Ethereum blockchain set for 'monumental' overhaul

PARIS - An army of computer programmers scattered across the globe is set to attempt one of the biggest software upgrades the crypto sector has ever seen this week to reduce its environmentally unfriendly energy consumption.

Developers have spent years working on a more energy-efficient version of the ethereum blockchain, a digital ledger that underpins a multibillion dollar ecosystem of cryptocurrencies, digital tokens (NFTs), games and apps.

Ethereum -- the second most important blockchain after bitcoin -- burns through more power each year than New Zealand.

Experts say the changeover, expected to take place between Tuesday and Thursday, would slash energy consumption by more than 99 percent.

Enthusiasts hope a greener ethereum will spur wider adoption, particularly as a way of enabling banks to automate transactions and other processes.

But so far the technology has been used largely to create speculative financial products.

The ING bank said in a recent note that the switchover might help ethereum gain acceptability among policymakers and regulators. 

"This in turn may provide a boost to traditional financial institutions' willingness to develop ethereum-based services," the bank said.

The switchover, dubbed "the merge", will change the way transactions are logged.

At the moment, so-called crypto miners use energy-guzzling rigs of computers to solve puzzles that reward them with new coins -- a system known as "proof of work".

The new system will get rid of those miners and their computer stacks overnight.

Instead, "validators" will have to put up 32 ether (worth $55,000) -- ethereum's cryptocurrency -- to participate in the new "proof of stake" system where they earn rewards for their work.

But the merge process will be risky.

Blockchain company Consensys called it a "monumental technological milestone" and the biggest update to ethereum since it was launched in 2015.

Critics have questioned whether such an upgrade will pass off without incident, given the sector's history of instability.

Ethereum went offline in May for three hours when a new NFT project sparked a surge in buyers that overwhelmed the network.

Several exchanges and crypto companies said they would halt transactions during the merge process.

The upgrade also faces a possible rebellion from crypto mining companies whose business will be severely damaged.

They can try to hijack the process or create a "fork", basically a smaller blockchain that would continue with the old mechanism.

And even if the "merge" is successful, ethereum will still face major hurdles before it can be more widely adopted.

For example, it is expensive to use and the update will not reduce fees.

And the wider crypto sector is beset by wildly fluctuating prices, security flaws and an array of scams.

Crypto lawyer Charles Kerrigan from the firm CMS told AFP that ethereum was "decentralized and complicated" and had not yet been tested enough for governments and banks to get onboard.

"There have been questions about how easily it could deal with upgrades of the type that traditional software vendors provide to customers," he said. 

"A successful merge will answer those questions."

Agence France-Presse

Bitcoin bruised after chaotic debut as legal tender in El Salvador

TOKYO - Bitcoin licked its wounds on Wednesday, a day after its heaviest losses in 2-1/2 months as El Salvador's historic adoption of the crypto asset as legal tender caused chaos online and on the street.

The coin last traded at $46,560, having endured wild trade the day before in which it hit a near four-month high of $52,956 before plunging 11.1 percent, its largest fall since June 2.

Analysts said the sharp retreat was partly due to investors who had bought the rumour of El Salvador's move now selling the fact.

"I think there was some anticipation building ahead of that event (El Salvador), similar to what we saw ahead of Coinbase listing on Nasdaq," said Henrik Andersson, chief investment officer at Apollo Capital, a crypto asset fund in Melbourne, Australia.

At one point on Tuesday, the digital currency fell as much as 18.6 percent, wiping out more than $180 billion from the market.

It was a historical day for bitcoin as El Salvador's experiment of making it legal tender got off to a bumpy start.

Technological glitches hampered its use while street protests by mistrustful citizens broke out in the Central American country.

As bitcoin wobbled, Salvadoran President Nayib Bukele said his government purchased an additional 150 bitcoins on Tuesday, worth around $7 million.

"That has underscored the difficulty in trying to protect the value of bitcoin as its own currency," said Nana Otsuki, chief economist at Monex Securities. "The buying didn't seem to be effective in halting its fall."

Amid the trading frenzy, major U.S. cryptocurrency exchanges Coinbase Global Inc, Kraken and Gemini struggled with delays in some transactions. All of them said their systems have since been restored.

