Swedish Central Bank Finishes Phase One Of the e-Krona Digital Currency Test Pilot

Swedish Central Bank Finishes Phase One Of the e-Krona Digital Currency Test Pilot

  • Riksbank has revealed the finalization of the first phase of its digital currency project.

Today, the Swedes learned that they might have to wait a little longer to use an e-krona for their daily uses after the Swedish central bank realized that there are minor issues that need addressing after the first phase of a central bank digital currency (CBDC) project.

The Riksbank released a study that details the results of the first phase of its CBDC project that will run on the Corda blockchain.

The central bank tested several core issues of a future CBDC system, such as liquidity supply using its own settlement system dubbed RIX with the network membership being used as the e-kronor distributors. Other aspects tested were payment networks such as mobile apps, participants, and end-users.

The main challenge identified with the system was scalability, with the central bank saying further modifications were needed. The report says,

“The solution tested in phase one of the e-krona pilot has met the performance requirements made in the public procurement. But this has taken place in a limited test environment, and the new technology’s capacity to manage retail payments on a large scale needs to be investigated and tested further.”

The Riksbank also indicated that there were challenges in information privacy, stating a need to check if it meets the banking secrecy laws and whether the system protected personal data.

Swedish central bank had indicated that it would be ready to launch the CBDC system in 2018 but has postponed the launch date for years. The Riksbank now says the second phase of the project might not be piloted until next year and gives itself until 2026 to be fully ready.

The head of Riksbank’s unit in charge of the project insisted that it is not right to settle on the system before knowing the digital currency’s exact work. The Riksbank has also made it clear the project will not replace its fiat any time soon.

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Author: Joseph Kibe

China’s Digital Currency to Roll-Out In A Second City After Successful Trials In Shenzhen

  • The second city in China is launching a lottery to test its digital currency/electronic payment (DC/EP) project, a local report states.

On Monday, local Chinese media The Paper reported that the district of Suzhou in Xiangcheng would launch a lottery to give away the country’s central bank digital currency (CBDC) in a bid to test the real-use cases of the digital currency. The ‘red envelop’ lottery is set to launch on December 12th across the city, a date known as Double 12 across China, and an end-year shopping festival.

The report said the lottery would be released similar to the one carried out in the city of Shenzhen in mid-October. In Shenzhen, the endeavor was a highly successful one, with over 50,000 participants winning 200 digital yuan each – totaling approximately $1.5 million. A later report confirms that over 95% of the digital yuan distributed were used in two weeks, stretching to over 3000 stores that accept the digital currency.

The city was chosen given the large prevalence of installed near-field communication (NFC) and QR code point-of-sales across merchant stores. Suzhou’s DC/EP trial is also set to introduce several new features not used in Shenzhen’s trial phase, such as the offline payment feature and the smartphone touch functions.

China’s DC/EP project will also launch a trial in Chengdu, which is preparing in anticipation by installing the NFC and QR codes point-of-sales. The People’s Bank of China (PBoC) also announced plans to launch the DC/EP project in the Winter Olympics venue in 2022.

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Author: Lujan Odera

Japan Joins the CBDC Race With A ‘Digital Yen’ Trial; 30 Major Firms Will Start Experiments In 2021

While China has already successfully run the pilot test of its digital yuan, now Japan is getting ready to do the same.

In its attempt to catch up, Japan’s 30 major firms will begin experiments of issuing a private digital currency next year, said the group’s organizing body on Thursday, reported Reuters.

The group consists of the three largest banks in the country, along with retailers, utilities, brokerages, and telecommunication firms. Using a common settlement platform, the group will conduct the experiments for issuing a digital currency. Hiromi Yamaoka, a former BOJ executive in an online briefing, said,

“Japan has many digital platforms, none of which are big enough to beat cash payments.”

“We don’t want to create another silo-type platform. What we want to do is to create a framework that can make various platforms mutually compatible.”

Recently, the Bank of Japan announced its plan to experiment with issuing a digital yen in a country where cashless payments make up only 20% of total settlement than China’s 70% and the United States’ 45%.

Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group — the megabanks of Japan have already rolled out their own digital payment systems.

Yamaoka said while private banks will be in charge of issuing the digital currency in the experiments, other entities’ prospects also issuing a digital yen won’t be ruled out.

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Author: AnTy

Ethereum Developer ConsenSys Partners with Thailand’s Central Bank & French Bank for Retail CBDC

ConsenSys has joined the Bank of Thailand as its technology partner to develop and test a prototype for central bank digital currency (CBDC). Other partners include SCG and Digital Ventures (DV).

As per the announcement, the CBDC will be tested and issued using ERC20 smart contracts. In partnership with Atato, it will “architect a solution using its Enterprise Ethereum stack, including ​Codefi​ and ​MetaMask​.” Charles d’Haussy, Director of ConsenSys in Hong Kong, said,

“A retail blockchain-based CBDC represents a new technology for the issuance of central bank money, where tokenized central bank money is accessible to the general public, and in this case businesses piloting the solution.”

The company that develops for the second-largest network Ethereum and funds the ecosystem startups is also helping French bank Societe Generale in its Central Bank Digital Currency (CBDC) pilot research.

According to the announcement, ConsenSys will work with the bank’s digital arm, SocGen – Forge, and will provide its expertise regarding issuance and management, delivery versus payment, and cross-ledger interoperability of the CBDC. Jean-Marc Stenger, CEO, SocGen said,

“We are pleased to partner with ConsenSys, a company who is a key player in the development of distributed ledger technology globally and offers many of the infrastructure and development tools used by the blockchain community.”

SocGen – Forge is also working with Banque de France on CBDC experiments and recently issued a EUR40 million bond that was settled with a digital euro.

These aren’t the first instances of ConsenSys being involved in CBDC experiments; it has been reportedly helping the Hong Kong Monetary Authority on a CBDC pilot to facilitate cross-border payments between commercial banks as well. Ken Timsit, Global Head of Enterprise Solutions at ConsenSys, said,

“ConsenSys is committed to advances in the CBDC space and has assisted six central banks around the world on CBDC projects.”

In August, it also acquired Quorum, JPMorgan’s blockchain platform on which the bank’s stablecoin JPM Coin is built, which is expected to see its first commercial use this week.

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Author: AnTy

The Trials of China’s DCEP Focusing on Retail Transactions: Report

The experimental test of China’s sovereign digital currency is currently focused on small retail transactions and hasn’t expanded to large volume transactions yet, said the country’s central bank as reported by local media.

The central bank gave the explanation following the rumors that a housing transaction of large volumes in Shenzhen supported the use of Digital Currency Electronic Payment (DCEP).

An unnamed employee of the People’s Bank of China (PBoC) clarified that the digital yuan is the same as fiat currency in legal tender and is a two-way convertible with banknotes in a 1:1 ratio.

The pilot tests of China’s Digital Currency Electronic Payment (DCEP) are ongoing in Shenzhen, Chengdu, and the Xiongan New Area after the country speed up its research and development in the recent years “in a bid to win the global race to launch one and against the backdrop of strained relations with the US.”

The Shenzhen subsidiary of the central bank’s digital currency research unit has also ramped up it’s hiring with more recruitment positions for blockchain development and research engineers posted earlier this month.

More Chinese cities are expected to join the trials next year. Earlier this month, China’s Ministry of Commerce also shared that it will launch DCEP’s pilot test in more “qualified localities” in the Yangtze River Delta, the Beijing-Tianjin-Hebei Region, the Guangdong-HK-Macao Greater Bay Area, and central and western China.

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Author: AnTy

Institutional Investors Gobbling Up More Bitcoin Than Being Mined This Month

Even since Bitcoin entered August, the price has taken to test the $12,000 level after successfully breaching the key levels, $10,000 and $10,500 last month.

But so far, the digital asset hasn’t been able to sustain above $12k despite breaking above it twice, resulting in a crash afterward. We are now back to trading around $11,500.

While the price has taken a breather here, people are not passing this opportunity to buy the dips.

