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How Cryptocurrencies are Changing the Fintech Landscape

CMCC Exchange now a Member of Hong Kong Cryptocurrency Union

CMCC Exchange now a Member of Hong Kong Cryptocurrency UnionDespite the skepticism of many analysts and even senior bankers, cryptocurrencies are here to stay. They have become a reality that everyone should accept. The blockchain, upon which many cryptocurrencies are based, is built on the financial technology (Fintech) of blockchain. Generally speaking, financial technology is meant to help participants in the global financial sector,

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Despite the skepticism of many analysts and even senior bankers, cryptocurrencies are here to stay. They have become a reality that everyone should accept. The blockchain, upon which many cryptocurrencies are based, is built on the financial technology (Fintech) of blockchain. Generally speaking, financial technology is meant to help participants in the global financial sector, but blockchain is only one form of that technology. Payment companies such as Payoneer and Skrill, and open banking applications, are other examples of financial technologies that are disrupting traditional financial institutions.

Cryptocurrencies hastened the advent of blockchain

In today’s modern financial structure, cryptocurrencies and fintech go hand in hand. Bitcoin was the first known blockchain application. Several other cryptocurrencies followed suit, including Ethereum, whose designers have implemented change to Bitcoin’s underlying blockchain in order to improve its performance. The main issue was the slow performance due to the need for a proof of work in order to increase the security of the network. The blockchain still needs work, but cryptocurrencies are behind the advent of this promising technology, and they are still the main way the technology is used.

Blockchain optimists talk about the technology’s large potential. They expect it to disrupt not only the financial sector but other sectors such as humanitarian work, governance, the platform economy, and others. The technology is still yet to deliver on those promises, but there are high hopes for the future.

Cryptocurrencies are still just in the beginning phases

Cryptocurrencies offer alternative solutions to customers from various countries, but it seems that their value proposition is mostly pronounced in developing countries. In developed countries with sophisticated financial structure and stable currency and institutions, customers are not likely to find great value in them (unless they are investing or trading Bitcoin and other cryptos, not conducting financial transactions). Cryptocurrencies have become appealing in countries suffering from hyperinflation such as Venezuela. As the value of the bolivar went down, the attractiveness of cryptocurrencies became even more compelling. In this case, cryptocurrency played the role of a value holder.

Cryptocurrencies can have a positive role in the development of developing countries and emerging markets

In other cases, cryptocurrencies helped people send remittances. Many immigrants outside of Africa use cryptocurrencies to send money to their families and loved ones in their home countries. This has reduced transaction costs and helped make the whole process faster. In this case, cryptocurrencies have contributed to remittance fintech solutions.

Rise of mobile banking

Those remittances are connected to mobile banking, something that also has been on the rise recently, especially in countries where large proportions of the population do not have access to basic bank accounts. Mobile banking is a good alternative, and it is complemented by cryptocurrencies which do not rely on the central bank.

Financing alternatives

In addition to the above, cryptocurrencies have offered startups alternative ways of financing their ventures. Initial Coin Offerings (ICO) have recently become a trendy way to raise capital from crypto enthusiasts and investors.

Conclusion

There are several use cases for cryptocurrencies. Different use cases can give rise to different innovative fintech solutions that make people’s lives easier, particularly by giving them access to previously unavailable financial services. We can expect a lot more innovation and disruption in the upcoming years.

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Blockchain

Elon Musk Tells Bitcoin: Use Renewable Energy For Mining

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Tesla CEO Elon Musk tweeted on Sunday that the all-electric carmarker will accept Bitcoin transactions when miners who verify transactions use more renewable energy. The billionaire acknowledged that he holds a strong belief that cryptocurrency has a promising future, but its success cannot come at great cost to the environment.

“When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” he said.

The problem is that bitcoin’s proof-of-work blockchain validation architecture is a negative phenomenon for climate protection compared to alternatives.

Bitcoin rose 5.1% to $37,360.63 at 1810 GMT (2:10 p.m. ET) on Sunday, adding $1,817.87 to its previous close, after Musk’s tweet. Musk also said that Tesla sold about 10% of holdings to confirm bitcoin could be liquidated easily without moving market.

