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Cryptocurrency Frenzy: Why are World Governments Jumping onto the Crypto/Blockchain Train?

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Digital assets are undoubtedly the new black. But what are the reasons for the sudden urge of countries to jump on board the crypto/blockchain train?

The world economy is becoming more digitalized. This fact is hardly surprising. However, what is the reason behind a sudden urge of multiple governments to issue a digital coin of their own? Altcoin Buzz contemplates and asks for an opinion.

Cryptocurrency is the buzzword.

Over a span of just a couple of weeks, multiple countries announced that they are either planning or are close to introducing a digital asset. There is China who is continuously working on its digital project. Then there is Turkey: President Erdogan has recently announced that the country plans to finish testing digital Lira in 2020.

Most recently, the European Union, an entity that comprises 28 member states, has stated that it is considering launching a virtual currency of its own. It is called Eurocoin.

These moves are impressive. After all, just a couple of years ago many countries were wary of the concept of digital money as such. Cash remained king; so did the credit cards.

However, the sentiments toward cryptocurrency per se seem to have changed. Here are a few reasons why this could be the case.

Need for speed

Moving capital fast is a must. Even the most conservative folks (many of which end up being in the government) realize it. The advantages of virtual currencies in this regard are thus clear. They are indeed faster and at the end of the day it matters not just a little bit, but a great deal. If a company is slow, it is likely to lose customers. In the same vein, a state that cannot move funds fast might end up losing influence.

Ripple effect

The fact that multiple “big boys” are considering the introduction of digital assets is sufficient for many political players out there. Thus, if a giant economy like China is set to introduce a digital asset, other countries will eventually have to do it as well. Why? Primarily, because of trade matters. The EU, for instance, is continuously competing with the Chinese economy in terms of trade. If one issues a digital currency, the other one is bound to do it as well eventually (once again: think of moving funds fast).

Circumventing “bad things”

It is not coincidental that countries like Russia and Turkey, for example, are feeling benevolent toward introducing digital versions of the Ruble and Lira. Both are authoritarian states that are either already subject to sanctions or about to (just think of the recent offensive championed by Erdogan).

By introducing digital versions of their currencies, they might try and circumvent restrictions. This matters as the Russian economy, for instance, is getting hit by sanctions. Even President Putin has admitted that the country fell short of $50 billion since they were introduced in 2014.

The mesmerizing nature of Bitcoin (and not Libra)

In one way or another Bitcoin has had a profound impact on the world. The governments–whether deliberately or by chance–acknowledged that it has the potential to challenge fiat.

However, Bitcoin is still very much in its nascent stage. To date, many don’t understand the concept of this cryptocurrency. Others are simply put off by its wild price fluctuations and occasional involvement in illicit activities. Hence, the governments do not seem overly concerned about it, albeit being wary of it in general.

However, this is not the case with Libra, which has received a storm of critique. Mark Zuckerberg, CEO of Facebook, is continuously trying to prove that Libra is not posing a threat to states. But the majority is not buying the argument.

Answering the question “why”, it is possible to suggest that this has to do with FB’s huge user base. Currently, it stands at 2.45 billion monthly active users (September 2019).

If such a big number of people suddenly start using Libra, the governments will feel highly uncomfortable and left out.

It is thus not coincidental that states, like France, believe that Libra is a threat to sovereignty.

In light of this, if Libra’s only competitive advantage boils down to the fact that it’s fast and easy to move around the world, then national digital currencies quite frankly have all the same features to offer. And it makes sense to create them on the governmental level and obstruct the development of Libra.

That goddamned hyperinflation

When money loses value it’s considered to be bad. However, when its value almost literally melts in your hand that spells big trouble. Why? Because socio-economic turmoil is close to inevitable. Just think of the Weimar Republic, hyperinflation and the emergence of the German Nazi State in the 1930’s as well subsequent horrors of the Holocaust and war.

Thus countries like Venezuela have decided to introduce digital currencies to help deal with the plummeting national currencies. The world knows it as El Petro.

An expert’s view

At the same time, Dr Usman Chohan, an economist who ranked among the top 10 Business Authors in the world on the Social Science Research Network, suggests that the reasons for the introduction of digital currencies vary.

