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Brazil’s Central Bank President Expects to Have News on a CBDC ‘Soon’

14/04/2021 by Idelto Editor

Brazil Central Bank President Expects to Have News on CBDC 'Soon'

The largest country in Latin America could have its central bank digital currency (CBDC) soon, as the Brazilian central bank is taking steps towards creating it. Recently, the Banco Central do Brasil (BCB) president hinted at the possibility of having news on the matter “soon.”

No Decision Has Been Made on Whether the Digital Real Will Be Interest-Bearing

During an online debate hosted by the Bank of Spain, cited by Reuters, Roberto Campos Neto highlighted that the central bank is “making progress” on the plans to digitalize the Brazilian real.

He called central banks globally to keep discussing on CBDCs and deepen its talks to advance in further digitalizing the economy:

We are making great progress on the digital currency process, and we should have news soon.

However, Campos Neto didn’t specify the details on the progress made by the central bank. Still, he pointed out that some topics are still in the pipeline, such as if the “digital real” will be interest-bearing and what kind of technology will host the CBDC.

Brazil Has Been Studying CBDCs Since 2020

Overall, Brazil has been witnessing a surge in the use of electronic payments across the nation, as more Brazilians keep increasingly adopting mobile solutions for such purposes.

Due to the growing interest among citizens, the BCB commissioned last year a study group to research the CBDC matter to “evaluate the potential benefits and impacts of issuing the Brazilian Real in a digital format.” The central bank set the following goal:

Among the study group’s objectives is the proposition of a digital currency issuance model covering risk mapping — including cyber security, data protection and regulatory compliance issues —, as well as an analysis of CBDC’s impacts on financial inclusion and stability and on the conduct of monetary and economic policies.

That said, Brazil’s central bank expects to assess the feasibility to generate a proper environment for the development of a “financial citizenship” with the creation of a CBDC:

In addition to cost reduction of the money cycle, a digital currency issued by BCB can support its strategic objective of ‘fostering the financial citizenship and strengthen the relationship with society and public powers’. An electronic currency can increase the safety of handling and custody of cash, in addition to creating monetary policy instruments.

What do you think about the latest words from the Brazilian Central Bank’s president? Let us know in the comments section below.

Filed Under: Brazil, Brazil cryptocurrency, Brazilian Real, CBDC, CBDCs, Central Bank, English, Finance, Latin America, News Bitcoin, study, study group

VanEck Launches ETF Offering Exposure To Bitcoin-Focused Companies

14/04/2021 by Idelto Editor

The Digital Transformation ETF launched by VanEck provides investors with exposure to the likes of MicroStrategy, Square, Riot Blockchain and more.

VanEck, an assets management company with roots in the cryptocurrency space, has long desired to offer a bitcoin exchange-traded fund (ETF) on the public market. The U.S. Securities and Exchange Commission has, however, not approved its filing to do so (or any other such filings, for that matter).

But in the meantime, VanEck has launched a new ETF that allows eager investors access to the Bitcoin market, albeit in a less direct way.

The new ETF, called the Digital Transformation ETF, is designed to provide investors with exposure to companies that have invested in or provide services for “the digital transformation of the world’s economy.” For many of the fund’s primary holdings, this means companies that are all-in on bitcoin.

The Digital Transformation ETF offers exposure to the likes of MicroStrategy, Riot Blockchain, Square and others that have directly allocated their treasury assets to bitcoin or directly contribute to the Bitcoin ecosystem in some way.

Would-be investors should note the clever distinction between direct bitcoin exposure and this product. They are not investing in cryptocurrency, either directly or indirectly, through derivatives. Instead, they are investing in relevant digital asset companies that participate in the cryptocurrency space.

To be eligible for inclusion and tracking in the ETF, a company must generate half of its revenues from digital assets projects, generate at least half of its revenues from projects that have the potential to generate half of their revenues from digital assets or digital assets projects or have at least half of its assets invested directly in digital assets or digital assets projects.

Filed Under: Bitcoin Magazine, English, Markets, vaneck

Bitcoin’s Kimchi Premium Bubble: Inflation, Deflation and Consequences

14/04/2021 by Idelto Editor

Bitcoin often trades at a premium in South Korea; what happens when this bullish spread quickly dissipates?

The Kimchi premium—the spread between Bitcoin price on South Korean exchanges and Western exchanges—has always been an indicator attracting people’s attention in the bull market. The source of this spread is rooted in the inability to easily get a substantial amount of USD out of the country due to institutional frictions. Thus, this lack of arbitrage opportunities coupled with a huge demand for bitcoin among Koreans makes bitcoin trade at a premium on Korean exchanges when speculative frenzy hits the masses.

As with any bubble, at one point, when money inflows stop propping up the price, it is going to crash or at least correct somewhat. Sometimes, even a small pin is enough for the bubble to start deflating. This is exactly what happened today when Upbit suspended its deposits and withdrawals. The premium has fallen from 21 percent and hit 10 percent at its lowest point.

