Jack Dorsey Believes that the Global Adoption of Cryptocurrencies Will Aid Square

Andres Chavez
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Jack Dorsey Believes that the Global Adoption of Cryptocurrencies Will Aid Square

It is no secret that crypto assets are becoming increasingly popular and more widely used. As a result, Jack Dorsey has forecasted that the firm that he co-founder, Square, will transition and end up offering a wide array of Internet services instead of just financial technology.

Dorsey offered his thoughts via an interview with The Australian Financial Review this week. The man who also founded Twitter, a global online microblogging giant in which he is also the CEO, said that he thinks the emerging asset class will be the one that defines the development of this newest venture.

Ease of Use

“In the long term will help us be more and more like an internet company where we can launch a product … and the whole world can use it, instead of having to go from market to market, to bank to bank to bank and from regulatory body to regulatory body,” he observed.

Instead of focusing on money transmission or payments as it happens now, Square will, most likely, develop services such as “hardware, analytics and payroll and lending,” according to the widely known entrepreneur.

Square, Inc. is a financial services, merchant services aggregator, and mobile payment firm with headquarters in Francisco, California. It is a platform that can help sellers run their business from secure credit card processing to point of sale solutions.

Over $190 in Revenue in the First two Quarters

The company integrated Bitcoin last year, when its Cash App started selling the world’s premier crypto asset to customers. The service has made more than $190 million in revenue over the first half of 2019, just shy of $3 million in gross profit.

Dorsey identified artificial intelligence and cryptocurreny or blockchain as the two technology trends that can disrupt financial services in a profound way. He says that Square is aiming to maximize the latter’s potential.

“We take a lot from the open source community [people who write source code that’s available to the public and used to create new software] and we wanted to give something back in our space of financial technology,” he pointed out.

He also informed that Square is “hiring five open source engineers to work entirely on making the crypto ecosystem better. I think the internet will have a native currency and anything we can do to make that happen we’ll do.”

Bitcoin Should’t Be Considered a Currency Yet

Dorsey has been a famous crypto backer, especially defending Bitcoin. He says that BTC is the only crypto asset he holds, but whilst he remained confident that the currency would be widely adopted with increasing frequency, he stated that it should not be considered a currency yet.

“It’s not functional as a currency. The peaks and troughs are like an investment asset and are equivalent to gold. What we need to do is make it more usable and accessible as a currency, but it’s not there yet,” he expressed to the publication.

By Andres Chavez

Burundi Bans Crypto Trading and Warns about “Strong Measures” for Those Who Disobey

Andres Chavez
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Burundi Bans Crypto Trading and Warns about “Strong Measures” for Those Who Disobey

Cryptocurrency trading is slowly creeping its way towards emerging economies, and Africa is not the exception. The continent has shown time and time again that it has numerous investors and traders that have been getting interest in entering the industry. However, it often happens that the governments and authorities do not share the same enthusiasm as the crypto community or find reasons to prohibit the activity.

Such is the case of the Republic of Burundi, a nation in the heart of Africa that, this week, banned cryptocurrency trading. However, the reason they provided is a valid one: they do not want to cope with the risks associated with the activity.

Incapable of Providing Protection

According to a Bloomberg report in the middle of the week, the Burundian government listened to claims by people in the country that urged them to ban crypto trading following a series of incidents in which they lost money.

The authorities claimed that they are not capable to provide the necessary protection to users in the crypto space, and that is the primary reason behind the ban of the activity in the African nation.

Alfred Nyobewumusi, currently one of the directors at the central bank’s micro-finance department, provided his comments on the issue at hand and informed the whole crypto community that failing to comply with the decision may lead to trouble.

“Strong measures could be taken against all those who will not respect this decision,” he said knowing that a sizable percentage of the Burundians are not only familiarized with digital assets, but are also interested in trading.

Investing in unregulated crypto exchanges and platforms can lead to trouble, no matter the location. Several scams and fraudulent projects have recently come to prominence, only to rob people’s money with painful impunity.

The Landscape in Other African Countries

A specialized crypto news site recently reported that Dr. Louis Kaskende, who is the deputy Governor of the Bank of Uganda, issued a warning message to the community about the limited protections that the country’s authorities could offer users in the event that they chose to get crypto services from unlicensed platforms.

