Bitcoin: Payment Gateway in Trade between Argentina and Paraguay

Willmen Blanco
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Bitcoin: Payment Gateway in Trade between Argentina and Paraguay

The company completed an international trade payment operation between Paraguay and Argentina. The objective of the proposed service is to reduce costs and confirmation times using Bitcoin.

Besides its public and unchangeable blockchain, which improves transparency, Bitcoin can be used to make foreign trade payments. This feature is especially used by Bitex to improve foreign trade and promote frictionless payments.

Recently, Paraguayan traders used the company’s services to conduct a merchandise import transaction from Argentina. The company’s co-founder and CMO, Manuel Beaudroit, talked about the services that it offers and the way in which Bitex leverages Bitcoin.

Beaudroit noted that, while the company helps specify foreign trade payments with Bitcoin, customers do not receive the cryptocurrency directly: the service consists of a payment gateway from local currency to local currency.

He stated that Bitex offers the service of international payments from local currency to local currency, connecting local bank accounts on the Bitcoin blockchain. He also explained traders never touch Bitcoin directly, but they take advantage of the underlying technology to make international transfers, thus avoiding the SWIFT banking network and the banking correspondents’ network.

Beaudroit considers that this reduces customers’ sensitizing and training process regarding Bitcoin and its use. He said that for a bitcoiner it is a covered issue, but for a company that has been working with a bank, adding one more difficulty would increase friction.

However, he noted that there are business cases where Bitcoin is used directly. He said that masking Bitcoin would allow taking advantage of its positive attributes, reducing the times and the costs, and bringing more transparency regarding payments, without adding more difficulty to the company’s service and payment structure.

He said that the company has APIs to use its services so that companies can connect their payment management system with Bitex and always have traceability of their payments. He highlighted that it is one of the attributes that companies find attractive when choosing them.

Since the company has the relevant business permits, there are no problems associated with the regulation to use its services. In fact, Beaudroit stated that Paraguayan authorities are very careful with international transfers to avoid smuggling and other illegal activities.

Additionally, the company has complied with the legal against-money-laundering (AML) and know-your-client (KYC) requirements, so they are confident about those using its services. He said that the idea is to keep people from connecting Bitcoin with money laundering, when imposing the same controls as banks.

As he explained, Bitex “dramatically reduces the times that importers and exporters must wait for sending or receiving a payment. A transaction that could have lasted a month before, with this company’s services, only lasts an hour.

Although customers use Bitcoin for cross-border payments, Beaudroit said that they are not affected by this cryptocurrency’s volatility. The executive highlighted that the payments come from a “working capital” invested in Bitcoin from which the company liquidates certain positions to obtain the necessary local currency, which is achieved “quite quickly and without being exposed to volatility.”

Regarding the import made, the Bitex executive said that there were no major setbacks, since only fiat currencies were used. Although receiving payment is a small part of the process, it takes the exporter a long time. These processes, generally liquidated through banks, are more complex and have very long execution times, compared to that of Bitex’s proposal to reduce these payments to one hour.

By Willmen Blanco

Probabilities that Facebook’s Libra Will Be Launched on Time

Willmen Blanco
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Probabilities that Facebook’s Libra Will Be Launched on Time

Libra’s regulation seems distant, but its release seems even farther. Concerns about privacy and money laundering increase for the US government.

When Facebook announced its intention to launch Libra in June 2019, it decided to release the digital currency in the first quarter of 2020. However, policy experts say that it is unlikely that the project will move ahead at that rate.

Angela Walch, researcher of Blockchain Technologies at the University College of London, said that the probabilities that Libra will be approved in the next 6 or 12 months are low. She noted that this proposal is so massive, with immediate global consequences, that even regulators will need time to think about it.

After sharing its plans for Libra on June 18th, 2019, Facebook has faced a lot o criticism. During the hearings in the Senate and the US House of Representatives, lawmakers criticized the social network for its launch into financial services without having adequately addressed challenges, such as user privacy and the spread of misinformation, in its platform.

Congressmen also criticized the monopoly nature of the Libra project. Facebook, as the main developer of Libra, has led the creation of the Libra Association, which is in charge of managing the network and Libra’s monetary reserve.

During a recent press conference at the White House, Treasury Secretary Steven Mnuchin said that his department is seriously concerned that Libra can be misused for money laundering and terrorism financers purposes.”

