The Central Bank of Brazil Recognizes Cryptocurrencies as an Asset

Maria Rodríguez
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The Central Bank of Brazil Recognizes Cryptocurrencies as an Asset

In Brazil, digital mining will be considered by the state as a “productive process”, and cryptocurrencies will be seen as assets called “well produced”

On Tuesday, August 26th, the Central Bank of Brazil (BANCEN) issued a report about the statistics of the external sector that corresponds to the most current ones. In the statement released to the press, cryptocurrencies are recognized as “well produced” assets. This means that, for the Central Bank of Brazil, cryptocurrencies have a value that must be considered; therefore, they are now classified as assets that can well be calculated in the traditional balance of payments.

According to the statistics report, it is clarified that the issuing entity, when using the methodology to calculate the balance of payments, will take into account the payments and transactions made with cryptocurrencies. In the same way, mining is established as a “productive process”, which must be recognized in the calculations and economic statistics.

It is known that the balance of payments is a system of calculation or accounting record that specifies all commercial transactions conducted by the country with other economies. These calculations must include all imports and exports of goods that are made in the region, as well as financial transfers, among other things.

Despite this, the report indicates that due to the nature of the digital asset there is no customs registry that can process cryptocurrencies. “Brazil has been a net importer of crypto assets, which has contributed to reducing the trade surplus (positive balance) in the goods account of the balance of the country’s payments”. In this sense, the inclusion of all cryptocurrency sales data is focused on producing a greater balance in the balance of payment of the South American country.

The publication of the report generated some media to comment that this action responds to an indirect recognition of cryptocurrencies in that country. Whilst citizens and other stronger media highlights that if the report recognizes that the country is a “Cryptocurrency Importer,” and does not properly recognize the crypto asset as a legal method of payment, the authorities are not having a real and total understanding of what cryptocurrencies are.

The Balance of Payments Statistics Committee of Brazil made the recommendation to include cryptocurrencies in the nation’s balance of payments, as assured by BANCEN authorities, after establishing the measure. The committee belongs to the advisers of the Statistics Department of the International Monetary Fund (IMF), so it should be governed by the recent document called “Treatment of Cryptographic Assets in Macroeconomic Statistics”, published by the same Department of Statistics in 2018.

Before the publication of this report, Thiago Lucena, who is CEO of Uzzo, a startup with operations in Brazil, recently commented that this will represent a negative impact on the processes with cryptocurrencies that are conducted in the country since, in his opinion, it will bureaucratize the industry and will allow the collection of taxes, enhancing all processes in the area.

By María Rodríguez

New Zeppelin Service Would Reduce Fees to Ethereum Users

Willmen Blanco
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New Zeppelin Service Would Reduce Fees to Ethereum Users

These networks would offer a solution to free users from the payment of gas. The GSNs aim to reduce obstacles in the mass adoption of Ethereum.

After two months’ trial period, Open Zeppelin and Tabookey launched the Gas Station Network (GSN) for metatransactions in the main Ethereum network. It is a decentralized relay network used to send ETH transactions without end users having to pay for the gas normally charged for the transactions.

Zeppelin and Tabookey focused on solving the difficulties faced by users of the Ethereum network, such as going to a centralized exchange, undergoing a KYC process and waiting for approval, transferring money from their bank, buying ETH, installing MetaMask, learning to use it and transferring ETH to it.

The Ethereum GSN network emerged as a decentralized way of adding reverse-charge calls to smart contracts. The relay network pays the cost of gas from verified transactions and, in turn, they are reimbursed directly for the contract with which users wish to interact.

In order for the relays to pay the cost of the transaction gas, the contract with which the user is interacting is required to be enabled for the GSN. To do this, developers need to code their contracts with the application found in the OpenZeppelin Contracts library or download the GSN Starter Kit already configured with all components.

A single RelayHub open source smart contract acts as a registrar for relays. It is a mediator in transactions between relays and dApp contracts, and issues events that help users find relays and assess their reputation.

Fundamentals of the GSNs

The same as a post office, the GSNs require a destination address to send a transaction in ETH. This address can be another person or a smart contract.

