In recent French news, Goldman Sachs CEO, David Solomon, revealed that the company is looking into developing its own cryptocurrency, like JP Morgan Chase. Also, the company is researching asset tokenization and stablecoins as such.
Recently a French news source Les Echos
did an interview with the CEO of Goldman Sachs, asking him about
cryptocurrencies and the companies plans regards them. He revealed
that they are working on and researching asset tokenization and
stablecoins in general. They are looking at JP Morgan Chase’s version
of a cryptocurrency and they “absolutely” would follow in
launching a similar cryptocurrency.
“Assume that all major financial institutions around the world are looking at the potential of tokenization, stablecoins and frictionless payments,” he commented.
He believes that that is the direction in which the payment system will go, hence stablecoins and asset tokenization. With an emphasis on “he believes”. Solomon commented this while he was asked to comment on the Facebook Libra project, which he refused, but answered: “I find the principle interesting.”
Crypto Regulation Is Coming
When asked about cryptocurrency regulation, he said that “a change is coming for sure”. What does he mean by that, we can only guess. It’s been already known for quite a while that multiple G-20 meetings have discussed the regulation of cryptocurrencies, but with no outcome. Possibly, this time they want to put a final decision on this issue.
“I think regulators around the world are watching what’s going on. They wonder how it will work and are very attentive to payment flows,” Solomon explained.
It is funny how companies quickly
change their mindsets. Just recently in January, JPMorgan Chase said
that crypto would only have value in a dystopian economy. Now they
are in the works of launching their JPM Coin. It will run on Quorum
which is a private version of Ethereum. The bank developed it in
conjunction with EthLab. The main intent for this bank-like crypto is
to settle portion of transactions between clients of its wholesale
payments business. JPMorgan revealed that they are beginning tests
with clients earlier this week.
Well not much for the banks, but this rather shows more about the great and interesting future we have ahead of us. Banks with these moves have acknowledged cryptocurrencies as such in the eyes of people who are not familiar with this matter. Payment systems will change, banks will try to offer something similar to cryptocurrencies, but eventually, people will realize – why do we need third parties, if we can do everything peer-to-peer?
Facebook just have released the whitepaper for their Libra project on libra.org, which is the official webpage for the social networks native cryptocurrency. Also, they presented Calibra, the digital wallet meant for the Libra currency. They are coming out with a bold statement to bank the unbanked.
Libra whitepaper has just been published and the main idea for Facebook is that you don’t have to have a Facebook account to use the cryptocurrency Libra. While Libra is only the currency, Facebook comes out also with The Libra Reserve, where all the funds are going to be stored and who provided them. Then there also is The Libra Blockchain, which, they say, is a decentralized database that will have the power to become the medium of exchange for billions of people.
Moreover, they have the Libra Asociacion which includes 28 founding members like Visa, Mastercard, PayPal, Uber, Coinbase, Lyft, and others. Basically, they have brought all the best companies in every industry and put them together to work on this project. Now they have only 28 worldwide companies, but they plan to gather around 100 by the beginning of 2020 when they will launch the blockchain.
“Once the Libra network launches, Facebook, and its affiliates, will have the same commitments, privileges, and financial obligations as any other Founding Member. As one member among many, Facebook’s role in the governance of the association will be equal to that of its peers.”
While Facebook’s Libra coin will offer multiple options on what to do with it, their initial goal is to solve the international remittance problem in the world.
The whitepaper explains that Libra is made up of three parts:
“1. It is built on a secure, scalable, and reliable blockchain; 2. It is backed by a reserve of assets designed to give it intrinsic value; 3.It is governed by the independent Libra Association tasked with evolving the ecosystem.”
We’re yet to find out whether the blockchain is reliable, whether people will give this coin an intrinsic value, and how good of a job will the Libra Association do in governing the project.