The Financial Stability Oversight Council (FSOC), established under Dodd Frank, also has the ability to designate a non-bank financial firm, such as Facebook, for a new and strict supervision that helps minimize the risk of such firm threatening the stability of the financial system.

Essentially, Facebook could be considered too big to fail. It is not clear if the FSOC will exercise this power although in October the organization designated Prudential, its last non-banking institution, as a financial institution of systemic importance.

Katherine Wu, a cryptocurrency legal researcher, commented that the hearings and events regarding the decentralized community on the week from July 15th to 19th showed that Facebook is an easy bipartisan goal for politicians and that the road to be approved will be difficult.

Besides the Currency Auditor’s Office, Wu focused on the “myriad of other agencies,” the New York Department of Financial Services, the US Department of Justice and the Federal Trade Commission, which could also declare jurisdiction over any part of the Libra network or Facebook’s Calibra wallet. He said that, whether or not Facebook will receive regulatory approval from the US, its global coordination with regulators and agencies worldwide will be difficult.

Facebook spokesperson Elka Looks commented that it will be long before Libra is launched, which they cannot do alone. Committing to regulators, policy makers and experts is critical to Libra’s success, the reason that led Facebook and other members of the Libra Association to share their plans from the beginning.

Stephen Gregory, a former compliance officer at Gemini, said that cryptocurrency exchange houses doubt Libra’s aggressive timeline. He added that, given the regulatory landscape, the practical conclusion is to remain in a waiting pattern for a non-insignificant period of time.

By Willmen Blanco

Bitcoin Is a Human Right

Willmen Blanco
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Bitcoin Is a Human Right

Five definitions can make it easy to understand Bitcoin. This cryptocurrency can be considered as money, a game, a land grab, and a human right.

The cryptocurrency par excellence, born 10 years ago, has passed from being connected with drugs on the Internet to being an asset, a right and a savings vehicle. It is so multifaceted that only rare people could claim to fully understand it.

If Bitcoin novices absorb these five definitions of Bitcoin, they will become aware that they can enter the network simply by buying Bitcoin fractions.

Bitcoin is Money

Despite exceptional levels of price volatility throughout its short life, Bitcoin has demonstrated its ability to be used as money worldwide. It is still not possible to buy products everywhere, but it will be possible to exchange this crypto currency for US dollars. Currently, robust markets to exchange Bitcoin for dollars, euros and Amazon gift cards are flourishing worldwide.

A gold coin can be used to buy a dinner, but it is not easy to find someone to exchange it for dollars. The same happens with Bitcoin as several million people worldwide already own bitcoins to store wealth.

Bitcoin is a Land Grab

Bitcoin is scarce, just like the amount of land on earth. While an increasing number of people move from the English pound sterling, the Japanese yen and the US dollar to Bitcoin, the lands of Bitcoin will only become more expensive and difficult to find.

People without bitcoins will have to borrow them, similarly to how those without property rent it. The land grab for Bitcoin will continue because people, companies and governments will not be able to afford to be Bitcoin tenants instead of owners. Bitcoin’s price has increased in the long term because it is being treated as premium real estate. As there is no single gatekeeper in the Bitcoin world, every person is a potential property owner.

Bitcoin is a Game

Bitcoin is not backed by any government, which leads to comparing it to a game. Since the creation of Bitcoin rules, they have been continuously enforced by thousands of players every ten minutes on average.

Bitcoin rules for money creation and value transfer have proven extremely reliable, encouraging more people to join the game. Software downloaded onto computers or phones allows playing, without requiring the learning of all the rules, but what must be clear is that there are rules.

Bitcoin Works like E-Mail

The computer science behind e-mail may not be understood, but the concept of sending and receiving e-mail is universally known. E-mail addresses can be shared, but only the password holder can access messages. Similarly, a public Bitcoin address can be shared with anyone sending money, which can only be spent with a password (or private key). Some consider Bitcoin hard to use, but people just need to get used to it. Understanding and using Bitcoin will become as commonplace as understanding and using e-mail, that is, sending and receiving.

Bitcoin is a Human Right

Buying food in California with Bitcoin is not revolutionary, but doing it in Venezuela is. With this savings vehicle, anyone worldwide can store money safe from corrupt governments. Bitcoin is an alternative form of money that should be accessible to those that want to own it.

