Blockchain: Things Wall Street didn’t tell you about Blockchain this week.
Updated: Mar 11, 2019
Blockchain: Things Wall Street didn’t tell you about Blockchain this week.
Facebook is building its own cryptocurrency
Facebook is developing a cryptocurrency to enable users of WhatsApp, one of its chat apps, to send cross-border transfers instantly, according to The New York Times. Facebook — which would roll out the coin this year — has 50 engineers working on its project, which is being led by former PayPal president David Marcus, and has had conversations with cryptocurrency exchanges about selling the coin on their platforms. The social media company plans to guarantee the value of the coin by backing each one with a set number of dollars, euros, and other national currencies held in Facebook bank accounts. The firm would integrate the option across Instagram and Messenger, which when combined with WhatsApp could bring the digital currency to 2.7 billion people. This coin could have implications on the use of cryptocurrencies in both the retail and remittance industries. Merchants and payment firms, in the US specifically, have been shying away from cryptocurrency acceptance for purchases, as its high rates of transaction failures and rapidly fluctuating values are threatening to merchants because the value of a cryptocurrency can change before a purchase actually clears. But Facebook's approach of potentially utilizing blockchain and backing the coin with multiple foreign currencies, which could limit its volatility and possibly incentivize more merchants to accept it, could streamline cryptocurrency acceptance.
US Grocery Chain Kroger Ditches Visa, Discusses Accepting Bitcoin
US grocery chain Kroger recently banned Visa from a regional supermarket in protest of the payment processor’s “excessive transaction fees,” announcing that hundreds of stores and fueling stations would halt Visa payments in April. However, the story has taken a surprising turn, with Kroger representatives reportedly considering Bitcoin’s Lightning Network as one potential alternative payment system. Morgan Creek Digital partner Anthony Pompliano got the ball rolling when he said that his team was willing to fly to meet Kroger executives to discuss the use case of Lightning Network-enabled Bitcoin as a low-fee alternative to Visa. Kroger stated on March 1 that 142 supermarkets and 108 fuel center locations would stop accepting Visa by April 3 in order to maintain low prices for customers. Visa is by far the world’s largest credit card issuer with 323 million users compared to 191 million Mastercard users, making the ban a bold move on Kroger’s part. The monopoly enjoyed by Visa has perhaps enabled it to inflate fees beyond market expectations. In this case, this is due to the sense that chains are essentially obligated to service Visa users or risk losing their business. Kroger is saying no to high fees and drawing a line in the sand, leaving room for low-fee alternatives like Bitcoin Lightning Network payments to state their case. As a leading traditional grocery retailer in the country, the move could embolden other dissatisfied companies to follow suit.
Reuters: Mexican central bank in talks with Amazon about new mobile payments
Mexico’s central bank is in talks with Amazon to launch a new government-backed mobile payment system that would allow consumers to pay for online purchases using QR codes, the bank’s head of payments said. It would be the first time the world’s largest online retailer offers such scanning technology in Mexico and could eventually open a new customer base in a nation where more than half of the population has no bank account. “They have also said that they could implement it relatively quickly,” Cortina said, adding that CoDi was specifically designed so that it can facilitate payments online as well as in stores. Phone-based banking is popular in other emerging markets such as China, India and Kenya, and has been driven by user-friendly, affordable apps from private companies. Only 3.9% of retail sales were made online in Mexico last year, with Amazon and MercadoLibre among the biggest players. Mexico’s new government is betting on financial technology to help lift people out of poverty. Broad acceptance of CoDi would mark an important step in its financial inclusion strategy.
Global Demand for Blockchain Engineers Up 517% in a Year
The second-fastest growing software engineering role is security engineer, with 132% growth, and third is embedded engineer, up 76%. The blockchain engineer role also consistently stayed among the top-three most-paid software engineering jobs in the various cities covered in the report. Blockchain engineering is the second most-paid software engineering specialization in New York and London, the third in the San Francisco Bay area and Toronto, and the first in Paris. The average of the average salaries that blockchain engineers receive in the aforementioned cities is $105,400. The San Francisco Bay area is the location with the highest salaries, $155,000 on average, while Paris comes in last, with blockchain engineer salaries averaging around $67,000. The average earnings of a blockchain engineer have soared to between $150-175,000 per year. A study published by recruiting site Glassdoor found that crypto and blockchain-related job opportunities significantly increased in the United States in 2018.
Mercedes-Benz to Use Blockchain Tech
German automobile brand Mercedes-Benz Car has developed a platform based on blockchain technology to increase transparency and sustainability in complex supply chains. Mercedes-Benz, a division of Daimler AG, a German multinational automotive corporation, has partnered with United States-based software company Icertis for cooperating in the development of blockchain tech for supply chain use. Mercedes-Benz has announced that that they have jointly developed and programmed a prototype with Icertis based on blockchain technology that allows for the storage of documentations and contracts in complex supply chains. The project allows for the creation of a transparent and sustainable mapping of sorted documents across the entire supply chain, the press release notes. The parties have now entered the testing phase of the pilot project. Underlining the complexity of the modern supply chains, Wilko Stark, a member of the divisional board of Management Mercedes-Benz, states that blockchain tech could affect “nearly the entire value chain,”
"Blockchain technology has the potential to fundamentally revolutionize our procurement processes [...] With our Blockchain-prototype, we are in the first step testing one of diverse possible applications with the aim of increasing transparency beyond our direct suppliers."
