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China’s Blockchain hustle, hidden agenda and why the world needs to take a note

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China Blockchain News

Following is an opinion.

What to expect in this article?

  • A look at a possible hidden strategy behind China’s blockchain initiative
  • Was this all well orchestrated by China from the get-go?
  • What has China done in the blockchain space so far?
  • Is China preparing itself for the post COVID world?
  • Why the world should pay attention to blockchain
  • Are the public networks like Bitcoin and Ethereum an antidote to China’s dominance?

China may have been the villain in the mainstream media and even has been the butt of the jokes about China Distancing, but behind the scenes, it is business as usual in China when it comes to Blockchain Technology Initiatives.

With all the backlash in the manufacturing space, China has been doubling down on its Blockchain hustle.

Is there a hidden strategy behind China’s blockchain endorsement?

Some speculate that China’s overzealous endorsement of blockchain technology might have a hidden agenda.

Majority of the world economies use the US dollars. It is quite expensive to decouple from the reliance of the US dollar.  Even if a country tried to do that – it will draw attention of global players as to the ‘reasons’.   

Generally a country would attempt to decouple from the dollar when they fear the US sanctions or restrictions in participating in the global economy.

China in theory could be using blockchain technology as the trojan horse to bring their digital Yuan on to the global stage.  

While the rumors become stronger by the day that China has intentionally let the world be hit with COVID by withholding information, they may be suspecting some retaliation from the US in form of sanctions that will be hit in the dollar trade and that may have fueled their move to speed up the Digital Yuan plans.

Is this all orchestrated by China?

One could perceive that this is all well orchestrated by China. 

First they take the world’s attention away by ‘letting the COVID spread like a wild-fire’.

Second, they move forward with their blockchain and Central Bank Digital Currency (CBDC, Digital Yuan) plans, even revealing that they are going to pilot it in May 2020.

Third, China has been for a long time accumulating gold to back its Yuen while the US has been printing fiat that does not have enough (if any) reserves backing its value.  With COVID, the US has been forced to print an additional $6 trillion dollars to keep the economy afloat.  This brings the US’s debt to unimaginable levels.

Fourth, China is busy building the world’s biggest public blockchain networks to bring in as many global giants as possible.  Once the technology is built and becomes a staple in the blockchain space – China could easily create utility for its Digital Yuen.

What happens when China introduces Digital Yuen that is backed by real gold and it convinces its allies to take part in commerce using Digital Yuen in place of Dollars?  

While most of the world economies might resist from taking part in this coup, China has some strong allies from Russia, Pakistan, North Korea, etc.,

Even if the US doesn’t lose its dollar dominance as a global reserve, it could still make a big dent in the US’s power to implement sanctions and other disciplinary actions with an alternative to the US dollar in Digital Yuen.

Countries that want to undermine the US sanctions might end up joining forces with China.

How far has China’s blockchain initiative come so far?

Even during the midst of this COVID pandemic, China has been moving ahead with its Blockchain initiatives.  They recently announced that they will be piloting the Central Bank Digital Currency initiative and have listed out multinational companies like McDonald’s, Starbucks as participating members.

It is clear that China is not slowing down, in fact, it is doubling down on its Blockchain initiatives.  Here are few blockchain accomplishments: 

  • Blockchain Service Network

The Blockchain-based Service Network or BSN’s whitepaper describes BSN as “a cross-cloud, cross-portal, cross-framework global infrastructure network used to deploy and operate all types of blockchain applications

BSN aims to change the existing problem of the high cost of developing and deploying blockchain applications by providing public blockchain resource environments to developers, just like the internet, thus greatly reducing costs associated with the development, deployment, operations, maintenance and regulation of blockchain applications and, thereby, accelerating the development and universal adaptation of blockchain technology.” 

BSN wants to provide a global blockchain infrastructure platform for anyone in the world to deploy their applications. The framework will allow anyone from students to large corporations to deploy their applications without great overhead.  The operating costs to deploy on BSN is estimated to be under $300 which is 20% of traditional blockchain cloud services.

  • National Internet Information Office lists 500+ companies alliance

China has disclosed names of over 500 companies that are building their blockchain projects using the BSN.  The names include brand names like Baidu, Alibaba, Tencent, etc.,

  • Other developments

  • Developing Citizen Card, Citizen Cloud Platform, Municipal Public Service Platform, Point payment through Red Date Tech 
  • China piloting Digital Yuen payment system with government offices
  • ICBC Xi Blockchain Service and ICBC Fi­nan­cial Ser­vices blockchain projects facilitate transactions for the bank’s clients
  • Enlisting companies like McDonald’s, Starbucks, etc., in testing CBDC payment systems
  • China Merchants Port to build smart port

As we can clearly see, China is clearly ahead of most of the countries in the blockchain space.  To be fair, a lot of innovation happens in the US, however, the bureaucratic pressure weighs in on the innovation and stifles the speed at which the projects could launch.

