Will COVID-19 Accelerate the Demise of Cash? It Puts CBDC’s into Sharper Focus: BIS Head

The outbreak of coronavirus pandemic has brought the whole world to a standstill and it has added to the misery of the financial institutions as well as governments to manage their deficits in these troubled times. While governments are on a money printing spree to get through. The ongoing crisis has also led to a rise in global discussion around Central Bank Issued CBDC’s and brought a sharper focus towards the concept.

During a webinar hosted by Accenture last week at the Reinventing Bretton Woods Committee – Chamber of Digital Commerce, the head of the Bank for International Settlements Innovation Hub, Benoît Cœuré primarily talked on two key areas resilience and technology. Cœuré believed these two key areas would be of great importance in the post-COVID-19 era for central banks and payment gateways

He further elaborated that the ongoing pandemic exposes the loopholes in the financial system and brought out the importance of technological advancements with time. He also believed the focus of central banks and governments should be to look for technologies that can work at arm’s length and overcome present issues of social distancing. In short, he believed that in the post-pandemic era there will be drastic changes in human behavior and consumption patterns which would have a lasting impact on how economies functioned in the pre-COVID era. He explained that there would be significant changes to the payment technology and elaborated,

“The payment industry immediately comes to mind. Payments have been at the forefront of technological change recently. A rapid shift towards digital payments can improve cost, transparency and convenience for billions of consumers. International cooperation is needed to support technological capacity in developing economies, ensure interoperability between national systems, enhance cross-border payments and remittances, and support financial inclusion – in short, to avoid spatial and social fragmentation.”

Physical Cash May Start to See a Decline in Demand

The ongoing pandemic is also going to change how people used physical cash. The head of BIS believed that it is an open question whether the present situation would lead to the demise of use of cash. But, it would surely accelerate the adoption of digital payments. He also believed that the global discussion around CBDCs would see a sharper focus and explained,

“The current discussion on central bank digital currency also comes into sharper focus. Whether COVID-19 will accelerate the demise of cash is an open question. But already, it highlights the value of having access to diverse means of payments and the need for any means of payments to be resilient against a broad range of threats.”

There has been a lot of debate about whether central banks should launch their own digital currencies and that debate has been fueled further by China who is already testing their national digital currencies in several cities.

Interestingly, China is among the most advanced nations when it comes to payment modes where almost 90% of the population is using a digital form of payment which are integrated into their daily use applications. This makes it even easier for the country to implement and issue CBDCs since they won’t have to make significant changes to their payment infrastructure. The ongoing crisis has only proved the need for such innovations and a majority of the nations are believed to spring in action once the pandemic situation is under control.

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Author: Lorraine Mburu

FBI Issues Warning to Crypto Holders About Increasing Coronavirus (COVID-19) Scams

The COVID-19 pandemic outbreak has brought the whole world to a standstill, with the majority of countries worldwide placed under strict lockdown measures to contain the spread.

The crypto community remains enthusiastic, despite the ongoing crisis, with the upcoming Bitcoin Halving just a month away. However, this enthusiasm has also made them vulnerable to scams.

The Federal Bureau of Investigation (FBI) has released a warning on Monday specifically for crypto holders, suggesting they be prepared for a surge of coronavirus-centred crypto scams in the coming weeks.

Cryptocurrencies have turned out to be a lucrative investment in the past couple of years, which has drawn the interest and investments from people of all kinds, be it institutional investors, small-time traders, young or old. This rapid rise in interest has also given way for scammers to lure many into Ponzi schemes, promising high returns in a short period of time.

However, the risk of scammers has risen significantly in these troubled times where a majority of the population are uncertain of their financial future, as most of the financial markets hit record lows and scarce investment opportunities.

The FBI believes scammers are praying on these insecurities to steal people’s hard-earned money, and launder it through the complex ecosystem of decentralized coin exchanges. While entities like Huobi have taken steps to prevent these activities, buyers beware.

FBI Believe Scammers May use Humanitarian Aid as Cover for Scams

The FBI warning noted that the scammers might use a number of methods and curtail their pitches on emotion quotient in the ongoing situation, where they might pretend to be from organizations looking for donations to help the needy.

The FBI also believes blackmail could also be a scamming avenue for making money. Where the scammers may threaten to infect the victim’s family with the Coronavirus.

The FBI has also urged people to be cautious and, use common sense and not let their emotions get better of them.

The agency has also stated that people should refrain from donating to anyone before verifying the credibility of the source, and report any suspicious website/s or person/s asking for donations.

