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IMF Chief Says Central Bank Digital Currencies Can Replace Cash — Urges Public Sector to Prepare for CBDC Deployment
International Monetary Fund (IMF) Managing Director Kristalina Georgieva says central bank digital currencies (CBDCs) can replace cash. She has urged the public sector to “keep preparing to deploy CBDCs and related payment platforms,” emphasizing that these platforms “should be designed from the start to facilitate cross-border payments, including with CBDCs.”
IMF Chief Encourages CBDC Adoption
Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), discussed central bank digital currencies (CBDCs) Wednesday at this year’s Singapore Fintech Festival. The IMF also released a CBDC handbook as a reference guide for policymakers and experts at central banks and ministries of finance around the world.
The IMF chief detailed:
CBDCs can replace cash which is costly to distribute in island economies. They can offer resilience in more advanced economies. And they can improve financial inclusion where few hold bank accounts.
“CBDCs would offer a safe and low-cost alternative. They would also offer a bridge to go between private monies and a yardstick to measure their value, just like cash today which we can withdraw from our banks,” she added.
Georgieva explained that many countries “are developing regulation to guide digital money developments.” However, she admitted: “We have not yet reached land. There is so much more space for innovation and so much uncertainty over use-cases.” Citing various benefits of central bank digital currencies, the head of the IMF opined: “In some countries, the case seems dim today, but even they should remain open to potentially deploy CBDCs tomorrow.”
According to the Atlantic Council’s Central Bank Digital Currency Tracker, 130 countries, representing 98% of the global GDP, are exploring a CBDC, with 11 having fully launched a digital currency. In addition, 19 of the G20 countries are now in the advanced stage of CBDC development.
Emphasizing that “this is not the time to turn back,” the IMF managing director stressed:
The public sector should keep preparing to deploy CBDCs and related payment platforms in the future … These platforms should be designed from the start to facilitate cross-border payments, including with CBDCs.
Georgieva also said that artificial intelligence (AI) “could amplify some of the benefits of CBDCs.” She noted: “It could improve financial inclusion by providing rapid, accurate credit scoring based on various data. It could provide personalized support to people with low financial literacy.” However, the IMF chief continued: “To be sure, we need to protect personal privacy and data security, and avoid embedded biases so we don’t perpetuate inequality but aim to reduce it. Managed prudently, AI could help.”
What do you think about the statements by IMF chief Kristalina Georgieva about central bank digital currencies? Let us know in the comments section below.
LUNA Hits ATH After Astroport’s Deployment, Why Terra Could Continue Growing In 2022
Maybe one of the best-performing assets in 2021, LUNA has been trending against the market for the past 2 weeks. While Bitcoin, Ethereum, and other major cryptocurrencies remained rangebound, the native token for the Terra ecosystem re-entered uncharted territories.
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As of press time, LUNA trades at coming in from a monthly low at which represents almost a 40% increase over that period.
LUNA on a rally in the 4-hour chart. Source: LUNAUSDT Tradingview
As reported by NewsBTC, Terra deployed several improvements on its mainnet in the past months. These included Colombus-5, Wormhole v2, and an Inter-Blockchain Communication (IBC) protocol.
The first of these upgrades could be the fuel that has triggered LUNA’s rally as it implemented a burning mechanism into the network. Effectively, this upgrade has turned LUNA into a deflationary asset that will continue to see buying pressure into the future.
Per a report by Delphi Digital, the Terra ecosystem has also benefited from the deployment of Astroport, an Automated Market Maker (AMM). The protocol is yet in an early phase but has already seen over billion in capital inflows.
This capital injection into Terra’s ecosystem coincides with LUNA’s rally which goes to show the importance of adoption for this token’s performance. Delphi Digital said:
LUNA price notched another ATH today before retracing lower. The price increase over the last few days was likely triggered by investors buying spot LUNA to lock up in the Astroport lockdrop, then hedging their position via perpetual futures to remain delta neutral.
Source: Delphi Digital
As the chart also shows, LUNA has the right ingredients to continue its rally: reaching price discovery on negative funding rates for the derivatives sector, which suggests speculators expected more downside in a short time. It remains to be seen if the trend will be able to hold in 2022.
Terra (LUNA) And Its Potential To Take Over 2022
LUNA’s ecosystem has displayed strength in other sectors. The network’s native stablecoin UST has been gaining more adoption and could potentially disrupt this sector of the crypto market.
