Source: Scitechdaily

Should it happen, the bond has an automatic pay out once the plume of volcanic ashes reaches a certain height. Cedric Edmonds, CEO of Replexus, announced that, “the volcano CAT bond will be placed on an insurance-linked securities blockchain, making the transaction particularly cost-effective for the aid agency and enabling secondary market trading among ILS investors. Additional benefits of the blockchain structure include allowing investors to hold their own securities on their own computer server rather than using a custody bank, and therefore saving five to 10 basis points per annum on the value of the securities they hold.”

Meanwhile, worldwide leader in data protection, Thales, has identified six ways that Blockchain technology can potentially be used in the insurance sector:

• by eliminating the need for centralised control and the additional costs

• to allow for trust to be distributed between blockchain members

• to allow for transactions to be digitally signed using an asset owner public/private key pair

• once recorded, data in a block cannot be altered retroactively

• for providing open, distributed ledgers to record transactions between two parties efficiently, in a verifiable and permanent way

• transactions do not have to only be data - they can also be code or smart contracts

Indeed, according to Munichre, it “envisions a future state where new life insurance applications are submitted using blockchain…Another potential use of blockchain would be the transmission of any type of digital evidence for underwriting, including the use of electronic health records (EHR). When digital evidence is easier to incorporate into underwriting, we can expect future changes into other areas of pricing and product development. The combination of the Internet of Things (IoT) and Artificial Intelligence (AI) will lead to automation of insurance processes that will make our industry look very different in the near future”.

How Blockchain technology can be used in the insurance sector

Source: Digital Insurer

It is not simply the use of Blockchain technology to help create back office efficiencies or, in some cases, new types of products, as there are a growing number of brokers such as Paragon Brokers in London and underwriters such as Peninsula Underwriters (based in Gibraltar) that offer specialist insurance cover. Furthermore, there is an increasing demand for insurance from companies which are offering Blockchain-powered solutions and/or digital assets and are searching for professional indemnity or director and offices policies.

• Business Understanding 

• Data Understanding 

• Data Preparation

• Modelling

• Evaluation

• Deployment

Data mining life cycle

Source: IBM

In recent times, analysis of data and use of AI has been used to help diagnose cases of COVID-19 when using Computed Tomography (CT) scans, reducing the time from about 5 minutes to 20 seconds. AI is also being employed to speed up the development of new drugs with one the current pandemic vaccines reaching human clinical trials already in an incredibly short time, as opposed to the usual process which typically takes years.  Likewise, the use of AI has shown to accurately predict which of those patients newly diagnosed with COVID-19 would progress further to develop severe respiratory disease and equally has shown that for some racial minorities certain vaccines are proving to be less effective. Interestingly, a New York University (NYU) study combined Chinese and American research revealed symptoms usually associated with COVID-19, such as certain patterns in lung images, fever and strong immune responses, were not on their own useful in predicting which patients with initial mild symptoms would actually go on to develop severe lung disease.

As a digital record, Blockchain technology is being widely used to fight COVID-19 by creating secure, trusted, and immutable databases, all the while detaching single point of failure in the network by offering greater transparency. For example, as reported by Reuters, UK hospitals have used Blockchain-powered platforms to help track COVID-19 vaccines whereby reducing mistakes that could have occurred had traditional manual systems been used. Blockchain technology is also seen a way to improve global supply chains; we have all witnessed how COVID-19 demonstrated the lack of resilience in the supply of PPE equipment and drugs for the healthcare sector, as was cited by the British Medical Journal. Aligned with this, the World Economic Forum reported: “COVID-19 has highlighted critical gaps and weaknesses in global supply chains. Blockchain technology may offer opportunities to increase trust & transparency - but it's not a silver bullet. Rather, it is part of a broader digitization strategy that must be evaluated and deployed responsibly and holistically”. Another example of the use of Blockchain technology has been in fight against fake COVID-19 vaccinations in Asia. In China, Hyperchain uses Blockchain technology to track donation as well as how the donations are used helping bring greater transparency process.  

According to a report from PwC, about 84% of institutions it surveyed are actively involved in using and researching the use of Blockchain technology as, after all, governments and WHO have encouraged people to use digital payment means, including cryptocurrencies, instead of cash to reduce the spread of COVID-19. This may help explain why, according to data by Statista, the number of digital/crypto wallets has risen from a handful in November 2019, before COVID-19, to 68.24 million on February 22, 2021.

As we have said before, Blockchain technology can be seen as ‘skeleton’ off which other data-hungry technology can hang. Increasingly, we are seeing Blockchain-powered platforms being integrated with AI, Big Data, IoT and Machine Learning whereby driving greater efficiencies and accessibility to data in the healthcare market as well as other industries.

*Source: SeekingAlpha.com

In March 2000, PayPal, or Coinfinity as it was then known, merged with X.com (an Elon Musk business) with the combined group being renamed as PayPal. With over 1million customers and being focused on making digital payments easier, PayPal was then bought by eBay for $1.5billion in October 2002. By February 2006, PayPal had over 100million users and in July 2014 the veteran corporate provocateur and financier, Carl Ichan, along with other large shareholders forced eBay to ‘spin off’ PayPal separately. PayPal’s first day’s trading, after its demerger from eBay, resulted in a rise of 50%, to be subsequently valued at $48billion.

Fast forward to 2019, when PayPal made its largest acquisition  and acquired Honey Science Inc (a Los Angeles-based firm) for $4 billion. Honey is a consumer shopping app which offers discount coupons and is free for users, whereas retailers are required to pay a fee. This enables PayPal to offer new services to its merchants as an excuse for them to use PayPal over other payment platforms. Additionally, PayPal has offered the ability to ‘tap into’ the fast growing rewards industry, which is expected to more than double in size and be worth $15.5 globally by 2025. Loyalty schemes are expected to be significantly disrupted by Blockchain-powered platforms since they provide the potential to be able to integrate loyalty schemes whereby making the rewards for users more tangible. How many of you reading this article have little or no idea as to the rewards you have with the various loyalty schemes with which you have membership? 

earnt $5million in a year). Instagram, too, offers riches to those who have millions of followers; the American actor, Dwayne Johnson, is reported to be being paid over $1million per post. However, to attract sufficient followers you need to post content, and there lies the problem. How do you protect your IP i.e., your pictures, videos, songs, etc from being copied and used by others? There have been a number of cases where a brand has actually used images from someone’s social media post without paying for the images. But unless you have registered your IP, how do you protect it?

The challenge of IP and being able to prove provenance is likely to become an increasing challenge for the new asset class which is grabbing headlines and attention - Non-Fungible Tokens (NFTs). Christies auction house in London recently sold an NFT of a picture from an artist, Mike Winkelman (otherwise known as Beeple), whose digital art ‘The first 5,000 Days’ had bidding begin at $1,000, eventually selling for $69 million and which The New York Times reported as “a JPG file was bought using a cryptocurrency”. In doing so it made Beeple the third most expensive living artist to sell work at an auction! As you can see from this YouTube clip, Beeple was completely amazed, too!  

In simple terms, an NFT can be described as a digital file typically stored on a Blockchain, being created by uploading the file. This could be digital art, such as Beeple’s, or music such as the Kings of Leon have recently done generating $2million from their NFT sale of an album, or even a video clip such as the basketball player LeBron NFT which sold for $200,000 on an NFT auction site. NFT auction sites such as Foundation, Nifty Gateway and SuperRare are enabling artists and creators of IP to ‘cut out’ the middlemen, agents, brokers, managers etc and simply upload their work (all at the click of a mouse) and watch the bidding commence. 