Kaskende made it clear that the Uganda’s central bank does not have the resources to properly supervise every financial services company or institution, and this activity is currently limited to financial institutions, banks, credit issuers, forex bureaus, and money remittance providers.

Back in May, the Reserve Bank of Malawi explained that digital assets were not legal tender in the African nation, and that they could not substitute the Malawai kwacha (the country’s fiat currency) under any circumstances.

At the time, the Reserve Bank of Malawi Governor Dalitso Kabambe stated that the country’s authorities were not planning to recognize investments in Bitcoin and other crypto assets.

The current reality in Africa is similar to that of developing countries in other locations: the community is attracted to crypto services and digital assets, but most governments and authorities do not feel prepared to offer sufficient protection measures against the dozens of unregulated, legally dubious projects that often end up being scams.

By Andres Chavez

Mexican cryptocurrency operators against the clock to adapt to Fintech Law

Willmen Blanco
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Mexican cryptocurrency operators against the clock to adapt to Fintech Law

Since September 17th, Volabit will disconnect its wallets in Mexican pesos. The Fintech Law prohibits FTIs from offering cryptocurrency operations to their users.

Cryptocurrency exchange houses operating in Mexico are modifying their operations processes due to the Law to Regulate Financial Technology Institutions (FTIs), or Fintech Law, together with the provisions issued by the Bank of Mexico (Banxico).

The rules issued by Banxico prohibit FTIs or credit institutions (CIs) from offering the general public operations with digital assets. However, they allow unregulated cryptocurrency exchange houses to continue operating.

Regarding the Fintech Law, it considers the issuance of a license for creating digital assets that covers platforms and services that operate with the national currency and allow the issuance of internal and external payments, which is forcing these companies to make operational changes.

In this sense, the Mexican exchange houses Volabit and Vexbi have recently announced on their official blog that, since September 17th, their wallets in Mexican pesos will be disconnected from their platforms. This is a “transitory measure” derived from the regulation concerning cryptocurrency operations that is being implemented in the Aztec country.

The statement explains that the platforms will continue to operate almost as usual. However, the difference is that deposits in Mexican pesos will automatically be converted to USD Coin, an ERC-20 token supported by the US dollar, which can be used to buy Bitcoin, Litecoin and Ripple.

With regard to the measure announced by the exchange houses, Tomás Alvarez Melis, director of Volabit, said that the Fintech Law, together with the provisions issued by Banxico, prohibits FTIs from offering cryptocurrency operations to their users. Additionally, they restrict operations with wallets in pesos, thus leaving two possible options for exchange houses.

Álvarez explained that some exchange houses such as Bitso are adjusting to the first option, whilst others such as Volabit and Vexbi are adjusting to the second. He added that these changes only affect the way in which companies trading with cryptocurrencies operate and have no relevance to users.

PayPal updated its legal agreements for its customer portfolio in Mexico and announced that, since September 25th, it will eliminate the possibility to have a balance stored in the accounts and access it when it is wanted. Instead, it will pass the bank accounts to an automatic transfer system. Instead of storing the money, it will be automatically deposited into the user’s bank account.

With this function, a fee will also be charged for each currency conversion, which will be updated to make payments, according to the new terms and conditions.

Next September 9th is the deadline established by the Fintech Law for financial technology platforms to request their authorization before the National Banking and Securities Commission (CNBV) to operate within the scope of the law.

Moreover, since September 10th, Mexican cryptocurrency exchange houses must report, before the Secretariat of Finance and Public Credit (SHCP), operations with cryptocurrencies that exceed 54,000 Mexican pesos (approximately USD 2,800).

The regulations are applied according to the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin, in force in that country.

According to data from FinTech Mexico, in the country there are 400 financial technology platforms in different sectors, such as payments, loans, investments and insurance.

By Willmen Blanco

Using DAI as a Value Guard Could Alter its Parity with US Dollars

Willmen Blanco
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Using DAI as a Value Guard Could Alter its Parity with US Dollars

The lack of supply of DAIs in exchange houses, the high cost of generating some DAI, and the increase of stored DAI multiply stablecoin prices.