While the US has adopted the ‘do-no-harm’ strategy, it is not enough.  

The US has to bring in the necessary changes to the law in all areas of commerce to help blockchain innovation to thrive in the US.

Switzerland seems to be at the forefront of nurturing innovation in the blockchain and crypto space. However, from a mere size of commerce – China far outweighs Switzerland. For this reason, we think an alliance between Switzerland and the US in this space could help both the countries and the world in general.

Is China preparing for the Post COVID new normal?

Zoom which is rumored to have been used by China to spy on the US businesses has integrated crypto payments.  Zoom’s move to integrate crypto payments comes in the wake of people calling to ban its use in the US.  Crypto payments will help the company circumvent any payment issues from the US based payment processors.

At the macro level, deployment of BSN comes at a time when the whole world will look to conduct most of the business activities over the internet in a post COVID world.  Blockchain offers a much secure platform to conduct business virtually.

With over 100 city nodes and an open platform that mandates government and IT Telecom companies to get onboard to further strengthen its network, China might be laying the foundations of the world’s most secure blockchain platform. In spite of the moral differences, companies may be forced to use BSN to leverage its sheer security and broad network, unless the alternatives emerge soon.

Advantages of China’s Blockchain Initiatives

Irrespective of the underlying intention or undisclosed agenda, the investments and direction taken up by China in the blockchain space has some advantages.

Validates the Blockchain technology: Multiple initiatives will act as a stamp of approval for the blockchain technology itself.  While many tout the awesomeness of the blockchain technology – it will mean nothing until it is put to use in real life. China’s push in many areas will help make Blockchain a part of our everyday lives.

Forces other countries to pay attention: China’s move in the blockchain space and their speeding up of CBDC will force the countries around the world to pay attention. The US has already hinted about their plans of digital dollars. The Supreme Court of India has lifted a ban on cryptos.  

Speeds up the legal framework: Innovation cannot happen amidst legal and political uncertainty.  In order to stay competitive, countries will have to introduce a sensible blockchain legal and business framework so that the companies can move forward with their initiatives.  

Disadvantages of China’s Blockchain supremacy

Lack of transparency: Blockchain’s original intent was to promote transparency. And if history is any proof, China’s appetite for transparency is almost non-existent. There is no free google or access to information within China.  Most citizens are privy to the information that the Government deems necessary for them to know. Do we want a country as this to dominate the blockchain space?  Personally, I wouldn’t. 

Domination of Centralized systems: China can easily force companies to adopt their home-grown centralized blockchain systems. When this happens, it could seriously hamper the true spirit of blockchain innovation. We have seen that just this week, McDonald’s, Starbucks and Subway have been on the pilot program to test China’s Central Bank Digital Currency, Digital Yuan.  Whenever a government like China proposes initiatives, it generally is not posed as a ‘choice’, it is usually a mandate for the companies to adopt.  Blockchain’s original design was to promote transparency and accountability but when few people control the entire aspect of blockchain in a centralized system and when that is forced upon others – it only deteriorates the current state of affairs further.

World needs to catch up with the blockchain times

Blockchain timeWith the world wanting to boycott Chinese products because of China’s authoritarian practices and total lack of transparency, one can argue that more of those same attributes will seep into anything developed in China.  

Then a global blockchain network developed by China may cement its position as global leader in a technology that could be leading us in all aspects of our life in the coming decades.

With over 100 city nodes across China the mere size of BSN is already gigantic, and growing by the day.

Instead of countries looking to develop their own blockchain systems, they can develop a legal and business framework to use blockchain technology, specifically public networks. This way, governments around the world can help strengthen the already strong public networks like Bitcoin and Ethereum to circumvent China’s plans to dominate this space.  

And in that effort, they can keep blockchain open, transparent and available.

Thank you for reading and sharing this article. Stay safe and healthy!

Also read:
China Distancing: What does it mean for Blockchain and Crypto?

IMPORTANT DISCLAIMER

We have used referral codes where available.

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Why this bull run has no precedence? ONE key metric to rule them all

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bull run 2020

Everyone is singing the praises for the bulls’ arrival in the crypto space.

Some say that 2020 will mark the biggest bull run in cryptos’, albeit short, history.  

We are already in October so we doubt any fireworks will take place now since there is a lot of uncertainty about the US elections.