Separately, the U.S. securities regulator has threatened to sue Coinbase Global if the crypto exchange proceeds with plans to launch a programme allowing users to earn interest by lending crypto assets. 

(Reporting by Hideyuki Sano, Anushka Trivedi; Editing by Sam Holmes)

-reuters-

Bitcoin climbs towards all-time high after topping $19,000

LONDON - Bitcoin moved to within a whisker of its all-time high on Tuesday, after hitting $19,000 for the first time in nearly three years.

The world's most popular cryptocurrency was last up 4.8 percent at $19,225, just shy of its all-time record of $19,666 hit in December 2017. Bitcoin has gained around 25 percent in the last two weeks alone, and is up around 160 percent this year.

Fuelling its rally has been the demand for riskier assets amid unprecedented stimulus programs to counter the COVID-19 hit; hunger for assets perceived as resistant to inflation; and expectations cryptocurrencies will win wider acceptance as a method of payments.

Bitcoin's 12-year history has been peppered with vertiginous gains and equally sharp drops. Its markets and price discovery is highly opaque compared with traditional assets such as stocks or bonds.

"My base-case scenario is that we will break the 2017 high and hold above it," said Fawad Razaqzada, an analyst at FX brokerage Think Markets. "But if you get an immediate rejection above the all-time, that would raise the possibility of a correction."

Smaller digital currencies such as ethereum and XRP - which often move in tandem with bitcoin - took a breather after gaining sharply in recent days.

Crypto markets have matured since bitcoin's December 2017 peak, attracting a greater number of large investors such as family offices and hedge funds.

Its 2020 gains have prompted some investors to claim the cryptocurrency could more than quintuple in price to as high as $100,000 in a year, drawing eye rolls from sceptics who say it is a purely speculative asset.

Analysts say bitcoin's limited supply of 21 million makes it a good hedge against inflation. Some investors think the value of traditional currencies will fall as governments and central banks unleash massive stimulus packages to support economies hit by COVID-19.

Yet bitcoin's gains have continued even as gold - traditionally a go-to hedge against inflation - has slipped, with a resurgent pandemic making global growth and inflation recovery a more distant prospect.

Gold has shed 3.6 percent this month, versus bitcoin's 40 percent gain.

Bullish investors cited expectations that bitcoin would achieve mass use as a means of payment - something it has so far failed to do - as a reason for the divergence.

Mainstream companies such as PayPal have embraced cryptocurrencies, sparking hopes bitcoin would become widely used and thus more valuable.

"With BTC one is also long a global currency which is now not just a easily accessible store of value but also a convenient payment mechanism," said Michael Hall at Nickel Digital Asset Management, a crypto fund in London.

(Reporting by Saikat Chatterjee; Additional reporting by Tom Wilson; Editing by Thyagaraju Adinarayan and Alex Richardson)

-reuters-

CEO of scandal-hit Wirecard resigns

The founder and chief executive of scandal-hit Wirecard resigned on Friday after the German payments provider was hit with fresh fraud allegations that have left it struggling for survival.

Markus Braun "resigned today with immediate effect", the firm said in a statement, adding that the decision was made "in mutual consent with the supervisory board".

He will be replaced on an interim basis by US manager James Freis.

The bombshell comes a day after auditors from Ernst & Young said 1.9 billion euros ($2.1 billion) were missing from Wirecard's accounts, intensifying a months-long crisis in the company.

The news prompted investors to abandon the once popular fintech company in droves, sending Wirecard's share prices into a tailspin.

The stock has plunged by more than 76 percent since Thursday morning and was trading at 23.90 euros a share by 1130 GMT on Friday.

It marks a stunning fall from grace for the Bavarian start-up, set up in 1999 and once seen as a darling of the fintech scene thanks to the growing global popularity of electronic payments.

It entered Germany's prestigious DAX 30 index with great fanfare in 2018 after nudging out traditional lender Commerzbank.

But since then Wirecard has been dogged by a series of articles in the Financial Times alleging accounting irregularities in its Asian operations.

The company's four board members -- including Braun -- have been under investigation since early June by Munich prosecutors for "market manipulation", and Wirecard's headquarters were searched as part of the probe.

