On Thursday

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

There is growing concern about the impact that some blockchains have on the environment. As Environmental Social and Governance (ESG) credentials are progressively coming under investor and government scrutiny, organisations are increasingly asking how efficient your blockchain is.

“The world uses over 170,000 TWh of energy per year, that means that the entire Bitcoin network, at its peak estimated consumption level, uses less than 0.1% of the world’s energy consumption. That’s for a network with 100+ million estimated users” is a quote from SwanBitcoin and, according to the University of Cambridge Bitcoin Electricity Consumption Index, the Bitcoin blockchain network consumes approximately 80 terawatt-hours of electricity annually - roughly equal to the annual output of 23 coal-fired power plants or close to the electricity required by Finland each year.
Energy Bitcoin Blockchain uses p.a.

Source: Cambridge Bitcoin Electricity Consumption Index

Bitcoin, with its Proof of Work (PoW) method of operation, compared to other blockchains that use Proof of Stake (PoS), is clearly much less efficient when it comes to measuring the amount of energy PoW Bitcoin uses to record a transaction. However, it is worth remembering that the amount of energy that Bitcoin uses is security metric, not speed or transaction metric, thus Bitcoin does not require more energy for more transactions since these 2 metrics are completely independent of each other. University College London’s (UCL’s) Centre for Blockchain Technology has recently carried out a survey to look at different PoS blockchains and their energy consumption.                                           

The Global Energy used per Blockchain

Source: UCL Centre for Blockchain Technology
Whilst the above examples use less than a 1/3 of the energy of Bitcoin, Dr Paolo Tasca, from UCL’s Centre for Blockchain Technologies, asserts: “However, through this research, we have found that not all proof-of-stake networks are created equally. This is something that both investors and adopters need to be wary of when selecting their network of choice.” He also advises to be mindful of the potential environmental impact of Ethereum 2.0 since it may well prove not to be as eco-friendly and efficient as some claim it will be. Furthermore, UCL found that a permissioned PoS blockchain consumed even less energy compared to permissionless blockchains, so this could be a key factor when considering which blockchain to use. Also, despite the energy required by blockchains to operate, UCL reported in its conclusion that: “POS based systems could even undercut the energy needs of traditional central payment systems, raising hopes that DLT can contribute positively to combatting climate change”. In order to address the amount of energy required to power the Bitcoin Blockchain, new more energy-efficient protocols are being harnessed. One of these is Lightning Networks which is being used for payments and for messaging, such as by Sphinx Chat (similar to WhatsApp).

Power used on a Bitcoin Lightning network versus a typical Social Media site

Source: CoinCorner

The challenge is that the more security that is required from a Blockchain and the faster you need a transaction to be processed, the more energy will be expended. Other factors impacting the amount of ESG of a blockchain include the hardware that miners and nodes use, together with the % of renewable energy that is used to power a blockchain (which is why 76% of crypto miners use renewables as part of their energy mix.) As ESG credentials are increasingly a focus so, too,...


On Tuesday

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

We have had a number of readers concerned about rising inflation and who have asked – “Can Bitcoin really offer protection against inflation?” As ever, the answer to such a question remains uncertain and only time will tell if we do, indeed, see the vast amount of cash which has been pumped into the global economy result in a sustained increase in inflation. Notably, the FED has recently confirmed that inflation is likely to rise and be persistently higher than was anticipated, and for longer than was expected just a few months ago. It is worth remembering, though, that the current fiat-based currencies are only 50 years old. On the 15th of August 1971, US President Nixon, in effect, ended the 25-year-old Bretton Woods system by no longer enabling one to convert US$ into gold. Fifty years ago, many jurisdictions’ national currencies were pegged to the dollar and in reality the US’s actions ended a gold-based system which had been the norm before. Today, as more and more people question the sustainability of fiat-based currencies, Jim Reid at Deutsche Bank, has summed up the current situation in a thought-provoking manner: “Interestingly, today crypto is starting to build up the strong passionate advocates that gold has had in the past. It also, however, attracts ridicule and disbelief. Whatever happens going forward, views, orthodoxy and money systems do change over time. Fiat money has only been the dominant framework for a small fraction of history and as such it shouldn't be too controversial to suggest it may not always be the system of choice. With endless structural deficits and extraordinary levels of money printing, we have certainly stressed its flexibility in recent years. Will there be a point when it breaks rather than bends?”

Of note, Bitcoin has rallied from $40,000 to over $58,000 in the last few weeks and the US’s largest bank, JP Morgan, believes this recovery is due to “the re-emergence of inflation concerns among investors and they are trying to use Bitcoin as a hedge”. Furthermore, JP Morgan claims the three reasons helping to explain Bitcoin’s recent price pick up are that: both Federal Reserve Chairman, Jerome Powell, and SEC Chairman, Gary Gensler, reported to Congress this week that they had no intention in banning cryptocurrency, as China had. The SEC claims it is taking a different approach to China, focusing on investor protection and regulation.

the recent increasing use of the Lightning Networks enables Bitcoins to be sent extremely fast and are gaining more attention “helped by El Salvador’s bitcoin adoption,”   

 JP Morgan clients since the beginning of 2021, $10+ billion has flowed out of gold exchange-traded funds (ETFs) and $20+ billion has gone into Bitcoin funds.

  Price of Bitcoin v Gold

Source: Goldmoney

Certainly, Bitcoin’s recent rally has helped it to out-perform gold. One the challenges that Bitcoin  and other cryptocurrencies face is that they are still a relatively difficult asset class for many institutions to invest in. After all, gaining access and safely holding Bitcoin requires specialist knowledge for private investors too. According to the Australia Financial Review, a survey of 2768 people in Australia found 23% of respondents wanted their pension funds to include crypto assets and, of the 5134 people who already owned crypto assets, 67% wanted to be able have cryptocurrencies as part of their pensions and savings. Millennials were found to be the most eager for crypto-exposure in their pension funds, with 40% of respondents born between 1981 and 1996 agreeing or strongly agreeing that superannuation managers should include this asset class. 

According to Canada-based company, Goldmoney: “The implications and prospects for fiat currencies’ purchasing power is dawning on the millennials who half understand the monetary problem. It has yet to dawn on the wider public…..Chasers of the crypto money mirage would do well to dismiss the hype and inform themselves properly about money. Gold has been true money throughout history, always re-emerging when fiat fails. No fiat, no electricity, no bitcoin”. What with the cost of energy prices rising, a lack of labour due to high unemployment, and on-going supply chain challenges creating shortages of goods, it is easy to see why we could see inflationary pressures mount. As ever, the key to a successful portfolio is diversification - hence we are likely to see inflation hedge old favourites such as gold and real estate to attract investors’ attention as well as Bitcoin.

Will users of Digital Assets need traditional custody providers? 
Custodians by assets under custody

Source: The Asian Banker

Banks are increasingly coming under pressure to adopt new business practises and offer alternative products and services as financial markets evolve and further embrace technology, both at an institutional and retail level. With our lives becoming increasingly digitised, there is a growing dependency on IT and machine-based processing as opposed to many of the...


On Thursday

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

The interest in stablecoins and Central Bank Digital Currencies (CBDC) continues unabated as corporations, regulators and governments begin to appreciate the transformational opportunities that these Digital Assets offer. Whilst COVID-19 has led to a decline in the physical use of cash, governments worldwide have given money to their citizens, arguably fuelling the biggest cash injection into the world economy ever.

For example, in the US, 20% of all the US$s ever created was done so in 2020. While the intention was to protect jobs and shield economies from the impact of lockdowns, the result was that many people received payments they arguably did not need – undoubtedly we have seen the savings rates jumping considerably.

European savings

Chart, histogram

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Source: ecb.eureop.eu

In France, companies received up to 100% of the previous year’s trading profits as a cash compensation as part of a $424billion COVID-19 stimulus, even though some businesses, again, did not need the payments. Meanwhile in the US, its citizens are sitting on a cash pile of $2.3trillion, having had a huge boost due to COVID-19 payments being made (at $1,400 per person) as part of the US’s $1.9 trillion economic recovery package. These payments were made regardless of the financial need of the individuals. The reason for highlighting this is, were governments able to target payments to those in real need, then the cost to those nations’ finances would have been considerably less. 

A more extreme example of the way in which Digital Assets can be paid is in China where the government has been trialling its new digital Yuan, due to be launched at the Beijing Winter Olympics in 2022. Selected on a random basis, the Chinese government has been giving its citizens the equivalent of $30, in the new digital Yuan, at a time, on condition that the money can only be spent in certain approved places and typically has to be spent with 5 to 10 days.

