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Global Banks Pouring Billions into Blockchain Development, Survey Finds

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Global financial institutions have moved past the exploratory stage when it comes to blockchain technology and are now pouring billions into new commercialization initiatives, according to industry research published by the U.S.-based Greenwich Associates.

Blockchain Spending Surges

The Greenwich study shows financial institutions increased their blockchain budgets by 67% last year, spending a combined $1.7 billion on various commercialization projects. Ten percent of the surveyed institutions reported spending at least $10 million on blockchain technology in 2017.

The study, which interviewed over 200 financial institutions from around the world, noted a major shift in how banks view distributed ledger technology (DLT). In particular, the industry has moved “beyond the proof-of-concept phase” and is now actively rolling out commercial blockchain products.

Employment dedicated to blockchain initiatives doubled in 2017, with top-tier banks averaging 18 full-time staff working on the technology.

Among those surveyed, 14% reported to have successfully deployed a blockchain solution, with payments and trade finance targeted the most frequently. Cost reduction was cited as the biggest driver of blockchain adoption, though revenue opportunities, settlement time and risk management also factored into the decision-making process.

“More than half the executives we interviewed told us that implementing DLT was harder than they expected,” Richard Johnson, Vice President of Greenwich Associates, said in a statement. “Nevertheless, more than three-quarters of projects currently under development are expected to be live within two years.”

The Blockchain Economy

The global blockchain industry is expected to top $60 billion over the next six years, with the likes of IBM, Microsoft and Accenture leading enterprise-grade adoption. Much of that effort will be dedicated to creating new “digital economic infrastructure,” according to the India-based Market Reports Center.

In a recent study, McKinsey & Company tested 64 use cases for blockchain technology in a survey of 200 companies. Seven of the 24 financial services use cases identified were deemed to be the most viable. Researchers concluded that these seven use cases alone could generate between $80 billion and $110 billion in economic impact, with cross-border business-to-business payments being the most likely to benefit.

Enterprise blockchain only scratches the surface of the true size and scale of the distributed ledger economy. Hundreds of startups have raised tens of billions in financing for initial coin offerings (ICOs), which have themselves spawned multi-billion-dollar investment communities dedicated to buying and trading tokens.

Cryptocurrency markets are currently in a protracted downturn. Six months ago, they peaked above $840 billion. Recent developments in institutional adoption suggest banks and other financial service giants could drive the next leg in the crypto-market rally.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 461 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Three Reasons BIS Crypto Rebuke Is B.S.

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What a difference a week makes. Traders in recent days have found more reasons to celebrate cryptocurrencies than to fear them, despite the best efforts of central bankers. The combined market cap of the cryptocurrency market is hovering at more than $293 billion, top digital currencies are trading in a sea of green and investors who sold too early are kicking themselves.

As Hacked.com previously reported, the Bank for International Settlements (BIS) published a scathing report on the cryptocurrency industry, rehashing old arguments against decentralization and adding more fuel to the fire. But there are chinks in the armor of their argument, much of which surrounds a lack of trust, extreme volatility and cryptocurrency mining power consumption.

Ripple’s Brad Garlinghouse recently reminded us that bitcoin is not a panacea. The BIS report, however, is full of bias and fails to acknowledge that for every issue that bitcoin faces there are fixes, such as a push toward alternative power-fueled bitcoin mining as well as KYC and AML efforts among the leading exchanges.

Cryptocurrency trader Brian Kelly on CNBC outlined a trio of reasons to doubt the findings of the BIS report, which are summarized below.

  • Crypto Threat

Kelly points out that the very reason that bitcoin was created in the first place was as an alternative to the centralized financial system. That in and of itself places a bullseye on the back of bitcoin, even though central banks have explored developing their own digital currencies. He said: “Bitcoin itself is an existential threat to the central bankers.”

  • Old School vs. New School

The other secret that the BIS report reveals is the old-school mentality that central bankers are stuck in. Kelly likens it to the rise of digital news versus traditional newspapers, reminding us of the early 1980s when it took a couple of hours to download an article on the San Francisco Examiner. He calls it “new guard/old guard” but also concedes that the cryptocurrency market, e.g. prices, probably got far ahead of the technology.

