tag:blogger.com,1999:blog-51119804487647834532024-02-20T02:53:19.685-08:00TemraBITCOIN BAROMETERTemrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.comBlogger111125tag:blogger.com,1999:blog-5111980448764783453.post-70688188314829167802019-11-24T15:35:00.000-08:002019-11-24T15:35:36.343-08:00Can bitcoin purchases be traced?<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">A few months ago a <a href="https://bitnewsbot.com/irs-sends-1000s-of-fishing-letters-to-crypto-users/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="IRS Sends 1000s Of “Fishing” Letters To Crypto Users">media report</a> suggested that the United States Internal Revenue Service (IRS) had sent out letters to crypto-currency holders reminding them of their tax obligations.</span></div>
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<span style="box-sizing: border-box;">This is quite startling because prior to this revelation it had been common knowledge that decentralized <a href="https://bitnewsbot.com/transactions-as-anonymous-as-cash-are-now-possible-on-ethereum/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="Transactions as anonymous as cash are now possible on Ethereum">cryptocurrency transactions were anonymous</a> and untraceable. </span></div>
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<span style="box-sizing: border-box;">In fact, the inability to trace bitcoin or alt coin transactions is part of the many reasons some <a href="https://bitnewsbot.com/taiwan-targets-anonymous-cryptocurrency-transactions/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="Taiwan targets anonymous cryptocurrency transactions">authorities </a>were and are still reluctant to embrace privately issued cryptocurrencies.</span></div>
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<span style="box-sizing: border-box;">When <a href="https://bitnewsbot.com/tag/bitcoin" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank">bitcoin </a>was created, the vision was for it to become a peer to peer trading currency for internet based transactions, which is <a href="https://bitnewsbot.com/people-increasing-vpn-tor-use-to-avoid-media-and-crypto-censorship/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="People Increasing VPN, Tor Use to Avoid Media and Crypto Censorship">censorship </a>resistant. The idea is for trading peers to settle obligations in much the same way as they would with hard cash, only this time digital cash would be used. </span></div>
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<span style="box-sizing: border-box;">Just as cash transactions between peers cannot be traced, similarly the vision is for bitcoin or cryptocurrency transactions on the internet to be untraceable as well.</span></div>
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<span style="box-sizing: border-box;">However, according to a Coindesk report, the sources quoted suggested that the IRS may have found a way of unmasking the identities of those engaged in bitcoin transacting as well as the nature of the transactions. </span></div>
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<b style="box-sizing: border-box;">But can bitcoin purchases be traced? </b></h3>
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<span style="box-sizing: border-box;">Well according to claims made by <strong style="box-sizing: border-box;">Chainanlysis</strong>, there is an <a href="https://www.chainalysis.com/chainalysis-kyt" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank">innovative software</a> which can trace and reveal identities of those using or trading with bitcoin or other cryptocurrencies.</span></div>
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<span style="box-sizing: border-box;">According to this tech firm the software can follow bitcoin as it moves from one wallet to another, and eventually to an <a href="https://bitnewsbot.com/these-cryptocurrency-exchanges-offer-futures-markets-on-unreleased-tokens/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="These Cryptocurrency Exchanges Offer Futures Markets on Unreleased Tokens">exchange </a>where the bitcoin user will likely cash out into dollars or another currency.</span></div>
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<span style="box-sizing: border-box;">This is the point where a law enforcement agency could issue a subpoena to the exchange to release the identity of a wallet holder that cashes out. </span></div>
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<span style="box-sizing: border-box;">If this is true then this should concern bitcoin users involved in illicit activities or <a href="https://bitnewsbot.com/thailand-wants-to-use-blockchain-to-catch-tax-dodgers/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="Thailand to use blockchain to catch tax dodgers">tax dodgers</a> while the rest of users will be unsettled but not dissuaded from using cryptocurrencies.</span></div>
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<span style="box-sizing: border-box;">Cryptocurrency use will still grow regardless of advances in the technology to unmask holders of such currency. There are far many <a href="https://bitnewsbot.com/buy-hosting-bitcoin/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="Buy Hosting with Bitcoin from Top 5 Best Companies (September 2019)">more positive reasons people use cryptocurrencies</a> than just for aiding illegal activities.</span></div>
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<b style="box-sizing: border-box;">History of a failing fiat currency</b></h3>
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<span style="box-sizing: border-box;">In fact, it may be necessary to refresh the memory of the reader and give context to why cryptocurrencies emerged in their untraceable format in the first place.</span></div>
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<span style="box-sizing: border-box;">Bitcoin’s creation was a response to flaws observed with nationally issued fiat currencies. Fiat currencies are susceptible to tempering or duplication due to the flawed process of creating and distributing them.</span></div>
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<span style="box-sizing: border-box;">Duplication of a currency ultimately dilutes its value and the subsequent loss of purchasing power. A number of small countries have seen their respective currencies lose value and collapse leaving ordinary people worse off.</span></div>
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<span style="box-sizing: border-box;">The problems associated with such flaws may have reached a crescendo in 2008 following the <a href="https://www.theguardian.com/business/2008/dec/28/markets-credit-crunch-banking-2008" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="Three weeks that changed the world">cataclysmic collapse of major financial institutions</a>. These unexpected bank failures led to a global financial crisis not seen in several decades. </span></div>
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<span style="box-sizing: border-box;">Now to illustrate why a fiat currency system is flawed, the US government through the US Federal Reserve responded to the 2008 crisis by creating money from thin air as it made frantic efforts to save collapsing industrial giants like General Electric, General Motors, Ford etc. </span></div>
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<span style="box-sizing: border-box;">Hundreds of billions of dollars were created and poured into the financial system under the so-called <a href="https://bitnewsbot.com/europe-japan-and-the-drug-of-quantitative-easing/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="Europe, Japan and the ‘Drug’ of Quantitative Easing">quantitative easing undertaking</a>, a major bailout of companies to ostensibly, save jobs and the US economy.</span></div>
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<span style="box-sizing: border-box;">The untold horror of this tale was the resultant money supply growth which caused an erosion of personal savings and wealth. When money is created like that it dilutes the value of currency that is already in circulation and it did in a major way. And since there was no alternative at the time, people watched helplessly as their savings got decimated in real terms. </span></div>
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<span style="box-sizing: border-box;">It seems that the actions of a few banks that are concentrated in the New York City had affected the entire global economy. This prompted the likes of <a href="https://bitnewsbot.com/brock-pierce-explains-the-origins-of-satoshi-nakamoto/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="Brock Pierce explains the origins of “Satoshi Nakamoto”">Satoshi Nakamoto</a> and partners to propose an alternative to a fiat financial system that is seemingly centralized in one country. </span></div>
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<span style="box-sizing: border-box;">Satoshi hoped his creation would offer victims of poor economic policies and corruption an escape route should the same financial shenanigans that followed the 2008/9 recession happen again. </span></div>
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<span style="box-sizing: border-box;">However, Satoshi was also acutely aware of the potential fallout that could result from such a creation and how this would discourage even potential users from adopting his innovation. So to support this <a href="https://bitnewsbot.com/japans-virtual-currency-exchange-association-set-to-vote-on-new-voluntary-rules/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="Japan’s Virtual Currency Exchange Association Set To Vote On New Voluntary Rules">virtual currency</a>, Satoshi created an entire ecosystem that includes the <a href="https://bitnewsbot.com/what-is-blockchain-technology/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="What is Blockchain Technology?">blockchain</a>, mining, cryptography and the peer to peer network.</span></div>
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<span style="box-sizing: border-box;">It is this ecosystem that will pre-empt any attempt to censor, control or to kill the innovation while ensuring user satisfaction. Indeed cryptocurrencies are unlike anything before them hence their endorsement by some influential figures. </span></div>
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<b style="box-sizing: border-box;">Strict laws protecting central banks</b></h3>
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<span style="box-sizing: border-box;">Indeed some governments have in the past descended heavily on individuals or institutions attempting to create alternatives to national currencies. Counterfeiting and money laundering charges have been preferred against individuals creating such alternatives.</span></div>
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<span style="box-sizing: border-box;"> The chronicles of </span><a href="https://en.wikipedia.org/wiki/Giacinto_Auriti" rel="noopener" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank">Giacinto Auriti</a><span style="box-sizing: border-box;">, the late Italian legal scholar, lawmaker and advocate for privately issued currencies come to mind. </span></div>
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<span style="box-sizing: border-box;">Aurit is often quoted saying between him and central banks there is a mortal struggle.</span></div>
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<span style="box-sizing: border-box;">At one point Auriti— a firebrand critic of monopolized currency issuing—created a currency which he gave in exchange for the Italian Lira to members of his immediate community.</span></div>
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<span style="box-sizing: border-box;">However the project was ended abruptly by the Italian financial police, the Guardia di Finanza in the year 2000. Apparently Auriti‘s venture was a threat to Italy’s financial system and it had to be stopped. </span></div>
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<span style="box-sizing: border-box;">Before Auriti, another critic of currency issuing monopolies, <a href="https://en.wikipedia.org/wiki/Friedrich_Hayek" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank">Friedrich Hayek</a> – a famous Austrian economist and a winner of a Nobel Prize in the field of economics—also questioned the rationale of enforcing a central bank’s sole right to issue currency. </span></div>
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<span style="box-sizing: border-box;">Hayek is famous for making this quote,</span></div>
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<span style="box-sizing: border-box; font-weight: 400;">‘I DO NOT THINK IT IS AN EXAGGERATION TO SAY THAT HISTORY IS LARGELY A HISTORY OF INFLATION, USUALLY INFLATIONS ENGINEERED BY GOVERNMENTS FOR THE GAIN OF GOVERNMENTS.’</span></div>
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<span style="box-sizing: border-box;">Hayek said he feared that since ‘Keynesian propaganda had filtered through to the masses, making inflation respectable and thus providing agitators with arguments, which the professional politicians are unable to refute.’ </span></div>
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<span style="box-sizing: border-box;">He concluded that depriving governments of their power over the supply of money was the only way to save civilization from this flawed system.</span></div>
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<span style="box-sizing: border-box;">Both Auriti and Hayek were unconvinced with reasons often given to justify central monopoly. </span></div>
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<b style="box-sizing: border-box;">Why trace financial transactions</b></h3>
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<span style="box-sizing: border-box;">But just why do states fight very hard to protect central bank monopoly over money creation? </span></div>
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<span style="box-sizing: border-box;">Well, apparently when privately issued currencies enter circulation, central banks lose not only influence and control over the economy, but the ability to track or trace financial transactions. </span></div>
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<span style="box-sizing: border-box;">In particular, it is this ability to trace transactions that is of concern to not only to central banks but law enforcement agencies as well. Losing this ability means law enforcement agencies cannot prevent terrorists or criminals from facilitating or financing heinous crimes. Law enforcement agencies want to retain this ability at all costs it would seem.</span></div>
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<span style="box-sizing: border-box;">When authorities are vested with the ability to trace the movement of money it is only natural that this may come with an extra perk; the ability or power to veto certain transactions.</span></div>
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<span style="box-sizing: border-box;">For instance, <a href="https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_compliance.aspx" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank">the Office Foreign Asset Control (OFAC) is believed to have the ability to stop any US dollar transactions conducted via the internet</a> or through a payment platform like SWIFT. </span></div>
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<span style="box-sizing: border-box;">Unfortunately this power has been used for purposes that have nothing to do with stopping terrorists or fighting organized crime.</span></div>
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<span style="box-sizing: border-box;">Businesses and citizens of countries that are at odds with Washington have borne the brunt of restrictions imposed by OFAC as it enforces the foreign policy objectives of the US government.</span></div>
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<span style="box-sizing: border-box;">This unfair use of the ability to trace or monitor transactions naturally leads to a demand for an alternative that resistant to this kind of control and censorship. </span></div>
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<span style="box-sizing: border-box;">Moreover, when <a href="https://en.wikipedia.org/wiki/Edward_Snowden" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank">Edward Snowden</a> revealed the extent abuse as well as violation of the right to privacy by state security agencies, this further gave impetus to the movement advocating for the protection privacy and individual liberties. </span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">It is within this context that innovations like bitcoin have been promoted and popularized. <a href="https://bitnewsbot.com/what-is-bitcoin/" rel="noopener noreferrer" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;" target="_blank" title="what is Bitcoin">Bitcoin </a>users are able to transact anonymously using alphanumeric addresses which governments have hitherto been unable to crack. </span></div>
<h3 style="background-color: white; box-sizing: border-box; color: #111111; font-family: Poppins !important; font-size: 22px; font-weight: 400; line-height: 30px; margin: 27px auto 17px;">
<b style="box-sizing: border-box;">Evidence of traced bitcoin transactions</b></h3>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">The bitcoin design and protocol embodies Satoshi’s vision of digital money for settling transactions on the internet while guaranteeing privacy at the same time.</span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">Early users of this financial technology quickly understood this aspect and swiftly made a switch to this peer to peer network. </span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">However, it is this inability to know the identity of those behind the cryptocurrency transactions that has prompted some law enforcement agencies to conclude that terrorists and criminals are behind most bitcoin transactions.</span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">Indeed a number of convictions have been made of criminals who used cryptocurrencies to finance their activities and this fact is used to fight a wider adoption of such currencies.</span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">It is within this context that a quest to find the means to trace bitcoin transactions arose something which the IRS and Chainanalysis claim to have achieved.</span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<strong style="box-sizing: border-box;">However, looking back at Chainanalysis’ claims, it seems its vaunted software cannot pinpoint with accuracy the real parties involved in a transaction unless they liquidates the cryptocurrency on an exchange.</strong></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">If the trading parties do not swap their cryptocurrencies with fiat via an exchange, it means this software will not able to unmask the identities of cryptocurrency users because trading between peers is untraceable. </span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">Meanwhile as cryptocurrency utility grows and more merchants begin accepting them as means of payment, fewer users will find it beneficial to switch to fiat money.</span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">At that point peer to peer transactions which are hard to trace will increase and Chainanalysis’ software will become even less effective.</span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">Moreover, there are alternative versions to the Bitcoin blockchain which are even harder to crack. <a href="https://bitnewsbot.com/tag/monero" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;">Monero</a> and <a href="https://bitnewsbot.com/tag/zcash" style="background-color: transparent; box-sizing: border-box; color: #8224e3; pointer-events: auto; text-decoration-line: none;">Zcash </a>are two cryptocurrencies that are impossible to trace because they are designed to offer complete privacy to users.</span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">For example under Zcash transactions, a peer to peer transaction appears on the public blockchain, so it is known to have occurred and that the fees were paid. But the addresses, transaction amount and the memo field are all encrypted and not publicly visible. </span></div>
<div style="background-color: white; box-sizing: border-box; color: #222222; font-family: "Noto Sans"; font-size: 17px; line-height: 25px; margin-bottom: 26px; margin-left: auto; margin-right: auto; overflow-wrap: break-word;">
<span style="box-sizing: border-box;">Chainanalysis software cannot trace where there is no address and in any case, cryptocurrency users will simply switch to these if they believe that bitcoin has become compromised.</span></div>
Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-34061368146555727922019-10-07T04:22:00.000-07:002019-10-07T04:22:01.140-07:00Ecocash shutdown exactly why Zimbabwe needs cryptocurrency<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
On Monday 30<sup>th</sup> September 2019 Zimbabweans woke up
to the news that the popular mobile money service Ecocash had effectively been shut
down. This followed a hastily crafted statutory instrument which gave effect to
a directive by the central bank to stop cash deposits or withdrawals from
mobile wallets.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Mobile money users could now neither cash in nor cash out while
the thousands of independent Ecocash agents were effectively put out of
business at the stroke of pen. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It took just two days for the country’s central bank, the
Reserve Bank of Zimbabwe to perform an about turn. Normal Ecocash services were
restored, albeit with more restrictions than before. </div>
<div class="MsoNormal">
It turns out that the seemingly clueless central bank top
hierarchy is unable to provide a lasting solution to the long running cash
shortages. Instead, the central bank is now focusing on blaming imaginary enemies
for every problem that besets the country’s financial system while ignoring its
own misdeeds.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Rogue Ecocash agents?<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
In the Ecocash case, the RBZ management believes money
launderers and those engaged in the illegal foreign exchange trading are using this
mobile money platform to facilitate their operations. RBZ also believes these
bad actors to be behind the spectacular collapse of the local currency in the
month of September.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Consequently, the central bank thought by shutting down 50
000 Ecocash agents it would take the fight to illegal currency traders. Taking
such a bold move would help financial authorities to rein in on runaway inflation
as well as to stabilize the local currency while suffocating informal currency
markets. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, a court challenge to the directive as well as the
disruption to business activity caused by the order exposed the central bank.
