On Thursday

One of the biggest challenges that faces the property sector is that it has been slow to digitise and often data and information on buildings is held in a wide variety of different places. Aon Reed Stenhouse, the insurance company, claim that 95% of the information on a new building in terms of the construction data currently gets lost on handover to the buildings first owner. It is for this reason that Briq, based in California USA, have developed a Blockchain-powered platform that keeps a record of the entire construction of a building.

 The carbon footprint of a city is receiving more attention and one way to reduce the carbon footprint is to analyse the carbon emissions from the materials that are used to construct building. 

Global Warming Has Concrete Problem When It Comes to CO2

Chart, bar chart

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Source: Ecori.org

The manufacturing of cement is a significant producer of  global carbon emissions  and after water cement is the most consumed product globally, as each year 3 tonnes of cement is produced for every person in the world. Cement accounts for over 4 billion tonnes of carbon dioxide emissions annually. Therefore, any smart city can significantly improve its carbon footprint by using less cement or cement that is produced in a low emission manner. Hansons have a cement manufacturing site in Wales and they are using a combination of renewable energy sources, solar and wind to help produce the power that is required to make cement. Hanson UK claims: “The carbon footprint of the Regen GBBS produced at the plant could be brought down to one-tenth of that of Portland cement.”

Tata in Wales have recently won a £20 million grant to help decarbonise Wales: “to explore the production of a hydrogen supply, carbon capture usage and storage and CO2 shipping from South Wales which would be the first CO2 shipping industry in the whole of the UK… This is all part of a wider initiative to manufacture low or net zero carbon cement and steel products, helping to drive the low carbon future of UK construction


Cities are major consumers of energy and with more and more companies pledging to go ‘carbon neutral’ there is a growing demand for users of electricity to have certainty as to the green credentials of the electricity they consume. This 2 min video from Shell explains how Blockchain technology is able to connect renewable energy producers with buyers offering a way to track and trace the provenance of the electricity in a highly trusted and transparent manner.

It is not just power generation that is using Blockchain technology to track carbon footprints. The Dutch based Blockchain business Kryha, working with The World Economic Forum has built a Blockchain-powered Carbon Tracing Platform, enabling traceability of carbon emissions from mine to the final product for copper.

According to the publication Sustainability News: “Climate experts suggest that blockchain technology could play a significant role in creating a system of standardization and accountability by accessing the carbon footprint of companies and tracking the offsets”. Indeed, cities and the same for governments and for companies that wish to reduce their carbon foot print they need to ascertain how much carbon they are creating and where from in order that they can understand what action they need to take to reduce their carbon emissions. The ability to track and trace in a transparent manner what their carbon footprint currently is and to be able to monitor the reduction in carbon emissions is going to be vital as society, staff and shareholders are likely to demand evidence and accountability.


On Tuesday

There is a battle between two of the biggest global corporations in the world over transparency as Apple launched its new software updates iOS 14.5 and iPadOS 14.5. These new updates will ask iPhone and iPad users to opt out of tracking in apps that monitor their behaviour and share that data with third parties. While this is great for user’s privacy as it will stop other apps from tracking what they are looking at on their phones and ipads it potentially is not great for Facebook and Google.  Tech firms for years have been collecting data about when and what websites we are looking at and then they sell this data to companies to advertise to us. Facebook have been the masters of this activity and generated $86billion or 97.9% of its global revenue in 2020 was from advertising. 

New Apple upgrade gives users the ability to opt out

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Source: Record.com

Facebook’s CEO Mark Zuckerberg on 27th January 2021 said in a quarterly earnings call: “We increasingly see Apple as one of our biggest competitors using its dominant platform position to push its own apps while interfering with Facebook’s. Apple may frame this as a privacy service to its customers, but it’s really only in Apple’s own best anti-competitive interests”. CEO Tim Cook spoke at the Computers, Privacy and Data Protection conference on 28th January and while he never mentioned Facebook by name to many the target was obvious. “Technology does not need vast troves of personal data, stitched together across dozens of websites and apps, in order to succeed. Advertising existed and thrived for decades without it. And we’re here today because the path of least resistance is rarely the path of wisdom. If a business is built on misleading users, on data exploitation, on choices that are no choices at all, then it does not deserve our praise. It deserves reform.”

While Apple has been publishing its transparency report since 2013, listing the requests that it receives from governments on users data as a company Apple has been less than transparent in other ways. In November 2020 as reported by the Washington post: “Apple will pay $113 million to settle an investigation by nearly three dozen states into the tech giant’s past practice of slowing customers’ old iPhones in an attempt to preserve their batteries.” In 2019 Apple were suedfor alleged lack of transparency over iCloud data” In 2016 the publication 9to5 wrote: “Apple’s product secrecy may create ‘magic,’ but lack of transparency on upgrade cycles creates frustration.”

The reason for this focus on transparency is because one of the key attributes that Blockchain technology is able to bring greater transparency a business and indeed governments. Indeed the  European Parliament publication Europal wrote “One of the most appealing aspects of blockchain technology is the degree of transparency that it can provide. Blockchain has the potential to improve supply chains and clinical trials, enforce the law, enable responsible consumption, and enhance democratic governance, through traceability of information as a means of ensuring that nothing is unduly modified. The level of transparency that blockchain affords adds a degree of accountability that has not existed to date

A recent example of can be seen by the launch of the, Aura consortium, a collection of some of the world’s biggest luxury brands LVMH, Prada and Cartier have agreed to use the to use a ConsenSys and Microsoft Blockchain -powered platform to share information about their products’ authenticity and provenance with customers. This will match product ID with client ID, enabling customers to access product history and authenticity by tracking manufacturing process right from raw materials stage to the retail outlet. It is hoped that being able to have this level of granual data it will help in the fight against fakes and forgeries that plague the luxury goods marketplace.