Add the uncertainty around the stimulus bills, unemployment trends, soon to be lifted forbearances and the list goes on.

2020 still has another 2.5 months to go but most of these uncertainties will take a while to show their true impact.

For instance, what will a Biden presidency mean for the economy and cryptos?  

How many people will be forced to sell their homes once the forbearance’s are lifted?

What happens if the next stimulus bill does not pass through?

When will the vaccine become available?

These are some of the unique situations that we have no precedence for. Do not let anyone convince you that we know what’s going to unfold, because no one does.

Yes, everyone has theories, like the ones we are presenting here, but that is all they are: theories.

The BIGGEST metric that crypto community is not considering

We are no economists nor can we run any fancy charts to impress a point on you.  

We are just good observers and have common sense to deduce a few things based on data.  

For instance, between 2007 and 2010 consumer spending dropped by an overall .2% and we know what that meant for the economy.

Personal consumption expenditure

In 2020, people have literally cut down on their spending.  Some of it is forced due to the restrictions imposed by external forces and most of it is self imposed.

I am sure the spending on marijuana, liquor and food have gone up but what about other spending?

2020 also saw a spike in the savings balances.  

Economy is not stimulated by people hoarding their money. People need to exchange value for the economy to thrive.

What happens to the spending behaviors when the true stats around evictions, lost jobs (that are not coming back) and small businesses that are shutting down permanently are out?

Our guess is that people are going to be weary of spending money in the short to medium term. If we were forced to pick a timeline – we would say about 12-16 months (assuming we get a vaccine in Q1 2021).

When is the next bull run? 

Based on what we have seen in 2007 through 2010 and observing the consumer spending habits in recent times, we think that Bitcoin (and cryptos) will not find their true peak until next halving.

We know this is not what you came to hear.  

If the bull run in your mind is hitting the 2017 highs then we do not think you have to wait until the next bull run.

If the bull run means a $100,000 bitcoin then we stand by our opinion on when that is going to be.

A case for bull run

In spite of what is going on in the street, following factors are acting as strong bull market signals for the crypto space. 

Hype: Crypto space (specifically Bitcoin) has been gathering a lot of steam in terms of brand awareness and mass penetration.  This is great for the long game.

Adoption: More than ever, private and public enterprises are becoming serious about bitcoin and underlying blockchain technology.  What is good for bitcoin is good for blockchain and vice-versa.  MicroStrategy investment, Paul Tudor Jones getting involved with bitcoin are some examples.

Tech explosion: Crypto space is home to some of the brilliant minds in the tech space. Add Big Techs interest in the crypto space and you have a perfect recipe for monumental shifts in crypto perception. Tech giants like Microsoft, Google, Twitter, Facebook are all getting involved with blockchain and cryptocurrencies in some shape or form.

Retail demand: More and more retail investors are looking for alternative investments and they are waiting on the sidelines to get involved with Bitcoin.  As soon as companies like Fidelity or other brands offer crypto investment through retirement plans – there would be a massive influx into this space.

DeFi: DeFi in its current state might be infested with shittty projects but as a concept and technological shift to turn the current banking system upside down – it holds great potential. Any demand to DeFi brings more demand to bitcoin, ethereum and blockchain in general.

Conclusion

The debate around when is the next bull run will hinge on how the market recovers from this pandemic. How soon will we get the vaccine and how many of the lost small businesses and jobs are we going to resurrect?

From a macro perspective, Bitcoin and few select cryptocurrencies will continue their upward trajectory so if you looked back to 2020 five years from now, you might think bitcoin was on sale.  

Question is: how many people have that kind of patience?

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

 

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Is Cryptocurrency driven by fundamentals or hype?

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Fundamentals or Hype

During the early 2000s India experienced a massive real estate bubble. With a lot of western companies opening their outsourcing centers in India, the land prices shot up 2x, 5x, 10x, and even 100x.

You read that right. 

Have you heard about 100x in Real Estate?

To be sure, the demand was exponentially growing in the major cities like Bangalore, Hyderabad, etc., which were quickly turning into back offices for the many western companies.

The hype in these cities was somewhat justified.

However, here is the kicker.  Many remote places which did not directly benefit from this influx of foreign direct investment started seeing their prices go up in similar fashion.

In a crazy case of trickle effect and super-hype created by the real estate agents, properties were just trading from one party to another for unbelievable markups and the prices constantly went up.

Today, that massive bubble is still intact minus the crazy multipliers.

The reason we like the comparison of what happened in Indian Real Estate market to the crypto is that a genuine need in a specific space has been exploited to translate that hype onto anything tagged with the name. 