A New Mobile Wallet – Calibra
While many of us were speculating whether Facebook will include their wallets within the actual social network or develop a separate wallet – well now we have the answer. Calibra will first serve as the digital wallet where users can store their Libra’s and exchange with each other. I guess it’s not much of a surprise that this will be a custodial wallet. Libra Association will govern this app, and eventually Calibra is meant to develop financial services and products around the Libra Network. Also, Facebook Messenger and WhatsApp will serve as a functional wallet as well.
Facebook highlights the problem that around 1,7 billion people in the world are unbanked.
“For many people around the world, even basic financial services are still out of reach: almost half of the adults in the world don’t have an active bank account, and those numbers are worse in developing countries and even worse for women,” Calibra writes adding: “The cost of that exclusion is high – for example, approximately 70 percent of small businesses in developing countries lack access to credit, and $25 billion is lost by migrants every year through remittance fees.”
They also have provided screenshots and videos of the app, and it looks… just like any other crypto wallet ap. It has a very smooth sense to it, but in my humble opinion – nothing special. Also, their main goal which they actualize – I believe they are being a little bit hypocritical, because stablecoins and such digital currencies have been around for quite a while and solving the same thing they want to solve – international remittances. For example Ripple. They are leaving out the fact that this Libra project is backed by the largest corporations in the world and is fully centralized, not decentralized as they would want.
Now the Calibra wallet is just in a Testnet phase where it serves only like a wallet, but eventually, their plan is to allow users to pay for all sorts of services like bills and public transit. Some say that Facebook is entering the WeChat or Alipay market.
Everlong Regulatory Issues
This is where the regulations come in. Of course, they want to be regulated in every corner of the world, and they will, which makes this coin even more centralized as I thought before. Also, they explain that social profiles and financial data won’t be linked to the wallet or profile, but I don’t really believe it. There will definitely be an option where you can share all that data which will eventually be more beneficial in terms of app use. A rather weird statement to read was how Facebook said they won’t share any data or information about its users “unless required by law or for limited technical reasons.” That means that it is no different than a bank or any third-party instance which promises to keep your money safe.
However, the whitepaper says that “The Libra protocol does not link accounts to a real-world identity. A user is free to create multiple accounts by generating multiple key-pairs.”
But ultimately, the Calibra wallet will use similar verification and anti-fraud procedures that banks and credit card providers currently use, as well as systems to monitor accounts for unusual behavior in order to prevent fraudulent activity.
“The libra currency and reserve will enable people around the world to trade in one single native currency,” says David Marcus, Facebook’s head of blockchain, and now the head of Facebook’s newly created cryptocurrency subsidiary, Calibra. “What we’re hoping is we will have the ability to foster a lot of innovation in the ecosystem across all dimensions.”
The Central Bank of the Bahamas (CBOB) plans to launch its cryptocurrency by next year.
As reported by Nassau Guardian, in the near future, CBOB will sign a formal agreement with NZIA.io to create and develop Project “Sand Dollar”. It would be the first digital currency in the Bahamas. At the beginning of 2019, in March, the Bahamas Central Bank announced NZIA Limited as its main partner in this project along with Singapore’s software development company Zynesis.
Equal, Expanded Access to Modernized Digital Payment Capabilities
Project Sand Dollar will be an “integrated, accessible electronic payment system for all businesses and citizens”, the central bank announces. The project will work in accordance with local financial legislation and aims to provid equal access to digital payments to the inhabitants of the archipelago. By doing this, they hope to reduce the volume of operations with cash and service costs.
Although there hasn’t been an official announcement by the CBOB, John Rolle, President of the Bank, noted that the institution hopes to fully expand the project by 2020. In general, the Bahamas are moving closer to full integration of blockchain applications and fintech solutions.
