Tag: Blockchain

Nouriel Roubini’s Project Crypto Fear

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

There have been some voices in the banking community that are determined to undermine the legitimacy of cryptocurrencies; Jamie Dimon is one, but the loudest voice is that of Nouriel Roubini. This American economist, who made his name on the back of accurately predicting the global financial crisis of 2008 has been making sure that US government senators listen to his dire warnings about digital assets if they are adopted.

Roubini claims that crypto is all about greed; for him there is no case for democracy and decentralisation according to him. His actual words were: “Crypto is the mother or father of all scams and bubbles.” That is what he told the US Senate Committee on Banking, Housing and Community Affairs.

His criticism of the industry is founded in some truth. Yes, there have been scams and some crypto assets will turn out to be worthless, but not all. Still, since when has everybody unilaterally agreed about everything? There is a point to debating the case, because it enables us to come to a clearer conclusion about the potential of the new technology.

Roubini is also an economist who likes to shout pretty loudly about it all being a ‘bubble’. Of course, he wasn’t alone in going on about the Dutch tulip fever of several hundred years ago. He said the bubble would burst, and some might think it has, because in 2018 the market hasn’t lived up to the hype of 2017. But what is happening now isn’t necessarily a bubble bursting; in the future we may look back and see that it was more a case of the market finding its own level before moving forward again. And, Roubini has ignored the potential of stablecoins, which could protect us from the kind of crash we experienced in 2008.

The mainstream media has supported Nouriel Roubini’s view. Crypto sceptics are more regularly interviewed than crypto supporters, and these anti-crypto talking heads fan the flames of the anti-crypto propaganda. But they may have egg on their face when crypto ETFs make their debut.

Roubini told CNBC, which gives him a lot of air time: “Folks with zero financial literacy — individuals who could not tell the difference between stocks and bonds — went into a literal manic frenzy of Bitcoin and Crypto buying.” Well, yes, because not everyone can invest in Wall Street! But this doesn’t make it a scam, or a bubble, or something to be feared.

Give crypto, blockchain and all the attendant new tech tools, such as AI, a chance, because it might deliver something unexpectedly good.

What blockchain is and what it isn’t

On By mehranmuslimiblogIn Bitcoin, Blockchain, EthereumLeave a comment

The ‘blockchain’ word has been in popular use since 2017 and it has come to mean anything from the technology that will change to world to a digital form of snake oil. It was also going to make every investor in it very rich.

Part of the blockchain legend has been based on all the hype around cryptocurrencies, and it is fair to say that its powers have been inflated to the point where some people have come to believe it is capable of delivering things that it most likely can’t. After all, it is just a database with new features.

Jack Dossman writes at Hackernoon defines it thus: “It allows multiple parties to record and share information on a database in real time, and not need to trust each other, as they are incentivised to do the right thing through tokens/coins.”

As he says, blockchain has a certain specificity that only makes it useful in certain circumstances. It’s great for cryptocurrencies and for faster, cheaper cross-border payments services, but it isn’t a solution for absolutely everything.

It has some flaws: for example, the proof-of-work mechanism uses extraordinary amounts of electricity. But, we must also remember that we are still in the early days of blockchain and to dismiss it now would be the equivalent of saying in 1995 that the Internet would never work.

It isn’t a ponzi scheme and it isn’t a way of making a company’s share price rocket simply by adding ‘blockcian’ to a company name; especially when there is no blockchain involved. Neither is it a tool exclusively used by scammers as some would like you to think. That’s just a side effect of the technology, not its ultimate purpose. Plenty of scammers use email and social media channels, but that doesn’t stop us from using the Internet.

It won’t revolutionise you business, unless your company really needs blockchain technology to grow — so don’t add it in just for the sake of it. Plus, you’ve probably heard that it’s a ‘disruptor’; well, it probably won’t disrupt every industry sector, because it isn’t needed everywhere.

So what is blockchain?

It is technology that provides:

· A shared, add-only database

· Removes need for intermediaries

· It’s trustless

· It offers consensus and validation

This makes it perfect for cryptocurrencies and the finance world. There may be other mass-market cases for blockchain use that will come to light in the future, but just don’t believe absolutely everything you hear about what blockchain can do.

The barriers to DEX adoption

On By mehranmuslimiblogIn Bitcoin, Blockchain, EthereumLeave a comment

There is a lot of talk about the decentralised exchange (DEX) concept and the attendant benefits and problems. The primary benefit of a DEX is that it cuts out the middlemen in all kinds of transactions, which tends to lower costs and speed up processes. In addition, there is no single, central entity that can impose regulations on a DEX on a sudden whim; this might include banning cryptocurrencies for example, or the DEX itself. This is quite important when you look at countries where exchanges and currencies have been banned, or their use restricted.

