It is like sitting at the front row watching history unfolding itself.

• A century of technology innovation
• Two monetary worlds
• Three phases of cryptocurrencies

The time has come as institutional investors are coming to town building bitcoin treasuries in public listed companies.

On the other hand, competition is heating up in the CBDC space.

Chinese government presumably aims to have the first-mover advantage by being the first global jurisdiction to adopt a CBDC.

China Finance, a magazine run by the People’s Bank of China (PBOC), published an article stating that the rights to issue and control a digital currency would become a “new battlefield” of competition between sovereign countries.

Meanwhile in Japan…

• Senior Japanese official fears China being ‘first-mover’ in digital currency
• Bank of Japan to begin digital currency proof-of-concept in 2021
• Financial giant SBI to run its first security token offering in October

Digital Currency / CBDC In Case of Forces Majeure

The BoJ report notes that a core feature of the digital currency must be resilience in the face of infrastructure disrupted by forces Majeure.

The report gives no details on how providing against such events might be achieved, although there are solutions that address potential electrical or network failures for Bitcoin (BTC) and other blockchain-based cryptocurrencies.

These include the development of mesh networks based around long-wave radio transmitters, and Blockstream’s satellite network, which broadcasts Bitcoin transactions via space.

#CBDC #BIS #BISDigitalCurrencyResearchGroup

The post CBDC & STO At The New Frontier appeared first on Blockchain Insider.

Headlines

• Central bank digital currencies: foundational principles and core features
• Shenzhen to hand out 10 million digital yuan in currency giveaway
• 数字人民币真的来了！深圳联手央行派发1000万“数字红包”

Reading Notes

Central bank digital currencies: foundational principles and core features

Three key principles for a CBDC:

1. Coexistence with cash and other types of money in a flexible and innovative payment system.
2. Any introduction should support wider policy objectives and do no harm to monetary and financial stability.
3. Features should promote innovation and efficiency.

https://www.bis.org/press/p201009.htm

Shenzhen to hand out 10 million digital yuan in currency giveaway

China’s CBDC pilots seem to be progressing apace.

On Oct. 5, PBoC’s deputy governor Fan Yifei announced that DCEP wallets processed 1.1 billion renminbi ($162 million) in transactions between April and August 2020.

According to the official, China’s central bank opened 113,300 personal digital wallets and 8,859 corporate digital wallets within the digital yuan initiative.

https://cointelegraph.com/news/shenzhen-to-hand-out-10-million-digital-yuan-in-currency-giveaway

数字人民币真的来了！深圳联手央行派发1000万“数字红包”

关于央行数字货币（DCEP – Digital Currency Electronic Payment，下称“数字人民币”）的消息频出，目前数字人民币已在深圳、苏州、雄安、成都，以及未来的冬奥场景进行内部封闭试点测试。

此次深圳市政府联合央行开展数字人民币红包试点，面向5万名中签人员发放总额高达1000万的红包，是进一步扩大数字人民币测试的应用场景。

这也预示着，数字人民币离面向社会公众推出又靠近了重要一步。

此次活动是向在深个人发放1000万元数字人民币红包，每个红包金额200元，数量共计5万个。

该红包可于10月12日18时至10月18日24时在深圳市罗湖区辖内已完成数字人民币系统改造的3389家商户无门槛消费。

https://finance.sina.com.cn/blockchain/coin/2020-10-09/doc-iivhvpwz0960147.shtml

The post CNY Airdrop & CBDC Principles appeared first on Blockchain Insider.

Programmable money represents a historic shift on how we perceive and use money.

Programmable money is money with constraints.

Technically, programmable money is digital currency attached to blockchain-enabled smart contracts. #CBDC

An analogy is food stamps where recipients are given coupons, the equivalent of money, which can be spent only on food — not on alcohol, betting on horses, lottery tickets or anything else.

I could create digital currency that can only be held by credentialed refugees and transferred to credentialed businesses.

“A charity or refugee agency can issue the credential to the refugee. The businesses can be similarly accredited. Then the programmed tokens representing funds can be issued to the refugee and held on his/her phone. The refugee can use them to pay for goods and services from accredited businesses, only. The refugee could also transfer them to other refugees.”

A programmable token could strengthen controls around aid payments, tracking and tracing flows on a national level, using link analysis to uncover fraud and corruption. #CCT

Where are payments going? Why is so much flowing to one place? “That’s the real promise,” said Rosenoer — rooting out the institutional corruption that keeps poor people poor. The developing world needs a tool like this — much more so than the U.S. or Europe “where lots of things are [already] good enough.”