Currently, there are two accepted currencies in the Bahamas. The United States Dollar and the Bahamian Dollar, which is pegged to the US Dollar at 1:1. Since there is no other information, just the fact that there is going to be a digital currency, it’s quite safe to say that the new cryptocurrency will also be pegged to the US Dollar. Thus it becomes just another government-issued stablecoin. It looks like this government praxis will keep on evolving. Governments will continue to look into developing their own cryptocurrency, rather than using a global one, like Bitcoin, for example. But by doing so, they keep themselves on the same path as before. That is, being centralized and controlling the currency. The only question is – how transparent these government cryptocurrency blockchains are going to be. If they’re private and only governments have access to them, then the word “cryptocurrency” loses its definition.
Today, Friday, May 24, BBC posted a large article about Facebook’s plans on launching their cryptocurrency. Rumours say its name will be “GlobalCoin” despite earlier speculations of Facebook Coin and Libra coin.
Released in a Dozen of Countries by Q1 2020
Facebook is planning to set up its digital payments system/platform by the beginning of 2020. Internal tests will start at the end of this year. Also, the report says that the company’s CEO Mark Zuckerberg has met with the governor of Bank of England to seek advice. More importantly, to discuss the risks that are involved with such a move. Moreover, there also have been talks with the U.S. Treasury and different payments companies. Facebook seeks funding from Visa, Mastercard, and Western Union for its fiat-backed cryptocurrency.
Facebook previously revealed that their cryptocurrency will be a stablecoin which will be backed by multiple fiat currencies, including the USD, EURO, and Japanese YEN.
Project Libra is the name of the whole initiative by Facebook to launch this payment system. Referring to this, earlier this month, Facebook launched a new entity in Geneva called “Libra Networks”. This entity will provide financial and technology services and develop related hardware and software. This was published on the Swiss registration.
This project is set out to help billions of Facebook users/people to transfer money without the necessity of a banking institution. However, there are very few details on this issue. Facebook said that they expect to reveal more in the upcoming months.
Can Facebook take over the whole cryptocurrency market? Facebook has a total of 2.4 billion monthly (!!!) users, while crypto has around 30 million. Of course, that is the traceable data. It could be a lot more, considering the amount of privacy coins and features within multiple cryptocurrencies, including Bitcoin.
Ontology is about to launch Paxos Standard Stablecoin on its blockchain. Paxos is a cryptocurrency which is pegged 1:1 with the U.S. Dollars. Currently, Paxos is an ERC-20 token. The stablecoin would be launched in May 2019.
OEP-4 token standard
Ontology says that this launch will make it easier for individuals and businesses, who are using ONT token, to transact between fiat-pegged tokens. However, while Paxos is only an ERC-20 token, Ontology wishes to expand this by putting Paxos on their blockchain OEP-4 token standard.
Also, Paxos Standard will continue to use PAX as their ticker symbol alongside with Ontology’s OEP-4 standard. Also, it will enable atomic swaps between the Ontology blockchain and blockchain network.
$100 million worth of Paxos
The announcement says that Ontology will issue about 100 million new Paxos stablecoins depending on the demand. However, it is not clear how this will play out. Whether Ontology will just add 100 million Paxos coins to the Paxos circulating supply or whether there will be a separate coin and they would co-exist. We asked this on Ontology’s public telegram channel and the admin “Patrick Van Oorschot” replied that more details will be during May when the token will launch.
Paxos has authorized Ontology to issue these tokens through their partnership.
“The launch of PAX on the Ontology blockchain will greatly accelerate real business applications on Ontology, create more success stories of traditional businesses shifting to distributed businesses, and provide enterprise partners and institutional investors with a regulated, reliable, and safe gateway to the world of digital assets.”
eToro is a Cyprus-based social trading and multi-asset brokerage company. Recently they announced plans of implementing eight stablecoin versions of other major currencies. Currencies such as the Euro, Yen, and Swiss francs within their platform. They believe that users are in need of this feature.
eToro Launching a Crypto Exchange
eToroX is the new crypto-to-crypto service/exchange that eToro is about to launch, and implementing eight stablecoins is just an introduction of an ambitious plan to offer tokenized versions of other assets. These assets might also include precious metals and fine art.