“There are two approaches: independent developers create a currency that becomes so popular a government adopts it (1st type), or the government in question researches and develops a currency of their own (2nd type),” says Chohan in an exclusive comment for Altcoin Buzz.

He then gives examples of Iceland, Venezuela, the UAE, and China.

Thus, following the 2008 financial crisis that hit Iceland particularly hard, the Auroracoin cryptocurrency was created.

“Even though the government opposes it and some call it a scam, but its tokens (50%) were distributed to all Icelandic citizens,” he says.

Venezuela, on the other hand, is suffering from hyperinflation. “The gringo sanctions regime and a wildly fluctuating nominal Bolivar makes Petro a strong choice for a state-backed currency, especially since it is to be securitized based on the oil reserves of the country,” he says.

Some are after a brand

The UAE has a different reason, according to Chohan. He points out that it is part of its “integrated blockchain” 21st-century branding. 

Last but not least, China. According to Chohan, it is “using a national cryptocurrency will give them better oversight on citizen movement of wealth, certainly domestically but also possibly overseas. It is also an attempt to seize the market before instruments like Libra get in the mix and Chinese people start using them instead.”

“The risk though is that the Crypto-yuan could hammer private solutions such as Alipay which are already very big,” he added.

He also believes the EU is pursuing 21st-century branding and some control over EU citizens.

He adds, “a crypto-euro might help transact with businesses in Iran, for example (possibly).” The latter ties into the concept of circumventing sanctions.

How soon is now?

It seems almost safe to say that as soon as the Chinese national digital asset goes live. Even though the country is definitely not pioneering the field (EL Petro has been available for a while now, even though some question its viability), its economic size speaks for itself.

In a recent interview with Altcoin Buzz, CEO of Global Cryptocurrency Organization stated that all fiat will move onto the blockchain. Assessing the potential timeframe, he suggested that China’s recent moves will speed up the process.

Quite frankly, it is extremely hard to disagree. The world is indeed on the verge of becoming even more digitalized.

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Could Cash Restrictions in Malaysia Boost Crypto Usage

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Malaysia has joined a growing list of nations imposing capital controls on their people. Economic and geopolitical tensions are forcing governments to restrict the flow of money across their borders. As this is practically a form of financial subjugation, will more turn to crypto?

Crypto Over Cash Controls?

It was reported by local media this week that Malaysia’s central bank is planning to impose a cash transaction limit of RM25,000 (approx. $US6,000). Bank Negara (BNM) deputy governor and chairman of the National Coordination Committee to Counter Money Laundering (NCC), Datuk Abdul Rasheed Ghaffour, said that the measure was to address the abuse of physical cash used for illicit activities.

The restrictions will apply to all cash transactions including payments of goods and services and donations and transfers between parties and businesses. There are a couple of exemptions however including transactions to and from regulated financial institutions and humanitarian aid donations.

The banker asserted that it would not affect households since, according to their very small survey, 80 percent of them are of low and middle income with average cash transactions well below the limit.

“Our engagements with individuals suggested that a single transaction over RM25,000 by cash is really (unprecedented). This can also be seen with the average total expenditure of households across various income brackets.”

He added that the two-fold objectives of the cash embargo were to complement the Anti-Money Laundering and Counter Financing of Terrorism framework in Malaysia and send a message that anonymous transactions will not be tolerated.

As another nation stomps on the rights of its people, the use of crypto currency may get a boost as a result. It has already been suggested that Bitcoin and crypto usage could spike as it has done in other countries that have imposed capital controls.

No Bitcoin Rush Just Yet

According to Coin.dance which has measured localbitcoins volume in MYR, there has been no increased activity yet which doesn’t mirror the yo-yoing of BTC price over the past couple of years.

crypto

LBC vol MYR – Coin.dance

A Reddit on the topic generated a response from a Malaysian in the crypto industry who suggested it may not cause a big Bitcoin rush. Reasoning would be that individuals can still use large amounts of cash providing they inform the bank the purpose of the transfer. This system is in place in many other countries already.

