Tag: Fintech

Dutch court says BTC does have ‘transferable value”

On By mehranmuslimiblogIn Bitcoin, Blockchain, Fintech, GovernmentsLeave a comment

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A Dutch court has made a very important judgement that could positively affect all Bitcoin (BTC) holders. The court ruling came in respect of a plaintiff who was owed 0.591 BTC according to court document, which was released on 20th March.

The plaintiff, Mr. J.W. De Vries lodged the complaint against Koinz Trading BV back in early February. Koinz is not a public company and had already been ordered by a court in the Middle Netherlands jurisdiction to pay Mr de Vries proceeds from mining, the 0.591 BTC, or make a penalty payment of up to €10,000.

It seems that Koinz failed to comply with the court’s demands to pay de Vries in BTC, and as a result were told, “pay up or be declared insolvent.”

What is interesting for those of us involved in the world of cryptocurrency, is the Dutch court’s statement with regard to Bitcoin having “all the characteristics of a property right”, and that therefore any claim to transfer of BTC under property rights is legitimate. The court text reads as follows

“Bitcoin exists, according to the court, from a unique, digitally encrypted series of numbers and letters stored on the hard drive of the right-holder’s computer. Bitcoin is ‘delivered’ by sending bitcoins from one wallet to another wallet. Bitcoins are stand-alone value files, which are delivered directly to the payee by the payer in the event of a payment. It follows that a Bitcoin represents a value and is transferable. In the court’s view, it thus shows characteristics of a property right. A claim for payment in Bitcoin is therefore to be regarded as a claim that qualifies for verification.”

The court also found that there was indisputably a contract between Koinz and Mr de Vries and that because the contract detail was set in Bitcoin, Mr de Vries should be paid in Bitcoin. As Cointelegraph states, “The court considers the legal relationship as a civil obligation to pay.”

The Dutch court’s decision is a step towards recognising Bitcoin as a legitimate currency, however not everyone is going in the same direction, The G20 Financial Stability Board (FSB) also issued a report on 20th March suggesting it is sticking with defining cryptocurrency as ‘assets’ and not a currency as the Dutch court ruling suggests. G20 claims that crypto “lacks the traits of sovereign currencies.” Mark Carnet, Governor of the Bank of England seems to agree with the FSB, because he made a similar statement last month, saying that in his opinion, “cryptocurrency has thus far failed to display the traditional characteristics of money.” He also said, “nobody uses it as a medium of exchange.” That’s not quite true Mr Carney, as the Dutch court judgment and others using BTC to pay for goods and services indicates.

A ‘ Crypto Bubble’ with benefits?

On By mehranmuslimiblogIn Bitcoin, Blockchain, Ethereum, FintechLeave a comment

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Michael Casey, chairman of coindesk’s advisory board and a senior advisor at MIT’s Digital Currency Initiative has a different view of the much-discussed ‘Bitcoin Bubble’. While most commentators present a ‘bubble’ as a harbinger of doom, he sees it as a positive situation.

He likens it to the late 1990s dot-com boom, and while he acknowledges that there are some who will disagree with him, he has suggested that what he refers to as the “Pets.com phenomenon” was a constructive event and that we should approach the ‘crypto bubble’ from the same perspective.

How does he reconcile the ‘boom and bust’ of the dot-com era with a positive outlook? Read on and find out.

Yes, he admits that many crypto coins will fail and people will lose money. But, he applies a theory from Carlota Perez, a Venezuelan theorist who wrote about the interplay between technology and capital markets in an influential book called “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages.”

She claims that bubbles and their collapse are “an integral, in fact necessary, part of the economic dynamics through which transformational technologies take root in society.” Speculation, she says, is unavoidable element during time of technological transformation. Actually, the same could be said of gold, spices and tulips. As Casey puts it, “Whenever a new technology contains a wide-enough accepted promise that it can redefine core aspects of how our economy functions, people start throwing money at it.”

Why do we behave like this? According to the theory it’s because nobody really understands how things will turn out, and who the winners and losers will be. We just know that something big and important is happening, so we all get involved in wild and unstructured speculative behaviour.

Mike Casey believes we should see the ‘crypto bubble’ as “an affirmation that the technology we’re all so excited about it does indeed have huge potential even if it is still too nascent for major, disruptive deployment in the mainstream economy.”

How this will play out, nobody yet knows, but if Casey is right, we can be fairly sure that we’re on the road to building a transformational open-access platform that represents a collective evolutionary step – even if the bubble bursts along the way.

