Jul 052017
 
Central Bank of China In Brief China's central bank has developed its own cryptocurrency, which is now being tested. Cryptocurrencies have the potential to not only benefit China, but the rest of the world, due to their basis in blockchain. Benefits of Digital Currency China’s central bank — the People’s Bank of China — has developed a prototype of a cryptocurrency that it could end up in circulation in the near future. It would be introduced alongside the China’s primary currency the renminbi (also called the yuan). China will be simulating possible scenarios and running mock transactions using the cryptocurrency with some commercial Chinese banks.  Click to View Full Infographic The potential benefits of developing a digital currency are significant, particularly in China. First, it would decrease the cost of transactions, and therefore make financial services more accessible, which would be a big help to the millions of people in the country who are unconnected to conventional banks. Second, as it would be supported by blockchain, it has the potential to decrease the rates of fraud and counterfeiting, which would be of service to the government’s attempts to reduce corruption — a key concern. Third, it would make the currency easier to obtain, which would increase the rate of international transactions, allowing for more trades and faster economic growth. The Rise of Cryptocurrencies Since Bitcoin’s humble beginnings back in 2009 (when it was only valued at around 0.0007 USD) the digital currency, and the very idea of cryptocurrencies in fact, has grown monumentally. The total market cap of cryptocurrencies on April 1st of this year was over $25 Billion. A single Bitcoin is now worth more than $2,500. Now many national economies, as China’s plan shows, are considering the idea of developing their own variant. Although China’s experimental approach to simulate a self-developed cryptocurrency’s usage is the first of its kind, other countries and institutions have made strides in that direction as well. The Deputy of Russia’s central bank has emphatically stated that “regulators of all countries agree that it’s time to develop national cryptocurrencies.” Over 260,000 stores in Japan will begin accepting Bitcoin as legal tender this summer, and big banks like Santander have announced plans to develop their own version. Cryptocurrencies have the potential of revolutionizing not only the business world, but many methods of transaction. There has already been talk of using cryptocurrencies to administer Universal Basic Incomes due to their traceability, as well as for the delivery of human aid; the potential for which was demonstrated by a (more…)
Jul 042017
 
Some Central Banks Are Exploring the Use of Cryptocurrencies By Alexandria Arnold June 28, 2017, 11:18 AM CST In a world were financial transactions are largely electronic, central banks are exploring the idea of using virtual currencies, even as cyberattacks and price swings dominate the headlines. "The central bank digital currency would be like a paper bill except digital," Dartmouth College economics professor Andrew Levin said in an interview on Bloomberg Television. For example, "it would be representing a U.S. dollar, but it would be basically free to use."     Dartmouth’s Levin tells Bloomberg TV why central banks are exploring the move to digital currencies. Source: Bloomberg Whereas credit cards charge transaction fees and interest, and paper currencies can be costly to process, digital currencies could be a "real benefit" to small businesses and consumers, Levin said. Central banks from across Europe and Asia are looking into virtual currencies. In March, Vietnam’s central bank said it was "seriously" studying the possibility of using bitcoin. The People’s Bank of China has run trials of its prototype cryptocurrency, and the Danish central bank is considering minting e-krone. But Federal Reserve Board Governor Jerome Powell said in March the U.S. central bank is not considering a digital currency. For a replay of the inaugural Bitcoin Facebook Live show launched yesterday. Skeptics have questioned whether one of the key features of cryptocurrencies — their decentralized nature — makes them a good fit for central banks. But in a recent proposal published by Levin and Rutgers University economics professor Michael Bordo, the pair said central banks could provide a secure store of value in their own digital currency. "In contrast to bitcoin, the value of the central bank’s digital currency would be fixed in nominal terms," Levin and Bordo wrote. "Moreover, the central bank’s digital currency could be implemented using an account-based system, thereby avoiding the resource-consuming ‘mining’ operations involved in generating virtual currencies like bitcoin." Source: Some Central Banks Are Exploring the Use of Cryptocurrencies – Bloomberg Share this:FacebookLinkedInTwitterGoogleTumblrPinterestReddit (more…)
Jun 172017
 
