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| February 23, 2019

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Report: ‘The State of Stablecoins’ Maps the Growth of Fiat-Pegged Cryptocurrency

February 22, 2019 |

Report: The State of Stablecoins Maps the Growth of Fiat-Pegged Cryptocurrency

A new report published this week shines a light on the stablecoin ecosystem. Authored by George Samman and Andrew Masanto in conjunction with Amazix, the report traces the rise of digital currencies against a backdrop of high inflation in 16 countries. The report claims these conditions will create a need for fiat-pegged digital currencies that aren’t beholden to the volatility of local currency in inflation-hit nations.

Also read: Company Evades SEC Penalty Despite Illegally Issuing Security Tokens

Making the Case for Stablecoins

“Sixteen countries today face annual inflation rates of more than 20%, whereas other economies face hyperinflation – like Venezuela, where inflation hit 80,000% in 2018,” begins the report by Samman and Masanto. It continues: “The high volatility of today’s cryptocurrencies hinders their usefulness. Average citizens need a way to protect their money, a way to send money to/receive money from their families in other countries, and merchants need a stable means of exchange in which to do business. The stablecoin market emerged to fulfill those needs.”

40 cryptocurrency and stablecoin companies were surveyed during the creation of “The State of Stablecoins 2019.” The wide-ranging report makes a number of conclusions regarding the nascent stablecoin economy:

  • Developed nations with “stable” fiat currencies will not be early adopters of stablecoins – instead developing nations with high inflation will drive adoption.
  • While most stablecoins are currently tethered to the USD, in the future it is expected that a diversified basket of tokenized assets will become the norm.
  • The next step in stablecoin evolution is for them to be integrated into decentralized banks that will serve the needs of people in emerging markets, especially authoritarian regimes .

Ethereum Dominates the Stablecoin Trade

The 82-page report reveals the extent to which the Ethereum network dominates for stablecoin issuance and trade volume. 68.4 percent of the stablecoin projects surveyed are built on Ethereum, although some expressed a desire to migrate to another blockchain or to their own native network. Ethereum-based coins include DAI and USDC. Stellar ranked a distant second in the survey, with just 7.9 percent of projects built on its chain.

Demonstrating the extent to which most stablecoins are highly centralized, more than one third of the projects surveyed viewed regulations favorably. Just 13.2 percent of projects did not view regulations favorably, insisting that self-governance and complete decentralization were more important.

Amazix, the community management firm that co-sponsored the report, quotes Reserve CEO Nevin Freeman as saying: “The stablecoin market has made significant strides in the past year, but there is still much work to be done. What’s needed is greater coordination amongst projects, and greater focus on the application of stablecoins to solving real-world problems in the places where they are needed the most.”

Report: ‘The State of Stablecoins’ Maps the Growth of Fiat-Pegged Cryptocurrency
Countries that have suffered a currency crisis at some stage

While focused on digital currencies, “The State of Stablecoins” also highlights the dangers of reliance on fiat currency, listing dozens of countries that have experienced a currency crisis since the 1980s. The report signs off with no less than 24 findings, including the assertion that “The holy grail of stablecoins is to become the decentralized central bank for the internet. However, in order for this to be achieved and for a global reserve currency to emerge the internet needs to be truly decentralized.”

Do you think citizens of inflation-hit nations might turn to stablecoins? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

The post Report: ‘The State of Stablecoins’ Maps the Growth of Fiat-Pegged Cryptocurrency appeared first on Bitcoin News.

Bitcoin News

Indian Trade Association Calls for Fast Crypto Regulation to Drive Growth

February 22, 2019 |

Indian Trade Association Nasscom Calls for Fast Crypto Regulation to Drive Growth

The Indian National Association of Software and Services Companies (Nasscom) has released a report that calls for regulatory certainty, particularly in areas such as cryptocurrency. The lack of legal clarity and the crypto banking ban have hindered investments in this sector, hurt crypto exchanges, and driven investors out of the country, according to the association.

Also read: SEC Chair Explains Key Upgrades Needed for Bitcoin ETF Approval

Regulatory Certainty Needed

At Nasscom’s flagship Technology and Leadership Forum held from Feb. 20-22 in Mumbai, Vice President Sangeeta Gupta unveiled key highlights from a report jointly developed by Nasscom and management consulting firm Avasant. It details the current state of India’s blockchain industry, including cryptocurrency.