In the past two weeks, Grayscale Investments added 14,422 BTC to its bitcoin product Grayscale Bitcoin Trust (GBTC). Although the real BTC purchased might not be this high given that these figures are based on the outstanding shares created by Grayscale’s institutional clients which involve “in-kind” purchases as well, there is some level of activity going on, for sure.

Interestingly, Grayscale Bitcoin Trust saw its value increasing by $1.6 billion in the first half of 2020. The number of BTC held in the GBTC fund grew from 261,192 to 386,723.

In total, Grayscale has $5.6 billion in assets under management.

The Big Names

Besides Grayscale, the first publicly listed billion-dollar company MicroStrategy dived in Bitcoin. As we reported, within a fortnight of announcing in its Q2 2020 earnings call, the company bought 21,454 BTC, to replace cash in its balance sheet as a reserve asset. Arcane Research noted,

“To put that into context: MicroStrategy just bought the next 23.8 days of new bitcoin supply.”

The company shared in its official announcement that they see bitcoin as digital gold and a superior asset class with the potential for incremental returns. The decision to invest in bitcoin was taken in the light of ongoing currency debasement because of the unprecedented money printing, quantitative easing, and the lack of yield.

Going with Bitcoin for treasury management purposes resulted in the company’s market cap increasing by 11% “relative to the straight fiat cash exposure.”

Interestingly, the largest asset manager in the world, BlackRock, and largest mutual funds provider Vanguard together own 25% of MicroStrategy.

More Demand than Supply

This demand actually outstrips the supply of Bitcoin which has been 900 BTC per day since the halving.

In these past two days, while Grayscale and MicroStrategy combined bought 35,876 BTC, only 12,594 BTC were mined during this period, showcasing the growing demand for this “alternative” class as an inflation hedge.

Institutional interest in Bitcoin is strong as we have been seeing throughout 2020. As of June, about 90% of North America’s cryptocurrency transfer volume came from professional-sized transfers, those above $10,000 worth of digital assets, as per Chainalysis. The report states,

“Over the last two years in North America, we’re seeing the impact of a growing class of institutional investors whose transfers account for the growing dominance of professionals in the North American market since December 2019.”

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Author: AnTy

China’s Testing its CBDC on Tencent-backed Food Delivery Giant

The People’s Bank of China is now planning to test its state-backed digital currency on the Tencent Holdings backed food delivery giant Meituan Dianping, just days after the reports came that DiDi Cuxing, the Chinese equivalent to Uber will be piloting the DC/EP.

Meituan has been in talks with the research department of China’s central bank on the real-world uses for the virtual legal tender dubbed Digital Currency Electronic Payment. The research wing is also in discussion on trials with another of Tencent-backed company Bilibili that streams video, reported Bloomberg.

Just like Didi, Meituan processes billions of dollars in daily transactions, the perfect stage for government-backed digital currency’s mass adoption. This digital yuan would further offer the government greater control over its financial system. According to some, it could even push the US dollar from the center of the global currency system.

The reports also helped Meituan, whose shares spiked, pushing it out of the negative territory.

Meituan and Bilibili offer various online services ranging from food delivery to e-commerce and video games. Currently, they are using the payment systems of Tencent and Alibaba’s Ant Group.

There is no date on a national rollout, which could still be years away. DC/EP was the result of five years of research and began its pilot program for the digital currency only a few months ago.

Coronavirus pandemic accelerated the development of digital currency in 2020, which combined with China’s progress, has other countries rushing towards developing their own state-backed virtual currency as well.

The Bank of Sweden is actively exploring “e-krona” while the US Federal Reserve is studying digital currencies but says it has no plan to issue a digital dollar.

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Author: AnTy

Chinese Ride-Hailing Unicorn, Didi Chuxing, to Pilot Digital Yuan; First Mass Scale Use of DCEP

China’s ‘Uber,’ Didi Chuxing, will test run the digital yuan according to an announcement on July 8. The Chinese ride-hailing unicorn has over 500 million registered users and is optimistic that a ‘strategic partnership’ with the PBoC Digital Currency Research Institute will scale the DCEP adoption.