Matters were not helped by rumour suggesting that Econet Wireless is
contemplating shutting down the service completely as retaliation. Perhaps this
might be what forced the central bank to rescind its decision. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To give perspective, in Zimbabwe, mobile money is primarily
used for micro payments and Ecocash—a division of the country’s largest MNO
Econet Wireless –enjoys a near total control of this niche market. A total
shutdown of this service will result in chaos in currency markets and the
greater economy.</div>
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<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Central point of
failure<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Currency traders—which government is blaming for sabotaging
the currency—primarily use the Ecocash platform as well as conventional banking
platforms to facilitate currency exchanges. From the central bank’s
perspective, attacking this one central point— the Ecocash platform—would
garner the best result in this fight against currency traders. However, the one
sided central bank decision ignores the concerns or potential effects on other
stakeholders.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Since launch in 2011, the Ecocash service has been hailed
locally and abroad for being an ingenious solution to the country’s long
running cash shortages. In fact, Ecocash has been particularly effective in
availing financial services to the unbanked and the under banked than regular
financial institutions.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Yet somehow the storyline changed a few months ago as the
biting cash shortages led to some Ecocash agents allegedly demanding premiums
as high as 60% for clients that wished to cash out or withdraw money. According
to the RBZ, the withdrawn cash is then used to buy foreign currency on the
parallel market. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Extortionate premiums<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal" style="line-height: normal;">
The high premium charged by
Ecocash agents meant clients looking for cash had to be prepared to part with
nearly half of their funds as the transaction fee!<span style="mso-spacerun: yes;"> </span>For example, a client that wants to withdraw
ZWL $1000 from their mobile wallet has to cash out/withdraw ZWL $1500. The
difference between the actual amount being sought (ZWL $1000) and the amount
deducted (ZWL $1500) is the premium charged by the agent.</div>
<div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div class="MsoNormal">
The extortionate premiums charged —which are also a
reflection of the worsening cash shortages—naturally led to an outcry as users
felt robbed of their hard earned money. Somehow it is this platform (Ecocash) which
has become villain and authorities who too eager to ingratiate themselves with
the public, seized on this misdirected public anger by censoring Ecocash. But
how did this situation get out of hand and who really must take the fall?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To illustrate, we briefly explain the southern African
country’s unique currency problems and how these have contributed to the crisis
that now subsists. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Since late 2016, Zimbabweans have become accustomed to three
kinds of money, the US dollar, electronic money which encompasses mobile money
and bond notes. The latter two are the local currency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Central bank versus
markets<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
For a long time the central bank stubbornly insisted that
all these forms of money were equal. This policy only changed in February 2019,
when the ZWL currency was allowed to depreciate against major global
currencies. Since then the currency has been tumbling and at the time of
writing the ZWL trades at about 15 to one US dollar on the official interbank
market although the rate is weaker on the so-called black market. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The interbank rate only reflects trades that occur under the
watchful one of the RBZ. Trades on the black market on the other hand are largely
conducted via the Ecocash or banking platforms where the RBZ has limited
influence. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In contrast to the RBZ position, markets had long understood
that there was no parity between the different forms of money and this had been
reflected in the multi-tier pricing system that remains in place to this day. A
single product can have three or four prices depending on the form of money
used to pay. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The USD is perceived to be the strongest and holders of this
currency pay the lowest prices. Additionally many businesses index their products
to this currency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Regulations that outlawed multi-tier pricing and USD
indexing have since been promulgated but this has not helped, businesses
continue to make reference to the USD when setting prices.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Electronic ZWL dollar
inferior to physical ZWL dollar<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Next to be perceived as a strong form of money is the so
called bond note or the ZWL cash. It should interest the reader to know that even
prior to the belated no parity admission by the central bank back in February,
prices quoted in ZWL were higher than those quoted in USD. For nearly four
years, ordinary Zimbabweans understood this and went along with this set up. The
RBZ admission was academic, it did not change anything.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Ecocash and RTGS balances are at the tail of this spectrum,
they are perceived to be weakest forms money/currency in Zimbabwe. Consequently
prices that are quoted for items sold via Ecocash or bank transfer are much
higher than when they are paid for in ZWL cash. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This probably happens because just like the USD, the ZWL
cash is generally in short supply when compared with electronic balances held at
banks and Ecocash. As official accounts show, the electronic balances seem to
be growing all the time. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Sadly the law of supply and demand will still apply
regardless of central bank threats or sanctions. When there is too much money
chasing a few goods prices will rise and a currency will lose value. Therefore
as RTGS balances grow their value in real terms goes down. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In the case of USD and ZWL, the central bank eventually
relented and now it agrees that the latter is inferior. Yet somehow the central
bank still refuses to accept the fact that electronic ZWL balances are inferior
to ZWL hard cash, which is in short supply. This reality has subsisted for more
than four years and this state of affairs also helps to explain why Zimbabwe
has multiple exchange rates. But what prompted a return of this economic
malaise last seen in 2008? </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Well, it seems things started going south once the local
currency was brought back into circulation after an eight hiatus. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Premature return of
Zimdollar<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
While the ongoing blame game has reached fever pitch, it is
the RBZ that should take the fall for the currency mess because by prematurely
bringing back the local currency, it created a favorable environment for the
money launderers and speculators that now it blames for manipulating currency
markets. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Zimbabwe dollarized in 2009 because its local currency had
become worthless and confidence in the central bank had disappeared among many
reasons.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, it should be noted that dollarization came at a
great cost, it curtailed the central bank’s ability to influence economic
activity. Indeed between 2009 and 2013, the RBZ was a mere spectator in the
economy while corrupt politicians could not use it as a vehicle to enrich
themselves. </div>
<div class="MsoNormal">
Everything seemed to flourish until when the local currency was
brought back into the equation.</div>
<div class="MsoNormal">
Now as the local currency looks destined for another
collapse it is imperative for Zimbabweans to understand that there is a need to
explore a different currency solution. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">The crypto
alternative<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Cryptocurrency appears to be the answer, whether it is a
central bank digital currency (CBDC) or a privately issued currency, the
country has to move away from a flawed system that only serves the interests of
the few.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If Zimbabweans were to adopt a cryptocurrency that is underpinned
by the blockchain, it will not be possible for any central authority to
manipulate such a currency. The blockchain technology is designed to pre-empt the
RBZ from curtailing or shutting down part of the financial system as it has
done with Ecocash.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A cryptocurrency is immutable meaning it will not be
possible for any one authority to replicate notes a practice that was uncovered
a few months ago. Apparently there are several 5 dollar notes bearing the same
serial number that are in circulation and this is something that shatters
confidence in a currency. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
With a cryptocurrency everyone including governments will be
forced to live within their means as it should be. Zimbabweans need to take
just charge of their future by asking government to abandon the flawed fiat
money in favour of cryptocurrency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Confidence in the central bank alone is no longer enough to
support a currency.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-44310911076316677152019-09-15T13:49:00.003-07:002019-09-15T13:49:59.362-07:00Kuva proposes game changing solutions to crypto adoption challenges<br />
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<br /></div>
<div class="MsoNormal">
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<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal" style="margin-left: .5in; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; mso-bidi-font-family: "Noto Sans Symbols"; mso-fareast-font-family: "Noto Sans Symbols";"><span style="mso-list: Ignore;">●<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Multi-asset blockchain enables exchange of
crypto assets across separate blockchains without intermediaries</div>
<div class="MsoNormal" style="border: none; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; mso-bidi-font-family: "Noto Sans Symbols"; mso-fareast-font-family: "Noto Sans Symbols";"><span style="mso-list: Ignore;">●<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->User satisfaction determining balance of rewards
between service providers and computing power providers.<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal" style="border: none; mso-border-shadow: yes; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt;">
<br /></div>
<div class="MsoNormal">
Kuva, a crypto start up inspired by monetary history in
Africa recently released a technical whitepaper for its blockchain kNET. The
whitepaper release marks the beginning of an economic and monetary operating
system, driven by users’ satisfaction. It is also the culmination of a two year
effort by the Kuva team to create a scalable crypto-currency for Africa and
indeed the world.</div>
<div class="MsoNormal">
Functionally, Kuva’s native blockchain, kNET allows
crypto-currency users to switch between different currencies, both digital and
fiat without intermediaries as well as enabling users to pay for various
services.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
At a protocol level, the kNET Blockchain attempts to
incorporate end user satisfaction into its governance protocols. In a
statement, Kuva outlined what it terms a third generation Blockchain
technology, with world first utility, scalability and user governance.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Kuva Director of Strategy, Andreiko Kerdemelidis said:</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
“The Kuva team has worked hard to address challenges seen in
the first generation Blockchain, the Bitcoin Blockchain. Bitcoin has shown its
resilience and utility as a store value over the past 10 years but its noble
consensus protocol has made it difficult to implement enhancements that can
help drive user adoption. Bitcoin consensus protocol has in effect become its
Achilles heel.”</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
According to the Kuva whitepaper, statically decentralized,
consensus-driven, trustless networks like that of Bitcoin, are a Gordian knot;
the same security that enforces their protocol and keeps users safe is also
their weakness. These protocols can only change with the majority agreement of
those who provide the resources to sustain the network, with the unintended
effect that these protocols rapidly harden and become unchangeable to the
detriment of end users.<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
For instance, it has not been possible to get miners’
consensus on controversial issues like increasing the block size. Increasing
the block size (a part of the protocol where transactions are processed and
stored) enhances the scalability of Bitcoin.<span style="mso-spacerun: yes;">
</span>However, for miners, a smaller block size means limited space or a
scarce resource which can be exploited to extract a premium on the fees paid by
those who want quick confirmation of their transactions. <span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span></div>
<div class="MsoNormal">
<span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
The result is that Bitcoin which was launched with a vision
as a universal “peer-to-peer electronic cash system”, has now settled
permanently to be a form of ‘digital gold’ rather than ‘digital cash.’ Bitcoin
is effectively unusable for making day-to-day small-value purchases due to the cost
of transacting which grows every time the cryptos’ value increases.<span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
Some Bitcoin supporters believe addressing this scaling
challenge will be vital in facilitating the next wave of its adoption.<span style="mso-spacerun: yes;"> </span>As it stands now, Bitcoin remains stuck at a
block size of just 1MB, smaller than a typical photograph taken on a modern
smartphone and this happens despite Bitcoin’s specialised computing power which
exceeds capability of every single supercomputer on Earth put together! <span style="mso-tab-count: 3;"> </span></div>
<div class="MsoNormal">
<span style="mso-tab-count: 3;"> </span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">User ratings in
governance<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Bitcoin proponents and opponents alike do acknowledge the
effect of this challenge (block size) in slowing the biggest cryptocurrency
from achieving its goal of creating a true alternative to fiat money as well as
advancing the financial inclusion cause. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So in order to avoid falling into the same trap, Kuva has
conceived that by involving end users—the true economic majority—in the
governance process, the chances of a Blockchain’s ability to scale and get
adoption are greatly enhanced. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Kuva believes it will achieve this by incorporating
governance protocols that are intended to progress the network toward a
‘dynamically decentralized’ system with a representative strategic governance
that balances the incentives for service providers and infrastructure
providers, based on the satisfaction of end users. This point is appreciated
when one observes the progression (or lack thereof) as well as the trends
observed in pioneering Blockchains. A pertinent example is crypto mining.<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"> </span>A few years ago, some
mining pools in Bitcoin gained over 40% of the hashing power in the network, a
phenomenon that raised concerns with stakeholders. These major pool oligarchies
are reported to have backed off from the 50% mark ‘voluntarily’ in order to
preserve confidence in the system. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To pre-empt something similar to this from happening, the
kNET whitepaper is proposing what it terms a strategy and governance for the
network to be shared between collateralized Licensed Service Providers (LSP)
and network infrastructure operators; the Masternodes and Masterminers.</div>
<div class="MsoNormal">
Importantly, this complex protocol allows the public or a
third-party organization to submit ‘Strategic Governance Proposals’ for voting.
Collateralized stakeholders will post a vote on a submitted proposal. In other
words, Kuva users will be able to influence changes or the direction of further
development of the network and protocol.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Solving the exchange
dilemma<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Meanwhile, the whitepaper touches on what it terms Chainbond
Protected Swaps (CPS) or simply put, a two party exchange between
crypto-currency assets across separate crypto networks. This allows the
seamless exchange between crypto-currencies like Bitcoin and Ethereum without
the involvement of an exchange as is currently the convention.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This is a potential game changer as users will not have to
briefly relinquish control of their private keys each time they want to swap
assets. Even better, they will not have to store funds with exchanges which
historically, have been vulnerable to hacking. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Sometimes a person in African who wants to buy digital currency
often has to spend time looking for a seller because there are no formal and
locally domiciled exchanges operating.<span style="mso-spacerun: yes;">
</span>This is ironic, as the strongest use cases for alternatives to
government issued money are in developing countries. Chainbond Protected Swaps
address an area that is presently hindering many potential users from adopting
crypto-currencies.<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
James Saruchera, Chief Executive of Kuva said, “CPS will
enable direct, trustless exchange between ordinary people where crypto is
needed the most.”</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
kNet’s ability to allow trustless exchange across
blockchains and user centricity, are attributes that may position it as the
final missing piece in the crypto puzzle.</div>
<div class="MsoNormal">
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-9955948162951912082019-09-07T15:05:00.005-07:002019-09-07T15:05:50.045-07:00Bitcoin and the gold comparison<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The 2019 Bitcoin price surge has reportedly seen some institutional
investors joining the craze by adding this fintech to their investment
portfolios. As per custom when there are concerns of a possible global
recession, investors will seek cover in unconventional assets which can preserve
value, things like old paintings, antiques, precious metals and now Bitcoin. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The last Bitcoin bull market resulted in a huge price surge
with the crypto almost crossing the $20 000 in 2017 mark before retreating to
just under $4 000 by the end of 2018, a less than proportionate drop. Those who
were invested significantly in this asset class reaped huge rewards while those
who stayed on the fence took note. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Some are now predicting that Bitcoin will end 2019 much
higher than $20 000 and that when the bears market takes over, possibly after
the next halving in 2020, a new lower value will be established and it will be
higher than $4000! </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The expected Bitcoin upward price movement reinforces a
realization that the token is increasingly considered a new asset class whose returns
surpass even that of bluechip stocks.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
When Bitcoin launched in 2009, it had a value of around
$0.03 and it would only reach parity with the USD in 2011. It will be in early
January of 2017 when Bitcoin managed to break past the $1000 mark and it has
not gone below that mark since. `</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In fact, available data shows that Bitcoin has—during its
presently short lifespan—even outperformed gold, the only asset to have
consistently topped the US dollar in real terms over the past fifty years. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The US dollar has lost approximately 97% of its purchasing
power in relation to gold in the nearly 50 years since the United States went
off the gold standard. Similarly, the euro has lost over 75% of its value on a
gold basis since the currency debuted in 1999. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Gold is traditionally seen as hedge during periods of
uncertainty, in times of sustained debasement of national fiat currencies and
the subsequent inflation. No fiat currency has maintained its value against
gold in the long-run unless of course it is backed by gold.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Even with a limited history and track record, this digital
asset has nonetheless shown that it can weather economic storms and fittingly,
some now consider it the digital equivalent of gold.</div>
<div class="MsoNormal">
Jerome Powell, the US Federal Reserve chairman is the latest
high profile figure to have recently come to the that conclusion. Appearing before
the US Congress, Powell refused to assign the currency status to Bitcoin but he
seemed happy to validate the contention that it is a store of value akin to
gold. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Powell declared: ‘Almost no one uses Bitcoin for payment,
they use it more as an alternative to gold really. It’s a store of value; it’s
a speculative store of value like gold.’ Perhaps it was disingenuous for Powell
claim that almost no one uses Bitcoin for payments but nevertheless, it is his
admission of the latter use case that is seen as a huge endorsement for the
crypto. That Bitcoin has no intrinsic value like gold does not matter as long
as the confidence in the Blockchain technology that underpin it remains.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Of course, Powell’s boss President Trump had less flattering
words for Bitcoin, and his comments fits well with those long opposed to Bitcoin.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">But just how does it
fare when compared with gold?<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Regardless of
statements made by politicians, Bitcoin looks set to maintain its new found status
as digital gold. This apparent but inadvertent status is in stark contrast with
the initial vision for Bitcoin. The crypto was supposed to be the peer to peer
electronic cash, the internet of money. Yet for all intends and purposes, it
has morphed into digital gold, which is unsuitable for day to day small value
purchases. It only makes sense using it for high value transactions.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Gold might not be fungible but it is a good store of value nonetheless
and the same goes for Bitcoin. This point is supported by reports that some
central banks around the world are holding Bitcoin and other crypto-currencies
as reserves to back their respective currencies. When crypto-currencies grow in
value and this has the effect of boosting or stabilizing exchange rates of fiat
currencies that are backed by such digital currencies.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For instance, media reports a few weeks ago that <a href="https://www.newsbtc.com/2019/07/22/bulgaria-big-on-bitcoin-as-reserves-could-exceed-its-gold-stash/">Bulgaria’s
Bitcoin holdings</a> had surpassed that of gold point to the fact that the token
may have reached that threshold. Of course, it is also possible that the recent
increase in Bitcoin value—from around $3 800 in March in 2019 to the current
price of around $10000—may have increased the value of such holdings without
necessarily increasing the amount of coins held.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Bitcoin is seemingly better at quickly factoring in things
like inflation, global political risks, or a recession than gold. Perhaps for
one to understand this they may have to go through the LBMA Alchemist issue 94,
which explains the general rationale for gold holding during a recession. The
reports states:</div>
<div class="MsoNormal">
<i style="mso-bidi-font-style: normal;">On the one hand,
investors are looking for safe havens in times of crisis, and gold is the
classical safe-haven asset. On the other hand, many investors will anticipate
monetary and fiscal stimuli, and buy gold for inflation protection</i>.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As the global economy marches to towards another recession
spawned by politics and a trade war between United States and China, we see
that it is Bitcoin and not gold that has grown threefold. Gold does not respond
as quickly as Bitcoin to events and certainly it does not grow as much. In
fact, according to data by Incrementum AG, this classical safe haven asset has
only managed to grow by an average of 20.8% during the past six global recessions
spanning four decades. Given this background it is safe to assume that the
coming recession cycle will be no different, gold will grow by about 20%.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Smart investment<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Smart investors have long realized that holding Bitcoin actually
protects an investment portfolio, not only from hyperinflation, but from
government policies that attempt expropriate value. As long as the cryptography
and mathematics behind Bitcoin remains uncompromised, this token will remain a superior
hedge against inflation for the better part of the foreseeable future. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Indeed, others have argued that Bitcoin, which unlike gold,
is a creation of man and thus it might be tempered with in a way that nullifies
some of its key attributes. Such tempering or changes will undoubtedly affect
how people perceive its value or its usefulness. For example, some users have
confidence in Bitcoin because it has a fixed supply of coins that can ever be issued
but that confidence will be shuttered if coins exceeding 21 million are created.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In theory this could be true, it might happen that coins
which exceed the supply limit will be issued but in practice, this will be hard
to achieve even for the creators of Bitcoin. In fact, the continuous flow of
new tokens claiming to solve the Bitcoin ‘flaws’ is proof of this token’s immutability.
Just like gold, Bitcoin cannot be replicated, it can only be mined and many in
the crypto community acknowledge this. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Also a statically decentralized, consensus-driven and trustless
network like that of Bitcoin is a Gordian knot according to those proposing
alternatives to it. In simple terms, this means the same security that enforces
its protocol and keeps users safe is also its weakness. Bitcoin protocol is
designed to rapidly harden and become unchangeable such that any changes which
might make the crypto-currency more useful to users become increasingly
restricted by the network as user adoption increases.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For example it has not been possible to get Bitcoin miners’
consensus on controversial issues like increasing the block size, a change that
might enable the network to process more transactions. While this side effect
is not deliberate it does work to keep Bitcoin unblemished.</div>
<div class="MsoNormal">
This unintended aspect of Bitcoin blunts the argument that
the token is susceptible to manipulation by a bad actor. As long as it stays
the same, the digital gold attributes will only get better.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Bitcoin not subject
to control<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Perhaps the one aspect where digital gold total trumps the
physical gold is control. Gold is a heavily controlled commodity, in fact in
some countries like Zimbabwe, its mere possession by ordinary citizens is
forbidden. Those holdings or trading commodity without a state issued license
risk jail time yet this commodity would seem the most logical asset to have in any
portfolio given that country’s current hyperinflation environment.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Meanwhile, there are no such restrictions or controls when
it comes to Bitcoin. Anyone can acquire Bitcoin to protect earnings or savings
from crazy economic policies. In fact, there is no government that can enforce
a ban on Bitcoin and that sometimes explains the hostility exhibited towards
the fintech. Bitcoin dilutes control of the monetary space and few monetary
authorities will countenance that.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In Zimbabwe, authorities have issued warnings about the
possible risks associated with Bitcoin trading but ironically, they expect
Zimbabweans to use the rapidly depreciating and very volatile Zimdollar fiat
currency as a store of value. Since reintroduction in 2016, the Zimdollar has
depreciated by about 900% and this trend looks set to continue as financial
authorities impose more draconian financial controls.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Evidently, the Zimdollar is a much riskier than Bitcoin and
a growing number of Zimbabweans are realizing this as the country’s economic
decay worsens. Possession of this digital gold can potentially free Zimbabweans
from the shackles of a failed fiat currency regime. Of course Zimbabweans and
indeed all citizens of the word need to know this if they are going insulate
themselves from bad policies.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-39621727203954601222019-08-12T14:56:00.004-07:002019-08-12T14:56:35.336-07:00Blockchain and democracy in Africa<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The African continent has made great strides in embracing the
ideals of democracy and freedom but problems persist when it comes to managing
electoral processes. Allegations of rigging and fraud are a common place on the
continent where incumbents are known to abuse their position for the
furtherance of their personal objectives. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Kenya, Nigeria, Malawi, Democratic Republic of Congo and Zimbabwe
are part of an endless list of countries with disputed elections results and
until now there has been no real solution to pre-empt this. Blockchain which
hitherto, has been largely associated with crypto-currencies like Bitcoin,
could potentially come to the aid of democracy on the continent and elsewhere.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Blockchain technology has many uses besides supporting
digital currencies, it can be used in the insurance industry to enforce
contracts, in the music industry to reward artists, for real estate management,
solar energy management, maintaining academic certificates etc. There are
ongoing projects exploring this and preliminary results appear to show immense
benefits. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Now some crypto entrepreneurs are now suggesting the use of
this technology in resolving electoral disputes and other controversial undertakings
like the amendment of constitutions to suit interests a small minority.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For instance, some Blockchain specialists have suggested
putting a country’s constitution on the Blockchain as one way of pre-empting
the common abuses and the subsequent problems. When this important document is
on a public ledger, which comes with the usual immutability and is
decentralized, it means few individuals in a government cannot force amendments
to the constitution without the knowledge or approval by the greater public. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To illustrate this point we look at Uganda. A few years ago,
that country was plunged into chaos when long time ruler, Yoweri Museveni, <a href="https://www.reuters.com/article/us-uganda-polititcs/ugandas-museveni-signs-law-removing-age-cap-for-president-idUSKBN1ER1CY">sought
to amend the constitution</a> in order allow himself to run for office again by
scrapping the age limit. The Ugandan leader had already served the maximum
years allowed by the law but that was changed too in 2005 by using a
parliamentary super majority. In Africa a dominant political party can change
the rules even if that process is unpopular with the voters. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Had the Ugandan constitution been on a Blockchain years
prior, this topic would not have come up for discussion to begin with. The
Ugandan leader prevailed just like many others before him elsewhere, apparently
democracy can be manipulated to suit interests of the elites, the minority. In
fact, this problem is seen even in countries outside Africa like Turkey, where
longtime ruler Recep Tayyip Erdogan pushed through a <a href="https://www.theguardian.com/world/2017/apr/16/erdogan-claims-victory-in-turkish-constitutional-referendum">referendum
that made amendments</a> to the constitution. The amendments increased the
powers of the president while reducing the influence of prime minister and
parliament.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Now when a country’s constitution is on the Blockchain, it
ordinarily means no one party—no matter how popular—will be able to freely change
rules. A candidate who has already served a two term limit will be precluded
from having his name on the ballot paper because the smart contract built into
the Blockchain will reject it. So instead of resorting to demonstrations and
violence as way of registering disapproval, citizens should insist on the
placement of such an important document on a public distributed ledger. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The same should go for a voters roll, a document containing
names and details of voters. Control of such voter records is seen as key for
political survival by some political actors on the African continent.<span style="mso-spacerun: yes;"> </span>For instance, in Zimbabwe, the voters’ roll is
tightly controlled by the incumbent party while the opposition as well as pro-democracy
forces virtually have no access to it. Access is only granted briefly during an
election period and it is availed in the hardcopy format and as such, no
independent observer has been able to verify or authenticate its contents in
time to make a judgment before the election. It is on the basis that the
country’s opposition has been alleging vote rigging for years, a process which
it says is being aided by government’s control of the voters’ roll. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Therefore if such a voters’ roll becomes available on the
Blockchain, it means individuals can check to see if their names are properly
listed thus avoiding the common scenarios of voters being turned away on
election day. When the number of registered voters for a particular county is
known well before an election, possible rigging and ballot box stuffing is
avoided because a Blockchain based voters’ roll will reject the extra ballots
on election day!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So in a nutshell, Blockchain technology has the potential to
enhance democracy on the continent and reverse the trend of resorting to armed
struggles as a way of fighting dictatorship. Civil conflicts which are specifically
rooted in disputed election results will be avoided. Blockchain technology is
known to infuse confidence in a monetary system like that of Bitcoin and
likewise it will instill confidence democracies thus help reduce conflicts.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Pro-democracy activists as well as the media have greater
role to play in ensuring citizens become more knowledgeable about these
possibilities. When enough people become aware a momentum will be created and
governments will eventually be forced to consider Blockchain for the
constitution and many other aspects of its mandate.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com1tag:blogger.com,1999:blog-5111980448764783453.post-71203354478277042262019-08-10T16:28:00.001-07:002019-08-10T16:28:25.219-07:00Flagging ICO scams<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Terence Zimwara<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The concept of an initial coin offering (ICO) is not
entirely a new phenomenon; in fact it is a borrowed one. ICOs are any attempt
to replicate an initial public offering (IPOs), a renowned capital raising practice
which has been widely used by businesses and corporations for decades. As the
name suggests, this process enables privately owned businesses to fund new developments
as well as the expansion of their present operations with capital raised from
the public.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">In the case of IPOs however, a regulating entity— often a
securities and exchange regulator—will issue guidelines on how this process is
consummated. For instance, the company seeking capital would have to produce a document
called a prospectus. It is that document which typically lays out the responsibilities
and expectations of those participating in any such fundraising.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">IPOs generally come with many such safeguards in case
something goes wrong but the same cannot be said of how ICOs have been handled
in the not so distant past. Apparently ICOs were so simple to set up, anyone
with basic IT skills could figure out a way to create a token along with a
website and whitepaper to support the coin offering. There were neither a
regulator overseeing this nor were there any legal remedies available to
participants in case something went wrong.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Whitepaper
factor<o:p></o:p></span></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Jelle Rijnink, a fintech expert with Aurus, a crypto
start-up explains that a whitepaper—apparently the equivalent of a prospectus—
would nominally outline the project’s objectives and how these would be achieved.
