Blockchain & Cryptocurrencies news round-up: March through May 2020
As the world combats that COVID-19 pandemic, the indomitable human spirit is on display once again! Healthcare professionals, law enforcement officials, common citizens, voluntary organizations, businesses, and governments are doing a lot to fight against the pandemic. As you would expect, a lot of this effort focuses on using cutting-edge technologies.
Among other technologies, businesses and experts are studying how blockchain can help to combat the pandemic and its effects on the world. Even otherwise, plenty of developments took place concerning blockchain and cryptocurrencies in recent months. In this article, we look at some of the key developments between March and May 2020 concerning blockchain and cryptocurrencies.
Experts state that blockchain can aid in combating the effects of COVID-19
The COVID-19 pandemic has significantly impacted the world economy. World Economic Forum (WEF) believes that blockchain will play a key part in shaping the world after the pandemic. WEF has reviewed the inadequacies of the global supply chain that became glaringly clear in the wake of the pandemic.
The organization concludes that the global supply chain lacks the connectivity and data exchange that the post-COVID-19 world needs. It believes that blockchain with its transparency can help businesses seamlessly integrate disparate networks, thereby improving the global supply chain.
IBM, the technology giant that has been at the forefront of many blockchain-related research and innovations, is participating in a blockchain project named “MiPasa”. Governments, scientists, researchers, and medical experts face a key challenge in their effort to formulate a coherent response to COVID-19. It’s the lack of integration of verified data sources. The MiPasa project provides an open data hub where blockchain ensures data integrity.
Bitcoin “miners” see their rewards reduce
On May 11th, 2020, a Bitcoin “halving” event took place that can potentially have a long-term effect on the Bitcoin network. “Halving” reduces the number of Bitcoins entering circulation. The May 2020 “halving” event reduced it from 12.5 to 6.25.
Bitcoin “miners” now face a reduced profit. Miners are users of computers on the Bitcoin network called “nodes”. These nodes take part in the Bitcoin transaction validation process, which is highly energy-intensive and competitive. Miners get fractions of new Bitcoins entering circulation. Bitcoin miners need to invest in powerful computers and energy supply to compete with other miners.
There is a limit on how many Bitcoins can exist, and that limit is 21 million. As a result, the number of Bitcoins entering circulation can only reduce progressively. This reduces the reward that Bitcoin miners earn. On the other hand, they need to invest more and more in powerful hardware and energy supply. The halving of Bitcoin reduces their profit.
The Bitcoin network might see several small miners close down their operations due to reduced profit. Companies running large Bitcoin mining rigs already control a lot of Bitcoin mining activities. This brings in an element of centralization in the Bitcoin network. That’s not how the original intention of creating a decentralized digital currency was! The recent halving might increase the power of large mining pools by pushing out small miners, and that may not be good for Bitcoin in the long run!
News from North America
In May 2020, the United States Securities and Exchange Commission (SEC) recently shut down the proposed “Telegram Open Network” (TON), an ambitious project from Telegram, the well-known messaging app. Telegram had planned to create TON, a blockchain network, and “gram”, its cryptocurrency. Telegram had raised $1.7 billion from nearly 200 private investors for TON, however, SEC found that this project violates the US securities regulations. A U.S. court upheld this decision from the SEC. Some observers believe that the USA won’t allow digital currencies to challenge the supremacy of USD, and the shutting down of TON only confirms that.
Blockchain is a promising technology, however, it’s new. Businesses find it hard to find enough people skilled in this technology, and this adversely impacts their ability to execute key blockchain projects. The York University School of Continuing Studies in Canada intends to address this challenge. In May 2020, the university has announced that it’s starting 2 new university-level blockchain courses. These courses will start in September 2020.
News from Europe
COVID-19 has had its impacts on the famed “Crypto Valley” of Switzerland, and the future is far from certain! Zug, the region of Switzerland also known as “Crypto Valley” is the home to many blockchain-crypto startups. COVID-19 has adversely impacted start-ups from most of the sectors, and blockchain-crypto start-ups are no exceptions. The withdrawal of private equity investors have had a telling impact on the blockchain-crypto start-ups in Zug, and many are staring at bankruptcy. A high-ranking government official from the Zug local government had requested for a $103 million bailout package for them. However, the Swiss government has rejected this proposal in May. Questions remain whether the blockchain-crypto start-ups in Zug can survive for long.
European Central Bank (ECB) has recently completed studying stablecoins, and it has provided its findings in May. ECB states that clear regulatory parameters should be established before the widespread adoption of stablecoins. Stablecoins are cryptocurrencies that are pegged to a prominent fiat currency like USD. Cryptocurrencies see significant volatility in their price, which impedes their widespread adoption. However, stablecoins are free from this. The ECB report certainly sees promises in stablecoins, however, it also foresees risks. ECB believes that people might use them as instruments of deposits, which will defeat the very purpose of issuing stablecoins. The central bank wants proactive regulations concerning stablecoins.
News from Asia
In April, China has officially launched a key blockchain initiative. The project is called the “Blockchain-based Services Network” (BSN), and it dovetails with the national blockchain strategy of the country. BSN will serve as the infrastructural foundation for interconnectivity throughout mainland China. It connects city governments, businesses, as well as individuals. BSN will also facilitate interconnectivity between China’s trade partners across the world. The China State Information Center, China Mobile, China Unionpay, and Red Date Technologies are the main players behind BSN.
In May, Japan adopted new cryptocurrency regulations. The new set of regulations include many regulatory changes. These regulations will now govern crypto custody service providers and crypto derivatives businesses. A key effect of the implementation of the new regulatory regime is that unlicensed crypto exchanges like Bitmex are exiting Japan.
News from Australia
Aglive, an Australian start-up has successfully completed a beef traceability trial using blockchain in May. The company has worked with DB Schenker, a global shipping logistics company for this. It has also worked with Meat and Livestock Australia for the trial. Using blockchain and Internet-of-Things (IoT), the company has tracked the entire lifecycle of frozen beef products from the farm in New South Wales, Australia to the completion of shipment in Shanghai, China. The successful trial once again demonstrates the value of blockchain in supply chain assurance.
The global business environment needed the infusion of technology to improve efficiency and transparency, and blockchain was increasingly seen as the solution. With COVID-19 causing a major upheaval all around the world, increasing the adoption of blockchain seems to be firmly on the agenda. We can expect to see blockchain aiding the global supply chain with transparency and efficiency in the coming years.