He added that there were many migrant workers in Malaysia that exclusively use cash and it has yet to develop the digital payments systems that are abundant in China. Additionally, crypto usage for payments is also very low there;

“I have yet to stumble on a place that accepts cryptos. And I’m living in the city. Most crypto fans here are probably like me too – more interested in the speculation and trading part although we know quite a bit about the technology too.”

So initially it does not look to be happening though the pattern of regime enforced capital controls is increasing across the world.

Source:newsbtc

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$15 Million Property Bought With Bitcoin (BTC), Ripple Reports Surge in XRP Transactions, and Ethereum Upgrade Countdown Begins – Crypto Newsflash

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Bitcoin

A $15.3 million luxury condo in Manhattan has reportedly been purchased using Bitcoin.

According to the real estate outlet The Real Deal, Magnum Real Estate Group sold the property to a group in Taiwan called the “Affluent Silver International LLC.”

“To complete the transaction the parties used Bitpay and Starr. Eric Hedvat, a broker with Jet Real Estate who represented Magnum, said it was a ‘seamless process.’”

This is the third unit in the building that Magnum has successfully sold using BTC.

Ripple and XRP

Ripple is reporting a surge of transactions on its XRP-based remittance network.

The company says the number of transactions moving through its cross-border payments product called On-Demand Liquidity (ODL) has increased seven-fold since the first quarter of this year.

“In less than a year since the commercialization of ODL, we have seen tremendous growth and customer interest with two dozen customers signed on to use the product.

Some of the notable customers committed to using ODL include MoneyGram, goLance, Viamericas, FlashFX and Interbank Peru. There have been more than 7x the number of transactions using ODL from the end of Q1 to the end of October.”

Ripple launched xRapid, now ODL, in October of 2018 and says 24 companies have signed up to use the product.

Ethereum

The countdown to Ethereum’s Istanbul upgrade is on.

Ethereumnodes.org has created a countdown clock for the event. At time of publishing, the update will be implemented on Friday, December 6th.

The Istanbul hard fork is a system-wide update designed to improve the blockchain’s efficiency and security. It’s the eighth hard fork since Ethereum’s launch in July of 2015.

Ethereum’s core developers are currently searching for any critical errors in the code, and if any are discovered the launch date will be pushed back to January.

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ARGO BLOCKCHAIN NOW EMPLOYS 7,000 CRYPTO MINING MACHINES

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Argo Blockchain, increased the number of its crypto mining machines to 7,000, with plans to add additional 10,000 machines in 2020.

ARGO TO INCREASE CRYPTO MINING MACHINES BY 10,000

The crypto mining industry saw a surge in interest due to recovering prices in 2019, with many of the miners who previously left the industry making a comeback. Crypto mining heavyweight Argo Blockchain, also saw some positive development, mostly in terms of upgrading their mining gear.

The company has been working on increasing its crypto miners, with quite an ambitious goal in mind. In a recent announcement, Argo stated that it plans to employ as many as 17,000 miners by the end of Q1 2020. The mining firm has already ordered 10,000 machines that should arrive in the following months.

Meanwhile, the UK crypto miner stated that the number of machines that are currently being used was already increased to 7,000. Once the additional 10,000 devices arrive — likely in batches, starting from early December — the company will reach its current goal of having 17,000 miners, total.

ARGO OFFICIALS OPTIMISTIC ABOUT THE NEW INVESTMENT

argo blockchain bitcoin and crypto mining

Argo Blockchain’s plans may seem ambitious at first, particularly since mining equipment can be pretty heavy on pockets. However, this industry saw quite an improvement in 2019, with many expecting that the trend will continue in 2020.

So far, 1,026 S17 Antminer machines, which were being used since May of this year, have already achieved a full payback on the investment, indicating that crypto mining is still very profitable. Argo’s executive chairman, Mike Edwards, commented on the new strategy by saying that the company wishes to ensure that the new mining hardware will deliver the strongest possible results.

Of course, crypto mining hardware itself is evolving and becoming stronger and more capable with release of improvised versions. That is why companies like Argo have to make major investments, in hopes that crypto miners will deliver results with their expectations. Doing so also creates long-term value for shareholders.

In other words, everybody wins. While it remains unknown how crypto prices might perform in 2020, experts appear to be optimistic, which is likely what inspired Argo to make such a decision.

Source:bitcoinist

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