The scandal deepened on Thursday when the firm was forced to delay the publication of its 2019 results for a fourth time.

Instead, Wirecard said in a statement that auditors Ernst & Young had identified "spurious balance confirmations" relating to "cash balances on trust accounts".

- Ticking clock -

The auditors' red flag was raised over escrow accounts at two Asian banks, which were supposed to hold 1.9 billion euros to manage risk for merchants using Wirecard's payment services.

Wirecard said there were "indications" that the balances had been falsified "in order to deceive the auditor".

The two Philippine banks that were supposed to hold the cash denied having a relationship with Wirecard, according to Bloomberg News.

Wirecard's board responded by fling a legal complaint against "unknown persons", saying they could have fallen victim to a vast fraud.

"It is currently unclear whether fraudulent transactions to the detriment of Wirecard AG have occurred," Braun said on Thursday.

But the clock is ticking for Wirecard, as two billion euros of credit could be withdrawn if it is unable to publish its results for last year by Friday.

According to preliminary figures, the group said it had processed 173 billion euros of transactions in 2019, up 38.5 percent.

Revenues grew 37.5 percent, to 2.8 billion euros, while net profits added 39 percent at 482 million, Wirecard said. 

Agence France-Presse

Apple, Goldman Sachs start issuing Apple Cards to consumers

Apple Inc rolled out its virtual credit card on Tuesday, working with bank Goldman Sachs Group Inc on the new iPhone add-on that may help Apple diversify from device sales and build out the Wall Street bank's new consumer business.

Apple announced the card in March, aiming to draw in iPhone owners by offering a card with 2 percent cash back on purchases with the Apple Pay service, no fees, an app to manage related finances, and a focus on data privacy.

For Goldman, the issuing bank, the card builds on a foray into its Marcus consumer banking brand, started in 2015.

Apple said a limited number of consumers who expressed interest in the card will start to receive sign-up invitations on Tuesday.

The card is designed to work with the iPhone, where users sign up for the card and can start using it immediately if approved via the Apple Wallet app and Apple Pay system.

Apple offers an option for a physical card made of titanium, but the physical card has no visible number. Instead, the card's number is stored on a secure chip inside the iPhone, which generates virtual numbers for online or over-the-phone purchases requiring a number.

Apple has focused on privacy, saying that purchase information is stored on the user's iPhone and that it cannot see the information. Goldman will not be allowed to use data for marketing purposes, even for selling other Goldman products.

Gene Munster, managing partner with Loup Ventures and a longtime Apple watcher, said Apple Card adoption is likely to be low in the first year, but that Apple Card could generate about $1.4 billion of high-margin revenue by 2023, adding about 1.8% to Apple's overall earnings and complementing the much larger Apple Pay business for total payments revenue of $5.38 billion by 2023. Apple has roughly 50 million U.S. Apple Pay users now.

But at Apple's size - $265.6 billion in sales for fiscal 2018 - the revenue matters less than the effect on keeping Apple customers tied to its brand, analysts said, said Ben Bajarin, an analyst at Creative Strategies.

"If it works, it's one more thing that causes you to stay deeply loyal and entrenched in the Apple ecosystem, even if something better comes along," he said 

(Reporting by Stephen Nellis in San Francisco; editing by Greg Mitchell, Peter Henderson and Sandra Maler)

source: news.abs-cbn.com

Bitcoin drops more than 10 percent as scrutiny of cryptocurrencies grows

LONDON - Bitcoin slumped more than 10 percent over the weekend to a two-week low as fears of a crackdown of cryptocurrencies grew on mounting scrutiny of Facebook's planned Libra digital coin.

Bitcoin fell 11.1 percent from Friday to $9,855 early on Monday, its lowest since July 2. The original cryptocurrency slumped 10.4 percent on Sunday alone, its second-biggest daily drop this year. It was last up 0.5 percent at $10,245.

Politicians and financial regulators across the world have called for scrutiny of Facebook's Libra coin, with concerns ranging from consumer protection and privacy to its potential systemic risks given the social media giant's global reach.