The major problem with stablecoins is that many skeptics believe that usually, companies haven’t got the reserve of fiat to fully back the stablecoins on a one-to-one basis. However, eToro claims that their company is backing the stablecoins with futures contracts.
Concerns of the Public Demand
Arieh Levi, a senior analyst at CB Insights believes that the users will stick to their platforms which they already use:
“It’s a pretty saturated market in terms of crypto trading. I’m not sure there will be too much demand as the existing players will likely stick to the platforms they already use.”
However, eToro CEO Yoni Assia stresses that he believes that there will be demand for these type of assets. He says that many traders would want to “bet on the price movement of Bitcoin against currencies like the Canadian and Australian dollar.”
The main concern is that eToro will have to compete with such industry giants as Binance and Coinbase Pro.
Pushing Into the U.S. Market
The launch of eToroX exchange is a part of getting into the U.S. market. Recently eToro began offering a few of the most popular cryptocurrencies like Bitcoin, Ethereum, Ripple and etc.. This was done specifically for the U.S. market. Now, eToro claims that around four or five percent of new registrations come exactly from the U.S. They are pleased with these numbers and believe that they are doing the right thing.
While many think that the bear market is over for quite some time, for the average millennial trader, it might not seem that way. However, along with the bull market, new traders will be coming in and the need for a wider range of platforms will be in demand. From that point on, we believe that it’s only a matter of marketing for eToro.
On Monday, March 18, 2019, six international banks signed up for the new Stellar – IBM’s blockchain-powered payments network “World Wire” to issue their own stablecoins. At the moment, World Wire has over 44 banks on their service. Their primary aim is to enable near real-time international settlements between banks.
Blockchain World Wire
It is a distributed ledger technology payment system which just went live. It will provide an infrastructure for clearing and settling cross-border payments in almost real-time. Also, at the same, time will reduce transaction costs. This will be done by removing third-party intermediaries from the process. IBM claim that they are handling around 60% of the world’s transactional systems. This provides World Wire with a advantageous head start. Moreover, BWW currently supports more than 47 currencies across 72 countries.
Six Banks Already Applied
It looks like JPM Coin started a new trend – banks issuing their own coins. At the moment, thanks to Stellar and IBM, Banks can easily apply to their own stablecoins that would be pegged to their native currencies. So far Brazil’s Banco Bradesco, South Korea’s Bank Busan, Philippines’ Rizal Commercial Banking Corporation and three other banks have filed an application.
“We let the market drive the expansion and selection of the network incrementally. We are really feeling excited that we are on a roll to build something new and revolutionary that’s really going to change the landscape of cross-border payments,”
says Jesse Lund, the head of blockchain solutions at IBM.
Stellar to Issue its Own Stablecoin
Also, IBM partners with Stronghold, a Stellar-based, USD backed asset. They are also in the talks of developing their own Stellar network’s first stablecoin. It would disintermediate legacy bank settlement systems by introducing the XLM token as an efficient, immutably-tracked settlement instrument for fiat currencies between institutional parties.
“Our view for stablecoins is really that they should be more broadly accessible and what World Wire seeks to do is to provide fungibility of digital assets across financial institutions,” says Lund.
Stablecoins are an essential tool for every crypto trader. Whether you are an investor, a trader or you just like to spend half of your paycheck on dogecoins it is important to hedge your bets in any case of unpredicted events. For example, you would rather like to have your coins in a stable store of value than crypto if US government is deciding whether on not to ban bitcoin. For such an erratic events crypto community has created a solution – stablecoins!
What is a stablecoin?