In reality however, this whitepaper would turn out to be nothing more but part
of a well orchestrated scam. The lax ICO atmosphere at the time encouraged a
lot of innovation which in turn induced countless yet very ambitious projects
to go public.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Such ICOs went on to generate millions of dollars in
funding for new projects with 2018 offerings alone raising approximately $20
billion. Indeed many great projects that are functional today were born from such
ICOs but it is also safe to say that the majority have since failed.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">It is such failings that have led to widespread negative
media coverage and this subsequently invited increased scrutiny from regulatory
and consumer protection bodies.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For instance, the Financial Conduct Authority (FCA) of the
United Kingdom notes these problems in a consultation paper that was released
earlier this year. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">According to the consultation paper, “2018 saw a
significant reduction in the amount of capital raised in ICOs compared to the
2017 amount. Global ICO funding was $65m in the month of November 2018,
compared to over $823m in the month of November 2017.There are a number of
reasons for this fall, with (some) commentators identifying investor caution as
a response to the large amount of fraudulent ICOs as well as a high failure
rate of new enterprises that use the ICO process. This can also lead to ICOs
missing their target collections. The underlying volatility of cryptoassets used
may also be an issue as they are used, in many cases, for payments in ICOs.”<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">In light of this, the FCA is now proposing regulations
that would guide future ICOs and help curb fraudulent coin offerings at least
in UK territories. There is no doubt other regulatory bodies and consumer rights
watchdogs around the world will make similar undertakings.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">But exactly what caused many bad actors use ICOs as a way
to dupe unsuspecting investors? Well the fear of missing out (FOMO) plays a
part but it could also be the way the process was carried out that invited
criminal elements. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Meanwhile Rinjink attributed the high ICO failure or fraud rates to
a combination of three main factors namely;<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The ease of starting the coin offering
process <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Anonymity of the process <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Lack of regulatory oversight created an
opportunity for scammers and money grabbing schemes to emerge. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Apparently it was just too easy not to fulfill the promised
deliverables and walk away with the funds without being made liable. There is/was
no deterrent! Indeed many masterminds of fraudulent ICO projects which came with
flashy websites and well put together whitepapers, managed to raise millions of
dollars and disappeared. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Meanwhile, the FCA also concurs with Rinjink’s earlier
assertion concerning whitepapers. In its guidance, the FCA notes that the whitepaper,
which typically accompany ICOs, is not standardized, and often feature
exaggerated or misleading information. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Given this lack of clear information, it is logical to
conclude that investors/consumers may not understand that many of these
projects are high-risk and at an early stage. Put differently, it means the
risk profile of most of the capital seeking projects may not suit the risk
tolerance, financial sophistication or financial resources of the investors. FCA
has since concluded that regulation of ICOs is an inevitable but necessary
response to the problem.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">It remains to be seen how such regulations will be
enforced given the disparate and fragmented regulatory approach to the issue. Others
have largely ignored the problem while others have been quick to respond. So it
could well happen that a capital seeking crypto start- up, which may be
domiciled in an unregulated environment, can actually invite investors including
those from a regulated environment to participate in an ICO. This leaves the supposedly
protected investors vulnerable to fraudsters and not to mention that they is no
legal recourse or compensation in case such an ICO fails. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Therefore this means even today investors still face the
risk of being lured to scams and as such, it will be wise for potential
participants in ICOs or anything similar to know the signs of a potential fraudulent
coin offering.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">So
how do you determine that an ICO is potentially fraudulent? <o:p></o:p></span></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">There are a number of key signs to look out for and below
we list and expand on some of the usual signs;<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Too
good to be true</span></b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">—as the sayings goes, if something is too
good to be true then it probably is. Any investment has a potential to earn
healthy returns for investors and equally, any such investment has an element
of risk, an investor can lose everything. So when an ICO promises big on
returns but is completely silent on the downside, there is a potential problem
and investors need to approach this kind of ICO with caution. Usually a higher
return means a higher risk. If you are however less risk averse, then murky
ICOs could be the thing for you. Always remember there is no free lunch
anything that promises surreal returns could otherwise be a scam.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Depth
of the whitepaper</span></b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">—the whitepaper is the equivalent of a
prospectus that crypto businesses seeking funding from the public usually issue
out. The difference however is that with prospectus there are set standards, if
such a document fails to meet expectations, it will not be sanctioned for
distribution to the public by regulators. At the moment there seems to be no such
standards when it comes to ICO whitepapers, all that is needed is a website to
host the paper. In addition, the information contained in many whitepapers
inconclusive, even Facebook’s Libra has been attacked for being scant when it
comes to providing vital information. An informative whitepaper must have
in-depth details of the ICO process, the objectives of the fund raising and the
background of those behind but without exaggerations. A potential investor
could well use the services of an experienced crypto advisor to give an opinion
about an ICO based on the information from gleaned from a whitepaper. Nevertheless,
a novice investor will still be able to unmask outright exaggerations on issues
like the professional experience of the proposed project’s key drivers.
Crypto-currencies have been around for about 10 years now, therefore it stands
to reason that all professionals in this field cannot have years of experience
that exceeds ten years. Therefore when a chief executive officer in his mid 20s
tells potential investors that he has more than 10 years experience, that could
be the clearest sign of a potentially fraudulent ICO!<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="mso-spacerun: yes;"> </span>No cap on maximum funds to be raised</span></b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">—dubious
ICOs will not state the exact amount that needs to be raised, it is an open
ended exercise. A document that essentially invites members of the public to
participate in any fund raising activity must clearly state how much needs to
be raised, the period of the fundraising exercise and to finance what? Transparency
or lack thereof on this aspect will be essential in determining if an ICO is
genuine or not.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Current
project status</span></b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">—as explained earlier, an IPO has been used
by businesses that are seeking to raise capital from the public for the first
time. The funding is usually needed to augment capital of an existing business.
So this means potential investors can seek clues and a better understanding of
what they are getting into by examining the existing business. The prospectus
usually contains historical information about the existing. It stands to reason
that a similar principle need be to applied to ICOs. A whitepaper should have
this kind of information available, there must be something happening already
that investors can look at in order to get a feel of the business that they are
about to invest in. Whitepaper that has in-depth details of the business’
history will undoubtedly enhance the credibility of the ICO exercise.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Core
team</span></b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">—these
are the actual brains behind the project that needs the funding. An IPO prospectus
usually is accompanied by names of the management team, the identity of
directors and the shareholding structure. A prospectus will go as far as
publishing pictures of the managerial personnel, the residential addresses of
directors as well the capital seeking company’s physical and contact addresses.
This enhances the credibility of the process, potential investors know who they
are funding and where they can find them. Whitepapers are not standardized yet
but any start-up that wants to endear itself with investors can borrow a leaf
from IPOs. At the same time, a shrewd investor should avoid investing in a
faceless organization that only lists mobile phones as contact information!<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Overhyped
projects</span></b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">—it may be natural for a capital seeking business to
project success but that should fall inside parameters of what may be deemed
reasonable. Overhyping means the revenue or profit projections maybe
unrealistic when contrasted the present usage of cryptos in general. An
overhyped project could potentially be the signal that an ICO is really a Ponzi
scheme or a scam. There is no denying that all crypto-currencies face
challenges that make the achievement of core objectives impossible, at least in
the short term. So it should concern investors when a start-up promises a quick
turnaround in a market that everyone agrees is far from reaching its full
potential. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">There are many more sources of information and diligent
investors must always do more to get enough before committing to invest.<o:p></o:p></span></div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com3tag:blogger.com,1999:blog-5111980448764783453.post-59746567899021967452019-08-03T16:57:00.006-07:002019-08-03T16:57:52.923-07:00Tackling the crypto exchange hacking problem<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Regular reports of crypto exchanges getting hacked are increasingly
becoming a real worry for those hoping to see the widespread use of
crypto-currencies. Hackers are primarily targeting crypto exchanges although
they are also known to target individual wallets.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Just like a bank robbery, hacking of an exchange is
particularly rewarding for these high tech thieves. In essence, an exchange
acts as a ‘vault’ for multiple wallets or private keys, therefore successfully
breaking in means the score will be greater than attacking individual wallets.
Hackers are known to have made off with millions of dollars in clients’ funds
each time they target crypto exchanges.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For example, according to a UK financial services watchdog
the Financial Conduct Authority (FCA), in the first half of 2018 alone, $731
million worth of cryptos were stolen from exchanges. This included $500 million
from a hack on the Coincheck exchange and $40 million from a hack on the
Coinrail exchange. By October 2018, hacking of exchanges increased to $927
million. The problem is quite significant relative to the size of this fledging
market.</div>
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<br /></div>
<div class="MsoNormal">
Perhaps the only small consolation is the fact hackers are
only targeting private keys, they are not attacking the crypto-currencies
themselves. This once again underlines the efficacy of Bitcoin and alt-coins, that
these currencies are immutable and that there is no incentive for hackers to
cripple this innovation.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
While the overriding concern of all crypto-currency
businesses has been getting the message about this fintech across to the masses,
resolving the scaling issues and regulatory uncertainty, there is a new
challenge they must now grapple with. The question now is; how do you hasten
widespread adoption of an innovation that is very vulnerable to hacking
attacks? In fact, this may be a worry of not only potential users but of early
adopters as well.</div>
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<br /></div>
<div class="MsoNormal">
An impartial observer
may conclude that the infrastructure supporting this technology is not secure
enough to help build confidence when there are regular hacking reports. How do
you convince folks who have worked hard all their life to convert their savings
into cryptos when there is a high risk that all such funds will be stolen with
little or no prospect of recovery? </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Given this current state of affairs, it is plausible to conclude
that many will prefer to keep savings in bank accounts where they are ‘safe’
than in the form of Bitcoin, which is susceptible to hacking!</div>
<div class="MsoNormal">
It is on this issue that the entire crypto-currency
community need to seriously self introspect. How can they collectively work nip
this problem in bud before it gets even worse? Of course, if everyone listened
to Andreas Antonopoulos, a prominent Bitcoin supporter, by keeping funds away
from exchanges, then the problem would not be as big as it is today.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, in fairness, the whole crypto business is a very
complex one, without crypto exchanges or similar intermediaries, this market
would not have grown to current levels. Asking a non-IT person to suddenly
start understanding the complexities of crypto-currencies will be asking too
much, they do not have the time for that. Therefore the use of ‘trusted’
intermediaries remains inevitable if the dream of greater adoption is to be
achieved. Indeed for hardcore advocates of a decentralized system, this might
be a bitter pill to swallow. However, just like medicine, it may have a bitter
taste but it gets the job done, crypto exchanges or intermediaries might be
seen as a deviation from the peer to peer principle but they do help get the
job done ultimately. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Thus for now crypto exchange businesses and custodial wallet
providers need to be supported by all crypto-currency issuers for the mutual
benefit of all. Sadly as it stands now, the fragmented crypto community is
failing to come up with a united response to the hacking problem, individual
players are working silos when attempting to combat this threat. Some insist on
making or improving security features of storage devices or wallets as the best
way of dealing with the hacking problem but others believe solving the problem
at crypto exchange level will yield better results.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It goes without saying that compromises will have to be made
if progress is to be made on this front. A balance will have to be struck
between user security concerns on one hand and the Utopian ideals of
crypto-currencies on the other. For those that wish to see decentralized
cryptos’ domination of the market continuing, now is the time to consider such
compromises before well funded players enter the market.</div>
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<br /></div>
<div class="MsoNormal">
Failing this, there is every chance that well resourced and
bigger players like Facebook and its partners will seize on this, by rewriting
the rules and in the process obfuscate the original ideals of a privately
issued currency. Until now, the laudable decentralization and permissionless
features of crypto-currencies have been the unrivaled hallmarks of this great
innovation but that may yet change.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To illustrate this point we look at the proposed Libra
stablecoin and how this can potentially change the crypto-currency landscape. A
glance at Libra’s whitepaper reveals that this stablecoin will start off as a
permissioned Blockchain backed crypto with the possibility of it becoming
permissionless eventually. However, Facebook and its partners may ultimately
choose for it to remain permissioned a little longer as one way of assuaging
and winning over skeptical politicians.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This means the much vaunted Libra stablecoin will not adhere
to the fundamentals of a decentralized currency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To compensate for this, the Libra Association members do have
the infrastructure and the financial muscle that they can use to invest in making
security features that make it difficult for hackers to target the Libra token.
There is no doubt Facebook and its partners will see enhanced security features
as one way of cancelling out the less desirable aspects of Libra and will thus work
harder on this.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If potential users are more satisfied with Libra’s handling
of the hacking challenge they will embrace it ahead of original cryptos.
Apparently not everyone is sold to the idealism of crypto-currencies, security
is more important for others.</div>
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<br /></div>
<div class="MsoNormal">
Therefore it may not matter how much permissionless
Blockchain supporters bleat, the world could well embrace Libra because it is
scalable or due to its superior security features. If Libra succeeds,
permissionless cryptos will find themselves behind in every measure; from user
numbers, market capitalization, merchant embrace etc.<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
Of course, the prospect of Libra taking a giant slice of the
market from founding crypto-currencies is not entirely a bad thing. This market
needs competition in order for it to continue improving and to be that better
alternative to fiat money. However, when one player with ties to the old order
becomes dominant, this will not augur well for the future of privately issued
currencies. </div>
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<br /></div>
<div class="MsoNormal">
Creators of pioneering crypto-currencies must be willing to embrace
changes just as they have brought change to the way we see money. Adapting to
changes will be key to survival for crypto-currencies that have dominated until
now. Their survival will keep this market free from monopolies and their
malpractices.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com6tag:blogger.com,1999:blog-5111980448764783453.post-79150834966039677162019-08-02T00:11:00.003-07:002019-08-02T00:11:39.059-07:00Crypto-currency-- Financial inclusion vs Tax evasion<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Reports that the United States Internal Revenue Service
(IRS) has sent out letters to crypto-currency holders reminding them of their
tax obligations adds intrigue to Washington’s changed tact towards this
fintech.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In the last few weeks, the US government has come out more
vociferous in its opposition towards crypto-currencies in general and against the
upcoming Libra stablecoin in particular. The IRS is telling the world that it
has ‘evidence’ that some American holders of crypto-currencies are skipping their
tax obligations.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Just like other US government agencies, the IRS seems to
assert that those opting to use or trade in crypto-currencies are doing so in
order to hide nefarious activities like illicit financials transactions, money
laundering or tax evasions. According to institutions like the IRS, the US
financial system remains solid and effective, therefore there are no valid
reasons for American citizens in particular to avoid using it. In fact, that is
the case in pretty much all developed states, there is really no reason to
start looking for alternatives when the present model works well! . By 2018, it
is estimated that at least 5% of US citizens own a crypto-currency, an insignificant
but telling figure.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Meanwhile, as an additional plus to the United States, the
US dollar remains the world’s most dominant currency—for now anyway—and
logically, there should not be any valid reason for an American to own or store
wealth in the form of alternative currencies like Bitcoin.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Interestingly, the same arguments are hollow when applied to
developing or poor economies which are plagued by unstable currencies. The very
architecture of the financial system is designed to benefit the elite, those in
living in urban centres or those in formal employment. The unemployed and the
rural populations—who are the majority in many developing countries—are usually
excluded from such a system. <span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
Since the financial system cannot accommodate the less affluent
or those staying in remote areas , crypto-currencies present a unique opportunity
to access financial services. Crypto-currency like Bitcoin are already popular
in these parts of the world because they enable ordinary people to make small
payments, send and receive money cheaply. The usual barriers like lack of
identification documents or high bank service charges are not important thus
are ignored. One only needs a Smartphone plus a data package and they are off.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Just like those using mobile money—another popular fintech
in the developing world—crypto-currency users in poor countries have not embraced
this fintech to avoid paying taxes. <span style="mso-spacerun: yes;"> </span>Their
miserly earnings mean many fall outside standard taxable income thresholds
hence the tax evasion argument does stick here. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Crypto-currencies are primarily used for micro-payments,
remittances and cross border payments and here too the perceived tax liability
is negligible, if any.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Bitcoin and alt-coins might originate from developed and
wealthy states—where the use case is presently insignificant—but for developing
countries the same cryptos have emerged, either by design or otherwise, as a
viable alternative to the one size fits all fiat currency financial system.</div>
<div class="MsoNormal">
As already highlighted, the now widely embraced mobile money
has proven there is place for alternatives to the conventional financial
system. And just like crypto-currencies, mobile money initially faced
resistance from some traditional players in the financial services sector even
as it was embraced by masses. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Technology firms and mobile network operators (MNO)
identified this long un-serviced need and went on to provide a solution without
the involvement of banks and now the benefits are clear for everyone to see.