  •  P2P Nature of Bitcoin

Lastly, it’s the peer-to-peer nature of bitcoin, which again removes the friction from payments as well as the hefty fees and lengthy transactions that are attached to them. “The middleman in this particular case is the BIS and the central banks,” Kelly said.

While bankers may feel threatened by decentralization, it’s not the other way around. Blockchain pioneers have repeatedly said that there’s room enough for both.

Market Rally

Cryptocurrency traders have glossed over the BIS report not because they aren’t willing to listen to reason. Instead, it’s more like the central bankers failed to accomplish much other than to point to the flaws in a nascent decentralized financial system without acknowledging the drawbacks of their own.

Meanwhile, the best defense is a good offense, and today’s cryptocurrency market rally is a big score.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 16 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Bitcoin Could ‘Bring Internet to a Halt,’ Says Bank for International Settlements

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The Bank for International Settlements (BIS) has delivered its most vocal criticism yet of bitcoin and related cryptocurrencies, arguing that the digital asset class may never be ready for mainstream adoption in the financial world.

BIS Weighs on Bitcoin, Cryptocurrency

In a 24-page report published Sunday as part of its annual economic review, BIS said bitcoin suffers from “a range of shortcomings” that will ultimately derail its effort to become a widely used method of payment and investment asset.

The arguments put forward by BIS are not unlike previous criticisms lobbed at the digital currency. The report’s authors argue that bitcoin consumes too much electricity and is at the center of too much manipulation to become a key artery in the global economy and financial system.

“At the time of writing, the total electricity use of bitcoin mining equalled that of mid-sized economies such as Switzerland, and other cryptocurrencies also use ample electricity,” the report said. “Put in the simplest terms, the quest for decentralised trust has quickly become an environmental disaster.”

According to the Bitcoin Energy Consumption Index courtesy of Digiconomist, bitcoin miners consume more electricity than 159 countries. For BIS, the size and growth rate of digital currency ledgers will eventually overwhelm existing technologies and bring the Internet to a halt.

BIS also concluded that, despite claims to the contrary, bitcoin’s decentralization is a fundamental flaw because it is “a poor substitute for the solid institutional backing of money.”

Based in Basel, Switzerland, BIS is an 88-year-old institution that promotes financial stability through central banking. It has been described as ‘the central bank for other central banks’ and has been instrumental in measuring the impact of the global currency markets.

Institutions Embrace Cryptocurrency

Despite BIS’ warning, institutions ranging from Goldman Sachs Group to the New York Stock Exchange are taking important steps to make cryptocurrencies accessible to their clients. Even banks choosing to remain on the sidelines of the crypto revolution are adopting blockchain technology to improve internal processes and boost business opportunity.

According to a recent study by the U.S.-based Greenwich Associates, major banks increased their blockchain budgets last year by 67% to $1.7 billion. Payments and trade finance are the most popular commercialization initiatives. The blockchain is also being exploited for revenue opportunities, settlement times and risk management.

BIS even acknowledged the power of distributed ledger technology in its criticism of cryptocurrency. The report released on Sunday conceded that distributed ledgers can improve functions related to cross-border flows and trade finance.

That said, an institution like BIS is clearly ingrained in the existing financial paradigm that has given more power to central banks. The “solid institutional backing of money” really refers to the fact that central banks can print as much money as they want while fractional banking allows institutions to lend out considerably more money than they hold in reserve. A supranational body like the BIS, which promotes this system, is unlikely to develop a favorable view of bitcoin.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 461 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Crypto Conspiracies – Fact or Fiction?

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Cryptocurrency was born in mystery, and much of its young life thus far has been enveloped in the same enigma which followed its anonymous creator.

Such beginnings make fertile ground for conspiracy theories, and the noble denizens of the internet have not failed us on that regard.

There are probably too many crypto-conspiracies for any common journalist to cover in the space of one article; but we’ve got time for a few particularly juicy ones.

Before you go reaching for your tinfoil hat, be aware that some of these are tinged with a shadow of truth. Often times the theatre of the conspiracy theory distracts from the real issue at its core.

Bilderberg Bitcoin Conspiracy

This one has a few moving parts, but it can be summarized thus: The Bilderberg Group are really the ones behind Blockstream and the Lightning Network, and are responsible for crippling BTC so they can then control it via their own private methods.