Chart via Tradingview

This is not the first time this bubble emerged and popped. In the peak of the 2017–2018 bull run the Kimchi premium reached 51 percent before it all came crashing down. Caution from this event is one of the reasons why the market has thrown a tantrum today. Traders see the Kimchi premium correction as a top signal and the harbinger of an overall market correction.

Chart via Tradingview

However, this is exactly a case of the tail wagging the dog. According to CoinGecko, the total bitcoin trading volume of the five major Korean exchanges—Bithumb, Upbit, Coinone, GOPAX, Corbit—makes up to 3.2 percent of the global bitcoin trading volume. Even in a case of the collapse of the bubble on Korean exchanges, it should not affect the global price much. Local bubbles come and go, which is not that significant.

What is significant, however, is the attention people pay to these sorts of things. Risk-on assets such as bitcoin are dominated by narratives and the Kimchi premium narrative is still a powerful one, if the amount of major media outlets and Twitter accounts mentioning it is any indicator. As with any narrative, though, it usually takes several invalidations for it to stop occupying people’s minds.

Will today’s premium correction make the premium disappear? Probably not. The bullish narratives for bitcoin are still untouched, the demand for bitcoin didn’t go anywhere, and the institutional frictions to withdraw money from the country are still in place. All this makes a perfect cocktail for the bubble to continue existing.

It is also worth noting that the Kimchi premium is not specific to bitcoin and is present for some other cryptocurrencies too, reflecting the arbitrage opportunities taken by traders and the overall bullish sentiment among Koreans.

The Kimchi premium can be a good and reliable indicator of the demand for bitcoin when taken within the context of its origin and combined with other factors affecting bitcoin’s price. On the other hand, used separately, it can give birth to false narratives and bring a lot of misinformation and damage. As with any indicator, one should be cautious to use it and never make any investment decisions based on this particular piece of data alone.

This is a guest post by Lex Moskovski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

Filed Under: Bitcoin Magazine, bubble, English, Markets, South Korea

Value Creation In Bitcoin

14/04/2021 by Idelto Editor

The incentive structure created by Bitcoin introduces new potential for value creation in society.

In 2009, Satoshi Nakamoto invented the greatest store of value ever seen in human history. His creation, bitcoin, has firmly secured its place as the hardest form of money in the new digital economy and the bedrock of a new open, global financial system.

Bitcoin has already won.

What remains relatively unexplored is the way in which Bitcoin, the monetary network, will incentivize new forms of value creation and unlock new methods of value capture never before seen in human civilization. This piece explores the ways in which Bitcoin’s structure of incentivizing long-term holding among its token holders collides forcefully with its open monetary network to systematically create more value for society and lead to an eventual cultural renaissance.

All second and third order effects related to Bitcoin come from its elegantly designed incentive structure. Miners are incentivized to honestly mine blocks, and network participants are incentivized to HODL. Bitcoin’s supply growth is decreasing over time, leading to a capped supply and the one true digitally scarce substance on this planet.

Bitcoin’s deflationary monetary policy and NgU tech increases each bitcoin’s purchasing power in the long run, which creates a model that incentivizes its holders to put off unnecessary spending, save for the long term and invest prudently. This model runs in stark opposition to the incentive scheme of the fiat regime, where constant debasement of currency and inflation incentivizes consumption and rampant speculation.

Each participant in the fiat system today is in a frenzy to dump their cash, either by protecting it in some safe haven, immediately spending their rapidly decreasing purchasing power, or speculating in riskier and riskier assets. Bitcoin, with its capped supply and fixed, open and deflationary monetary policy provides the most elegant system to opt out of this madness.

While its holders are incentivized to continue holding for the long term, potential new participants to the network are incentivized to get in as quickly as possible whether by purchasing or earning coins in the marketplace. As supply decreases over time and demand continues to build, the value of each coin continues to rise: Number Go Up. We know what happens to those opting to purchase coins in the marketplace: they pay a higher price. What happens to those earning coins in the marketplace? As of yet this exchange is quite uncommon, so the answer is unclear.

My theory, however, is that this will lead to the creation of higher forms of value across many spectrums of society. Let us continue to explore how an open monetary network addresses the idea of value creation and further price discovery.

To understand how open software networks function and evolve we must take a look back at history. The early days of the internet opened up a world of possibilities in the realm of information sharing, allowing anybody to communicate their ideas freely over an open data transfer protocol. Over the past several decades, incredible amounts of software has been written to build critical infrastructure on top of these protocols, building what we know and use as the modern day web. This has served as the foundation for today’s modern day social networks, which serve as hyperscale information sharing and talent discovery tools. In a similar way, an open monetary network allows any participant with access—in the case of Bitcoin anyone on the planet with a bitcoin wallet—to engage in free commerce on a scale that has never been possible before.