By the definition, stablecoin is a “Cryptographic asset that is optimized in the means of retaining its value during times of volatility”. In simple words – a stablecoin is like any other coin but with a fixed value. Issued on a blockchain, Stablecoins does not require third parties for a transaction and is fully transparent. They achieve the effect of stability by many different techniques such as backing the coin with stable assets, have a guaranteed right of exchange to other assets or mimicking equity. To really understand the fundamentals of a stablecoin it is best to analyze some practical examples of the most used stablecoins:
Tether: the colossus of stablecoins
In a view of the aforementioned three stablecoins, the most used stablecoins are backed by a fiat currency. Tether (USDT) which is the most used one of all three, is a stablecoin backing 1:1 with USD. It is first of its kind in the means of fiat backed stablecoin and has endured the most widespread adoption. Tether states in their website that it is secure, fully backed by USD, transparent and renounced by media giants such as WSJ, Coindesk and Cointelegraph. As all other cryptocurrencies, tether has blockchain technology behind it, but it is failing at decentralization. Tether Ltd. controls the emission of coins, which consequently has created negative stigma and fraud allegations by the crypto community.
The stablecoin controversy
During the December crypto-market bull run, tether faced wrong accusations of artificially creating tether coins without USD backing. The allegations went on for more than half a year. Tether Ltd. was even subpoenaed by the SEC for an investigation. However, the fraud accusations are now ceased and full tether backing log can be accessed at their website – tether.to.
There is a phenomenon that would make Keynes`s head hurt very bad – stablecoin value increase and decrease! Stablecoins are perfect as for market indicators and speculatory instruments for trading. The reason is that due to the fact that they change value proportionally with the crypto-market increases and decreases. When the market is going up stablecoin value decreases, meaning that investors are selling to buy other crypto assets. When the market goes down, demand for stablecoin increases making stablecoin value increase by 0.01-0.03 USD. At first glance, the increase can seem insignificant but if properly leveraged can give immense gains with less risk than trading other crypto assets. Some exchanges have even listed USDT/USDC pairs for trading for speculatory purposes.
Tip by BestCoinInvestments professionals: How to keep your wealth stable without using stablecoins?
Aforementioned reasons of possible fraud, third-party trust et cetera can make you afraid of putting your valuable resources in stablecoins. Good news is that there is a solution – creating stability by yourself using leveraged bitcoin markets. The secret of storing stable value with bitcoin is putting exactly the right short position. Shorting bitcoin with 1x leverage will give you stable USD value while still keeping your value in bitcoin. For every 1% increase of bitcoin, you will lose some bitcoin but will retain the same value in USD as your assets price increases. If bitcoin falls in value you will gain more bitcoin filling the losses in your USD value.
You must keep in mind that some bitcoin instruments such as inverse perpetual swap contracts have long:short funding rate every 24 hours which results in lost/gained funds depending on your position and overall market situation. Choose your financial instrument wisely minimizing the margin interest rates and funding rebates. This is not financial advice. Do your own research before using the aforementioned technique.
Facebook Inc. currently is developing a cryptocurrency stablecoin specifically for WhatsApp. With that users will be able to transfer money exclusively within the app, reports Bloomberg. The initial target audience is set to be India.
Facebook financial services
Ever since Facebook hired the former PayPal president David Marcus to work on their messaging app, people have been curiously waiting for the outcome. Also, Facebook recently hired about 40 blockchain specialists to work in their Blockchain group, which now makes sense. Maybe this has something to do with David Marcus. However, Facebook Messenger already has a built-in cryptocurrency payment service. A company called Lite.IM has made it easy for users to send and receive Litecoin within the messenger app.
Facebook bought WhatsApp in 2014 for a shocking $19 billion price, citing Forbes. They must have significant plans for the future, after a deal like that.
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share,” stated a company spokesman.
Facebook user count
Facebook currently claims that they have 1,45 billion daily active users and 2,20 monthly active users. These numbers are just staggering! On the other hand, 2017 Q4 reports show that WhatsApp has 1,5 billion users and 60 billion messages sent every day. Talking about mass adoption, this is what many cryptocurrency enthusiasts have speculated about. If Facebook with its user-base implements a cryptocurrency, then it could become a top asset within days.