Trials for the Chinese Digital Yuan

A picture containing diagram

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Source: Fokast

The Hong Kong state has just released details of its proposed e-HKD (state-backed digital currency) that will run alongside the Hong Kong $ which, itself, is pegged to the US$. And, interestingly, another country just recently announcing that it is looking to launch its own CBDC is Georgia. In the US, there have been demands for stablecoins to be backed 100% by cash deposits - rather ironic as it would be impossible for banks to repay savers for the deposits they have made with the banks. Nevertheless, there are a number of existing stablecoins with further ones being planned that are/intend to be 100% backed by cash deposits.

In Digital Bytes we have written many times about CBDCs and stablecoins since this is a topic repeatedly asked about, especially as many organisations are looking at the accounting, legal, custody, banking, treasury and technical requirements  Not only do CBDCs offer governments greater control to issue capital to those most in need of financial assistance, but a digital currency could prove to be a way to tackle the challenges of the shadow economy and its citizens not paying the correct tax that is due. Without doubt we will see a number of governments issue CBDCs over the coming years and potentially a number of corporations will issue their own stablecoins too - but that is all for another day!


On Tuesday

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

Today, some 55% of the world’s population – 4.2 billion inhabitants – live in cities. This trend is expected to continue. By 2050, with the urban population more than doubling its current size, nearly 7 of 10 people in the world will live in cities”. This is a quote from the World Bank in an article looking at the urban development and how it is possible to strive to make our cities more sustainable and inclusive. Urban planners and governments are increasingly turning to technology to create ‘smart cities’. The concept ‘smart city’ is thought to have been first used by IBM when it spoke about “the capability of capturing and integrating live real-world data through the use of sensors, meters, appliances, personal devices, and other similar sensors.

How the world has become urbanised

Source: World Economic Forum

In more simplistic terms, a smart city looks to improve transportation, reduce congestion, and create more inclusive social services all the while being sustainable, so making the city a more desirable place to live and, in essence, solving the challenges of urbanisation such as increased demand for energy, water, transportation, waste disposal by using technology. City planners are realising that to make cities fit for purpose and ‘smart’, data is the key. Technology, such as Internet of Things (IOT) connected by using Blockchain-powered platforms, offers some real advantages in terms of collecting, managing, holding, and sharing data in a distributed but secure manner. This is opposed to centralised systems (which often lack the ability to scale and are reliant on one organisation) having control of all the data and, even worse, if hacked or subject to cyber-attacks the database is reliant on only one point of failure.

For example, a Blockchain-powered platform can store the history of vehicle accidents, their maintenance, miles driven, when and by whom. From this, premiums could be adjusted (depending on particular vehicles and the drivers) since data on insurance claims and maintenance parts can be processed automatically based on IoT devices inside a vehicle. Furthermore, as regards transportation, research has been carried out looking at how to try and minimise Particulate Matter (PM) from tires and brake dust with the use of Blockchain technology being chosen because the researchers claimed this technology had the ability to: 
respect the privacy of individuals,
be trust-worthy,
offer fair access to the geographic area for all citizens. 
All of these are important in developing human centric solutions to technical Smart City problems.

In the US, there are plans to create a smart city called Painted Rock in the state of Nevada, covering 68,000 acres. Unveiled last year, the plans envision a city of more than 36,000 residents, 15,000 homes and 11 million sq ft of commercial space. Blockchain LLC (the company behind these plans) estimates that eventually the city will generate $4.6bn in output annually and will be run using Blockchain technology. In Dubai, there are even greater ambitions with Digital Dubai stating: "Adopting Blockchain technology Dubai stands to unlock 5.5 billion dirham in savings annually in document processing alone — equal to the one Burj Khalifa’s worth of value every year. The Dubai Blockchain Strategy establishes a roadmap for the introduction of Blockchain technology for Dubai and the creation of an open platform to share the technology with cities across the globe. The Dubai Blockchain strategy is built on three pillars of government efficiency, industry creation and international leadership.” In order to fulfil its ambition to be a smart city using Blockchain technology, the Dubai Future Foundation has created the Global Blockchain Council. The Council will have 46 members including government representatives, global firms, UAE banks and international Blockchain technology firms.

In conclusion, IOTforall.com, summarises why it thinks the use of Blockchain technology will prove to be vital for the development of smart cities: “There exist many solutions that...


Last Thursday

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

In June 2021 in the US state of Texas, Governor Greg Abbott signed a new law known as the Virtual Currency Bill which came into force as of 1st September 2021. The impact of this is that Texas will now recognise virtual currencies, including digital currencies, into law. It makes Texas the second state after Wyoming to recognise cryptos. The fact that Texas now legally recognises cryptos is more evidence of how Digital Assets are being embraced and possibly helps to partially explain, along with Texas’s cheap power supplies, why so many of the Bitcoin mining firms which have fled China are now moving to Texas. However, companies engaged with crypto activities very much remain in the ‘cross hairs’ of US regulators. According to the Wall Street Journal ,the Securities and Exchange Commission (SEC) is alleged to be investigating Uniswap Labs, the organisation behind one of the world's largest DeFi platforms. Some publications, such as Coinidol, have indeed posed the question: “Is the US SEC in a War Against Cryptocurrency Business?”. No doubt this is off the back of the SEC investigations into some of the key crypto businesses such as Binance, Coinbase and Ripple.

Meanwhile, DeFi platforms are potentially challenging many of the traditional financial services - for instance lending, borrowing and insurance as well as investing, and have proved to be very popular for retail investors. In order to gain institutional appeal, DeFi platforms ideally need to be authorised and this is the route taken by Swarm Markets, itself having been regulated by the German regulator BaFin since 1st July 2021. Here in the UK, much frustration has existed regarding the time it is taking for the FCA to review firms’ applications to be listed on the FCA crypto register. As of 10th January 2020, companies engaged with crypto activities in the UK were required to register with the FCA and prove they had systems and procedures to comply with Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs). Whilst the FCA did grant temporary registration and allow existing firms which had been executing MLR crypto activities before the 10th January 2020, the FCA’s initial deadline to review these 100+ firms was extended to 31st March 2022. Those firms which have been granted the temporary registration include Revolut, Fidelity Digital Assets, Copper, eToro and a subsidiary of the huge Chinese Digital Asset platform, Huobi. Because of the FCA delay in the granting of permission to be able to offer crypto activities to UK citizens, it is believed that over 60 firms have relocated out of the UK. Furthermore, there are lawyers in the UK arguing that it could be illegal to promote Non-Fungible Tokens (NFTs) to UK citizens since some NFTs are backed by physical property and therefore may be considered to be security. 
However, the FCA is slowly granting registration for firms and adding them to the FCA crypto register - on the 26th of August, Coinpass, a UK-based firm which buys and sells crypto currencies was successfully added to the FCA crypto register. It has also recently agreed for another company, Ramp, to be allowed onto the FCA crypto register. Meanwhile, according to the FCA, also in the UK: "On 25 June 2021, the FCA imposed requirements on Binance Markets Limited. The firm complied with all aspects of the requirements. See our Supervisory Notice. See the FCA Register for any requirements that apply to the firm. These requirements remain in place and BML are still unable to conduct regulated business in the UK". One wonders whether this announcement from the FCA will give some comfort to those other regulators expressing concerns as to Binance, especially with regards to AML/KYC procedures. Interestingly, from a recent post we put on LinkedIn regarding the FCA adding firms to its crypto register, we had considerable interest not just from the UK but also internationally, as can be seen from the various jurisdictions below.

Source: Teamblockchain.net

This interest from various jurisdictions serves to highlight the global nature and interest in
cryptos and how they are regulated. Whilst professional advice ought to be always taken before conducting any activity in a country, Global Insights has a comprehensive summary for different countries when it...


2 Weeks Ago

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

There has been considerable coverage about how companies are able to use Blockchain technology to raise capital via tokens and while tokens are still being used as a funding mechanism - see here for a list of recent projects. The reality is that, until the volatility (the amount that the price of tokens zigs and zags up and down) declines and until we see real institutional buying of this new asset class, investors would be wise to commit a relatively small amount (3% to 5%) of their portfolio into tokens/cryptos. This leaves at least 95% and, arguably, this 95% of investors’ monies is where we could indeed see most disruption. The use of Blockchain technology to help improve the efficiency of issuing equity and debt by using smart contracts to report to compliance staff on an exceptions basis (by being able to monitor data that has been stored in a structured format) could prove to be a game changer for the financial markets.

The traditional ways of issuing debt and being tied to one jurisdiction (therefore needing to comply with certain tax requirements) may well not hold true for the issue of digital debt instruments. It is claimed by the German firm, Cash link, that over the life cycle of a bond, by using Blockchain technology it is possible to save 35% of costs by automating many of the current manual processes such as updating bond documentation. The use of blockchain could also reduce the number of intermediaries involved since bonds may no longer need to be registered with a central securities depository. Even more extreme, HSBC Blockchain technology could help streamline the process of tracking the use of bond proceeds, resulting in savings of as much as 90%. Either way, as costs are reduced it becomes possible for smaller debt issuance programs to be undertaken by firms which historically have not been able to access capital from the bond markets. Denis Coleman, from Goldman Sachs is reported as saying: “By lowering some of the barriers to participation in bond markets, blockchain technologies could eventually open them up to much smaller players. This is just the very start of a journey, but you could see the democratisation of bond markets.”