The transaction is like putting cash in an envelope, while the price of gas is like giving the letter carrier an incentive to deliver the letter. On the other hand, the signature is the stamp put on the form at the post office as a proof that the content of the envelope to be sent has been verified.

GSNs use a public group of relays, of which the sender selects one. It is as if the sender of the letter selected the post office that offers a better service. That way, the sender has the option to negotiate their rate, verify their reliability and send the transaction.

The public group of transactions can be compared to a group of letter carriers in dispute for carrying the largest number of letters. They may eventually act selfishly and abuse the system, in order to increase their profits.

Post offices are reflected in the GSN network, which publishes its rates and URLs on the blockchain, accepting transactions with no time limit for users, filling them with gas, signing them, returning them to the user, relaying them to the blockchain and getting compensation for its effort.

Post offices are associated with a head office that acts as a registrar, as data from the associated post office are used to prevent abuse of services or censorship.

It is observed how the application selects a relay and delivers the transaction to the blockchain. Behind the scenes, the application selects a relay using information on the chain about the transaction fees and the current reputation, tries to send the transaction through the selected relay, immediately knows if the request was handled or retries with the next relay.

By Willmen Blanco

Presidential Candidate Andrew Yang Wants to Use Blockchain to Improve Voting System

Andres Chavez
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Presidential Candidate Andrew Yang Wants to Use Blockchain to Improve Voting System

Among all the candidates aspiring to be elected the President of the United States of America in the year 2020, Andrew Yang has demonstrated that he is among the most pro-crypto and blockchain. In the same vein, the candidate for the Democratic Party recently used his website to provide an idea to make the process fully fraud-proof.

Yang stated that if he is victorious, he will implement the blockchain technology to optimize the whole voting process. On that same line of though, he wrote that it is “ridiculous that in 2020 we are still standing in line for hours,” implying that he is shooting for more speed and transparency.

Having the Option to Vote on Mobile Devices

Yang stated that he thinks that Americans need to have the option to vote on their mobile devices, and the blockchain model would be used for verification. It makes sense that, if people use their smartphones to perform a significant percentage of everyday activities, they also use them to vote faster.

Yang also indicated another sensible subject when it comes to voting process these days: the majority of voting machines are prone to suffer hacking attacks, as are most of the Internet-connected devices we use every day. Blockchain technology can also help out on that front.

Getting Rid of “Antiquated” Voting Booths

The politician stated that the voting booths are “antiquated,” and that it is “100% technically possible to have fraud-proof voting on our mobile phones today using the blockchain. This would revolutionize true democracy and increase participation to include all Americans.”

If the candidate is truly talking about inclusion in addition to speed, security, and efficiency, he also needs to include those without smartphones, because despite them being widespread in every location, not everybody has to own one.

On that subject, Yang stated that people that do not have smartphones “could use the legacy system and lines would be very short.” The member of the Democratic Party has long been a crypto supporter, even receiving donations in Bitcoin for its campaign, and now he is attempting to gain the trust of fans of the blockchain technology, which is an ever-growing community.

In July, it was reported that a new political action committee that supports Yang would be accepting crypto donations via the Lightning Network, in the form of Bitcoin. He has said in the past that the blockchain space is huge and still has untapped potential. He has also called for clear guidelines for all actors in the crypto industry, including investors, firms, and individuals.

Increasing Participation

The candidate also stated that he wants mobile voting to help increment the participation in future election processes. He again used his website to say that a normal presidential election has roughly 50% participation from the eligible public, and the low number can reward “extreme points of view as opposed to the popular will.”

If Yang’s dreams come to fruition, it would not be the first time that the blockchain technology has been used to improve elections and voting processes around the world. United Russia, which is the ruling party of the Russian Federation, recently developed a blockchain-based platform for primary elections. The system let people vote online and, to prevent fraud, a blockchain was used to count the votes.

