According to Metric, Bitcoin Is Among the Most Attractive Assets to Invest

Willmen Blanco
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According to Metric, Bitcoin Is Among the Most Attractive Assets to Invest

The Reserve Risk is a metric to analyze the trust of the holders of an asset. Currently, it shows high trust among Bitcoin holders.

A recent analysis conducted by the Glassnode team indicates that Bitcoin’s reserve risk is at low levels that had not been seen since early 2016. The Reserve Risk is a metric used to analyze the trust of the holders of an asset, in the long term, regarding its price in a given time.

To better understand the Reserve Risk, it can be defined as the division between the price of the digital asset and the HODL Bank. The latter represents the deferred expenditure for doing HODL, that is, the action of saving cryptocurrencies for long periods. This allows showing the level of trust existing among investors.

A low Reserve Risk means that user trust is high and the price is low, which makes investing in the cryptocurrency attractive. On the contrary, if the Reserve Risk is high, the attractiveness of the cryptocurrency decreases as investor trust is low.

High Market Expectations and Trust Go Hand in Hand

The fact that the Reserve Risk is currently low allows for an attractive relationship between risk and the reward received from investing in Bitcoin. This raises the possibility of an imminent growth of the main cryptocurrency in the market.

The current behavior of Bitcoin’s price allows observing that the cryptocurrency remains solid at the same time as its adoption grows rapidly. Of course, this inevitably feeds the trust built over time between Bitcoin holders and those wanting to invest in the crypto asset.

This adds to the high expectations of the cryptocurrency market to be able to see, in the upcoming months, a bullish trend driven by the next Bitcoin halving, which is expected for May 2020.

Year 2020 Is Becoming Bitcoin’s Perfect Storm

Since the beginning of the year, it has been possible to appreciate the behavior of Bitcoin and several other cryptocurrencies in the market. They have shown a bullish trend that seems to threaten the bearish trend that marked the second quarter of 2019.

The coronavirus has been one of the main catalysts of the bullish momentum shown by Bitcoin since the beginning of the year. The panic that this terrible disease has caused worldwide has harmed the traditional market.

This has been such a serious situation that the US Federal Reserve recently had to take an emergency measure. The central bank cut its interest rates to prevent the economic recession that the country might experience after the attempts to contain the disease.

On the other hand, on March 4th, the Supreme Court of India eliminated the prohibition on the trading of cryptocurrencies in the Asian country.  This could add to the other factors of the bullish sentiment that the cryptocurrency market is experiencing by creating expectations that go hand in hand with the possible adoption by a market that has 1.3 billion inhabitants.

By Willmen Blanco

Dubai Has Its First Blockchain KYC Platform for Global Businesses

Maria Rodríguez
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Dubai Has Its First Blockchain KYC Platform for Global Businesses

Thanks to this new tool, it would be possible to improve the experience of the users, by allowing them to open a bank account quickly and easily.

Dubai International Financial Centre (DIFC) and Mashreq bank announced the launch of their new blockchain data-sharing platform, which would be the first one of this type in that region and even in the Middle East. This platform would benefit the operations of global businesses.

This initiative is known as Know Your Customer (KYC) and it will work along with the DIFC Financial Technology (FinTech) firm, Norbloc.

In this way, the objective is to support licensed businesses and corporations opening digital bank accounts instantly by verifying their identities through a blockchain platform, as the official website of the Dubai International Financial Centre explained.

Before this development, the process was done manually. Now, Mashreq removes the existing paper-based Know Your Customer procedure and replaces it with a blockchain-based digital process.

How Does It Work?

DIFC and Mashreq took a strategic decision to focus on improving both the quality and integrity of KYC corporate information by automating this important step that allows them to carry out the process.

Besides, with this new tool, they would contribute to improving the customer experience by opening a bank account and, in this way, facilitating the processes that allow doing business in DIFC.

According to the official information, DIFC prepares each new KYC record as part of a company’s corporate license application. Then, with the customer’s consent, this information is shared electronically with Mashreq through the blockchain platform.

Thanks to blockchain, this is a simplification of the traditional process that companies carried out when opening a new bank account. Now, Dubai’s blockchain KYC platform will make it easier and faster for new companies to do business in the United Arab Emirates (UAE).