So, what is the solution? How do wannabe NFT sellers protect their creations in order to prove they wrote the script, the song, took the photo/video etc? Well, look to Andy Rosen, a Brit living in Los Angeles who has been dealing with artists since the late 1970’s when he was a ‘snapper’(photographer) for iconic bands such as The Jam, the Sex Pistols, Boy George, Bruce Springsteen. Rosen has built FileProtected, a Blockchain-powered platform to enable people to register their own creative works and so generate an immutable record of their IP. Furthermore, Rosen has had considerable personal experience seeing artists losing control over their IP which is what inspired him to build FileProtected. Whilst it was not developed specifically for NFTs, FileProtected could well prove to be a great tool for this rapidly growing market.

Certainly NFTs are attracting attention worldwide as Martin Bartlam, who is International Group Head of Finance & Projects and FinTech Global Co-chair at the global lawyers DLA Piper has stated: “NFTs are becoming increasingly popular as a means of digitally recognising an identifiable interest in a specific asset or even just a specific part of an asset. This enables value to be realised by turning ownership interests in traditional assets into a digital tradable form. Ownership is digitised and parcelled into unique electronic units that can be transferred with ease across countries and networks. Ownership might relate to a photograph, a song or even a memory as well as property or other traditional assets. This is our modern version of opening up new trading routes. Whilst care needs to be taken, as with any purchase, it certainly opens a digital doorway to a new and potentially exciting global marketplace”. If this proves to be the case, it will be more evidence of how Blockchain technology is creating a new asset class and potentially driving a more decentralised way of trading assets.

Furthermore, NFTs (which, in effect, are digital collectables) could prove to be increasingly popular for high-net-worth investors as, according to the 2021 wealth report from Knight Frank, these wealthy potential investors are looking for new opportunities.

The opportunities most likely to excite wealthy investors in 2021

Source: Knight Frank 2021 Wealth report

This new asset class will no doubt bring its share of challenges in terms of the legal issues with regards to ownership and, indeed, the ability to sell the IP, as well to prove that transfer and actual ownership has occurred on the sale of an NFT. Hence, could NTFs prove to be a pot of gold and source of bountiful litigation fees for lawyers as they are asked to challenge or defend buyers and sellers over an NFT’s authenticity, provenance and value etc? Will Blockchain-powered platforms and the ledgers they create fall short when faced with the rigours of a thorough forensic investigation and legal debate in court? For this we will have to wait and see, but for now maybe you need to spark up your creative juices and see what IP you might have in a dusty box under your bed or hidden in your attic and, who knows, you may well have the potential to create and sell your own NTF and be tomorrow’s headline at a Christies or Sotheby auction?

Undoubtedly, public authorities all over the world are vast employees of people. In the UK there are 5.5 million people (16.7% of the work force), in USA 24million (15% of the work force) and in China, back in 1978, it was an incredible 100% of the labour force who were employed by government-run organisations!

Number of people working in Chinese state-owned enterprises

Source: Statista

In view of this, it ought to be of no surprise that there are a number of Blockchain-based apps that are being used to help improve the efficiency in the manner in which human resource departments are run. Listed below is a selection from different jurisdictions around the world:

• the BeSure Network - when working in dangerous/hazardous environments, information can be securely accessed by managers, employees and regulatory bodies 

• Blockeducate - stores and shares educational qualifications

• eXo Platform - used by the University of California and HSBC for staff rewards and recognition, since “47% of staff do not feel recognized for what they do 

• Job.com - uses AI and Blockchain to match job seekers with the right company. Rather than the standard 20% commission, employers pay only 7% of a candidate’s annual salary when they sign up on Job.com. Additionally, 5% of this is immediately sent to the candidate as a signing reward

• Oracle - helps new staff induction processes

• Peoplewave - assists candidate sourcing, selection and screening

• TiiQu - offers a Blockchain-powered platform to create a digital passport to be used as proof of a candidate’s professional trustworthiness, identity and qualifications

• Vault Platform - used to make harassment reporting more transparent:

• Zinc - allows users to upload their skills and experience data, empowering them to decide with whom they share this data, and when. Ensures CVs are always up to date and accessible anywhere in real-time. 

Furthermore, Deloitte believes that Blockchain technology is able to support local authorities and governments in a variety of ways in order to make them more efficient as well as improve the effectiveness of the services which they deliver. For example:

• as an official registry for government-owned assets or intellectual property owned by businesses and individuals i.e., offices, homes, vehicles, patents

• to help with the way voting and elections are conducted

• to streamline tendering of goods and services

• to reduce fraud and error by bringing greater transparency and automation of current labour-intensive processes

Unsurprisingly, there are many challenges government bodies face as often they are run in a very bureaucratic fashion and lack the funds to implement change. Often their procurement processes make it extremely difficult for new tech disruptors to even tender. Another factor holding back innovation is education, i.e., those working in government-run organisations often lack the time to undertake the research required to find the so-needed solutions due to cutbacks. In the UK, organisations such as CPRAS are actively engaged with government bodies to help drive through change and bring about more efficient practices. When recently asked, Richard Hallewell at CPRAS responded: “Procurement and education challenges go hand-in-hand and, together, are applying a handbrake to the adoption of tech solutions in the public sector. We need to bridge this gap urgently or we will be condemning our public sector to a default position of high-cost / low-impact cycles. The alternative though is transformational – imagine if we can arm all our public services with the most efficient and impactful solutions available. Together with the CIPFA technology Procurement Association we are building the knowledge base and procurement pathways to release the hand-brake to create a “new norm” where Councils and the wider public sector can benefit from the transformative solutions that are being developed all around the world.”

As reported by Centre Blockchain de Catalunya , the 17th of March 2021 is the day the European Commission has reported it will be issuing an update on the ‘Digital Green Pass’. This is a certificate to prove if one has recently been tested for COVID-19 and whether the holder of the Green Pass has been vaccinated. According to Euronews, in an announcement from Ursula von der Leyen, President of the European Commission, she stated, "The Digital Green Pass should facilitate Europeans’ lives," adding, "The aim is to gradually enable them to move safely in the European Union or abroad - for work or tourism." However, it is believed that it will take another three months of technical work, so the Digital Green Pass is unlikely to be available until July 2021.

Source: Twitter

Nevertheless, this has not prevented the rollout of the AOKpass, a Blockchain- powered solution which has been developed by the three organisation International Chamber of Commerce, Societe Generale of Surveillance and SOS International. The AOKpass is already being used in the Catalan city of Girona and so, by virtue, is helping the city to regain a degree of normality in the aftermath of the ravages of COVID-19. AOKpass is not the only Blockchain-powered app to prove if you have been vaccinated since the World Health Organisation (WHO) has been piloting a program with VaccineGuard, which has been developed by an Estonian-based company called Guardtime. As ever, Blockchain technology is not a silver bullet and there are other possible solutions, as Dr Stephen Castell, who recently wrote in Digital Bytes, pointed out: “There is an App called Zykme that transfers personal data P2P, securely and privately, using a unique patentable one-time transfer code protocol, i.e. simply from the data subject to another person with whom, and only with whom, that data subject wishes to share his/her personal data; and without that data being held centrally/remotely (so definitely NO blockchain!). Thus personal, Covid Vaccination Evidence Data is stored only in the Zykme.net App, on the personal smartphone etc device, totally under that person's individual control. There is no reason why Zykme could not include personal Authorized Covid Vaccination Evidence Data right now”.