Even those previously opposed now accept the utility of mobile money and the
impact it has had on societies in some lands.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To understand this, one has to familiarize themselves with
the findings of a growing number of global surveys on this topic. For instance,
in its overview, the World Bank Global Financial Index survey of 2018 states
that a growing body of research reveals many potential development benefits
from financial inclusion — especially from the use of digital financial
services, including mobile money services, payment cards, and other financial
technology (or fintech) applications.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As an example, the index quotes a study in Kenya which found
that access to mobile money services delivered big benefits, especially for
women. It enabled women-headed households to increase their savings by more
than a fifth; allowed 185,000 women to leave farming and develop business or
retail activities; and helped reduce extreme poverty among women-headed
households by 22 percent.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Meanwhile, in countries like Zimbabwe, mobile money has come
in handy for citizens grappling with the country’s ongoing cash shortage
problem. A glance at the country national payments records reveals that mobile
money now leads in terms of transactions volumes, meaning Zimbabweans have largely
embraced mobile money as an alternative to fiat cash, which remains in short
supply. At the same time, large dollar value transactions are still being
settled in the traditional way i.e. bank transfers, point of sale machines etc.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In Zimbabwe’s case, mobile money is currently the preferred
method for making micro payments, hardly transactions that fund terrorism.
Illicit financial flows involve huge sums of money and only traditional
financial channels can efficiently carry out such transactions. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To users in developing countries, crypto-currencies are
similar to mobile money in many respects, if not better. Payments are settled
much quicker, the service charges or fees are lower because there are a few
intermediaries involved and lastly, there are no restrictions or limits on
payments across borders. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This latest fintech clearly works well in the developing
world and those opposed to it have few valid reasons to justify the opposition.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So perhaps the question now is; Why should crypto-currency
users in the developing world be concerned with events in the US congress
earlier this month? Why should they be concerned with Maxine Walters and Co. comments
and moves to curtail Facebook’s Libra and Bitcoin?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Well, in normal circumstances, crypto-currency users from
developing lands need not to worry about events thousands of miles away.
Unfortunately, US power is not normal power, domestic decisions made by the
American Congress are often felt across that country’s borders. The US can
almost single handedly cripple any economy by cutting it off from the global
payments system. Crypto-currencies are a little bit more complex but the US can
still have its way by attacking or reining on Silicon Valley tech firms that
facilitate this nascent industry. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To illustrate this point we look at the African continent. It
is true that some on the African continent are confident that Libra will bring
about financial inclusion because Facebook, the US based tech firm behind the
token, already has the infrastructure to successfully bring this dream to
fruition. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, that the US congress can order Facebook to halt
work on Libra until it is satisfied that US government concerns are duly
addressed underlines the power Washington has. Therefore this means tax
evasions concerns, which primarily concern one country, the United States,
could stand in the way of an innovation that can potentially bring financial
services to those currently excluded and many of such people are in Africa.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So yes, citizens of developing countries have an interest in
the American government’s drive to stop or stifle Libra and other
crypto-currencies. American power has the potential to deny marginalized
societies a chance to break from their present situation. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So perhaps, a better question would be; at what point do
interests or concerns of a small group of politicians trump (no pun intended)
the benefits that can accrue to a billion plus people? The question has to be
asked because that is precisely what is happening, US congress is only
interested in maintaining a system that gives the country an advantage even if
it comes at the expense of a greater number of people. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This is a reverse for a country renowned for being amenable
to change, a place that encourages innovation and where freedom is celebrated.
Many innovative entrepreneurs around the world see it as the best place to
launch new ideas. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Attempts to crush new innovations like Libra might as well
serve as signal that the country is no longer happy to lead and rivals will now
feel encouraged to seize the initiative.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Aside from that, the United States has, by virtue of its
position as a global superpower as well as a defender of freedom and democratic
ideals, a responsibility to help bring positive change to the poor and those
marginalized. This includes supporting innovations that will bring about
financial inclusion as well as the improvement of living standards of citizens
of the world’s poorest countries. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
While tax evasion and money laundering concerns are
justified, they should not stop America from remaining a global leader. A
balance must be struck between finding solutions to tax evasions or terrorism
funding problems and the genuine need to bring financial services to the poor.
Facebook might have taken the important steps of seeking audience with
skeptical politicians but this has to be reciprocated. A solution can only be
found via engagement.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com3tag:blogger.com,1999:blog-5111980448764783453.post-63830336388475964342019-07-29T14:57:00.002-07:002019-07-29T14:57:32.636-07:00Risks of associating cryptos with Ponzi schemes<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Terence Zimwara<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Some crypto businesses see no harm in the use of network
marketing as a strategy for hastening adoption of the fintech even though the approach
is also commonly used by bad actors. Indeed network marketing is a legitimate
business practice that has been employed by some businesses for decades. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Ponzi or Pyramid schemes on the other hand, are
essentially fraud schemes packaged to appear like a legitimate network
marketing business. Even ‘smart’ people will not be able tell the difference
between a scam and a legitimate one, the line is very thin. Such fraud schemes
are common in poor countries as well as in emerging markets where consumer
protection laws are not that robust. Victims are usually lured by the promise
of huge earnings in the shortest period possible time or by a passive income
that promises a healthy lifestyle. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Usually with such schemes, the emphasis is on getting
more members to join than the marketing of the actual product. Apparently the
core business is getting new members to join but this is never said upfront.
Victims usually realize they have been conned when they have already joined or
paid but the schemers are confident that only a few will take action to recover
lost funds. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The fraudsters often gamble that the rest of the victims will
be in on the con because; firstly they want to recover their own ‘investment’ and
secondly they can also profit by luring their own victims. Indeed, those
joining such an elaborate scheme much earlier, will realize substantial
revenues that are mainly extracted from fees paid by later recruits. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Successful members/investors are then used as testimonies
to lend credibility to the grand scheme. This maybe the reason why some defend Ponzi
schemes, the earnings are real for the early investors. Indeed, even Bernie
Madoff’s multi-billion grand theft might have duped many investors in the end but
those who joined early earned handsome rewards.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Regrettably, all Ponzi network marketing schemes often
collapse as it will become mathematically impossible to continue getting new
investors or referrals as they commonly known. When that point is reached, such
a scheme collapses like a deck of cards and the last members to join often lose
out. There is neither compensation nor relevant laws that provide cover while
consumer watchdogs only react when the schemers are already gone.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For example, controversial organizations like OneCoin,
MMM and RRR Link conned unsuspecting people into parting with millions of
dollars by employing similar tactics. Arrests have been made but masterminds
might not even serve time!<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">As the old adage goes, once bitten twice shy, some in
African countries where Ponzi schemers regularly strike now view with suspicion
any organization using any such marketing methods. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Sadly when a legitimate business attempts to employ the same
tactics in a market that has seen its fair share of Ponzi schemes, such a
business will see their image getting tainted by this association. That also
goes for Blockchain or crypto businesses, distrustful potential users will
steer clear of crypto-currencies when a suspicious referral system is brought
into the picture.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Blockchain is real and its utility has been proven countless
time but this association with such unpopular schemes will only slow down the
embrace of the innovation. Already some crypto businesses on the continent
constantly have to bat away accusations that they are running pyramid schemes.
This does not augur well for cryptos in a market that represent the best user
case scenario.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">One Bitcoin mining company is using such an approach as
it attempts to recruit more miners to its pool and its officials believe they
are conducting a legitimate and genuine operation. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Potential miners are told of enticing but surreal income
projections, which are dependent on the number of successful referrals. After attending
one of their regular investor meetings, one gets a feeling that the
organization is running a pyramid scheme but using its association with Bitcoin
to claim legitimacy. </span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For opponents of Bitcoin, this particular case is manna
from heaven, they are quick to seize on this by warning the public to avoid
this ‘latest’ Ponzi scheme in reference to Bitcoin and not the said
organization. Such an attack is at best disingenuous but it sticks if the targeted
audience has had previous encounters with actual Ponzi/Pyramid schemes. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">MMM was grand scheme that left hundreds of thousands
counting losses across the African continent. Crypto opponents on the continent
are able to weep up emotions by invoking these memories when they attack
crypto-currencies and they may have a ready audience in the form of ignorant
government officials. A few years ago, Nigeria and Uganda lawmakers were both
reportedly contemplating tougher regulation for cryptos, which authorities are
repeatedly linking with the growing problem of Ponzi and Pyramid schemes. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Therefore crypto businesses must avoid falling into this
trap by choosing marketing methods that make the task of marketing tokens easy.
Perceptions are stronger and difficult to alter though the passage of time
will. It does not matter that a crypto company believes that it is running a
legitimate operation, what matters are the potential users’ perceptions. If the
perceptions about network marketing are currently negative and they cannot be
changed immediately, the best course of action would be to avoid relying on this
referrals business as strategy of driving up numbers.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">It is best to only resort to that method when the air has
been cleared that crypto-currencies are not scams but are real solutions to the
continent’s problem of inaccessible banking services.<o:p></o:p></span></div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-25494537754157111632019-07-25T06:57:00.000-07:002019-07-25T06:57:01.837-07:00Intrinsic value—does it matter for Bitcoin<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Opponents of pure crypto-currencies including those
supporting stablecoins have consistently used the tokens’ perceived lack of
intrinsic value as their main line of attack. Stablecoins are backed by
‘stable’ fiat currencies like US dollar and Euro or alternatively with
commodities like gold. Fiat currency itself is stable because it has state
backing, it’s the legal tender.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Ordinarily this lack of intrinsic value means a pure crypto-currency
like Ethereum is not really backed or tied to anything of value. Matters are made
worse by the fact that few countries have given recognition to Bitcoin or any
of the so called alt-coins.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Without official or legal recognition as well as real assets
to back them, growth and acceptance of crypto-currencies will remain stymied we
are reminded. But just how far this intrinsic value argument goes is unclear. Most
government issued currencies are also not backed by underlying assets, they
have no intrinsic value but they remain in play.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Legal tender status<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Indeed, prior to 1971, the world was accustomed to a gold
standard; the US dollar was redeemable for gold. The world has since moved away
from that system to one where value of the currency is determined by the forces
of supply and demand. Under such a system, it is the central bank that is entrusted
with the task of maintaining or stabilizing the value of a currency by either injecting
or limiting the amount of money in circulation.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The abandonment of the gold standard meant a central bank
issued currency was now just a token with no real value. Besides the legal
tender status that is assigned to it by a government, it has no intrinsic value
per se, the currency only functions because it has state backing. Logically people
will have confidence in that currency’s ability to act as a medium of exchange
or a store of value simply of because it has the legal tender status. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is this confidence that matters particularly when a
currency has nothing backing it. Pure crypto-currencies like Bitcoin are not
backed by anything nor do they enjoy the legal tender status but have exhibited
signs of a fully functioning medium of exchange. That is only possible because
early users have confidence this novel currency. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In 2018, when Bitcoin’s value began heading south, critics
began predicting a total crash but that has not happened just yet. After
peaking to just under $20 000 in late 2017, Bitcoin value fell to below $4000 by
late 2018 but only to stabilize around that price. The so-called analysts
pointed to the price of $3600 being the resistance level; Bitcoin could not
drop further than that, the only direction was up. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
That assessment seems correct for the moment because Bitcoin
has since rallied, briefly peaking at $13 000 in July 2019. Some are predicting
that it will breach the $20 000 barrier later this year with reports suggest
that institutional investors have joined the club. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Why the confidence in
Bitcoin<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Bitcoin and alt-coins have maintained their values precisely
because users have confidence in the mathematics behind the creation of such
tokens. The Blockchain— the technology that underpins
crypto-currencies—occupies the role usually reserved for a central bank, it
ensures the currency in circulation is immutable, it cannot be duplicated and
more importantly, it allows users to verify if the founding rules are being
adhered to. In other words there is no debasing of currency through over
printing or uncontrolled borrowing as is the case with fiat currency because
the Blockchain pre-empts this even if that were the only ‘options’ left . </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As a growing number begin to understand this about the
Blockchain, more people get attracted to Bitcoin even as it has no intrinsic
value. As often is the case with currencies, it is confidence that translates
to a strong and stable currency. High confidence means a strong currency and
vice versa. Backing a currency or even a stablecoin with gold or oil might not
be enough to sustain or support a currency when there is no confidence. That is
what Venezuela has learnt with its petro crypto token.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Oil not enough<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Venezuela is in the midst of a crippling economic crisis;
its currency has all but collapsed and generally the country is short of
confidence. In response, the government launched its own crypto, which it said
is backed by oil or gold. However reports coming from that country indicate
this project may have suffered a stillbirth; few people are accepting this as a
means of payment. Instead, Venezuelans have placed trust in Bitcoin, a privately
issued crypto-currency with no intrinsic value. Reports suggest many are using
Bitcoin to settle transactions as well as to hedge against runaway inflation.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This example proves that while precious resources or
commodities are important in backing a currency, confidence in the process of
issuing that currency remains paramount. Venezuela is a renowned oil producing
country and backing the petro token with oil made all the sense, yet for citizens
of that country that is simply not enough. Reports of abuse of national
resources as well as corrupt practices by government officials are some of the
factors that drain confidence in a currency as well as the economy in general, and
this may have contributed to the petro failing to take off. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Legal tender not
enough<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Zimbabwe is another example that has proven that without satisfying
certain conditions like confidence, a currency cannot stand even as it enjoys
the so-called legal tender status. When the Zimdollar collapsed in 2008, the
country adopted the popular and stable US dollar as the new legal tender or as the
process is known, Zimbabwe dollarized. It was during this dollarization era
when officials repeatedly complained that the US dollar had curtailed the
central bank. The central bank could not issue out effective monetary policies
without a local currency. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Things like inflation targeting and foreign exchange
controls were not possible without a domestic currency was argument. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Sometimes the arguments had little or no economic rationale.
For instance officials averred that a country just had to have its own currency
for the sake of it. A local currency was a source of nationalistic pride. Local
currency supporters did not want to be reminded why the currency had collapsed
in the first place.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Consequently, in late 2016, the government reintroduced the
Zimdollar, then initially disguised as the so-called bond notes, which were supposed
to be at par with the US dollar. The Zimdollar was brought back to ostensibly
enable the central bank to positively tackle monetary issues. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Of course, this is not the only reason. With capacity to
mint your own currency comes the ability to print money well beyond a country’s
economic means. With printing money comes power, an entire population is at the
mercy of a few central bank appointees who are in fact more subservient to their
appointers than to the interests of the masses.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In countries with weak governance systems, such an
arrangement enables corrupt politicians to finance expensive but ultimately
unviable public projects and Zimbabwe is no exception. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In early 2017,Zimbabwe launched Command Agriculture, an
ambitious but costly agriculture funding initiative and this expansive exercise
gobbled $3 billion between 2017 and 2019. Government had initiated this in
order to bolster the country’s agricultural output and food security after
years of grain deficits. Two years later, government now says Zimbabwe needs to
import at least 800 000 metric tonnes of maize in order to avert a famine
following a poor agricultural season! In other words, the giant agriculture project
has failed even after the central bank created or printed money to fund this.</div>
<div class="MsoNormal">
Just recently, the country’s auditor general produced a report
which exposed the rampant abuses that plagued Command Agriculture leading to
its now apparent failure. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is imperative to note that this kind of unrestrained
spending coincided with the return of a local currency. Command Agriculture would
not have been possible without the fictitious money coming out of the central
bank.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Now ordinary people are paying the price, a legal tender
status or state backing will not save a currency from collapsing. The new
Zimdollar has depreciated by 900% against the US dollar since its
reintroduction in late 2016 and looks destined to fall even further. With
official inflation figures now at 175%, ordinary Zimbabweans are dumping the
currency in favor of the USD and Bitcoin. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The growing interest in Bitcoin by some Zimbabweans is
particularly important as it is happening despite public warnings against the use
of crypto-currencies which were issued by the country’s central bank. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Bitcoin’s popularity in Zimbabwe underlines the importance
of transparency in managing a currency. This crypto-currency has a known number
of coins in circulation as well as the total number that will be issued. There
is no possibility of reneging on this because this is already wired in the
Blockchain and no one party can alter this. Knowledge of this creates
confidence, a key attribute for anything that functions as a medium of
exchange.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Intrinsic value matters yes but on its own it cannot sustain
a currency. However, with just confidence, a currency will survive as Bitcoin
and alt coins have shown us. Bitcoin opponents may have to look for another
reason to attack the crypto, the intrinsic value is argument does not stick
anymore.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-332351221443973612019-07-17T14:30:00.002-07:002019-07-19T15:20:22.693-07:00Crypto-currency inevitable despite Trump outbursts<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
United States of America President is not one given to
diplomacy, Donald Trump speaks his mind and in many ways that endears him with
his supporters. Trashing Washington’s well established etiquette and its
venerable poise, this president has taken on powder keg topics or issues with
breathtaking unruliness. From the trade spat with China or a brawl with Iran to
lashing out at a special counsel investigation into 2016 US elections, Trump’s
showmanship looms large.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, for those searching for clues of the exact
happenings inside the Trump White House, the twitter rants are a treasure trove.
Journalists now seem to prefer reporting on his twitter feeds to official
government announcements. Anything he says grabs headlines around the world.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So many crypto-currency enthusiasts and supporters could not
believe their luck when the man teared into Bitcoin and the upcoming Libra
recently. Trump attacked Bitcoin and claimed the US dollar was the strongest
currency before suggesting (or threatening) that Facebook had to establish its
own banking charter if it wanted to launch Libra. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As usual, those looking for clues from the twitter rants found
this to be quite bemusing but interesting nonetheless. For crypto-currency discourse
had until now remained limited to a motley of crypto supporting websites, some
tech magazines and on rare occasions, the mainstream media. The bigger media
may have been avoiding this subject, possibly out of ignorance or perhaps due to
sinister motives. Whichever the case, the effect has been clear and consistent,
it suffocated this debate.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So when an unhinged Trump tears into crypto-currency there
has to be something much bigger about the topic than the attention it had been
getting. Interestingly, the US Treasury Secretary Steve Mnuchin addressed the
same issue but was more measured as did Jerome Powell, the chairman of the US
Federal Reserve. The two men may have been trying to walk back some of the
president’s unrestrained comments earlier. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Nevertheless, it is Trump’s utterances that matter because
they are not laced with the usual diplomatic niceties, when he sees a threat he
makes sure everyone knows about it. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So what is the threat here anyway? Apparently the US
government establishment believes a crypto-currency like Libra stands a good
chance of succeeding and thus possibly ending the US dollar’s global dominance.
That is the first clue to be gleaned from Trump’s twitter rants; it is primarily
about the impeding loss of power and not the usual money laundering or
terrorism funding talk that officials have tried to use to sanitize their alarm.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Bitcoin and Libra are real threats to Washington’s foreign
policy and its sanctioning toolbox, the Office of Foreign Asset Control (OFAC).
It seems a widely adopted crypto-currency as Libra is promising to be, can
potentially nullify the effectiveness of the financial sanctions policy.