In India that hype tag was ‘land’ and in crypto that hype tag could mean anything from ICOs to DeFi.

Ask any crypto enthusiast they will make you believe that crypto is all about fundamentals.  However, anyone who has spent even a few months in the space quickly realizes that crypto prices don’t follow fundamentals.  

This is one place where Crypto space shares its similarities with the stock market as well.

Stock market is completely distanced from the economy and it too acts irrationally, that is, when people are losing jobs and businesses are shutting down permanently, the stock market rallies higher and higher.

Similarly, crypto space, to its own detriment, is ignoring the projects that have amazing fundamentals while pumping other projects solely based on the hype.

Long term vs. Short term

Hype is short lived. Fundamentals are a long game.

That is why we emphasize that anyone interested in the crypto space does their own research in finding the projects that meet their fundamental criteria.

Once you know that a project has fundamentals (team that can execute, problem worth solving, solution that can solve, market demand, etc.,) then you just ignore the FOMO and FUD.

This will help you sleep better and use your spare time and energy in quality endeavors like taking care of yourself or spending time with family, etc.,

If you get on the hype train – it will be difficult to catch the right wave and this constant lookout for the next big thing is going to rob you of all the peace.

And, if you find yourself on the right side of the wave – you will be decimated and drowned.

DeFi defies all common sense

That is what happened with a lot of people who tried to ‘time’ the DeFi market.  

Don’t get us wrong. Many people made a ton of money (and good for them).  However, remember, crypto at this point of its evolution is a zero sum game.  That means, for everyone who made a million someone lost that million.

Unless you got on a project quite early keeping your risk level low or you have some insider information (not to mention this being illegal), you can generally not ‘time’ the market.

Many veteran traders have lost their shirts in chasing the market.

Conclusion: does this mean I should stay away from DeFi?

We cannot tell you that.  That is something you got to decide for yourself.

By market cap, Yearn Finance is considered one of the top DeFi projects. It lost over 67% in less than a month.   

Personally, if the top most project is still trying to find the ground while other projects are losing 99% of their value in a matter of a day, that means one thing:  the space needs time to mature.

We will continue to learn about DeFi. We will continue to invest what we can afford to lose when we find the right project that meets our fundamentals criteria.

That is our strategy at the moment. You have to find a strategy that suits you.

While crypto space is riding on the hype at the moment, we continue to believe in fundamentals.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Will India Ban Cryptocurrency Trading?

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Cryptocurrrency Ban India

India keeps playing with the emotions of the crypto community in India with constant back and forth of change in rules.

First it was a complete ban of crypto transactions. RBI forbids banks from serving any clients that deal in cryptocurrencies. Thanks to the Supreme court decision, RBI had to back off.

Now, there is a renewed effort to place a ban on crypto again.  

Is Crypto Ban a good thing for India’s financial future?

No, Cryptocurrency is here to stay according to many financial investors and billionaires. As nations prepare for a hyper-inflation cycle to sweep the world, Cryptocurrency can act as a hedge in addition to gold and silver.

If the government is concerned about illegal activities with cryptos then they can relax because most crimes happen in fiat cash transactions, not crypto which is traceable.

Crypto traders generally are not the ones that take part in illicit trades.  It is those who introduce illegal ICOs and OTC trades.

How about regulations?

Instead of banning crypto trades, how about bringing clear regulations to provide a framework for the crypto trading.

Such a framework should include stricter guidelines for ICOs and OTC trades.  

Crypto exchanges can relay the trading information directly to the tax authorities (instead of needing to be subpoenaed) so that there is transparency.

Will India Ban Cryptocurrency Trading?

That depends on whether India wants to be in the ranks of the United States, Switzerland, South Korea, etc., or if it wants to be counted among China, Russia and North Korea.

The United States, South Korea and Switzerland (along with other countries) are doing everything to stay ahead in the blockchain and crypto race.

Other countries we stated above are working to stomp on the innovation. 

A better question is: Can India ban cryptocurrency trading?  

The answer is NO.  

To ban cryptocurrency trading – India will have to shut down the internet.  

In the event of an actual law that bans Indians from participating in the cryptocurrency trading, the only people that will be impacted by those are the ‘honest’ citizens because the crooked ones will still find ways to trade using VPN or alias names.

For a country that wants to be at the forefront of technological revolution a ban would be a very backward decision.

We urge the Indian government to NOT punish the honest citizens by introducing a ban.  Rather, introduce a sensible legal framework for everyone to operate in.

This will bring more businesses to India and take India’s platforms to the world.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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