What Is Bitcoin?

Bitcoin is a currency that was released in 2009 by Satoshi Nakamoto (a pseudonym) and is today the best known of more than 5,000 cryptocurrencies in existence.

As a decentralized digital currency that a person can buy, sell, and exchange directly, Bitcoin uses no intermediaries such as banks. Yet every Bitcoin transaction has been noted on a public ledger which anyone can access. That transparency makes transactions difficult to reverse and to falsify, which is important because there is no government or other issuing institution supervising or guaranteeing Bitcoin’s value.

According to Bitcoin, there are 3 main ways to obtain the virtual currency:

  • buying on an exchange
  • accepting them for goods and services
  • mining new ones

Bitcoin and other cryptocurrency miners are paid for their work as auditors who verify these legitimacy of transactions. All of the transactions that individuals are trying to verify are gathered into boxes with a virtual padlock on them called “blockchains.” Miners run software in the hopes of locating the key to open that padlock. Once it is found, the box opens, and the transaction is verified. The miner who finds that key receives a reward of newly generated Bitcoins.

Reportedly, it takes over 25 trillion attempts to find that rarest-of-rare key.

The decentralized network of specialized computers, called “rigs” or “mining rigs,” seeks to solve extremely complex mathematical equations. Once those equation are solved, verification is secure that the blockchain is accurate.

The process is quite energy intensive.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” Tesla CEO Musk tweeted last month, conceding at that time that Tesla would not sell any Bitcoin. However, the company intent was “to use it for transactions as soon as mining transitions to more sustainable energy.”

Will Musk’s call-to-action influence bitcoin’s energy usage?

(more…)

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Blockchain

El Salvador Considers Paying Workers Salaries in Bitcoin

The country of El Salvador considers paying the salaries of works in Bitcoin according to a recent report.

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Following the adoption of bitcoin as the country’s second legal tender, El Salvador’s government is discussing if companies would pay their employees in bitcoin.

  • In a tweet by a local radio station 107.7 Fuego on Tuesday (June 15, 2021), three government ministries were considering the possibility of companies’ workers receiving their wages in BTC. This was revealed by the Minister of Labor, Rolando Castro.
  • According to Castro, the decision to pay salaries in bitcoin will come after the bitcoin’s legal tender status becomes law. The Ministry of Labour is working with the Ministries of the Economy Finance to analyze the decision.
  • As reported by CryptoPotato earlier in June, a supermajority of El Salvador’s Congress voted in favor of President Nayib Bukele’s bitcoin plan. Even Google search for “El Salvador” reached an all-time high (ATH) following the announcement.
  • While the country’s decision to adopt bitcoin has seen high praise from BTC enthusiasts and the crypto community, the bitcoin move has raised concerns, especially from global financial institutions.
  • However, El Salvador continues to forge ahead with its bitcoin ambitions despite skepticisms. Recently, the Central American Bank for Economic Integration (CABEI) announced that it would offer technical assistance to the El Salvadoran government in the implementation of BTC as a legal tender. The government is also planning to mine bitcoin with energy from volcanoes.
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Source: https://cryptopotato.com/el-salvador-considers-paying-workers-salaries-in-bitcoin/

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Rep. Maxine Waters Announces a Task Force to Study Crypto and CBDCs

Rep. Maxine Waters announced a taskforce on Financial Technology that will study crypto and CDBCs an their impact in the US politics.

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America is not lagging behind in the crypto race. During the last hearing of the U.S. House Committee on Financial Service, Rep. Maxine Waters (D) announced the creation of a working group aimed at studying and regulating the crypto industry.

“As Cryptocurrencies grow exponentially, I have organized a working group of Democratic members to engage with regulators and experts to do a deep dive on this poorly understood and minimally regulated industry. Today we continue this discussion by considering Central Bank Digital Currencies, which are being created by governments around the world, and which the Federeal Reserve is actively reviewing.”

CBDCs and Crypto Need More Study Before Being Regulated

Waters explained that CBDCs have the ability to improve the country’s financial system through technological innovation but stressed that an in-depth study of the topic is needed for them to be differentiated from common cryptocurrencies.