$66 Million Building to Be Tokenized on Ethereum Blockchain in Record Deal
A security token merely means an issuer is selling a crypto token in compliance with securities laws. But with a tokenized security, “it’s a whole different world,” where blockchain technology gives investors an unprecedented level of transparency, said O’Meara, chairman and chief executive officer of Inveniam Capital Partners. ICP is about to put this idea to the test. The company plans to tokenize some $260 million in four private real estate and debt transactions, starting with a WeWork-occupied building in downtown Miami, Florida. Announced Tuesday, the firm intends to sell tokenized shares of the building, valued at $65.5 million, likely the largest piece of real estate to be financed this way to date. The company placed a deposit on the building last month using an unspecified amount of bitcoin. Once the other three deals are finalized, ICP will be auctioning off shares in the assets, represented by ERC-20 tokens on the ethereum blockchain, the coming weeks. Shares in the four assets will be sold through what is known as a Dutch auction, meaning potential investors will place their own bids outlining how many shares they want, what price they would like to pay per share and which cryptocurrency they would like to pay with. Inveniam will accept bids denominated in the top 50 cryptocurrencies by market cap at launch. When the sale concludes, tokens will be distributed in order from the highest bids to the lowest. “The price that every bidder pays will be based on the lowest price of the last successful bid dependent upon the bidder’s fiat-to-crypto conversion rate limit,” a press release noted.
Swiss Bank Julius Baer to Offer Digital Asset Services
Swiss private bank Julius Baer has partnered with a cryptocurrency banking startup to offer digital asset services later in 2019. Julius Baer said it has partnered with SEBA Crypto AG and will utilize platform to offer storage, transaction and investment solutions for digital assets to meet growing demand from its clients. The arrangement will come into effect once SEBA receives a banking and securities dealer license from the country’s financial regulator, the Financial Market Supervisory Authority (FINMA). Baer is “convinced that digital assets will become a legitimate sustainable asset class of an investor’s portfolio.” SEBA, which was launched by former UBS bankers, raised 100 million Swiss francs (or $104 million) in VC funding last September in a bid to establish its regulated cryptocurrency bank. The aim is to offer traditional banking services to firms in the crypto industry, alongside cryptocurrency trading, asset management and custody services for institutions that are interested in moving to the space.
Bloomberg: Cryptocurrency Assets Get Arab World’s First Regulatory Nod
Bahrain’s central bank said that it issued “the final rules on a range of activities relevant to crypto assets.” The framework covers areas from licensing and governance to cyber security.
The central bank’s “introduction of the rules relating to crypto assets is in line with its goal to develop a comprehensive rules for the fintech eco-system supporting Bahrain’s position as a leading financial hub” in the Middle East and North Africa, Khalid Hamad, executive director of banking supervision at the central bank, said in an emailed statement. Bahrain’s neighbors Saudi Arabia and the United Arab Emirates have previously launched a joint pilot crypto currency initiative with the goal of easing cross-border payments and better understanding blockchain technology, a decentralized public ledger of transactions that offers more speed because it doesn’t rely on a central record keeper. The central bank in Bahrain has already been operating an incubator-style sandbox licensing program, which included crypto-currency exchange platforms and companies using blockchain. The program allows them to test out their services as Bahrain looked into regulating the emerging industries and technologies that come along. Bahrain’s move is a “great step in the right direction for the crypto-asset ecosystem in the region,” said CEO of BitOasis, a leading crypto-currency exchange platform in the Middle East and one of the companies enrolled in the country’s regulatory sandbox.
‘Free’ Electricity for Students Makes College Campuses Major Crypto Miners
College campuses are the second largest cryptocurrency miners across industry verticals, according to research by tech conglomerate Cisco published in PCMag on March 5. Cisco’s security researchers reportedly investigated cryptocurrency mining activity across various industry verticals. The research was carried out with Cisco’s security product Umbrella, which monitors clients’ network connections to screen malicious activity, including possibly dubious crypto mining. In Cisco’s ranking, college campuses and utilities are followed by the media and healthcare industries, with six and seven percent respectively. Cryptocurrency mining in the local government, manufacturing, and financial services sectors occupies four, three, and two percent respectively. A similar tendency was observed in April of last year, when cyber-attack monitoring firm Vectra discovered that both intentional cryptocurrency mining and cryptojacking was becoming more prevalent on college campuses than in any other industry. In January of 2018, Stanford University posted a warning against crypto mining on campus, as school resources “must not be used for personal financial gain.” The warning also cited the school’s chief information security officer.