JP Morgan: Price of Bitcoin is Superior to its “Intrinsic Value”

Maria Rodríguez
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JP Morgan: Price of Bitcoin is Superior to its “Intrinsic Value”

Experts say that the value of Bitcoin could again reach $ 14,000. They say this situation is similar to the rise of the end of 2017

As reported a few days ago in a recent report published by the financial software and news assistance company, Bloomberg, the banking giant JP Morgan Chase & Co. said that due to recent financial movements in the cryptocurrency market, Bitcoin reached a price higher than its marginal cost, reaching above its “intrinsic value”.

The financial analysts of JP Morgan ensured that there was a divergence between the marginal costs and the real value of the digital currency. They say it was adjusted due to a reduction in real prices within the market. “In recent days, the real price of Bitcoin has moved considerably above the marginal cost and this divergence between real and intrinsic values ​​leads to some echoes of the rise at the end of 2017, and at the moment when this divergence solved mainly by a reduction in real prices”.

JP Morgan conducted an extensive financial study to determine the real and intrinsic cost of the cryptocurrency in order to know with certainty its true value and to forecast the near future of that market. With the aim to establish the marginal value of the currency, the experts analyzed Bitcoin from its production cost, taking into account the necessary computational force, the electricity used and the effectiveness of the hardware it needs for its creation. That is, the cryptocurrency was analyzed as a basic product.

Analysts commented that trying to define the real value of a cryptocurrency represented a real challenge due to its nature and rarity within the usual financial processes. Despite the final result, there are still discrepancies in opinions between financial experts, some of whom say that it is impossible to measure their real value, and others who maintain that their value is above the currently price quoted.

“In fact, the points of view vary from some researchers who argue that it has no fundamental value, to others that estimate reasonable values ​​above current prices”, the report says.

Although it has been concluded that Bitcoin has a value above to the current market, the final press report reminds that among the basic principles of the economy the cost of producing a currency, or any product, does not determine its final value, but that it will be quoted for its demand within the markets.

Currently, Bitcoin is quoted at almost $ 8,800. It reached good figures since April, although between February and March its value was less than $ 5,000 and in December of last year, it was around $ 3,300. So who has bought Bitcoin last year has had an approximate gain of 140%.

Other experts mentioned that the financial market within the cryptocurrencies has taken a big turn, and they assure that the bear market has finished, reason why they predict that Bitcoin will reach, again, the 14,000 dollars’ value.

By María Rodríguez

Russia Would Use Gold-Backed Cryptocurrency for International Trade

Maria Rodríguez
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Russia Would Use Gold-Backed Cryptocurrency for International Trade

The board of the Central Bank opposes introducing cryptocurrencies into the national monetary system, but agrees to implement them in international trade

Recently, the Russian Government has shown itself to be more flexible and interested in cryptocurrencies and blockchain technology. A few weeks ago, the Government of this country decided to perform blockchain tests in its territory and has even opened the doors to disruptive technologies such as augmented reality, robotics and Artificial Intelligence (AI).

The Governor of the country’s Central Bank, admitted that the agency will consider creating a gold-backed cryptocurrency to facilitate transactions between the country and other nations, according to what she said during a meeting in the lower chamber of the Russian parliament.

In this sense, Elvira Nabiullina, Director of the institution, will review a proposal for the creation of the asset backed by gold. “We will, of course, consider the proposal about what is a cryptocurrency backed by gold. But, in my opinion, it is more important to develop agreements in national currencies”, she said.

However, according to the report published by the Russian news agency TASS, the country’s Central Bank is willing to consider the proposal as part of economic cooperation agreements between nations.

Although the news that the Central Bank of Russia is considering to create a cryptocurrency may be surprising, due to the hostile attitude that the Government has taken over the past few years, the fact is that this and other possibilities are being studied presumably to face economic sanctions of the United States.

Nabiullina did not say that this new cryptocurrency would be included in the nation’s internal monetary system, since it would only be used for international trade, something similar to Venezuela’s idea with Petro. “In general, we oppose the introduction of cryptocurrencies into our monetary system. We do not see the possibility that cryptocurrencies can act as currency substitutes. Definitely not in this part”.

During her speech, Nabiullina added that the systems of liquidation of the fiat currency within the Eurasian Economic Union (EAEU) present good dynamics and have improved considerably.