 

 

 

 

Gibraltar GSX is excited about Crypto

On By mehranmuslimiblogIn Blockchain, FintechLeave a comment

One of the prominent guests at BlockShow Asia 2017 was Nick Cowan, the managing director and founder of GSX, Gibraltar’s first regulated stock exchange. Cowan is an fervent supporter of the Fintech market so I was interested to discover what he said in the numerous interviews he gave following the show about his personal position and what this might mean for a financial centre like Gibraltar.

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It is important to note that Cowan loves networking the crypto communities and admires their dynamism. As far as he can see there are two very important dynamics operating in the crypto market at the moment: the first is distributed ledger usage and the ways in which blockchain platforms can transform a range of businesses and second, the trade in cryptocurrencies. He told Cointelegraph that during one trip to one Asian country, he met about 500 people with an average age of 60 who were all cryptocurrency traders. Considering the perception is that the cryptocurrency market targets those in the 25-45 age range, it would seem that the traders are somewhat older, at least in Asia.

However, Cowan also pointed out that there are significant differences between jurisdictions. For example, in the next country he visited (he didn’t say which one) the focus was more on crypto fund management and institutional engagement with this emerging market. He also answered some questions about what are the drivers behind the interest in crypto. He said: “A lot of it is driven by regulation, in terms of the acceptance of the technology and cryptocurrencies in general.” But what impressed him most was the level of knowledge in each country he has visited.

As he said, and it is evident to anyone who is curious about this market, the interest in everything crypto is snowballing and the perception that it is going to go mainstream is growing. Cowan said: “You are seeing more and more companies, Fintechs that are looking to start their business or grow their business tapping into token sale space as a way of raising money.” He described the sector as being “on fire.”

Gibraltar GSX got involved in crypto about two years ago and the fact that it is a small jurisdiction enables it to be a bit more flexible than other stock exchanges. It got involved by launching a Bitcoin asset-backed security approved by the European Union. As Cowan, explained, when they started on the project Bitcoin was $300, but they knew little about it and the whole team had to dive in and find out everything possible about this whole new world.

The Gibraltar government is also interested in blockchain and has been talking to various communities globally about whether or not there should regulations for operators of blockchain-based financial services. As a result, Gibraltar is introducing regulations in January 2018. Cowan sees this as an opportunity and GSX is applying for a license so that it is in a position to explore the ICO token space to its fullest and use all the knowledge its team has acquired. In fact, watch this space because GSX is launching its own security token next year on its main exchange.

 

 

 

 

 

Cleaning up ICOs

On By mehranmuslimiblogIn Blockchain, Fintech, ICOLeave a comment

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This year has been the year of the ICO and whilst these have brought a breath of fresh air into the marketplace of funding startups and other ventures, the speed at which ICOs have gathered momentum has raised some eyebrows and some questions about just how ‘clean’ this new Fintech mechanism is.

There are two sides to the ICO debate: one the one hand it is positive for the innovators who can raise funds through fairly simple token sales and reach a global market. The popularity is clear for all to see, because the funds raised by ICOs grew from $200 million in 2016 to $2 billion in 2017.

On the negative side, there are those who are concerned about the lack of regulatory controls over these ICOs. That is one reason the mainstream financial authorities are reluctant to accept them as a legitimate method of capitalisation. Add some shady ICOs into the mix and their concerns are understandable.

There are some other issues around ICOs that need to be resolved as well and these involve the technology, which is still in its infancy. Some argue that there are insufficient reporting standards, no exchange regulation and little or no regulation in a number of countries. The result is a clash of standards when those entities using conventional financial systems start adopting the blockchain.

Resolving ICO problems

How can these issues be resolved? There are several ways to solve the transparency problem. One is to define standards of reporting for companies using ICOs and it easy for participants to view the internal workings of the ICO via the exchange interface. This will provide investors with more detailed information about the company behind the ICO.

Second, more due diligence by investors is needed. There needs to be a proper assessment of the proposed business models to ensure they are viable. Investors should also be provided with more information about the company’s legal status.

Greater understanding of the financial markets will also help. It is widely agreed that most financial instruments will migrate to the blockchain in the not too distant future and preference should be given to projects that are using time-tested instruments and are understood by conventional investors, over experimental utility token economy models.

A clean up of the ICO marketplace is needed, because they are not going to disappear. Governments may try to ban or restrict them, but decentralisation is the way forward and rather than ignore ICOs and pretend they are some kind of digital bubble, what is required is a “clean investment system.”

However, this cannot come from central authorities, because that would betray the whole basis of the blockchain, which is decentralisation. What is required is that the companies and investors involved in the ICO market “embrace systems that will promote credibility within the ecosystem,” as CoinTelegraph suggests. Transparency and openness from the company side, and more in-depth research by investors will greatly contribute to a more legitimate and trustworthy ICO marketplace.