Asserting the “Need for regulatory certainty” for the blockchain and cryptocurrency industry, the report suggests that “A proactive, consultative and defined regulatory approach to blockchain will boost the blockchain ecosystem growth in the country,” noting:

Industry participants in India are constrained due to the cautious regulatory approach taken with respect to specific elements of blockchain, such as cryptocurrency and digital assets.

Indian Trade Association Nasscom Calls for Fast Crypto Regulation to Drive Growth

Nasscom is a non-profit Information Technology industry association which describes itself as “the apex body for the 154 billion dollar IT BPM industry in India, an industry that has made a phenomenal contribution to India’s GDP, exports, employment, infrastructure and global visibility.” Among Nasscom’s initiatives listed on its website is “Liaisons with government and industry to influence a favourable policy framework.”

The association’s report emphasizes:

India needs to act fast and work consultatively with the key stakeholders in the crypto/blockchain community and provide regulatory certainty and clarity around blockchain technology (specifically around cryptocurrencies and digital tokens).

VC Investments Hindered

Despite VC investments pouring into the blockchain ecosystem globally, India has seen less than 0.2 percent of global investments, Nasscom detailed.

Indian Trade Association Nasscom Calls for Fast Crypto Regulation to Drive Growth

“Investment through VC firms or ICOs in the blockchain ecosystem in India has been considerably low (totaling to USD 8.5M) due to the uncertain policy and regulatory environment in the country,” the report claims, elaborating:

Some of the initial, sizeable investments in India were on crypto exchanges such as Unocoin and Zebpay, which have now disabled trading through fiat currency due to an RBI directive … A restrictive regulatory environment in India is limiting the investment opportunities from both domestic and global investors into Indian start-ups.

In addition, the report notes that the lack of regulatory certainly has driven India-based investors and startups to establish operations overseas in countries such as Malta, Singapore, the U.K., and Switzerland “to limit their exposure to regulatory risk associated with the use of digital tokens or assets in India.”

Lack of Regulation Hurt Crypto Businesses

While the Indian government has a favorable view of blockchain technology and is even considering introducing a national digital currency, the report describes that it has been “hawkish on cryptocurrencies.”

Indian Trade Association Nasscom Calls for Fast Crypto Regulation to Drive Growth

Citing that there is “No explicit legal framework around ICOs or digital tokens/crypto-assets,” coupled with the government not considering cryptocurrency legal tender and the banking ban by the central bank, the Nasscom report concludes:

While there is no formal regulatory framework governing crypto exchanges, preventing access to formal banking channels has led to the shutdown of prominent crypto exchanges in India.

What do you think of Nasscom calling for fast crypto regulation in India? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

The post Indian Trade Association Calls for Fast Crypto Regulation to Drive Growth appeared first on Bitcoin News.

Bitcoin News

Uber Sales Growth Slows Further as IPO Nears

February 16, 2019 |

Uber Technologies, as it steers toward a planned IPO later this year, reported its slowest sales growth since the company began disclosing detailed financials two years ago.
WSJ.com: US Business

Uber keeps burning through money and its sales growth slows as it prepares for IPO

February 15, 2019 |

Uber Technologies Inc., the ride-hailing giant that’s preparing for an initial public offering this year, released its fourth-quarter financial results Friday, showing slowing revenue growth and persistent losses.

For full-year 2018, those losses were down 15% compared with the year before, but…


L.A. Times – Business

Trade Friction Stymies Growth in Germany and Japan

February 15, 2019 |

Japan and Germany avoided slipping into recession as 2018 drew to a close, but the world’s third- and fourth-largest economies seem set for a year of weak growth amid uncertainty about global trade.
WSJ.com: What’s News Europe

High Cost Slows Down Bitcoin ATM Growth in Africa

February 15, 2019 |

High Cost, Lack of Human Feel Slows Down Bitcoin ATM Growth in Africa

There are more than 4,000 bitcoin automated teller machines (ATMs) in the world, but only just about 10 (or 0.2 percent) of these are in Africa. In a continent widely touted as the next big growth region for cryptocurrency, could it be that the story of Africa’s growth isn’t as real as many “Africa rising” headlines have suggested?

