What happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact weekly review.
Selected articles of the week:
Blockchain technology offers various advantages over the architecture of traditional payment networks. Its decentralized ledger allows for secure and decentralized recording of transactions, making intermediaries redundant and reducing the risk of fraud. Furthermore, cross-border payments are processed faster, more cheaply and efficiently. These advantages have been recognized by central banks around the world, who are exploring the potential of the technology in the form of central bank digital currencies (CBDCs) so as to leverage its benefits without giving up control over the flow of money. The Swiss National Bank (SNB) is a pioneer in this field, actively exploring the technology since 2019 through various prototypes to examine the potential benefits and challenges of a digital currency. In collaboration with the Bank for International Settlements (BIS) and neighboring central banks, pilot projects have studied cross-border payments, tokenization of securities, and trading of these assets via DeFi protocols. A overview of the SNB’s current efforts.
The Swiss National Bank (SNB) continues to experiment with the possibilities of a digital central bank currency (CBDC).
Stablecoins are digital tokens that mirror the value of a less volatile asset, usually the US dollar, on a one-to-one basis. The issuers typically hold an equivalent amount of the underlying asset as reserve. These reserves can be redeemed by investors for their digital tokens. The liquidity of the underlying assets is therefore of utmost importance to maintain the peg of a stablecoin. In the event of underfunding, a bank run would result in a “de-pegging” and the collapse of a stablecoin. To bring more transparency to the sector, Moody’s Corp is working on a rating system for the reserve certificates issued by issuers. As an expert in bond ratings, the system from the second-largest US rating agency is expected to provide valuable information to both regulators and investors for navigating the complex world of digital currencies.
Moody’s Corp, one of the three largest rating agencies in the United States, is developing its own rating system for stablecoins.
2022 was a defining year for the crypto industry. The bankruptcy of centralized crypto service providers resulted in not only financial damage but also a significant loss of trust. In the new year, the primary focus should be on containing these damages at a regulatory level and restoring market participants’ trust. Only then can the full potential of blockchain technology be realized. In the annually published “Crypto Theses” report, crypto analysis firm Messari examines the current state of the ecosystem and identifies the most important trends for 2023. A summary.
A report from crypto analytics firm Messari identifies the driving trends that will shape 2023 for the blockchain industry.
Cryptocurrencies have the potential to offer financial integration to millions of people without access to traditional banking. By utilizing blockchain technology, cryptocurrencies create a secure, fast, and cost-effective alternative to traditional financial systems. Regardless of location or financial status, access to financial services can be achieved with only an internet connection. It is hardly surprising then that cryptocurrency adoption is much higher in Africa than in the Western world. Even in the more affluent countries of the continent, its inhabitants are increasingly turning to Bitcoin and others. An illustration can be seen in South Africa, where the population is classified as “unbanked” at around 22%.
South African retailer Pick n Pay accepts Bitcoin payments over the Lightning Network in all 1,628 stores nationwide.
Furthermore: Crypto exchanges play a crucial role in the crypto ecosystem as they provide the infrastructure for the purchase, sale, and trading of digital assets. They connect buyers and sellers, thus facilitating the flow of value within the crypto market. With the formerly second-largest exchange FTX out of the running, the highly competitive sector remains dynamic. The battle for market share continues.
A summarizing review of what has been happening at the crypto markets of the past week. A look at trending sectors, liquidity, volatility, spreads and more. The weekly report in cooperation with market data provider Kaiko.
