End of Money: How Future Generations Are Already Adapting to Living without Physical Money

Audy Castañeda
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End of Money: How Future Generations Are Already Adapting to Living without Physical Money

Specialist highlights how digital means of payment are replacing physical money.

In recent years, with the advancement of technology, the variety of methods that can be used to make purchases has grown. In this context, the Covid-19 pandemic has accelerated the transition to the cashless future, shaking the digital payments industry and bringing a series of changes and challenges for both merchants and consumers.

The study “Global Payments 2021: Transformation amid Turbulent Undercurrents”, conducted by McKinsey & Company, shows that in 2020, globally, cash payments fell by 16%, while cashless transactions increased by 6%.

What is happening in Brazil

In Brazil, a survey conducted by the National Confederation of Merchants (CNDL) and the Credit Protection Service (SPC Brazil), in partnership with Sebrae, indicates that, during the pandemic, 45% of respondents made more payments online (including transfers and PIX), while 23% used the credit card more and 21% intensified the use of the debit card and also of cryptocurrencies.

Reinforcing the trend, data from Abecs (Brazilian Association of Service and Credit Card Companies) show that payments with credit and debit cards came to represent 46.4% of household consumption in the last quarter of 2020.

Many experts consider the cashless society to be the future. The term is explained as “economic phenomenon in which financial transactions are carried out electronically, instead of using bills and coins”.

In this scenario, all consumers will have their card or electronic device to process and complete transactions. Credit and debit cards, digital wallets (e-wallets) and applications, QR codes, PIX and Internet banking, Bitcoin, cryptocurrencies, are some examples that already exist.

The adoption of forms of payment that are not physical money is becoming common in other LATAM countries. The Latin American population, as revealed by the “Mastercard’s New Payments Index 2022” survey, is at the forefront in the adoption of crypto assets as a means of payment.

According to the survey, carried out between March and April of this year, it reveals that 51% of consumers in the region have made at least one transaction with cryptocurrencies and more than a third have said that they have paid an everyday expense with stablecoins.

Outlook for the Future

With the significant decline in the use of money, the world is moving, albeit at different speeds, towards a truly cashless global society.

According to Gabriel Roizner, CEO of Mozper, in economies where immersion in digital technologies is more complete, movements are already taking place to eliminate money.

“In Brazil, cashless is still starting, but the trend is growing. An example is the PIX. According to the Central Bank, the system is already used by 71% of the population, who registered 380 million keys”, he comments.

According to the European Payments Council (EPC), cash transactions accounted for just 1% of Sweden’s GDP in 2019, and cash withdrawals have been steadily declining by around 10% annually.

“Some countries are much closer to a cashless future than others: cash accounts for just 5.4% of point-of-sale payments in Canada, 4.5% in Norway, 11.9% in the US, and less than 10% % in places like Australia, Hong Kong and Sweden,” he says.

By Audy Castaneda

Bitcoin Network Power Demand Drops to 10.65 GW as Hash Rate Sees 14% Drop

Audy Castañeda
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The Bitcoin network recorded the lowest energy demand of the year 2022 at 10.65 gigawatts (GW). At its peak, the BTC network demanded 16.09 GW of power.

Overall Bitcoin (BTC) network power consumption saw a drastic drop after mimicking a two-week drop in mining hash rate, reducing displacement power to mine BTC blocks to 199,225 exahashes per second. (HE/s).

According to data shared by the Cambridge Center for Alternative Finance, the Bitcoin network recorded the lowest energy demand of the year 2022 at 10.65 gigawatts (GW). At its peak, the BTC network demanded 16.09 GW of power.

Banking System Consumes 56 Times More Energy than Bitcoin

On June 16, a Cointelegraph report highlighted how the banking sector uses 56 times more energy than the Bitcoin ecosystem. Publisher Michel Khazzaka, an IT engineer, cryptographer, and consultant, said in an exclusive interview that:

“Bitcoin Lightning and Bitcoin, in general, are really great and very efficient technology solutions that deserve to be adopted on a large scale. This invention is brilliant, efficient, and powerful enough to achieve mass adoption.”

