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 way in retrospect in our weekly review.
For many years, US banks were reluctant to engage with cryptocurrencies. JPMorgan CEO Jamie Dimon repeatedly called Bitcoin a "scam" and Goldman Sachs saw it as "not an investable asset class." However, after the sharp price increases recorded in the past, the pressure from customers became too strong and the first services were launched. According to crypto custodian NYDIG, "hundreds more" U.S. banks will soon enable trading as well as custody of cryptocurrencies and benefit from the renewed fee income. New York Digital Investment Group (NYDIG) is a subsidiary of Stone Ridge, a $10 billion alternative asset manager. The crypto custody specialist currently oversees $6 billion in digital assets. According to the Stone Ridge subsidiary, banks are increasingly forced to offer services for digital assets, otherwise they risk losing customers to alternative providers.
A persistent criticism of cryptocurrencies is their use for illegal activities. The accusation goes back to the early days of Bitcoin. Back in the day, the digital currency was largely used on illegal marketplaces like "Silk Road." But a lot has changed since then. Over the years, the fledgling digital currency Bitcoin has been perceived and accepted as a digital store of value. Through regulation and adoption by institutional market participants, the cryptocurrency mastered its way to becoming an accepted asset class. Numerous cryptocurrency exchange-traded products are now in existence and are listed on exchanges around the globe. Two market research reports published this year have now estimated illegal transactions to be 0.34% of the total volume of crypto markets. The number has consistently declined as regulation has increased and is sitting at an all-time low. The bulk of the estimated $800 - $2,000 billion of money laundered each year, as estimated by the UN, flows through the traditional banking system and offshore constructs.
Bitcoin, as well as technology stocks, are undoubtedly among the biggest winners in the financial markets these days. While technology companies make up only a small portion of Berkshire Hathaway's (NYSE:BRK) portfolio, the cryptocurrency is disliked by the company's leaders. Board members Warren Buffet and Charlie Munger don't care much for Bitcoin and both have criticized the digital asset in the past. This week, at the company's annual shareholder meeting, they were asked about it again. While Buffet declined to comment, Munger made his position clear. Earlier, the investor only criticized Bitcoins volatility, meanwhile, he considers the development of the crypto market as "disgusting and against the interest of civilization." According to Mr. Munger, Bitcoin is primarily useful for kidnappers, extortionists, and other criminals. Nonetheless, he has not provided the audience with any facts or sources to back up his statements.
Lending is one of the most basic financial transactions.Things were lent at a premium thousands of years ago. Over the years, the system has become more efficient with the participation of banking institutions. Even though the fractional reserve system has put global lending at an all-time high, many people are still excluded from credit markets today. Decentralized blockchain projects can remedy this situation. Decentralized Finance (DeFi) uses blockchain technology to combine the best of both worlds. A permissionless system eliminates costs for intermediaries and improves accessibility. Through various processes, lending is digitized and the intermediary is replaced by decentralized computer programs.
In addition: The field of decentralized financial applications (DeFi) has developed rapidly. In the last year, numerous traditional financial products have been replicated on blockchain platforms. Meanwhile, decentralized trading of assets such as stocks, commodities or precious metals is also possible. The Synthetix protocol was launched to provide access to these synthetic assets in tokenized form, using a system of algorithms and derivatives. The permissionless protocol provides 24/7 access to global securities trading - without any geographical restrictions.
Selected articles in the weekly review:
Banks in the U.S. are increasingly offering crypto services.
https://cryptovalleyjournal.com/hot-topics/news/us-banks-open-up-to-bitcoin/
Cryptocurrencies are used increasingly less for illegal purposes.
Crime with Cryptocurrencies – Regulatory and Market Evidence
Berkshire Hathaway's Warren Buffet and Charlie Munger are criticizing Bitcoin.
Permissionless blockchain protocols are providing credit markets without intermediaries.
An introduction to decentralized derivatives trading with Synthetix.
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