How do executive view Blockchain and Digital Assets?

Source: Deloitte

Therefore, it should be of no surprise to see the findings the Deloitte 2021 Blockchain Global survey (based on 1,280 firms world-wide) be so upbeat about the use of Blockchain and Digital Assets: “Banks and industries other have no choice but to embrace change Participation in the age of digital assets is not an option - it is inevitable. Leaders are only left to decide how and when their organisation should start - and how to use digital assets and new global financial infrastructure to their greatest advantage”.

As we start to see the issuance of more Digital Assets backed by real estate, debt and equities, there will be a growing demand to be able to make income payments digitally - i.e, rent, coupons and dividends. There is no reason why such digital income payments cannot then be made on a weekly or at least monthly basis as opposed to the current six-monthly distributions, which is the norm in equity markets with quoted companies making interim and final dividend payments. As investors and managers of mutual funds are offered a choice of greater transparency (one of the key attributes that Blockchain technology enables) lower costs and potentially more frequent income payments and the demand for more Digital Assets is likely to grow.

The future of Digital Assets

Source: Deloitte

Another increasingly important consideration for investors  that has to be addressed by those organisations looking to raise capital is Environmental Social Governance (ESG) credentials. Once again, according to KPMG, Blockchain technology  offers some real advantages: “The beauty of using DLT and blockchain is that it can be combined with a range of other emerging technologies to enable exactly the type of digitized, verified, tokenized, data-sharing platform that banks, insurers and asset...


3 Weeks Ago

Protecting investors and maintaining confidence in the financial markets were two of the key reasons for regulators to be established, so as to monitor activities in financial markets as opposed to a financial services sector that had previously relied on self-regulation, trust and honour.

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

As we have seen, what some call ‘the democratisation of wealth’ has created a fertile hunting ground for the nefarious-minded to prey on people’s ignorance. The desire for some investors to make (as the Americans would say) a ‘quick buck’ has led to a raft of con artists and scammers trying to misappropriate investors’ funds. In part, this has led to an initiative by the UK government called Take Five to Stop Fraud. The government has even been involved in the creation of Scam Academy, designed to help people “spot and steer clear of – three of the biggest financial fraud scams in the UK today...Email scams, Number spoofing and Phone scams”. Take Five To Stop Fraud

Source: Take Five To Stop Fraud

Fraud and scams are nothing new when it comes to money. CBS News lists its 14 top Financial Frauds as evidence of this including, back in 193 AD, a Praetorian Guard who tried to sell the actual Roman Empire, and in 1785, a corrupt priest and his prostitute lover (posing at Queen Antionette of France) who used the Queen’s line of credit to purchase a necklace is claimed by some to have helped start the French revolution! Unfortunately, scammers are increasingly turning their attention to Digital Assets, which are not (at the best of times) an asset class easy for novices to fully understand with its dazzling range of acronyms. The majority of Digital Assets are not regulated; therefore investors cannot rely on the safety net of investor protection schemes, but they are increasingly being drawn into Digital Assets because of the spectacular returns some of these Digital Assets have achieved. 

Furthermore, the problem of scamming appears to be worsening with the Federal Trade Commission in the US having reported: “Since October 2020, reports have skyrocketed, with nearly 7,000 people reporting losses of more than $80 million on these scams. Their reported median loss? $1,900. Compared to the same period a year earlier, that’s about twelve times the number of reports and nearly 1,000% more in reported losses”. Organisations such as CryptoChain University list various dubious websites where scams or fraudulent ICOs have occurred, and the Cryptocurrency Scambook cites 15 different scams to be aware of - worth a read for pointers as to helping decide if what you are being offered is a scam. As the article states: “A reminder to always make it a habit of being sceptical.” Arguably, the biggest scam associated with Digital Assets was Onecoin, perpetrated by the Crypto Queen, about which the BBC released a nine-part podcast. Onecoin never actually created a cryptocurrency - it was a hoax and scam from inception, yet managed to ‘snaffle away’ a reported $25billion.
The Crypto Queen

Source: BBC
Crypto scams are still occurring, and it is thought that 2021 will be a record year with over 14,000 scams being reported in the US alone in Q1 2021, with a combined value of over $215million.

Meanwhile, more platforms and exchanges are becoming regulated which will only encourage institutional investors into trading Digital Assets. Hopefully,...


4 Weeks Ago

Decentralised Finance (DeFi) has certainly caught the attention of our readers with a number asking whether DeFi is “just another fad, or does it truly offer real innovation in the way some of the financial markets operate?” 

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

DeFi what is it?

DeFi uses Blockchain technology and removes the need for intermediaries such as banks, brokerages, exchanges, clearing houses, custodians etc, to enable financial transactions to take place.
DeFi is decentralised and often relies on computer-based Smart Contracts, many of which use the Ethereum Blockchain (which currently means that some transactions can be relatively expensive and slow).
The net value of assets locked into DeFi platforms is approximately $86.5 billion, a considerable rise since as last September as then there were only $20billion worth of assets on DeFi platforms.  
DeFi platforms enable users to lend or borrow funds, offer insurance or trade assets.

Why the fuss?
DeFi platforms can offer the ability to trade 24/7/365, unlike the current financial markets. In October 2020, the FCA announced retail investors are not allowed to buy derivatives that give exposure to cryptos. According to the UK newspaper, the Telegraph: “Bitcoin is the original and still the most important cryptocurrency, but it cannot be owned directly in traditional tax-efficient accounts such as Isa and pensions”. Yet it would seem you can now simply pop down to the Post Office and buy a crypto as using  your EasyID verification with Swarm Markets. The German regulator, BaFin, has given regulatory approval to the Swarm Markets DeFi platform so will the FCA, therefore, ban retail investors from dealing with a regulated DeFi platform? Are we to see fund managers being allowed to use Swarm and buy cryptos in UCITs for ISAs and pension funds? Payment firms such as Visa, Mastercard, Applepay, Google Pay, Samsung Pay, PayPal have all taken a market share from the banks in the payments markets so could we see DeFi platforms that offer higher returns from depositing funds or DeFi lending services begin to threaten another core service which was historically offered by the banks?

What are the regulators doing about DeFi?
Depending on which jurisdiction you look at, it would appear that the regulators take almost opposing views. In the US, the SEC is very active in pursuing firms  that are not regulated and whom it believes are selling securities as Blockchain Credit Partners, based in Cayman, as its two founding directors found out. The company Blockchain Credit Partners has been paid penalties of $12million  and two of its directors have each paid to in penalties $125,000 as the SEC claimed that Blockchain Credit Partners had sold $30million of securities via their DeFi Platform. 

DeFi future?
DeFi offers anyone with internet connection access to any global currency, allows anyone the ability to generate an income on their deposits, or get access to loans instantly. The challenge is, is that because DeFi is decentralised, then were an investor to use an unregulated DeFi platform there would be no redress in the event of some nefarious actor ‘running off’ with your money. However, there is a possibility that the derivatives market could turn its attention to DeFi since the International Swaps and Derivatives Association (ISDA) has been looking at smart contracts for a while. The ISDA released its seventh paper on smart contracts...


A Month Ago

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

Typically, local authorities spend money in five different areas - education, public welfare, health, roads and criminal justice - and the monies they have at their disposal are not insignificant. In the US, state and local governments spent $3.2 trillion on direct general government expenditures in 2018 and in the UK, local authorities spent £94.6 billion in 2019-20. Therefore, it ought to be of no surprise that government offices are looking for ways in which technologies such as Blockchain can help them deliver services to the local community in a more efficient and transparent manner - after all, they are spending our taxes.

One of the key attributes that using Blockchain technology has, is the ability to offer greater transparency and therefore trust. For example in the UK, this offers some real benefits for local authorities when complying with special educational needs and disabilities (SEND) for young people. Historically, the current systems of many local authorities have been dependent on bureaucratic analogue procedures which rely on paperwork and files. Such cumbersome and bureaucratic processes demonstrate their efficacy (or, conversely, inefficiency), yet struggle to retain or expand social capital, chiefly ‘trust’ - i.e. parental trust in one local authority. Local Educational Authorities (LEA) rely on partners to cooperate – parents trusting professionals in their assessments of their children. However, by creating a blockchain-powered platform where all relevant parties can have access to the same data it is possible (using smart contracts) to create a ‘trust-free’ database with far greater transparency. 