Khazzaka, who founded payment consultancy Valuechain in late 2021, proposes an alternative to the energy estimates provided by the Cambridge Bitcoin Electricity Consumption Index (CBECI). The index, often cited by Cointelegraph, estimates that Bitcoin consumes approximately 122 TW/H per year.

In the interview, Khazzaka explained that, “Lightning will allow the bitcoin protocol to do more transactions without consuming more energy. And this is magical.”

Khazzaka concludes that the combination of Bitcoin and the Lightning Network allows Bitcoin to be “194 million” times more energy-efficient than a classic payment system.

For him, “the banking and payments sector must embrace Blockchain technology and perhaps Bitcoin.” While his conclusion may come as a surprise to cypherpunks and anarcho-capitalists who favor the cryptocurrency space, Khazzaka believes that Bitcoin could, in fact, benefit banking, by stating that, “If they are brave enough, Blockchain technology will improve their efficiency and scalability.”

Possible Reasons for Sudden Reduction in Bitcoin Energy Demand

The sudden reduction in Bitcoin energy demand can be attributed to the hash rate drop. Mining hash rate serves as a key security metric, the computing power required by BTC miners to successfully mine a block.

Bitcoin mining difficulty reached an all-time high of 231,428 EH/s on June 13, followed by a drop of more than -13.9% in two weeks. The latest breakdown of the hash rate distribution shows F2Pool and AntPool as the largest known miners, with 81 and 80 blocks each mined in the last four days, respectively.

A group of federally funded researchers designed a class of stablecoin called the Electricity Stablecoin (E-Stablecoin) that would transmit energy as a form of information.

As Cointelegraph explained, the E-Stablecoin would be minted by inputting one kilowatt-hour of electricity, plus a fee, which could then be used for transactions in the same way as any stablecoin.

By Audy Castaneda

Cryptocurrencies Moved About 60,000 Million Euros in Spain Last Year

Audy Castañeda
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0
Cryptocurrencies Moved About 60,000 Million Euros in Spain Last Year

A report from the Bank of Spain claims that the number of transactions in Europe has increased.

Cryptocurrencies are a magnet for money. A Bank of Spain report published this Tuesday estimates the volume of transactions with this type of asset in 2021 in Spain alone at around 60,000 million euros, which is equivalent to about 1,275 euros per inhabitant.

The fixation to invest in them is not out of place with respect to the surrounding countries: Spain accounts for around 10% of the business in the eurozone, a weight proportional to that of its GDP. The digital currency is still the little sister when compared to the Stock Exchange, which in 2021 moved a volume six times greater, but the trends are opposite: while electronic currencies gain ground, the sale of shares in Spain fell by almost 12% last year.

Report on Cryptocurrencies in Spain

The diagnosis is that in Europe only in the United Kingdom, France, Germany and the Netherlands, there were more transactions in 2021 than in Spain, which is fifth on the list. The Netherlands and Portugal stand out, where the volume of operations was higher than what would correspond to them due to the size of their economies.

The results cannot be considered completely reliable; therefore, the Bank of Spain has used other sources of information. The prevailing thesis is that the Spanish are especially attracted to cryptocurrencies.

The Finder Cryptocurrency Adoption Index, which conducts a regular survey in 27 countries, estimates that 12% of adults have invested in them in Spain. Most are men (13%, compared to 10% of women). The group of young people between 18 and 24 years old, more used to moving through the digital universe, was the most active in purchases, a reality that raises concern due to the lack of financial culture in certain cases, as well as their exposure to specific scams.

One Percent Illicit Activities

The Bank of Spain explains that the percentage of operations that are aimed at illicit activities is low, only 1% in Spain between July 2020 and June 2021, but warns that it may be due to the way they are measured. Chainalysis only identifies those where there has been a police investigation.

Another phenomenon highlighted by the regulator is that the boom in cryptocurrencies is not only caused by small savers, but by the emergence of institutional investors. “A greater relative importance of larger transactions (of more than 10 million dollars) is observed, which suggests that they would have gained relative importance in operations with these currencies,” the text explains. There are no signs, on the other hand, that banks are more exposed, although the difficulties in measuring it mean that there is some caution in this regard.