While many countries are yet to fully support some form of vaccination passport it is difficult to see how airlines will even allow passengers on a plane without doing all they can to protect the safety of fellow passengers. Even in the US, the new Biden administration talks of “assessing the feasibility” of linking COVID-19 vaccinations to international vaccination certificates and producing electronic versions of them (page 181 of its 200-page national pandemic strategy with seven goals aimed for ending the COVID-19 pandemic). At one level it is difficult to see what the real objection is - after all, for many years travel has been prohibited to much of Africa and South America without certificated proof of having been vaccinated against yellow fever! On this subject too, WHO is also in discussions with Estonia to develop a ‘smart yellow card’ - a digital version of an existing analogue paper-based system to prove yellow fever vaccination.

There must surely be a balance between having to prove if one has been vaccinated (whereby allowing people to travel, gather in crowds, go to the theatres, cinemas, concerts etc) and restricting personal freedom. Ana Beduschi, an associate professor of law at the University of Exeter insists that “the introduction of vaccine passports poses essential questions for the protection of data privacy and human rights. It is not sufficient to develop technical solutions for the verification of people’s health status,” adding, “the risks of deploying such technologies must be anticipated and mitigated as much as possible”.

We had to wait until the Medici family from Florence opened its first bank in 1397 to find a way in which to create money and interestingly, in the same way that Blockchain technology offers greater transparency and trust, the Medicis traded on the fact that people trusted them together with their banks. Arguably, the Medici family pioneered many of the financial concepts that we still use today in our banks - double entry bookkeeping (e.g., assets = liabilities + equity, and also ‘letters of credit’) as way to get around the religiously frowned-upon act of usury (lending of money) which existed at the time.

The Medici family

Source: News of the new age.com

In essence, rather than merchants travelling around with sacks of cash they could receive 40 pence for a Florin in London, 90 days after a merchant had deposited money in Florence. The London bank then offered 36 pence for a Florin, again payable in 90 days for someone who wished to send goods to Florence thus generating a 4 Florin profit for the Medicis, i.e. 22% p.a. However, although it was essential that the transaction/letter of credit lasted for 90 days, before long the Medici family had secured branches in Milan, Venice, Rome, London, Geneva, Lyon, Avignon, Barcelona, and Bruges so expanding the use of their letters of credit, the holding of deposits and the making of loans. A fortune was made from the letters of credit which, themselves, became a method of exchange/payment based on a promise to pay, since merchants trusted they would be paid simply by presenting their letter of credit. 

The ability to create money ‘out of thin air’ really took a massive leap forward with the development of fractional banking, which is when a bank holds only a portion of the money deposited with it as reserves and then offer loans to other parties and, in doing so, charges interest on these loans. Arguably, this concept was honed by goldsmiths realising that not everyone needed their gold or silver, all at the same time. Therefore, when customers deposited their gold and silver at a goldsmith they were, in turn, given a promissory note. These notes were used as a form of ‘exchange/money’ with the goldsmiths using these gold and silver deposits to issue paper certificates/loans, and again they then charged their borrowers. In the 17th century, goldsmiths therefore transitioned from being guardians of valuables to interest-paying and interest-earning banks. The goldsmiths in London developed these services as, prior to such activities, they were mainly to be found in Italy, Germany and Holland. In part, this led to the first central bank which was in 1668 in Sweden.

But why is this relevant to Bitcoin? Well, many argue that Bitcoin is a form of money but, rather than being backed by promise from a bank or backed by gold, it is limited by design to only being able to create 21 million Bitcoins and is backed digitally by code and algorithms. It has been designed specifically to eliminate the ability to double spend, as there is a record to prove when it has been passed from one party to another. The challenge is that if Bitcoin (or any crypto derivation) were to truly become a globally accepted medium of exchange it could threaten the control that the central banks, and therefore governments, to control their economies. However, after 11 years the value and acceptance of Bitcoin continues to grow and, despite the naysayers, it is increasingly becoming bought by millions of individuals and is now much easier for asset managers to hold and trade. 

                 How Bitcoin as an asset, which can be held by Fund Managers, has changed

*BTC on Apple Pay, Google Pay, Mastercard, PayPal, Square, Samsung Pay & Visa

Source: Teamblockchain

In the last four years the infrastructure in terms of provision of custody services, insurance, and general acceptance of even quoted companies holding Bitcoin as part of their treasury services has been established. There are now a variety of ways that fund managers can gain access to Bitcoin including the recently BTCC ETF which is traded on the Toronto Stock Exchange.

The alchemists failed, but the Medici family and then the goldsmiths succeeded. Can we truly class cryptos, therefore, as the third successful way in which money is being created out of thin air? If so, the implications for society are immense, this time with it being possible for private individuals to have a stake in what may become a very valuable asset.

Coinbase refers to future the in its prospectus: Tokenise new assets.” The section goes on:  “We will invest in infrastructure and regulatory clarity to pave a path for the digitization of  more traditional financial assets to help pave the path for new assets to be represented as  crypto assets.” This is a clear indication that Coinbase is likely to use its equity to continue  

its buying spree of acquisitions (having already executed 16 acquisitions) and, as a public  company, it will no doubt use its paper, not cash reserves. Who knows, maybe Coinbase will  even acquire traditional asset managers, or a bank, and thus further blur the lines between  the traditional finance sector and decentralised finance (DeFif)? 

Once Coinbase is publicly traded on a recognised exchange it offers institutional investors a  way to gain exposure to the crypto currency market in a manner that, to date, has simply  not been possible. Also, given the dominance of Bitcoin (accounting for over 60% of the  capitalisation of the crypto market) one could make an argument that the buying of shares  in Coinbase could be seen to be a proxy for gaining exposure to Bitcoin, which is currently  not a permitted asset for UK pension funds. It is of no surprise therefore that as the price of  Bitcoin rises so does the volume of trading in the entire crypto currency market, thus  boosting Coinbase’s profits (although Coinbase is far more than just a way to get exposure  to Bitcoin!

Coinbase’s clients continue to grow 

Source: Coinbase 

As a crypto currency platform Coinbase states, it has: “Approximately 43 million verified  users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries”. Meanwhile  in its prospectus, Coinbase claims it generated $1.1 billion of trading income on the $193 billion of crypto trading, (page 107). This indicates that Coinbase generates a margin of  approximately 0.57%, with Bloomberg noting “the traditional U.S. stock exchanges - which  collectively trade more volume in a day than Coinbase does in a year - collect on the order of  0.01% of volume in exchange fees, conservatively. Running a crypto exchange is at least 60  times more lucrative than running a stock exchange”. Indeed, the entire payments world is  changing as increasingly clients are using digital wallets. As ARK Investment Management's analysis has pointed out:” PayPal’s Venmo and Square’s Cash App have amassed roughly  60 million users organically in the last 10 and 7 years, respectively, a milestone that took  J.P. Morgan more than 30 years and five acquisitions to reach.” If ARK is correct in stating  that “a digital wallet is worth conservatively $3650, (the average valuation per US bank  customer at year-end 2019)” this alone means that, with 42 million customers, Coinbase  could command a valuation of $150+billion!