“Under PBOC’s overall DCEP strategy and operation timeline, DiDi’s DCEP taskforce will design and implement pilot DCEP projects following rigorous safety, security and governance standards.” read the announcement.

With only a few months of being in existence, the digital yuan pilot is already making a debut in China’s shared economy. This comes barely two months since it was first used to partially pay some state employees in pilot provinces. Now that the DCEP will be integrated with Didi Chuxing’s ecosystem, it might just be the beginning of a mass scale adoption as China looks to wipe out the fiat renminbi in circulation.

Notably, Didi Chuxing’s market muscle and financial position will be a big boost for the digital yuan. Currently, this ride-hailing service dominates the Chinese market with a valuation of $56 billion, operating across 400 cities. It also enjoys the backing of big tech like Apple, Softbank, Alibaba, and Tencent. While its value proposition goes a long way in the digital yuan roll out, Didi Chuxing noted that working with the PBoC is strategic for their fundamental goals as well,

“The partnership is a key milestone in DiDi’s ongoing initiatives to enhance the interconnectivity of online and offline economic sectors in China, as the government seeks to support the development of the real economy sectors with innovative financial services,”

China Setting Stage for the Digital Currency Economy

This development is no surprise, given the recent highlights of China’s digital yuan. As other countries continue with debates on adoption, China is miles ahead and could soon launch an official version of the DCEP. A former top executive of the PBoC recently said that the DCEP backend infrastructure is almost complete. However, no comments were made on an official launch date.

Looking at the ongoing works, this date could be sooner than most stakeholders expect. For starters, the digital yuan pilot is being facilitated by China’s banking and tech giants who have been tasked with digital wallet facilities, amongst other ecosystem functions. Also, major food chain retailers like Subway, Starbucks, and McDonald’s are reportedly looking to pilot China’s CBDC as well. Could this be finally sunrise for the project, which has been in the works since 2014? Well, the COVID-19 pandemic might just favor the odds as paradigm shifts to digital economies.

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Author: Edwin Munyui

Is it that Time Again? Yes it is! The Market is giving All the Signs that it is an Alt Season

Everything is popping!

Is anyone getting 2017 vibes?

Tis’ the time when gains floweth over.

Today, even bitcoin jumped to $9,480 with $1.2 billion in ‘real’ trading volume.

Now, when it comes to altcoins, even XRP spiked more than 7% to nearly $0.20. And yes, Chainlink (LINK) continues to make new highs every day, the latest one being $6.38.

Cardano (ADA) has started to simmer down after days of pumping while Dogecoin (DOGE) is still going strong after Tik Tok users took it upon themselves to push it to $1, but it is still almost 27,000% off from the target. So, that’s to be seen.

VeChain (VET) is also popping today with 24.3% greens; in the past week, it has been up 125%.

So, why are Altcoins’ Surging?

In 2020 after the March sell-off, cryptocurrencies, including bitcoin, recovered handsomely, but while the world’s leading digital asset entered into a tight range, altcoins took this time to fire off.

For the past couple of months, bitcoin’s dominance has also been chipping off, which has been working in favor of altcoins.

Moreover, as we saw in the second quarter of 2020, the stock market has been growing off the charts as well. This growth was propelled by young investors who were at home during the lockdown with free time, internet, and of course, stimulus money in their hands and apps like Robinhood that charges zero commission at their disposal.

The young generation put their money in the stocks that have the least value, even if they were of bankrupt companies. And now, their attention seems to be on crypto.

Robinhood, however, only has seven cryptos listed viz. Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), and Dogecoin (DOGE), and the last one is already being pumped.

This time zoomers had Tik Tok with them to advertise it among their peers and sent the prices mooning.

“Think TikTok will actually become the biggest distribution channel for crypto products,” said Qiao Wang, an independent trader, and startup investor. And if the US bans it, “Then a TikTok copycat will be built and *it* will become the biggest distribution channel.”