Regulatory Vacuum

The entity recognizes the virtues of the technology behind cryptocurrencies: it highlights that they can improve the efficiency and resilience of the financial system by reducing transaction costs and that they allow greater interoperability in payments and more competition.

The Bank of Spain points out that “activities on crypto assets in Spain are not currently regulated, except for certain advertising requirements set by the CNMV”. And it explains that right now the institution lacks the power to regulate and supervise cryptocurrency providers, although the evolution of the market is monitored, “due to its responsibility for financial stability.” Given its international expansion, it urgently calls for the establishment of homogeneous rules so that there are no different regulations that force disputes to be resolved through arbitration.

By Audy Castaneda

Charles Hoskinson Spoke about Crypto Regulation before the US Congress

Jenson Nunez
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Charles Hoskinson Spoke about Crypto Regulation before the US Congress

The Cardano founder shared an innovative vision of digital assets and Blockchain regulation in a meeting with US lawmakers.

Cardano blockchain founder Charles Hoskinson made his appearance before a US Congressional hearing to start a debate about the future of crypto regulation.

Hoskinson opened up and shared his thoughts about crypto regulation with members of the Subcommittee on Commodity Exchanges, Energy, and Credit of the US House of Representatives, the lower house of Congress. The technology development entity in charge of Cardano, Input-Output Global (IOG), revealed a summary of their statements in a blog post.

The Importance of Blockchain

In his speech, the mathematician and CEO of IOG explained the fundamentals and various uses of Blockchain technology. Hoskinson highlighted how Blockchain would serve as an influence to generate digital identity solutions, bring value to supply chains and make financial access easier for individuals.

To demonstrate real-world use cases for the technology, he described the US meat industry as a sector that can benefit from using Blockchain with verifiable records. The developer also spoke about his agreements with many African nations to bring real technological solutions to the population of that area.

These use cases and projects represent the type of development and economic evolution that Blockchain technology could offer to a country like the United States of America, especially in remote areas of the country.

Hoskinson then used these use case examples to represent the decentralized nature of Blockchain and reach an agreement to apply a regulation that understands, responds to, and goes hand in hand with that nature.

On the Regulation of Digital Assets

Hoskinson also noted that the broader blockchain industry could not work without these currencies. Digital assets are programmable software that can become almost any asset and could change over time.

The founder also provided some standard notions about these digital assets and their utility. He said that digital assets could be so vast that they could serve to verify data, transfer information or value, or purchase goods.

The founder said these assets could also provide access to services, serve as a reward or membership program, and act as a store of value or investment.

Hoskinson also focused on the legislation of the United States of America, which has never used an instrument that can attend so many different things.

Regulation Gets Based on Fundamentals

The CEO of IOG made it clear that neither he nor his entity stands against regulatory efforts for the crypto space; however, they believe that these efforts must get carried out responsibly while ensuring the improvement of the industry and not undermining innovation.

This new technology is a radically new asset class that cannot easily fit within the walls of laws and tests created nearly a century ago. Hoskinson also expressed that current securities laws for consumer protection focus on the existence of centralized entities, and these entities don’t get applied to Blockchain cases.

By: Jenson Nuñez

Freelancers and Salaries of USD 2,500 in Crypto are the New Reality for Young People

Jenson Nunez
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Freelancers and Salaries of USD 2,500 in Crypto are the New Reality for Young People

The number of Argentines who receive their salary in digital assets on Bitwage grew 250% in the pandemic. They estimate that most do so in stable coins and allocate a part to bitcoin as an investment.

Globalization unlocked a new situation, and more and more young professionals are choosing to work as freelancers or applying for remote jobs from abroad with prominent salaries in dollars paid in digital assets; in many cases, it is even their first job.

This phenomenon happened among qualified people who live in nations with low wages and too many restrictions to receive international currencies, such as Argentina. So, they find in digital assets a solution to get a freelance or remote job from abroad and get a better-paid salary.

The platform highlighted that, during the pandemic, its users in Argentina grew 250%, along with a standard monthly income per person of at least USD 2,500 in digital assets. Such a figure allows Argentines to have a higher purchasing capacity than what local jobs offer.