How long will it be before we see Coinbase using its equity back on the acquisitions trail following its recent public listing on the NASDAQ exchange? Afterall, Coinbase has been growing fast with 35 million users in July 2020 and over 56 million clients - net income of $322.3 million in its 2020 profits and $1.8 billion of revenue in Q1 2021. It is certainly in rude health. Coinbase is no stranger to doing deals with notable acquisitions including Tagomi, a crypto currency brokerage platform, the controversial Neutrino, an intelligence company and  Xapo, an institutional crypto custody specialist firm, to name just a few. Arguably, Coinbase has a better understanding about the outlook and opportunities in the blockchain and crypto sectors than any other NASDAQ-quoted organisation. Coinbase has also been trying to influence politicians in the US, having spent over $700,000 on government lobbying since 2105 and with a bigger ‘war chest’ of cash, no doubt the amount Coinbase spend on lobbying will increase.

Another firm active with crypto currencies is PayPal (currently valued at over $310billion), having announced it will start accepting crypto currencies on its payments platform. In March 2021, PayPal announced it had acquired the Israeli-based crypto custody firm, Curv, for an alleged $200-$300million. According to a report from Bloomberg, PayPal is also interested in acquiring crypto currency companies. BitGo, a digital asset custodian announced in December 2020 that it had over $16billion of crypto assets in custody for institutional clients. Bloomberg’s report showed that crypto mergers and acquisitions had more than doubled in 2020 to $1.1 billion, compared to 2019. The US was the most dominant market with $785million worth of deals. Henri Arslanian, global crypto leader of PWC, believes that 2021 is on track “to significantly surpass 2020 from every single metric.” It would seem that Arslanian is, indeed, correct if you look at the recently announced Crypto/Blockchain VC deals.
Crypto/Blockchain venture funding by size

Source: Block Research
In 2020, there were just four venture capital-funded deals worth $100 million, and three deals worth between $50 million and $100 million. Already in the first three months of 2021 there have been six deals worth more than $100 million: BlockFi, NYDIG, Dapper Labs, FireBlocks and Blockchain.com (twice). Seven more were worth $50 million to $100 million. But not all institutions are bullish on crypto since HSBC now prohibits customers from buying quoted companies which hold Bitcoin, such as Square or Microstrategy. The image below is proof of HSBC’s current sentiment towards crypto-related assets.

Message from HSBC to its clients

Source: HSBC

Surely such a dictate from HSBC to its clients flies in the face of a freewheeling capitalist bank, such as HSBC? Maybe HSBC is now taking a much more cautious stance, having once been found moving vast sums of dirty money and been forced into paying record anti- money laundering fines. One wonders how long HSBC will continue pursuing such an aggressive stance towards crypto or will it, like JP Morgan, end up ‘eating humble pie’ and even begin to back organisations engaged with crypto assets? Afterall, HSBC clearly understands the benefits of Blockchain technology, which gave birth to the asset class of crypto currencies since, back in September 2020, it published a report: “How blockchain could revolutionise bonds”. Furthermore, HSBC’s Digital Vault offers custody of assets including assets such as equity, debt or real estate. HSBC digitises its clients’ holdings whereby enabling customers to check their records without the need to request the paper documentation that maybe required, for an audit, or to check an interest payment for tax returns, for example. The benefit of using Blockchain technology and the digitisation of the records are a lower cost for HSBC and give clients faster access to information.

Undoubtedly, there continues to exists a blurring between traditional institutions and those organisations engaged in crypto assets and, as the size of both the cryptocurrency market and digital assets grow, the boundaries are likely to blur even more. The amount of money being invested into these sectors is ever-expanding...


On Tuesday

What have the Queen of England, the Catholic Church and Bill Gates all have in common? Landownership, and lots of it! Earlier this year, the Melinda and Bill Gates Foundation became the largest owners of farm land in the US, owning over 240,000 acres of land (approximately 97,000 hectares). The Catholic Church owns over 71 million hectares, which is a land mass the size of France, but the largest owner of land that is not a government is Queen Elizabeth II. According to the publication Love Money:By far the world's largest non-governmental landowner, Queen Elizabeth II is the head of the British Commonwealth and therefore legal owner of around 2.7 billion hectares of land, as estimated by The New Statesman. That's as much as a sixth of the planet’s land surface. The Crown Estate includes prime chunks of London, massive tracts of agricultural land in rural Britain and more than half of the UK's foreshore”. 

The real estate sector is estimated by Savills to be worth over $200 trillion globally with approximately $185 trillion as residential property and $15trillion as commercial real estate. More up-to-date figures from Associated Press last year claimed that the value of real estate world-wide was almost $270 trillion and expected to grow to over $330 trillion by 2023. In the UK alone, the residential property sector is valued at $8.7 trillion. Therefore, it ought to come of little surprise that many organisations are looking at how technology, including Blockchain, could improve the efficiency of how real estate is bought and sold and managed on an on-going basis. Much has been written about the tokenisation of real estate yet, to date, there have been relatively few examples - possibly because tokenised real estate creates a digital security which is subject to the same regulatory restrictions of any publicly offered equity or debt instrument. This means that issuing a digital security in multiple jurisdictions is not a straight forward process given one would need to comply with a range of different regulatory listing requiremnets.