According to the Ministry of Economic Development of the Russian Federation, the Government is interested in promoting the adoption of these technologies. For this reason, it chose four regions of the country to start testing under a regulatory sandbox, a more flexible legal environment for innovation compared with federal laws.

Attempt of Regulation

At the beginning of 2019, the member states of The Eurasian Economic Union received a report from the Eurasian Economic Commission (EEC) related to cryptocurrencies, with the aim of achieving regulation in the area.

According to the TASS report, the Minister in charge of the Development of Integration and Macroeconomics of the EEC, Tatyana Valovaya, comments: “We have prepared an analytical report and we will present it soon, which will analyze what cryptocurrencies are, what is happening in the world, what approaches countries have, what regulation is provided”.

Similarly, the minister stressed that, if the trend of cryptocurrencies and the development of blockchain is accelerating, “we must realize that. A group of experts from the five countries has been trained within the EAEU platform”.

The advance of blockchain technology and the adoption of cryptocurrencies in other countries have led Russia to accept these assets in international trade. Deciding to use these digital currencies internally will depend on the progress of the crypto world in other countries and the needs of Russia in particular.

By María Rodríguez

Poloniex is Criticized after Blocking More than Nine Cryptocurrencies of its Platform

Maria Rodríguez
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Poloniex is Criticized after Blocking More than Nine Cryptocurrencies of its Platform

Some legal advisers of exchange companies in the United States say they have difficulties to legally protect their clients due to the strong regulations

Recently, the US exchange company Poloniex has received strong criticism from analysts and financial experts for blocking transactions and getting out more than nine cryptocurrencies from its digital platform.

Poloniex stopped offering Ardor (ARDR), Bytecoin (BCN), Decred (DCR), GameCredits (GAME), Gas (GAS), Lisk (LSK), Nxt (NXT), Omni Layer (OMNI), and Augur (REP) to its customers in The United States.

The company explained that blocking these cryptoactives from its platform responds to the “lack of legal clarity” that is subject to these cryptocurrencies. It indicates that maintaining them could cause legal and financial problems.

With respect to the news of the elimination of these cryptocurrencies from the Poloniex platform, Jeremy Allaire, CEO of Circle, regretted the situation and commented, through the social network Twitter, that he is frustrated about this situation that warns other companies of exchange in the United States. “Poloniex announced today that we are geo-blocking some assets in the United States. We are deeply frustrated by the need to take these steps; this is the result of an increasingly limited environment in the United States for encryption assets”, he said.

Due to this comment, the Chief Legal Officer of Circle, Gus Coldebella, also used his Twitter account to express that in the United States, all the legal teams that represent these exchange companies are in trouble to take correct decisions, after the publication of the guide issued by the US Securities and Exchange Commission (SEC).

Coldebella explains that the geo-blocking of these cryptocurrencies on the Poloniex platform responds to the strong regulations that have been made by the agency. “All the legal teams that try to protect US cryptographic companies fight to take correct decisions following SEC’s guidance. The geo-blocking of Poloniex to these assets in the United States is our effort to respond responsibly to this uncertain regulatory environment”, he said in his Twitter account.

Critical Strong Toward the Exchanges

After Coldebella exposed his difficult situation within the legal environment of legal teams to maintain legal clarity to the companies of exchanges in the United States, one of the main collaborators of Forbes magazine, Frances Coppola, criticized the official and detailed, with examples, the differences between encryption assets and values. She said that, due to their differences, those concepts must be separated in terms of their regulation.

“Oh, look, the legal officer of a cryptocurrency exchange wants new laws, so cryptographic assets are not subject to the same restrictions as values. Because, of course, the reasons why people need protection against offers of fraudulent values never apply to encryption assets, right?”, Coppola sentenced.

This also responds to the statements of the Director of the firm to which Coldebella belongs. He affirms that the regulatory policies about cryptocurrencies should be adjusted in order to provide more clarity to the companies they represent and safety to the users of these platforms.

To conclude his idea, Coldebella states that the laws related to these cryptoactives are wrong to treat these issues. He thinks that the guidance issued by the SEC is incompressible and almost impossible to apply to reality.