Use case (social):

Programmable tokens can be used to help achieve environmental goals like ridding the world’s oceans of plastic waste. During a coastal cleanup last year of the Manila Bay, for example, local fishermen collected 3 tons of trash — most of it plastic — and were paid for their labor with an Ethereum-based ERC-20 token. Coins.ph (a partner on the ground) helped to convert the crypto into fiat currency. Efforts like these appear to offer an ingenious solution to two seemingly intractable problems: poverty in the developing world and ocean plastic waste.

The future of programmable money – you and I will be able to write code attached directly to our money, dictating its behavior and movements.

Use case (finance): Automated payable/receivable statement

Programmable money could enable global financial transactions that preserve compliance with local laws and regulations, suggested Rosenoer: “Assume that you have a tokenized asset that you want to sell. Let’s call it a long-term debt. The law says that I can only sell it to an accredited investor — one that has a certain amount of net assets and annual income — or I can sell it to a foreign investor.” These are classes of people defined by law. If Rosenoer sells his asset to them, they may have to hold the asset for a period of time if they are subject to U.S. jurisdiction, and then they can only sell to an accredited investor or a foreign investor.

“I can program my token to ensure that whoever holds it meets these requirements,” continued Rosenoer.

This means that I do not have to, for example, create whitelists and blacklists. The token carries the restriction and someone else can issue the credential that meets the requirement(s).

The post Programmable Money appeared first on Blockchain Insider.

3 Ways To Implement CBDC

A lot of money at stake, it will take time.

1️⃣ Gradual (or) indirect approach

2️⃣ Direct approach

3️⃣ Hybrid solutions

Can start with Blockchaining Sukuk.

The post How To Implement CBDC appeared first on Blockchain Insider.

On one hand, we see the possibility of the technology to empower people with more freedom and security. On the other hand, we are aware that once appropriated by the authorities or the ruling elites, it will be powerful to facilitate the growth of crony capitalism.

Universal Basic Income (UBI)

The utopian idea of universal basic income — which has been with humanity for at least half a millenia — can become real with digital currency.

Due to the crisis caused by COVID-19, millions of people have lost all or part of their income.

To support them, governments have been giving out money to victims.

Is it possible to make this practice permanent?

And if so, why will we need state digital currencies? 

What is wrong with the idea of UBI?

How will the crypto technologies help?

CBDCs Can Facilitate Crony Capitalism

Once the “authorities” and “ruling elites” understand the power to be (with them):

… the emergence of CBDCs will facilitate the growth of crony capitalism. … if successful, central banks will be able to play favorites without the need for intermediaries.

“If a central bank really wanted to do this, the amount of opacity that they can create for themselves while at the same time, strip mining everybody else’s privacy is ridiculous, so that they could do pretty much whatever they want.”

Further reading: https://cointelegraph.com/news/decred-co-founder-cbdcs-can-facilitate-crony-capitalism

The post The Good, The Bad, And Something In Between appeared first on Blockchain Insider.

Looking at the headlines:

• World Bank Digs Deeper Into DLT and FinTech for Financial Inclusion
• The Suzhou trial – Digital Yuan Being Tested for a Workers’ Subsidies Scheme
• Aussie Crypto Unicorn Raises $160M With ‘Big Four’ Bank Backing
• The launch of 3iQ’s BTC Fund on TSX
• Berlin Real Estate Worth $12M Tokenized for Everyday Investors
• Akon City, a ‘sustainable eco-tourism smart city’ powered by Blockchain technology in Senegal.

Connecting the dots, the Blockchain’s shift from niche financial tool for techies to the mass adoption of digital currencies is happening into the conventional financial sphere. The interaction (blending or convergence?) of the two monetary worlds seems to be progressing positively.

The recent report by World Bank Group and Bank for International Settlements (BIS) further complement the previous report by BIS as CBDC (Central Bank-Issued Digital Currency) Is Well On Its Way.

Payment Aspects of Financial Inclusion Fintech Wheel by World Bank Group

Worth noting is the PAFI Fintech Wheel in the report.

Jolted below notes related to above mentioned headlines, the power to relate is important in getting the bigger picture.

Click on the respective headline to read the original report.

World Bank Digs Deeper Into DLT and FinTech for Financial Inclusion

The World Bank’s fintech-focused report on financial inclusion is not the organization’s first foray into blockchain and associated emerging technologies.