It was therefore interesting to see that Binance, the world’s largest digital exchange, recently began offering tokenised equities i.e., an asset-backed security, but sold as a token. The offer from Binance gives investors the ability to buy a digital version of Tesla and Coinbase, yet it didn’t issue a prospectus (the normal requirement), but issued a one page document instead. This has stirred the German Federal Financial Supervisory Authority (BaFin) into action, cautioning Binance by stating that a prospectus would have to be published if they (who/what??) are to be “transferable, can be traded at a crypto exchange and are equipped with economic entitlements like dividends or cash settlements.” However, in Binance’s defence, the German-based digital platform, CM-Equity (where Binnace has listed its Tesla and Coinbase tokenised version) has already listed (what??) and is trading similar tokenised assets issued by FTX and Bitterex. 

Bitterex, itself, is offering access to the following equities for investors in various countries where it is usually not possible to trade such stock. Hence, it is easy to understand the attraction of creating tokenised stocks if the process is, indeed, legal:
Beyond Meat Inc 

As an aside, the demand for more digital fiat-backed stablecoins will no doubt increase if tokenised stock trading demand grows, since how will investors be paid the dividends they are entitled to? Surely not in fiat? As has been mentioned in previous editions of Digital Bytes, expect to see more organisations creating stablecoins in all the major currencies across the world. The creation of a host digital €, Yen, £, CHF and $ (of which there are a number already) will then enable real estate to start paying rental income in a digital format. The ability to pay dividends on equities and rental income from property in a digital format also offers the opportunity for companies and landlords to begin making distributions to investors more frequently. Most payment platforms, such as...


Last Thursday

Coinbase’s recent listing on the NASDAQ stock exchange is yet more evidence of how digital assets (in particular, crypto currencies) are getting closer to the traditional financial markets. According to the New York Times, there was a keen appetite for Coinbase shares from institutions as Coinbase was initially vlaued at $68 billion, but at the end of its first day’s trading was worth $85.7 billion. Subsequently, this ensured that the venture capital firm Union Square Ventures had an extremely profitable day since, way back in 2013, it had invested into Coinbase at 20 cents a share, whereby now making its Coinbase holding worth $4.6 billion!

Matt Levine is a well-respected and followed reporter for Bloomberg, so no doubt his recent comments on Coinbase will not fall on deaf ears throughout Wall Street: “Cryptocurrency exchange Coinbase Global Inc. goes public today, and I remain amazed at what a good business it is, compared to regular finance. Almost $1 out of every $1,000 in the entire crypto market - not $1 out of $1,000 traded, but $1 out of $1,000 of all the crypto that exists - went to Coinbase. Another way to look at it is that Coinbase touched $335 billions of crypto trades in the first quarter and took about 0.54% of the value of those trades for itself. Just for being the exchange, the platform where cryptocurrencies were traded.” Indeed, on the same day that Bloomberg printed this article from Levine, Goldman Sachs announced its latest earnings, with its CEO highlighting the growing importance of digital currencies and, in particular, cryptos such as Bitcoin: “Central banks are looking at digital currencies, working to apply this technology to the local markets and determine the longer term impact on global payment systems. Also, significant focus on cryptocurrencies like Bitcoin, where the trajectory is less clear as market participants evaluate their possibility as a store of value”.
Without a doubt, crypto currency volatility and ‘hype’ has dissuaded many traditional banks and asset managers from being involved in this new asset class. However, as we see organisations such as State Street's partnership with Gemini Trust, Fidelity Investments and BNY Mellon are now offering institutional-quality custody for cryptocurrencies. Thus  questions regarding crypto’s legitimacy are beginning to recede. 
BTC as a share of the cryptocurrency market

Source: Trading view
Historically, Bitcoin has attracted much of the attention when people talk about crypto assets but, as the above chart indicates, in the last year Bitcoin’s dominance over the crypto assets class has been falling. This is, in part, down to the fact that the next five most valuable crypto currencies (excluding Tether, which is a stablecoin) have performed so strongly in the last year compared to Bitcoin, as the table below shows.
 Performance of the six largest cryptos in a year
Market Cap as at 20th April 2021
Performance 20/04/2020 to 20/4/2021
Binance coin
Bitcoin cash

Source: Coingecko
What is interesting is that four out of the six - Bitcoin, Ethereum, Cardano and Bitcoin cash - are blockchains which means they are very much infrastructure plays. Interest in gaining exposure to the required new infrastructure continues from investors. It is very likely that there will be more than one blockchain since different blockchains, with their various characteristics, will be more suitable in certain circumstances. This may help explain the reason as to why the price of these different blockchains has appreciated so much in the last year. As a crypto currency exchange, Coinbase offers investors exposure to crypto and Blockchain-related investment opportunities. Given Bitcoin’s dominance of the crypto market, buying Coinbase offers investors indirect exposure to this asset. Coinbase are  unlikely to the last company to list on a traditional stock exchange, indeed how long will it be...


Last Tuesday

Central Bank Digital Currencies (CBDC) is a topic that is regularly asked about by readers. It seems that it is also a topic very much on the agenda for central bankers around the world. The Chinese have already started the rollout of their own CBDC and France, Japan, Sweden, Switzerland, the Bahamas, France, the Philippines and Turkey are all at various phases of testing with a view to launch their own.