US President Donald Trump criticized bitcoin, Libra and other cryptocurrencies last week, demanding that firms seek a banking charter and subject themselves to US and global regulations if they wanted to "become a bank".

Bitcoin, which initially shrugged off Trump's tweet, fell sharply after US Federal Reserve Chairman Jerome Powell called for a halt to Facebook's project until concerns from privacy to money-laundering were addressed.

"Together they have increased the tail risk that the US will look to crack down on it in some way," said Jamie Farquhar, portfolio manager at crypto firm NKB Group in London.

Underscoring the growing attention on Facebook's plans, Japanese authorities have also set up a working group to look at Libra's possible impact on monetary policy and financial regulation, government sources told Reuters.

European Central Bank policymaker Benoit Coeure is due to deliver a preliminary report on the matter at a meeting of G7 finance ministers this week in Chantilly, north of Paris.

Bitcoin climbed nearly 55 percent in nine days after Facebook unveiled its plans for Libra on June 18, touching an 18-month high of nearly $14,000. The project has boosted hopes among some investors that cryptocurrencies could gain wider acceptance.

(Reporting by Tom Wilson Editing by Andrew Heavens)

source: news.abs-cbn.com

Facebook's Libra currency under fire

LONDON - Facebook's planned virtual unit Libra, already under heavy attack from US President Donald Trump and global regulators, faces skepticism among the wider cryptocurrency community as well.

One theme -- besides Brexit -- dominated discussion among the movers and shakers from London's financial technology or FinTech industry as gathered for their annual get-together: the future of virtual currencies.

"Can I just ask you to raise your hand if you would not be willing to use Libra?" asked the moderator at an event at London's recent 'FinTech Week'.

In the room, filled with about 100 experts and media who closely track the sector, about two-thirds of participants raised their hand to express distrust at the upstart currency.

Helen Disney, founder and boss of Unblocked Events, which promotes the blockchain technology that powers many cryptocurrencies, acknowledged growing doubts over who exactly would oversee and regulate Libra's operation.

POWER TO THE PEOPLE

People are "concerned about how the governance... would work", Disney told AFP.

"The cryptocurrency community is very libertarian in thinking," its "about giving power to the people, democratization of finance, keeping away from big banks and companies who control (the) economy," she said

Last week's gathering came one month after Facebook announced to the world its plans for the virtual currency.

Libra, which is widely regarded as a challenger to dominant global player Bitcoin, is expected to launch in the first half of 2020.

Whereas Bitcoin is decentralized, Libra will be co-managed by 100 partner firms, including Facebook's newly-minted financial services division Calibra.

The companies behind Libra -- which will be backed with a basket of real-world currencies -- include payment giants Visa, MasterCard and PayPal, as well as taxi-hailing services Lyft and Uber.

To access Libra on smartphones, users will go through a virtual wallet that will also be named Calibra.

While Facebook boasts an enormous customer base dotted across the globe that should facilitate Libra's uptake, it has also been plagued by privacy concerns that could make users hesitate.

"Can't wait for a cryptocurrency with the ethics of Uber, the censorship resistance of Paypal, and the centralization of Visa, all tied together under the proven privacy of Facebook," said Sarah Jamie Lewis, head of non-profit research organization Open Privacy.

Libra has meanwhile raised eyebrows among the world's financial regulators, including the Bank of England, the European Central Bank and the US Federal Reserve.

But Disney believes that Libra will finally force regulators to present clear regulation guidelines, as demanded by the cryptocurrency community itself.

"We have been waiting for a long time for a clearer signal (regarding) the regulation of cryptocurrencies and digital assets," she said.

But James Bennett, head of cryptocurrency research firm Bitassist, argues that Libra should not be seen in the same light as Bitcoin.

"In the long run, people may realize that Libra is not a cryptocurrency," Bennett said at the FinTech Week event.

"A true cryptocurrency should be resistant to attacks by all parties, from sovereign states to global corporations," he said, adding that "cryptocurrency is a type of money used to transfer value over the internet that cannot be stopped, confiscated or destroyed by any single entity".

BASED ON THIN AIR 

Trump has meanwhile unleashed a vicious attack on virtual currencies, slamming them for their alleged shadowy nature and arguing that Libra had no standing nor dependability -- unlike the dollar.