Growth of traditional bank accounts v digital wallets 

Source: ARK Investments

However, trading and private clients are not the only way that Coinbase is generating  profits. Coinbase charges 0.5% to offer custody for the digital assets it stores for  institutional clients. According to Forbes, in December 2020 Coinbase had $20 billion in  custody but, given that the capitalisation of the crypto market has increased over 3 fold and  that institutions are investing in cryptos, it would not be unreasonable to assume that  Coinbase has $70billion of assets in custody - which at 0.5%p.a. generates $350million of  fees. However, Coinbase’s website claims it has “$90 billion of assets on its platform” which  if all these were to generate 0.5%, it would equate to $450million of fees! This figure seems  almost too high to be believed……  

The ability and experience of offering custody for digital assets could prove to be a  significant driver of revenue for Coinbase if we are to see existing assets such as equities,  bonds, real estate, commodities, etc being digitised. We have already witnessed changes in  legislation in Luxembourg and Switzerland which enable the issuance of securities in a  digital format, as opposed to having to have paper documentation, meaning it is now  possible to issue equites in a digital manner for as little as CHF 50,000. However, given the  recent announcement from the DTCC in the US that it is looking to move the settlement of  stocks from two days to one day, surely this could be an added ‘spur’ as regards the  digitalisation of securities in America? The change from a two-day to one-day settlement is  undoubtedly going to necessitate thorough examination of the infrastructure on Wall  Street. Once Coinbase becomes part of the ‘establishment’ (i.e., quoted, and subject to  audits and greater transparency) it increasingly makes commercial sense as to why Coinbase  is looking to become a publicly quoted company. 

If indeed Coinbase is valued at $100billion it would potentially account for 0.8% of the  NASDAQ index and be the 26th/27th largest stock in this index, based on current valuations.  Coinbase would almost be the same valuation of US bemouths such as IBM, Goldman Sachs,  GE, Boeing and Morgan Stanley. Each of these well-known firms are valued around $100 to  $110 billion and each account for approximately 0.34% of the S&P500 index. Coinbase truly  has been a huge financial success but there is another company in the digital assets sector that eclipses it. This company is Binance, which some claim to be worth $200 Billion. But  that is a story for another day……! 

Bitpay, the largest provider of crypto payments globally, has teamed up with Apple Pay  whereby enabling its debit card Mastercard clients to use Apple Pay. The cryptos that BitPay will initially allow its users to hold include Bitcoin, Bitcoin Cash, BUSD, Ether, PAX, USDC and GUSD. In addition to Apple, Samsung Pay has also announced an agreement with BitPay and  confirmed that the cost to process transactions will be 1%, whereas some cards that use  cash charge up to 3%. Even Google Pay has joined in on signing up Bitpay so its customers,  too, will be able to buy and store crypto as well as make online payments. All three of these  firms will use BitPay’s app so they can convert fiat currencies into crypto currencies and vis  versa. Given Apple, Google and Samsung now offer their clients the opportunity to spend  crypto is further evidence of how easy it is to use the likes of Bitcoin and Ethereum, which have been subject to criticism in the past. Indeed, Visa has 32 cards which offer the ability to  use crypto on a Visa-powered debit card at any of the 40 million merchants worldwide that  accept Visa. In a statement from Visa at the beginning of February, Jack Forestell, its chief  product officer announced: “We set out to make Visa the bridge between digital currencies  and our global network of 70 million merchants and today we are the leading network for  crypto wallets with 35 crypto platforms choosing to issue with Visa. With this pilot program,  we want to extend the value of Visa to our neobank and financial institution clients by  providing an easy bridge to crypto assets and blockchain networks.”  

Mastercard has seven firms which allow crypto/fiat services and, not wishing to be left  behind (according to Reuters), has said it will support a select number of cryptos - thus  enabling its merchants to accept certain digital assets as a form of payment. It would appear  that the race is on since PayPal as well has recently announced it will be offering UK clients  the ability to access cryptos. PayPal, with 26 million merchants globally, has informed investors of its plans to create a division to be focused on digital currencies. Its CEO, Dan  Schulman, has been quoted as saying:” There’s no question that digital currencies and  underlying technology have the potential to drive the next wave in financial services and I  think those technologies can help solve some of the fundamental problems of the system.” 

How people rate the trustworthiness of digital currencies 

Source: The Economist Intelligence Unit 

Facebook’s ‘Diem’ digital currency is still waiting for approval from the Swiss regulatory  authorities and arguably it was Facebook’s proposal that initially stirred central bankers into  taking digital currencies seriously. However, given research from The Economist Intelligence  Unit, which has reported that 65% of the people it surveyed would rate a digital currency from a large international technology firm as balanced and trustworthy, one cannot help  wondering how long it will be before we do actually see a digital currency being issued by a  global brand. 

However, what is more noteworthy is the posting on Twitter from Nadya Ivanova, COO of L’Atelier:

Ivanova then proceeded to state, “People that we see currently are actually truly profiting from non-fungible tokens…the sector represents a unique and emerging opportunity for banking products in the long-term, say in the next 10-15 years.” Clearly NFTs are beginning to attract more and more attention, and while individual prices of some NFTs are rising it is very difficult to know the exact size of the total NFT market. The reason for this is every NFT is a unique Digital Asset, so essentially each NFT has its own market and there is no centralised exchange which holds data about all the NFTs being traded. An NFT is created using Blockchain technology and links the token to a unique Digital Asset. The asset could be a piece of digital art, such as the one Christies is selling (see below) or some virtual land in a virtual universe (Decentraland) or the rewards you have earnt playing digital game, or a physical asset such as wine, a pair of Nike sneakers, a Louis Vuitton handbag etc. There are almost limitless possibilities which can be used to link to an NFT, but each NFT is unique. Therefore, since there is only ever one NFT, each token is essentially its own market, so it is hard to be sure of the actual size of the NFT market (although it is possible to see the turnover and price appreciation on websites such as Coingeko, Coinmarketcap or NonFungible.com).

The six largest NFTs

Source: Coinmarketcap.com

For the first time, Christies auction house in New York is selling a pure digital piece of artwork from an artist, Mike Wicklemann (otherwise known as Beeple), who has over 1.8 million followers on Instagram and has worked with singers including Ariana Grande, Justin Bieber and Kate Perry, and also global brands such as Nike and luxury goods firm, Louis Vuitton. Beeple has sold over $9 million of art including ‘Tom Hanks Beats the Shit out of Coronavirus’ which sold for £107,000. 

Tom Hanks Beats the Shit out of Coronavirus

Source: Beeple-crap.com

Furthermore, the person who will bid the most at the Christies auction for a pure digital form of artwork called ‘The First 5,000 days of 2022’ (described by Christies in its promotional material as, “…the first purely digital artwork (NFT) to be offered at a traditional auction house, with its authenticity assured thanks to blockchain technology”) will receive a NFT certificate.

Source: OECD Database (2013-2017) and OECD Economic Outlook, Volume 2020 Issue 2 (2018-2020)

Consultancy Oxford Economics calculates “that over the course of the crisis, U.S. households saved $1.6 trillion more than they would have done. HSBC estimates that households in the eurozone and U.K. saved €470 billion (3.9% of GDP) and £170 billion (7.7% of GDP) more in 2020 than they did in 2019, setting up each region for a major spending boom once the virus is suppressed” - undoubtedly resultant from those working during the last year who have been unable to shop, eat out or go on vacation.

The prices of crude oil and copper keep rising

                               Source: Macrotrends                                                       Source: Macrotrends

Seemingly, commodity markets are expecting a sharp rebound in consumer spending and economic activity if copper prices are anything to go by as they have risen by 65% in the last year. Furthermore, there is the potential for trillions of $, £ Yen and € worth of consumer spending given many people have been saving due to not being able to go out due to COVID-19 restrictions. This together with the ongoing massive fiscal stimulus from governments in 2021.Will this result in an upswing of asset prices, not only for commodities, but also rising inflation economies in general? If this is the case (and it leads to rising interest rates), this could be a disaster for those holding ‘so-called’ low risk bonds and could well trigger the end of a 10 year + bull market equities?