Furthermore, CBDCs have very much been on the EU Central Bank’s agenda, and on 14th April it issued a press release updating the public on its findings from a consultation paper about a digital Euro. The three main findings were: citizens and professionals alike value privacy most for a possible future digital euro.
preference for a digital euro being integrated into existing banking and payment systems.
public consultation to provide valuable input for Eurosystem’s decision in mid-2021 regarding commencing formal investigation for a digital euro.

Interestingly, the consultation paper attracted “8,200 responses - a record participation for an ECB public consultation. A large majority of respondents were private citizens (94%)”. This indicates the interest in a digital Euro/ CBDC and what we believe is inevitable being that it is not if, but when, the EU will follow China’s lead and issue a Euro CDBC. On the very same day, Christine Legarde, head of the EU Central Bank, called for regulation on Bitcoin saying, “the digital currency had been used for money laundering activities in some instances and that any loopholes needed to be closed”, although she did not detail any specific examples on which to base her concerns about how and where crypto currencies had been used.

Destination of funds leaving illicit services in 2020

Source: Chainanlysis

However, in a report released earlier this year from Chainanalysis it would seem that the EU is not, itself, a hot spot for nefarious actors using crypto, but Russia and America appear to be where such activity is concentrated. The Chainanlysis report claimed that only 270 digital wallet addresses accounted for over 55% of crypto currency money laundering. The United Nations estimates, $800 billion to $2 trillion is laundered globally each year, accounting for 2%-5% of the global gross domestic product. The UN has not quantified the exact size of the crypto laundering market. However, a report published by MIT (in the US) has claimed criminals laundered US$2.8 billion through crypto exchanges in 2019, compared to US$1 billion in 2018. As of 2019, total Bitcoin spending on the dark web was US$829 million, representing 0.5% of all Bitcoin transactions. 

In 2014, Canada became the first country to pass regulation on crypto currencies with respect to anti-money laundering. The first real global response was not until June 2019 when the Financial Action Task Force (FATF) published its guidance for virtual assets and virtual asset service providers (VASP) having stated, “The FATF strengthened its standards to clarify the application of anti-money laundering and counter-terrorist financing requirements on virtual assets and virtual asset service providers. Countries are now required to assess and mitigate their risks associated with virtual asset financial activities and providers; license or register providers and subject them to supervision or monitoring by competent national authorities.” Following on from this, the Monitory Authority of Singapore Payment Services Act (covering firms which were involved in handling crypto currencies) stated that such firms needed to have a license and were required to comply with Anti Money Laundering (AML) regulations. In July 2020, the MAS proposed another set of regulations to control the crypto currency...


2 Weeks Ago

As the lock down restrictions in many parts of the US, Australia and the UK begin to ease, people will no doubt be keen, once again, to pay a visit to their favourite restaurant, pub, or local bar. In the last year your local hostelry has possibly had a lick of paint, whilst the food industry has witnessed unprecedented investment into non-animal-based alternatives as people increasingly focus on not eating meat. Indeed, in the US, Food Dive has reported that the numbers of people eating meat fell from 85% in 2019, to 71% in 2020. Furthermore, the Good Food Institute has reported that investment in the alternative meat market rose threefold in 2020 to a record high of $3.1 billion, stating: “Companies focused on plant meats, eggs, and dairy (as opposed to fermentation and cell-based-meat ventures) accounted for the lion’s share of that windfall, taking in three times the amount of capital they raised in 2019”.  

This change in eating habits is set to continue, according to Boston Consulting Group and Blue Horizon Corporation, with their prediction that the demand for ‘alt-meat dining’ would comprise 11 percent of the protein market by 2035 - climbing to 97 million metric tons annually, from the mere 13 million that is now. One of the challenges restaurants and food suppliers face is how to prove to customers that the food they serve is what it is claimed to be on the menu, whether this be where the food has been sourced, ‘local organic vegetables’, or how livestock has been treated and reared. According to Paymentsense’s report, 66% of the population now believe that ethical considerations matter when choosing where to eat, with 36% of people looking for locally sourced ingredients when eating out. The connected food chain 

Source: FoodLogistics.com

If restaurants and shops are able to generate better trust regarding what they sell, then this is likely to lead to greater loyalty and increased business. But the key is, how to generate more trust based on facts, as opposed to shallow advertising slogans and marketing spin? Well, as beforementioned, the facts as to how, where and when the food sold in the shops or served in a restaurant is grown or reared, and how sustainably produced it is, is all eminently possible using simple QR codes and Blockchain technology. With a quick scan using a mobile phone customers are able to gain a detailed insight to the provenance of the food they are about to consume.
In an article in Food Engineering Mag.com, Herain Oberoi, General Manager of database, analytics and Blockchain marketing at Amazon Web Services (AWS), believes: “The lack of data compatibility exposes supply chains to problems like visibility gaps, inaccurate supply and demand predictions, manual errors, counterfeiting and compliance violations. This is where blockchain can allow organizations to gain real-time, end-to-end visibility into their supply chains. Transactions are always time-stamped and up to date, so companies can query a product’s status and location at any point in time”. Nestlé Australia Ltd is one of AWS’s clients which uses Blockchain technology for its ‘Chain of Origin’ coffee brand. Armin Nehzat, digital technology manager at Nestlé Australia Ltd., asserts that the following characteristics of Blockchain help to ensure that the company delivers on its mission. “The combination of these blockchain characteristics is what helps us better collaborate with our suppliers and ultimately connect consumers with the provenance of their products”:
Transparent - members on the blockchain network can see everyone’s activities whereby ensuring everyone is held accountable to their deliverables.
Verifiable - as the product moves across the supply chain, participants can verify each other’s activities and raise alarms when needed. 
Immutable - once an update is made on the network, it cannot be changed. This means that users can always go back and audit activities to detect anomalies and learn from their mistakes. 
There are many Blockchain-powered platforms offering solutions in the food supply industry for retailers and restaurants which, in effect, makes it easier to ‘plug...


