Six Important Banks That Adopted Blockchain Technology

Maria Rodríguez
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Efficiency, speed, security and lower costs are some of the advantages of blockchain in the financial world compared to traditional technologies.

Banks around the world have shown interest in blockchain technology and are advancing in the use of this technology that has more than 10 years and was first used as the platform base of cryptocurrencies.

Blockchain technology is achieving more spaces in the financial world. In fact, according to a 2018 Bloomberg report, banks and other financial services companies were investing USD 1.7 billion that year to adopt the blockchain technology.

Recently, it was announced that a group of 40 central banks around the world has already expressed interest in blockchain technology. However, most of the central banks believe that blockchain and cryptocurrencies need more regulation.

Banco Santander

Banco Santander, in Spain, is one of the financial institutions that is leading the use of blockchain technology in that country and is one of the first banks that showed interest in distributed ledger technology in Europe.

One of the objectives of this bank is to develop an international payment service. For this reason, in 2016 the institution allied with Ripple to initiate a pilot test using blockchain technology.

Two years after starting the tests, in 2018 the institution launched Santander One Pay FX. This is its first cross-border payment service based on blockchain. It is a platform aimed at clients in Spain, the United Kingdom, Brazil, and Poland. The service is based on xCurrent technology and is designed by Ripple as a protocol to connect different payment networks.

After that, the Spanish bank, which has more than 150 years of history, continued advancing in the development of blockchain solutions focused on the remittances sending services.

In 2019, Banco Santander announced it would develop a payment broker to “extend” its services to countries in Latin America.

JP Morgan Chase

Based in the United States, this is one of the countries more known worldwide. JP Morgan has its blockchain platform and a native token. Last year, it was the first bank in the US to launch its cryptocurrency called JPMCoin.

To achieve this, in 2015, the bank created a division dedicated to exploring emerging technologies such as blockchain. Then, the bank launched Quorum, a private blockchain built from the Ethereum base code and designed to make payments faster and safer.

The platform has been a success. More than 300 banks have joined the Quorum platform for the verification of cross-border payments through the Interbank Information Network (IIN); Among them, six Mexican banks.

HSBC

One of the five biggest banks in the world, HSBC, which has 7,500 offices in more than 80 countries, announced the creation of a blockchain platform with other recognized banks.

In 2018, HSBC processed an estimated three million operations, making 150 thousand payments through the private blockchain network “FX Everywhere”. An amount that represents USD 250 billion. This amount is a small part of all the transactions that the bank performs, but it is also a large instance for blockchain financing.

Additionally, HSBC also launched a shared blockchain financing platform along with 12 other banks, including BNP Paribas. The system is called the eTrade Connect. It aims to optimize the international trade financing platform time, going from 36 hours to 4.

Wells Fargo, BTG Pactual, and Mitsubishi

Wells Fargo & Co., a financial company with operations worldwide, plans to launch an internal settlement service this year that will be based on its blockchain platform and use the “tokenized dollar”.

Besides, a division of the institution invested USD 5 million in Series B of Elliptic, a startup specialized in connecting banks with exchanges.

BTG Pactual, the largest Brazilian investment bank specialized in investment capital and venture capital in Latin America, has also shown interest in blockchain.

Mitsubishi, Japan’s largest bank, also revealed that this year it will launch its payment network backed by blockchain. Also, the Mitsubishi Group consortium issued a local cryptocurrency in par

tnership with the Kintetsu railway company. About 15 tourist establishments will accept the asset in Ise-Shima.

In this way, more and more banks are interested in using blockchain technology to support their operations, to store their information or even issue their cryptocurrency. At the same time, the creation of central bank digital currencies (CBDCs) would help to achieve greater adoption of blockchain technology, so it is a chain of benefits for both sectors.

By María Rodríguez

Mining Industry Costs Could Increase as a Result of Bitcoin Halving

Alexander Salazar
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Mining Industry Costs Could Increase as a Result of Bitcoin Halving

A report by TradeBlock predicts that mining 1 BTC could cost USD 12,525 after the halving. It is estimated that only 30% of the mining devices will be replaced by equipment of the latest generation.

Bitcoin investors speculate that the next Bitcoin halving could lead the price of the cryptocurrency to soar up to USD 90,000 or even at higher levels. However, the operators of the equipment used for mining Bitcoin consider that the halving event could represent a duplication of costs.

A recent report by the cryptocurrency ecosystem-focused research company, TradeBlock, estimates that the average cost to mine a single bitcoin (BTC) could increase to USD 12,525 after the reduction by half that will occur next May. This is almost twice the current average price, which is estimated at USD 6,851.

It can be seen that the new estimated cost is well above the current market price, already around USD 10,000, which gives a clear picture of how the reduction could turn around the profitability of the cryptocurrency mining industry if the market price does not increase.