Facebook and its Libra partners may have taken the unusual step (in the crypto
world) of engaging or of trying to submit to authorities first before launching
but that is being rebuffed because the issue has more to do with threats to America’s
global dominance by crypto-currencies. KYC or AML concerns are just smoking
guns! </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The second clue comes from the stance taken by congress, a
body often at odds with Trump, but seemingly happy to back him on this one. Such
unity should be enough to raise stink to any neutral observer. When a
polarizing president’s utterances are in sync or are supported by a usually
divided congress, it means the threat is real. In fact, a bi-partisan congress
has even gone a step further by asking Facebook to halt its march towards Libra
launch because lawmakers want to time to study or to have their concerns
addressed first. Of course Facebook may not be in a position to adequately address
any such concerns. Simply put, congressional leaders do not want Libra to
compete with the US dollar period! No amount of glossing over will hide this
fact.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Facebook’s blockchain lead David Marcus tried to point out
that the US need not be left behind with this technology when appearing before
the Senate Banking Committee but lawmakers were unmoved. Their disdain of
Facebook and general fear of competition blinds them to a point that any
rationale argument in favour of privately issued currency is assailed.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
While Facebook is hardly the right candidate to speak on
behalf of this industry, Marcus did manage to highlight one important fact, the
need to serve those without access to financial services. The world has 1.7
billion people who are unbanked and many more who under-banked and this is has
been the case pretty much for years. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Some lack a bank account not because there
are no financial institutions around them but because they do not trust them or
lack the necessary documents needed. A World Bank Global Financial Index survey
found that close to 20% of unbanked respondents said they do not trust
financial institutions as their reason for avoiding the banking system.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Banking fees as well as accessibility are some of the key
issues of concern to those without bank accounts and it these areas where
crypto-currencies hold an advantage over traditional banks. One only needs
internet access to be able to access or use crypto-currencies, which are also
better at making cross border payments or remittances.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
These are real life use cases and trying to forestall a US
company from providing such services will only result in non-US companies or the
difficult to regulate cryptos like Bitcoin filling this void. Crypto-currencies
are inevitable, whether privately, anonymously or publicly issued, the world actually
needs them.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Governments need to come to terms with this reality sooner
rather than later and embrace this technology. Moreover, efforts should be
undertaken to see how these technologies can be integrated with the
conventional financial system.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Attempting to legislate against innovation— as the Capitol
Hill rumor mill seems to suggest—will be a signal to rivals that the United
States is relinquishing its position as the number one hub for innovators. In
any case, any such legislation will be akin to putting cart before the horse,
it goes against the conventional way of doing things. A new product or an
innovation must given a chance to grow and express itself before one passes
judgment. Legislation should only come when there is sufficient information and
knowledge about an innovation.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Indeed fear and cynicism might win votes and elections
sometimes but that should never be the case when it comes to lawmaking or
government policies, which often outlast elected governments. Instead, sobriety
must always take precedence.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-36422774165552029992019-07-15T14:43:00.000-07:002019-07-15T14:43:02.767-07:00Stablecoins—the critical final piece<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The impasse that has prevailed
between crypto entrepreneurs and regulatory authorities meant mass adoption of
crypto-currencies was not going to happen unless a breakthrough was found. To potential
cryptos users, an endorsement of crypto-currency by authorities is seen as an
important step towards instilling more confidence.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"> </span>On the other hand, regulators
are unwilling to give such an endorsement to any innovation which they see as a
threat, and now with US President Donald Trump accentuating these fears,
endorsement may not come anytime soon. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Prior to Mr Trump’s outbursts against cryptos, central
banks/regulators had for years been adamant that all players in the financial
services industry had to comply with KYC and AML processes without exception. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Central banks genuinely believe they should be able to track
and trace all financial transactions that fall within their jurisdiction;
privacy is not something that overly concerns them. In nutshell, central banks
want to maintain total control.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Obviously creators of
purely decentralized cryptos will never accept this because their innovations
are already popular, in part because they give users complete privacy. Also
anyone who wishes to acquire crypto-currencies is free to do so as long as they
have the funds to make the purchase. There is no documentation required or the usual
KYC procedures, which may be responsible for the exclusion of some 1.7 billion
from the banking system. Crypto-currencies like Bitcoin are permissionless!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This unhealthy
stalemate has subsisted for a few years now although both parties are in
agreement that the Blockchain technology is actually beneficial. Naturally,
this situation has been seen as a call to action for entrepreneurs to create a hybrid
that satisfies the seemingly mutually exclusive needs/concerns of users and regulators.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For the moment, stablecoins appear to be that important
compromise albeit with some limitations. Stablecoins are cryptographic tokens
collateralized with a physical asset, most commonly being fiat money such as the
USD or commodities such as gold or silver. Tokenization of an asset essentially
transfers the ownership and value of an asset to the correlated token. Pure
crypto-currencies may have failed to achieve mainstream adoption thus far due
to the fact they have no ‘intrinsic value’ hence the price volatility.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This tilt from the extreme end of the spectrum—a
decentralized crypto like Bitcoin—to stablecoins indicates an understanding of
challenges stifling pure cryptos. Consequently, there has been a deluge of
generic forms of crypto-currencies, from USDT, a privately issued stablecoin
which is backed by the USD to petro that the Venezuelan government issued coin
and now Libra.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Indeed, pure crypto-currencies were initially created to
compete or replace fiat currency as a medium of exchange and a unit of account.
This has not really happened on a large scale partly due to the aforementioned
reasons and not forgetting the instability of most crypto-currency values, if
not all of them. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As we have seen in preceding articles, many other factors
also contribute to this challenge of slow adoption hence their failure to
upstage fiat money thus far. To illustrate, crypto market capitalization as at
March 11, 2019 was estimated at about $134 billion. At around the same time,
the overall value of banknotes and coins in circulation is over US$7.5
trillion, the global narrow money supply (banknotes and coin, including cheque
account deposits) is US$36.8 trillion, while the global broad money supply
(banknotes and coin, cheque account deposits as well as money market accounts,
savings accounts and time deposits) is more than US$90 trillion, making cryptos
still relatively immaterial compared to fiat currencies. (At the time of
writing, crypto market capitalization had surged to over $300 billion largely
spurred on by Bitcoin, which is set to breach its previous peak.)</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As already noted, a number of stablecoins have emerged and
more are coming with the most notable being the upcoming Facebook Libra. The
Libra story supports the growing realization that stablecoins are the future of
cryptos for now and why an alternative system is necessary. Also, the Libra
story could amplify the debate about the importance of Blockchain technology in
bridging the financial services gap.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, in spite of all this, stablecoins including Libra are
a deviation from the original ethos of digital currencies and thus they cannot pass
as decentralized or permissionless currencies. To understand this point, one
has to observe the structure of the organization behind the Libra stablecoin
for instance. An umbrella body representing the interests of organizations who
are party to this project, the Libra Association Members is being set up. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Purportedly this body will not be under the direct control
of any of the participating organizations but the fact that it is there
underlines the critical difference with Bitcoin which does not have a similar
body. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This is one key deviation from the original principles; pure
cryptos have no central point of failure, there is no big brother snooping
around so to speak. Today politicians and regulators gripe against Bitcoin because
they cannot influence or control those using it or where it is used because it is
decentralized, there is single point to attack.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To illustrate this last point we take the example of the
United States government, which presently relies on the US dollar’s global
dominance to project its power around the world. Washington can literally cut
off any country from the global financial system if it feels that country
threatens its foreign policy objectives for instance. So when the world
switches to a currency, which it cannot control like Bitcoin, the US government
will resist this because such a currency erodes its power. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The much anticipated Libra may not pass the same decentralization
test as Bitcoin because it has a central point of failure, governments can
always exert pressure on either Facebook or the organization charged with
overseeing the Libra project. This is already happening even before Libra is
launched; the US government is essentially asking Facebook to make certain
changes or to slowdown the project and the internet giant will oblige or risk
punitive action. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Indeed most stablecoins are designed in a way that allows
governments and regulatory bodies to have influence in their issuance or
circulation thus setting them apart with pure crypto-currencies. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Stablecoins may be permissionless but there may be
exceptions to this as the Libra case once again shows. Facebook is currently
engaged with US authorities over concerns that Libra might be used as a conduit
for illicit transactions, money laundering and even terrorism funding. The US
government wants be to assured that those it flags as possible money launders
or terrorists, be precluded from using Libra. Facebook may be in position to
give such assurances given its control over the massive user database as well
as the network that will be the key in supporting the stablecoin. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is quite possible that people in <a href="https://www.treasury.gov/resource-center/sanctions/pages/default.aspx">OFAC</a> blacklisted countries
might not be able transact freely with this stablecoin, that is if the US government
has its way. This effectively renders Libra a permissioned stablecoin!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Lastly stablecoins are a deviation from the original
principles of cryptos because they rely on or are backed by fiat currencies
issued by central banks. Backing a crypto with a fiat currency— not matter how
strong—means it will be susceptible to monetary policies and consequences
thereof. Such a coin will be affected by inflation or devaluation of the
underlying currency leaving holders worse off.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As we have observed here, stablecoins are fraught with these
challenges which can potentially render them ineffective. Nevertheless, they
are an important step forward in the quest to have crypto-currencies widely accepted.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In any case, this market needs competition and stablecoins
could prove to be just that competition. There is no doubt issuers of pure
crypto-currencies will be thinking of ways of responding to the upcoming Libra
stablecoin. This means existing pure crypto-currencies will see improvements or
changes that make them more acceptable to potential users thus making the goal of
greater adoption achievable.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Stablecoins are well poised to break the ice and end the
impasse between regulators/governments and the Blockchain movement. Most important,
stablecoins could be the final piece needed to bring financial services to
those who do not have them. The next few years will be important for this small
but critical industry.</div>
<div class="MsoNormal">
<br /></div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-64579634647904859152019-07-14T04:36:00.002-07:002019-07-14T04:36:37.418-07:00Why Taiwan is a promising Blockchain leader<br />
<h1 style="margin-bottom: 14.0pt;">
<br /></h1>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Blockchain
technology has been around for quite a while now. It is only now that the
technology is starting to take a firm hold. By 2021, the blockchain market will
approximately be worth $2.3 trillion. Many governments are now starting to
realize the value of the technology and some are adopting the technology for a
variety of tasks including health care, voting and land administration
services.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">A legislator in
Taiwan, Jason Hsu intends to find ways to integrate the blockchain technology
on a grand scale and steer his country towards the adoption of blockchain for uses
other than cryptocurrencies. Hsu has been lauded as the “crypto congressman” by
Vitalik Buterin from Ethereum. He is a tech entrepreneur who successfully ran
for Congress and now wants to turn Taiwan into a haven for innovators working
on different application technologies.<o:p></o:p></span></div>
<h2 style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="color: black;">Change
of legislation<o:p></o:p></span></b></h2>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">In September 2017
when </span><span lang="EN-GB"><a href="https://www.scmp.com/tech/china-tech/article/2132319/what-happened-initial-coin-offerings-china"><span style="color: #1155cc; font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">China slapped a ban on ICOs</span></a></span><span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">, Hsu saw this as an opportunity to propose
some changes to legislation that would help Taiwan capitalise on China’s move.
His intention was to introduce more friendly laws that would not only nurture
the blockchain technology but entice more startups to set up base in the Island
nation.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">As Hsu reflects
the today, a number of technological disruptions are making an impact on how
our lives manifest. The country ought to recognize this fact and update its
policies to incorporate new ideas into the current system.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Subsequently Jason
helped to launch the regulatory sandbox in the finance department to explore future
opportunities for financial technology start-ups. The sandbox also helps to
ensure that start-ups are able to create workable solutions and technologies
that are usable by all and sundry.<o:p></o:p></span></div>
<h2 style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="color: black;">Sandbox<o:p></o:p></span></b></h2>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Hsu believes that
today’s environment is moving very fast and sandboxes in such areas as a
medical technology are vital in order to test new devices that can incorporate
digital health. In Dec 2017, parliament passed into law Taiwan’s regulatory
sandbox, which allowed certain selections of startups to unveil new products or
services while enjoying immunity from the existing laws.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">The Taiwan
Financial Technology Experimentation and Innovation Act (Regulatory Sandbox
Bill) is supposed to help bridge the fintech gap in Taiwan. Hsu was a major
player in the drafting of the bill as well as the entire legislative process.
The sandbox was unveiled to create opportunities for upcoming fintechs on the
island and help build innovations that would create solutions globally.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="color: black; font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Applications<o:p></o:p></span></b></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<a href="https://www.blogger.com/null" name="_gjdgxs"></a><span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Jason Hsu, </span><span lang="EN-GB"><a href="https://www.expressvpn.com/blog/jason-hsu-interview-blockchain/"><span style="color: blue; font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">the congressman who is turning dreams
into reality</span></a></span><span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;"> is also
exploring different initiatives along with a few other industry enthusiasts and
these include:<b style="mso-bidi-font-weight: normal;"><span style="color: black;"><o:p></o:p></span></b></span></div>
<div class="normal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 14.0pt; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Noto Sans Symbols"; mso-bidi-font-family: "Noto Sans Symbols"; mso-fareast-font-family: "Noto Sans Symbols";"><span style="mso-list: Ignore;">●<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Digital content
proof of ownership</span></div>
<div class="normal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Noto Sans Symbols"; mso-bidi-font-family: "Noto Sans Symbols"; mso-fareast-font-family: "Noto Sans Symbols";"><span style="mso-list: Ignore;">●<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Decentralized
internet for every citizen</span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Noto Sans Symbols"; mso-bidi-font-family: "Noto Sans Symbols"; mso-fareast-font-family: "Noto Sans Symbols";"><span style="mso-list: Ignore;">●<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">prediction
platform for<span style="mso-spacerun: yes;"> </span>politics, or share markets
and many more</span></div>
<h2 style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="color: black;">Parliamentary
support<o:p></o:p></span></b></h2>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Taiwan is modeled
in such a way that the Executive Yuan can propose their own legislation. <span style="mso-spacerun: yes;"> </span>Legislators are also allowed to propose and
draft laws and the norm is the different versions can be debated on. The
Executive branch is still very conservative, but they do share a common goal
with the legislature, it is the pace in which the two are moving at that is different.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Hsu intends to
create opportunities for the youth, and he is not worried much about convincing
his parliamentary colleagues but makes it a point that start-ups do support his
proposals. Support from the startup puts a lot of pressure on officials and congressional
representatives to give a response.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">The Financial
Supervisory Committee and the Ministry of Finance are well on the way towards
passing cryptocurrency and blockchain legislation. They have formed a
parliamentary level commission for blockchain that is working towards building
the necessary framework.<o:p></o:p></span></div>
<h2 style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="background: white; color: black; mso-highlight: white;">Skepticism over Blockchain<o:p></o:p></span></b></h2>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="background: white; color: #222222; font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-highlight: white;">Hsu says that people will always be
skeptical about any new innovation. When the internet was new, people said it
was a scam but today many acknowledge its utility. As a legislator, Hsu’s
intention is to create a fair environment that cultivates innovation while safeguarding
consumer rights. <o:p></o:p></span></div>
<h2 style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="background: white; color: black; mso-highlight: white;">Development and adoption of blockchain<o:p></o:p></span></b></h2>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="background: white; color: #222222; font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-highlight: white;">Many countries are still struggling to
understand the blockchain technology as well as how to develop and implement
it. In Taiwan’s case however, the country has been a </span><span lang="EN-GB"><a href="https://www.euromoney.com/article/b13209y01r88c9/taiwans-electronic-revolution"><span style="background: white; color: #1155cc; font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-highlight: white;">computer
and electronics integrator</span></a></span><span lang="EN-GB" style="background: white; color: #222222; font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-highlight: white;"> since the 1970s
and is endowed with a pool of talented and experienced engineers. With this in
mind, Hsu has set out to build up Taiwan as a blockchain haven where innovators
can pioneer new projects that will churn out applications for blockchain.<o:p></o:p></span></div>
<h2 style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="color: black;">Blockchain
implementation<o:p></o:p></span></b></h2>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Blockchain has
been underrated for as long as it has been around. As with any new technology,
once a useful application comes up, people start to take notice. Blockchain
gave birth to Bitcoin, but now the technology is growing and integrating other
applications.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Hsu has plans to
ensure the government recognizes and uses blockchain on a larger scale. It has
already moved to the Departments of Justice, Education, and Health onto the
blockchain. The average person needs to recognize the improvement of life is
via blockchain’s efficiency. As part of his many objectives, Hsu has introduced
25 pilot projects in various departments to look into the potential use of
Blockchain in areas such as court records, supply chain, and drug tests.<o:p></o:p></span></div>
<h2 style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="color: black;">Blockchain’s
future<o:p></o:p></span></b></h2>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Blockchain is not
going anywhere. The world’s governments are slowly accepting the technology and
in no time, these hurdles and scaling issues will be a thing of the past. Jason
also believes that Cryptocurrencies and fiat currencies can co-exist.
Cryptocurrencies are a financial alternative that can create solutions for poor
countries like Zimbabwe and Venezuela.<o:p></o:p></span></div>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">Taiwan is a haven
for technological start-ups that focus on blockchain, IoT and AI. An escalation
in the creation of major start-ups and incubators are thrusting Taiwan into the
blockchain limelight. Taiwan Tech Arena is one such startup incubator that will
initiate at least 100 start-ups every year, and accelerate the expansion
overseas of 300 more in a span of the next three years.<o:p></o:p></span></div>
<h2 style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="color: black;">Conclusion
<o:p></o:p></span></b></h2>
<div class="normal" style="margin-bottom: 14.0pt; margin-left: 0in; margin-right: 0in; margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">The only way to grow
blockchain technology lies in its demystification. This can only be done by
changing blockchain’s narrative from the complex tech talk to a language understandable
and that an average person can relate to. This means showing people what the blockchain
technology can really do, the real-life problems it can solve as well as laying
out its many advantages. <o:p></o:p></span></div>
<div class="normal" style="margin-top: 14.0pt;">
<span lang="EN-GB" style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri;">A lot is happening behind the scenes, not just in Taiwan, but globally
as the race to integrate blockchain with everyday life gathers momentum. It is
only when people realize the real benefits of the technology and how they stand
to benefit will a greater adoption of the technology be realized.<o:p></o:p></span></div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-38408319364247519512019-07-12T15:08:00.001-07:002019-07-12T15:17:40.027-07:00Central bank issued cryptos<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The crypto-currency race is heating up, giant corporations
like J P Morgan, Microsoft, Facebook, Oracle and many others have all signaled
their intention to or are in the process of creating their own Blockchain
backed currencies.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It seems former skeptics are now taking this financial
technology quite seriously; Bitcoin’s resilience has proven that a privately
issued currency has its place in a space that has for a long time been closed.
So perhaps it comes somewhat as a surprise when central banks also join in the crypto-currencies
frenzy.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is surprising because when Bitcoin was launched, central
banks led the charge in vilifying and maiming the currency. Potential users
were constantly reminded why this privately issued currency had to be ignored not
least because of risks of financial loss. As Bitcoin endured courtesy of the
underlying technology, alarmed central banks and their cohorts upped the ante
in their opposition. </div>
<div class="MsoNormal">
This currency is being used by criminals or terrorists has
been their usual refrain.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Essentially, authorities were alarmed that a privately
issued currency was gaining foothold and that this threatened the future of
central banks and their monopoly over monetary policy management. Of course,
Bitcoin was created specifically to challenge this monopoly and give people a
viable alternative to fiat currency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So it is quite awkward that some 8 years after the start of
Bitcoin, the Bank of England signaled its intention to experiment with its own
Blockchain backed currency, the so called RSCoin. At the time of the
announcement in 2016, the academics working on this project said they hoped
this particular Blockchain backed crypto would even upend the US dollar as the
world’s reserve currency. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
According to media reports at that time, supporters claimed
the RSCoin would combine the benefits of distributed ledger technology (DLT) with
those of a regular controlled currency. Such are the double standards, apparently
crypto-currencies are only beneficial when issued by central banks. The
benefits or advantages that are already seen with cryptos like Bitcoin are
simply whitewashed.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Indeed many figures
in the regulatory world privately acknowledge the utility of the Blockchain
technology or DLT and do not want to be left behind. Threats against Bitcoin
have not worked, there are now 2000 more crypto-currencies and more will come.