Besides, according to DIFC’s statement, the FinTech firm Norbloc provided the blockchain platform, Gowling WLG drafted the legal agreements, and Deloitte supported Mashreq with governance and program management.

“The program aligns with the United Arab Emirates Blockchain Strategy 2021, earmarking the beginning of a journey towards a broader vision of forming a Consortium of Banks, Government Bodies as well as other Licensing Authorities, for sharing customer KYC data without problems, thus leading to increased transparency, added security, and a better customer experience”, Ahmed Abdelaal, CEO of Mashreq, explained.

The DIFC is one of Dubai’s independent free-zones. It offers companies 100 % ownership of their businesses without the need for a local partner. Among other benefits for companies is that the DIFC’s legal framework emphasizes on data protection whilst maintaining practices that are consistent with all European Union (EU) regulations and the Organization for Economic Co-operation and Development (OECD) guidelines.

The United Arab Emirates is taking advantage of different blockchain projects such as the digitized trade project known as the “Digital Silk Road”, or a document exchange platform known as the “Bank Trust Network”.

Now it has this new platform to store information and facilitate international trade so this would bring more benefits for the country.

By María Rodríguez

Control of the Steem Blockchain and Cryptocurrency Ownership

Willmen Blanco
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Control of the Steem Blockchain and Cryptocurrency Ownership

What happened with the network reopened the debate on the management of funds in exchanges. A saying in the bitcoiner community emphasizes that: “If those are not your keys, then those are not your coins.”

People should remember that one of the ideals that made cryptocurrencies and distributed networks possible is decentralization. Since Bitcoin emerged in 2009 as the first blockchain, this cypherpunk principle has governed much of the cryptocurrency ecosystem as a guarantee that the opinions of each community member are at least heard.

It is known that this “pact” is sometimes violated to the convenience of different projects seeking to have greater power, make decisions or be leveraged to achieve objectives as part of a corporation. Even though it is not illegal, it could be considered unfair.

The control of the Steem blockchain went from a group of enthusiasts in their community to a conglomerate of exchanges and Steemit. This event revived the debate on the treatment given by cryptocurrency exchanges to their users’ funds, the way that they exploit their position to promote the centralization of services, and thus remove from the game those that had to work hard for years.

It is important to note that the ambition that a company or person has is not bad in itself, but the use of dirty games to feed it. For instance, it is wrong to use funds of users that did not authorize the transfer of their money, as if it were a bank, to reconfigure an independent project.

The bitcoiner community has a saying that emphasizes that: “If those are not your keys, then those are not your coins.” This proverb seeks to make users aware that their private keys should allow them to control their funds. Otherwise, those cryptocurrencies or tokens will rest on platforms that can use them without authorization. This is the way that Binance, Huobi, and Poloniex gained control of Steem, a platform that uses Delegated Proof-of-Stake (DPoS) governance.

Even though traders may be inclined to keep their funds on these types of platforms, due to the nature of their work, the truth is that safeguarding cryptocurrencies in exchanges is against the principle that each person owns their own money and must, therefore, take care of it.

The financial principle of peer-to-peer (P2P) transactions is an ideal that should remind users that this technology seeks to empower the collective and free it, rather than favor centralization or small power groups that make decisions.

The Steem case shows that unfair actions are not only individual initiatives by individuals or companies, but there are cases in which they are organized on multiple fronts to achieve an objective, which can be interpreted as a premeditated act that disregards the opinions of the members of the affected community.

The openness of the Bitcoin code is the clearest signal that the technology on which cryptocurrencies rest is collaborative and integrates multiple functions so that everyone can contribute to its development. However, there are also projects aimed at promoting centralization or serving as intermediaries, which does not match the original narrative of the first cryptocurrency.

Cryptocurrency exchanges do not have the right to make unilateral decisions that negatively affect users, a particular project or entire communities of enthusiasts. The outburst of the Steem network raised such ​​criticism and questioning that Binance and Poloniex executives were forced to try to calm the turbulence generated.

