fourth round companies accepted are distributed ledger technology (DLT) or blockchain-based startups. Also, the regulator has accepted a small number of crypto-assets related firms as the FCA suggested that they are “keen to explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks.”

Christopher Woolward, executive director of Strategy and Competition at the FCA, explained further why it saw fit to include crypto-assets firms in this year’s fourth round:

“…we can see significant use of distributed ledger technology (DLT), some experimentation with crypto assets which will help inform our policy work and propositions aimed at helping lower-income consumers.”

The DLT and crypto assets-focused startups selected for the fourth cohort include BlockEX, Capexmove, Etherisc, Fineqia, Fractal, Globacap, Natwest, Token Market, Tokencard, Universal Tokens, World Reserve Trust, 20|30.

Due to the enormous growth in interest in new crypto assets like Bitcoin, the UK government created a Cryptoassets Taskforce earlier this year, consisting of the Treasury, Bank of England and Financial Conduct Authority.

The FCA does not regulate cryptocurrency exchanges, brokers or businesses, which gives them a gray area status and some freedoms. However, it has been pushed by the British Cryptocurrency Trade Association, the UK’s first self-regulatory blockchain industry trade body, to begin regulating the industry.

The United Kingdom was ranked fourth out of 48 other “crypto-friendly” nations, according to a study made by Blockshow Europe this year in which the UK had been praised for its “importance as a European hub for cryptocurrencies”.

 

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Bank of Finland’s FUD Main Feature of New Report on “Fallacy” of Crypto

The Bank of Finland has released a paper explaining why the country’s central bank regards cryptocurrencies as a “fallacy”, writes Cointelegraph.

The paper, reading like a film title and dramatically called the ‘The Grand Illusion of Cryptocurrencies’, was written by Aleksi Grym, whose improbable role at the bank is ‘Adviser on Digitalization and Head of the Digital Central Bank process in the Financial Stability and Statistics Department’.

Grym’s paper suggests that DLTs are no different from other record keeping systems and cryptocurrencies as they demonstrate how poorly understood money is today as a concept. It claims that they muddle “our sense of fact and fiction”.

“For all intents and purposes, that ledger is a centralized ledger. The fact that there are multiple synchronized copies of it, distributed across a network, is irrelevant, as each one has the same data,” it argues.

He adds, erroneously, that cryptocurrency is “unrelated to the fundamental characteristics of money”, as money functions as a unit of exchange, and has a store value which digital currencies such as Bitcoin don’t.

The report bases its findings on several studies of cryptocurrencies conducted by Finland’s central bank, siding with the “speculative bubble” theory; a term used by many Bitcoin detractors elsewhere to argue against its adoption. Grym adds that a CBDC would be tantamount to a bank account at the central bank. Money, he argues, is created from “liquidity transformation”, not thin air.

The article reflects some legislators view that cryptocurrency is used for criminal activity or is security against “real or imagined” state oppression, or even simply the thrill of trading.

Bitcoin and digital currencies have had numerous detractors over past years, but perhaps not so blatantly at the state level, with perhaps the exception of China. Popular media has played a fundamental role in this.

As Gareth Jenkinson, writing for Cointelegraph, recently pointed out, accuracy, for one thing, is out of control often allowing subjectivity taking over its place. In this way, he writes, “cryptocurrency has forced its way into the minds of the masses” but usually through the popular media, damaging the fundamental truths about Bitcoin and cryptocurrencies in the process:

“The spin, positive or negative, will be dependent on how the sector grows and addresses its own shortcomings in order to build trust and understanding in the global community”.

 

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The Evolution of Bitcoin According to Darwinism: No ‘Eureka Moment’

The development of Bitcoin and other cryptocurrencies can be viewed with some clarity using Darwinism and evolution as an explanation, writes Shanna McEachern in the Global Banking and Finance Review.

McEachern refers to the massive numbers generated by cryptocurrency, seemingly out of nothing, to predictions that the digital currency market will evolve to USD 2 trillion by the end of this year. She asks, “is this the natural step in the evolution of capital markets?”, or are they in danger of extinction following in the dinosaurs’ unfortunate demise in another era of giants.

As McEachern points out, evolution occurs through the survival of small, inheritable mutations that render a species better able to survive and flourish through slow change and impact of initial change makers. There is no “eureka” moment, she claims. This is true as, over time, careful research ideas are developed, considered, tested and finally released into the public domain. Such was the case with Newton, only releasing his theories on gravity 20 years after he commenced his research.

It was exactly in this way that Bitcoin was born, emerging from the technology of DLT behind it after years of development. Although official records will inform that Bitcoin was invented by an unknown person or group of people using the name Satoshi Nakamoto and released as open-source software in 2009, it came from a much earlier seed. Some of the more colorful commentators even claim that it was created through rogue AI but if it was one person’s brainchild, it was the result of much time, thought and development before its exposure.

McEachern draws an interesting analogy to woodpeckers making holes in trees, later inhabited by another bird species, as an example of “ecosystem engineers”, as one species supporting one another without intent to do so; a kind of natural by-product. She draws this comparison to Bitcoin, fundamentally changing, in this case, a financial environment, which in turn benefits other aspects of it through DLT and blockchain, thus creating another evolving world.

“From Bitcoin, the ecosystem thus evolved to include a diversity of other species: from thousands of other cryptocurrencies to coin-based economies and blockchain technologies,” McEachern argues.

Where does this leave Bitcoin in the evolution of things? Returning to the dinosaur analogy, is there a financial cataclysmic event followed by its evolution facing dramatic closure or is it to evolve again into something even more innovative born from the original idea? McEachern indicates it could more than a beginning than an end, as social interaction and the desire for development and innovation perpetuates change:

“…just as molecular and organismal interactions bring novelty in the world of genetics, our media and social interactions (even when they feel redundant) bring innovation in modern ideas and technologies.”

McEachern concludes that it will be institutions that play the major role in cryptocurrency’s survival by investing in the “wealth” of concepts created by its evolution.

 

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