Although the use of Blockchain technology would enable LEAs to replace bureaucratic systems in a variety of ways, they would absolutely need to be cognisant of what data is held and who has access to this data in accordance with GDPR legislation. However, this ability to verify and share information about children and young people known to a local authority could resolve many issues LEAs face regarding SEND. Such a new digital blockchain-based system would help to make holistic assessment feasible, ensuring appropriate intervention by monitoring and reviewing a child on an on-going basis. Blockchain technology would remove the need to have to trust in a centralised data controller (typically the school the child attends) in order to accurately represent the child’s needs for support and provision. Since all this data would automatically be shared with the LEA and relevant professional carers, on-going intervention could also be automatically triggered using ‘trust free’ smart contracts. Once services have been delivered, the ability to establish and implement self-executing pay-on-delivery would improve the quality of the evidence submitted to tribunals (and potentially the decisions made by judges) by providing clear quantitative data on the exact cost of a child’s support.

Another way that Blockchain technology could be used is the automatic payments of benefits. Chainlink is a ‘decentralised oracle network’ providing reliable, tamper-proof inputs and outputs for complex smart contracts on any blockchain. For example, Chainlink can be used to monitor weather temperature and rainfall data. By using smart contracts, automatic payments could be made against a local authority’s insurance policy covering flooding, power outage or sustained abnormal temperature fluctuations.

Source: Chainlink

In Reno, Nevada, the mayor is optimistic about using Chainlink, saying in a tweet: “The time is now to work on great projects for Nevada. $LINK.” Since blockchain-powered platforms have the ability to hold and store data, this enables the historic spending and payments made by a local authority to be very transparent. Interestingly, local authorities in the US will be receiving substantial funds in the near future from the American Rescue Plan which allows Federal relief funds to be sent directly to state and local governments of all sizes....

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

It could be argued that, since 2008, banks have had a torrid time globally as they desperately tried to repair their balance sheets and rebuild their capital reserves. The cosy cartel that many banks enjoyed has been challenged as they faced real competition from FinTech firms, with governments in various jurisdictions actively encouraging ‘challenger banks’ and ‘neobanks’ (on-line digital banking).

The payments eco system

Source: Insider Inteligence

Whilst you will no doubt recognise some of the organisations above, many are unlikely to be familiar. With increasing competition from a variety of companies, this is the conundrum that many banks face. Some argue that with the growing interest in Decentralised Finance (DeFi) another wave of change and competitors are on the horizon. Biznewspost claims: “The coronavirus pandemic accelerated payments industry digitization by two to three years, as lockdowns, restrictions, and ongoing consumer health concerns upended daily life in ways that trickled into spending trends and consumer habits.” Habits such as, ‘Buy Now Pay later’, have offered stiff competition for traditional banks as companies including Klarna (Europe’s biggest Unicorn valued at over $1billion ), Affirm, Afterpay, and even Paypal (having just paid $2.7billion for Paidy, a Brazilian buy-now-pay-later firm), are making it easier for shoppers to obtain credit as they spread the cost of buying over a few months.. According to CB Insights: “E-commerce software companies that support online retail have seen surging investment in 2021, with $12.4B raised in the first half of the year — a 51% jump from all of 2020”.

European FinTech Unicorns - firms worth $1billion+

Source: Sifted

According to CB Insights, there has been a tremendous growth in FinTech firms, with Europe now accounting for 25% of all 120 FinTech unicorns globally. A number of these FinTechs, and certainly many of the Payment platforms such as Google Pay, ApplePay (with 383million users), PayPal, Visa and Mastercard, are all accepting Digital Assets as payment. 

Payment platforms are preparing themselves for the inevitable issuance of digital currencies from Europe, the US, the UK and Japan, to name just a few, with one of the most established payment cards, Mastercard, having recently acquired a US-based business crypto intelligence firm, CyberTrace. Meanwhile on the whole, banks have largely fought shy of Digital Assets. Indeed, it still is the case that, apart from Clear Bank in the UK, it is extremely difficult for those organisations engaged in cryptocurrencies to even obtain a bank account. This is also true in much of Europe. In Australia however, as reported by TechWire Asia: “Approximately 17% of Australians own a cumulative AU$7 billion worth of cryptocurrency.” Volt, a neobank, has teamed up with a crypto exchange to enable clients to trade cryptos and, more importantly, hold/store them in their Volt account. This potentially means that Volt will be the first bank globally to be able to offer clients the ability to store Digital Assets and be protected by a nation’s bank deposit insurance compensation scheme.

For a while the traditional banks have suffered from low Price Earnings with JP Morgan’s 2021 estimated PE 11.7; Europe’s largest bank, BNP Paribas, PE 8.8; Japan’s largest bank, MUFG, PE 6. If you compare this with some of the payment platforms’ PE - Visa 54.78, Mastercard 48.8 or Paypal 70 - you can see (in terms of which forms have the best prospects for future earnings growth) what investors are believing, as they are clearly rating the...

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

One of the impacts of the COVID-19 pandemic is that many traditional jobs were at best suspended, and many have been lost. However, what was created was an ideal back drop for those with time on their hands and an internet connection to look for other ways to fill their days and earn money, whereby helping to explain the phenomenal rise in popularity of Play to Earn. Arguably, Axie Infinity has led the way, having risen in price from $4.47 on 7th June 2021, to over $74 now

Axie Infinity

Source: Axie Infinity.com

Axie Infinity describes itself as a "digital pet universe on the blockchain" where players look after their digital pets. However, in order to start playing, small digital animals called Axies need to be purchased. Ironically, the game (which was developed in Vietnam) has been dominated by people in the Philippines who make up 40% of the players. Now the Philippine government is also looking to profit as it seeks to levy tax on the gains its citizens are making. Due to the popularity of Axie, the price of Axies has risen immensely - meaning for those who cannot afford the initial purchase price, they are able to enrol for Axie scholarships at Axie Universities. A ‘scholarship’ in Axie Infinity is when an owner of Axies gives free Axies to someone, resulting in the original owner/donor earning a % of the players’ income. These types of scholarships are a helpful way for those people new to cryptos to learn how to use digital wallets and how to cash in the ‘Secret Love Points’ that one earns while playing Axie Infinity. Depending on the scholarship terms, the profit share can vary between having to pay away 30% to 40% of the income generated.

Another Play to Earn on-line game is Blankos Block Party, from Mithical games. Its developers also worked on highly successful video games including Call of Duty, World of Warcraft and Guitar Hero. When playing ‘Blankos, one can earn Non Fungible Tokens (NFTs) which can be traded on marketplaces. Rudy Koch, a co-founder of Blankos, has said: “What NFTs allow us to do is to bring the player into the economy so they can participate in the value that they bring to the game. Through the items that they earn, through the levels that they build, through the customizations that they make - they own the NFTs. They own the items, for the first time. And they can play with them, they can sell them.” Whilst the idea of buying and selling items you have won/earnt from playing on-line games is not new, the ownership and transparency that comes with Blockchain technology is. Burberry, the fashion designer and retailer has its Non-Fungible Token (NFT) collection on the Blankos Block Party. Rod Manley, chief marketing officer at Burberry, has stated: “That pushing boundaries through experimentation is at the heart of what the company does and it is excited to unlock genuine value for the gaming community by encouraging players to interact with the brand in an environment that celebrates art, design and exploration”.
Burberry’s collaboration with Block Party demonstrates how traditional global brands are engaging further with Digital Assets as a means in which to raise their profile among a new and growing audience which is paid to play.

For readers who are looking for more information about other pay to play games, including update of new games due to be launched, there is now an on-line publication called Play to Earn on-line.  But remember, these games afford no guarantees and players can lose as well...

Written by Jonny Fry
Writers linkdin: https://www.linkedin.com/in/jonnyfry/

There appears to be a growing realisation that, as a society, we will have no choice but to live with COVID-19 and its mutations. Many times we have witnessed the fact that, as soon as a country allows international travel, there is the potential for the virus to quickly enter its shores. Far-flung countries, such as Australia and New Zealand, initially evading the ravages of the virus last year and appearing to have been able to hold it at bay by strictly shutting down their borders, have now found themselves in prolonged lockdowns.

While there exist many who are ‘anti-vaxxers’, there are a growing number of countries and businesses insisting that you have to be able to prove you have recently been tested and/or you have had two vaccinations, before you can enter a particular jurisdiction, shop, restaurant or event.

The challenge is, how do consumers and travellers prove their vaccination status or their most recent test results? Whilst there is no definitive answer to this question, we are increasingly seeing a number of organisations turning to the use of Blockchain technology as the basis of a digital, transparent solution. Indeed, the World Economic Forum has proposed that for travellers to foreign countries “a ‘vaccine passport’ or ‘e-vaccination certification of compliance’ for border crossing regulations” could be required “to enable seamless border-crossing”. In Europe, the Digital Green Certificate, a digital certificate for travel available to cover anyone vaccinated against COVID-19 or those who have recently been tested and proved to be negative, is seen as a possible solution.