Also read: Nasdaq Stock Exchange to Start Offering BTC and ETH Indices

Bitcoin ATM Penetration and Use Weak in Africa

It is little surprise that the bulk of bitcoin teller machines in Africa are found in South Africa, the continent’s most sophisticated economy. About five fiat-to-crypto ATMs are dotted around in the cities of Capetown, Johannesburg, Nelspruit and Pretoria. Altogether, the machines can dispense up to one million rand (about $ 71,000) combined each day, even though identity verification is required for crypto purchases exceeding 5,000 rand ($ 350).

High Cost Slows Down Bitcoin ATM Growth in Africa

In Uganda, the Kampala Post Office hosts one machine, the country’s only, which is operated by local blockchain company Kipya Bit2big. Another bitcoin ATM can be found in Nairobi, Kenya at the Kenrail Towers, and surprisingly, in impoverished Djibouti at Appart Hôtel Moulk in the capital city.

Operators of the Djibouti machine, Group DOS, are reportedly planning to introduce two more ATMs in the tiny east African country this year, one at an airport and another at a shopping mall. A two-way bitcoin ATM in Zimbabwe owned by Golix has since become a white elephant after the government banned cryptocurrencies through the back door last April.

In total, there is about nine bitcoin teller machines throughout Africa, a continent of 1.2 billion people from 54 countries. Even more surprising though is the absence of bitcoin ATMs in Nigeria, the continent’s biggest economy by GDP and Africa’s largest cryptocurrency market.

Often, the general assumption is that bitcoin ATMs, which are sometimes called BATMs, will help drive crypto adoption. However, given the slow rate of penetration of such equipment on the continent, perhaps the question to ask is whether Africans use the existing machines at all? There is no straight answer to the question, but the general trend indicates some remote use, hindered largely by legacy trust issues with the old, rigged financial order. And how the mobile money revolution has reduced even the most mundane traditional banking services to something of an amusement.

‘Africans Prefer Face-To-Face Interactions’

High Cost Slows Down Bitcoin ATM Growth in Africa

Suleiman Murunga, founder and chief executive officer of Coinpesa, one of Uganda’s largest cryptocurrency exchanges, illustrated both the cultural and economic barriers to progress. “Africans prefer face-to-face interactions and that is why mobile money agents are more popular than bank ATMs,” Murunga told news.Bitcoin.com, in an interview.

“Peer-to-peer trades offer more than just access to BTC, they tap into our sense of community and provide a source of information – things that an ATM can’t provide. In addition, bitcoin ATMs are expensive and the volumes currently do not justify the cost,” he added.

Each BATM costs roughly $ 12,000. Not many exchange operators or businesses in Africa are willing to make such an investment. That’s also partly because the number of people interested in BTC is low, and the learning curve that one would have to go through is long and expensive, according to William Chui, a former executive at Zimbabwe’s struggling digital asset exchange Golix. He said:

People in Africa, who’ve become accustomed to using mobile money and the convenience that it brings, see an ATM in a physical location as a nuisance, as it overrides the convenience that mobile money brings to the table.

Investment Slows Down as Crypto Bear Market Bites

For African economies looking for something to cheer them up, the current crypto bear market will have the opposite effect. Companies and investors alike are cutting back on their exposure to cryptocurrencies. There’s already the uncertainty of regulation in most African countries that’s got everyone on tenterhooks.

High Cost Slows Down Bitcoin ATM Growth in Africa

In Nairobi, our contact indicated that a few people still patronize the Kenrail Towers BATM, which uses rates from three different crypto exchange websites. But high transaction fees, sometimes of as high as 8 to 14 percent in parts of Africa, have also been a major drawback to the growth of the bitcoin teller machine on the continent.

Even then, Chui remains cautiously optimistic. “The bitcoin ATM makes it easier for people to access and builds trust somewhat, with the buyer knowing a physical location where they can get or sell their BTC. On its own, however, the ATM won’t educate the market, because they’re limited in number and would need to be in very strategic points in order to be noticed.”

In the same way that consumers insert a card into a traditional ATM, the bitcoin cash machine allows users to insert fiat money, which is converted to the volume of BTC that they want to buy. The machine then sends the bitcoin straight to the customer’s wallet. The bitcoin ATM is currently operational in about 80 countries all around the world. With more than 2,600 machines, the U.S. hosts the greatest number of such machines followed by Canada, Austria and the U.K.