The crypto currency market has grown to over $2trillion in size with various digital assets now being held in over 70million wallets. The turnover (especially in the larger crypto currencies) is particularly impressive, where it is not uncommon to observe 20% - 40% of the value of a crypto being bought and sold in a day whereby demonstrating the liquidity of these assets.

The volume of crypto currencies being traded has been increasing, as can be seen from the chart below, with the start of 2021 proving to be especially active for this asset class. In March 2021 alone, Bitcoin miners earnt a staggering $1.5 billion in fees, while Ethereum miners had earnt $1billion in February 2021. 

Volume of Cryptocurrencies traded per month (spot v derivatives)


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Source: Cryptocompare

The DeFi sector is now over $112billion in value and in the last 24 hours has turned over $16billion Meanwhile, we have witnessed an explosion of interest in Non-Fungible Tokens, in the last 30 days there has been $103million turnover from over 573,680 tokens. As the image below shows the amount of money that some NFTs attract is likely to stimulate further interest from artist and other owners of IP.


Size of the NFT market

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Source: Nonfungible.com

To give some context to these digital asset numbers the value of  equities traded in the US in March 2021 was $656billion and  the daily foreign exchange volume is approximately $6trillion a day.

Possibly the most impressive statistic for crypto currencies is the daily turnover enjoyed by a number of digital assets. It is not uncommon to have 20% - 50% daily turnover (especially for some of the larger crypto currencies) and, in some cases, even more of their capitalisation being bought and sold within a 24-hour period. These daily turnover figures illustrate the liquidity and interest of these assets and would be the envy of many small and mid-cap equities being traded on traditional stock exchanges, where liquidity remains a key challenge for traders and market makers. One possible explanation is that crypto currencies can be traded globally enabling the generation of greater liquidity, whereas traditional stock exchanges (certainly, historically) represent the trading with a particular country.

IT stocks daily turnover v Crypto daily turnover

      Company    Current market   cap*

Value turned over per day

Alphabet         $1.52 trillion

1.826m*$2,250= $4billion

Amazon           $1.67 trillion


Apple               $2.17 trillion

107m*$129= $13billion

Microsoft.       $1.91 trillion


Bitcoin             $1.08 trillion


Ethereum        $0.23 trillion


*as at 8th April 2021

The interest in digital assets keeps expanding by the amount of funds under management in various pooled/collective vehicles, as can be seen below.


Funds under management in Investment products

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Source: Cryptocompare

Given the size of the various digital assets it is not difficult to see why these assets are attracting so much interest from traditional financial institutions. The interest is likely to receive a further boost since Coinbase has now announced that it is to be listed on the 14th of April in the US at a valuation of $100billion – although some feel this is too high! It will be interesting to see if the interest in digital assets remains, as and when we see a fall in traditional equity markets (which is long overdue), given we have not seen a substantial fall in equity prices now for over 10 years.


3 Weeks Ago

The profits of arbitraging an asset have been exploited by highly sophisticated investors, such as hedge fund managers, for years. These arbitrage profits can arise when an asset such as an equity, commodity, and now a crypto currency, can be bought on one exchange for less than the price it can be sold for on another exchange. Arguably, in theory this is a risk-free trade since you buy Bitcoin in one place and sell it for a higher price elsewhere.

Firms which are deeply engaged with crypto currencies such as Bitcoin, BitGo, BlockFi, Galaxy Digital and Genesis are increasingly targeting hedge fund managers, acting as lenders or, as some call them, shadow bankers. The hedge fund managers are exploiting pricing anomalies on Bitcoin between spot prices (the price offered on digital exchanges) and the futures price of Bitcoin, and executing trades that can generate annualised returns of 20%-40%. Meanwhile, many traditional banks are reluctant to engage with crypto currencies. Indeed, it can still be extraordinary difficult to even open a bank account in some jurisdictions if your company is involved in crypto currencies (although this is slowly changing). "The people with all the money - the banks, the brokerages - they're not in this space yet,” as has been reported by Jeff Dorman, chief investment officer for Arca Capital Management which specialises in digital assets. "Everyone wants to borrow dollars, but there's not enough dollars in the space. There is a huge cash shortage." Another indication of the lack of cash in this market is that most loans of stablecoins, which are typically backed by traditional currency reserves or a basket of other digital assets, also earn high yields. This is because stablecoins such as Tether and USD Coin are used, just like cash, to buy other crypto currencies.
So, how, in our so-called interconnected and sophisticated global financial services markets, can such pricing arbitrage opportunities occur? Well, it starts with the price difference between the spot price for Bitcoin and the value of a derivatives contract in a few months in the future. For example, on 30th March 2021 the Bitcoin spot price was US$56,925 while the July future’s price contract on an exchange in the US – CME - was at US$60,205. A hedge fund could buy Bitcoin at that spot price and sell the July futures, meaning the derivatives would gain value if Bitcoin were to fall. By doing so, a hedge fund could lock in a 4.9% spread between the cash and futures price and, annualising that between 30th March and July 30th (when the futures contract expires), could offer a profit of 19.6%. Therefore, hedge fund managers must have a means by which borrow from somewhere and, in theory, provided the cost of debt is less than the profit to be made, they will do these types of trades all day. 
But, you may say, what are the risks? The risk is shown in the above example that CME Group, quoting the futures price, goes out of business - which, if that happened, the hedge fund manager and the entire financial system would face more problems than a Bitcoin trade going wrong. Yes, it is possible (be it a remote one) that CME Group crashes, given how it is regulated it is. Meanwhile, the problem of banks not willing to engage with the crypto sector is well-known, in part due to a lack of regulatory and legal clarity over these assets and not helped by the perception...

