Crypto asset prices are down at least 75% across the board for the most part. But strangely enough, institutions and mainstream entities continue to gain interest and involvement.
Latin America is an often-over-looked region in the crypto-space, but that’s beginning to change. With a population double that of the United States and rapidly approaching Europe, Latin America’s impact on the global
Central banks in the United Kingdom are giving a big fat “no” to cryptocurrency startups. This is causing many crypto companies to move to more welcoming places in Europe such as Gibraltar, Poland, and Bulgaria.
While the government of the UK has had a generally positive stance on accepting blockchain technologies and crypto startups, the private banking sector sees it all in a different way. This comes from a number of reasons, but the main reason being FUD: Fear, Uncertainty, and Disillusionment.
A lot is to be speculated in the crypto world. The market value of crypto has skyrocketed in the last six months from $30bn to $160bn. As the first big boom to happen completely on the internet, production is happening at an exponentially rapid rate and makes it complicated for anyone who isn’t keeping up with news to understand what is going on.
And then the only things people on the outside hear are about price flux and the “dark web.” And a strong emphasis on “dark web.” Bitcoin has been made famous by all of the criminals who use the technology to buy and sell illegal goods on; the most popular marketplace being the Silk Road.
“When you look on the dark web, everything there is being paid for with cryptocurrencies,” said an anonymous UK banking boss. “You don’t know who is transferring money in and out. If cryptocurrency goes to Iran and we’re involved then I get shut down.”
Many bankers are feeling scared about not completely knowing what they are getting in to. The fact that there have been no regulatory actions taken in the UK regarding cryptocurrencies makes it a very volatile game to get involved in.
On top of that, Bitcoin and many cryptocurrencies have the intention of taking power away from centralized authority, primarily banks. OmiseGo, a cryptocurrency startup with the token OMG, is creating a digital wallet to hold all cryptocurrencies and act as a bank in your wallet. One of OMG’s goals is to “enable financial inclusion and disrupt existing institutions.” People could potentially hold all of their money in their OMG wallet, and even use it to take out loans. A lot of the power that banks have comes strictly from holding assets behind walls, and the decentralized nature of cryptocurrencies tends to take that away. Jamie Dimon knows very well about the destructive nature of cryptocurrencies and made his view clear on CNBC: “It’s creating something out of nothing that to me is worth nothing,” he said. “It will end badly.” Later on, he was told to by major Middle Eastern tech CEO Fadi Ghandour that he needs to learn about cryptocurrencies before talking about them.
But the voice of centralized banks is clear, especially in the UK. Michael Hudson of Bitstocks said that “It is almost an impossibility to get a UK bank account. We bank in Gibraltar and Poland — the two jurisdictions that are most stable. We had an account in Bulgaria but that didn’t last long.” This ends up disrupting a delicate process because borrowing money from foreign investors can scare clients away from a “volatile” business. Simple things like paying staff have become a complex situation to Bitstocks.
Although it is hard for many startups, it is not impossible. Barclays has a few crypto clients and HSBC is in talks with a few major clients. But it sounds like until solid regulation guidelines are in effect in the UK, startups may need to move around.
Established in the early 1970s, the petrodollar has secured the United States’ influence over the oil trade for over 40 years, but recently, it is clear that this monopoly is slowly beginning to fall apart – in some part due to the influence of Bitcoin and other emerging cryptocurrencies.
After scrapping the national currency in 2009 when its inflation rate soared to an unbelievable 89 sextillion percent, Zimbabwe turned to foreign currencies which was a breath of fresh air for those who saw their savings become worthless. But now, the African country is facing an unprecedented cash crunch leaving many to search for a solution.
At the end of 2016, Zimbabwe’s central bank began issuing “bond notes,” or “bollars,” a paper currency-like note officially carrying the same value as the U.S. dollar. Backed by a loan of US$200 million from the African Import Bank, the notes were created in an attempt to ease shortages of U.S. dollars and South African rand.
The small denomination “bond notes” are not easily exchangeable in the market, leading businesses to turn to the black market to sell the notes at a premium in order to secure U.S. currency to purchase imported goods. This has forced higher prices on customers paying with the “bond notes.”
Chantelle Matthee, an analyst at NKC African Economics in neighboring South Africa, explained: “Firms’ prices reflect that one U.S. dollar in hard cash is equivalent to $1.30 in bond notes, meaning that the surrogate currency has already lost 30 percent of its value.”
While officially consumer prices rose only 0.6 percent year-on-year, in the real world, there are reports of merchants charging upwards of 40 percent for goods.
Zimbabwe’s government took this crisis to the next level, however, when diving into the electronic payment system. Nicknamed “zollars” by economists, the central bank began creating dollar surrogates lacking sufficient dollar or gold reserves as a backing.
As the rumor mill churned, word began to spread that the government had run out of U.S. dollars and was buying up black market dollars to hedge against their failing system. These rumors sent the price of “zollars” plummeting, placing a steady 20% premium on greenbacks, leading many to recall the 2009 economic crisis.
Jethro Nkosi, a computer technician in Harare noted: “I am really scared that I will wake up one day and find my money in the bank is worthless,”
Amid this cash shortage, President Mugabe announced a huge shake-up in the administration, axing 3 ministers, including finance minister Patrick Chinamasa. Additionally, Mugabe created a new cyber ministry, focusing on cybercrime and monitoring of social media.
The move to create a cyber ministry was largely rooted in controlling what the administration suggested was the spread of misinformation including the previously mentioned rumors, which government suggested created panic buying and price increases.