This also means, ‘one-man marketing army,’ Tron founder Justin Sun has also found a way to pump his coin.

Does this mean the alt season has officially kicked off?

It looks like it!

But according to analyst Mati Greenspan, “This is more like Alt-Wednesday with a hope of turning into Alt-July,” because “a season implies that it lasts a while.”

But given that “It’s officially “refresh blockfolio every 30 seconds” season,” we are getting signs that say it is an altcoin season.

According to analyst Rekt Capital, over the years, Dogecoin has played an important role in crypto, it either predicts altcoin season or confirms them.

“This time Dogecoin has confirmed Altseason,” he said.

And who doesn’t believe it’s all season, technical analyst Pentoshi has all the checkpoints including soaring Doge price, BTC dominance which has broken a 3-year trend, and the retail on Robinhood and Tik Tok.

Some believe this wildness in the market means Chainlink won’t stop here either; it will only go on to make even new highs.

Amidst this frenzy, trader Crypto Yoda warns about staying vigilant. “Remain cautious about the possibility of BTC suddenly ending this momentum with an impulsive move.”

Meanwhile, Binance CEO, Changpeng Zhao feels, “Not all alts will pump during the next #altszn,” which is “more like 95%.”

“If a project has been around for 3 years but not much to show for, then…A few that have consistently pushed development will thrive,” he said.

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Author: AnTy

Bitcoin Passed its First Stress Test & Turned Out More Resilient than Other Asset Classes: JPMorgan Report

Bitcoin took its first test and has got “mostly positive” results, according to JPMorgan Chase & Co.

This test was the sell-off in March when the price of bitcoin crashed more than 40% just like many other markets — stock market, bonds, and gold — as economies shut down and investors fled riskier assets in favor of cash due to the coronavirus outbreak.

But bitcoin emerged largely unscathed and the digital currency has already recovered 150% as per the bank’s reports titled “Cryptocurrency takes its first stress test: Digital gold, pyrite, or something in between?”

The fact that cryptocurrencies survived the madness of March suggests its “longevity as an asset class,” wrote strategists at the bank led by Joshua Younger and Nikolaos Panigirtzoglou.

But, they also said, “price action points to their continued use more as a vehicle for speculation than medium of exchange or store of value.” Bitcoin is also looking to be correlated to riskier assets like equities, said the strategists.

Bitcoin is yet again moving in line with the equities market this week after the Federal Reserve announcement about not increasing the interest rate till 2022. The flagship cryptocurrency dropped about 8% while S&P 500 had its worst slump in 12 weeks. Then it started gaining and has rebounded to $9,400 but is still halfway off $20,000 peak.

In its May report, the bank whose CEO Jamie Dimon once called bitcoin “fraud” said that bitcoin’s intrinsic value has effectively doubled.

Bitcoin Stayed Close to its Intrinsic Level

Since bitcoin’s creation in 2008, the March crash was the first stress test experienced by bitcoin. The strategists point out that the relatively nascent existence of the coin was what precluded the stress test from happening.

During the sell-off, bitcoin was volatile but the same was the case for most traditional asset classes as well.

The good thing was, during the March panic, the valuation of bitcoin didn’t diverge much from its intrinsic level, meaning the market value dipped below mining costs only briefly. In other words, during the shock period like in March, traders might rush for the safety or more liquidity of the crypto market but what we saw was most cryptos fell at the same time.

“That suggests that there is little evidence of run dynamics, or even material quality tiering among cryptocurrencies, even during the throws of the crisis in March,” strategists wrote.

As a matter of fact, the market structure of the world’s leading cryptocurrency turned out to be more resilient than those of equities, gold, Treasuries, and currencies, they wrote.

Liquidity which is directly related to volatility was measured for this, when the order book thins, a given transaction could result in a larger price change and vice versa.

Although bitcoin recorded one of the most severe drops in its liquidity around the peak of the crisis, the disruption didn’t last long and it rebounded much faster than any other asset classes.

Latest Bitcoin Price News and Crypto Market Updates

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Author: AnTy