Blockchain Wars: COVID-19 Edition

With United States refocusing attention on controlling the spread of COVID-19, China continues to pursue its goal of global leadership in blockchain technology.

Following on the success of last year’s blockchain initiatives, China successfully moved nearly their entire population off of paper money – a change affecting Chinese citizens of all economic levels. Panhandlers on the streets of Beijing now display QR codes for donations into their digital bank accounts.

As was reported by the Wall Street Journal in April, four large cities in China are piloting full digital currency integration. China’s Central Banked recently completed a “Certification of FinTech Products” program, a year-long public education campaign on blockchain technology. These initiatives, along with President Xi’s open and continued public support of digital currency dominance, have propelled China into a blockchain technology and cryptocurrency leadership position.

Compared to its largest global rival, the United States has not kept pace. Washington’s knowledge gap and financial regulatory ineffectiveness were showcased clearly during the early hearings on Facebook’s proposed cryptocurrency, Libra. The hearings quickly exposed that neither chamber of Congress understands nor appreciates the impact that cryptocurrency and blockchain technology are poised to have on the future of the world’s financial architecture.

So what has been the net effect? Facebook is moving forward with Libra – but they are leaving American investors out and instead partnering with companies and countries outside of Washington’s regulatory reach. More evidence of American crypto-flight came in the form of PayPal’s decision this week to test its new Bitcoin buying feature in Europe instead of its home country, the United States. The United States is increasingly seen as hostile toward digital currency integration and is driving financial innovation offshore in the process .

Fortunately, there is legislation being proposed that will allow for companies in the United States to safely compete for positions in the coming digital economy without the fear of being caught on the wrong side of yet to be written legislation. Voices on both sides of the political aisle seem to understand failing to act is a failure to provide American business with the framework they need to compete on the future global stage.

Blockchain technology stands poised to rebuild the way data, digital assets and currencies move around the globe. The global financial landscape will be restructured to reflect the immutability and instant transferability of blockchain-based assets and currencies. Waiting for third-party transaction validations are becoming a thing of the past. Goldman Sachs, Fidelity, IBM, The Bank of England, The Bank of Japan, the ECB, the Federal Reserve and the IMF have all commented on the inevitability of this changing paradigm.

Without action to support the adoption of cryptocurrency and blockchain technology, it is all but assured that the United States will see a decline in its political and economic influence. The abandonment of the US dollar as the world’s favored “transaction currency” (the currency the world uses to trade international goods like oil and gold) will be the first sign in this decline of US economic hegemony – but it won’t be the last.

Politicians are starting to take notice but are uncertain as to how to proceed. Looking backwards and hanging on to the past is not a winning strategy. The United States must once again embrace its innovative spirit and evolve.

China has taken the first steps toward dominating the future of the internet and of finance. Indeed, the first shots in the coming “Blockchain Wars” have been fired!

Curve Pool Gives Investors New Exposures Through Liquidity Pooling

Weekly Analyst Thoughts

Curve Pool

Defi recently welcomed a new development to its space: Curve Pool. Curve Pool brings together stablecoins and wrapped tokens and offers liquidity pools for investors to contribute to.

Below is a snapshot of their website and the potential returns (APY) investors can earn by joining their pools. Notice that Synthetix token (SNX) offers multiple rewards in SNX for providing liquidity to its stablecoin (sUSD) and its synthetic bitcoin (sBTC).

Source:     https://www.curve.fi/

Synthetix app Mintr, pictured below, promotes opportunities to earn SNX with Curve pool.

Source: https://mintr.synthetix.io/

In summary, if you are holding SNX, REN or other stablecoins, but not using Curve pool to provide liquidity and earn interest on your holdings, then money is being left on the table. If this post sparks your interest in Curve pool, consider the sBTC pool (pool 6) because it gives investors exposure to multiple tokens as they could earn SNX, REN, BAL and CRV.

By Jacob Stelter

China Lands First Blow in Global Blockchain Wars

As lawmakers jockey to chastise technology leaders like Facebook’s Mark Zuckerberg (for the dastardly future crime of earning potential profits by providing a payment service to millions of people), America’s greatest economic foe, China, has quietly built a substantial lead in the race for leadership in technology’s newest battleground: Blockchain Technology.

This was an exciting week for cryptocurrency holders. Bitcoin prices surged as much as 40% Friday after China’s Xi Jinping urged his fellow citizens to “seize the opportunity” afforded by blockchain technology. The Chinese leader’s statements on blockchain are believed to be his first in-depth remarks on the technology. His comments stressed the importance of stepping-up research on the standardization of blockchain to increase China’s influence and rule-making power in the global arena.

2019 has been a busy year for China. While the United States bemused itself with bipartisan bickering, China quietly pursued global leadership in blockchain technology. During the year, China successfully moved nearly their entire population off of paper money and onto digital currency solutions. This change affected Chinese citizens of all economic levels. Even panhandlers on the streets of Beijing no longer solicit coins and bills, they instead display their QR code for donations to their digital bank accounts.

China’s central bank also announced a verification system this week called the Certification of FinTech Products that will certify 11 types of financial technology hardware and software widely used for digital payments and blockchain services. This initiative follows a year-long public education campaign where China’s central bank published and disseminated pamphlets and other educational materials heralding the benefits of digital currencies and explaining the capabilities of blockchain technology to streamline commerce and fight corruption.

China’s intention of dominating this new technology has been made clear – first with covert foundational initiatives and now overtly with President Xi’s announcements and the sponsoring of these programs. This is all advantageous for a command economy like China, which can now recapture lost innovation through streamlined implementation, a phenomenon now materializing. Washington’s struggles with endless equivocation and ineffectiveness reflects the Western world’s general indecisiveness, allowing China to establish itself as the global blockchain technology and cryptocurrency leader.

Blockchain technology stands poised to rebuild the way that data, digital assets and currencies move around the globe. The global financial landscape will be restructured to reflect the immutability and instant transferability of blockchain-based assets and currencies. Gone are the days of waiting for third-party transaction validations. Goldman Sachs, Fidelity, IBM, The Bank of England, The Bank of Japan, the ECB, the Federal Reserve and the IMF have all commented on the inevitability of this changing paradigm, but no operator has gone as far as the Bank of China to position itself as a leader for this coming reality.

The Chinese government has moved forward with formal policy to ready itself and its population for a digital economy, passing a new law (effective January 1st) aimed at “facilitating the development of the cryptography business and ensuring the security of cyberspace and information”. Among other things, this law also makes it illegal to falsely claim that blockchain technology is fraudulent. The new legislation, and indeed President Xi’s comments, were anticipated by many as China readies the country for the launch of its state-backed cryptocurrency – which is expected as soon as December.

When we finally see the inner workings of China’s national cryptocurrency, we can be certain that its blockchain architecture will likely be a long way from the decentralized, trust-less principles upon which Bitcoin, Ethereum and other public blockchains are based.

China’s interest in the space appears to have had a positive impact on already established cryptocurrencies like Bitcoin, by adding global legitimacy to the cryptocurrency industry overall. Only time will tell the true cost of America’s war on its innovators. China has taken the first steps toward dominating the future of the internet and of finance. The first shots in the “Blockchain Wars” have been fired and America barely noticed.

John Sarson

Managing Partner & CIO