Traditional currencies such as the dollar are used not only to count money or make payments, but also as value guard. The last use is also evident in the world of cryptocurrencies. This is the case of DAI, a stablecoin pegged to the US dollar.

Stablecoins are digital assets similar to cryptocurrencies, but whose price is less volatile because it is linked to the price of another stable asset. DAI, for example, is linked to the US dollar, but its parity with this fiat currency is in danger.

Recent research issued on the Sanbase website shows an increasing use of DAI as a safeguard of value, that is, users use it to have money saved. 14.5 % of the total DAI supply is safe and inactive on loan platforms.

Some of these inactive DAIs would be deposited in wallets or decentralized finance platforms (DeFi), which makes researchers think that users seek to safeguard the digital asset due to its important value.

Between 5 and 7 % of all DAI moves every day in the market. However, the number of addresses that have not moved their tokens in the last 90 days has increased. This behavior helps to check the use of DAI for savings.

Becoming Similar to the US Dollar

CoinMarketCap revealed that since August 31st the price of DAI is between one and 1.01 dollars. The price variations oscillate between 1% to 3 % above the US dollar during the last month and it continues to increase.

According to the data of the study, during the last three months there is a pressure that would cause the increase in DAI prices. The increase in demand and the decrease in offers could be influencing that upward trend, according to the study.

In August, the tokens deposited on the loan platforms reached their maximum. The total figure closed at 11.3 million, which represents 14.5% of the total DAI supply in the market.

The treasury of encryption companies has also begun to use DAI as a short-term hedging method. Also, payment providers accumulate a significant number of those tokens in their wallets, according to the report.

In July, loans with DAI increased by more than 3,400 %, according to Coinbase Earn figures. But what causes the increase in the price of DAI?

Expensive Generation of New Crypto Assets

In the decentralized exchange houses (DEX) and in the centralized exchange houses (CEX) the amount of DAI deposited has fallen. It is estimated that the entire exchange platform market has about 5.1 million DAI, the lowest figure also in the last four months.

This behavior in exchange houses could be linked to low sales pressure and not a real lack of demand, the researchers note (because users do not want to sell the asset, but save it).

In addition, the lack of motivation to generate new crypto assets is due to the high cost this represents since the MakerDAO team increased the commission of stability of their contract to increase the value of DAI and that users would rather generate USDC tokens, instead of creating new DAI.

The increase in alliances and applications related to MakerDAO represents an increase in the demand and use of DAI. Therefore, the researchers reiterate that in the exchange houses the amount of DAI deposited has fallen not because there are no users demanding the asset, but because there is no offer of users selling it.

By Maria Rodriguez

Expenditure on Blockchain in Europe Expected to Reach US $4.9 Billion by 2023

Willmen Blanco
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Expenditure on Blockchain in Europe Expected to Reach US $4.9 Billion by 2023

For 2019, it is estimated that expenditure in the continent will exceed US $800 million. Identity management is one of the cases of blockchain use with the greatest boom in Europe.

The International Data Corporation (IDC), through its most recent blockchain global biannual Guide for Expenditure, reports that expenditure on these types of technologies in Europe could reach US $4.9 billion by 2023.

The statistical data, published on August 27th on the IDC website, warn of a progressive increase in expenditure on blockchain technologies in Europe, estimated at more than US $800 million by the end of 2019, with a compound annual growth rate (CAGR) of 65.1%, between 2018 and 2023.

According to the guide, it is estimated that the investments of the industrial or process manufacturing sector will have a growth of 69%, between 2018 and 2023. Likewise, professional services and retail trade are expected to increase their investments by 68% in the same time period. Meanwhile, the discrete manufacturing industry sector would do so at 67% and the banking sector at 66%.

The firm noted that in 2019 banks still account for 31% of total blockchain expenditure. Besides, bank use cases, including cross-border payments and trade financing, are experiencing rapid growth. He highlighted that, in addition to banking, other industries are increasingly intensifying and participating in digital transformation. In that sense, identity management is one of the booming use cases in Europe.