While there is no clarity on why the agency suddenly issued such a specific warning, it seems there have been many COVID-19-themed scams in the past couple of weeks, prompting the authorities to issue the warning.

In one instance, scammers managed to collect $2 million from PPE seekers in Asia. A few scammers in the UK and USA were found sending malicious texts which drew attention from financial regulators.

A Chainalysis report has revealed that the ongoing pandemic has brought down funding of these scams by one third. This, however, hasn’t discouraged scammers from trying to phish people as their number of attempts have remained constant.

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Author: James W

BitMex Research Suggest Bitcoin Ecosystem is Thriving With Diverse Development Work

In the wake of the coronavirus outbreak, the financial institutions have come to a standstill and governments around the globe are pumping and printing fiats at their will to keep it going. Bitcoin, the decentralized digital currency which was created in the wake of the 2008 financial crisis also registered a massive drop of almost 50% leading to panic selling.

Apart from the price drop, the Bitcoin network has also seen falling hashrate input, decreased mining difficulty which created a sense of uncertainty among many. However, a recent report from BitMex Research suggests that Bitcoin is going strong and the network is healthier than that of 2014.

The research report suggests that the development of the Bitcoin network is getting stronger not just from the Bitcoin core community, but the contribution has poured in from different walks of the crypto ecosystem who are continuously working to make the network more scalable.

Lightning Lab and Blockstream Biggest Contributors

Source: BitMEX Research

The BitMex report revealed that Lightning Lab and Blockstream are the biggest contributors to the Bitcoin network. Both these platforms have continuously worked on scaling the sidechain solutions. Bitcoin’s scalability has been one of the biggest talking points in recent times and layer 2 solutions in the form of lightning network and liquid are being actively developed as a sidechain to contain the congestion on the main network.

Twitter CEO Jack Dorsey’s Square app comes in the third position in terms of their contribution to the Bitcoin network. Square is well-known for its belief in the lightning network and has worked in accordance with them to make it more reliable and user friendly.

The research also makes note of independent developers contributing to the network and believe there are at least 33 core developers working on the platform, but there are many other anonymous contributors as well which cannot be easily tracked.

Altcoins Do Not Enjoy Same Diversity in Development

While it’s very evident from the research that the Bitcoin network still attracts a lot of developers both known and unknown to its platform, the same does not hold true in the case of altcoins. The research report revealed that the development community for the majority of the altcoins is quite centralized.

Ethereum and IOTA top the list with over 100 developers working on the foundation tram. While centralization in the developer team has its drawback, it also ensures a clear vision for the platform which streamlines the flow of development and subsequent progress of the network.

As for the financial aspect of the development, the exact details of the funding is obscure as contributions pour in from many non-profit organizations like Chaincode Labs and MIT DCI, while the likes of Square and Blockstream has raised significant amount as well.

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Author: James W

Bakkt Bitcoin Options Trading Slumps In Last 10 Days With Zero Activity

Trading activity in the Bakkt BTC option market seems to have been at a standstill in the past 10 days as no transactions have been recorded. The exchange’s option trading based on Bitcoin future prices dropped significantly despite a strong start in the first two weeks of 2020.

Bakkt’s business model was quite promising given the cutting edge as physical trade of Bitcoin for settlements within its ecosystem. This has however, yet to yield the speculated level of activity especially in trading Bitcoin futures and options. As it stands, around 63% of the transactions within this network are BTC backed.

Earlier in Jan. 2020, Bakkt’s trading volumes in futures and options were on an uptrend with the former hitting a high of $40.8 million during the first week. The BTC futures were more actively traded than the options and are currently at $20 million as of yesterday; Bitcoin Options traded on the other hand have been at the zero-mark for the past 10 days;

Bakkt’s 1,500% Spike in Physical Bitcoins Delivered

This BTC oriented exchange saw the number of physical coins delivered to them increase by over 1500% over the course of January. Some analysts attributed the spike in volume to Bitcoin’s speculative nature which in turn correlates with the amount of activity in crypto exchanges. The leading digital currency has been on an uptrend to hit the $9,000 mark; this may have contributed to Bakkt’s physical BTC spike.

In addition, interest on unsettled future contracts grew by 14% to stand at $6.17 million. The exchange plans to roll out an alternative to settle BTC transactions through cash; they hope to edge out peers like CME who already have this convenience within their ecosystem. Stakeholders are also optimistic that the Bakkt BTC derivative volumes will pick up as we approach the May 2020 halving.

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Author: Lujan Odera