Among major PAFI tools, the World Bank listed distributed ledger technology (DLT), stablecoins, CBDCs and payment tokenization systems, placing them in line with other fintechs like big data analytics and cloud computing.

Combining several technologies, products and access models, the World Bank drew up the so-called “PAFI fintech wheel” to identify fintech developments that are potentially relevant to the payment aspects of financial inclusion.

In the 70-page report, the bank provided a detailed overview of selected advances in technology that are considered to be the most relevant to payments as well as described their applications and associated risks.

The Suzhou trial – Digital Yuan Being Tested for a Workers’ Subsidies Scheme

This month, agencies and enterprises in the Xiangcheng District of Suzhou will reportedly be paying 50% of local workers’ transport subsidies in the new digital currency (also referred to as DC/EP, for “digital currency/electronic payment”).

These patents indicate that the DC/EP adopts a two-layer architecture and two-tier delivery system, which enables licensed third-party payment institutions or banks to participate in secondary issuance of the digital currency.

… the report notes that the currency’s blockchain structure will ensure “traceability, encryption and supervisability.”

Aussie Crypto Unicorn Raises $160M With ‘Big Four’ Bank Backing

In March 2019, Airwallex received a $1 billion valuation — ranking it as Australia’s second unicorn alongside graphic design firm, Canva. Australia is currently home to three unicorns, with aerial imagery company, Nearmap, recently joining the list.

The launch of 3iQ’s BTC Fund on TSX

The launch of 3iQ’s BTC Fund on TSX was a historic event, to say the least.

The listing of a publicly-traded Bitcoin fund on a major stock exchange will serve as an important milestone for the industry as a whole — especially in regard to crypto being viewed as a legitimate asset class by the global investment community.

Currently trading under the name, “The Bitcoin Fund,” the offering has around 1.5 million Class A “QBTC.U” shares available on the Toronto Stock Exchange, or TSX.

At press time, each share is trading for around $12. The price indexes being used by the fund are from crypto data company CryptoCompare and VanEck Europe subsidiary MV Index Solutions.

3iQ is serving as the fund’s investment and portfolio manager.

The Bitcoin Fund is under the custody of the Winklevoss’ exchange Gemini, and thus Tyler and his brother Cameron are invested in the fund’s success.

TSX is Canada’s premier stock exchange, facilitating more than $97 billion worth of monthly trade.

• customer demand for regulated crypto products has been strong across the investing spectrum — be it the retail or institutional investor market.
• as time goes on, market demand for crypto offerings will increase.
• the demand for an easily accessible, securities-based product delivered through traditional channels.

Berlin Real Estate Worth $12M Tokenized for Everyday Investors

Germany’s Black Manta Capital Partners has launched a security token offering (STO) for Berlin real estate worth more than $12 million.

The project is a collaboration with the German real estate firm Tigris Immobilien and includes around 2000 square metres of real estate in total, mostly comprising individual apartments from 40 to 60 square meters in size. Construction is expected to be complete by 2022 and units will be sold to investors and owner-occupiers.

Token holders will share 20% of the sale profits through securitized participation rights. The company said the tokens will enable ordinary investors “to participate in a profitable real estate project normally reserved for professional investors.”

Minimum investment is just €500 (Fractionization / Fractional Ownership)

Blockchain technology is gaining steam in the real estate market with real estate security tokens now representing half of active security token markets and 15% of total volume.

• new “tokenization services” industry to emerge and the crypto custodian market to grow.
• institutional investors require regulated custodians

Akon City, a ‘sustainable eco-tourism smart city’ powered by Blockchain technology in Senegal

Blockchain’s shift from niche financial tool for techies to the mass adoption of digital currencies.

The celebrity singer famous for his “Lonely” song, is not only embark on lighting a million homes project, but also developing Akon City, a ‘sustainable eco-tourism smart city’ in Senegal.

While those listed above are quite a number of positive progress, some news shouldn’t be overlooked, especially when it concerns custodian services and legistration.

Where on the planet is KuCoin?

Unlike Binance, Coinbase and Ripple, KuCoin did not file with the Monetary Authority of Singapore to request a deferral of the requirement to operate without a payments license. Such deferrals allow those companies to operate as payments service providers without a license through July.

Without a license or a deferral, KuCoin cannot legally operate in Singapore. It remains unclear whether KuCoin is nonetheless operating in Singapore or if the exchange is in fact now operating elsewhere.

The post Financial Inclusion in The Fintech Era appeared first on Blockchain Insider.

