What has been happening around Blockchain Technology and Cryptocurrencies this week? The most relevant local and international developments as well as appealing background reports in a pointed and compact weekly review.
Bitcoin, with its nature of programmed scarcity, is increasingly perceived and used as an inflation hedge as well as for portfolio diversification. However, the unique features of the cryptocurrency are not limited to its unprecedented proprietary monetary policy. A decentralized, censorship-resistant, and permissionless payment network opens new doors, especially in developing countries with a non-existent or inaccessible financial infrastructure. In June, the government of El Salvador declared its intention to take advantage of these very characteristics. The Latin American nation passed a law that promotes Bitcoin to a payment currency on par with the U.S. dollar. In doing so, El Salvador hopes to increase the economic inclusion of its unbanked population - currently around 70% - and improve the efficiency of domestic and international payments. However, as the implementation of the law draws closer, criticism from the population is growing. Hundreds of protesters showed up on the streets in recent weeks to speak out against the implementation of the cryptocurrency. Critics argue that the introduction of Bitcoin could exacerbate El Salvador's financial crisis and further fuel the rampant corruption in the country. The official launch of the cryptocurrency is scheduled for September 7 and represents the world's first attempt of a nationwide payment adoption.
The Middle East has also taken notice of the new opportunities Bitcoin offers. Iran has been struggling with a complete economic embargo by the United States for quite some time. Any imports and exports, especially in the economic sectors of oil and banking are affected. Accordingly, the government of Iran has been relying on blockchain technology for some time now. Mining of cryptocurrencies was legalized as early as 2019, and over a thousand licenses were issued the year after. In addition, the state committed to providing a portion of its oil and natural gas resources to local miners in the form of subsidized electricity capacity. Through the economic integration of cryptocurrencies, the government hopes to be able to act more detached from the embargo going forward. So far, the strategy seems to be working. Around 5% of all newly mined Bitcoins currently come from Iran, of which the country is using a large part to pay for imported goods.
Since the end of last year, a number of high-profile U.S. financial institutions have been offering digital asset management services to their customers. In most cases, however, these services are limited to institutional and high-net-worth clients. Private customers are generally excluded from the extended services. The retail bank "Vast Bank" plans to change this circumstance. As the first state-approved bank, the financial institution offers all customers the opportunity to purchase cryptocurrencies directly from their payment account. Especially crypto-interested clients, who do not have enough knowledge to buy and hold digital assets directly, shall benefit from this offer. According to the bank, the decision followed an exceptional customer demand. A survey conducted internally showed that more than 60 percent of all account holders were interested.
Thanks to politics and regulation, the necessary legal certainty for a flourishing ecosystem around blockchain and cryptocurrencies was created early on in Switzerland. The first companies to settle in the canton of Zug soon led to the term "Crypto Valley" being coined in reference to the " Silicon Valley". In the meantime, the ecosystem has expanded into various industries and geographically the Crypto Valley has also grown far beyond the Zug area. In the last two months, there have been a number of developments. Deutsche Börse acquired a majority stake in Swiss startup Crypto Finance in the triple-digit millions, and initial companies have launched a blockchain-focused training program. A Zug-based venture capitalist is expanding to South Africa, and the University of Basel is making its blockchain bachelor's degree program freely available.
In addition: At the beginning of August, the long-awaited "London Upgrade" was implemented in the Ethereum blockchain. This includes the protocol improvement proposal EIP-1559. By renewing the fee structure, the underlying cryptocurrency Ether gets a new economic structure. As a portion of the transaction fees are wiped out, the digital currency's inflation rate decreases. For this reason, a high usage of the network leads to a reduction of circulating tokens. Since the launch of EIP-1559 one month ago, more than $750 million worth of Ether has already been "burned", which corresponds to a 50% reduction of the inflation rate.
Selected articles in the weekly review:
As El Salvador's Bitcoin integration approaches, some citizens are expressing concerns.
https://cryptovalleyjournal.com/hot-topics/news/bitcoin-law-in-el-salvador-meets-resistance/
Iranian government relies on Bitcoin to evade economic embargo.
For the first time, US retail customers will be able to purchase cryptocurrencies directly from their payment accounts.
US retail bank allows crypto purchases from checking account
An overview of the latest developments coming out of the Crypto Valley.
The latest upgrade to the Ethereum blockchain is unleashing its inflation-reducing nature.
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