By Willmen Blanco

Petro Is Used Cautiously by Airlines Serving Venezuela

Willmen Blanco
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Petro Is Used Cautiously by Airlines Serving Venezuela

Humberto Figuera, President of the Association of Airlines, stated that that the situation is confusing. In the center of the country, a municipal market already calculates lease payments in petros.

Domestic and foreign airlines serving Venezuela might use Petro to pay for gasoline and the use of airports, but they would do so cautiously for fear of possible financial sanctions by the USA. This was stated by Humberto Figuera, President of the Association of Airlines of Venezuela, who added that the situation to pay for the fuel with the Venezuelan government’s cryptocurrency is rather confusing.

The leader believes that the biggest fear of the airlines is not that the US authorities determine that they are breaking the sanction against Petro. In his opinion, the airlines are more concerned about not being able to buy spare parts or simply being ignored by sellers for trying to pay with the cryptocurrency.

According to Figuera, the US Department of the Treasury will not verify who has bought petros or not among the airlines. He believes that the over-compliance of this sanction is what should worry the most since a company that produces spare parts or that manufactures airplanes might not want to sell or pay attention to those paying with petros.

The US Department of the Treasury, through its Office of Foreign Assets Control (OFAC), has already sanctioned the Venezuelan flag airline, Conviasa, which it accused of being poorly managed by the Venezuelan government and of promoting politically-oriented activities.

Last January, Maduro decreed that the country’s government services, including aeronautical rights and procedures before the National Institute of Civil Aeronautics (INAC), should be paid with petros. It is still unknown if Venezuelan or foreign airlines have paid for some of these services in Petros.

Lease in Petros

Whilst the airlines analyze how to operate in this new scenario in Venezuela, in other regions of the oil-producing nation, ordinances or bulletins are being approved, indicating that Petro should be adopted as a reference or as an instrument to pay for services. This occurred in the Municipal Council of Naguanagua, in Carabobo state, located about 107 miles west of Caracas, where the councilors authorized the lease payment for the Municipal Market, estimated in petros.

The ordinance was rejected by the traders, who indicated that the profits from their business are not enough to pay the new fees. One of those affected is Jesús Manuel Morillo, who previously paid VES 320,000 per month for the rental of the premises and now has to pay VES 3,360,000. In recent days, a group of traders approached the City Council to request the repeal of the aforementioned measure.

Venezuela is driving further adoption of Petro to pay for products and services within the country. However, its efforts are not yet perceived on a large scale as Venezuelans have migrated to the use of the US dollar (USD), the Colombian peso (COP) or the Brazilian real (BRL), in the cases of border areas. This preference for the use of international currencies occurred because the national currency, the bolivar (VES), loses value rapidly in the face of the hyperinflation experienced by the country since 2017.

By Willmen Blanco

Bitcoin’s Price Is Impacted by Fed’s Announcement

Willmen Blanco
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Bitcoin’s Price Is Impacted by Fed’s Announcement

The price of Bitcoin fell by 2% after the Fed’s announcement. Bitcoin and traditional markets reacted in the same way.

The Federal Reserve, the central US banking system, was created on December 23rd, 1913, after a series of financial panics raised the desire for central control of the monetary system to ease financial crises. The action taken by the Fed, due to the risk of a fall in the economy, could have influenced the trend in the evolution of the price of Bitcoin (BTC).

Recently, the US Federal Reserve announced cutting its interest rates, scheduled on March 18th, as an emergency measure to counteract the negative effects produced for fear of the coronavirus. However, given the economic situation resulting from the attempts to contain the outbreak of this disease, which has interrupted travel and commercial activity, the economic entity reduced the interest rate in the short term by 0.5 points, to a range between 1 and 1.25 percent.

The International Monetary Fund (IMF), the Bank of Japan, and the World Bank assured that they will act in the manner necessary to repair any economic damage caused by the current situation. Whilst it is true that an announcement of this magnitude could lead traditional markets to a bearish trend, it is also necessary to emphasize the possibility that it has been the trigger for the fall in Bitcoin’s price.