In the same way that the large social networks of today are talent and information discovery mechanisms, Bitcoin is a price discovery mechanism for everything it touches. Any possible economic transaction that involves human decision-making and interacts with the Bitcoin network will in time come to a perfect price equilibrium as determined by the other users of the network. For a network user and long-term token holder to part with their satoshis requires a creation of value that far exceeds the potential return on each parted unit over the coming period of time that the account projects for. In turn, what this leads to is true price discovery for the essential things that matter most: human time and knowledge.

The microprocessor, modern day high speed computing, the internet and social media have reduced the barriers to entry in many walks of life and allow anyone to create and share value. The internet protocols that have allowed for this explosion of innovation have been built for the transfer of information but not the transfer of value. What we see as a result are megacorporations and walled gardens that act as the high priests facilitating the flows of value between creators and consumers in the new digital economy. Bitcoin cuts out these middlemen and enables those creating value to directly capture the value that they are creating.

In order to capture value in the new economy and entice bitcoin holders to part with their precious satoshis, creators must push the boundaries of creation and create such value in such proportion that true believers are compelled to part with what they believe to be the hardest asset ever invented.

In the end, only the very best will survive.

True meritocracy of value is the end result, enabling true capitalist forces that the world has not seen in many decades. Bitcoin culture is one of low time preference, a mindset that encourages long-term thinking and saving. At the same time, the Bitcoin network opens up a world of opportunity for value creators to capture that value, forming a meritocratic haven where bold ideas and beautiful creations reign supreme.

This new monetary system will enable excellence and beauty to a degree never before seen. The culture of Bitcoin combined with the capabilities of a global monetary network is set to unleash a force upon the world that reshapes every element of society for the better, creating value for everyone involved and pushing forward the trajectory of humanity.

This is a guest post by Karan. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

Filed Under: Bitcoin Magazine, culture, English, Ethics, price discovery, value of bitcoin

Popular Nightclub E11even Miami Reveals Cryptocurrency Payment Acceptance

14/04/2021 by Idelto Editor

Popular Nightclub E11even Miami Reveals Cryptocurrency Payment Acceptance

While crypto assets have seen monumental gains this week, the popular nightclub in Florida, E11even Miami will accept bitcoin and a slew of other digital assets for merchandise, beverages, and tables. Following the pandemic, E11even Miami will be reopening on April 23 and will have crypto asset support when the nightlife establishment reconvenes services.

24-Hour Nightclub E11even Miami to Support Crypto Payments

Since 2014, E11even Miami has been a popular nightclub in the Sunshine State and well known for operating 24 hours a day and seven days a week. In recent times, Miami has become a hub for cryptocurrencies as the city’s mayor Francis Suarez is bullish about the digital asset industry. Suarez wants to dedicate “efforts to make bitcoin an acceptable currency” in the city of Miami. Moreover, Samuel Bankman-Fried’s FTX Exchange has acquired a naming-rights deal for NBA’s Miami Heat arena.

Popular Nightclub E11even Miami Reveals Cryptocurrency Payment Acceptance

E11even Miami’s founder Dennis DeGori has seen the positivity toward crypto assets in Miami and detailed that when paying for tables, drinks, merchandise, “guests have the option of seamlessly paying with cryptocurrency.” The announcement details that E11even Miami will accept BTC, BCH, XRP, and DOGE for payments.

“With the tremendous growth & relevancy of Cryptocurrency coupled with Mayor Francis Suarez leading the charge for Miami’s tech boom, we felt it made sense to introduce Cryptocurrency as an option to our guests to pay for their night out,” DeGori said during the announcement.

The club’s founder added:

E11even is dedicated to always staying ahead of the curve, and we believe cryptocurrency is here to stay.

Crypto Acceptance: Soon to Be a ‘Nightlife Industry Norm’

The nightclub owners say that the business has “partnered with one of the largest cryptocurrency processing companies,” but doesn’t mention the partner. “Accepting crypto is attractive to the venue, and its guests as E11even continuously sees its VIP guests more involved in the Bitcoin industry,” the company said. Gino LoPinto, the operating partner of E11even Miami has noticed the trend.

“Bringing services and amenities that cater to our cutting-edge clientele is of uber importance (to us), and we’re seeing an increasing trend of clients wanting to use their Cryptocurrency as a form of payment,” LoPinto explained. “We believe nightclubs allowing Bitcoin as payment will soon become a nightlife industry norm, and we’re excited to be the ones paving the way.”

What do you think about the nightclub E11even Miami accepting crypto assets for payments? Let us know what you think about this subject in the comments section below.

Filed Under: BCH, Bitcoin, Bitcoin (BTC), Bitcoin Cash, BTC, Club, Dennis DeGori, E11even Miami, English, Francis Suarez, Gino LoPinto, miami, News, News Bitcoin, Nightclub, Nightlife

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