"I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air," Trump tweeted Thursday.

source: news.abs-cbn.com

Bitcoin's losses grow, recoils 30 percent from 2019 highs

LONDON - Bitcoin skidded as much as 9 percent on Tuesday, falling below the $10,000 mark and pushing losses to over 30 percent since the original cryptocurrency hit an 18-month-high last week.

In volatile trading, bitcoin recovered some of that ground by early afternoon to trade down 6 percent at $9,953.

On Wednesday last week, it touched $13,880, its highest since January 2018, on hopes that Facebook's unveiling of its Libra cryptocurrency would drive adoption of digital coins.

Traders said there was no immediate news catalyst for the fall, ascribing the moves to largely technical trading. Other major cryptocurrencies including Etherum and Ripple's XRP also fell 4 percent and 5.5 percent respectively.

Facebook's announcement that it planned to launch by the end of June 2020 its own digital coin as part of a push into digital payments and e-commerce signalled a resurgence in interest in digital currencies, traders said.

After a relatively quiet few days, daily volatility in bitcoin has exploded since last week. 

(Reporting by Tom Wilson; Editing by Saikat Chatterjee)

source: news.abs-cbn.com

Bitcoin surges above $11,000 thanks to Facebook's currency plans

LONDON - Bitcoin surged to a near 16-month high above $11,000 Monday, overshadowing showings across stock, foreign exchange and commodity markets, with investors looking ahead to the week's G20 summit.

Bitcoin reached $11,251.21, surpassing $10,000 for the first time since March last year, as the cryptocurrency sector got a huge boost from Facebook's unveiling of its own digital unit Libra, analysts said. 

"The strong resurgence in the bitcoin price is mainly due to the renewed mainstreaming interest in cryptocurrencies and the technology which underlines them," Naeem Aslam, analyst at trading group ThinkMarkets, said.

"Projects like Facebook's Libra have provided much-needed tailwind for this space."

The social network plans to launch Libra next year, with the backing by a basket of real-world currencies and a consortium of companies including Visa, MasterCard, PayPal and Uber.

"Bitcoin volatility is likely to persist, with $12,000 and $15,000 as the next two critical resistance levels," said OANDA senior market analyst Edward Moya.

Bitcoin has risen about 20 percent this month alone but is still well off record levels near $20,000 seen at the end of 2017.

Elsewhere Monday, oil prices nudged higher as rising US-Iran tensions continued to fuel supply concerns.

Stock markets were largely steady ahead of a crunch meeting between US President Donald Trump and Chinese counterpart Xi Jinping at the weekend summit of 20 major economies.

Markets are waiting to see if Trump and Xi can break an impasse in their trade war when they meet on the sidelines of the event in Japan.

Global equities last week rallied after Trump hailed positive telephone talks between the pair, fuelling hopes of a possible end to their long-running tariffs battle.

"No one thinks the US and China will do a deal in Osaka, but there is some hope that we will have a positive development that marks a shift in the rhetoric and a re-energizing of talks following the breakdown in the recent discussions," said Neil Wilson, chief market analyst at Markets.com.

The dollar meanwhile dropped Monday, continuing to face pressure from expectations that the Federal Reserve could lower US interest rates as soon as July as the economy shows signs of softening amid the trade war with China.

source: news.abs-cbn.com

Facebook reveals Libra cryptocurrency, with lofty goals

SAN FRANCISCO/NEW YORK - Facebook Inc revealed plans on Tuesday to launch a cryptocurrency called Libra, the latest development in its effort to expand beyond social networking and move into e-commerce and global payments.

Facebook has linked with 28 partners in a Geneva-based entity called the Libra Association, which will govern its new digital coin set to launch in the first half of 2020, according to marketing materials and interviews with executives.

Facebook has also created a subsidiary called Calibra, which will offer digital wallets to save, send and spend Libras. Calibra will be connected to Facebook's messaging platforms Messenger and WhatsApp, which already boast more than a billion users.

The Menlo Park, California-based company has big aspirations for Libra, but consumer privacy concerns or regulatory barriers may present significant hurdles.