One of the first platforms to use Blockchain technology was by the International Chamber of Commerce and the world’s largest medical, security and travel repatriation firm, SOS. They launched AOK in May 2020, allowing users to keep control over their personal data whilst allowing them to share an authenticated digital copy of their COVID-19 compliance status certificate. IBM’s Digital Health Pass, using a Blockchain-powered platform, is now  integrated with Amadeus which, itself, is an airline booking system that is used by more than 450 carriers worldwide and means that your health and vaccination status can be securely stored and then shared when you book in at an airport. It seems that governments are pushing the responsibility for covid health and vaccination proof onto the airlines; in a similar way that it is the airline that checks to ensure you have the correct entry vias before you board a plane. Hong Kong University has teamed up with ConsenSys to build the Medoxie COVID-19 Digital Health Passport which will run on the Ethereum Blockchain. As reported on the website Business Blockchain, Karen Cohen, deputy chair for Blockchain Australia believes a blockchain-based COVID-19 certificate could pave the way for the protected circulation of health data worldwide, stating: “This would be a really wonderful test case as a globally secured way of sharing health data.”

However, the use of Blockchain technology is not without its challenges when it comes to using this technology to store and cryptographically share information, including issues such as:
speed of the blockchain 
cost to record data
security of data - personal information will need to be hashed/stored in a manner such that the data could not be subsequently removed at a future time. There is very much the need to be mindful or privacy laws and regulations such as the General Data Protection Regulation (GDPR)
close attention to the management of vaccine certifications and test results 
the success of immunity and vaccine certifications will be largely dependent on the trust in the public authority which, in many countries, cannot be taken for granted. 
vaccine passports...

There are reported to be over 480 exchanges which trade Digital Assets but, as with traditional stock exchanges, there are just a few exchanges which dominate the trading of Digital Assets.  

The six biggest digital exchanges (excluding derivatives)

Source: Coingecko.com

The six largest Digital Asset exchanges all usually enjoy daily turnovers - i.e., reported to be buying and selling billions of US$ worth of transaction in 24 hours - which is impressive when you consider the number of Digital Assets they list is, at most, only 335. In terms of valuation of these exchanges, Coinbase is the only publicly quoted firm (having listed earlier this year) and is currently valued at $54 billion. Coinbase’s valuation is greater than that of the NASDAQ stock exchange, which itself is valued at $31.5billion. NASDAQ is the world’s second largest stock exchange in terms of the value of the companies that are listed on its exchange. When it first listed, Coinbase's valuation was almost as valuable as Goldman Sachs, yet it only employs 4% of the number of staff compared to Goldman Sachs. Notably, Coinbase has recently announced some very impressive trading results which has enabled its cash reserves to swell to $4.36billion.

It is understood that the crypto exchange, Kraken, is also considering an IPO (having seen the success of Coinbase’s listing) and it is thought that Kraken will look to float for $20billion. Kraken has 6 million investors and its COE, Jesse Powell, has told CNBC: “The first quarter just completely blew away the entirety of last year. We beat last year’s numbers by the end of February. The whole market has really just exploded”. Binance is the biggest Digital Asset exchange with its Binance token being worth over $70billion (although it had previously been valued at $100billion in May 2021). Whilst Binance has recently had to face some regulatory challenges in various jurisdictions, its US subsidiary has expressed a desire to become listed and raise $100m. Binance is another example of a Digital Asset platform which has become very profitable and yet it, too, only employs a fraction compared to other long-standing financial institutions. For example, back in 2018, Binance made a profit of $54million more than Deutsche Bank, with just 200 staff at Binance compared to Deutsche’s 100,000 employees.
The world’s 18 largest stock exchanges

Source: Statista.com

There are other exchanges, whilst not as large, which are attracting impressive valuation such as Naga AG, based in Germany, which continues to trade on a lofty PE of 170 compared to NASDAQ’s PE of 27.9. NAGA’s copy trading turnover grew by over 360% in the first half of 2021 compared to the previous year. Meanwhile in Asia, Indonesia's first regulated cryptocurrency exchange, TokoCrypto, is looking to list as a publicly traded company in the next two to three years, having made $10 million in profits in the first half of 2021. According to the publication Nikkei Asia: “Tokocrypto launched its token offering (TKO) on the Binance platform in May 2021. Around 200,000 people participated in the offering and committed around $4.2 billion, Tokocrypto said it holds approximately $1 billion worth of TKO tokens and has 800,000 users; it claims to acquire a new user every five seconds”. Even in India,...

Thomas Power, Alan Sugar’s first apprentice back in the 1980’s, often reminds me about the famous line “Show me the money” in the film Jerry Maguire or, as some say: “Put your money where your mouth is”. Well, global banks are certainly doing that when it comes to investing in companies which are engaged in blockchain and/or Digital Assets. The publication, Business Insider, has drawn up a list of 13 of the worlds’ global banks which have already invested in firms that are involved in a variety of different ways with Blockchain technology and/or Digital Assets:

Global banks investing in companies engaged with Blockchain technology

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Source: Blockdata

55% of the 100 biggest banks are increasingly being asked by their clients to offer services to allow them to become engaged with Digital Assets. One of the most common services is that of providing custody services i.e. the ability to securely look after clients’ Digital Assets, with 23 of the 100 biggest banks in the world (ranked by assets undermanagement) actively exploring crypto custody solutions. Standard Chartered is providing custody for ICAP, the world’s largest interdealer broker, as it launches a cryptocurrency trading platform in conjunction with Fidelity Investments. This will enable many of ICAPs and Standard Chartered’s clients to be able to access and trade cryptos.

Furthermore, payment platforms continue to embrace digital currencies, with Paypal (which has over 400million customers) recently announcing that it is to launch the facility for its UK clients to buy and sell crypto currencies. This comes on the heels of last week's announcement from Walmart (the world’s largest retailer with over $555billion of sales last year) that it is searching for an expert to head up crypto and digital payments - presumably to enable Walmart to transact using digital currencies? This job vacancy comes not long after Amazon, too, announced that it was searching for someone with a similar skill set.

Yet more evidence of how merchants and payment platforms are embracing Digital Assets - which they will have to do (as will the banks) if we are to see CBDCs being launched in Europe, Japan, Sweden, Korea, UK and USA...... For a quick way to see what different central banks are doing about launching CBDCs click here for the CBDC tracker map of the world.

A recurring question we receive is: “I thought Blockchain technology was bad for the environment as it uses so much electricity”. So, we decided to analyse how this technology is helping to meet the challenges of climate change. A report from the World Economic Forum (WEF) has illustrated how ‘Blockchain technology can be used to help commodity mining companies reduce their emissions’. The WEF has also published its finding on ‘How blockchain and cryptocurrencies can help build a greener future’. 

Seven ways Blockchain can help the environment

Source: Future Thinkers

The website, Future Thinkers, cites seven ways in which Blockchain technology is able to help improve our environment, and we have also given examples of various organisations in each category:
Supply Chains - Provenance
Recycling - Plastic bank
Energy - Lo3nergy
Environmental Treaties - Dr. Mike Troilo talks about Blockchain Technology and Sustainable Development
Non-Profits - Charity digital
Carbon Tax - IBM Blockchain Labs
Changing Incentives - Smart key

Adelyn Zhou, from ChainLinks labs, recently wrote an article in an WEF publication explaining how smart contracts could help fight climate change and cope with its impact, giving three examples: 

i) Regenerative agriculture - incentivise communities around the world to reduce their carbon footprints through more sustainable land-use practices (usually a combination of planting trees and conservation) an example being, the Green World Campaign in collaboration with Cornell University’s Initiative for Cryptocurrencies and Contracts (IC3).

How smart contracts technology incentivises regenerative agricultural practices

Source: Chainlink Labs

ii) Conscious consumption - smart contracts can also empower environmentally conscious individuals and organisations. As an example, Blockchain-powered energy grids such as the Brooklyn Microgrid Project are using smart contracts to give consumers the ability to produce and trade solar electricity with their neighbours through an exchange which uses a blockchain as a coordination mechanism. 

iii) Hedging risk with crop insurance - farmers across the globe (the vast majority of whom are entirely uninsured) are especially vulnerable to changes in weather patterns, be it rainfall, drought, wind, and more. It is believed that 75% of agricultural risks remain uninsured, which has encouraged companies such as  Arbol and Etherisc to offer smart contract-powered crop insurance to farmers across the world.

It is not only the World Economic Forum that is supportive of Blockchain technology, but also the United Nations (UN): “The UN believes that blockchain, the technology lying behind these online currencies, could be of great benefit to those fighting the climate crisis, and help bring about a more sustainable global economy”. The UN has practical experience of working with blockchain projects, having been rolling out its Building Blocks in different countries. Building Blocks enables the UN to distribute money to refugees - directly, securely and quickly - without the need to go through a local bank. It has been successfully deployed in refugee camps in Jordan, enabling the UN to create an accurate on-line record of who has received what, and when. It is thought by the authors of a report commissioned by the UN environment agency, UNEP, that Blockchain technology could also improve the livelihoods of waste pickers, who eke out a living in the informal economy.