By Andres Chavez

While Bitcoin Boosts the Market, XRP Plummets

Willmen Blanco
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While Bitcoin Boosts the Market, XRP Plummets

Ether, Bitcoin Cash, Litecoin, EOS, Bitcoin SV and Monero rise against the dollar. XRP has experienced a drop of approximately 90% compared to that one of Bitcoin.

XRP investors have not had many reasons to rejoice in 2019. For most of the year, XRP remained in a range of approximately US $0.30 to 0.50 per cryptocurrency, and far from the highs of more than US $3 in 2017. Then, in early August, XRP broke its support level of US $0.30, falling to new lows in 2019.

XRP is being traded at US $0.26 per token today. During the 10 days before August 22nd it remained below US $0.30 on a sustained basis. The crossing of that line of US $0.30 seems significant given XRP’s recent history. Since cryptocurrency prices soared at the end of 2017, the price of the token has only dropped below US $0.30 on an occasional basis and has normally remained low for a few days.

Its latest decline reflects a trend that has been seen throughout the summer of 2019: a growing preference of investors for Bitcoin over almost all other cryptocurrencies. Since April, the domain of Bitcoin has been steadily rising, going from approximately 50% to almost 70% today. Of course, a good part of the money that is flowing into Bitcoin may come from other companies such as XRP, since investors move their funds to create Bitcoin-focused portfolios.

Perhaps the best way to illustrate this flow of funds is to examine the XRP-BTC exchange rate. The approximate value of 1 XRP token is 2,627 satoshis, a low that has not been seen in XRP since December 2017.

In fact, shortly after Ripple’s explosive growth in December 2017, an XRP token was being traded at more than 25,000 satoshis. This means that XRP has seen a drop of 90% in terms of Bitcoin and 95% in terms of the US dollar since it broke all-time highs 20 months ago.

In terms of both Bitcoin and the dollar, XRP has dropped significantly this year. Alarmingly, while most other altcoins have declined in terms of Bitcoin due to their growing dominance in the market, many of them have continued their bullish trend against the dollar.

Ether, Bitcoin Cash, EOS, Litecoin, Bitcoin SV and Monero, almost all major Altcoins, have declined in terms of Bitcoin but have risen in terms of dollar prices. According to CoinMarketCap, XRP is the only major altcoin that is below both metrics.

The truth is that it does have company outside major altcoins, since Stellar and TRX are large companies that have also fallen compared to the dollar so far this year. However, that will not be of great comfort to XRP investors, especially considering that the company has generated some high-profile headlines during the year 2019 and that it has not had much to show regarding the price of the token.

The partnership with MoneyGram, for example, made the price of XRP go from around US $0.40 to almost US $0.50. However, just a week later, it plummeted back to the levels before that partnership, and even lower.

In the cryptocurrency market, the increase in the price of Bitcoin is often compared to a rising tide that raises all ships. However, as the Bitcoin tide rises and the altcoins follow it, at least in terms of dollars, XRP continues sinking.

By Willmen Blanco

Bitcoin mining hash rate finally exceeds 80 EH/s

Willmen Blanco
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Bitcoin mining hash rate finally exceeds 80 EH/s

According to Coin Dance, Bitcoin’s highest hash rate was 96 EH/s at the end of July 2019. The hash rate increase would imply an increase in the mining difficulty for its next adjustment.

Bitcoin’s processing power, reflected through its hash rate, managed to surpass 80 EH/s recently, according to several block explorers on this chain.

The web portals Blockchain.com, Coin Dance and BitInfoCharts agree that in recent days the Bitcoin network has raised its hash rate above 80 EH/s, but does not share the date on which the event occurred. This could be because these Bitcoin blockchain explorers process the data differently. According to Blockchain.com, the milestone had not yet been reached until Sunday, August 18th, 2019.

Coin Dance shows that, by the end of July, the Bitcoin hash rate had not only exceeded 80 EH/s but had even reached 96 EH/s. On the other hand, the BitInfoCharts website shows that the milestone in question had first been reached by Bitcoin on August 7th, 2019. However, it should be mentioned that the hash rate of this network is above 80 EH/s once again.