Another cause for concern is in Europe where, at the end of 2020, Germany’s Bundesbank was owed €1,136 Billion (an increase of 26% in just 12 months) by the European Central Bank (ECB). Given the perilous state of Portugal, Italy, Greece and Spain’s (PIGS) economies, for how much longer will the prudent Germans allow the southern PIGS to simply continue printing money? The combined debt of the PIGS is $1.18 billion, which makes one wonder if we are to return to the possibility of a hard Euro for the north European countries and a soft Euro for the rest of those countries that use the Euro? Indeed, cracks in the Euro are already apparent. In May 2020, German courts ruled that Germany’s Bundesbank would only support the EBC provided the ECB only no more than 33% of any one member’s debt. The Germans have insisted that asset purchases be allocated according to a member state’s shares in the ECB. The three biggest contributors are Italy 13% and France 16%, with Germany being the largest at 21%. The last thing the ECB relishes are rising interest rates as this would wreak havoc on its huge bonding holdings as the ECB has over €4.1 trillion of debt.

The spectre of economic uncertainty and potential for higher inflation (given the massive fiscal stimulus that many economies have enjoyed) has led to house prices in most countries far outpacing inflation. Some capital cities have seen prices rise by over 27% in the last year. It also helps to explain why investors have also turned their attention to cryptocurrencies, with some citing that over the past eleven years Bitcoin has shown little correlation to the price of equities (as measured by the S&P500). 

However, rather than fretting about the price of a crypto such as Bitcoin or Ethereum, why not look at buying a selection of different Blockchains? After all, you have over 30 to choose from! Alternatively, you may simply wish to follow the Mootley Fool’s advice and buy some, or all, of the 7 blockchain companies it thinks investors ought to consider.  

One thing is for sure, nothing lasts forever - bull markets or bear ones. This last year we have witnessed COVID-19 changing the world, potentially ushering in a more digital-styled economy i.e., more on-line shopping, less use of cash etc. The ongoing use of AI, Blockchain, IoT, Machine Learning etc is changing our day to day lives and, as a result, tomorrow’s global titans and the ways in which to conduct business will change too. So, as Bitcoin and 

other crypto prices climb a ‘wall of worry’, expect to see bumps along the way. Meanwhile, an alternative way to gain exposure to a highly volatile asset such as Bitcoin is via regular savings i.e., simply allocate a small % of your investable funds every month.

Stablecoins

Source: Crypotslate.com

The growth of stablecoins has arguably been fuelled by a progressive interest in crypto currencies, themselves now valued at over $1.4 trillion. There are notably specific drivers stimulating this growth of stablecoins, such as the advancement of the DeFi sector together with more stablecoin crypto pairs, especially involving USDT (otherwise known as Tether). Increasingly, digital exchanges are now offering crypto pairs in USDT rather than Bitcoin. But Tether, despite offering assurances that its tokens are 100% backed by US$, has never offered evidence. Back in April 2019, the New York Attorney General alleged that iFinex, the parent company operating both Bitfinex and Tether, possibly defrauded cryptocurrency investors by engaging "in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds.”

Whilst stablecoins clearly continue to attract investors it is difficult to see how they make money themselves given the current global almost zero interest rates. So why do so many different organisations offer them? Well, stablecoins have created lots of trading/ transactions for digital exchanges, as investors are able to switch from other cryptos into stablecoins rather than selling their cryptos for cash. To date, much of the focus and use cases for stablecoins has been to view them as a payment mechanism, as a way to avoid using banks and in particular avoid the high transaction fees often associated with international remittances. 

However, stablecoins can be seen to be part of the infrastructure required as we witness the ongoing digitisation of other assets and services. By observing more jurisdictions (such as Switzerland, German and Luxembourg) which have now all passed legislation to enable the issuance of securities (equities and bonds) in a digital format i.e. not using paper based systems, these new digital securities will potentially need digital currencies/stablecoins. Arguably the greater adoption of these digital assets could come from the regulators since assets which are in a digital format can allow income to be distributed based on the duration (e.g., the number of months, weeks, days or potentially hours) that an investment has been held. This is opposed to the current situation where coupons on bonds, dividends on equities and rent on property is paid on fixed dates, usually every six months. Stablecoins will enable the issuers of these digital securities to use smart contracts to make automatic payments on a much more frequent basis. 

Historically, individuals gained exposure to equity markets by investing directly into equities and it was not until 1774 that a Dutch man named Abraham van Ketwich created the first ‘mutual’ fund. This was called Eendragt Maakt Magt, meaning "unity creates strength,” and was comprised of a selection of government bonds and plantation loans in the West Indies. Foreign and Colonial Government Trust was launched in London in 1868 as an investment trust i.e. a closed-end fund, which is still traded on the London Stock Exchange. It was not until 1929 that the Wellington fund (now part of Vanguard) was launched, becoming the first mutual fund to own stocks and bonds. Indeed, it was Jack Bogle at Vanguard who invented the first ‘Index Fund’ in 1975, which was the start of the tussle to attract funds under management between passive and active fund managers.

Distribution of open-end funds globally between 2011-2020 by trading strategy

Source: Statitsia.com

The demand for index funds from investors has grown steadily as more capital has been allocated to exchange traded funds (ETFs) and passively managed funds (PMFs) globally (which now accounts for 31% funds according to data from Statista). Index funds, with their lower management fees and not being reliant on individual fund managers, are now becoming more popular for those also looking to gain exposure to cryptocurrencies. Recently, German-based MV Index solutions (MVI) and CryptoCompare announced they have over $1billion in assets with fund managers who are using their various crypto indices. MVI claims, “The demand for index services has been global with products launching in markets across America, Europe and Asia”. Also in Europe, Swiss crypto investment manager FiCAS AG launched its cryptocurrency exchange-traded product (ETP) in June 2020 and has now received permission to market its ETP (similar to an ETF) on a pan-European basis.

Interestingly, the Asian Times claims that the total assets in crypto assets to be $6billion by the end of 2020 and, given the stella returns in the crypto asset class in recent months and the almost zero interest rates on bank deposits, it is understandable why cryptos have been attracting investors’ attention.

Digital Assets which trade 24/7 are ideally suited to funds that use mathematical algorithmic models, with trading being executed by computers automatically. It is almost impossible for humans to keep up to date and efficiently trade across what is believed to be over 1,100 digital asset exchanges globally. We have even seen Vanguard using Blockchain technology to improve benchmark tracking and reduce the cost of managing some of its index funds which Vanguard.

But as well as Crypto funds there is a growing range of DeFi tokens which have very similar features to funds such as the DeFi Pulse Index token, with over $62 million of assets offering exposure to range of DeFi tokens. These DeFi tokens are a new way for investors to access asset managers and styles of trading, which historically had been the preserve of only the very wealthy. DeFi tokens trade 24/7 and are accessible on-line directly, without the need for any intermediaries, custodians, administrators and other third parties which have historically increased the ‘total expense ratio’ i.e., the total costs of managing a fund for an investor.

Expect to see a lot more DeFi token/funds and crypto funds being launched in 2021 as they offer smaller investors and institutions alike an alternative and more diversified way to get exposure to this growing asset class, as opposed to holding cryptos direct. Crypto funds also potentially offer institutions a more compliant way to have exposure without the need of worrying about who owned the actual crypto before them. 

But more on this another time…..

