By Taylor Ryker, Analyst
Top Weekly Updates:
1. China’s blockchain love and cryptocurrency hate. According to Roger Huang of Forbes, China’s central government is encouraging its citizens to develop blockchain technologies while making it very difficult for them to obtain cryptocurrencies, such as bitcoin (“Why China is So Afraid of Cryptocurrencies,” 12/31/19). Huang reports that China’s incentive to use blockchain technologies to develop their own digital yuan is based on surveillance, tax collection, and control. Public cryptocurrencies such as bitcoin offers semi-anonymity and protection from central controls.
The current 2020 internet is based on both public and private internets/intranets that offers different levels of security and access for governments, businesses, institutions, and users. The strength of the internet is the value brought by the public internet that many intranets (such as private servers for law firms or corporations) connect to in order to communicate across the world. Similarly, the immense potential of value for cryptocurrency is a healthy relationship between private and public blockchains.
On Wednesday Jan. 8th, China announced that their nationwide blockchain network, the Blockchain-based Service Network (BSN), will launch in April 2020. The BSN is poised to be a commercial platform that is currently partnered with 400 enterprises and 600 developers.
2. Soleimani Killing sees Spike in Oil, Gold, and Cryptos with Fears of War. On Friday, Jan. 3rd President Trump ordered an airstrike that killed powerful Iranian military leader Maj. Gen. Qassem Soleimani. The leader was responsible for the deaths of hundreds of US and coalition service members in the Middle East and behind many of the attacks directed at the West and Israel. The news of the death of Soleimani saw Gold up 1.5% and Oil up 2.93%. In addition, the cryptocurrency market saw across the board gains up to 7% with bitcoin up 4.86%. Investors are scared that Iran will retaliate and pull the US into a new war that will probably cause market turmoil and uncertainty.
The killing of Soleimani showcased the gaining traction that cryptocurrencies may pose a safe haven during times of global volatility. If the US is drawn into a new war in the 2020s, there will probably be the need to raise billions of dollars of capital to finance these military campaigns. The wars in Iraq and Afghanistan since the early 2000s increased the national debt and a new war will possibly add to that amount. Investors should look into which cryptocurrencies provides a safe protection of asset value heading into a decade with increased hostilities.
3. Chinese internet giant Baidu launch cryptocurrency. On Monday Jan. 6th, Baidu, considered the Google of China, announced that they released their cryptocurrency, “Xuperchain.” The news follows in the footsteps of other Chinese internet giants like Alibaba, Tencent, and JD.com getting into the cryptocurrency space. Baidu’s Xuperchain is a network that offers “blockchain-as-a-service” where users and companies will be able to deploy their own application with ease, at a cost effective rate, and while complying with all Chinese regulations. Since May 2018, Baidu has developed Xuperchain as an open-source software; however, some pundits have warned that Xuperchain will probably be a centrally controlled blockchain by Baidu.
The launch of Xuperchain is a good thing for cryptocurrency technologies. The large push by Chinese internet giants highlights the immense value proposition of cryptocurrency where China’s dominance is a likelihood in the 2020s. In addition, the West’s alarm and fear of China’s rise in the cryptocurrency space will incentivize the support of West-based cryptocurrencies. It will be interesting to see if Baidu’s Xuperchain will need a larger public blockchain to be able to speak to other private blockchains.
If this situation arises, it would be wise to have some exposure to this larger public blockchain which is akin to the current internet that allows for the hundreds of thousands of intranets and email servers to communicate to each other. The new internet will be a combination of both private and public blockchains.
4. Qatar Bans Crypto Trading. While many governments around the world have a more friendly outlook towards cryptocurrencies, Qatar, a Middle Eastern country on the Arabian peninsula, is reported to have banned cryptocurrency trading. According to The Block on Jan. 6th, the Qatar Financial Centre (QFC) Regulatory Authority announced that “virtual asset services may not be conducted in or from the QFC at this time” (Khatri, “Qatar bans crypto trading-report”).
Qatar is not the only country that has banned the trading of cryptocurrencies such as bitcoin. Other countries such as Egypt, Pakistan, and Morocco have also banned crypto trading. However, these countries constitute a small minority and that the majority of nations around the world allow its citizens to trade cryptocurrencies.
5. Crypto Prices Increase Across the Board. Since Tuesday Jan. 7th, the crypto market has seen a steady increase in the price of major cryptocurrencies, such as Bitcoin ($8,350, +8%), Ethereum ($145, +6%), and EOS ($2.90, +8%). With the increased fears of a potential US-Iran military conflict in addition to other economic concerns, investors may potentially be moving their wealth into cryptocurrencies to hedge heading into uncertain economic times in 2020. One thing to be cautious about concerning the increase in price is that the Chinese New Year is right around the corner and that is when many Chinese will liquidate their crypto holdings to finance their festivities and money exchange customs.
The increased price of cryptocurrencies comes at a needed time when many throughout the cryptocurrency space have capitulated. Ranging from Twitter and social media personalities who have covered particular cryptocurrencies walking away from their channels to miners turning off their unprofitable operations, many in the crypto space have pointed to the fact that there is much depression and fear. Hopefully, this strong start to 2020 is able to be sustained throughout the year and that more funding is poured into this space. There are exciting developments afoot and I remain optimistic to see what unfolds in terms of blockchain solutions to scalability, social media, user experience, and data monetization.
6. US State Governments begin to use Blockchain for Voting Elections. A state delegate prefiled a bill in Virginia’s General Assembly to be heard on Jan.8th to request funding for a study into blockchain-based elections. Other States such as West Virginia, Colorado, and Utah have participated in blockchain-supported voting elections since 2018. The use-cases for blockchain technologies is expanding and to potentially include future federal and state elections would allow for protection against voter fraud
It is interesting to hear that the State of Virginia is potentially interested in adopting blockchain technologies for their elections. Block.one, the parent company of the EOSio source code, has recently invested millions of dollars to construct their new headquarters in Northern Virginia, outside of Washington D.C. In addition, Dan Larimer, the CTO of Block.one, has hinted that EOS could host a decentralized social media application where US citizens would be able to authentically vote in elections. I will be following the updates on this issue of blockchain voting because it could be the gateway for US citizens to participate in other local, state, and federal activities, such as paying taxes, receiving welfare benefits, or filling out the census.
Disclaimer: KJ Kingsley is not a financial advisor and holds the digital tokens or cryptocurrencies represented in the content above. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this post constitutes a solicitation, recommendation, endorsement, or offer by myself to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of any of the author’s employers.