There is noticeably a trend regarding posts on Linkedin. Digital Bytes has been commenting on and posting various articles about how global financial institutions are building the required infrastructure to enable the safe custody, management, trading, and expansion of digital assets including stablecoins, DeFi, NFTs and Cryptos. The common thread we have identified are the names of the organisations viewing the posts, together with the very global nature in terms of the cities and countries of the people who are viewing the posts.

Last week Digital Bytes this post which highlighted Visa’s announcement of its plans to have USDC and U$-pegged stablecoins on its platform, and concluded that this announcement ought to give the $63billion stablecoin sector even more awareness and interest. Indeed, stablecoins are a very liquid asset class and in the last month have turned over $100billion on average a day. The table below gives a snapshot of the 2,000+ viewers in the first few days following the previously mentioned Linkedin post and, as can be seen by the names of the financial organisations and locations of those viewing it, the range is truly international with viewers working for some of the best-known regulated financial services organisations globally.

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Source: TeamBlockchain/Linkedin

So far, in 2021, the pace of change and newsflow around cryptocurrencies has been very active. Last week, PayPal also jumped on the crypto bandwagon with its new ‘Checkout with Crypto’ (“PayPal converts users' crypto holdings to fiat currency at checkout, with no additional transaction fees”), allowing its US clients the facility of being able to pay for goods at 24 million online merchants around the world using a range of crypto currencies. 

The amount of stablecoins being held in exchange wallets

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This interest in stablecoins is undoubtedly expanding. French company, Coinhouse, has recently launched a Euro-backed stablecoin, with PwC France and Maghreb providing monthly attestations of the backing. Of real significance is the biggest stablecoin, Tether (with over $41billion of assets), having finally given the market comfort that it is, indeed, backed by reserves. Expect to see other payment platforms such as ApplePay, GooglePay, Mastercard, PayPal Square and SamsungPay all follow Visa's lead and start incorporating stablecoins too. It would seem that stablecoins are, in effect, preparing the way for government issued CBDCs…..


4 Weeks Ago

The success of a mutual fund has, historically, relied on three facets - good performance, confidence/trust in the asset management firm, and strong and effective distribution -because, even if you are best fund manager in the world, if no one has heard of you then it is tough to attract assets to manage. Performance takes time and can be very fickle, as can be seen by the fact that active funds typically underperform the indices that they are supposed to beat. Furthermore, in the past, large banks and insurance companies have had a captive investor- base or have been able to afford to pay to advertise nationally and, in some cases, globally, which has helped them funnel assets into their funds. However, confidence and trust need to be earnt as, after all, why would investors give their savings to an organisation which they did not trust? The regulators recognise this, and one of their main objectives is to ensure that confidence in the financial system is maintained with only honest and trustworthy individuals and organisations being permitted to be regulated and sell financial products. Unsurprisingly, this is why there is a prodigious amount of attention being paid to Neil Woodford, the UK-based disgraced fund manager who is alleged to have ‘broken the rules’ and invested too much into unquoted equities. The fallout of Woodford’s actions continues since one of the UK’s biggest financial advisors and ‘darling’ of many of the UK’s national press, Hargreaves Lansdown, is now being sued.

The Woodford fiasco could have been averted had his fund been subject to the rigor and controls required for being on a Blockchain-powered platform, whereby making the fund’s holdings transparent for all to see. Smart contracts could have been employed to automatically inform the regulator, administrator, auditors, custodians, financial advisors, fund analysist and, most important of all, the investors. These parties could have been informed in real time that Woodford had continued to ignore the fund’s stated strategy and was holding too big a % of the fund in potentially illiquid, non-quoted equities. For a while PwC has been saying that Blockchain technology can help mutual funds improve the efficiency of the way that the back-office settlement processes are handled by:
reducing costs - fewer reconciliation errors
speeding up settlement - faster validation 
increasing resilience - no single point of failure
improving transparency - easier to monitor

There is arguably now a fourth criteria to determine the success in terms of the size of a mutual fund - Environmental Social corporate Governance (ESG). The ESG credential of a fund is a key criterion adopted by more and more investors when making investment decisions, whether it be the fund managers in their selection of assets, or by advisors (or investors) when purchasing a mutual fund. This helps to explain why companies that offer fund analysis for financial advisors such as RSMR, are seeing increased demand from investors for this type of information. Again, a report from PwC claims that 77% of institutional investors plan to stop purchasing non-ESG products and in this same report PwC states further that: “ESG fund assets will account for more than 50% of total European mutual fund assets by 2025 at an annual growth rate of 28.8%.” The added transparency that Blockchain technology offers can enable fund managers to assess the ESG credentials of an equity or a bond and, in turn, blockchains can be used to show investors’ ESG credentials for a fund and how these ESG scores have worsened or improved over time. As the Institutional Asset Manager publication pointed recently reported: “Capco says that new technologies could improve ESG ratings, noting the growing use of “impact tokens” on blockchain as a way of offering proof that a positive impact has been delivered and attributing it to a particular investment.”