It is somewhat ironic that there is a proposal to ban cryptocurrencies in India, yet at the same time the government is actively engaged in exploring how to launch its own Central Bank Digital Currency (CDBC). It would be a shame if the government were to ban cryptos since we are seeing considerable innovation in India in the FinTech/ DeFi sectors. If we are to see closer economic trading terms between the UK and India, due to Brexit (given India’s strong FinTech sector expertise and London’s position as a financial centre), it could be very beneficial for both countries. All that is needed is clear guidance and regulation to ensure innovation is able to flourish whilst protecting the public’s interests.

But then the Indians are not alone as, according the Library of Congress, as the Chinese have an implicit ban on crypto currencies, they are in the process of rolling out their own CBDC. It is known that at the end of January 2021 China announced further trials of its CBDC, giving away $5million to residents in Suzhou. Once again, whilst money has been given away there have been ‘strings attached,’ since it can only be spent in outlets defined by the government and, again, beneficiaries are required to ‘use it or lose it’ as the digital money is only valid over the Chinese New Year, 10th Feb - 26th Feb. For years governments worldwide have tried to restrict trade and ban certain goods so whilst, in theory, this ought to be achievable for physical goods such as guns, drugs and alcohol, banning goods clearly have proved to be very difficult to implement. 

Dark net sales of illegal drugs has grown 

Source: UNODC

According to data from the UN, the world trade of those buying illegal drugs over the ‘dark net’ has been expanding. In some countries, such as Russia, over 85% of those surveyed in 2020 claimed they had used the dark net to source drugs. Therefore, how, in our increasingly digital economy, will governments fair in a battle to ban cryptocurrencies which are not constrained by geographic boarders. Indeed, we are already seeing signs of this as regulators, such as the SEC, actively pursue firms and individuals which have allegedly broken security regulations in the US via Initial Coin Offerings (ICOs). Given that the SEC is now not simply targeting firms but the directors (such as the case with Ripple Labs), this is leading to others establishing enterprises in a more clandestine manner. Is the threat of regulation and arbitrary sanctions forcing people to be less transparent? The following statement from Before CoinMarket Cap (BCMC) is not the type of assertion that a regulator or government would be happy to see: "We have assembled a team of professionals who are always glad to help you. Unfortunately, the government of our country has not yet decided on its attitude towards crypto currencies and ICOs, so we cannot declare ourselves in open forum, but this does not prevent us from working in real time. We can always change our jurisdiction." Again, rather ironic, since the Blockchain technology that powers many of these tokens about which the BCMC wants to write (and highlight the good and bad), is heralded as being so effective at enabling greater transparency!

One wonders, surely if governments understand the benefits of digital currencies and are to even launch their own versions, is it that these same governments are worried about how crypto currencies are being used by nefarious actors? Alternatively, are governments concerned that, were their citizens to start using an alternative payment mechanism/currency it could make their own fiat non-asset-backed currencies redundant, whereby stripping away one of the key tools to control their economies?

A combination of technology is enabling new data to be created and shared in a way that, only a few years ago, was almost confined to science fiction. For example, Internet of Things  (IoT), AI, Cloud computing and Blockchain technology are now facilitating the tracking of  ships, planes, trucks (and the commodities they carry) in real-time. This greater  transparency and the capacity to be able to offer provenance for the end user  subsequentially can lead to more ESG-compliant business practices. For instance, cobalt is a  key commodity needed to make electric car batteries, with Ford and IBM now using a Blockchain-powered platform to ensure that child labour is not being used in the production  of cobalt. Another example of how Blockchain technology is being used in the commodity  sector exists in Africa where the Nigerian commodities exchange AFEX has created an app,  Warehouse Receipt Checks. AFEX is looking to reduce fraudulent receipts being created in warehouses by encrypting the data and storing it on a Blockchain-powered platform, enabling banks and other lenders to verify if a warehouse receipt has been previously  financed. This process ought to mean it will be easier, especially for smaller farmers to be  granted loans and access credit since there is greater transparency (and thus more trust) as  to what commodity is where, at any one time.  

However, AFEX is no stranger to engaging with Blockchain technology as, in 2018, Sterling  Bank and a company called Binkabi, an Africa-focused blockchain start-up, also launched a  Blockchain-powered commodity finance service. Furthermore, in the Caribbean, Blockchain  technology has been harnessed by Agriledger to increase by 750% the amount of money  farmers in Haiti receives for their mangos. To further and guarantee the market viability and  access of the Fresh Fruit Value Chain in Haiti, the government has opened a tender for  Mobile Units that can be used for all the processing. The units will be owned by the farmers  and create greater opportunities for commerce.  

Likewise, producers of other soft commodities such as sugar, coffee and wheat, to name  just a few, are also using Blockchain technology to weed out inefficient practices. Without  doubt this news is encouraging since, according to the publication, Packaging News, “food  waste is evident across the entire supply chain with 1.6 billion tonnes of food being lost or  wasted worth a staggering $1.2 trillion”. Therefore, with the use of Blockchain technology, once produce can be tracked along its supply chains inefficiencies can be more easily  identified and action taken to cut waste.. 

However, Blockchain technology is not only being adopted for soft commodities. Vakt is an  organisation which has investors such as ARAMCO, BP, Chevron, Shell and Total and Vakt and has been used successfully in the North Sea to improve the logistics, financing and  trading of oil. The creation of one data base with the ability to be shared by those parties using the Vakt platform (whilst maintaining privacy of each transaction) has allowed the removal of a central data base, whereby reducing the risk of cyber security attacks, offering  greater transparency therefore creating greater trust among these petrochemical firms who  are usually fierce competitors. 

Ways in which Vakt uses Blockchain technology 

Source: Vakt 

Vakt uses JP Morgan’s Quorum Blockchain platform, aiming to digitise the way commodities  are traded globally. However, it is not only Vakt that shares this vision. Another firm in the  commodity sector is Norlisk (the massive Russian producer of palladium, nickel, platinum  and copper) who announced in January 2021 that it had joined the Responsible Sourcing  Blockchain Network. An organisation that use Blockchain technology to be able to verify  responsible practices and sourcing. Also Norlisk has been given Russian central bank  approval to digitise commodities on Norlisk’s tokenisation platform, thus enabling commodities to be traded 24/7. Potentially leading to an increase the liquidity of the commodities that Norlisk turn in to Digital Assets. Thus enabling investors to access the  Norlisk platform and allow traditional commodity users to buy more or offload their excess  exposure to the commodities that have been tokenised rather than taking physical delivery. 

Whether the commodities be hard or soft they often rely on the need for financing and it  was for this reason that the digital network, Komgo, was established. Komgo now has 20  banks, 140 firms and 1,000 users sending over 3,000 messages a month using its Blockchain  platform. Komgo also utilises JP Morgan’s Quorum Blockchain technology to help make  trade financing more efficient by reducing many of the existing paper-based manual  processes. But why is this so relevant? According to ConsensYs (which acquired the Quorum blockchain from JP Morgan), “Komgo offers a 30-40% increase in cash-flow gains ..and is expected to facilitate a 20-50% reduction in operational cost.” Unsurprisingly, with  savings like these in the huge commodity sector it is easy to see why more and more  those organisations involved in the mining, transporting, financing and consumption of  commodities are engaging with Blockchain technology.

It is not simply within financial services that regulating tech is being discussed. In Europe there has been considerable discussion about how to regulate Artificial Intelligence (AI) as  the Europeans look to take a lead on regulating this wide-ranging branch of computer  science and address the challenges around protection, liability and discrimination.  Unsurprisingly, this inevitably leads to the question of ‘algorithmic accountability’ - i.e should companies which operate AI platforms be held liable for the results of their  algorithms? Furthermore, another challenge arising is that even some of the brightest  ‘techies’ cannot foresee the potential consequences of what they have created. A prime example of this occurred when Facebook was required to shut down its project AI on its  smart speakers when its internet bots (computer software applications) were discovered to  be ‘talking to each other’ in a language not understood by the programmers. Interestingly, Musk, who is a massive fan of new technology and innovation is very circumspect about AI, claiming: “AI is a rare case where we need to be proactive in regulation instead of reactive  because if we’re reactive in AI regulation it’s too late,” adding that, ‘AI is the biggest risk we  face as a civilisation”. 