Looking back at 2017 and 2018, there was so much hope and promise as to how Blockchain technology could help the 1.8 billion unbanked globally as well as being a force for good to help improve our environment creating a cleaner, fairer economy by breaking down many of the existing ways of doing business. It is encouraging to see from some of the above examples it really would seem that the hopes and dreams of some of the early adopters and...


Decentralised Exchanges (DeFi) continue to gain a growing number of users as the level of trading and wide selection of assets and services they offer expands. The total value of assets in DeFi is now over $84billion compared to only $1.8 billion in June 2021. So, what is driving this expansion of DeFi?

DeFi enables owners of cryptocurrencies to earn interest and allows one to borrow, lend and buy insurance, or just speculatively trade. In effect, DeFi aims to offer owners of cryptocurrencies a range of services in a decentralised manner - typically offered by traditional financial markets which rely on centralised exchanges and clearing houses. Gartner believes that DeFi has 2 to 5 years before it reaches a plateau of productivity i.e., when the technology starts to enjoy mainstream adoption which, in reality, is not very long for a technology that could shake the foundations of the financial services sector.

       Hype cycle for Blockchain - July 2021

Source: Gartner.com

Meanwhile, by using smart contracts DeFi is looking ‘strip out’ much of the friction costs that accumulate due to the necessity of dealing with multiple intermediaries together with the need for audits and checks, regulatory compliance monitoring, and associated fees and costs - all of which stifle many existing traditional financial services today. Notably, Harvard Business Review cites a comparison between Yield Farming versus Foreign Currency Carry Trading: “The search for passive returns on crypto assets - “yield farming” - is already taking shape on a number of new lending platforms. Compound Labs has launched one of the biggest DeFi lending platforms, where users can now borrow and lend any cryptocurrency on a short-term basis at algorithmically determined rates. A prototypical yield farmer moves assets around pools on Compound, constantly chasing the pool offering the highest annual percentage yield (APY). Practically, it echoes a strategy in traditional finance - a foreign currency carry trade - where a trader seeks to borrow the currency charging a lower interest rate and lend the one offering a higher return. Crypto yield farming, however, offers more incentives. For instance, by depositing stablecoins into a digital account, investors would be rewarded in at least two ways. First, they receive the APY on their deposits. Second, and more importantly, certain protocols offer an additional subsidy, in the form of a new token, on top of the yield that it charges the borrower and pays to the lender”.

Interest in using DeFi lending has certainly increased as more people access pools of borrowing facilities, whether they be holders of Digital Assets looking to generate a yield on the Digital Assets they own or borrowers wishing to increase their exposure to this asset class. Forbes has described DeFi lending as: “Unlike with a traditional bank, borrowers using DeFi apps cannot be held accountable with physical assets if unable to effectively pay back a loan. DeFi applications are similar to smartphone applications, but they built with smart contracts”. CoinmarketCap, which tracks cryptocurrency prices in real-time, lists a variety of other lenders and DeFis apps where yield farming returns vary from 0.2% p.a to over 40%.

The three largest DeFi app lenders - Aave, Compound and MakerDao

Source: Dune Analytics @hagaetc

In turn, Harvard Business Review has proposed that: “DeFi offers a less volatile and more accessible point of entry than other markets - and may just have enough appeal to bring...


The term stablecoin, a digital currency backed by US$s, could be seen as somewhat misleading for American citizens since they will have witnessed the value of their $ fall in value over time. The lack of stability/buying power can be seen due to the impact of inflation. One US$ in 1695 would be worth 76.5 times than it is today or, to think of it another way, one US$ in 1935 is worth 20 times what it can purchase today. 

The decline in the value of the UD$

Source: Staitisa.com

The impact of inflation is not confined to the $. Since its launch, the Euro has fallen in value by almost 33%. Hence the need to ensure that you have your investments in the long term, protected from the ravages of inflation in real assets. Yet despite this, many of us keep money in a bank?
Fall in the purchasing power of the Euro

Source: in2013dollars.com

Notwithstanding the impact of inflation, would it not be more accurate to refer to a fiat-backed digital currency as a pegged coin (as opposed to a stablecoin) since surely stability is a relative and not an absolute description? Digital currencies, backed by a fiat currency, arguably fall into two categories - Central Bank Digital Currencies (CBDC) or stablecoins (typically issued by non-government organisations). Regardless of what you call a digital currency, backed by $, £, €, CHF or Yen etc, there are a number of advantages and disadvantages surely worthy of consideration for digital currencies. Stablecoins were once dismissed as a way to store ‘ill-gotten gains’ when ‘crypto whales’ wanted to reduce their exposure to crypto currencies, and neither could access $ in a bank account nor wanted to deal with a traditional financial institution. Ironically, going forward we could see regulators being supportive of digital currencies and possibly insisting that issuers of income producing assets (such as equites and bonds) change the frequency of income payments. A stablecoin would enable customers to be treated ‘more fairly’ since stablecoins could facilitate digital equities and digital bonds to make income payments more frequently, e.g., weekly. The income due to an investor could be calculated based on the number of days a security has been held, as opposed to waiting for monthly coupons from bonds or six-monthly dividend payments. 

Another advantage of a digital currency is that it reduces the costs and time taken to remit money, as well as reducing the cost of money spent by tourists when overseas. This is likely to impact many of our readers who travel overseas or indeed run their own businesses, especially if they are trading with overseas suppliers and/or customers.

Size of retail cross boarder payments

Source: Bank of International Settlements

Challenges to be addressed:
infrastructure - this is the technology behind digital currencies which is able to handle the volume of transactions
potential environmental impact of some Blockchain technologies
privacy of users
interoperability - how will digital currencies be able to interact with cash?
decentralised vs centralised technology - in a truly decentralised environment, if there is a problem, who is held to account: ‘Mr and Mrs Bitcoin’?
those who prefer, or are only able to use cash - according the Bank of England, “Today, there are currently 1.2 million unbanked people in the UK, who by and large rely on cash and cannot access digital payments or can access them only at disproportionate cost”
loss making - given current interest rates, stablecoins cost, not make, money.

Central Bank Digital Currency status

Source: CDBC Tracker

For an update on what different countries and their central banks...


The interest in Digital Assets continues to rise and, according to Crypto.com which carried out research on 24 of the largest crypto exchanges, now over 221 million people globally claim to own some form of Digital Asset. The other trend identified by Crypto.com is that the dominance of Bitcoin and Ethereum is reducing, from 67% at the beginning of 2021 to 51% by the end of 6th July 2021, as investors are now buying other cryptos. There are reported to be over 504 digital exchanges with Coingecko having a list of over 489, of which 310 are showing that some form of trading has taken place in the last 24hrs.

Number crypto currency holders globally

Source: Crypto.com

Therefore, the number of people holding Digital Assets could be far higher, and this ignores the daily raft of Non-Fungible Tokens (NFTs) being issued. For example, Reuters has reported that Open Seas (one of the most popular NFT exchanges) has seen the volume of NFTs traded on its exchange exceed $2billion in the first half of 2021. In June 2021 alone, Open Seas handled over $18 billion NFT trades valued at over $1billion. The types of assets being ‘wrapped’ in NFTs is very varied, as the chart below shows. 

of NFTs sold in various categories Jan -June 2021, on the Ethereum Blockchain 

Source: Non Fungible.com

We have highlighted this issue before, but could liquidity in the crypto markets prove to be too irresistible for institutions? Small and medium sized companies (small caps) which are quoted on stock markets around the world have typically been shunned by institutions and been mainly traded by specialist fund managers. Many larger institutions and wealth managers tend not to buy small cap shares directly but gain exposure to this asset class through specialist small cap funds. The reason often cited is the lack of liquidity of small caps therefore making it difficult to invest large sums into a small cap or, worse, not being able to sell small cap shares without substantially moving the price of the underlying shares.

However, there is growing evidence that even cryptocurrencies, which have a relatively small capitalisation, enjoy deep levels of liquidity. For example, it was reported last week that one of the world’s most famous footballers, Lionel Messi, is transferring from Barcelona to Paris St Germain and, as part of his renumeration, Messi is to be paid in PSG Fan Tokens. At the time Messi joined the French football club PSG Fan Tokens were valued at $24.37 with a market cap of $44,815,247. Following the official announcement of Messi’s transfer, the PSG Fan Tokens price climbed to a high of $61.23 increasing the tokens capitalisation to $56million, and the number of tokens traded exploded to almost $630million. Even in the last 24 hours, PSG Fan Tokens are trading at $32.87 and the volume of tokens traded in the last 24 hrs was $49million. With these levels of trading activity, it ought to provide sufficient liquidity for most institutions to buy and sell without adversely affecting the price. A word of caution though, as one needs to be careful about crypto trading volume data since those exchanges which report volumes are not regulated, and occasionally crypto trading can look higher than it really is due to wash trading. But more on this another time….