When looking at mutual funds, Blockchain technology can help asset managers, regulators and investors bring greater transparency to what has been a complex investment surrounded by acronyms and technical language which many private investors struggle to understand (assuming the small print has been read). Possibly, and more importantly, the use of Blockchain technology can greatly assist in the on-going regulatory monitoring, thus helping investors decide whether to keep the fund or not. The use of smart contracts can identify anomalies and raise attention in real time meaning compliance managers are able to spend their time on managing risks and potential breaches, as opposed to checking data and records which may be days or weeks out of date. Blockchain technology also...


A Month Ago

The Danish Red Cross has turned to using a Blockchain-based solution for its recently sponsored $3million Catastrophe Bond (CAT bond) which will provide aid in the event of a volcanic eruption. Replexus, the Guernsey-based firm that issued the bond, claims that its Blockchain-powered platform can reduce the cost for each bond issue by up to $400,000

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.
One of the key tools that the insurance sector needs in order to see greater adoption of Blockchain technology is a way to be able to collect premiums and pay claims using a digital currency. This need is being addressed, however, as a number of stablecoins (each backed by a variety of fiat currencies) have been, and are, in the process of being launched. The adoption of a Central Bank Digital Currency (CBDC) in the insurance sector is another use case for governments to be mindful of as a means of driving down costs and improving the efficiency in the insurance industry which, itself, is still largely ran on analogue-based systems. Nevertheless, it is an industry which is looking to embrace...


One of the key challenges which has faced governments and organisations (such as the World Health Organisation - WHO) as they fight to control the spread of a pandemic such as COVID-19 is gathering and understanding the colossal amount of data being collected. A number of governments, such as the Brazilians and the Cezchs to name just two, have turned to use Cross Industry Standard Process for Data Mining (CRISP-DM). CRISP was developed in 1996 as a European Union and was led by five firms - Daimler AG, Integral Solutions Ltd, NCR Corporation, OHRA and Teradata. It offered a methodology to analyse data and consisted of 6 steps:

Business Understanding 
Data Understanding 
Data Preparation
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...


We’ve had several readers respond to an article written in Digital Bytes on the 3rd of March 2021 about the fact that a number of the world’s largest debit card providers are now accepting cryptocurrencies on their payment platforms. Furthermore, whilst presenting at a recent on-line event, it was interesting to note that many of the attendees were surprised to learn that PayPal ($282billion) is more than twice the size of IBM ($115Billion) and Goldman Sachs ($119billion) in terms of its stock market valuation. So, we decided to look further into PayPal, a now global business which was established in 1998 just outside San Francisco. The table below offers a snapshot of some of the statistics regarding PayPal compared to Mastercard, Square and Visa. 

Payment platforms which accept fiat and crypto
PE Ratio
Revenue Growth (YoY)*
Net Margin*
Number of users
No. merchants 
2million (as at 2019)

*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? 

The average US citizen is a member of as many as 29 different loyalty programmes. Furthermore, some of the loyalty schemes have become more valuable than the corporations issuing the rewards points in the first place. Of note, America’s three largest airlines (American Airlines, Delta and United) have actually used their frequent-flyer rewards schemes as collateral to borrow capital as they struggle in the aftermath of COVID-19. Indeed, some analysts claim that “Frequent flyer miles are literally the only reason United and American haven’t filed for bankruptcy.” The largest bank in the US, JP Morgan, claims that loyalty programs could be an alternative asset class for investors to consider. Therefore, in view of Paypal’s involvement in the loyalty sector and ability to handle digital payments, together with the fact that it accepts cryptos, this could prove to be a real winner. As affirmation of this, the US publication, Barrons, has reported that PayPal’s integration of crypto currencies could add more than $1 billion to PayPal’s annual revenues by 2022. PayPal, along with other payments platforms such as Mastercard, Square and Visa, has the potential to give a huge boost to the adoption of cryptos as a form of day-to-day payment. As Barrons has highlighted: “A consumer could buy and store Bitcoin on the PayPal app and use it to make a purchase at a store or online retailer. The merchant would get paid...

As the world increasingly transitions from the constraints of national borders, and therefore becomes potentially less reliant on specific national legislation and regulations, this presents a real challenge for creators’ intellectual property (IP) as we continue to see the evolution of promoting their creative talents. Given the global reach of the internet and the ability to post and stream content on social media sites (such as Instagram and TickTok), there is a real challenge as to how to protect the creator’s IP.

The rewards for posting and having a ‘following’ on TickTock are highly appealing, especially for younger viewers who no doubt aspire to be able to repeat the success of some of TickTock’s highest earners, such as the 19-year-old Addison Rea (who is alleged to have  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...


In order to stimulate local and national economies, authorities need to engender greater confidence in the fact that it is, indeed, safe for people to return to their offices, shops, restaurants, entertainment venues and travel (particularly on public transport). We have seen initiatives in cities such as Girona, in Spain, where the Catalan De Blockchain has worked with city officials and technology providers to launch an app which their local football stadium is looking to use to encourage the safe return of fans. Called ‘Obrir Girona’, it is hoped that the Blockchain-powered app will enable the city’s local residents to gather at public events by using this ‘covid-free’ digital passes.