By María Rodríguez

Tax Authority of Israel Establishes that Bitcoin is an Asset and Generates Taxes

Maria Rodríguez
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Tax Authority of Israel Establishes that Bitcoin is an Asset and Generates Taxes

According to Israel Tax Authority (ITA), currencies must have some “physical manifestation” to be classified as coins. It considers that those who sold large quantities of bitcoins should pay taxes

The Israel Tax Authority determined that Bitcoin (BTC) is an asset and not a currency. According to this, transactions with bitcoins will be subject to taxes, as explained in a recent report by the specialized news agency Globes.

Noam Copel, who founded the blockchain startup DAV, bought BTC in 2011 and sold these cryptocurrencies two years later, earning USD 2.9 million to the current rates.

During the process, Noam Copel, Founder of the blockchain startup DAV, argued that Bitcoin should be considered as a foreign currency. Taking that concept into account, earnings in BTC should be considered as exchange rate differences received by an individual that is not in the course of a business, so they should not be taxed.

But, in response to these considerations, the Israel Tax Authority (ITA) clarified that, for that country, until now, Bitcoin is not a currency and for this reason, it cannot be considered as a foreign currency, but as an asset that generates taxes on capital gains. This ruling means that the profits obtained from the sale of the cryptocurrency in that country will be subject to tax and capital gains.

Why is BTC not considered a currency?

The Israel Tax Authority (ITA) proposed that currencies must have some “physical manifestation” to comply with the laws of the country and be classified as coins. In this way, the court proposes that, to be considered a currency, Bitcoin must have some physical-concrete manifestation, or represent a real alternative to coins and banknotes in any country.

Judge Shmuel Bornstein ruled that Copel had not proven that Bitcoin could be used as a viable alternative to fiat currencies when he sold the cryptocurrency. Bornstein said that in the current context it is difficult to consider Bitcoin as a currency for tax purposes, because, as he states, there is a possibility that this asset may cease to exist or be replaced by another digital currency.

However, the doors are not yet closed and the monetary authority indicated that, at the present, cryptocurrencies are not considered physical currency, demonstrating that this decision may change in the future.

Bornstein concluded that Copel, the one who appealed, should be subject to taxes of about 3 million NIS. The employer must now pay taxes on USD 830,000 of the profits he earned.

Gidi Bar Zakay, Former Deputy Head of the Israel Tax Authority (ITA) and cryptocurrency tax specialist, commented: “What ultimately determines whether Bitcoin is a currency is the proof of reality. As soon as its use becomes common, the legislature will have to redraft the law to take this into account, and we will all benefit from these technological and monetary developments and the ability of Bitcoin and other cryptocurrencies to serve as means of payment reliable, efficient and widely accepted”.

The ITA first described the plans to tax cryptocurrencies as property in February 2018. In early May 2019, the US Internal Revenue Service (IRS) announced that it was giving priority to the issuance of guides related to cryptocurrencies, after politicians in Congress warned that there is still much ambiguity about how assets should be taxed.

The General Director of the crypto-finance company Circle, Jeremy Allaire, stated that digital assets are financial instruments, but that they should not be considered values ​​or currencies, whilst the US Securities and Exchange Commission (SEC) will consider cryptoactives as values.

Whilst these concepts and regulations are established in different countries, the debate remains and makes a way to new changes of opinion.

By María Rodríguez

Malta Awards 19 Scholarships Valued at US $ 179,000 for Blockchain Training

Maria Rodríguez
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Malta Awards 19 Scholarships Valued at US $ 179,000 for Blockchain Training

Students will be able to choose PhDs and will be prepared not only in Distributed Ledger Technology, but also in finance and legal frameworks related to that technology

Malta maintains its objective of becoming the “blockchain island”, in order to be one of the most friendly countries with this technology. In addition, it offers flexible regulation with Distributed Ledger Technology (DLT) and it allows exchanges with cryptocurrencies, the country seeks to prepare its future staff.

In this regard, the government of Malta awarded 19 student scholarships for blockchain training worth 160,000 euros, equivalent to US $ 179,000, according to a recent report by the local news agency Malta Independent.

The Parliamentary Secretary for Financial Services, Digital Economy and Innovation,Silvio Schembri, was in charge of delivering the scholarships that come from a special fund of US $ 351,000 created by the Malta Digital Innovation Authority (MDIA) and the University of Malta in August 2018.

The announcement of the scholarships took place during the Malta AI & Blockchain Summit. At that time, Schembri commented that these scholarships are the first prizes of this type. In addition, the official said that this is another step in the country’s goal of becoming the “blockchain island”.