Currently, billions of people send and receive information through the Internet. In the future, billions of people will be able to receive and send value through the Bitcoin network. This should be considered a human right: communicating on the Internet is freedom of expression and Bitcoin is freedom of money exchange.

By Willmen Blanco

Bitcoin Volatility Increases after Criticism to Libra

Maria Rodríguez
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Bitcoin Volatility Increases after Criticism to Libra

If the private network, such as Libra and others, is audited, some users may not know what to expect from the public network; such as Bitcoin. President Trump’s comments have affected users’ opinion too.

The cryptocurrency market analysis firm Sfox conducted a study related to the dominance and volatility of Bitcoin. According to the investigation, these characteristics increased during July, just when the United States Congress held hearings with the Libra team, the digital payment method of Facebook.

However, the analysis indicates that the price of Bitcoin (BTC) fell after the hearings to Libra by the US Senate, in which the creators of Libra were presented on July 16th and 17th.

Another possible event that influenced the price of BTC is the influence of the statements issued by the US President Donald Trump, who stated through his account on the social network Twitter last July 11th, that he rejects the new project of Facebook, as well as all cryptocurrencies in general.

“The price to buy Bitcoin has steadily declined since the start of the Libra scrutiny by the US government. It declined from USD 12,483, on July 10th, (before Trump’s tweet) to USD 9,543 on July 17th (the day of the hearings in the Libra Congress). A decrease of almost 24%”, Sfox analysts explained.

As part of the study, the analysts compared the movements of the price of BTC with the date of publication of the information about the hearings to Libra and the publication of President Trump’s opinion.

Increasing in Only Seven Days

The study explains that Bitcoin volatility increased in a short period of time and went from 89.33%, on July 10th, to 100.30% on July 17th. In addition, the study mentions that it is the first time that the historical volatility of the cryptocurrency exceeds 100% since March 6th, 2018.

About the reason why Bitcoin volatility is increasing, the Sfox team explains that the market probably does not fully understand the implications that it can bring for a public blockchain, such as Bitcoin, the scrutiny of the US government towards the chain of blocks contemplated for Libra, which is private. That is, if the private network is audited, some users may not know what to expect from the public network.

Analysts also observed the performance of Bitcoin and other cryptocurrencies. According to the latest data, Bitcoin was the center of attention during the government scrutiny to Libra. Something that did not happen with altcoins, such as Ether (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Bitcoin SV (BSV), and Ethereum Classic (ETC). These cryptocurrencies “were less correlated with BTC than in recent months, while all altcoins were highly correlated each other”.

The report explains that investors are more in tune with Bitcoin than with the rest of the altcoins, especially when the cryptocurrency sector is the center of public attention. This is because some users believe that regulators will address the laws surrounding BTC, rather than the sector as a whole.

The specialized firm eToro also conducted a study about Bitcoin, in which it found that whilst 58% of US adults have heard about Bitcoin, 16% of people already know Libra, despite Facebook’s digital asset is more recent. Ethereum, meanwhile, has only 12% recognition, and smaller cryptocurrencies, such as Ripple’s Litecoin and XRP, are less known by users.

By María Rodríguez

NY Regulator Launches Division to Monitor Cryptocurrency Startups

Willmen Blanco
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NY Regulator Launches Division to Monitor Cryptocurrency Startups

The department will monitor emerging financial technologies. It will be responsible for granting licenses, including those approved by BitLicense.

The New York State Department of Financial Services (NYDFS), the New York State financial regulator, is moving its internal cryptocurrency business supervision team to a new division.

In a statement issued on Tuesday, July 24th, 2019, Linda Lacewell, the newly appointed superintendent, announced that the Research and Innovation Division at the Department of Financial Services will track emerging financial technologies and will be responsible for granting licenses and monitoring cryptocurrencies.

In response to a request for comment, the agency said that this will include the approval of licenses granted by BitLicense, a regulatory regime that governs companies that buy, sell or issue cryptocurrencies to consumers in the state of New York.

The NYDFS explained that this division will monitor the cryptocurrency licensing process and encourage development in this area.

Lacewell’s predecessor, Maria T. Vullo, opposed regulatory experimentation for non-bank financial companies when she ran the agency, marking this research and innovation division as a reprieve to the formerly heavy hand of the regulator.