Delphi Digital records an increase in market capitalization for UST since December 15th. This stablecoin has been in a close fight with DAI, one of Ethereum’s most prominent assets, as seen below. Delphi Digital added:
UST and DAI have been neck-and-neck in terms of market capitalization, with UST briefly overtaking DAI as the 4th largest stablecoin last week. Yesterday, UST overtook DAI more decisively as it had been trading higher for at least the last 24 hours.
Related Reading | LUNA Outperforms Bitcoin’s Rally, Why It’s Ready For Massive Gains
Christmas is still some days away, but December has already proven itself as one of LUNA and Terra’s most important months in 2021. With solid fundamentals, this network seems poised to continue its upwards trend in the near future.
Aave To Introduce Permissioned Deployment for Institutions Later In July
Aave declared a kick-off of its new project this month to meet the abruptly growing demand from different institutions. According to their announcement, Aave, one of the leading DeFi money markets, will launch a permission payment platform for investors.
The DeFi protocol is partnering with Fireblocks, a crypto service provider and custodian, to launch the new platform.
TraderNoah, a Twitter user, on June 4, 2021, revealed a screenshot of an email they supposedly got from a Blockworks webinar.
$AAVE Pro coming in July.
For those that didn’t attend the "NExt Steps in Institutional Defi" Zoom with Stani, here’s a recap email I received. pic.twitter.com/ClwlBkXh2r
— Noah Goldberg (@TraderNoah) July 4, 2021
The webinar titled ‘Next Steps in Institutional DeFi’ featuring Stani Kulechov, the CEO and founder of Aave.
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Also in attendance were Michael Shaulov, Fireblocks co-founder and CEO, and Mike Novogratz, Galaxy Digital CEO.
The email and the conference both confirm plans for the launching of ‘Aave Pro,’ Aave’s institutional product, in July. This move is to provide the solution to the numerous demands from institutions.
What Aave Pro Partnership with Fireblocks Will Facilitate?
Aave Pro launch is meant to support only four digital assets, namely; AAVE, BTC, USDC, and ETH. In its operations, there’ll be segregation of Aave Pro’s pool from other Aave’s deployments.
The platform’s V2 smart contracts get an added whitelisting layer. This addition enables certain institutions, fintech, and corporates to get access to Aave Pro.
The accessibility is regulated by the KYC (Know Your Customer) verification from Fireblocks. Also, Fireblocks will oversee anti-fraud and anti-money laundering for Ethereum-Based protocol.
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There’s also a future plan of decentralizing governance from an email. Recall that Kulechov first mentioned in May the plan of creating a permission pool for institutions. The lending pool is to inculcate both anti-money laundering restrictions and KYC compliance.
According to the operations of the pool, users will first complete a Know Your Customer verification from the partner, Fireblocks.
Aave is hovering in the green zone after marking a 15% increase on the daily chart | Source: AAVEUSD TradingView.com
The new platform is meant to bring collaborative learning in both decentralized and centralized finance. Currently, the combination of the DeFi token, 3 deployments give a total value locked of about billion.
Twitter Community Responds Back With Mixed Reactions
There are mixed reactions from the screenshot on crypto Twitter. Some people outline the great opportunities for institutions to engage in DeFi using the new platform. Others are quite skeptical about the Fireblocks’ partnership with the DeFi token.
What people have yet to appreciate about Aave and Compound’s institutional products is that having doxxed institutional clients gives them an easy way to move into undercollateralized lending and credit markets.
— Noah Goldberg (@TraderNoah) July 4, 2021
The reason for this latter group is the recent lawsuit against the firm filed by StakeHound, a staking provider. The lawsuit is on for allegedly deleting private keys to a wallet that has about million worth of ETH.
If Fireblocks is the one doing all the KYC, why do they need a separate pool that is supposedly being governed by anon $AAVE governors?
Btw, Fireblocks 🤡 recently lost 72m in ETH and is being sued now. pic.twitter.com/M8o3n7qJdI
— DefiMoon (@DefiMoon) July 5, 2021
Aave Pro is not the first project from Fireblocks. There have been several such projects from Fireblocks created to assist institutional capital in accessing decentralized finance seamlessly.
Their move was to create a bridge for institutional investors to access decentralized finance. In early 2020, Fireblocks had partnered with Compound in launching some services to assist institutional investors.
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The project was to eliminate some of the challenges associated with the storage of private keys in browse while using a wallet.
This procedure will not be favorable for an institution that has multiple users as members. Thus, Fireblocks made a bridge by putting governance in operation.
Featured Image From Pixabay - Charts by TradingView
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