When it comes to Blockchain and Digital Assets there are clearly some challenges and  questions that have emerged which will need addressing, such as: 

• Data security and access 

A public Blockchain, such as Bitcoin: once a record has been created it is not possible  to amend or delete that data, therefore potentially directly contravening the General  Data Protection Regulations (GDPR) which became law across Europe on 25th May  2018. GDPR states that one has a “right to be forgotten”, but how can your  information be removed from a Blockchain that is immutable? 

• DeFi 

Software developers, such as Andre Cronje, are creating products and services that  are available on DeFi platforms, and then accessible globally. Only in December 2020  Cronje released his ‘yCredit’ protocol, having already created various other DeFi  applications - Deriswap, Keep3r Network, StableCredit, and yInsure.Finance. These  various software tools have been released but the users will have no redress to Cronje as he is not regulated. Often the buyers of these DeFi tokens will reside in jurisdictions far away from wherever Cronje inhabits.  

• Cryptos - unregulated assets 

To date, many cryptocurrencies have not been regulated so how do you regulate the  likes of Bitcoin which, allegedly, was invented by someone called Satoshi Nakamoto  whose whereabouts is unknown. But how long Bitcoin will remain unregulated is up  

for debate as the head of the European Bank, Christine Lagarde, is now “calling for  Bitcoin’s ‘funny business’ to be regulated”? 

The need for regulations in other areas that are likely to use this Blockchain technology will also need to be considered - such as driverless cars. A ‘heady cocktail’ of technology including AI, Big Data, Blockchain, Internet of Things (IoT), Machine Learning, to name  just a few, are likely to be the backbone of driverless cars. Indeed, Google’s driverless  vehicles have already covered over 20 million miles and, while it took Google 10 years to  drive the initial 10 million miles, it has only taken one year to complete the other 10  million. So, how long will it be before driverless cars are for sale in the public domain? Furthermore, how will they be regulated and who will be liable for any insurance claims as, since they are being driven by computers, how can the owner of the car be  responsible in the event of an accident? Reassuringly in the UK, such questions are  already being addressed by the Law Commission, but the situation is far from certain. It  is not just a matter for the drivers of cars, but also the highway authorities and or local  councils who are responsible for the roads, traffic lights. Should the IoT devices or  algorithms that control them fail, who then is responsible for them - the local  authority/highway commission, the manufacturers, or the software developer? 

Such legal conundrums are already being addressed, with there now being a greater  deployment of smart contracts there was a need to have some legal certainty around smart  contracts. Many lawyers often derided smart contracts claiming they were not smart, nor  could they form part of a contract. Therefore in the UK The Law Commission launched a  consultation paper in December 2020 to look at this topic having previously asked the  Chancellor of the High Court, Sir Geoffrey Vos, look at smart contracts and he concluded  that: “Smart contracts are capable of satisfying the requirements of contracts in English law  and are thus enforceable by the courts”. 

• Alibaba - one of the largest holders of Blockchain technology patents globally, using this technology in supply chain logistics, financial services and the fight against counterfeit food.

• Ernst & Young - is actively involved in the development of the Baseline Protocol, which uses the Ethereum Blockchain to record business data. Baseline Protocol is being used to share business data among multiple stakeholders and by companies such as Coke One North America and SAP.

• IBM - Hyperledger Fabric is one of the keyways in which ‘Big Blues’ is rolling out Blockchain technology to its clients. IBM’s Food Trust network is used by household names such as such as Nestlé, Dole, Walmart and olive oil giant, CHO. IBM has also been very active in the shipping sector, working closely with Maersk’s TradeLens platform to digitise the movement of global shipping logistics and supply chains. 

• Hedera Hashgraph - developed in 2016 and designed to offer secure applications in real-time. Hedera Hashgraph has an impressive range of global corporations that own and govern  the organisation have just announced that U.S-based AVC Global subsidiary Medical Value Chain will be offering a track-and-trace platform for global pharmaceutical supplies to Bahrain. 

The Hedera Governing Council

Source: Hedera Hashgraph.com

• IconLoop - South Korea is very active in the use and development of Blockchain technology. IconLoop has applications using Blockchain-powered platforms in banking, healthcare and government sectors as well as using the technology for driving licenses, which it is currently developing.

• JPMorgan - the biggest bank in the United States has gone on to create the JPM Coin, despite its CEO being verbally disinterested in Bitcoin. JPMorgan is a member of a blockchain consortium comprising of 130+ banks called the Interbank Information Network, using technology to improve compliance monitoring and controls whilst reducing the time it takes to process payments. 

• Oracle and Microsoft - these two global-technology ‘titans’ both sell cloud computing services offering blockchain-as-a-service attracting companies such as GE Aviation, Singapore Airlines, Indian Oil, Nigeria Customs, Starbucks, JP Morgan.

• PayPal - as one of the largest online payments systems, it has accepted Bitcoin for years and now offers a service to institutions enabling them to hold cryptocurrencies as part of their treasury reserves. PayPal has recently stated that “it was looking for a way to understand how to leverage blockchain to better serve merchants and users.”

• Salesforce - Salesforce Blockchain offers an additional facility to Salesforce’s customer relationship management system (CRM) which already has 150,000+ clients. Lamborghini is using the Salesforce Blockchain-powered platform to prove the heritage of its cars. This proof of provenance can substantially increase the value of a Lamborghini.

• Visa - five years ago, Visa invested in a blockchain start-up called Chain, then proceeded to develop ‘Visa B2B Connect’ with Chain as a fast and secure way to 

process business-to-business payments around the world. Visa also offers a number of crypto debit cards such as Binance, Coinbase, Baanx and Revolut.

• World Economic Forum - of all the supernational organisations, the World Economic Forum is one of the most active and has established the Global Blockchain Council, helping with the adoption of Blockchain technology for the global public interest. An example of this is its initiative, to track greenhouse gas emissions from mining and metals companies.

Still not convinced about the adoption of Blockchain technology? Simply by searching on Google for Blockchain+xxxx ( xxxx being the name of industry in which you are interested), there are plenty of examples to be found. However, despite this, TeamBlockchain presented at an on-line financial services event only last week and it was still astonishing to hear feedback comments from the attendees such as: “Didn’t realise how widespread Blockchain technology was”; “Thought it was just about crypto”; “Wow, there are 80% of central banks looking at digital currencies!”; “Can I have more information about how Blockchain is helping companies to meet their ESG targets?” But then again, writing every week in Digital Bytes is continuously a learning curve as to how, why and where Blockchain technology and Digital Assets are being used by governments, companies, individuals and society. Indeed, Deloitte and the World Economic Forum stated in their 2021 Global Technology Governance Report that: “Blockchain’s characteristic immutability and transparency of transactions as a “single source of truth” could increase trust in the accuracy of critical official data…”

One thing is immutable, we are becoming ever-more digital in the manner in which we conduct our lives. As we witness more and more AI, machine learning and robotics being used to automate the many dangerous, mundane and repetitive processes or jobs, we will undoubtedly see the harnessing of Blockchain as being one of the key technologies going forward.