By analyzing a Bitcoin graph and an S&P 500 index graph, in periods of 5 minutes, it can be seen that the same patterns occur at the same time. On the part of Bitcoin, after maintaining a sustained bullish trend for most of February 2nd, it seemed to take a break from the beginning of February 3rd. At 11:00 a.m., the price of Bitcoin went from USD 8,692 to USD 8,860 but, from 11:10 a.m., the price began to enter a short-term bearish trend that would take it to USD 8,700. At the time of writing this article, the price of Bitcoin was USD 8,693, which means that in no more than 3 hours the price of Bitcoin fell by 2%. Subsequently, it increased slightly to USD 8,735.

On the part of the S&P 500, it can be seen that there is a pattern very similar to that shown by Bitcoin. On February 2nd, the index indicated a sustained bullish trend but, at 11 a.m. on February 3rd, it can be seen that the same “jump and pullback” that Bitcoin experienced occurs. At the time of writing of this article, the index went from 3,060 to 3,127; then in later hours, it can be seen that the index fell to the 3,000 area.

The evidence presented in the graphs only demonstrates how the global market reacted to the announcement made by the US Federal Reserve. However, this should be a clear example of how Bitcoin’s price can be influenced in the same way as traditional markets, which is why cryptocurrency trading experts place enough importance on fundamental analysis (research into important news on the environment) before planning any action.

By Willmen Blanco

Binance to Focus on Latin American Countries Struggling against Inflation

Willmen Blanco
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Binance to Focus on Latin American Countries Struggling against Inflation

Josh Goodbody, Binance executive for Latin America, believes that regulation must be consistent with adoption. They believe that Latin Americans need new solutions to deal with economic chaos and censorship.

Binance announced last December the launch of its new platform Latamex, through which it offers the service of purchasing and selling cryptocurrencies with local fiat money in the Latin American market. This year, the company appointed Josh Goodbody as Director for Growth and Institutional Business, focusing on Europe and Latin America.

The executive, who joined the team behind the platform after serving as head of Europe and the Americas at Huobi, announced the plans of the firm where he helped consolidate the Global Institutional Business Department. Besides, he served as a lawyer in financial markets, working on regulatory reforms and building a new commercial infrastructure of banks such as JP Morgan, State Street, and Credit Suisse.

Binance recognizes Latin America as a key region for the business and institutional growth that the company has projected worldwide, but it will focus on countries such as Venezuela, Argentina, Mexico, and Brazil. In those nations, citizens are struggling against inflation and there is a certain level of understanding that cryptocurrencies, with their paradigm of decentralization and refuge of value, offer an alternative to deal with the economic chaos and censorship to which they are subject.

According to Goodbody, it is necessary to understand that each country requires a different approach and requirements but, as the cryptocurrency markets mature, Binance will expand its presence in the region and beyond it. He also states that a large part of the company’s mission is to connect with local communities to understand what they want and expect.

Regarding the Latin American countries with the greatest future in the cryptocurrency industry, he indicated that despite their potential to contribute to the sector, Brazil undoubtedly has the largest market for its leading economy. He also highlights Mexico and Colombia for their current results, which allows them to lead the cryptocurrency market, and for the performance that Binance partners are having there, which allows them to offer fiat links.

Between Adoption and Regulation

Regulation is necessary and inevitable if it is sought to ensure the growth of the industry. The countries may have different levels of clarity regarding regulation as each of them is now asking many questions. However, the largest countries tend to take longer to achieve the clarity required by the regulatory framework, since they have more regulatory agencies, more projects, more cryptocurrencies to evaluate, and more people to protect.

In this respect, Binance explained that it seeks to comply with the rules and is committed to working jointly with government agencies to ensure a sustainable market and increase public adoption. Since cryptocurrency transactions can help eliminate procedural bottlenecks that affect traditional banking and financial services, Goodbody said that Binance wants to connect regions and decentralize how citizens use money worldwide, thus empowering the community.

Binance stated that local exchanges do not have all the features that the firm can offer, such as the exchange between different cryptocurrencies, advanced trading tools such as Binance Futures, and auxiliary products such as Lending and Margin. Besides, Binance provides an approach to the ecosystem with its decentralized exchange, that is, its products are powerful and can boost the growth of the ecosystem, based on user education through the company’s academy.

By Willmen Blanco

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