“These 19 winners are a symbol of courage to accept the change and we definitely need more people like them. I thank the University of Malta and the vision of MDIA for its commitment to preparing future generations to meet the needs of future industries. The building blocks of Malta, the Blockchain Island, require the participation of all, from the beginning”, he said.

A Comprehensive Study

As reported by local media, the Memorandum of Understanding to create the scholarship comprises a period of three years. All the winners will request a degree in blockchain technology and Distributed Ledger Technology (DLT). Students would specialize in blockchain and its relationship with laws, finance, business,Information and Communication Technologies (ICT), among others.

In addition, Joshua Ellul, the Director of the Centre for Distributed Ledger Technologies, emphasized that blockchain technology involves several disciplines. For this reason, they have worked together with the University of Malta.

“Blockchain and distributed ledger technologies offer new academic challenges, spanning multiple disciplines, including law, business and Information and Communication Technologies (ICT). It is for this reason that we have been proactive at the University of Malta in the development of a multidisciplinary master program in Blockchain and DLT”.

Tony Sultana, Executive Chairman at Malta Information Technology Agency (MITA), announced that the next year more students would be able to conduct their studies at the master’s and doctoral levels.

“With the current work environment, information technologies are used in different sectors. I remind our future students that this scholarship is not only open to the flow of technical studies, but also to those who have a background in law or business”.

Sultana invited students to start their careers next year and invited anyone who has experience in law or business to take these studies, to achieve greater integration of the community to the initiative.

Schembri stated that the Malta Financial Services Authority will issue the first licenses for blockchain companies this year. He commented that by the end of 2018 the number of blockchain companies operating in Malta amounted to 800. The expansion of the blockchain world in Malta promises to continue.

By María Rodríguez

The Millionaire Earnings that Blockchain Could Generate for Insurers

Maria Rodríguez
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The Millionaire Earnings that Blockchain Could Generate for Insurers

Making contracts automatically, reducing costs and storing the information is only a little part of what distributed ledger technology offers

The demanding style of work of insurance companies and the importance of providing a better service are the aspects of competition between those institutions. These companies are looking for an ingredient able to make a difference and executes transactions quickly and safely.

Improving the relations with customers, reducing expenses and saving time are the main advantages pursued by insurers to attract more and more users. According to a study made by Markets and Markets, which offers market research reports and custom research services, blockchain technology could be the answer.

Smart contracts came to certify much more than the purchase and sale of cryptocurrencies. Thanks to the advancement of technology, contracts can be made automatically, efficiently and contemplating the aspects that both parties desire, all of this at the same time.

The analysis of Markets and Markets estimates that the use of blockchain technology will move almost USD 1,394 million in the insurance sector by the year 2023. This figure would imply an annual growth rate of 84.9% from 2018, when the figure was 65 million dollars. According to the institution, the increase in profits will be due to these companies need to have transparent and reliable systems.

The Contributions of Blockchain

Blockchain platforms are a system of exchange of digital transactions through a huge database in which all operations are recorded. This mechanism allows monitoring transactions, avoiding excessive procedures and reducing the number of people involved in the process.

For these reasons, Markets foresees that companies related to deaths and identities services will adopt blockchain technology, as well as smart contracts.

Thanks to smart contracts it is possible to program and execute a contract using computer codes, which contain the criteria previously defined by the parties. If the content is correct, the contract is launched automatically.

Similarly, with these technology insurers will be able to know the identity of the clients that conduct the transactions, as well as the date and time of issue of the policy. This would help reduce the fraud rate and allow an easy management of the platform.

The report explains that the use of this technology will reduce the costs of verification, execution and arbitration. “It is expected that the application of identity management and fraud detection will be the segment with the highest income generation for insurers until the year 2023, since blockchain technology helps validate the authenticity, ownership and origin of the data through the supply chain”, the article explained.

A total of 15 insurers from all the world, including Aegon, Zurich and Allianz, allied themselves through the Blockchain Insurance Industry Initiative (B3i), in order to study the advantages blockchain can bring to the insurance sector.

The interest of these companies remains. European companies such as Allianz used this technology to encourage trading in catastrophe bonds, which transfer the risk of natural disasters to investors. The radius of action of blockchain seems to be increasingly broad and does not stop surprising.

By María Rodríguez

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