Bancor initial coin offering raises over $200 million in three hours to become the largest crowdfunded project ever DOMINIC POWELL / Friday, June 16, 2017 A demo of the Bancor protocol. Source: Bancor.network A new blockchain startup built on the Ethereum platform has become one of the highest funded crowdfunding projects ever, raising approximately $US153 million ($201 million) through an initial coin offering (ICO) in just three hours earlier this week. The startup is called Bancor, and it offers a platform aimed at making it easier for other startups and users to launch, manage, and trade their own forms of blockchain currency, known as “tokens”. These tokens are managed through the Ethereum network’s “smart contracts”, which enable self-executing contracts enforced and recorded on the blockchain. Combining these two features, the Bancor protocol offers “smart tokens”, which enable “any party to instantly purchase or liquidate the smart token in exchange for any of its reserve tokens, directly through the smart token’s contract, at a continuously calculated price, according to a formula which balances buy and sell volumes”. The ICO was intended to run for an hour, reports Coindesk, with a funding target of 250,000 ether (the main currency of the Ethereum blockchain), or around $US95 million. Due to alleged difficulties with the network, including supposed delayed transactions, the campaign was extended an additional two hours, resulting in a total of 396,720 ether or approximately $US153 million being raised. Over 10,000 investors got on board with the ICO, with Coindesk reporting the largest single purchase was $US27 million, equalling 6.9 million BNT, the token used by the Bancor protocol to fuel its new platform. This was enough to shoot Bancor into the number one spot of highest funded crowdfunds, and continues the recent initial coin offering craze, with blockchain startup Brave raising $US35 million in 30 seconds via a recent ICO. However, due to the transitory value of cryptocurrencies such as Ethereum, the true amount raised by these startups is ever-changing. With the value of ether increasing over 2800% this year alone, a $US153 million raise could be $50 million more, or less, in a matter of days. The Ethereum protocol is proving to be a popular platform for successful crowdfunds, with seven of the top 10 crowdfunding projects having been based on the platform, including the crowdfund for the platform itself. Share this:FacebookLinkedInTwitterGoogleTumblrPinterestReddit (more…)
Jun 162017
 
BREAKINGVIEWS-Review: Gold's financial fascination never dies by Reuters Friday, 16 June 2017 13:33 GMT (The author is a Reuters Breakingviews columnist. The opinions expressed are her own.) By Kate Duguid NEW YORK, June 16 (Reuters Breakingviews) – Before winning the presidency and replacing the Oval Office's red drapes with lamé, Donald Trump was lionizing the gold standard (http://bit.ly/2riEUiS). He wasn't alone. Campaign rivals Texas Senator Ted Cruz, Kentucky Senator Rand Paul and Ben Carson also backed reviving a policy that had been abandoned by the global financial system 40 years earlier. James Ledbetter's new book "One Nation Under Gold" helps explain why the outdated idea won't die. These Republican presidential contenders were not proposing sincere policies with white papers and serious co-authors. Bullion-backed bucks had been discarded for good reason: it was an impractical constraint that, even when it was the law of the land, had to be abandoned when the United States needed money for war or to combat recession. No countries in the world operates on a gold standard today; there is no consensus on what a standard would look like or how it would be implemented. And, as Ledbetter puts it: "there will never be enough gold in the world to support the U.S. economy at its current size." Yet gold, the book argues, is woven into the American DNA. It is enshrined in the Constitution which says that states may not "make any Thing but gold and silver Coin a Tender in Payment of Debts." Ledbetter chronicles two centuries of debate over the clause's exact meaning and its implications for a federally distributed currency. The California gold rush of the mid-19th century established the West as a locus of political and economic power, largely because of the immigration it brought, and the subsequent development of industry. The gold rush became part of America's founding myth, and for early settlers, evidence of divine providence. Sound money, as commodity-backed currencies are known, also appeals to an American tradition of small government. A limited supply of gold necessarily limits the supply of money a government can issue, which in theory limits government spending. Gold remains of interest to Americans not just as a basis for currency, but also as an investment. Though it pays no dividends and, unlike a company, the size of the asset will not grow, the precious metal is still popular, particularly amid economic insecurity. To (more…)