The only logical thing is to join the race.</div>
<div class="MsoNormal">
One can only feel sorry for those in the central bank orbit
still fighting crypto-currencies; the world has accepted this idea. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Augustin
Carsterns is a General Manager with Bank for International Settlements and a
harsh critic of privately issued currency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Earlier this year he was quoted by the media, railing against
crypto-currencies arguing that there are ‘huge operational consequences for
central banks in implementing monetary policy and implications for the
stability of the financial system.’ </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
According to him, central banks thus do not
put brakes on innovations (like crypto-currencies) just for the sake of it.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This is rather a belated but important admission, regulators
could have been deliberately stifling growth of crypto-currencies this entire time
but now ructions within the ranks of central banks beginning to manifest. Switzerland
is one country to have gone a step further in embracing Blockchain technology and will probably issue its own central crypto. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is clear that reasons often given for the warnings or
advisories against Bitcoin are just a ruse; central banks were not happy with
the intrusion, they just wanted this space to remain monopolized. </div>
<div class="MsoNormal">
It may be worthy to note that prior to Bitcoin, there had
been several attempts to issue currency privately and each time such efforts
were crushed. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Abuse of national currency and unchecked printing are some
of the inflation causing reasons that motivate individuals to seek
alternatives.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Creators of Bitcoin learnt from the mistakes of early
currency dissidents and made this decentralized digital currency that seems to
give disillusioned fiat currency users a viable alternative. Unless central
banks reform, privately issuing crypto-currencies or alternatives to fiat
currency will keep coming. It will not matter that central banks are now
joining the crypto movement; people will continue to seek alternatives.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Essentially, it this threat or competition from private
currencies, which might force central banks to reform after all. Furthermore,
it has never been desirable for any entity to enjoy a monopoly position as
history has shown us. Therefore central banks can issue their own cryptos but
that should not mean an end to privately issued currencies. The more the
merrier!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In any market, the quality of choices is only enhanced when
there is healthy competition and that should be the case in the currency
markets as well.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-35472582508178171442019-07-12T15:05:00.002-07:002019-07-13T16:19:45.833-07:00Bitcoin’s vexing anonymity and confidence<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The world’s first privately issued currency, Bitcoin, can be
described as a success given the challenges it has survived. There is no doubt
that this success will be bettered as events in the financial services world
continue to unravel. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Bitcoin has made its point, even harsh critics like Jamie
Dimon, the CEO of JP Morgan has been forced to eat humble pie, after initially
attacking the crypto. News that JP Morgan will be launching its own crypto
vindicates Bitcoin and those behind it in a big way.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, in spite of this apparent success and acceptance of
the ideals of a private currency, the fact that Bitcoin creators still choose
to remain unknown is something that still confuses. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is customary, perhaps even natural, for individuals who
bring life changing innovations to seek or expect recognition for their
efforts. After all, the geniuses of this world gained global recognition for
their innovations, from Bill Gates with his Microsoft to Mark Zuckerberg and
his Facebook, Jack Ma with Alibaba to Ren Zhengfei and his Huawei,. Yet with
Bitcoin, you cannot put a face to it, Satoshi Nakamoto remains anonymous! </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Unfortunately opponents of Bitcoin are seizing on this as
they up the ante against the crypto-currency. For example, South African
regulators want all issuers of crypto-currencies to register with them so as to
gain ‘permission’ to continue operating in that country. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This may well suggest that South African regulators want to
know those behind Bitcoin.<span style="mso-spacerun: yes;"> </span>Of course,
Bitcoin issuers are not going to comply with this, besides it is not possible
for any one regulator to grant permission to Bitcoin or to enforce an order
banning this crypto. The Blockchain technology behind Bitcoin makes the
innovation permissionless, it continues to grow like this because it was
created to survive like this.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
South African regulators are well aware of this but they are
pressing on as the idea is winning the moral argument against anonymous crypto-currencies.
Central banks hope to turn the tables against cryptos like Bitcoin, by tying
the anticipated refusal to register down to possible ties to money laundering,
illicit transactions and terrorism financing.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Of course this terrorism or money laundering argument has
run its course but it may well be one of the major reasons why Bitcoin has not reached
its full potential. Such a tag saps confidence in that crypto-currency while
giving lagging rivals a window to play catch up rather quickly. It could well
be true that Facebook studied the Bitcoin Blockchain well and understood the
pioneering crypto’s weak points before announcing its entry. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Facebook’s Libra coin is now being touted as a crypto that
may finally achieve the elusive dream of greater adoption even as it slated for
launch in 2020. Bitcoin did all the hard work, it fought authorities for years
to accept the very idea of a privately issued currency and it is now easy for the
likes of Facebook to announce it will launch its own. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Authorities now seem to have come around the idea of
privately issued currency that is if the United States Congress demands to
Facebook are anything to go by. Apparently American congressional leaders want
Facebook to assure them that the Libra coin will not be used for nefarious
activities something they cannot do with Bitcoin. Of course, in reality politicians
have little leverage over Facebook, the congressional hearings are only a pyrrhic victory,
and nothing really changes in the end if past hearings are anything to go by.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Powerful politicians are now negotiating with an entity that
has not even launched just because they can put a face to the organization. Ideally
these powerful politicians should have been negotiating or pleading with Bitcoin!
Bitcoin will thus remain handicapped by this anonymity while lesser rivals
gain recognition and adoption by the masses. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So while Bitcoin developers and supporters may argue that
Libra does meet the minimum standards for a decentralized currency, there is a
good chance that those without banking services will embrace it just because
they know Facebook, they know Mark Zuckerberg. The social media company has the
numbers and many potential users will simply embrace Libra without asking the
hard questions like they are doing with Bitcoin or Ethereum for instance. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Bitcoin creators’ insistence on anonymity opens the doors
for opportunists as what happened in 2016 when Craig Wright attempted to present
himself as Satoshi Nakamoto. This is made possible by the fact that there is
no-one or a public relations person that can forcefully dismiss such
opportunists.</div>
<div class="MsoNormal">
In Bitcoin’s defence however, this anonymity has been
justified given the environment that the currency has had to operate. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
From its
inception, the creators recognized the potential of Bitcoin and what it could
possibly turn into, and chose anonymity over recognition. Unusually for them,
the incentives for going public were outweighed by the cons; possible legal
ramifications, personal harassment, liability etc. Some have even suggested
that the actual Satoshi Nakamoto may have passed away so the ‘coming out’ that
many expect might never happen. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Sadly the situation has changed quite significantly, there
is a good chance Bitcoin might become the next MySpace or Yahoo unless some
changes are made and that may include revealing the real identities behind this
crypto. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
MySpace was one of the pioneering social media organizations;
it had tens of millions of users especially in North America and enjoyed a
leadership position. However that would change when Facebook and Twitter came
along. Facebook came with a strategy that was more appealing to a wider
audience and its users grew exponentially and the same goes for Twitter. Before
long MySpace had been deposed as the number social networking site and today no
one remembers much about them. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Similarly, Yahoo was one of the pioneering and dominant email
providers but that would change when Google came along. This new kid on block
came with its famed search algorithm, emails, videos plus many other services. The
result was a familiar, Google upstaged the likes of Yahoo and Hotmail and today
there are over a billion Gmail users! Yahoo is now the forgotten email service
provider just because it failed to regenerate itself in time.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The idealism behind Bitcoin is almost perfect but now there
is a good chance that a rival with diluted principles will enjoy a larger share
of the spoils. Bitcoin developers need to do more in order to maintain the
momentum and this could mean increasing the block size for instance or the
number of coins in circulation or even revealing the actual team behind this
innovation. Indeed the threat coming from Libra means Bitcoin creators need to
reevaluate the pros and cons of going public. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Achieving mass adoption should be the greater objective hence
making sacrifices will be necessary along the way. Bitcoin’s Blockchain has
many potential uses but the scaling and numbers issues continue to make it
difficult for such potential to be realized. It is time to regenerate the strategy
in order for the king of cryptos to continue holding that position.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-7266070115726687102019-07-12T02:56:00.004-07:002019-07-12T02:56:55.018-07:00The controversy surrounding ICOs and crypto adoption<br />
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<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
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<br /></div>
<div class="MsoNormal">
Initial coin offering (ICO), the buzzword in 2017 and early 2018,
is a fundraising initiative similar to an Initial Public Offering (IPO) by a
company listing on a stock market for the first time. The hype and success of
early cryptos kick-started an unusually high request for funding the creation
of more crypto-currencies and tokens. </div>
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<br /></div>
<div class="MsoNormal">
Cryptos are touted as the next big thing after the internet
itself and many do not want to be left behind hence the funding requests. So
far such funding requests have manifested in the form of ICOs, which raised
billions of dollars attracting the interest of global regulators. </div>
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<br /></div>
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Indeed a good number of ICOs were issued during the period
of explosive growth in cryptos values. However, prices have since receded and
most tokens now trade at well below ICO issuing prices thus severely impairing
the value investment portfolios. In other words, if holders of these investment
tokens decided to sell they would incur huge losses. </div>
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<br /></div>
<div class="MsoNormal">
According to a Financial Conduct Authority (FCA)
consultation paper, evidence suggests there are particularly significant risks
of fraudulent activity associated with ICOs. The FCA is a UK based regulator
and consumer protection body. </div>
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<br /></div>
<div class="MsoNormal">
FCA’s consultation paper quotes a study which ‘showed’ that
approximately 25% of ICOs could be fraudulent, whilst other estimates suggest
that 46% of ICOs issued in 2017 have already ‘failed.’ </div>
<div class="MsoNormal">
The paper adds, “In many cases, investors do not receive
what they were promised and issuers do not deliver the intended product or
service. This is in part driven by a conflict of interest for the issuer of the
ICO, who may seek to maximise the capital being raised by failing to be
transparent, not providing sufficient details of the risks, and misleading
consumers. In some cases, large sums of money have been raised for projects
without appropriate plans or capability for delivery,” concludes the UK
watchdog.</div>
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<br /></div>
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From this perspective, it is easy to understand why some
view newly created cryptos with suspicion or just as scams. Nevertheless, it is
also fair to say that some ICOs have been successful; the funds raised have
helped to create outstanding crypto innovations even though token/coin prices
remain well below launch levels.</div>
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<br /></div>
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Unfortunately, the narrative has been focused mainly on the
former; the entire market needs to be regulated and fast before more investors
lose. Conventional financial regulatory bodies want to take the lead in
regulating this market even as they do not fully understand the concept of
crypto-currency. The result has been these outlandish proposals which are
essentially aimed at constraining the growth of this market. Predictably the
response by crypto businesses has been that of defiance.</div>
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<br /></div>
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It is important to remember that regulators lack the
technology and the know-how to fully control this nascent industry. They will
have to rely on the voluntary cooperation by crypto players. If crypto
entrepreneurs are unwilling to subject themselves to regulations, there are a
few options on the table which regulators can use and these are not 100%
effective. </div>
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<br /></div>
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For example, the Reserve Bank of Zimbabwe (RBZ) banned banks
from dealing with crypto exchanges and at the same time it issued advisories
warning members of the public against dealing with crypto-currencies. One
crypto exchange, Golix was forced to stop operations and even had an automated
teller machine seized. </div>
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<br /></div>
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Nevertheless, that has only forced people who have already
embraced crypto-currencies to go underground. Bitcoin trading is going strong despite
the ban and the country’s dithering economy—something that can be traced back
to RBZ actions—is only helping make the case for wider adoption of cryptos. The
verdict seems to be that the RBZ is hardly a suitable candidate to call out
crypto-currencies as risky financial assets when its own currency is in
shambles!</div>
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<br /></div>
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Zimbabweans are and can still participate in ICOs or
whatever fund raising initiative without worrying much about the RBZ. That it
pretty much the case in many jurisdictions, regulatory authorities do not have
absolute control over ICOs and peer to peer trading. </div>
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<br /></div>
<div class="MsoNormal">
Sadly however, such haggling between over enthusiastic
regulators and sometimes recalcitrant crypto businesses plays a part in slowing
the adoption momentum. Fence sitters are easily swayed by the media reports of
ICO scams and confidence in cryptos is further shattered when governments skirmish
with crypto businesses. </div>
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<br /></div>
<div class="MsoNormal">
When Golix was forced to shut down in Zimbabwe, it
approached the courts for relief and indeed a judgment was handed down setting
aside RBZ’s decree.In spite of that, banks still refuse to deal with exchanges
and reports suggest clients may have lost funds. </div>
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<br /></div>
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At the very least, Zimbabweans will decide to wait until the
dust has settled before embracing cryptos. In worst case scenarios, potential
adopters will avoid cryptos completely. </div>
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<br /></div>
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Therefore a middle ground has to be found to enhance
confidence in cryptos. Regulators have to acknowledge that they cannot always
force regulations if crypto players are unwilling to observe such. Equally
crypto players need to acknowledge that without the ‘seal of approval’ from
regulatory bodies, confidence in cryptos will remain low and adoption will
remain static. </div>
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<br /></div>
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That maybe the direction needed at this particular moment.
Already Facebook seems to be attempting this in its engagement with US
government officials. The social media giant knows it can still go ahead with
its Libra project without ‘approval’ but it wants this endorsement as this will
help bring confidence to the coin. Similarly, a tech start-up Denk had its ICO
approved by the SEC and this endorsement will go a long way in attracting
investors who are otherwise wary of unregulated ICOs.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-40183216530127808562019-07-07T16:03:00.004-07:002019-07-07T16:03:45.443-07:00Ignorance and complex verbiage: another barrier to crypto mass adoption<br />
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<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
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<br /></div>
<div class="MsoNormal">
Bitcoin is an important innovation that has the potential to
end years of dominance by central bank issued currencies. However, in spite of
this potential, Bitcoin and other crypto currencies remain on the periphery, in
part because potential users are struggling to understand how this
sophisticated distributed ledger technology supported currency works.</div>
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<br /></div>
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Not only that, the technical language used within crypto
world might also be a big turn-off for potential users. Understandably, the
terms and phrases used when discussing Bitcoin are necessary to make the right
distinction and for clarity.</div>
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<br /></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"> </span>So with this in mind,
one might be compelled to conclude that the crypto entrepreneurs might not be doing
enough to educate or explain to potential users these terms or phrases. That ignorance
levels among the targeted audiences remain very high, some 10 years after
launch of Bitcoin, is a serious indictment against advocates of the currency.</div>
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<br /></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"> </span>While many crypto
news sites do carry contributions from the ‘nerds or geeks’, often these highly
intelligent individuals assume that their audiences comprehend issues as well
and quickly as they do. So these contributions are often laced incredibly
difficult lexicon and concepts.</div>
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<br /></div>
<div class="MsoNormal">
Such assumptions ultimately act as barriers to effective
communication with those of lesser intellect who are in fact the majority. Matters
are compounded by the fact that important players like mainstream media are also
not capacitated to handle crypto issues or information very well. This
important bridge between users and developers remains shaky and ineffective.</div>
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<br /></div>
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For example, in the developing world it is plausible for
journalists, just like ordinary folks, to view crypto-currencies with
suspicion. Far too many complex get-rich-quickly scams have left thousands
counting losses and it is easy to see why crypto-currencies could be viewed
similarly.</div>
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<br /></div>
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In any case, it is not easy even for the smart non-IT folks to
follow the crypto-currency discourse when complex terms like Cryptographic hash,
Elliptic Curve Digital Signature Algorithm (ECDSA) or hard-fork chain split are
thrown about in a rather a cavalier fashion.<span style="mso-spacerun: yes;">
</span>Such heavy phrases sometimes kill the conversation before it is even
starts. </div>
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<br /></div>
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As consequence, the crypto narrative or agenda get easily
distorted because media practitioners are either ignorant or find the jargon to
be unfriendly to their audiences. </div>
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<br /></div>
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More efforts need to be directed towards filtering the technical
language to ensure that anyone who is interested in the subject can follow
trends or the latest news. There has to be a way ordinary people can discuss
these complex parts of crypto-currencies without getting ‘bored’.</div>
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<br /></div>
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Furthermore, it is important to for the crypto world to
communicate directly with the masses. A situation sometimes exists where other
forces or non-crypto players seem to be controlling the narrative and this poses
many risks. </div>
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<br /></div>
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For example, the death of Quadriga CX CEO and the reports of
the subsequent loss of millions of dollars worth of cryptos generated a very
negative narrative about the entire crypto market. </div>
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<br /></div>
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After the issue was widely reported by some global media
outlets— by journalists who are not very knowledgeable about cryptos— the
debate that followed only reinforced the stereotype that cryptos are a scam, a
very risky investment or are used by criminals etc. </div>
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<br /></div>
<div class="MsoNormal">
What do you get when you interview a Wall Street banker
about the risks of crypto-currencies? Chances are he will likely assail
crypto-currencies and point to the Quadriga CX fiasco as ‘evidence’ of crypto
businesses being scams. That is exactly what happened! Journalists covering
this story relied on regular financial experts who are just as ignorant to
unpack the Quadriga saga. The outcome was predictable. </div>
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<br /></div>
<div class="MsoNormal">
There lessons here, crypto players must seize the initiative
from less the knowledgeable or opponents and control direction of the discourse.
Ideally, the debate should be about the utility of Blockchain or the proof of
work concept with the crypto players taking the lead in driving this narrative
home!</div>
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<br /></div>
<div class="MsoNormal">
Part of this ‘control’ includes simplifying the complex
verbiage and terms as well as repeating the message enough times to make the
topic stick. The same way ‘mining’ of crypto coins is seen as critical for the
survival of Bitcoin, has to be the same way managing the debate about cryptos
should be seen.</div>
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<br /></div>
<div class="MsoNormal">
The creation of crypto focused media outlets has helped in
countering negative storyline but it is perhaps time to invest in pages of
mainstream media. The quest to achieve mass adoption means reaching out to readers
who are non-crypto enthusiasts but open minded and who may not have the time or
interest to visit popular crypto websites but enjoy reading well researched
articles. Perhaps this group might listen or even start following the crypto discourse,
that is if the topic is regularly discussed in their favorite newspaper like
the New York Times or the Bild.</div>
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<br /></div>
<div class="MsoNormal">
Journalists can only write good articles if they are well
capacitated or trained. Educating journalists about cryptos helps to make the
topic less difficult to understand as well as eradicating biased reporting.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-48265091527471582432019-07-07T05:09:00.000-07:002019-07-07T05:09:00.059-07:00Merchants embrace key in the quest for wider Bitcoin adoption<br />
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<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
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<br /></div>
<div class="MsoNormal">
The number of merchants accepting crypto-currencies like
Bitcoin as a means of payments remains very low. Apparently merchants are only willing
to accept cryptos as payment when there are sufficient numbers of who wish to
pay this way. When that happens, businesses are likely to even display prices
in cryptos but it is still a long way before we get to that stage. </div>
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<br /></div>
<div class="MsoNormal">
Meanwhile many potential clients will use cryptos increasingly
as a payment method when there are enough merchants accepting cryptos as means
of payment. No one wants to be stuck with a currency that is not widely
accepted. In other words, Bitcoin still has to pass the acceptability test even
after being around for 10 years.</div>
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<br /></div>
<div class="MsoNormal">
The question then arises; what must come first; merchant
adoption or general public adoption?</div>
<div class="MsoNormal">
Essentially, the idea must be to make crypto trade or the conversion
to and from fiat money seamless, with little to no involvement of
intermediaries. When that is achieved, merchants will be attracted to cryptos
because of the obvious savings they stand to gain.</div>
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<br /></div>
<div class="MsoNormal">
In the same way a businessman would reject a currency from a
country he barely knows that is the same way he will reject crypto-currencies.
He does not want to be trapped with something that he believes no one is
willing to accept. </div>
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<br /></div>
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An understanding this means crypto-currencies issuers will
have to redouble their efforts at finding a solution that allows for this
seamless conversion. </div>
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<br /></div>
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The merchant does not even need to know the complex process
of Bitcoin mining or to even download the Blockchain software in order to start
accepting cryptos. Their only interest is serving their customers—including
those buying with cryptos—well and getting rewarded with a successful purchase.