Essentially, to obtain the same current number of bitcoins after the halving, miners will have to perform twice as many calculations. According to the report, this will also imply an equivalent increase in the use of electricity.

The halving was programmed into the initial code of the Bitcoin network as a defense against inflation when the currency was created more than a decade ago. The idea is that a predictable and increasingly slow pace in the supply of the cryptocurrency would help stabilize Bitcoin’s purchasing power. This system contrasts with the operation of government-backed fiat currencies, which can be printed at will by central banks.

Cryptocurrency mining companies are struggling to be prepared for the halving, improving their computer fleets and including processors of the latest generation, which are faster and more efficient in terms of energy consumption.

Researchers from JP Morgan Chase have said that the average cost that miners use to issue bitcoins is the “intrinsic value” of the cryptocurrency. It can be compared with the cost invested in oil drills to increase barrel production. If a fall in the market makes oil unprofitable, many drills will close that faucet until prices rise again.

According to the analysts’ estimate, the cost of issuing 1 BTC after the halving will be USD 12,525, if the computing power of the network (hash rate) remains at its current level. The analysis assumes a cost of electricity of 6 US cents per kW/h, which is greater than the 2 US cents that some large mining companies can obtain through the local network or wholesale purchase agreements.

Another debatable forecast of TradeBlock is that about 30% of the mining equipment will switch to the latest technology, whilst the other 70% will remain the same. Some executives in the cryptocurrency mining industry believe that many mining devices of previous generations may become less economical after the halving, which would leave the fastest teams as the dominant ones in the market.

John Todaro, director of digital currency research at TradeBlock, believes that this threshold deserves careful monitoring by Bitcoin investors.

Todaro concluded that it is important to know what miners are thinking and doing. He predicted that there may be profitable miners at those levels, but many others operating at a loss could disconnect their platforms.

By Alexander Salazar

Bitcoin Price in Argentina Exceeds the One of the International Market

Maria Rodríguez
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Bitcoin Price in Argentina Exceeds the One of the International Market

The different rates that are handled in the parallel dollar market drive these differences in the price of cryptocurrencies.

Since August 2019, the price of Bitcoin (BTC) and the price of the main cryptocurrencies in Argentina began to experience a lag concerning the value established on international markets.

Some analysts considered that this issue was motivated by the uncertainty among investors, due to the financial difficulties that affect the country or because of the uncertainty regarding a political change.

However, the gap was also present in different exchanges operating in Argentina. In this way, there are important differences between the prices quoted between one platform or another, something that is not common in other countries.

CoinMarketCap platform allowed us to see these differences more clearly. On February 15th, the price of Bitcoin was about USD 10,241 per BTC. At the official exchange rate, this would represent about 628,557 Argentine pesos.

But LocalBitcoins in Argentina offered at the same time reflected values ​​for the purchase for an average of 828,500 Argentine pesos, equivalent to about USD 13,948, that is, about 3,707 dollars more than the value reflected in international markets.

The Reasons

To understand the situation a little more, it is necessary to remember that at the end of 2019, the new President of Argentina, Alberto Fernández, dictated that for some of the dollar purchases citizens had to pay 30% of the amount. This, because the US dollar is the most used currency in the country after the official currency, the Argentine peso.

These provisions generated a “gap” to access to the US dollar. For this reason, the Argentine government indicates through government channels an official price for each dollar, whilst the parallel market (known as Blue) is becoming more popular among citizens, with a rate per dollar that exceeds by almost 25% the price established by The Central Bank.

Therefore, in the main exchange platforms that operate in Argentina, as well as in peer-to-peer (P2P) services such as LocalBitcoins, buyers and sellers establish BTC prices and commercial orders.

In this way, they set the price of Bitcoin in Argentine pesos according to the Blue dollar rate. For this reason, so much higher values ​​are established and they vary according to the different existing indices, as happened in Venezuela.

For instance, this weekend the Buda.com exchange set the price of Bitcoin at 876,499 Argentine pesos (USD 14,280 at the official exchange rate).

Meanwhile, the Ripio platform quoted the price of each BTC at 878,110 Argentine pesos (USD 14,306 as the official exchange rate). This represents about 1,611 Argentine pesos more between one exchange and another.

Finally, CryptoMKT sets the price of each Bitcoin at 868,000 Argentine pesos (USD 14,142 at the official exchange rate). This is about 8,499 Argentine pesos less than the price calculated by Buda.

All of this makes difficult for some users to predict the prices and to know which one is the correct one. Citizens interested in buying cryptocurrencies or dollars look for the best price for them, as well as sellers look for an expensive price to obtain more money.