Controversy over stablecoins
Today is a time when we have a stablecoin for almost every fiat currency in the world, including gold, silver, and other derivatives. Many believe that currently, that is the safest way how to spend your crypto. Stablecoins are not that volatile and can presume the value of your money. However, there is a lot of controversy over the topic of stablecoins. Especially, Tether. Tether is a cryptocurrency, which is pegged to the US Dollar. Bloomberg reviewed statements from four separate months details over the cash flow in Tether Ltd.’s accounts. It showed that on January 31st Tether had $2,2 billion in their report in Puerto Rico’s Noble Bank. On the very same day, they had 2,195 billion tokens in existence. The numbers match, but many believe that Tether is a scam. One of the reasons – a cryptocurrency exchange Bitfinex is owned by the same executives. Previously the company refused to do an audit.
It is believed that Facebook might be the best company so far for stablecoin development. “Facebook, which has 2.5 billion global users, more than $40 billion in annual revenue and greater experience navigating regulatory issues, may have a better chance of making a stablecoin that sticks,” writes Sarah Frier in her article. If Facebook develops a stablecoin for WhatsApp, then why wouldn’t they use it in connection with Facebook? That opens the door to a lot of new crazy ideas and means that their asset will quickly become very popular. The question is whether Bitcoin and other cryptocurrencies will be available for transfer. Also, this was one of the issues a lot of disputes have been about. If Facebook and its users create a cryptocurrency, it could take over the crypto-market by seconds. Is that good or not, we don’t know. But one thing is for sure. It would be a lot easier to send crypto to your grandparents and relatives during Christmas time.
On October 23, Coinbase Custody received a qualified custodian license, which means the company now will operate as a Limited Purpose Trust Company charactered by the New York Department of Financial Services (NYDFS).
As Coinbase clarifies, it “is more than just a new license — it’s an important piece of regulatory clarity that will allow us to compliantly store more assets and add new features like staking.”
That means that Coinbase Custody Trust Company has met all the needed banking standards of NYDFS, and will operate as a separate business to Coinbase Inc.
I don’t know, but I have the impression that I can call it a regular bank now. How do they differ, if not looking at the asset class they’re operating in. They apply to the same banking rules all the other banks do, so in one word they all are – centralized. For now, it’s only in NYC, but we all know that they are going to expand to the world.
The USDC craze
It seems like this is the last piece of the puzzle Coinbase needed to start finally adding all those other coins and tokens everybody has been waiting for so impatiently. Moreover, they have already begun to do such. After this news, on the same day, Coinbase announced that they are adding the Circle supported stablecoin – USDC. Everything is excellent and all, we can now store our funds within the Coinbase app on a stabilized currency, and not worry about anything. Wrong! There have been posts already that the fees are too high, and one tweet from @EzMrcz I liked the most, he said: “I can get 673 USDC with $700 USD on Coinbase. Wtf is that lmao?”
Going deeper into the thread, people are saying that this is true – this is because of the abnormally high fees, but only when paying directly from the bank account, when paying from your USD account within Coinbase there are no fees. Which sort of demolishes their opening statement: “Customers can deposit USD and click to convert to USDC with no fee.”
However, one specific thing is almost if not shocking then at least it’s worth giving a thought. Circle, which is a fin-tech company worth almost $3 billion, released the USDC stablecoin this year, in May. Now, when they finally got the listing on Coinbase, some users found out a few pretty controversial points in the user agreement. Circle can “suspend or terminate your USDC Account which can result in the potential forfeit of any US Dollar funds otherwise eligible for redemption.” These actions would apply if you were a suspect of one of the prohibited transactions:
Weapons, controlled substances, Money-laundering, Ponzi schemes, counterfeit goods and more. If Circle founds out you have been in a chain of these kinds of transactions, they can freeze your USDCs.
The mysterious thing is that Coinbase mentioned they are going to add a new feature – Staking. Not sure how that is going to carry out, but as far as I know, they haven’t elaborated on this.
One thing is for sure – as Coinbase gets more regulated and receives more licenses, they become more centralized as well. Sure, it is a different independently-capitalized business, but still. Many people are suggesting to use other services like Wirex or Uphold.