Another statistic worth keeping an eye on is the value of funds which are held in various Digital Asset Exchange traded products and mutual funds, as these are more accessible to private investors. Coinshares claims that such products now have almost $50 billion of assets undermanagement.

Digital Assets Exchange traded Products and Mutual funds net new assets ($million)

Source Coinshares.com

Coinshares has also reported that in 2021 to...


2 Months Ago

Venture Capital (VC) funds invested a record $8.8 billion into blockchain and Digital Assets in the first half of 2021, hitting an all-time high . One of the most active VC firms, Tiger Global, had invested most of the $6.7 billion fund it raised in March by June. In Tiger’s recent update to investors, it reported that it had “consistently underestimated the market for private tech companies. Six months earlier, data suggested a $3tn market opportunity. It was now closer to $5tn”. Indeed, Tiger Global has been one of the most active investors in companies engaged in Digital Assets, such as Amber, Coinbase, Babel and Coinswitch Kuber, to name just a few.

Unsurprisingly, it is difficult for asset managers to ignore earnings that have exploded by more than 16 times in July compared to June, which is exactly what the Axie Infinity token (Axie) did in July, generating $190 million in revenue. In June, Axie, with its Non-Fungible Token ‘pet’, demonstrated the opportunities which gaming firms offer by enabling gamers to earn as they play. The company’s game went viral in the Philippines where 60% of its gamers come from. Earning $110 a day playing Axie is a considerable sum in a country where the average income in a month is only $250.  Axie’s token price has risen from $3.6billion on 27th June 2021 to over $49billion on 27th July 2021. Performances such as this are difficult to ignore, especially when the turnover for Axie has ranged between $120million to $7.5 billion a day, according to Coingecko - phenomenal liquidity for such a new organisation offering institutional buyers the ability to trade reasonable positions.

Historically, investors had simply bought a crypto such as Bitcoin or Ethereum, possibly because they were the two largest and most actively traded cryptocurrencies. However, as evidence mounts that such a narrow ‘buy and hold’ strategy has underperformed other investment strategies, asset managers’ attention is turning elsewhere.

Crypto asset performance

Source: Aaro Capital

As pointed out in a recent article by London-based Digital Assets manager, Aaro Capital: “The above chart shows the compounded returns of the average cryptoasset fund against a buy-and-hold investment in BTC and ETH or a value-weighted portfolio based on the top 100 assets by market capitalisation. The left panel shows the compounded returns for the whole sample from March 2015 to June 2021. The red vertical line indicates February 2020, i.e., the initial stage of the COVID-19 outbreak. The right panel shows compounded returns for the sample starting in February 2020, that is, assuming the initial investment is made right before the outbreak of the COVID-19 pandemic”. 

A recent survey by Goldman Sachs found that 46% of family offices are interested in cryptos and, interestingly, it cites reasons including concerns about potential higher inflation rates in the future. Nadine Chakar at State Street would appear to sum up the current sentiment and explains a possible reason for the ongoing interest in cryptos “We are at a tipping point now where this is moving fast. We are getting calls from endowments and foundations that are getting donations in crypto and saying, what do we do with this? We are seeing companies that are thinking of adding crypto to their balance sheets. The growth in popularity of digital assets is showing no signs of a slowdown and State Street Digital is committed to continuing to build out the necessary infrastructure to further develop our digital assets servicing models to help meet our clients’ growing demands.” State Street is the US’s second oldest bank, with $3 trillion of assets under management and one of the world’s largest custodians globally. In the same vein, Sean Taor, head of European debt capital markets at Royal Bank...

The importance of a good night’s sleep cannot be overestimated and how many people do you know personally who say: “I am a dreadful sleeper; I just wish I could sleep like I used to as a teenager”? A study of 470,000 individuals looked at the potential correlation between sleep duration and cardiovascular disease, with short sleep being identified as between 5 - 6 hours per night and long sleep as greater than 8 - 9 hours. Lack of sleep is not only potentially dangerous for your health, but it can also lead to a loss of productivity and economic activity.

A study in Australia estimated the economic cost of poor sleep to be as much as  $45.2 billion p.a. Another study, organised by RAND Corp, discovered that the cost of lack of sleep across five OECD countries (Canada, USA, UK, Germany and Japan) exceeded $600 billion a year.

Ways to monitor your sleep

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Source: Nature.com

There are a variety of ways for someone’s sleep to be assessed. Wearable devices such as smartwatches and activity bands monitor the amount of sleep by using a combination of movement signals (accelerometry), heart rate and heart rate variability. The number of hours of sleep can then be downloaded, as well as the number of times the wearer has woken up each night. Furthermore, now included in the bedding market is a range of ‘smart beds’ from companies such as Sleep Number, Mattress Firm, Tempur-Pedic and Casper which have sensing features and/or temperature control. However, all well and good as regards monitoring one’s sleep patterns, but once personal data begins to be shared remotely with a third party this is where some real challenges around personal data security, GDPR etc, begin and, in theory, where Blockchain-powered platforms can help. Since 2012, Estonia has been a pioneering jurisdiction when it comes to using the power of blockchain technology to handle healthcare data. Currently, its entire healthcare billing, 95% of health data, and 99% of prescription information is digitally maintained via a Blockchain-powered platform.

What is surprising is, that for a condition such as insomnia which (according to SleepCogni) affects one in three people across the world, there appears to be few examples of how Blockchain technology is currently being used to track and monitor sleep. However, if you are aware of information to the contrary, please let us know. Meanwhile, whilst having nothing to do with Blockchain technology, here is a list of 12 actions thought to help you get a better night’s sleep. 

Sweet dreams!


Once again we see evidence of how  payment platforms are embracing digital assets. Mastercard’s Start Path program, implemented in 2014 to help businesses gain traction and scale, is a good example. Since then, Mastercard has announced a new global initiative involving 7 fintech start-ups, all of which are focused on developing crypto services. Mastercard has reported: “We believe we can play a key role in digital assets, helping to shape the industry and provide consumer protection and security. Part of our role is to forge the future of cryptocurrency, and we’re doing that by bridging mainstream financial principles with digital assets innovations.” Meanwhile, hot on Mastercard’s heals is Visa, having written a blog post titled: “Advancing our approach to digital currency”. Included in the blog was: “We’re reshaping how money moves across the globe, and that means pursuing a broad array of technologies and partnerships. In that regard, digital currencies offer an exciting avenue for us to continue doing what we do best: expanding our network-of-networks to support new forms of commerce. Fiat-backed digital currencies, commonly referred to as “stablecoins,” have emerged as a promising new payment innovation, combining the benefits of digital currencies with the stability of existing currencies like the US dollar. It’s a concept that is gaining traction beyond fintechs, and now includes financial institutions and central banks.”

Furthermore, PayPal’s CEO, Dan Schulman, has been very optimistic about PayPal’s involvement with cryptocurrencies. In a recent presentation to investors discussing PayPal’s latest earnings Schulman expanded on the features his company was introducing. He did also spend some considerable time expanding on Central Bank Digital Currencies (CBDCs), remarking that: “We are working with regulatory agencies, central banks across the world. The number of countries that are looking at CBDCs, central bank issued digital currencies is increasing rapidly. You’re like at 40 countries six months, a year ago. You’re almost up to 100 countries looking at it right now.” Added to this, ApplePay (with its 500 million customers) would also appear to be looking to embrace cryptos; it has a recent job posting advertising that it is looking for staff with: “5+ years’ experience working in or with alternative payment providers, such as digital wallets, BNPL, Fast Payments, cryptocurrency and etc.” UnionPay, the world’s biggest payment platform, although not that particularly well known outside of Asia, has 5 billion UnionPay payment cards in issue. UnionPay has an estimated 270 million internet shoppers as clients and it is worth remembering that in China, alone, on-line shopping is expected to be in excess of $2.3 trillion in 2021. Whilst there have been few recent new developments from UnionPay regarding its crypto plans it did announce at the end of 2020 that it was launching a payment card with the Korean payments firm, Danal, to offer its Paycoin cryptocurrency as an option.

One thing all the payment platforms will need to consider is the forthcoming new money laundering regulations. The EU’s Sixth Anti-Money Laundering Directive (6AMLD) has proposals to include a crypto currency sector. Therefore, those firms involved with handling cryptos will be required to verify the identity of those sending and receiving transactions. Following BREXIT, the UK will not implementing 6AMLD but HM Treasury has published a consultation and is potentially looking to implement Financial Action Task Force (FATF’s ) “Travel Rule” for crypto assets. In view of this, firms handling crypto assets will need to be able to track and transfer the ownership of crypto assets for their clients and be able to pass this information to other organisations.


