As predicted, banks are changing their tune on crypto. But this JPM project misses the point – introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer https://www.linkedin.com/pulse/case-against-bankcoin-brad-garlinghouse/ …
Yesterday, the second-largest cryptocurrency in the world, XRP, achieved major adoption goals when it was picked by the blockchain solutions firm, r3 as the first settlement mechanism for Corda Settler. Post the news, r3 posted a YouTube video on its channel, explaining the working behind the Settler. Here, r3 also wrote:
“Corda Settler is an open-source CorDapp to help Corda users settle transactions. Corda Settler provides a bridge to any payment rail that can return a cryptographic proof of settlement. This includes any ‘traditional’ domestic and cross border payment systems able to return such a proof, as well as blockchain and cryptocurrency-based rails.”
The video began with the explanation of what the Settler does, stating that there are two legs of the transaction wherein one leg creates an obligation to complete the other leg. Furthermore, Corda Settler allows uses to complete the second leg on any system, whether it is an on-blockchain rail, a cryptocurrency system or a traditional system.
Subsequently, r3 told the users that in case of the second leg not being on Corda, it will provide two integration points – one for the users to initiate payments and the other for the confirmation of the payment status.
The explanation then took a turn to cite an example of the mentioned process. Here, it stated:
“A network of participants using Corda Settler – Company A and Company B are the counterparties. They are using a notary service on Corda and they both have access to nodes in other payment systems.”
Next, the video demonstrated the mechanism keeping XRP as the mode of payment. As per the demo, company B has an obligation to pay $100 to company A. As a beneficiary, company A can choose the currency in which it would like to receive the payment.
Here, the beneficiary chooses XRP to update the obligation wherein it will get the current exchange rate from an exchange to further update the obligation with the new currency. The beneficiary may also select details, such as the address on the XRP network to receive the payment with the amount.
Post all the required signatures, company A will distribute the obligation with company B in order for the latter to initiate the payment. The video further explained:
“Company B is now ready to settle this obligation and so initiates a transaction from their XRP node. This obligation can be settled in one or many transactions. Company B gets a payment submission confirmation from the XRP network, updates the obligation with the transaction hash and sends it to company A and the settlement.”
The last leg of the transaction is completed after the settlement queries transaction with the specified transaction ID. r3 explained that once company B’s payment has been confirmed, the settlement marks the payment as settled, obtains a notary signature and distributed the updated obligation to both the companies.
r3 also mentioned that this has shown an imperative connection between digital assets and applications on Corda and other settlement systems.
Did JP Morgan Miss The Point Of Cryptos, and What Effect Will JPM Coin Have?
It’s only February and already, we’ve had one of the biggest announcements in the crypto industry. JP Morgan announced yesterday that it had successfully trialed the JPM Coin. It will use it for its $6 trillion wholesale payments business as well as securities transactions. In doing so, it became the first bank in the U.S to have its own cryptocurrency.
Unsurprisingly, the industry is already racking its brains pondering the implications of the newest crypto. There are those who believe that despite being centralized, the JPM Coin will inspire mainstream adoption of cryptos. It’s only a matter of time before the other banks turn to digital currencies.
There’s an even bigger group that believes that JP Morgan has missed the whole point of cryptocurrencies. The JPM Coin will be a centralized currency. Thus, the bank will have a stranglehold on its supply, who uses it and how it’s used.
One of the people who believe that the industry should not be celebrating the JPM Coin is Brad Garlinghouse. The eccentric Ripple CEO believes that the bank is taking us back to the old days as we try to move ahead. He tweeted:
However, according to one crypto research expert, Garlinghouse has every reason to be critical of the JPM Coin. With the JPM Coin targeting Ripple’s – and by extension XRP’s – core market, it’s no surprise that Garlinghouse is so critical. This is according to Tom Shaughnessy, the CEO at New York-based crypto research firm, Delphi Digital.