Facebook hopes it will not only power transactions between established consumers and businesses around the globe, but offer unbanked consumers access to financial services for the first time.

The name "Libra" was inspired by Roman weight measurements, the astrological sign for justice and the French word for freedom, said David Marcus, a former PayPal executive who heads the project for Facebook.

"Freedom, justice and money, which is exactly what we're trying to do here," he said.

Facebook also appears to be betting it can squeeze revenue out of its messaging services through transactions and payments, something that is already happening on Chinese social apps like WeChat.

The Libra announcement comes as Facebook is grappling with public backlash due to a series of scandals, and may face opposition from privacy advocates, consumer groups, regulators and lawmakers.

Some Facebook adversaries have called for the company to incur penalties, or be forcibly broken up, for mishandling user data, allowing troubling material to appear on its site and not preventing Russian interference in the 2016 presidential election through a social media disinformation campaign.

It is not clear how lawmakers or regulators will react to Facebook making a push into financial services through the largely unregulated world of cryptocurrency.

In recent years, cryptocurrency investors have lost hundreds of millions of dollars through hacks, and the market has been plagued by accusations of money-laundering, illegal drug sales and terrorist financing.

Facebook has engaged with regulators in the United States and abroad about the planned cryptocurrency, company executives said. They would not specify which regulators or whether the company has applied for financial licenses anywhere.

Facebook hopes it can bring global regulators to the table by publicizing Libra, said Kevin Weil, who runs product for the initiative.

"It gives us a basis to go and have productive conversations with regulators around the world," said Weil. "We're eager to do that."

MAJOR PARTNERS

Bitcoin, the most well-known cryptocurrency, was created in 2008 as a way for pseudonymous users to transfer value online through encrypted digital ledgers. Early developers believed that the world needed an alternative to traditional currencies, which are controlled by governments and by central banks.

Since then, thousands of bitcoin alternatives have launched, and Facebook is just one of dozens of blue-chip companies dabbling with the underlying technology. But its status as a Silicon Valley behemoth that touches billions of people around the world has created significant buzz around Libra's potential.

Partners in the project include household names like Mastercard Inc, Visa Inc, Spotify Technology SA , PayPal Holdings Inc, eBay Inc, Uber Technologies Inc and Vodafone Group Plc, as well as venture capital firms like Andreessen Horowitz.

They hope to have 100 members by Libra's launch during the first half of 2020. Each member gets one vote on substantial decisions regarding the cryptocurrency network and firms must invest at least $10 million to join. Facebook does not plan to maintain a leadership role after 2019.

Though there are no banks among the inaugural members, there have been discussions with a number of lenders about joining, said Jorn Lambert, executive vice president for digital solutions at Mastercard. They are waiting to see how regulators and consumers respond to the project before deciding whether to join, he said.

The Libra Association plans to raise money through a private placement in the coming months, according to a statement from the association.

PRIVACY, REGULATORY CONCERNS

Although Libra-backers who spoke to Reuters or provided materials are hopeful about its prospects, some expressed awareness that consumer privacy concerns or regulatory barriers may prevent the project from succeeding.

Calibra will conduct compliance checks on customers who want to use Libra, using verification and anti-fraud processes that are common among banks, Facebook said.

The subsidiary will only share customer data with Facebook or external parties if it has consent, or in "limited cases" where it is necessary, Facebook said. That could include for law enforcement, public safety or general system functionality.

Transactions will cost individuals less than merchants, Facebook said, though executives declined to provide specifics. Each Libra will be backed by a basket of government-backed assets.

The company plans to refund customers who lose money because of fraud, Facebook said.

Sri Shivananda, Paypal's chief technology officer said in an interview that the project is still in its "very, very early days," and there were conversations in progress with regulators.

Mastercard's Lambert characterized Libra similarly, noting much needed to happen before the launch.

If the project receives too much regulatory pushback, he said, "we might not launch."

(Reporting by Katie Paul and Anna Irrera Editing by Lauren Tara LaCapra and Lisa Shumaker)

source: news.abs-cbn.com

Bitcoin rises 10 pct, recovers from last week's brutal selloff

SINGAPORE/TOKYO - Bitcoin extended its recovery in holiday-thinned trading on Tuesday, rising 10 percent to be up more than a third from last week's lows of below $12,000.