Furthermore, when this type of exchange does not exist, people wishing to invest in cryptocurrencies are subject to government regulations as applied to existing financial markets – so you end up having ‘more of the same’. A decentralised exchange also offers better security. In a DEX each user is in private control of their own funds, so there is no central point for hackers to attack, as they did with Mt Gox.

And, a DEX potentially has the means to facilitate faster and cheaper transactions than a centralised exchange, since there is no third party authenticator. However, this has yet to be tested out on a big scale.

What is stopping DEX adoption?

One of the biggest downsides of DEXs as we currently know them is that they lack the functionality of centralised exchanges. At the moment they only offer the most basic functions and don’t have any of the frills, like a stop-loss mechanism. The other issue that acts against them being more widely used is that they lack they can’t convert to fiat currencies due to existing KYC and AML regulations. If they did, they would become centralised exchanges. So, anyone using a DEX can only use cryptocurrency deposits.

And there are other barriers, at least in the eyes of governments and financial regulators. One of the most difficult to overcome is taxation.  Because a DEX doesn’t have any centralised function, authorities such as taxation and regulation bodies have no power over a DEX. If there was mass adoption of DEXs and they replaced centralised exchanges, hundreds of billions of dollars would be hidden from the view of taxation and regulation bodies. We’ve already seen countries like China and India banning crypto because the governments see this as a major issue.

There are some existing exchanges that claim to be shifting towards a decentralised model, saying that the fact they are currently centralised helps to speed up their development. That idea is one that causes heated debates, because we know that to truly be decentralised these exchanges will have to radically rewrite the platform protocols. But, while there may be barriers to wider adoption of decentralised exchanges right now, this is not to say it will remain this way forever – this is a sector of the blockchain world that will continue to be of interest to everyone involved in it.

 

 

 

The governments that are backing blockchain

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

Momentum has been growing in the cryptocurrency and blockchain space. After all the arguments over it during 2017, we have arrived at a point where we can see the seeds sown have taken root and the sense of ‘when’ has superseded ’if’ in the question about mass adoption.

During 2018, there has been further debate over it, but we have seen some very positive advances in blockchain use, quite apart from what we might call ‘the usual suspects’ — Facebook and Amazon –solidifying their activities in the new technology sphere.

When these companies use blockchain, it’s a bit like hanging out a neon sign, but when governments start to talk up blockchain, it’s more like a fully illuminated Times Square. Suddenly, everyone sits up and takes notice.

So, which governments are leading the battle charge for blockchain? Well, there are five that are of particular interest, and one or two might surprise you.

United States of America

Interestingly, the USA, where so many blockchain entrepreneurs are based, has been slow out of the starting blocks in relation to blockchain and crypto. According to Cointelegraph, the U.S. Treasury Department is “currently running a pilot program to determine whether Blockchain technology can be utilized for supply chain management,” and federal agencies are exploring the potential for using blockchain technology in government departments.

China

China has blown hot and cold over blockchain. It has been decidedly frosty about ICOs and cryptocurrency, but much warmer about the adoption of blockchain technology by government departments. We are also seeing cities like Nanjing announce billion dollar blockchain funds to support the development of blockchain-based enterprises and it seems clear that China will promote the use of this technology for business purposes.

Spain

In Europe, Spain may not be a crypto hub like its neighbou Gibraltar, but it is doing some interesting things with blockchain in the governmental and banking sectors. The Spanish government is supporting projects like Navibration, a Spain-based technology company aiming to create a social network of audio-guided tours, which will help its massive tourism sector. And BBVA bank, as well as Santander, are both using blockchain technology for loans and international money transfers.

Japan

Japan is crypto friendly and has made bitcoin legal tender. Also, in an effort to reel in even more investment capital, the Tokyo Metropolitan Government Accelerator Program started hosting the “Block Chain Business Camp Tokyo; the goal being to promote blockchain projects that have the potential to improve Tokyo residents’ quality of life.

Australia

This is another country that has been in favour of blockchain technology for some time. According to Cryptovest, “Australia’s federal government has decided to invest A$2.2 million ($1.6 million) in a blockchain initiative as a way to make its key sugar production more competitive, local media reported on Tuesday. Prime Minister Malcolm Turnbull’s coalition backed Sustainable Sugar Project, which targets Queensland, the major sugar export region of Australia.”

There are a significant number of blockchain companies in Australia, and this country is one to keep an eye on, because it could become a major blockchain influencer.