While Mugabe’s administration struggles to gain control of its financial woes, many citizens of Zimbabwe are turning to alternatives.
As it becomes increasingly difficult to engage in foreign trade, many businesses are facing collapse. Because of this, a number of savvy industrialists are looking to bitcoin to engage in international trade and preserve their wealth.
Businesses and individuals scrambling for solutions has since sent the exchange rate skyrocketing in Zimbabwe. On Monday, October 16, the current rate on the country’s primary bitcoin exchange, recently renamed Golix.io is $10,000USD/1BTC. It is worth noting that the trading price on Zimbabwe’s Localbitcoins.com is about equal to the globally weighted average.
Despite the premium on the country’s only exchange, bitcoin is gaining speed in Zimbabwe. As the country’s banking system faces increased scrutiny and international transactions become more difficult, the cryptocurrency offers a new solution which could change the face of Zimbabwe’s financial system.
Bitcoin advocate and Zimbabwe based economist Philip Haslam explains: “The thing about bitcoin is once you import it into the country, you don’t have the problem of the currency eroding and perishing like you have with notes — It’s a system that allows for privatized banking.”
While everyone is talking about Japan and China, Southeast Asian governments like Thailand, Vietnam and Cambodia are getting increasingly involved with blockchain
Over the last half century, Dubai has transformed itself from a small desert city to a sprawling metropolis of 2.7 million people. The government has truly leapfrogged on the back of technology.
Indeed, Dubai has caught tech fever in a serious way. Earlier this year, the city announced that it will be flying automated taxis, and recently, Dubai even unveiled its own robocop prototype. While these pieces of our sci-fi dreams are finally becoming a reality, it is clear that, for Dubai, the city is moving according to plan.
With its tremendous growth and daunting logistical challenges, Dubai has had to be innovative in importing its water, managing healthcare, education, housing and even in building its renowned skyscrapers to prevent them from sinking into the soft sand or being damaged by harsh winds. In doing so, the emirate has become a globally competitive city, attracting an incredibly skilled foreign force from across the globe.
Both Dubai’s economic success and infrastructure tech success, however, can be traced back to its tremendous oil reserves. Containing the bulk of the world’s oil, the Arab Gulf is not an easy place to drill.
Following in Abu Dhabi’s footsteps, Dubai discovered oil in 1966 after years of exploration. The country relied on what was then advanced technology to access its reserves, and the resounding success of its oil endeavors led to tremendous wealth for the emirate. Reliance on oil, however, has led to its own challenges.
Seeing that its reserves were not finite while acknowledging the looming issue of global warming, Dubai has reduced its dependence on oil significantly. Oil accounted for 24% of the country’s GDP in 1990, and the UAE now plans to commit to 0% of its GDP in the near future. This massive transformation has been fueled by its technology initiatives.
In 1999, Dubai launched its ICT strategy which led to the development of Dubai Internet City. DIC is a free economic zone within the city which has provided tax and customs incentives to draw tech giants from across the globe, creating a hub for tech-minded startups. Dubai’s Internet City was such an economic success that the country also launched Dubai Media City and Dubai Science city, separate economic zones focusing on their namesakes.
In keeping to its commitment to technology, Sheikh Mohammed bin Rashid Al Maktoum launched the Dubai Smart City initiative in 2013. In a collaborative approach between the public and private sectors, the city has embarked on a number of projects focusing on increasing happiness, growth, and functionality.
With the city already boasting over 1000 e-services from securing licenses, paying fines, signing contacts and more, Dubai is already well on its way to realizing its Smart potential.
More recently, the emirate has rolled out smart traffic lights using the Internet of Things, increasingly widespread internet connectivity, a blockchain-based real estate sector, and more. Its most ambitious projects, however, are still in development.
In realizing its Smart City dreams, Dubai hopes create a platform which will connect its citizens to public transportation, reduce energy consumption, create online libraries and resources for students, and allow businesses to share resources. Additionally, Dubai is looking to integrate its whole government using blockchain technology to increase efficiency, transparency, and transform its economy.
“We want to make Dubai the first blockchain-powered government in the world by 2020,” Aisha Bin Bishr, director general of Smart Dubai, noted.
This blockchain strategy has led to the creation of emCash, the emirates’ first state-sponsored cryptocurrency.
Ali Ibrahim, Deputy Director of Dubai Economy announced in a press statement: “Founded on the latest block chain technology, emCash will be the digital currency in emPay wallet, launched by Emcredit to support contactless payments. emPay allows UAE residents to make varied payments, from their daily coffee and children’s school fee to utility charges and money transfers, through the near field communication (NFC) option in their phones. With emCash, emPay users will have the option of a secure digital currency, and merchants receive such payments in real time without going through intermediaries.”
EmCash will act as a seamless payment method for everyday payments, reducing settlement times, costs, and increasing flexibility and security.
With the introduction of its own encrypted digital currency using blockchain, Dubai is making tremendous progress in its Smart City initiative. While there is still 3.5 years of waiting until these goals are fully realized, Dubai’s experiments in the fintech realm will surely act as a model for other cities looking to take advantage of these emerging technologies.
Friday September 29 was a peculiar day for bitcoin enthusiasts in East Asia. While Japan’s government moved to officially recognize 11 cryptocurrency exchange operators, and while South Koreans were gearing up for a 10-day public holiday, the Seoul government pulled a move that blindsided many.