Bitcoin, the world's biggest and best-known cryptocurrency, fell nearly 30 percent at one stage on Friday to $11,159.93 and, despite a late recovery, had its worst week since 2013. At 0445 GMT on Tuesday, it was quoted around $15,049 on the Luxembourg-based Bitstamp exchange.

The digital currency had risen around twentyfold since the start of the year, climbing from less than $1,000 to as high as $19,666 on Dec. 17 on Bitstamp and to over $20,000 on other exchanges. But it has posted heavy declines since.

While bitcoin investors and analysts believe the decline in its value was a natural correction after a heady run-up in prices, there have been further warnings from market regulators and central banks.

"There is no right current price which would reflect the right current valuation," said Andrei Popescu, Singapore-based co-founder of COSS, which describes itself as a platform that encompasses all features of a digital economy based on cryptocurrency.

"Taking profit is right, while buying into a long term projection is also right. You don't have to be right in this market, just less wrong than the rest," Popescu said.

Shmuel Hauser, the chairman of the Israel Securities Authority, said on Monday he will propose regulation to ban companies based on bitcoin and other digital currencies from trading on the Tel Aviv Stock Exchange.

Singapore's central bank last week issued a warning against investment in cryptocurrencies, saying it considers the recent surge in their prices to be driven by speculation and that the risk of a sharp fall in prices is high.

Prices of rival cryptocurrencies, which slid along with bitcoin last week, have also recovered, with Ethereum, the second-biggest cryptocurrency by market size, quoted around $771, up from Sunday's low of $689 but still far from highs around $900 hit last week.

(Editing by Sam Holmes)

source: news.abs-cbn.com

Bubble or breakthrough? Bitcoin keeps central bankers on edge

FRANKFURT - Central bankers say the success of bitcoin and other cryptocurrencies is just a bubble.

But it keeps them awake at night because these private currencies threaten their control of the banking system and money supply, which could undermine the monetary policies they use to manage inflation.

With bitcoin smashing through the $8,000 level for the first time this week after a 50 percent climb in eight days, they are also worried they will be blamed if the market crashes.

This is why several central banks are advocating regulations to impose control. Others are even looking at whether to introduce their own digital currency and are testing payment platforms.

"The problem with bitcoin is that it could easily blow up and central banks could then be accused of not doing anything," European Central Bank policymaker Ewald Nowotny told Reuters.

"So we're trying to understand whether bank activity in relation to cryptocurrency trading needs to be better regulated."

The global cryptocurrency market is worth $245 billion which is tiny compared to the trillion dollar plus balance sheets of the Bank of Japan, the U.S. Federal Reserve or the ECB.

These institutions issue yen, U.S. dollars and euros, both by creating physical cash or by crediting banks' accounts, as is the case with their bond-buying programs.

Cryptocurrencies, however, are not centralized. They do not pass through regulated banks and traditional payment systems. Instead, they often use blockchain, an online ledger of transactions that is maintained by a network of anonymous computers on the internet.

This has raised concerns about their vulnerability to hackers, as underlined by a score of incidents in recent months, and their use to finance crime.

Cryptocurrencies holders also have a claim on a private, rather than a public entity, which could go bust or stop functioning.

For these reasons, and given their low adoption by retailers, central banks have dismissed cryptocurrencies as risky commodities with no bearing on the real economy.

“Bitcoin is a sort of tulip,” ECB Vice President Vitor Constancio said in September, comparing it to the Dutch 17th century trading bubble. “It’s an instrument of speculation."

LEGAL TENDER

China and South Korea, where cryptocurrency speculation is popular, banned fundraising through token launches, whereby a newly cryptocurrency is sold to finance a product development.

Russia's central bank said it would block websites selling bitcoin and its rivals while the ECB told European Union lawmakers last year "they should not seek... to promote the use of virtual currencies" because these could "in principle affect the central banks' control over the supply of money" and inflation.

Yet Japan in April recognized bitcoin as legal tender and approved several companies as operators of cryptocurrency exchanges but required them register with the government.

