Just over the last week there has been a lot of things happening in the Cryptocurrency world again. It was Bitcoin’s anniversary on the 22nd. In May 2010, Bitcoin was used to purchase two large pizzas from Papa Johns, then Bitcoin was trading at 0.004centrs making two pizza worth 10,000 BTC a total of $41 at the time.
Today they would be worth $82,000,000.
Just jumping into some of the news that’s happening at the moment.
I want to cover a lot about whats happening with the banks. A few banks are getting on board with cryptocurrencies and its putting people on two sides of the fence.
Argentina bank, Argentina Banco Masventas (BMV) announced a partnership with Bitex to enable clients to use Bitcoin for international payments as an alternative to SWIFT.
Bitex is a blockchain-based financial services provider based in Latin America. Organisations who participated in the project RIPPLE reported transaction savings of 40% to 70%, so a lot of these big big banks are starting to see the value of blockchain and what some of these other projects, like Ripple, are doing.
Also these payments through the new payment system, reportedly took around two minutes, as opposed to the average 2-3 days required by many conventional cross boarder payments.
So Argentina has jumped on the bandwagon and they’ve actually been using Bitcoin through Bitex which is a ffinancial services provider.
Also the Bank of England, these guys are actually fleshing out how Bitcoin and other Cryptocurrencies are going to work.
So on May 18th, the Bank of England released a staff working paper laying out various scenarios of possible risks and financial stability issues of central bank digital currenences (CBDC’s).
So they are seeing how this is going to work in the future and writing up different papers to see how its going to tie in to the system right now.
Central banks are progressively studying the introduction of CBDC’s and their potential impact on the banking system.
Last week Norway’s Central Bank issued a working paper on CBDC’s as well. So essentially all these different countries are seeing what other countries are doing and a lot of them are jumping on the bandwagon as well.
The Federal Council of the government of Switzerland requested a report on the risks and opportunities of introducing its own state backed digital currency or so call e-franc.
So a lot of countries are even looking at creating their own digital currency. Also Japan are doing the same.
India is another big player. Seven major bank in India have begun testing virtual currencies and have joined a blockchain powered trade finance initiative led by Indian IT giant InfoSys.
This is similar to Bitex in Latin America but India has their own version. InfoSys is being used by the banks to run a successful Financial Trade Connection (FTC), a Blockchain based solution developed specifically to address the trade finance process requirements of banks.
So a lot of banks are jumping on board because they see the results that Ripple has had and some of the institutions that are using them at the moment.
Some other big news is Japan’s largest bank has its own coin and will carry out a large scale trial of Cryptocurrency MUFG Coin. Japan’s largest bank Mitsubishi UFJ Financial Group’s (MUFG) with over 2.6 trillion in assets, could become the world’s first major financial institution to deploy its own cryptocurrency by 2019.
They have confirmed plans to trial as many as 100,000 MUFG retail bank customers before full adoption takes place. Already ATM’s and other payment devices are being rolled out to make the process seamless.
So this is what’s causing some concern at the moment. There is a lot of people for this and a lot of people against it.
Cryptocurrency started out more as a libertarian type coin where obviously they are trying to get away from the banking system. This is scaring a lot of people such as the retail investors out of this market and the market is primarily run off retail investors. Things are still unregulated and causing uncertainty for a lot of people.
So, to summarise, central banks are starting to move into this space.
You can jump onto some major blogs and can read a lot about banks getting into this crypto space. This does raise a few questions and is scaring a lot of people so we are seeing a lot of volatility in the market.
The market is moved by retail investors. Regulation needs to play a big part and this regulation is where banks are coming in and scaring a lot of people.
There is not a lot of new money coming in until regulation gets sorted so its a bit of a double edged sword at the moment.
Very few institutions are in the market until regulations are met. So what does this mean for the future of cryptocurrency being used as an actual currency?
What i want you to keep in mind is when we buy cryptocurrency, which are essentially going to be used as currency, it always really important to see how this is going to play a part all around the world. So you know things like Bitcoin are great because its the reserve of all other cryptocurrencies and you need it to buy into other things.
We are seeing a lot of different coins out there that are trying to implement the same technology as BTC and use as a means as currency.
But you need to look at all thats happening in the market with a lot of banks coming into the market creating their own coins and how these other cryptocurrencies will play a part if a bank will only accept their own digital coins. Its still such early days, and its very interesting to see how things are moving forward.
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