Regarding the regulatory landscape of financial services, Lacewell said that it must evolve and adapt as innovation in banking, insurance and regulatory technology continues to grow.

The NYDFS was regulating companies in the cryptocurrency space in the year 2015, when its BitLicense program went into effect. The regime has been attacked by industry entrepreneurs, including ShapeShift CEO Erik Voorhees. He once said that despite being only two miles away from the Statue of Liberty, people cannot sell CryptoKitties in the state without that license, which he considers to be absurd.

According to the reports, the agency only granted eight BitLicenses in the first three years after its implementation. Currently, more than 20 licenses have been granted to cryptocurrency firms.

Lacewell recently approved two subsidiaries of the cryptocurrency exchange Seed CX, which will operate in the state of New York under the BitLicense framework.

Appointed Executives

Four executives were appointed in the announcement, all with a background in government jobs.

At the helm of the organization is Executive Vice-Superintendent Matthew Homer, who most recently worked on the launch of Fintech Plaid.

The current research director Olivia Bumgardner will also join the division as deputy superintendent. During her tenure at the state financial control agency, she has led initiatives that involve crypto assets and cybersecurity. Matthew Siegel, attorney for the Antitrust Division of the US Department of Justice, will act as a deputy superintendent, and Andrew Lucas, director of the Office of Financial Innovation, will act as an attorney.

Regarding these appointments, Lacewell said that this new division and these appointments position the Department of Financial Services (DFS) as the regulator of the future, which will allow the Department to better protect consumers, develop better practices and analyze market data to strengthen New York’s position as the center of financial innovation.

To conclude it can be said that the world of cryptocurrency trading has been growing significantly, which leads to the implementation of organizations that regulate transactions conducted through emerging financial technologies

By Willmen Blanco

Facebook Promises to Devote Time, so that Libra Can Be Regulated

Willmen Blanco
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0

Regulators and politicians have significantly delayed the launch of the digital currency. Zuckerberg explained that Libra would not be launched until it was safe, stable and regulated.

Facebook CEO Mark Zuckerberg says that the company will spend all the time that is needed to get the participation of regulators and others before launching the Libra cryptocurrency project.

During a quarterly earnings call held on Wednesday, July 24th, 2019, the founder of the large social network company tried to assure investors that Facebook would act responsibly with the development of Libra. Facebook’s ambitious cryptocurrency project was revealed in June as a potential way of payment for unbanked individuals.

Facebook worked with the possible members of its governing council, the Libra Association, to publish its White Paper in June, in order to answer questions on the issue. Zuckerberg said that they were committed to working with politicians to do this well.

In the beginning, the company said that its goal was to launch the currency in the first half of 2020, but the setback from regulators and politicians has put into question the intended deadline.

In response to an analyst’s question about the best moment, Zuckerberg said that Facebook’s approach to Libra is trying to keep a very open dialogue. He explained that, unlike a few years ago, when the company could have launched a new product, Facebook now tries to detail specific ideas and values that they believe should have an eventual service.

The executive added that they have opened a period of time, for as long as necessary, to address the questions of regulators and the different experts and constituents on this issue, and then determine the best way forward. He assured that that is what they certainly plan to do with Libra.

He noted that they had worked with the other 27 members of the Association to publish the White Paper in order to present the idea, hoping that it was a very important and heavily regulated area and that there were many questions. He highlighted that they will need to devote as much time as necessary to working on that.

Keeping the message

Zuckerberg’s comments echo the statements of David Marcus, the CEO of Calibra. As it is known, this company aims at launching a digital wallet that will allow users to have access and participate in the Libra network.

Marcus, who used to sit on the cryptocurrency trading board of directors and is now member of the Libra Association, testified before the Congress on July 16th, 2019, in back-to-back hearings, in an attempt to assure lawmakers that Facebook would launch Libra only when all regulatory questions have been answered.

However, Marcus did not promise to stop the development of the cryptocurrency completely. He believes that Libra will allow achieving an important economic evolution, since unbanked citizens will be able to enter digital economy with just using low-end Smartphones.

Zuckerberg concluded on Wednesday, July 24th, 2019, that Facebook is trying to provide a safe, stable and well regulated producer. Since that has always been the strategy, he promised that they will continue working on it actively.

By Willmen Blanco

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