Post this last year’s global pandemic, a digital solution to your identity (combined with your COVID-19 vaccination details) may well be the only way for permitted travel to certain countries in 2021, such as Australia. The International Air Transport Association (IATA), the lobby group of the world’s airlines, stated it would launch a digital health travel pass early next year 2021 which would include a passenger’s COVID-19 vaccination data. The World Economic Forum has developed an app called CommonPass, not using Blockchain technology but relying, instead, on Amazon Web Services. Another solution called AOKpass is being built by SOS, (the??) world's largest medical and travel security services firm, based in Singapore. SOS has partnered with the International Chamber of Commerce which, itself, is using Blockchain technology.  

How AOKpass works

Source:SOS.com

Notably, another coalition involving Microsoft, Oracle and Salesforce is working on a digital COVID-19 vaccination passport that will encrypt data regarding an individual’s vaccination history, the proposal being that it will be downloadable onto a mobile phone. Those without a mobile phone can print off a QR code to prove they have been inoculated. As yet, it is unclear whether this cohort is using Blockchain technology but, in December 2020,  Salesforce was reported to have been working with IBM in creating a digital passport that did use a Blockchain-powered platform. It is hoped that these digital proofs of vaccination will enable people to travel, attend international sports events and concerts etc with less concern. However, will we see people being banned/deported if they do not have their data available?

One wonders that if corporations such as those mentioned above are able to gain access to government records such as health records, then why not passport details or driving licences so doing away with more paper-based documents? One of the irritations when dealing with any official/regulated entity is the requirement to prove who you are since these firms are compelled by Know Your Customer (KYC) regulations. So, why can we not have a way to prove digitally who we are? Due to COVID-19, couriers such as FedEx and UPS have abolished the need for customers to physically sign for goods. However, a UK-based firm, Nugget, has developed a Blockchain-powered app which keeps one’s biometric identity so that as the courier nears the delivery address he can ‘ping’ the consumer from a mobile device to verify identity and hence receive the goods; therefore, no need to have your driving licence, utility bill, passport at hand to prove who you are.

So exists a variety of solutions that, by using Blockchain technology (which is able to offer solutions to remove many of the paper documents we have been reliant on for years), can improve the efficiency of travel, financial services and deliveries, to name just a few, and help citizens in the increasingly digital society in which they now found themselves.

Meanwhile a subsidiary of Alibaba (which along with Tencent dominates the on-line payments landscape in China) has carried out tests on its mobile app with the Chinese CBDC in Shanghai so, seemingly, it will not be long before China’s CBDC will be launched nationwide.

An estimation by the International Monetary Fund (IMF) is that over 1.7 billion people globally are unbanked. Even in the US, it is calculated that over 8.4 million households do not have a bank account. Within the Hispanic community there are as many as 17% of households un-banked, which makes it complicated and time consuming to give these citizens the financial support they need as a result of COVID-19. A digital currency signifies that money can be distributed and, more importantly for the finances of a country, taxes can be collected digitally since people are increasingly using their mobile devices to pay for goods and services. In terms of saving money, the Diem Association claims it costs 7% to make international payments, taking up to five working days. Compare this to a digital currency where payments are almost instant, and the costs are measured in cents and pence.

The market capitalisation of Tether

Source: Coingecko.com

There is a hidden story about Bitcoin mining. A ‘hash’ a term used to refer to an algorithm which converts an input of letters and numbers into an encrypted output (hence crypto). These are, in effect, the building blocks of a number of cryptocurrencies including Bitcoin. According to the Cambridge Centre for Alternative Finance, research has revealed that 76% of ‘hashers’ use renewable energy. Miners also use renewable energy to power their activities, with hydropower being the number one source at 62%. However, the 76% (above) refers to the share of hashers who use renewable energy as part of the production of Bitcoins. Indeed, it estimates that only 39% of hashing’s total energy consumption comes from hydroelectricity, coal (38%) and natural gas (36%). The Chinese, with over 60% of Bitcoin capacity, have used renewable energy for much of their Bitcoin production. In China's rainy season (June to October) 'green' powered provinces such as Sichuan and Xinjiang have hydropower plants capable of providing cheap electricity prices for Bitcoin mining operations. The location of Bitcoin mining is often driven by other factors. For example, in Russia, Gazprom is now selling surplus cheap gas to Bitcoin miners whilst the Venezuelans, as a way to get around international sanctions, are mining Bitcoin as a way to generate much-needed foreign reserves.

Global distribution of Bitcoin mining capacity

Source: BitOda.com

There would appear to be a close correlation between where Bitcoin is mined and cold weather, with places such as Canada, Russia, Kazakhstan and Iceland all appearing to have notable Bitcoin mining facilities. As reported by Forbes, Bitcoin mining is being seen potentially as a way to create jobs in the heartlands of America. An example of this is a US- based firm called Core Scientific which runs Bitcoin mining rigs for UK-listed Argo Blockchain PLC (whose share price has risen a massive 981% since BTC prices have doubled in the last month). In December, Argo mined 96 BTC which, at $20,000 at the beginning of December, were worth $1.9million - but at a price of $41,000, would be worth $3.9million! However, heed caution, as Argo PLC is a small cap stock thus may prove to be very illiquid stock to trade. According to the IAG Business School at Pontifical Catholic University of Rio de Janeiro, Bitcoin mining can also be used to reduce the risk of fluctuations in the price of electricity for those looking to build renewable energy facilities. Renewable energy can 

provide an alternative source of income when electricity prices are low by diverting electricity to produce Bitcoin, as opposed to selling it at wholesale prices on a country’s national electricity grid.

Based in Singapore, South East Asia’s biggest bank (DBS), has announced the launch of a

Digital Exchange, backed by the bank, offering institutions and HNWs access to be able to trade and provide custody services for digital assets and digital currencies. DBS Bank will also be offering the ability for companies to raise capital via tokenisation (STOs), as well as offering a listing service for these new tokenised digital assets. The Singapore Exchange will own 10% of this new digital exchange, which has been given (in principle) approval by the Monetary Authority of Singapore as an ‘approved exchange’. This type of status is vital if institutions are to engage and start trading assets on DBS’s new digital exchange. The exchange will offer trading in cryptos (such as BTC, ETH, XRP and Bitcoin cash) as well as tokenising unlisted companies, bonds and private equity funds, so providing liquidity and hopefully greater price transparency for these existing asset classes.

DBS Digital Exchange

Source: DBS.com

Earlier this year, Northern Trust used Blockchain technology to issue BondbloX, a bond using the Monetary Authority of Singapore’s Sandbox as Singapore is desperately positioning itself to be the digital centre in Asia.

Meanwhile in Europe, a company called Zodia Custody (based in London) has been established as a JV with between Standard Chartered and Northern Trust and will be their new digital asset custody service. It is expected that Zodia will be launched in 2021 and will be focusing initially on offering custody services for those who wish to use a third party to hold their crypto currencies. In Barcelona, a company called Brickken is launching a digital assets platform targeting those start-ups and small businesses looking to raise up to €150,000. Brickken offers a full tokenisation service so is able to help firms wishing to raise capital, done either via a utility token or a security one. Once the tokens have been issued Brickken lists them on its platform, enabling third parties to buy, sell and trade them. Under EU laws, Brickken is required to carry out full KYC and AML checks and will, initially, only be able to list those tokens it has listed. However, this appears to be a new way for smaller firms to raise the often much-needed capital thus enabling them to transition from an idea to a revenue-generating business. According to Statista, there are just over 15,000 companies in Spain which employ 50-249 people, but there are 2.6 million companies employing less than 10 people in Spain, so Brickken has a large market to target.