What do you think about bitcoin ATMs’ use in Africa? Let us know in the comments section below.


Images courtesy of Shutterstock and Golix.


Express yourself freely at Bitcoin.com’s user forums. We don’t censor on political grounds. Check forum.Bitcoin.com

The post High Cost Slows Down Bitcoin ATM Growth in Africa appeared first on Bitcoin News.

Bitcoin News

U.K. Posts Slowest Growth in Six Years Amid Brexit Worries

February 13, 2019 |

The U.K. economy experienced its weakest growth since 2012 last year as businesses slashed investment in the face of growing uncertainty about the way in which the country will leave the European Union.
WSJ.com: What’s News Europe

SEC Commissioner Suggests Excessive Crypto Regulation Hurts Growth

February 12, 2019 |

SEC Commissioner Suggests Excessive Crypto Regulation Hurts Growth

A commissioner at the US Securities and Exchange Commission (SEC) has said that the official regulation of cryptocurrencies could actually stunt the technology’s development. Hester Peirce’s comments come at a time when the SEC has been accused of acting contrarily and gives hope to those wanting governments to take a step back to prevent over-regulation

Also read: Analysis: Understanding the SEC’s Stance on Crypto 

Allowing the Technology to Come Into Its Own

U.S. Securities and Exchange Commissioner Hester Peirce was speaking at the University of Missouri School of Law on Feb. 8 when she hinted that government regulation could actually cause the crypto industry difficulties. The lawyer, who has been nicknamed the “Crypto Mom” for her generally positive comments towards cryptocurrencies, said that it may be a better idea for regulators to step back and allow blockchain projects to mature, and that hastily drawn up regulations could harm the industry:

We might be able to draw clearer lines once we see more blockchain projects mature. Delay in drawing clear lines may actually allow more freedom for the technology to come into its own.

Peirce said that she would keep an eye on ensuring no laws harm crypto projects, citing stablecoin Basis, which is shutting down and returning its $ 133 million in capital to investors due to the difficulty of complying with securities regulations. “I am not going to comment on what I think about the merits of any particular project or how the securities laws apply to it, but my antennae will go up when apparently legitimate projects cannot proceed because our securities laws make them unworkable,” she said.
SEC Commissioner Suggests Excessive Crypto Regulation Hurts Growth
Peirce further added that the SEC could at times be overly negative towards cryptocurrencies, and that this is something that needs to change: “We rightfully fault investors for jumping blindly at anything labeled crypto, but at times we seem to be equally impulsive in running away from anything labeled crypto. We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences.”

Diverse Perspectives Needed

Peirce’s comments come at a time when the SEC’s views on cryptocurrencies haven’t been wholly clear. Last year the SEC rightly took enforcement action against initial coin offerings and other crypto companies perpetrating fraud. But, as Peirce noted, this doesn’t mean regulators and government agencies should be automatically skeptical about everything to emanate from the cryptocurrency sector.

As Angela Walch, a professor of law at St. Mary’s University School of Law and a research fellow at the Centre for Blockchain Technologies at University College London previously said, it is important for regulators to have a “diverse perspective,” as all too often they can be overly focused on protecting the financial system and indifferent to innovation and the benefits cryptocurrencies could bring.

What do you think about Hester Peirce’s comments and the SEC’s stance on crypto? Let us know in the comments section below.


Image credits: Shutterstock. 


Express yourself freely at Bitcoin.com’s user forums. We don’t censor on political grounds. Check forum.Bitcoin.com

The post SEC Commissioner Suggests Excessive Crypto Regulation Hurts Growth appeared first on Bitcoin News.

Bitcoin News

Twitter’s Push for Healthier Discourse Lifts Revenue, Hurts User Growth

February 9, 2019 |

Twitter reported record quarterly revenue and its first full year of profitability, signs that its efforts to promote healthy interactions appear to be working.
WSJ.com: US Business

Chipotle Profit Rises as Changes, Investments Drive Growth

February 8, 2019 |

Chipotle’s menu changes and restaurant investments helped drive better-than-expected sales and margins in the latest period, showing the company is continuing to move past food-safety scares.
WSJ.com: US Business