“I think that, compared with the rest of the world, the difference will continue to be between 2 and 3 %. The only thing that moves it is the informal dollar price”, Germán Guismondi, representative of Paxful in Argentina, considered.

About the price of Bitcoin in the world, it is expected that after the halving of May 12th the price will increase.

“I am convinced that, in the medium and long term, Bitcoin will continue to increase its value. The market matured a lot. I don’t think we will have 2018 again”, the CMO of SharpShark added.

The truth is that everything has a relationship and, whilst there are a parallel market and distortion in the price of dollars, the same will happen with cryptocurrencies prices.

However, dollars and crypto assets have been an alternative to save money in countries like Argentina and Venezuela, which faces a strong economic crisis. Users turn to these digital currencies to avoid the loss of value of their local currencies. This is something that helps further adoption of digital assets and that would boost the adoption of the technology base of these operations: blockchain.

By María Rodríguez

Uruguay Launches Platform for Digital Raffles Based On Blockchain

Josselyn Avila
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Uruguay Launches Platform for Digital Raffles Based On Blockchain

“LaRifamos” platform connects people who want to raffle a product with users interested in participating in the raffle.

A group of Systems Engineering students from the ORT University of Uruguay created a platform to carry out digital raffles based on blockchain technology. the name of this platform is LaRifamos, in Spanish.

This is an initiative that connects people who want to raffle a product with users interested in participating in the raffle.

Another advantage for the users offered by the platform is the high probability of winning the raffles thanks to the transparency of blockchain technology.

Through this platform, people can sell products through a raffle system. Users can buy and participate in digital raffles staying at home and without making much effort.

Currently, LaRifamos has more than 2,000 active users. Although not everyone buys numbers for raffles, they could also have the chance to win the item offered. On this platform, it is possible to raffle from a good to services or apartment rentals.

According to Rodrigo Stratta, who is one of the students who participated in the project, the first raffles have not exceeded 250 numbers yet.

The raffle numbers are not very expensive, compared with the cost of the prizes that will be raffled. So far, raffle participants have not paid more than USD 200 for a number to participate in the raffle.

Stratta believes that, since the platform is not massive yet, the probabilities of winning are quite high compared to a traditional raffle.

About the Project

LaRifamos platform was created as a final project of the ORT university students and allows selling products through a raffle circuit.

The idea came after a market study showed that there were no alternatives to finance those looking to sell a good. It also sought to cover the need for capitalization of those who wish to achieve goods of high value.

The young researchers were inspired by the case of a French woman who last 2018 did not find buyers for a castle she needed to sell. Because of this, the woman decided to sell the castle through a raffle system.

“After reading the news, we thought about creating a similar model here and generating a platform where people could do the same. We started doing commercial validation. We met with the National Directorate of Lotteries of Uruguay and we saw that there was an opportunity that it was viable and that people were willing to buy”, said Rodrigo Stratta.

How the Platform Operates

The platform has a web application, where raffles are displayed and buyers make the purchase of numbers. It also has a back-office so that users who are administrators can configure the system. These systems are deployed as cloud services, using a rest API for communication with the backend. Acquired raffle numbers are sent digitally; therefore, they cannot be changed by third parties.

To comply with the laws of Uruguay, the project records all the raffles approved by the Lotteries Agency, the regulatory entity. The draw is made with a notary public present, according to the laws stipulated in the country.

The platform charges a commission of almost 15% of the value of the sale made. Also, notaries supervise the objects to be raffled.

Until the moment, the platform has held five events. He has raffled video game consoles and even a trip to Buenos Aires with two nights of stay. To celebrate 2,000 active users, the platform has an active draw for a free Smart TV. These raffles are made regardless of the number of numbers sold.

This is the first case of blockchain technology in the sector of chance in Uruguay. However, in this country blockchain has been used to track gluten-free products, in cannabis traceability, and also to reduce the operating costs of a company in the energy sector.

All these companies in Uruguay claim to have relied on blockchain technology due to the transparency that characterizes it and the reliability it provides to users.

By María Rodríguez

Users Will Be Able to Conduct Cryptocurrency Transactions at a Venezuelan Bank

Alexander Salazar
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Users Will Be Able to Conduct Cryptocurrency Transactions at a Venezuelan Bank

BOD announced the launch of “Crypto Mode” to create a community of national users. The institution said that it seeks to facilitate the massive use of cryptocurrencies in Venezuela.

The Venezuelan bank BOD announced last February 14th an unprecedented decision for Venezuelan banking after activating a customer cryptocurrency transaction service. The institution said that the creation of “BOD Crypto Mode” is aimed at encouraging the “massive use of cryptocurrencies” among its customers.

The financial institution provided few details on the characteristics of the service, the date that it will be operational, the limits on the amounts to be transferred or on the number of daily transactions that a customer can make. The bank stated that “Crypto Mode” seeks to support its users with bank transactions related to cryptocurrencies, but it did not provide any further details either.