Ripple may have enrolled 100 banks on its platforms, but in JP Morgan, it has a formidable competitor. The bank moves $6 trillion every day on its wholesale payments platforms. Even a fraction of these would be miles ahead of the amount transacted on Ripple’s network.
Speaking to Bloomberg, Shaughnessy stated:
This is a huge slap in the face for Ripple. Ripple’s target market is cross-border payments and remittances and now JPMorgan’s effort is a direct threat.
Shaughnessy isn’t the only one who believes that the JPM Coin is a direct threat to Ripple and XRP. Travis Kling, the founder of Ikigai Asset Management also believes that Ripple Labs should be very worried. The seasoned crypto investor explained:
JPM’s project is much more evolutionary than revolutionary — it is utilizing a private, permissioned blockchain technology called Quorum, which is much closer to a Google Sheet than a Bitcoin. The project is clearly competing directly with Ripple Labs and their centralized cryptocurrency XRP.
Garlinghouse pointed to an article he wrote on his LinkedIn page in 2016. In the article, he explained that a centralized bank coin would go against Satoshi Nakamoto’s vision. Banks are competitive and as such, they’d never settle on one digital currency to use, he reasoned. We’d, therefore, end up with hundreds of bank coins which would add more chaos to the industry.
The result would be an even more fragmented currency landscape than what we have today. If banks of different digital asset groups want to settle trades with one another, they’ll have to make markets between their unique digital assets or trade between their digital assets and a common fiat currency. What a mess!
A Progressive Outlook
And while Garlinghouse is quick to criticize the centralization of crypto, XRP has been constantly criticized for the same exact thing. Ripple Labs, which Garlinghouse leads, has been accused of having a whole lot of influence on XRP.
Away from the JPM Coin vs. Ripple narrative, there are many who view JP Morgan’s move as very positive. While it’s not everything the crypto world would have wanted, at least a banking giant has recognized that the future belongs to digital currencies. It could also be the first step in the infiltration of the tightly knit finance industry by cryptocurrencies.
What QuadrigaCX Says About Institutional Crypto Investment
Noelle Acheson is a veteran of company analysis and member of CoinDesk’s product team.
The following article originally appeared in Institutional Crypto by CoinDesk, a newsletter for the institutional market, with news and views on crypto infrastructure delivered every Tuesday. Sign up here.
Open pretty much any mainstream financial media source and it’s hard to feel cheerful. Economic growth is slowing. The yield curve is flattening. Trade tensions are tensing. There’s plenty for an institutional investor to fret about.
Yet none of those worries are top-of-mind for institutional investors these days when it comes to their crypto investments. Along with most of the blockchain sector, they’re more engrossed in the drama unfolding around the death of the CEO of a Canadian crypto exchange.
In case you missed the story on CoinDesk, the CEO of beleaguered Canadian crypto exchange QuadrigaCX, which was already in trouble because of frozen accounts, passed away unexpectedly in India in December. Leaving aside the suspense over the encrypted laptop, the debated existence of cold wallets and the exact role of the chihuahuas in all this, the attention-grabbing detail is that he apparently was the sole keeper of the password that could access client funds. When he died, he took the password with him.
On the surface, it doesn’t look like this has much to do with institutional investment. The exchange was not exactly geared up for rigorous checks and oversight. But its fate, and that of its clients, points to a fundamental truth about crypto investing for institutions, one that both colors allocation decisions and shapes emerging infrastructure.
It’s this: The crypto market is the only market out there at the moment where operational risk is greater than market risk. And this highlights both crypto investing’s weakness and its opportunity.
Readers of this newsletter know that every week there’s positive news about infrastructure development for institutional transactions. Sometimes it’s a listing or a launch, occasionally a partnership or merger, and the array of items usually comes together to create an impression of constructive evolution.
Often the news is security related. Licenses are sought after and awarded, which implies greater oversight; compliance processes are boosted, which reassures regulators; and new products and services stress tighter security, which addresses market concerns. The general tone is one of raising overall standards to meet institutional expectations.