Waters has been a vocal crypto skeptic for a long time and has already used her influence to slow down the previous administration’s progress on this issue.

In late 2020, after Joe Biden’s victory, Waters signed a letter requesting the new president to rescind the regulations issued by the Office of the Comptroller of the Currency focused on regulating banks and their relationships with crypto and stablecoins in general.

According to Waters, the OCC had overstepped its powers when issuing its interpretations, allowing banks to hold stablecoins in their reserves. Her petition also affected the OCC’s authority to continue granting banking licenses to crypto businesses.


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Waters did not disclose who the other members of the task force would be or which institutions they would collaborate with.

Two Sides of One Coin

There are conflicting positions among U.S. policymakers when it comes to crypto regulations. The SEC recently left cryptocurrencies off its regulatory agenda for the next quarter, showing that there is no major concern about regulating the space.

However, the landscape is changing among lawmakers. While there are some pro-crypto voices in the Senate, like Cynthia Lummis, there are also influential figures who are not very sympathetic to the decentralized world of cryptocurrencies.

In addition to Waters, Senators Elizabeth Warren and Roy Blunt recently criticized crypto, warning that cryptocurrencies have played a vital role in the boom of ransomware attacks, as well as helping with the worsening of the climate crisis.

The United States is also trying to move forward with the design and implementation of a possible digital dollar. The project hasn’t gained momentum yet, but it hasn’t been completely discarded either.

Much of the motivation for the industry’s growth is China’s progress in this area. In fact, working groups have already been created to study the impact that the DCEP, China’s digital currency, will have when it is implemented.

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Source: https://cryptopotato.com/maxine-waters-cryptocurrencies-cbdc-taskforce/

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Exodus: Chinese Bitcoin Miners Set Their Sights on Texas

The Bitcoin miner exodus from China is ramping up as the regime continues to clamp down on operations across the nation.

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Beijing is still issuing orders to shut down Bitcoin mining operations, and many of them are now seeking friendlier climes overseas to base their operations.

On Monday, CryptoPotato reported that Yunnan, the fourth-largest Bitcoin mining producer, had been targeted in the regime’s latest crackdown.

In what crypto industry observers are calling the “great mining migration,” many of these companies are looking towards North American, and specifically Texas, to base their mining facilities, according to a report by CNBC.

Everything is Bigger in Texas

Texas often has some of the world’s lowest energy prices, and its share of renewables is growing over time. Currently, Texas is the nation’s leader in wind-powered electricity generation, producing almost 30% of the U.S. total, according to the state comptroller.

The lone star state has a deregulated power grid that lets customers choose between power providers. Additionally, its political leaders and bankers are very pro-crypto, which makes it a dream destination for Bitcoin mina miners seeking a new home.


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Brandon Arvanaghi, previously a security engineer at crypto exchange Gemini, commented:

“You are going to see a dramatic shift over the next few months. We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible.”

Vice president of Hong Kong-headquartered mining pool Poolin, Alejandro De La Torre, is already planning an exit.

“We do not want to face every single year, some sort of new ban coming in China. So we’re trying to diversify our global mining hashrate, and that’s why we are moving to the United States and to Canada.”

Arvanaghi continued to explain why Texas could be the destination of choice, stating, “Texas not only has the cheapest electricity in the U.S. but some of the cheapest in the globe,” before adding, “It’s also very easy to start up a mining company … if you have $30 million, $40 million, you can be a premier miner in the United States.”

Bitcoin Hashrate Exodus

Castle Island Ventures partner Nic Carter said that given the drop in hashrate, “it appears likely that installations are being turned off throughout the country.” The analyst thinks that probably 50% to 60% of Bitcoin’s entire hashrate will ultimately leave China.

Current estimates suggest that its market dominance is between 55% and 65%, and it is already falling. The actual hashrate for the Bitcoin network is currently 114.5 EH/s, down 33% from its peak of 171.4 EH/s on May 13, according to Bitinfocharts.

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Source: https://cryptopotato.com/exodus-chinese-bitcoin-miners-set-their-sights-on-texas/

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