The ECB, the Bank of Japan and Germany's Bundesbank are already testing blockchain, admitting it may have a future use for the settling of payments.

The BOJ last year set up a section in charge of fintech to offer guidance to banks seeking new business opportunities, and joined up with the ECB to study distributed ledger technology(DLT) like blockchain. They concluded that blockchain was not mature enough to power the world’s biggest payment systems.

LUKEWARM

Commercial banks have so far been lukewarm to existing digital currencies.

But with electronic payments already supplanting cash, they're alert to the danger that they would lose business if their clients decided to switch to them.

For this reason, Swiss banking giant UBS is leading a consortium of six banks trying to create its own digital cash equivalent of each of the major currencies backed by central banks.

This would allow financial markets to make payments and settle transactions more quickly.

This poses risks for central bankers, as the guardian of the banking and payment system.

"(We could) wake up one day and most of the big banks have been eviscerated and most of that activity has moved elsewhere," St. Louis Fed President James Bullard told Reuters in a recent interview.

This could lead to a financial crisis if regulators lost sight of the activity, he said.

Some central banks such as Sweden's Riksbank and the Bank of England are also looking at the merits of introducing their own digital currency.

Holders would have a direct claim on the central bank - just like with banknotes but without the inconvenience of storing large amounts of cash.

In Sweden, where most retail payments are electronic, the Riksbank said it was looking into an e-krona for small payments between consumers, companies and authorities.

"An e-krona would give the general public access to digital complement to cash guaranteed by the state and several payment services suppliers could connect to the e-krona system," the Riksbank said.

A central bank digital currency (CBDC) could also change the way monetary policy is carried out by allowing central banks to inject liquidity directly into the real economy, bypassing the financial sector, if they want to boost inflation.

This could help make monetary policy more effective, according to a study by economists at the Bank of England.

But it could also be risky if depositors were tempted to convert their bank deposits into central bank money during a banking crisis, accelerating any run on commercial banks.

A senior Bank of Japan (BOJ) official said on Wednesday that although technology is revolutionizing banking, digital currencies will not replace physical money any time soon.

"It's too far off," Hiromi Yamaoka, head of the BOJ's payment and settlement systems department, said on the sidelines of a forum on financial innovation hosted by Thomson Reuters.

"It would change the banking system too drastically." (Additional reporting by Balazs Koranyi in Frankfurt, Howard Schneider in Washington, David Milliken in London and Leika Kihara in Tokyo; editing by Anna Willard)

source: news.abs-cbn.com

Dining goes digital for Thailand's street food vendors

BANGKOK - Bangkok's famous street-food vendors have joined the digital revolution, embracing payment via Quick Response (QR) barcodes that can be read using smartphones.

Thailand is famous for its traditional street stalls that offer everything from stir-fried noodles to clothes and for many Thais eating out at a pavement stall is part of their daily routine.

Now, some vendors in the capital Bangkok are offering digital transactions after the Bank of Thailand (BOT) last week gave the green light for five banks including Bangkok Bank and Siam Commercial Bank to implement electronic payment systems using QR codes.

"The global trend is towards a 'cashless society' as it is more convenient and there is proof of transaction. The QR code system would be most practical in Thailand as less investment is needed on behalf of vendors," Somsak Khaosuwan, Deputy Permanent Secretary of the Ministry of Digital Economy and Society, told Reuters.

At Samyan Market, a market and shopping area in Bangkok that sells everything from vegetables to handbags, vendors said QR codes were taking off although some shoppers still prefer to use cash, particularly those who are less tech-savvy.

"I don't need to worry about finding change," said Kitti Khoonphisitwong, 40, a dried-fruit vendor.

"But most customers, especially older people, find the app a hassle," he said.

Shoppers in their 20s and 30s said they were more inclined to use the system.

"I often shop online so I have no issue with digital transactions," said Thanachanok Teesakul, 20, a student.

Scams using fraudulent QR codes are on the rise in China, where digital payments are booming. Somsak said Thailand needs to ensure QR payment systems are secure.

"We need to make people feel comfortable in using the system," he said.

(Reporting by Suphanida Thakral; Editing by Amy Sawitta Lefevre and Eric Meijer)

source: news.abs-cbn.com