If you remove the Bilderberg aspect from this equation then what you have is a fairly reasonable complaint. Depending on how you view it, you could easily make the case that Blockstream’s handling of Bitcoin has been poor; and big questions still remain over the Lightning Network’s ability to be truly decentralized.

Even back in 2016 community members were voicing these concerns, with Nodecounter releasing announcements like this:

“These Blockstream-paid Bitcoin developers (for the Bitcoin ‘Core’ software) are enforcing a limit on how much information can be transacted in Bitcoin. This is limiting the number of transactions to just 3 per second, approximately. Blockstream is concurrently developing a ‘solution’ to this problem, called the ‘Lightning Network’. This ‘solution’ is to be placed on top of the crippled Bitcoin network to allow it to scale. Blockstream will monetize the Lightning Network in the form of fees required to use their service.”

So where do the Bilderbergs come into it?

Well, in 2016, then president of AXA, Henri de Castries, invested $55 million in the Blockstream project. However, Henri was also president of another group – the Bilderbergs.

Another source of Blockstream’s funds was Digital Currency Group, which was headed up by Glenn Hutchins – Hutchins is also on the board of directors for the Federal Reserve.

So if we follow the money trail, then one could easily draw connections between the mainstream financial elites and Bitcoin.

Financial institutions have slowly started to dip in to the crypto pot in recent years; and the downside is that they bring their own methods along with them. Such shared interests and investments are common in the everyday business world – but crypto was supposed to be open-source; community driven and decentralized.

If one small group alone – Bilderbergs, or merely whales – can dictate the direction of Bitcoin, then what does that say for the ideals of the original whitepaper?

Corporate interference in blockchain and crypto tech is a growing concern which should worry us all, whether the Bilderbergs are involved or not.

NSA and SHA-256

The idea that the NSA are behind the creation of Bitcoin is one that has been floated for years. The core proposition is that the NSA invented Bitcoin and have been using it as a way to observe and spy upon the population for years – with crypto users taking the role of guinea-pigs in a socio-economic experiment conducted by the government.

This theory hangs on the fact that the SHA-256 hashing algorithm used by Bitcoin was originally invented by the NSA, and published in a National Institute of Standards and Technology (NIST) paper in the early 2000s.

It’s certainly true that the NSA was involved in the creation of the hashing algorithm, but that should come as no real surprise – the Tor Browser was created by the American military, and firms like IBM and Microsoft have been collaborating with government agencies on tech projects for years. IBM’s dealing with government groups (both domestic and foreign) goes back all the way to World War 2.

While it’s no stretch to imagine the government running rampant over basic human liberties, it’s also important to remember that governments want good cryptography to exist just as much, or more than, everyone else. And assuming the NSA could leave a backdoor in Bitcoin, how long would it be before it was discovered by the legions of hackers who pull open the hood of Bitcoin on a daily basis?

Another factor to take into consideration is that the Bitcoin code is freely available online in open-source form, and has been studied and pored over for almost a decade now.

Additionally, in 2016 the NSA revealed they were switching their cryptography methods to bolster them against the actions of hackers using quantum computing methods. This was accompanied by an announcement that they no longer considered SHA-256 to be secure.

Satoshi Nakamoto or CIA

In a video released by a group of anti-secrecy campaigners, it is alleged that the name Satoshi Nakamoto is actually a Japanese translation of Central Intelligence. The idea being that Bitcoin has been a CIA project all this time, and they decided to play a joke on us by dropping hints about the name.

The truth about the translation of the name itself is not too far off: Satoshi is a Japanese name meaning wise, clear-headed, observant. While Nakamoto is a surname descending from the Ryukyu Islands of southern Japan which means of central origin, or one from the middle.

Whether this constitutes proof in your eyes is completely up to you, but you should know that several Satoshi Nakamotos have been found both in America and Japan; including one Satoshi who claimed he was the enigmatic inventor of Bitcoin. However he was soon revealed to be no more than a lathe machinist.

Whatever your view of the conspiracies surrounding cryptocurrency, you’d be hard pressed to deny that they make for intriguing reading. More conspiracies are born every day; and it seems the lifespan of cryptocurrency may forever be enshrouded in the same mystery that characterized its invention, and its inventor.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 11 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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