Banking in 2020

(1) From Paper Money to Digital Currency

As blockchain technology is able to bring down borders of financial products as defined in the conventional way of doing things, it is a matter of:

How do we define money in the new paradigm?

(2) Data Is The New Oil

One of the capabilities of Blockchain and its practical applications would be to turn data into currency, something coined as datanomics – data + economics.

(3) The Dawn of Crypto Bank

Looking at the three phases of cryptocurrencies, we are now slowly moving into the stage of corporate currency implementation. CBDC is happening anyhow.

So, where is the big deal?

Blockchaining Sukuk

Blockchaining Sukuk, crypto is the future.

News from CoinTelegraph

As reported by Cointelegraph, information related to blockchain, cryptocurrency, and the banking industry within the past 48 hours at the time of writing:

Billing itself as the next step in the challenger bank concept, the all-digital account will allow multiple currencies, both fiat and digital, to be held in the same account- HODL, exchange, spend.

According to a Technical Assistance Report paper released Dec. 30, 2019, the IMF’s Philippines mission encouraged the central bank to start exploring the possibility of collecting data on these crypto exchanges for its macroeconomic analysis, particularly in regard to international financial flows using crypto assets.

A CBDC is a new type of legal tender which will expand the public’s digital access to central bank accounts, which is limited to commercial banks today. As a result, this tool will combine the digital nature of bank deposits with the classic advantages of cash in daily transactions. A key point to carefully consider, though, is,

To what extent is this the case?

Would the new currency take the form of a personal account at the central bank that can pay positive interest rates, or that of an anonymous digital token without interest, like classic cryptocurrencies?

The central bank’s tests are ongoing – while China has not yet set a formal release date for its CBDC, which will be the first state-backed cryptocurrency on the world stage, the Standing Committee of the 13th National People’s Congress in China passed the crypto law on Oct. 26, 2019.

It divides passwords at large into three distinct categories — passwords, common passwords, and commercial passwords — and aims to facilitate China’s transition to blockchain technology.

Mayo predicts that the financial sector is ripe for big advances over the next 10 years. That decade of thriving banks will be technology-enabled.

Following the announcement of plans for a national blockchain infrastructure, Turkey has seen steady growth in blockchain projects, both in the public and private sectors.

Turkey’s Istanbul Clearing, Settlement and Custody Bank (Takasbank) announced that its blockchain-based, physical gold-backed transfer system enables participating banks to transfer digital assets representing a quantity of physical gold.

This platform distinguishes itself from many similar projects in the world by allowing the use of blockchain technology to transfer digital assets based on physical commodities, not having any value of its own, and ensuring full compliance with existing regulations.

The post Eyes On Technology And Banking appeared first on Blockchain Insider.

Central banks are progressively studying the introduction of CBDCs and their potential impact on the banking system.

The Bank of England Staff Working Paper No. 725 titled Central bank digital currencies — design principles and balance sheet implications by Michael Kumhof and Clare Noone dated 18th May 2018, laid out various scenarios of possible risks and financial stability issues of central bank digital currencies (CBDCs).

The Working Paper, No 1 | 2018 of Norway’s central bank, Norges Bank, stated that it is considering developing its own digital currency as a supplement to cash to “ensure confidence in money and the monetary system”.

Reuters reported on 17th May 2018 that Switzerland is seeking the study of state-backed “e-franc” cryptocurrency.

A Statement on Developmental and Regulatory Policies released on Thursday, 5th April 2018 shows that The Reserve Bank of India (RBI) is looking into issuing its own central bank digital currency (CBDC), after a meeting of the Monetary Policy Committee (MPC).

These come with no surprise because as early as 2016, the Bank of England and the People’s Bank of China had explored the idea of issuing their own digital currencies, with over 90 central banks worldwide that same year investigating DLT – Distributed Ledger Technology.

More good outlook as Anthony Lewis, research director at global banking consortium and enterprise software firm R3, predicted that a central bank issued digital currency (CBDC) will be implemented in 2018 in a panel discussion at Deconomy in South Korea on 4th April 2018.

CBDC at a glance

Russia – CryptoRuble
Japan – J-Coin
Venezuela – Petro, an oil-backed cryptocurrency
Singapore – project UBIN
Bank of Canada – Project Jasper
United States – toying with the idea of a FedCoin
Sweden’s Riksbank – contemplating the e-Krona

and the list is growing for sure.