Blockchain technology and the digital assets it can create were once shunned and treated with suspicion but, then again, people are often reluctant to accept change. However, now we see highly respected multinational corporations and even governments beginning to figure out and start using blockchains (and digital assets) as they realise the transformational opportunities this technology offers. Greg Medcraft, who was the chairman of the Australian Securities and Investments Commission and has been in Paris at the Organisation for Economic Co-operation and Development (OECD) for three years, is very candid about the outlook for banks and what regulators need to do in reference to Blockchain technology:

“Regulators need to prepare for disruption by blockchain”.  Blockchain business models can reduce costs and make markets more transparent, but, as OECD's extensive policy work on blockchain shows, many new challenges will arise. Decentralised Finance" (DeFi) will emerge over the next decade, creating a parallel financial system operating on the internet. DeFi is revolutionary. It is the next frontier, definitely. The arrival of mainstream central financial institution digital currencies (CBDCs), which is able to allow DeFi, are maybe 5 years away With DeFi, there isn’t a friction.  You’re looking at replicating numerous current elements of banking it is inevitable that governments will have digital variations of paper cash, which can sit alongside non-public “stablecoins” (digital foreign money whose worth is pinned to an underlying fiat foreign money), to allow funds to settle reliably in actual time on blockchains”. 

This is not the first time that Medcraft has been outspoken and supportive of Blockchain technology. When he joined the OECD in 2018, he stated in the podcast The Blockchain revolution and power of positive distruption: “I see blockchain’s potential coming from its 3 key use cases: 
1. Secure transfer of value; 
2. Secure transfer of data; 
3. Cyber-security and privacy, provided by its distributed nature of nodes. 

Blockchain’s benefits for businesses include:
Reducing the number of intermediaries needed for any type of transaction. 
Improving the transparency and traceability of goods in the supply chain.
Speeding up payments and reducing costs. 
Increasing security and privacy of data and assets. 
Improving access to markets and financing, particularly for SMEs. 

To this end, policymakers’ efforts should be guided by three objectives: 
i) To be pro-active and forward looking. This will help us avoid regulatory knee-jerk reactions and resist the temptation to jump in before we properly understand developments.
ii) To ensure regulators and policymakers keep up to date with the rapid changes brought about by new distributed ledger applications, and the need to build up their capacity to understand and deal with these innovations. 
iii) To ensure a coordinated approach on two fronts: First, working collaboratively with key stakeholders, including industry, academic and consumer groups. Second, internationally. The global nature and inter-connectedness of markets call for international co-operation to avoid regulatory fragmentation, curb incentives for regulatory arbitrage, and spread best practice.”

The importance and transformational impact that Blockchain technology is likely to have, and the importance that the OECD attaches to it, can been seen with three out of the four topics for the OECD 2021 Symposium on Digitalisation and Finance in Asia this autumn which are focused on the use of the technology:

24th September 2021
SESSION 1: Central Bank Digital Currencies (CBDC): latest developments and design considerations. SESSION 2: Artificial Intelligence (AI) in Finance.
1st October 2021
SESSION 3: Decentralised Finance. SESSION 4: Asset tokenisation: latest trends in policymaking.

Meanwhile in Australia, the government is clearly taking note of the potential disruption that Blockchain technology offers. The Digital Finance Co-operative Research Centre (which is comprised of over 20 members from the finance industry in Australia) has been selected to receive AU$60million from the Australian government in order to examine the digitisation of real-world assets such as equities,...

Bitcoin mining requires considerable computer power, and therefore electricity, so naturally the major Bitcoin miners have located parts of the world where the price of electricity is the lowest.

The electricity cost to mine a Bitcoin

Source: Changelly.com
There is a widely held perception that Bitcoin mining has to be detrimental to the world’s environment because it uses more power than individual countries, although many do not realise that the tech sector alone accounts for 2-3 percent of all global carbon emissions according to the UN. Interestingly, while there have been concerns about the amount of electricity that cryptocurrencies such as Bitcoin use, we are now increasingly seeing alternative headlines such as: “Why Energy Concerns Around Blockchain May Be a Misconception”.

The electricity Bitcoin mining uses compared to other countries

Source: U.S. Energy Information Administration, Country Data, 2019 est. (or most recent available year)
Recently, US Federal Reserve Chairman, Jerome Powell, referred to Bitcoin as ‘essentially a substitute for gold rather than for the dollar’. If this becomes the case, we could see a significant increase in investors in Bitcoin and, as the chart below indicates, Bitcoin mining does actually use less energy than gold mining!

The amount of electricity used to mine Bitcoin v Gold in a year

Source: Cambridge University

Of importance is that the price of generating electricity from renewable sources is now often less than using fossil fuels. According to the International Renewables Energy Agency: “In the last ten years, the cost of electricity from utility-scale solar PV fell by 85 per cent, onshore wind by 56 per cent and 48 per cent for offshore wind”. However, the problem is that often renewable energy is generated in remote locations away from where any power is consumed; it is also being generated 24hrs a day including at night when electricity demand is usually at its lowest.

The cost of renewable energy is falling

Source: irena.com
This is where Bitcoin mining is able to help since, provided you have an internet connection, any surplus power can be utilised instead of being transported around a national grid or stored in still relatively inefficient batteries. Bitcoin mining offers an opportunity to wean the world off its fossil fuel dependency and transition over to using renewable energy sources by acting as a complementary technology for clean energy production and storage. An added benefit is that the more renewable energy plants there are, the lower the unit costs become due to economies of scale, whereby encouraging more investment into renewable energy projects and potentially bringing the marginal cost of producing electricity from renewable sources close to zero.

Contrary to popular belief, much of the energy required for Bitcoin mining comes from renewable energy sources such as wind, solar or hydroelectricity power plants. Because renewable energy projects can use surplus energy, they create at off peak demand to mine cryptocurrencies such as Bitcoin. This can then enhance the investment returns for a renewable energy project so encouraging further investment into other renewable energy projects. Bitcoin mining can act as a source of income for countries such as Iceland, Georgia, Russia, Venezuela because these countries have Bitcoin miners located in these jurisdictions 

Value of Bitcoins mined per day

Source: Ycharts.com

Historically, China has accounted for up to 60% of...

There appears to be a scramble for staff in the Blockchain sector on Linkedin. Currently, the professional network platform has over 1,700 vacancies - click here and see for yourself.  On cryptojobslist.com over 3,100 vacancies are being advertised. Meanwhile, on an Indian website, Naukri.com, over 48,800 jobs are on its advertisement page.

It seems that many traditional firms are also searching for staff. The US’s largest bank, JP Morgan (with assets of $3.2 trillion), is looking to hire staff in its Blockchain subsidiary, Onyx, which was launched back in October 2020. According to posts on LinkedIn, JP Morgan is looking for people in its auditing, marketing and engineering departments. It was not even a year ago that JP Morgan sold off its Blockchain busines, Quorum, to ConsenSys. This was followed, in April 2021, with JP Morgan along with Mastercard, UBS and other investors being part of a $65million fund raiser for Consensys. Visa recently reported that it had increased the number of “crypto partnerships” by 43% in these last four months to date as interest in cryptos continues to grow. Off the back of this, Visa is also looking to recruit more staff. Amazon is presently looking for a head of crypto payments on its website: “ You will leverage your domain expertise in Blockchain, Distributed Ledger, Central Bank Digital Currencies and Cryptocurrency to develop the case for the capabilities which should be developed, drive overall vision and product strategy, and gain leadership buy-in and investment for new capabilities”. Does this mean Amazon, as a company, is looking to invest in cryptocurrencies or start accepting cryptos as payment for goods? Binance has been searching for 350 staff globally with Zhao, its CEO, reporting to Bloomberg that: "We are hiring aggressively. We see the industry growing exponentially on a year-to-year basis, and we need to scale our team to cope with it." Furthermore, in the legal world it would seem that Tech Crunch’s headline, “the NFT craze will be a boon for lawyers”, appears to have been spot on. Specialist NFT lawyers have been inundated with new business enquiries from companies looking for regulatory and legal advice as they search how best to monetise their IP with NFTs. Charlie Kerrigan, partner at the law firm CMS, has recently commented: “NFTs are unusual because there has been such a strong uptake in a short time. We work with crypto firms and with sports, entertainment and other media firms and the level of interest and ingenuity were seeing is mindboggling. The projects are a good example of the skills modern lawyers require since they mix technical issues of regulation, IP and data alongside commercial advice, negotiation and project management. We have to listen well and be on our toes!” 
Many people in the past have complained that Blockchain and the digital assets it creates was simply ‘smoke and mirrors’ - in fact, the reality is totally different. Certainly, the above examples all clearly demonstrate a demand for those employees who can help firms ‘build-out’ their Blockchain plans. The cyberpunks who aspired to help the world’s 1.7 billion unbanked and by-pass the banks, regulators and stock markets have given way to quoted global multinationals and governments. Often well-known brands and long-established firms have realised that whilst they are not keen on crypto trading, the technology which underlines these digital assets (i.e., Blockchain) is able to address the real...