The platform also highlights that Argentines who offer services abroad represent the country’s largest export sector, after the oilseed-cereal industry. Exports of services represent a source of value due to the creation of jobs and the income in foreign currency.

For this reason, they hope that using their network to collect their salaries from abroad in digital assets will keep evolving in Argentina. Although they highlight that their service works globally, it comes from the United States of America, and it got founded in 2014.

Generation D Gets Better-Paying Jobs and Works Remotely

According to the latest report, the services industry exported from Argentina had an income of USD 5,700 million in 2020. Computing, programming, and design were the sectors with more significant performance.

The company indicates that many young people who export these services have never entered the local traditional labor market. They have begun their professional experience offering their services as freelancers.

The entity highlight that young people tend to adapt to their needs, and values, such as freedom, anonymity, remote work, flexibility, and dynamism. For this reason, they describe this group of workers as the decentralized generation.

They explain that they identify themselves as not wanting to work in an office from Monday to Friday from 8:00 a.m. to 5:00 p.m. They prefer to have a job they can do in their notebook from a remote place, meeting goals with flexible deadlines or fixed days.

 Generation D Breaks with the Traditional Work Scheme

Most users get paid in stable coins, so they collect and save in stable coins, and what they need for daily expenses they convert to the local currency, such as Argentine pesos.

Likewise, users usually allocate a small part of their salary to bitcoin as an investment because they think about a high peak in the price over time. Most users configure this feature so that the conversion to BTC gets done automatically as soon as they charge.

Thus, they keep an organized investment strategy in bitcoin and avoid purchasing impulsively and according to their emotions. Meanwhile, they put their savings in stable coins and transfer what they need for daily expenses to their local currency. This situation is the new reality for more and more youngsters who work as freelancers or remotely abroad.

By Jenson Nuñez

According to the Bank of England, Crypto Crash Survivors Could Become the Dominant Entities in the Global Economy

Jenson Nunez
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According to the Bank of England, Crypto Crash Survivors Could Become the Dominant Entities in the Global Economy

The deputy governor of the Bank of England compared the current crisis with the dotcom crash. According to him, the survivors of this crisis could face the same situation as entities like Amazon and eBay.

The economist Peter Schiff suggested users not purchase crypto during the crash, while SkyBridge Capital CEO Anthony Scaramucci requested users to hold on despite the downturn.

On the other hand, when the newspaper of the Chinese Communist Party confirmed that Bitcoin would reach zero, the investor Michael Saylor defended the opposite idea and said that Bitcoin would never get to that level.

After seeing this problematic scenario, the Bank of England, the central bank of the United Kingdom, established some comparisons between the current collapse of crypto and the bursting of the dotcom bubble.

In May this year, Cunliffe said that investors might leave digital currencies in search of safer assets; anticipating a more profound stage for the crypto crisis.

Own CBDC

The Bank of England is also leading strategies for its retail central bank digital assets and will deliver a consultation paper by the end of the year. A key question is whether to produce a fully standalone CBDC with a fiat on-ramp or off-ramp or simply something flexible enough to help the private stablecoins.

Cunliffe explained how stable coins integrated into the supply chain might maximize efficiency. He said they couldn’t provide something that did all of those things.

Cunliffe then raised a question: Is it better to have private stablecoins to achieve more improvement in certain areas linked to a central bank ledger in some way?

Cunliffe added a response highlighting much confidence in that situation. He firmly said he wants to know where the responsibility lies and if the algorithm might go wrong.

According to the representative, when $5 trillion worth of securities got wiped, many entities abandoned their spot, but the technology did not. It came back ten years later, and the ones that survived, Amazon and eBay, turned out to become the alfas in the food chain.

A Slight Recovery

Digital Assets and volatility usually go hand-in-hand. The market is slowly experiencing a recovery, with Bitcoin returning to the $20,000 peak. The crypto market cap recently increased by more than 2 percent to $902 billion, according to information provided by CoinMarketCap data.

The most prominent crypto worldwide, Bitcoin, had reached an all-time 18-month low, whereas Ethereum observed a more than 55 percent drop; however, this is not the first time that cryptos have experienced such a fall.

By: Jenson Nuñez

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