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...


According the FT, which is tracking the roll out of COVID-19 vaccinations globally, the total number of COVID-19 vaccinations which have been administered as at 9th March 2021, is over 305 million. Click here for the latest data. 

12 countries which have given the most COVID-19 vaccinations per 100 residents


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Source: FT

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...


The Mesopotamian shekel is believed to have been the first known form of currency and is thought to have been used nearly 5,000 years ago. However, due to the ‘scare nature’ of the precious metals used to make a currency, there began a search to try and turn basic metals that were abundant into precious metals via alchemy. Although the word alchemy dates from Egyptian times, around 300 BC an alchemist known as Zosimos of Panopolis wrote about the concept of a philosopher’s stone’, a legendary material that supposedly was able cure all ills, grant eternal life and turn metals into gold. It was believed by some to have been given to Adam by God. However, in more recent times it is Harry Potter who has made ‘the philosopher’s stone’ famous again but unfortunately the alchemists, even famous ones such as Sir Issac Newton, were unsuccessful in creating money out of thin air.

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 process of being a publicly listed company on the NASADAQ stock exchange has been  initiated in the USA by Coinbase, not via an IPO but as a direct listing whereby saving both  hours of management time carrying out a road show and $millions of fees. Interestingly,  Coinbase is not actually looking to raise capital since it is already sitting on $1billion of cash  and $350 of crypto currencies. Wall Street may look back on the event of this digital  currency exchange becoming publicly quoted as a precursor for a change in the way the  financial services sector is operated. The floatation of Coinbase will bring greater  transparency and trust into how money is being made from digital assets with some of the  brightest analysts pouring over Coinbase’s financials. Furthermore, it is inevitable that  similar firms operating in the digital assets sector will now be sure to follow Coinbase and  become publicly traded too. 

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...

There has been a string of announcements in which the leading payment processing  businesses worldwide are enabling their customers to use cryptocurrencies. In doing so, and  as these firms alter their back-office processes and procedures, are they potentially  preparing themselves to have the ability to process and handle Central Bank Digital  Currencies (CBDC)? 

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...


2 Months Ago

Fungible assets are items that we use and typically can exchange for other assets e.g., cash, land, shares etc, whereas a non-fungible asset is unique, rare and non-divisible, a good example being a ticket for a concert or a ticket to fly to Hong Kong first class. The Non-Fungible Tokens (NFT) Report (a copy of which you can get here) has been released by L’Atelier, a subsidiary of BNP Paribas. The report reveals that the NFT market grew to over $250million in 2020, a four-fold increase compared to the previous year.

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.

As mentioned earlier, NFTs for its enthusiastic supporters offer the ability to digitise the ownership of tangible and intangible assets. As we see data from individuals, cars, buildings etc being monetised for the personal benefit of the general public (as opposed to being used by corporate giants such as Alibaba, Amazon, Facebook, Google, Tencent, NFTs could enable this to happen faster using the infrastructure that some of the various digital exchanges have created. However, there are reasons to be cautious - almost all NFTs are recorded on the Ethereum and the cost...


There continues to be great speculation as to how much higher the prices of crypto assets, in particular Bitcoin, can rise. There exists a growing number of people concerned about the current economic back drop and some argue that this has helped drive crypto prices higher. Bitcoin, by some, is referred to as ‘Digital Gold’ and JP Morgan, the biggest bank in the world outside of China, claims that the price of Bitcoin could reach $146,000. In part, Bitcoin’s recent price increase has been fuelled by institutions buying cryptos in the belief that the decline in the US$ will continue as America gears up to pump another $1.5 trillion into its COVID-19-ravaged economy. 

Comparison of household savings 2014 - 2020

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...


Invesco DB US Dollar Index Bullish Fund

Chart, line chart

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Source: etfdb.com

In reality, Stablecoins are a relative description especially when pegged/backed/linked to a fiat currency. Those who have their assets in order to earn money or have expenses to pay in Yen, € or £ would hardly consider the US$ as ‘stable’. Indeed, a chart we have shown several times in Digital Bytes is the value of the US$ against a basket of other global currencies, and clearly demonstrates the downward trend of the US$. Nevertheless, stablecoins continue to attract investors’ attention and are being seen to further grow in value. Moreover, there is an even greater choice of stablecoins which are linked to other currencies and not just the US$, with examples in the last few months being: in the UK, London Block Exchange’s £-backed stablecoin; in Switzerland, Sygnum’s CHF stablecoin; in Japan, GOMO’s Yen stablecoin and in Germany, Bankhaus von der Heydt’s (one of the oldest banks in Europe) € stablecoin. According to Cryposlate, the value of stablecoins now stands at $153billion, the largest one notably still being Tether having seen its growth increase from $4.2 billion to over $31billion in the last year. While Ethereum remains the predominate Blockchain used for stablecoins there are other Blockchains being employed including Binance Chain, EOS Omni, Qtum, Stellar, Tron and Waves, to name a few.

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...

The asset management industry has undergone massive changes in the last few years, becoming more sophisticated in terms of the products and services that it offers as fund managers seek out new assets to manage and new ways of managing existing assets. As the wealth of many individuals has grown over the last 70 years so has the responsibility to provide for your own pensions arrangements as opposed to relying on the state - both of which have fuelled the growth in savings and the fund management industry.

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...