The onus is on crypto entrepreneurs to proffer solutions and already there are
products on the market that are doing exactly that. Devices like the PundiX
Point of Sale machine, which allows the seamless conversion from Bitcoin to USD,
is one potential solution merchants are looking for, if only they are aware of
this. </div>
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<br /></div>
<div class="MsoNormal">
PundiX does exactly what they ask for; it allows the
switching from Bitcoin to USD locally. There is no need to involve crypto
exchanges domiciled in foreign countries; everything is done locally over the
counter by simply swiping a debit card. </div>
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<br /></div>
<div class="MsoNormal">
So going back to our earlier question, yes it is quite
possible for merchants to adopt crypto-currencies first without having to worry
about not being able to use these. In fact, a merchant need not understand the
complexities of Bitcoin, the POS device does that. The merchant only needs to
know how to operate the POS device!</div>
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<br /></div>
<div class="MsoNormal">
Furthermore, the merchant will not be worried about tax evasion
concerns because the device can always convert revenues into legal tender when
necessary. Apparently this may be another key concern that is slowing crypto
adoption by merchants.<span style="mso-spacerun: yes;"> </span>Businesses are
wary of possible tax avoidance and evasion allegations should they decide to
accept Bitcoin, so a solution like the device mentioned above undercuts such
concerns. Government tax agencies will be satisfied as long as they know taxes
are being paid regardless of the currency used in settling transactions.</div>
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<br /></div>
<div class="MsoNormal">
On a different note, the price volatility of cryptos is
another key challenge for merchants as well. No one wants to trade in a
currency that is unstable. You want to be certain of the value you get before a
deal is concluded and that the value stays the same after. So when Bitcoin
starts the day at USD11 500 but ends it at USD10 900, this is not ideal for a business
that has to make payments to suppliers at the end of that day.</div>
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<br /></div>
<div class="MsoNormal">
And unless the merchandise is priced solely in
crypto-currency—which is even more complicated—there is little rationale for
accepting cryptos as payment in the first place. At least that would be the
thinking of businesses that refuse to accept cryptos. </div>
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<br /></div>
<div class="MsoNormal">
Well there is a solution to that too! Today there is a
growing list of crypto-currencies or alt coins that address those exact
concerns and these are called stablecoin. Bitcoin remains king of
crypto-currencies but stablecoins—which are essentially hybrids—have a place in
this fight for adoption. </div>
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<br /></div>
<div class="MsoNormal">
As the name suggests, stablecoins are created in such
a way that they do not fluctuate widely over a given period because the track
the value of an underlying asset. The underlying asset can be a commodity or a
basket of fiat currencies. True to form, stablecoins like the USD Tether have demonstrated
this ability to remain stable; the Tether has maintained a value which is more
or less equal to US$1 throughout its lifetime.</div>
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<br /></div>
<div class="MsoNormal">
Using such a crypto-currency eliminates the volatility risk
thus making wider acceptance a real possibility. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Of course there are more advantages to those accepting
crypto-currency as payment but ignorance as well as hostility by regulators are
stopping potential users from realizing these advantages. Nevertheless, as more
people get disillusioned with the fiat currency system, it is imperative for
those working to promote the use of alternative forms of money to regularly
repeat this message.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Crypto payments are prompt and the transactions
fees are significantly lower because there are fewer middlemen or
intermediaries involved, if any. </div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><br /></span></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Crypto-currencies are usually not subject to
exchange control regulations or a particular monetary policy as is the case
with fiat money. A business organization can make cross border payments or
receive payments from abroad without worrying about the foreign exchange
control rules and regulations. Usually such rules compel recipients of payments
from abroad to surrender a portion or the entire proceeds at an uneconomic
exchange rate. For businesses operating in economically weak countries, an adoption
of cryptos means this so-called foreign exchange risk is eliminated.</div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span>Cryptos are not affected by local inflation
trends hence they are a good store of value.</div>
<div class="MsoListParagraphCxSpLast">
<br /></div>
<div class="MsoNormal">
An understanding such advantages means more merchants will
start accepting cryptos as payment because they know at the end of the day,
they will be able to convert all revenues—using the POS—into a currency that
governments recognize. There is zero tax evasion allegation risk, there is zero
exchange rate risk and more importantly, there is zero entrapment risk!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Whatsapp 263 771 799 901, @tem2ra, Facebook</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-29651967894243550142019-07-06T03:27:00.001-07:002019-07-06T03:27:08.332-07:00Limited internet access: How this affects crypto adoption in emerging economies<br />
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Crypto-currencies might be the next big thing if this
nagging problem of limited internet access is addressed. It would appear this
is one area where crypto entrepreneurs are floundering, particularly those from
developed economies. These entrepreneurs are busy rolling out new tokens, which
are usually targeted at potential users in emerging markets where unfortunately
internet accessibility remains a challenge.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In many African states, a majority of the population resides
in rural areas where provision of essential services, including internet is at
best negligible. Yet it is in such rural areas where a big chunk of potential
users of crypto-currencies reside. There are fewer or no regular banking
services in rural areas when compared with those in urban settings. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Given this
background, it is then easy to see why some cryptos that are designed in Europe
but destined for the African market are failing. One has to have a clear understanding
of the urban/rural dynamics on the continent—among many other issues— before
expecting a crypto to be successful. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Network accessibility and cost remains a challenge in many
emerging economies yet availability of the same is vital if greater adoption is
to be achieved. Generally, network coverage particularly 3G or 4G is heavily
skewed in favour of the affluent, those with access to banking services already
(and might not be attracted to alternative forms of banking.) </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In other words, Mobile Network Operators (MNO) as well as
internet service providers (ISP) will only target remote rural areas if there
is a big profit to be made there. On the other hand, rural communities are
likely to embrace peer to peer currencies if these become easily accessible. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So an opportunity does exist for both the internet providers
and the crypto start-ups, the question is; how can this be exploited for the
benefit of both parties?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Indeed some studies show that data usage is increasing in emerging
economies. However, a closer look will reveal that tailor made social media data
packages are responsible for the general increase in the usage of the internet.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For instance, MNOs offer special data plans for popular
social media sites like Facebook, Twitter, Whatsapp or Telegram. Data rates for
such packages appear to be cheaper than regular internet browsing costs. In
fact, data consumed using these popular social media sites is much higher than
data consumed via regular internet browsing. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Perhaps it is with this in mind that many are predicting the
Facebook Libra token to potentially be the game changer in as far as crypto mass
adoption is concerned. Facebook and Whatsapp are already widely supported by
many MNOs because of the sheer number of people using these services. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Facebook
and Whatsapp are popular in both urban and rural settings, which is a major
plus.</div>
<div class="MsoNormal">
So unlike Bitcoin, which has faced a myriad of challenges,
the Libra token will face far few problems as it is backed by companies with a ‘track
record’. There may be no need to invest heavily in education or advocacy as
would be the case with many other cryptos, it is simply a question of adding
another service to the platform that has more than a billion users. To a
Facebook user, it is just a matter of exploring this new service without
worrying about data cost. So on that score, Libra may have a head-start in
emerging economies</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, there is a downside to the Libra coin, this crypto may
not be as permissionless as Bitcoin nor will it be as decentralized. Libra is a
hybrid and may not come with everything promised by a crypto-currency like Ethereum
for instance. Therefore pioneering cryptos-currencies will still be able to
compete well with Libra only if crypto entrepreneurs can solve the internet accessibility
challenge. This is a daunting but achievable task.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Perhaps, one way to circumvent this challenge would be to
cooperate and coordinate with MNOs in designing data packages and applications for
crypto-currencies that are affordable and user friendly. This way,
interested/potential crypto users will feel empowered to explore different crypto
platforms or to experiment without worrying about data cost. For an MNO, the more
users get hooked on a particular application, the better the revenues generated.
It is potentially a win-win scenario.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Moreover, crypto businesses should be able to convince MNOs
or those managing cellular infrastructure, to deploy in areas where the
unbanked are concentrated. Currently crypto-currencies require good internet
access for one to perform transactions yet that kind of access is normally
available in areas where banking services are widely obtainable i.e. the urban
areas.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Meanwhile a prospect of high usage of cellular
infrastructure is a tantalizing opportunity enough to encourage an MNO to
invest. Perhaps an MNO could be convinced further— to build such infrastructure—if
a crypto start-up actually helps or shares the cost burden! </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It has happened before, a few years ago, Facebook’s Mark
Zuckerberg proposed the idea of giant floating Wi Fi balloons and drones as way that would
complement net accessibility in remote areas. Facebook realized that it had to do
something to increase the number of its subscribers in remote places. So
instead of waiting for an MNO— which might have other priorities—to build the
infrastructure, the social media giant came with this proposal.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Crypto players could also take a leaf from this and play
their part in building the necessary infrastructure to facilitate a greater
adoption of this innovation.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Whatsapp 263 771 799901, @tem2ra, Facebook</span></div>
Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-68374210113539721962019-07-01T15:34:00.002-07:002019-07-01T15:34:47.405-07:00Fear of competition behind central bank and regulator hostility towards cryptos<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Regulators in some emerging markets have taken a
particularly hard-line stance against cryptos just as they have done with other
disruptive technologies. The much vaunted mobile money initially faced similar
difficulties as officials were unsure of the best way of reacting to this
fintech. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In small economies like Zimbabwe, banks in particular were
irked by the growth of the Ecocash mobile money platform partly because Econet,
the mobile network operator (MNO) operated outside the regulatory purview. At
some point soon after the coming on board of Ecocash, banks faced pressure from
government over the high bank service charges and fees. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In return, banks argued Econet’s mobile money service had to
be subjected to the same pressure since the company had now entered the
financial services space. Econet is the biggest MNO in Zimbabwe with over 8
million active subscribers in a country with a population of 13 million. Such numbers
potentially made Econet one of the biggest, if not the biggest player in the
financial services industry in the country. The fear was that the MNO would use
this advantage to elbow out competitors.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To show the seriousness of their fears, banks refused to
allow the seamless transfer of funds from banking platforms to the mobile money
platform. Conventional bank customers thus could not move funds from their regular
accounts to the popular Ecocash platform.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
At the time it was not clear who had the mandate to regulate
Ecocash, the central bank or the telecoms regulator, Postal and
Telecommunications Regulatory Authority of Zimbabwe (POTRAZ). </div>
<div class="MsoNormal">
Both institutions
seemed eager to regulate the MNO. Eventually the RBZ would have its way, mobile
money is now regulated by the central bank and commercial banks have since
relented as well. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Understanding that MNOs actually complement and do not
threat the financial system caused the changed of stance by banks. And as
Reserve Bank of Zimbabwe found out, it is easy to impose monetary policies on
MNOs because they do not employ decentralized systems like Bitcoin. So instead
of fighting mobile money service providers, regulators now encourage use of
mobile money platforms. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is also helpful to remember that the internet itself
faced resistance and hostility from players as well as regulators of the industries
that felt threatened. However as usage of the internet grew, it became clear to
all that the World Wide Web actually enhanced efficiency of the very industries
that initially felt threatened. Not only that, the internet brought to life
many other services that were not possible before. In fact, the internet has
become so integral to our everyday lives such that when its shutdown, life
becomes unbearable and chaos will ensue.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Similarly, the extraordinary fear mongering of all things to
do with privately issued cryptos will dissipate once a critical mass of users
is attained. Change has never been something that is easily embraced, often
those agitating for new ways must fight for acceptance. It is now ten years
since Bitcoin was launched and we are entering a critical phase, global
companies are now joining the movement. JP Morgan, Oracle, Facebook and even
central banks have now accepted the concept of crypto-currencies and are working
on their own crypto projects.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Many are predicting that the Facebook coin, Libra will be a
giant step towards in achieving that elusive mass adoption goal. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Of course some central banks are not happy that the world is
moving the direction of cryptos despite their spirited warnings against the
embrace of such fintechs.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For less progressive institutions, there are fears that crypto-currencies
will ‘<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">infringe upon central banks’ exclusive right to issue</i></b> <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">money</i></b>’
as the South Africa Reserve Bank (SARB) put it in a consultation paper. SARB
has since proposed measures that may be viewed as circuit breakers in case
crypto-currencies become very popular. In other words, SARB does not want
crypto-currencies to be successful!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Fear appears to be the general motivation for this hostility
and this fear is widespread. </div>
<div class="MsoNormal">
In Kenya, regulators continue to warn citizens about the
dangers of crypto-currencies, which are mostly not regulated. Nigeria and
Uganda, are both contemplating tough regulation for cryptos, which authorities
are repeatedly attempting to link with the growing problem of Ponzi and Pyramid
schemes. Regrettably, some ignorant lawmakers associate cryptos with such scams
hence they support this hostility.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
These central banks are trying to kill an innovation before
it has been given a chance to prove itself. In a departure from established
norms, regulators are crafting legislation for an innovation before they fully understand
it. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, in other jurisdictions, central banks are embracing
crypto-currencies but only on the condition that they alone should be the issuing
entities. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For example, a few years ago, the Bank of England was widely
reported to be involved in the development of what is called the RSCoin, a
crypto currencies which it hopes will eclipse the US dollar as the world’s
reserve currency. According to the researchers working on it, this crypto will
combine the benefits of Blockchain technology as well as those of a centrally
managed currency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Iran is reportedly working on its own crypto-currency even
as it has discouraged the use of other cryptos like Bitcoin. The Venezuelan
government has already launched its own crypto but the results have been disastrous
so far.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Whichever way we look at it, fear of competition appears to
be the prime motivation for the hostility. Central banks do not want to lose
their monopoly of issuing money. Unfortunately the world has moved on and its
time central banks accept this. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
@tem2ra, Facebook whatsapp 263 771799901</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-19207193529574364352019-06-30T03:08:00.002-07:002019-06-30T03:08:34.074-07:00Debunking the Bitcoin terrorism funding myth<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terrorism is a word that sends shivers to many whenever it
is mentioned in any conversation. Terrorists have been responsible for the most
heinous and despicable acts of violence of our time. From the September 11<sup>th</sup>
destruction of the New York Twin Towers to the London underground train bombings,
the world has constantly faced this threat since then.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In response, governments around the world have united efforts
in combating this scourge by enacting laws that pre-empt future terrorist acts.
Many such laws include the Anti Money Laundering (AML) as well as Combating the
Financing of Terrorism (CFT) provisions. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
By identifying and stopping the transfer of money to
religious fanatics, authorities have been able to prevent terrorism events.
Nevertheless, the problem remains just as much as that of money laundering or
tax evasions. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Criminals and terrorists are always trying to find ways to
circumvent these regulations and crypto-currencies are identified as one of the
many ways. So while Satoshi Nakamoto had pure intentions when he released the
whitepaper for Bitcoin in 2009, somehow the narrative was changed. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Those engaged in the fight against terrorism argue that
Bitcoin and other crypto-currencies have opened a new funding channel that made
their task harder.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Crypto-currencies like Bitcoin are impossible to trace, they
offer complete privacy to holders. It is this feature that has created problems
for Bitcoin adoption efforts. Most governments and regulatory authorities have
refused to give recognition to this privately issued digital currency, in part
because it denies them the ability to determine the identity of those using the
currency. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Without knowing the identity of those behind the
transactions, many have been quick to conclude that terrorists and criminals
behind most Bitcoin transactions.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This is how they justify their fight against or opposition
to crypto-currencies, a stance supported by the gullible. But just how accurate
is this assertion that terrorists are now heavily relying on crypto-currencies
to finance their operations?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Well, no one is really in a position to tell that because crypto
transactions are private, third parties cannot really tell who is sending or
receiving funds. So opposition to Bitcoin is largely based on the assumption
that terrorists and money launders favour this currency than actual evidence.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To illustrate, in Europe, a <a href="https://www.bbc.co.uk/news/technology-43025787">BBC</a> report states
that, “Europol estimates that £3-4 billion is laundered using cryptoassets each
year in Europe. This remains a relatively small proportion of total funds
estimated to be laundered in Europe, however, which stands at £100 billion.”</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So even by Europol’s own admission, only a small fraction of
funds is believed or assumed to be laundered via crypto-currencies. Apparently
money launderers still prefer the traditional channels, fiat money and the
conventional financial system. It is a mystery then how opponents of Bitcoin are
so adamant that the crypto has become the terrorist’s currency of choice hence
it has to be curtailed. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Central banks around the world have issued advisories against
use or holding crypto-currencies partly because it is used to finance illicit
transactions. Regular financial institutions are forbidden from integrating
their systems with crypto exchanges.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Associating of crypto-currencies with terrorism financing
somehow blurs on-going efforts explain the actual benefits of using such a
medium of exchange. Crypto-currencies can potentially solve problems that have
existed for decades. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Take the plight of undocumented immigrants for instance. Every
year, millions of people take on the risky adventure of migrating to foreign
lands in search of better life. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Those managing to make it often lack identification
documents that are recognized by their host countries. This forces them to
accept menial jobs that pay the least. As if that is not enough, these migrants
will face problems each time they try to send money to families back home.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To use registered or formal money transfer agencies, one has
to have government issued identification documents, which is not an option for
illegal immigrants. Faced with this situation, undocumented migrants are forced
to resort to informal channels, which can be anything from unregistered
couriers to friends and family members. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
These channels are not only expensive but risky as well; the
funds might not reach the intended beneficiary. Therefore the coming onboard of
crypto-currencies has been a welcome relief as this gives senders an efficient
and more secure option.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Additionally, crypto-currencies like Bitcoin prioritize
privacy, there are no cumbersome Know Your Customer (KYC) processes involved. KYC
processes are known to be the reason why many remain unbanked or choose to use
informal channels.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Clearly, it these attributes that are forcing this economic
group to use crypto-currencies when remitting funds. This might explain why the
numbers of those using crypto-currencies is increasing but how then this is
seen as terrorism financing is quite baffling. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To illustrate, in 2015 millions of migrants from North
Africa, the Middle East and Asia reached Europe in search of better economic
fortunes. Germany had the highest numbers by far. So when a bigger number of
these migrants begin sending money to their respective home countries like
Afghanistan, Syria, Mali, Somalia etc, there should be no alarm. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Things will only get murky when a <a href="http://www.fatf-gafi.org/media/fatf/documents/reports/FATF-Report-G20-FM-CBG-July-2018.pdf">Financial
Action Task Force (FATF</a>) report to the G20 notes that suspicious
transaction reporting linked to crypto-currencies is rising globally! Such
transacting might be seen as suspicious because the receiving countries are
blacklisted as terrorist hotbeds.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A spike in crypto remittances from Germany to Syria might be
construed as growth in funding of terrorist groups when in fact it is money sent
to support those that stayed behind.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Important innovations should not be curtailed simply because
terrorists or criminals are using the same. It is imperative to remember that
terrorists or criminal gangs will always be there and they will still use the
social media that we love so much, the latest IPhone or traditional financial
systems. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is the job of those tasked with fighting such vices to
find ways of achieving this (combating terrorism and money laundering) without inconveniencing
those who want peace and are law abiding. Also we need to assure entrepreneurs
that their efforts will be rewarded instead of being punished. That way we will
continue to enjoy new ground breaking innovations.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
263 771 799 901 whatsapp, twitter @tem2ra Facebook</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-12617125213740371832019-06-29T02:09:00.001-07:002019-06-29T02:09:14.941-07:00Africa cryptos; Bias towards home grown solutions<br />
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It may seem far-fetched but the use of indigenous names or
phrases helps in getting the attention of potential crypto users and nowhere is
this more profound than on the African continent. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
An innovation will gain quick approval if it is seen to be
associated with the local entrepreneurs or the local environment. In Africa there
is a general tendency of bias towards what is seen as home grown rather than
something completely of foreign origin. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Part of the reason could be Africa’s history of colonialism
and how that shapes the perception or attitudes towards ‘foreign made’
products. <span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
Indeed the language used may have a bearing on the chances
of success of a crypto solution. Take South Africa for example, many Zulu and
Xhosa people see the Afrikaans language as a reminder of the country’s brutal
past. Afrikaans is the language of the country’s white minority. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For Zulus and Xhosa people, the Afrikaans language as an
unwelcome Apartheid relic. <span style="mso-spacerun: yes;"> </span>Therefore if
you are going to target this particular group with any product, it is
imperative to use their respective languages. When an innovation or a new
product is given an indigenous name, the chances of its success are enhanced. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In other words, African communities will follow or choose what
they see as locally created technologies over foreign ones. Of course, such
prejudice ignores fundamental factors like the technical capacity of developers
in emerging markets when compared with those in crypto leading countries. More
importantly, funding can only be raised in the usual places like the UK, US or
Japan and not on the African continent. The best way to get around this would be
to have the best of both worlds.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For instance, a UK registered start-up which is aptly named KuvaCash,
is on course to launch its own crypto wallet and token. The start up’s name which
literally means having cash, in the Shona language of Zimbabwe. That name is
enough to make ordinary Zimbabweans curious about this crypto wallet.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In addition to the name, KuvaCash’s CEO, James Saruchera, is
a Zimbabwean who says he experienced the country’s record hyper inflation first
hand. Seeing the pension of his grandparents getting decimated motivated him
into creating a solution for his countrymen. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Such an appealing profile enhances the chances of success of
this crypto because Zimbabweans/Africans feel that Saruchera is one of them,
therefore what he is proposing will help them since he ‘understands’ their
problems. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Also following a similar approach is another start-up, Zimbocash
which is preparing to launch a token specifically targeting the Zimbabwean
market. <span style="mso-spacerun: yes;"> </span>Zimbocash’s whitepaper
encapsulates the country’s regular fiat currency troubles and how these can
potentially be solved by crypto-currency—the Zimbocash crypto in particular. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The start-up has native Zimbabweans as ambassadors on the
ground working to create an interest in the crypto. When combined with other
factors, such an approach greatly enhances the chances of success of this
token. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In Kenya, Bitpesa is a Nairobi based a crypto payments and
remittance firm, which is now expanding operations to other countries on the
continent as more people embrace the technology. This outfit has enjoyed
success because partly it uses a name that resonates with users. The name
Bitpesa, is a combination of English and Swahili—the local Kenyan language.