BOD explained that “Crypto Mode” helps create an ecosystem that facilitates a secure, transparent and reliable massive use of cryptocurrencies, integrating and developing alliances between the different actors of the cryptocurrency and blockchain community in the country.  According to the institution, this will allow operators, users, exchanges and payment systems to interact optimally while ensuring that it would bet on the generation of a community of digital asset operators.

The South American bank mentioned that customers may refer to other users with whom they conduct frequent transactions in licensed exchanges. However, it did not mention whether this will include transactions with international platforms that allow the purchase and sale of Bitcoin and other cryptocurrencies in the local fiat currency, the bolivar (VES).

Liquidity and Cryptocurrencies

The bank BOD would have a guideline whose aim is to provide the cryptocurrency system with liquidity. The decision would facilitate this type of transactions, without placing further obstacles in the international banking system.

Even though Petro, the national government’s cryptocurrency project, is not mentioned, the bank agrees with the compliance of the regulations established by the National Superintendence of Crypto Assets and Related Activities (Sunacrip). In other words, BOD would adapt to the guidelines established by this regulatory body in terms of transactions and other activities with cryptocurrencies.

This rapprochement between national banks and Sunacrip began last October 2018, when it was reported that Sunacrip would meet with public and private banks to discuss the issue of cryptocurrencies, transfers and allowed limits. That meeting was announced while Venezuelan miners and operators were discussing the subject of cryptocurrencies with the superintendent, Joselit Ramírez.

On that occasion, one of the participating operators complained that a national bank did not allow him to conduct more than 14 daily transactions and that the limits in VES were too low to trade in cryptocurrencies. This decision by BOD may allow financial institutions to address these issues.

Another Venezuelan bank, Bancaribe, introduced a new service called “My Foreign Currency Account”, an unpaid mechanism in which users can open accounts in US dollars to deposit funds and withdraw them at the counter. These plans seem to be in line with the little use of VES in Venezuela.

By Alexander Salazar

Telefónica Increases Investment in Israeli Blockchain Company

Maria Rodríguez
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Telefónica Increases Investment in Israeli Blockchain Company

This company has already worked in the past to develop blockchain solutions for communications problems and administrative process management.

As part of an attempt to improve digital services, the Spanish company Telefónica is in the process to adapt and update its platforms. It hopes to include blockchain technology in its services. In this way, it was announced that the Board of Directors of the telecommunications multinational has decided to make a substantial investment contribution with the startup company Clear Blockchain Technologies.

According to unveiled information, the company’s subsidiary group, Telefónica Innovation Ventures, was present during a round of financing for the company specialized in Israeli blockchain technology, Clear Blockchain Technologies.

The investment round managed to raise the sum of 13 million dollars, where other companies such as HKT, Telekom Innovation Pool of Deutsche Telekom, FinTech Strategic Investments, and Singtel Innov, provided financial support for the creation of technological solutions for companies and administrations of big size.

The Israeli company has previously collaborated with the Telefónica Company as local media say. Clear has been dedicated to creating solutions to measure the reach of blockchain technology. It is also specialized in generating methods that solve treaties and businesses using blockchain technology.

The tool of greater demand of the Israeli company is focused on automating the contracts of the companies, as well as managing the information between companies that maintain alliances and agreements. It also offers the service to process payments automatically. This service could help reduce the real costs of commissions to financial institutions and avoid fraud and embezzlement.

The services offered by Clear could have been Telefónica’s greatest interest in investing in this technology, especially if it is taken into account that business between companies manages to have a volume of more than 150 billion dollars a year internationally. Hence, it would be summed up to a profit for the bank for the management of these operations, generating 140 billion dollars for the sector.

Telefónica among Blockchain Drivers

Over the years, the group that manages the Board of Directors of the multinational Telefónica has expressed that blockchain technology is “very relevant”. They are motivated to explore and apply their solutions to the financial and administrative operations they perform, as well as the services they offer.

In a statement about the company’s position regarding the blockchain technology, they say they generate enough confidence to delegate their main operations.

“Blockchain adds a layer of confidence about operations: the recorded data remains immutable and allows consensus on the data stored between the parties involved in the transactions”.

This summarizes the constant work that the telecommunications company has done to help the development of this technology. The company is currently building an establishment plan for 8,000 companies based on blockchain technology. Just as it has managed to partner with projects such as Hyperledger to promote the creation of tools that help the sector.

Telefónica has embarked on betting on multiple tools and projects linked to the use of blockchain and other new technologies, achieving to be considered as the telecommunications company that has been most involved in the new technological sector, something that would be very positive to boost the adoption of blockchain technology in the market.

By María Rodríguez

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