Reduction of Risks

The IDC states that blockchain has allowed companies to eliminate intermediaries, save costs and reduce risks of fraud and human error. It also argued that it is becoming crucial that European companies have an effective and secure way to store, protect and use customers’ personal data in the insurance, banking, government, personal and consumer services sectors. For this reason, blockchains are being used for a variety of purposes, including i-vote (Internet voting) and intellectual property management.

Regarding this, Carla La Croce, senior research analyst at the IDC, highlighted that companies are now seeing blockchain not only for their cryptocurrency-related resources. They are also using it as a management tool for tracking items, information and customer data. In her opinion, as expenditure continues to grow, it is more likely that the market adapts and security and validity become a standard for the customer, with more companies adopting blockchain as a secure and reliable solution.

For his part, Mohamed Hefny, Program, Systems Solutions and Infrastructure Manager at the IDC, believes that some challenges are subject to the lack of rules and regulations, and the way in which small goods producers, such as farmers and fishermen, use business platforms. Despite this, he believes that the fact that the European Commission recognizes the importance of this type of technology is promising.

US and Europe, the Greatest Investors

In early August, the IDC issued a report where it revealed that the country with the highest levels of investment in blockchain projects in 2019 is the United States, with expenditure on crypto asset technology solutions estimated at almost US $1,100 millions. These figures show a steady trend over time, since for the 2017-2022 period, Western Europe occupies the second place in this projection (with US $661 million), followed by China and the Asian countries of the Pacific zone (excluding Japan).

Finally, the IDC considered that blockchain technologies will allow large companies and emerging firms to guarantee a digitalized and data-based market that ensures reliable management of assets, money and consumer personal data.

By Willmen Blanco

Tech Mahindra Will Work with Adjoint to Develop Blockchain Finance Management Platform

Andres Chavez
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Tech Mahindra Will Work with Adjoint to Develop Blockchain Finance Management Platform

If a given company has aspirations of success and growth, a forward-thinking approach needs to be in place, and openness towards new technologies is a requirement as well. The blockchain technology needs to be in the agenda.

One of India’s most prominent tech companies, Tech Mahindra, is ready to experiment with the blockchain technology in its quest to improve its operations. Tech Mahindra happens to be the IT arm of the conglomerate Mahindra Group.

Tech Mahindra will join forces with American Distributed Ledger Technology (DLT) company Adjoint, and they will work together to develop and launch a blockchain-based solution for financial management and insurance.

A One of a Kind Product

The piece of news was reported first by specialized news outlet CommsMEA at the start of the week. The article states that the solution that Tech Mahindra and Adjoint will jointly develop is one of a kind, and will allow customers to save $4 million for every $1 billion of financial risk management and banking relationships.

According to the reported news, the new system will let customers validate the business case with their own data in a safe environment, ditching out-of-order and double data entries that are usually problematic.

To facilitate data reporting and to make sure to maintain everything compliant, the auditors will be able to have access to an immutable record of all the associated transactions, one of the key benefits of the blockchain technology.

Reliable User Experience

The aforementioned scenario would allow the two involved enterprises to create a seamless and reliable user experience that is properly backed by data integrity and quality, according to the report.

This unique system will be backed up by UpLink, a DLT platform of the open source variety. It has the objective of facilitating compliant modern financial processes management. Included in the platform is a messaging protocol and consensus mechanism that aims to let all involved parties to determine the data that goes to the distributed ledger.

The report states that the collaboration “is in line with TechMahindra’s TechMNxt charter whose focus is to leverage next generation technologies and solutions like Blockchain. The underlying priority is to enable digital transformation, build and deliver cutting-edge technology solutions and services to address real world problems and meet the customer’s constantly changing needs.”

A Growing Interest in the Blockchain Space

Tech Mahindra has been getting involved with the blockchain technology for several weeks now, as evidenced by the company’s announcement, earlier in the summer, of an anti-spam phone call project based on the world-changing resource.

That solution offers phone providing companies compliance with the Telecom Regulatory Authority of India’s regulations to protect mobile subscribers from unsolicited phone calls in the Asian nation.

A specialized crypto news site reported in the month of April that Samsung SDS had come to an agreement that would allow it to cooperate with Tech Mahindra as the Indian tech company tried to venture into the international blockchain space.

By Andres Chavez

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