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.

In my humble opinion, as we are moving towards a moneyless society, their speeches came just in time to aware more people about the existence of the Crypto World and what we can do about it.

Both

speech given by Mark Carney, Governor of the Bank of England dated 2 Mar, 2018, titled “The Future of Money” (video embedded below)

and

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

gave quite a clear understanding to the public regarding the existence of the two monetary world (illustrated in sub-topic under Chapter 3 of the book Blockchain Insider, “A Tale of Two Worlds“, which is yet to be published).

The overall progress in the financial world is good as the authorities started to look into it and understand more about Crypto related matters.

What I prefer is to blend in the best of both world.

Related topics:

Towards A Moneyless Society

A Tale of Two Worlds

The Future of Money by Mark Carney, Governor of the Bank of England

The post As The Regulators Steps In appeared first on Blockchain Insider.

Blockchain – The Technology

If you are old enough in the tech industry, you will notice that the Blockchain is a revolution that builds on another technical revolution so old that only the more experienced among us remember it: the invention of the database. As such, the technology part of it concerns more on how we can apply the technological breakthrough to organizations, corporates, and governmental bodies.

In fact, IBM, which has engaged in more than 400 blockchain projects across a number of industries, including supply chain, financial services, healthcare and government, sees Blockchain as much more than the foundation for cryptocurrencies like Bitcoin and wants the government to consider embracing it as a way of saving time, cost and risk.

In summary, it is more about how we can leverage the design and the immutability of this technology to make our computer systems more efficient and more secure.

Crypto Economy – Opportunities and Risks

What we have now is truly borderless, programmable money backed by immutable computer systems based on pure logic & mathematics.

The crypto economy part of it deals not only on how we can further put back more financial power into the hands of an ecosystem’s stakeholders but on a much bigger picture in terms of traditional players defending their forte and revolutionists creating a more open, fairer financial systems for the people.

It’s the evolution of money towards a moneyless society and the possible disruption of the whole financial system as we know it today.

It can be done through Blockchain consensus and programming logic. It’s a matter to trust human beings or computer systems or to strike a balance between both side of the world.

“We are in the early phase of Blockchain now. We can define its impact on mankind.” ~ Roberto Capodieci, Playing with Blockchain Consensus workshop, 22-23rd Feb 2018

May the force be with you.

Notes: Excerpt from Chapter 3 – Smart Money of the book Blockchain Insider.

Related News At Time of Writing

According to a recent European Commission Roundtable related to cryptocurrencies, while the so-called cryptocurrencies and their underlying blockchain technology is affecting many sectors of the economy (including finance), it is now more than important for financial institutions, governmental organizations and corporates to learn how they should respond to the challenges posed by fast technological developments, and seize the opportunities the technology could offer.

The goal of any government or financial authorities is to ensure investor protection, market integrity, and financial stability while taking full advantage of these new technological developments:

1) Cryptocurrencies and their implications for financial markets
2) Investor protection and market integrity in relation to cryptocurrencies as an emerging asset class, and
3) The potential and challenges posed by initial coin offerings (ICOs)

Source: European Commission Roundtable: Blockchain ‘Holds Promise,’ Investors Must Know Risks

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If you were to ask me what’s the biggest picture I see in this blockchain and the advancement of the whole tech things, I would say resource allocation is at the very core of it. Of course, this is merely from my personal point of view.

There had never been a problem with the resources, the problems lie within the distribution.

It’s all about trust. To trust a small group of elite in the fiat money system or a network of computing nodes in the cryptocurrency world.

It’s the evolution of money, for now.

As a matter of caution, unscrupulous things happen everywhere. Equipped with the right knowledge and enough amount of due diligence before you dive into anything.

We shall be heading towards a world where resource allocation will become more efficient, open and fairer. Newer and more advanced technology which none of us could have ever think of at this moment may come along the way.

While a decade from now we’ll call this the blockchain boom, it could be just one of the complementing piece of puzzle besides IoT (Internet of Things), Big Data, AI (Artificial Intelligence) etc, as we evolve to a better world.

What Can We Do With Blockchain?

Blockchain promises a world without middlemen, with characteristics such as its openness, immutability, cross-border, high resistance to censorship, coercion and geopolitical manipulation.

Forget about the glamorous blockchain world we tend to see in the media, it is just part of the evolution towards the ultimate goal.

Excerpt from the book Blockchain Insider, Chapter 3 – Smart Money.

Related presentation file:

The post Towards A Moneyless Society appeared first on Blockchain Insider.

Things happened sooner and faster than many of us could anticipate.

One of the slides in our presentation Blockchain for Finance showed that it was only $509 bln backed in 14th Dec 2017 (See presentation file below, slide no.7).

We are seeing a ~60% rise in market cap within merely a month’s time. That’s quite a huge amount of money being sucked into the crypto world from the fiat money system, and also being generated in the cryptosystem itself.

“Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road.” – Stewart Brand

And yes, we are not merely talking about the euphoria or quick profit out of it, or whether it’s a bubble to be burst soon, but it’s all about confronting a bigger issue that is facing the majority of the human population – 【 Totalitarian Financial Surveillance 】.

Worse Than Useless

They are not afraid of the dark web. They just don’t want us to have ours.

The question now is will we get ours (secrecy)?
Will we assert our human right to privacy?
Will we use this technology not to enslave the world through a totalitarian financial surveillance system but to free the world?
Will we do something that will first do no harm?

The post Cryptocurrency is Well on Its Way to Becoming A Trillion-dollar Industry appeared first on Blockchain Insider.