Meaning of this Rise in the Bitcoin Hash Rate

Maybe the main cause behind the constant growth in the Bitcoin hash rate in 2019 is the change in the cryptocurrency market landscape, especially that of Bitcoin. Since the beginning of the year, Bitcoin and most of the other crypto assets in the foreign exchange market have experienced a significant rise, which has counteracted the effects of the dominant bearish trend of 2018.

The possibility of a change in trend gave the miners enough faith to reactivate their farms, previously partially or totally paralyzed by the poor mining performance at the end of last year. This led to a remarkable recovery of the Bitcoin hash rate in mid-2019.

Another cause is the arrival of more advanced technology, which allows the creation of more powerful and efficient Bitcoin mining equipment. The 7nm chips, present in several of the ASIC miners currently on sale, make it possible for equipment such as the BitMin AntMiner S17 Pro, and the Micro BT Whatsminer M20S, to reach 62 TH/s and 70 TH/s of power, respectively.

It is worth mentioning that, although some batches of the most advanced Bitcoin mining equipment have not yet been dispatched to their buyers, these may have been previously activated by some of their manufacturers. They could have done this, either to test them or to get some extra benefit from this equipment before delivering it. Bitmain, in particular, has been designated as a company that practices this policy.

Regarding the consequences of the rise in the Bitcoin hash rate, the most immediate is its impact on the mining difficulty. If it keeps increasing, so will the difficulty by the time of the next adjustment. This, in turn, would affect the profitability of Bitcoin mining. However, both the prices of BTC in the market and the hash rate of its network are values ​​that fluctuate constantly. Hence, the profitability of cryptocurrency mining is something that is best calculated in the long term.

By Willmen Blanco

Bank of England Governor Proposes a Cryptocurrency as a World Reserve Asset

Maria Rodríguez
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Bank of England Governor Proposes a Cryptocurrency as a World Reserve Asset

The governor of the Bank of England says that the global reserve fund can be changed, and replace the US dollar with a cryptocurrency that has the same characteristics as Facebook’s digital currency, Libra

Mark Carney, who is the current governor of the Bank of England, proposed a total financial modification to world funds in the US currency, and start using a cryptocurrency that is similar to Libra, which belongs to the Facebook Company, as a savings mechanism for nations of the world.

Some public officials who do not have much to do with the crypto world, such as Carney, have come out to defend new technology as part of a much more progressive vision in the business and finance of the future. Despite the great fear that many nations have experienced after the announcement of Facebook about its next cryptocurrency that will soon be released to world markets.

Carney explained that, although his idea about exchanging the US dollar for a digital cryptocurrency may be crazy, it is a better option than allowing the world reserve fund to be modified by another conventional currency, so it would be more reliable to end up changing the dollar for a reliable digital currency that by the Chinese yuan.

Therefore, he clarified that it is more feasible to create a “hegemonic synthetic currency” -which is better adapted to what the public sector needs through a set of systems that support a cryptocurrency network provided by the Central Bank- than creating another physical currency with a whole series of complex technical and economic changes.

“The combination of greater uncertainty regarding economic policy, absolute protectionism and the concern that, in addition, negative disturbances cannot be adequately compensated due to the limited policy space is exacerbating the deflationary world economy”.

As part of the opinion of Carney, he also said that for the plan to work in the best way, the cryptocurrency should not be presented as Facebook has done with Libra. Thus, this digital currency must be perfect at first. So users can build the necessary confidence for such an important mission.

“Either it succeeds or it doesn’t. If it succeeds it becomes systemic, because it would involve a large number of users. And if you are a systemic payment system, it is 5-sigma. You have to be all the time. You can’t have more problems. You can’t let people lose money from their wallets”, Carney said.

Although it is a bit strange that Mark Carney, the same official that in 2018 commented that Bitcoin (BTC) should not be considered a legal currency since in “traditional terms” it is not, nor does it have any value, he is today defending the participation of a cryptoactive in the most important financial markets of the world.

This demonstrates that, in many ways, this technology could adapt quickly to the future of global financial activity, if it receives support and financing to increase its value and also to increase trust among citizens of the world.

By María Rodríguez

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