CBDC related bank / central bank’s papers

Central bank digital currencies — design principles and balance sheet implications, Bank of England
18th May 2018

Central bank digital currencies, Norges Bank
NORGES BANK PAPERS NO 1 | 2018

Central Bank Digital Currencies, Bank for International Settlements
CPMI Papers | No 174 | 12 March 2018

Statement on Developmental and Regulatory Policies, Reserve Bank of India
April 05, 2018

CBDC (Central Bank-Issued Digital Currency) Explained

As defined by R3, an enterprise software firm working with a network of over 200 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to develop on Corda, a blockchain platform designed specifically for businesses, a CBDC is a digital store of value (money) and method of exchange issued by a central bank. Theoretically, it introduces a new digital mechanism for real-time settlement between individuals.

So what’s the difference between cryptocurrency and CBDC?

Cryptocurrency is a blockchain asset and not the liability of anyone. Central bank issued digital currency is based on a fractional reserve banking system based on debt and the liability of increasingly highly indebted nation state central banks. ~ Rainer Michael Preiss, Coin Telegraph

The Money Flower image below illustrates the relationship well.

The Money Flower

Some people like flowers, and most people like money. How about a money flower?

Image Source: The BIS (Bank for International Settlements) report

More about Blockchain and Cryptocurrency in my speech transcript for MBLBC Oval Debate, Kuala Lumpur:

The post Central Bank-Issued Digital Currency (CBDC) Is Well On Its Way appeared first on Blockchain Insider.

A lot of progress happened in the Crypto world during the first quarter of 2018. As the authorities step in, two prominent figures from the financial world gave their views on the Crypto World in March 2018, coincidentally.

2 Mar, 2018 – “The Future of Money” by Mark Carney, Governor of the Bank of England

15 March 2018 – “Crypto Tokens: The Good, The Bad, and The Ugly” by Ravi Menon, Managing Director, Monetary Authority of Singapore

On the corporate and business side, Starbucks Corp. Chairman Howard Schultz believes that a trusted consumer brand with brick-and-mortar locations will help bring “legitimacy and trust” to cryptocurrencies. Which, is true, looking at how the market progress after his view was published in Bloomberg Technology in Jan 2018.

Earlier Mar 2018, the Messaging app company Telegram closed an initial $850 million in funding as part of an ICO that could bring in as much as $2 billion in total.

16 Mar 2018, Tony Fernandes, CEO of AirAsia (the $3 billion low-cost airline company in Southeast Asia) which is publicly listed in Malaysia, told TechCrunch that he is analyzing the potential to hold an ICO that would raise money by introducing its own cryptocurrency on the sidelines of Money2020 in Singapore.

What we see here is how the digital currency is evolving and how it might eventually be dominance by the authorities.

90% of today’s altcoins will vanish, replaced by trusted consumer brands’ token and eventually, sovereign cryptos backed by the governments or authorities. ~ How Tze, Blockchain Insider

Updated: 28th December, 2018

2 Articles in December 2018, one from Time magazine, one from WSJ

(1) Why Bitcoin Matters for Freedom

Innovation happens at the edge. For people living under authoritarian governments, Bitcoin can be a valuable financial tool as a censorship-resistant medium of exchange.

http://time.com/5486673/bitcoin-venezuela-authoritarian/

(2) Once a Rebel, Bitcoin Is Conforming to Mainstream Markets

The influx of money from traditional investors has led the cryptocurrency to behave more like a traditional asset

https://www.wsj.com/articles/once-a-rebel-bitcoin-is-conforming-to-mainstream-markets-11546005600

We shall see how the distribution may look like in next article.

Excerpt from the book Blockchain Insider, Chapter 3: Smart Money

Related News:

Inside Telegram’s ambitious $1.2B ICO to create the next Ethereum

AirAsia, Southeast Asia’s low-cost airline, is considering an ICO

CBDC – Central Bank-Issued Digital Currency

As reported by Coin Telegraph in an article about Reserve Bank of India considering Central Bank-Issued Digital Currency

As early as 2016, the Bank of England and the People’s Bank of China explored the idea of issuing their own digital currencies, with over 90 central banks worldwide that same year investigating DLT tech.

In 2017, the Bank of Canada published extensive research into the benefits of CBDCs, and already in the first months of 2018, banks in Malaysia, Taiwan, Poland, Switzerland, among others, have all made news with inquiries into the use of Blockchain systems.

Earlier April 2018, an R3 researcher stirred a Deconomy panel in South Korea with his prediction that wholesale CBDCs would see real-world implementation in 2018.

The post The Three Phases of Cryptocurrencies appeared first on Blockchain Insider.