Pesa is the Swahili equivalent for money or cash. Bitpesa may have a learnt a
thing or two from the wildly popular Mpesa, Kenya’s famous mobile money
platform.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Kenyans are proud of their language and that is what may
have inspired SafariCom to give its mobile money platform its name.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So start-ups from
outside Africa that wish to tap into this market must remember to incorporate
local content when designing their innovations. This will enhance the appeal of
their solutions.</div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-12344082118665366702019-06-29T02:03:00.000-07:002019-06-29T02:03:06.176-07:00Problems slowing cryptocurrency adoption in emerging marketsTerence Zimwara<br />
<div class="MsoNormal">
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Crypto-currencies are changing the way cross border payments
and remittances are being conducted. Crypto-currencies transaction fees are
generally cheaper and more convenient when compared with traditional payment
platforms. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Just like fiat currency, transactions can be conducted via a
mobile phone or desktop computer with the difference being that there is no
central point or authority that restrict payments or imposes limits. </div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"> </span>In addition, decentralized
Blockchain technologies like that of Bitcoin make it possible for anyone interested
to verify all the transactions. As a consequence, crypto-currencies are able to
overcome the problem of lack of trust that sometimes bedevils fiat currencies. Often
central banks say one thing but go on to do something else. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, in spite of this, crypto-currencies are still encountering
problems gaining traction in emerging markets.<span style="mso-spacerun: yes;">
</span>And unless something is done to address this, mass adoption will take
much longer to happen, particularly in these vital markets. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
There is a general consensus that when enough people are
using these fintechs, the transacting costs, which are already low will only come
down further. Furthermore, cryptocurrencies or tokens will realize their true
potential once enough numbers are using the technology. So what could be hindering
this objective?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Ignorance <o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
To begin with, there is not much being done in terms of
educating potential users or the general person. It would seem that some of those
involved in the crypto business are motivated by the desire to make a big buck
than taking on the exercise of informing and making aware. New enthusiasts (to
the cryptoworld) are repeatedly informed about the Bitcoin price—which is
growing fast—and how even the inexperienced investors are realizing huge gains.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It appears that Bitcoin for instance, is marketed more as a
financial or investment asset rather than as a medium of exchange or store of
value. Yet it is the latter two aspects of this crypto that can potentially
hasten mass adoption (if only someone takes more time in preaching this.)</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So after ten years of existence there is just not enough
information on what crypto assets can do besides growing in value. For instance,
in countries where there are harsh foreign currency regulations,
crypto-currencies potentially offer alternatives that allow one to bypass or circumvent
such regulations. This is because monetary authorities have no jurisdiction or
cannot enforce policies over digital currencies like Bitcoin or XRP.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If this is widely known, more people in countries like
Zimbabwe, Venezuela or Iran would be switching to cryptos. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is the dissemination of such facts that will drive a wider
adoption of crypto-currencies even as their numbers grow. According to coinmarketcap.com,
there are over 2000 such tokens and we can only expect more to come. There are
apparently a disproportionate number of these currencies relative to their time
in existence and the number of people using them. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Now many worry that such an avalanche of tokens/coins issued
without a proper regulatory structure in place could spell trouble. In some
instances this trouble has manifested in the form of collapsed starts-ups.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">ICOs and scams<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
To support this assertion, some point to a noticeable slowdown
in ICOs was observed in 2018. According to the UK’s Financial Conduct Authority
consultation paper, this can be attributed to ‘investor caution as a response
to the large amount of fraudulent ICOs as well as a high failure rate of new
enterprises that use the ICO process.’</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Indeed it is the abuse of the ICO process as well as the
packaging of outright scams as cryptos that has invited increased scrutiny by
governmental authorities.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
OneCoin is one prominent fraudulent scheme, which was disguised
as a crypto-currency exchange business that fleeced investors millions of
dollars. The media coverage of such failures reinforces the negative stereotypes
about all crypto-currencies.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Cryptocurrencies seen
as Ponzi schemes<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Perhaps the biggest test for cryptos, particularly in Africa,
has to be their association with Ponzi or pyramid schemes. Put differently, it
is the failure by the more gullible to distinguish fraudulent schemes from
legitimate crypto-currency businesses. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Ponzi schemes are elaborate undertakings by fraudsters to
steal from unsuspecting people and these are quite prominent in poor countries.
By contrast, crypto-currencies like Bitcoin have been proven to satisfy their core
objectives like acting as an alternative to fiat currency—that is a store of
value or medium of exchange. Bitcoin has been around for 10 years and still
going strong, Ponzi schemes on the other hand do not last that long. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is only when enough people in these poor countries are
able to make the distinction will crypto-currencies like Bitcoin overcome this
challenge of being associated with Ponzi/Pyramid schemes. But why must this be an
issue of concern crypto stakeholders?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Well, a few years ago a Russia based Ponzi scheme, MMM was
able to con millions of dollars from a number of people in several African
countries. After a while this outfit was busted and the ringleaders were
apprehended.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Interestingly however, that the same luring tactics used by
this now defunct MMM syndicate are being employed by some crypto start-ups on
the continent. This not only raises concerns with members of the public but invites
unhelpful government intervention.</div>
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<br /></div>
<div class="MsoNormal">
In Nigeria, regulators may have taken a hard-line stance
against cryptos partly because ignorant lawmakers view crypto-currencies as another
repeat of the MMM debacle. For the continent’s central banks, there is no
better pretext in their ongoing fight against cryptos than labeling these
fintechs as a danger to the public! </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In spite of this, there is still a window opportunity to
remedy this, the crypto community needs to go back to the basics. More
investment needs to be channeled towards the education part of this business.
Such an investment benefits all players.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For example, if crypto start-ups in Zimbabwe had invested
more towards this effort then foreign currency account holders who are
currently scrambling to withdraw from the banking system will realize they have
an option to protect their savings. However, because this topic remains on
periphery of the country’s national economy debate, many of such account
holders will lose out following the recent foreign currency regulations.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Therefore education and awareness remain important if the
objective of unlocking the full potential of crypto-currencies is to be
realized. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Feedback 263 771799901 WhatsApp, @tem2ra, Facebook</div>
<br /></div>
Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-20978081726052399662019-03-13T04:19:00.002-07:002019-03-15T06:17:13.103-07:00Blockchain beyond currency<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Terence Zimwara</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br />
<div class="MsoNormal">
HARARE, While Blockchain technology, particularly the Bitcoin
Blockchain, has brought so much consternation among legacy players, there is a
chance that this software can do good, if given that chance.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The launch of the Bitcoin Blockchain in 2009 was not because
of a random event like the financial collapse of that year. Prior to that,
academics had struggled with a theory known as the Byzantine General Problem. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
When generals of an ancient kingdom laid siege on city, they
needed to coordinate on how and when to breach the city’s defenses at the same
time. The only problem was that they had send trusted persons to pass through
the city and deliver messages between the generals. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
There are many risks involved in that arrangement, either
the messengers themselves will get killed and the message is not delivered or
the messengers might be persuaded to pass on false information.</div>
<div class="MsoNormal">
Either way, the generals needed a way to be sure if they
messages coming in were authentic. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This problem is not only limited to that
scenario, it is one we see in many forms today. Blockchain has many functions
that make the technology a perfect answer to this longstanding problem. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For instance, the immutability function of the Blockchain engenders
trust. So if the generals were using Blockchain, this would enable them to pass
and receive authentic messages. Bad actors or hackers will be prevented from
manipulating that communication channel. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In this article, we highlight how the problem continues to hinder
international trade even to this day. We illustrate using the case of the many small
scale miners in a developing country like Zimbabwe and big mineral processing
companies in developed or emerging markets. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Zimbabwe has vast deposits of chrome ore, a mineral presently
extracted by under-capitalized artisanal miners in addition to over a dozen
small to medium sized processing companies. The country’s nationalistic laws,
which prohibit foreign companies from owning controlling stake in mining
companies has ensured foreign capital steers clear of the country.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Nevertheless, a huge demand for this resource in countries
like China exists, where major infrastructure development projects are ongoing.
Chrome and iron are important minerals for such giant construction projects.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Now here is the problem; a few Zimbabwean miners might have
knowledge that Chinese buyers are looking for the mineral. However, unless the
Chinese buyers actually make the trip to Zimbabwe to physically inspect and
confirm the existence of a certain quantity and quality of the mineral, which
is often extracted in remote and undeveloped mining fields, this transaction
might not happen at all.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Sure enough, a number
of middlemen have emerged over the years to bridge this gap between the less
resourced chrome miners and the well financed buyers in China, who cannot even
locate Zimbabwe on the global map! So far, the only problem with this
arrangement is that these middlemen charge an inordinate facilitation fee, or they
simply feed false information to both sides just so they earn exorbitant
profits. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Chrome ore miners are forced to accept ridiculously low
prices while buyers are given a product that does not meet expectations. <span style="mso-spacerun: yes;"> </span>In many cases there are a few options for the
two transacting peers, either they grudgingly accept these conditions or there
is no contract at all. However, the emergence of smart contracts, which are
enabled by Blockchain technology, changes the game completely.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
With such smart contracts, it may now be possible for cross
border business partners to trust each, even if they have not met. By simply
fulfilling their part of the conditions of an agreement, the chrome miner is
guaranteed of payment while the buyer knows that funds will be released to the
miner only after satisfying conditions. Smart contracts bring trust to
international trade.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The technology works
like an escrow except this escrow is not based on some central controlling
authority but rather on a public ledger. Additionally, since everything is
handled by the smart contract software—a layer on top of the Blockchain
technology— the transactions fees will be lower due to the elimination of
middlemen and their associated costs. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Clearly, this is use case for a public ledger
system/Blockchain and one that all relevant stakeholders need to look into. IBM’s
Hyperledger is one Blockchain to address some of the challenges as explained
above. The intention of the technology is not to challenge the position of
certain regulators but to offer an innovative solution or alternative that brings
more efficiency to international trade transactions.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As we have explained in previous posts, permissionless
cryptocurrency makes transacting across border much sweeter as they eliminate
the many middlemen in the payment system. Ultimately, the final savings are
huge something that should interest transacting parties.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<br /></div>
Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0tag:blogger.com,1999:blog-5111980448764783453.post-56198616801303088282019-02-25T12:46:00.001-08:002019-02-25T12:46:25.684-08:00Fiat cash and payments losing ground to cryptos<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Cash has been and remains a key driver of commerce globally
and this happens despite the clear difficulties associated with it such that we’ve
become so accustomed and inured to such problems.<span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In fact, many cannot even entertain the idea
that there are, and there should be alternatives to money</div>
<div class="MsoNormal">
It is quite obvious by now, that fiat money/currency
represents the highest point of money since its beginning. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Starting with a barter
exchange system, money would be represented by metal coins for sometime before
monetary authorities settled for a gold standard. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">Real</i></b> evolution of money
seems to have ended when the gold standard was dropped in favour of fiat cash
in 1971. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Of course, the debit and credit cards would later emerge
along with payments platforms like PayPal, Visa, MasterCard and of late mobile
money to mention just a few. However, all these forms of payment are premised
on the central bank fiat currency system, where one authority is legally
entrusted with task of issuing currency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Even the Society for Worldwide Interbank Financial
Telecommunications (SWIFT), the renowned global cross border payments facilitation
platform is also based on this fiat cash system.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The fact that the world embraces fiat currencies shows that
this form of money is not entirely a bad thing, after all, it has proven its
utility for almost five decades now.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Main problems of fiat
cash<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Granted, fiat money has always had its fair share of
problems or weaknesses, but the debate about such weaknesses has remained
relatively muted, as no viable alternative has existed until recently. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, events of the last two decades have amplified some
of the inherent problems of fiat cash and payment systems. The financial crisis
of 2009 brought to the fore such problems culminating in the emergence of
alternative forms of currency like Bitcoin initially, and later Ethereum, Dash,
XRP among others.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To begin with, fiat
cash is susceptible to inflation and depreciation shocks. A host of countries
have been forced to rebase or issue new currencies as inflation left previous
ones worthless.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Inflation, which is continuous increase in prices of goods
and services, erodes value of a currency and ultimately leading to its
collapse. Inflation has become such a routine for some countries, as they seem
to suffer regular bouts if this phenomenon more than others. Often corruption
and mismanagement of state finances are the main triggers of inflation especially
in developing economies.</div>
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<br /></div>
<div class="MsoNormal">
So while individuals and businesses are by and large,
subjected to rules and regulations of commerce, something which maintains order
in markets, the same cannot be said of government or central bank officials. State
or central bank officials are able to destroy savings and value with little or
no punishment coming their way.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
To illustrate, fiat currency is issued at a central point—the
central bank—and everyone else must trust and believe that those assigned this
task (currency issuing) will adhere to stipulated guidelines for such. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Sadly, that only happens in an idealistic society, in real
life, abuse of this trust is commonplace across many central banks. Political
considerations, which are often used to justify the abuses, take precedence
over everything else. Time and again this has proven to have serious
implications on people’s lives.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">How this affects
commerce<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">When a currency loses
value as a </b>result<b style="mso-bidi-font-weight: normal;"> of </b>breach of
trust at (trusted) institutions like central banks, commerce is heavily
affected. Currency depreciation or devaluation usually suggests a corresponding
a round of price increases will follow.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, since abuse of central banks’ currency issuing
privilege is riskless undertaking, officials are obliged continue running the
printing press—currency printing—to finance runaway government budget deficits
or any other unplanned state expenditures.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The resulting flood of money, which does not correspond with
the level of aggregate output, naturally leads to pressure on a currency. Subsequently,
another round of devaluation or depreciation will occur, triggering a fresh
round of price increases. This cycle continues and each time the deprecation or
devaluation of currency is more profound than before.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Herein lies the problem, employees or those receiving a
fixed income are hit really hard as their earnings lag behind either inflation
or the rate of currency depreciation. Such stagnant incomes in turn result in
reduced demand for goods and services. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Faced with reduced demand companies will cut jobs, hire less
workers or close shop thus compounding the unemployment challenge. Higher
unemployment rates lead to toxic civil relations often with deadly results.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A cursory look at countries facing internal strife like <a href="https://www.independent.co.uk/news/business/analysis-and-features/venezuela-nicolas-maduro-economy-crisis-oil-prices-explained-history-hugo-chavez-a8494696.html">Venezuela</a>
and <a href="http://www.thezimbabwean.co/2016/05/10-fundamental-causes-of-the-financial-crisis-in-zimbabwe/">Zimbabwe</a>,
reveals that it all began with the abuse of national resources including the currency.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Currency instability causes uncertainty in business. What
you agree to be paid today, may be substantially lower tomorrow in real terms,
therefore abstaining from conducting the transaction in the first place may
seem logical. This lack of confidence also lowers an economy’s growth. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Constrained economic growth means governments will be forced
to commit significant resources towards welfare programs instead of building
infrastructure or supporting small businesses.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Governments will see reduced revenues and taxes in real
terms as a consequence of currency depreciation. In nutshell, the actions of
the few at central banks will start a chain reaction that will hurt everyone. This
sad state of affairs naturally motivates enterprising individuals to proffer
solutions.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">First alternative to
money<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Consequently, the shadowy Satoshi Nakamoto, proposed an
alternative currency, the Bitcoin, whose core selling point is pre-emption of
individuals, whether government bureaucrats or private players, from
over-issuing currencies, something now well known to destroy livelihoods. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This digital currency has a predetermined number of ‘coins’ that
will be created and supported by public ledger, the Blockchain hence it will
not be feasible for anyone to issue extra coins. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It has been ten years since the launch of Bitcoin, and this
so-called internet of money has made strides in not only offering a resilient
alternative to fiat money but in also making apparent the possibilities offered
by such a temper proof system. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Since then a number of other privately issued
crypto-currencies have emerged to give users an array of currency options.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Traditional banking institutions, which have hitherto
attempted to stifle growth of this currency, are now joining the club, having
seen some of the advantages of decentralized currencies. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
JP Morgan’s announcement that it will launch its own
privately issued currency is the latest testament to Bitcoin’s enduring
success. Indeed, stablecoins like JPM Coin are being touted as the next big
thing in payments because they satisfy the competing interests of regulators
and private currency issuers.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This growing range of crypto options makes it possible for
ordinary people to insulate themselves from the ravages of inflation and
economic mismanagement. However, all cryptos still have a formidable opponent
in the form of central banks. Central banks have pretty much littered cryptos’
path with obstacles, some legal and others not so legal.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In addition, mass adoptions of cryptos remain relatively
slow, in spite of the promise of Bitcoin, Ethereum, Dash etc. Apparently, there
are only a few merchants accepting payments in the form of cryptos, therefore a
potential client, who is also a holder of cryptos, must content with an intermediary
in the form of an exchange, before dealing with the merchant. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In the interim, this makes cryptos a less appealing option
when compared with fiat cash. When there are a few places that accept your
currency, it is only logical to dumb it in favour of one that is widely
accepted. <span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
Central banks and regulators are all too aware of this and
have been adept in exploiting this challenge. Central banks and regulators have
repeatedly issued warnings and outright bans on any form integration of fiat
currencies with cryptos. Of course not everyone is taking heed but the warnings
are having the desired effect, mass adoption remains slow. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Call to action<o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><br /></b></div>
<div class="MsoNormal">
Nominally this means cryptos holders are trapped with the
currency since it has not utility outside the small crypto community.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This situation demands a solution that at least satisfies
crypto holders’ concerns while not deviating from the founding principles of
crypto-currency—decentralization and transparency. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
At the same time, merchants
ordinarily like to remain compliant with tax and national laws, so they too
want to be able to transact in any currency as long as they are able to switch
to legal tender without hassles. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So the challenge is on for crypto entrepreneurs to come up
with solutions that meet these conditions. Already a number of start-ups have
sprung up, and they are presenting different kinds of platforms or wallets that
seek to address these longstanding concerns.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
There is no doubt if any one such platform truly resolves
these lingering challenges, such a platform will be widely embraced.
Furthermore such intermediaries will hasten mass adoption of cryptos , a key
challenge for the community. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<br />Temrahttp://www.blogger.com/profile/03458624037729356109noreply@blogger.com0