Obviously, these moves (and plenty more like them) are necessary. The nascent crypto market is still largely unregulated, as official institutions around the world wrestle with the choice between fitting the new asset class into existing obligations, or creating new ones.
Meanwhile, institutional investors do not like ambiguity when it comes to processes. Few can afford the risk of fines or public embarrassment as a result of not having retroactively complied with rules when they eventually emerge.
What’s more, businesses built on new technologies are generally feeling their way along the development curve. As anyone involved in cybersecurity knows, it’s almost impossible to foresee and protect against all possible attacks. With traditional securities, there is generally some recourse or walk-back. But most cryptoassets are still bearer securities, which implies a whole different level of custody risk.
This unique condition of the crypto market is not a disadvantage. On the contrary.
First, the “progress principle” and its impact on motivation is well documented. The tangible and identifiable steps forward in sector development engender a constructive atmosphere, which brings in even more brain power and keeps the momentum going, regardless of price movements.
Second, the focus on security highlights the market’s youth as well as its potential. While improving the security of crypto holdings may seem like a basic beginner step, the chance to participate in the creation of a new asset class is rare.
What’s more, the risk-return profile of cryptoassets as a whole becomes even more asymmetric as the operational base of transactions – the technology, regulation and quality of market participants – continues to evolve. And the bear market is giving a much-needed breathing space for the construction to advance, the security to improve and investors to become even more familiar with the fundamentals.
This entry-level progress sets the stage for more sophisticated risks as the market matures.
To many this may rhyme with the well-known song of parenting: We focus on making our young feel secure, so that as they grow they have a solid emotional base from which to deal with what life later throws at them.
While extremely painful to many, the lessons learned from QuadrigaCX’s lax security and almost non-existent governance are an important part of this evolution. Beyond the unwelcome education, serious mistakes serve to highlight vulnerabilities, focus attention and hone priorities. This makes the sector stronger.
Meanwhile, crypto infrastructure continues to evolve, and any interest that has been scared away will return as the sector’s increasing professionalization calms concerns over operational vulnerabilities.
Eventually, institutional investors in crypto assets will be able to get back to doing what they do best: fret about market risk, and take positions accordingly.
Litecoin (LTC) Reddit: Subarus can now be bought with LTC
These past few days on the r/litecoin subreddit, redditors have been talking about: buying a Subaru with LTC; LTC crossing Bitcoin Cash in term of number payment proceedings; a user buys LTC using a crypto ATM; Litecoin hashrate goes over 200 TH/s, users praise LTC for having low transaction fees, and an old LTC meme reawakens.
Here is a brief overview.
Buy a Subaru with LTC
In a video, a confirmation comes from Bob Moore Subaru a car dealership in Oklahoma City has accepted that they will accept LTC among two other cryptocurrenices: BTC (Bitcoin) and ETH (Tthereum), as payment for not only purchases of all car models, but also for services given at their center.
Litecoin surpassed Bitcoin Cashes in number of payment proceedings
According to an analysis, in the previous year, Litecoin processed way more (almost three times as much) payments per day than Bitcoin Cash; in terms of number of active users, Litecoin again surpasses Bitcoin Cash by a notable margin.
0.636 LTC for 30 EUR
A redditor spots a crypto ATM Basel, Switzerland and buys 0,636 LTC for 30 EUR.
Litecoin Hashrate climbs back above 200TH/s
According to a pos by Franklyn Richards, Litecoin Network has surpassed 200TH/s (terahash) hashrate. This has been after a continuous growth for two months. Last time when the hashrate came about this much was back in April 2018.
Low LTC Transaction Fees
LTC is praised is praised for its instant speed and low transactions costs; a redditos makes claim: “I just sent 1000$ of Litecoin across the world, it was instant and I paid 0.00026$ in fees,” further saying that for USD $1, over 3800 transactions can be made.
‘Arise chikun arise’ revisited
Redditors have reminisce over the ever famous ‘Arise chikun arise’ pun as a redditor posts the following: