A Step toward more Secure Payments with Blockchain

The breakthrough in bitcoin has led to an extremely new format for blockchain to be defined as a distributed ledger. By taking advantage of these …

blockchainDigitization in the banking sector is not an option, but it is inevitable because every industry is digitized and the banking industry is no exception. Digitalization was an important step in overcoming cash disadvantages and providing a more transparent experience. Digitization offers convenience to consumers and also saves time by reducing human error and thus creating loyalty of consumers.

The breakthrough in bitcoin has led to an extremely new format for blockchain to be defined as a distributed ledger. By taking advantage of these benefits, industries have come up with numerous ideas to use blockchain technology on their platform.

Blockchain Companies: 1World Online, aXpire, Context Labs, Cryptyk, Datawallet, HashChain Technology, i-House.

Commercial currencies are both expensive and slow in their current form, with a large number of intermediaries involved. These intermediaries can be eliminated through the distributed booklets from transactions with higher efficiency and lower costs. At the same time, Goldman’s blockchain-based Forex trading patent demonstrates how blockchain is still a risk factor. A genuine trend in post-trade is seen, with even the largest market participants seeking to standardize, outsource, and reciprocate their costs of post-trade processing.

The future of secure digital payment lies in contactless methods of payment. This includes mainly sound waves, QR, RFID, and NFC. Whether it’s retail or tariff payments, contactless payments are much easier and quicker. The combined experience of the bank and third-party services enable new business models, such as the opening of their internal infrastructure to third-party developers, to develop their software and to provide their customers with new cases of use to stay ahead in the competition.

Blockchain or cryptocurrency payments sound like another complexity in the saturated mobile wallet marketplace, the evolving card technology, and the endless POS system providers. However, considering the number of players involved in modern card payments, crypto could actually make it easier with the increasing number of challenges, the risk of cash and card payments, and the explosion of crypto adoption; it can be the perfect way to change the way payments are made.

Check out: Top Blockchain Companies.

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PayU to Acquire Wibmo for $60 Million

Wibmo, which is backed by the Accel Partners, is having its specialization in multiple payment services which offers the 3D secure payment …

PayU which is a digital payment company is as of now in the final stages of discussions to acquire the Bangalore based Wibmo, which is having specialization in online payment processing.

If the deal gets closed, then it is estimated to be of around $50-$60 Million, and another acquisition of PayU.

Wibmo, which is backed by the Accel Partners, is having its specialization in multiple payment services which offers the 3D secure payment processing, for ensuring the safety of the digital transactions to mobile payments and merchant payments.

“Naspers has a huge appetite for investments in the fintech space, and this acquisition will complete the entire suite of payments offerings for PayU which otherwise is in the business of providing payment acceptance solutions for online merchants,” said one of the persons cited earlier.

“The deal is valued at around $60 million,” the person said.

Picture Credits: Twitter

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Facebook’s New Version Of Bitcoin – Not A Lot To It Really

But it’s not really going to be crypto, the Bitcoin-like parts, which make it so. This is … Facebook’s cryptocurrency: a financial expert breaks it down.

Facebook is said to be preparing a new crypto. Essentially, to cash in on the remittance market. The ability to send money internationally, something that can often be remarkably expensive. It might well arrive and it could even be useful. But it’s not really going to be crypto, the Bitcoin-like parts, which make it so. This is much more about being able to side step some of the regulatory issues over money transfers. From The Conversation:

Facebook’s cryptocurrency: a financial expert breaks it down

Facebook is reportedly preparing to launch its own version of Bitcoin, for use in its messaging applications, WhatsApp, Messenger and Instagram. Could this “Facecoin” be the long-awaited breakthrough by a global technology giant into the lucrative market for retail financial services? Or will it be yet another exaggerated “crypto” project, buying into the continuing excitement about decentralised peer-to-peer exchange but, in the end, not delivering very much? Time will tell, but my two decades of research into the economics of payments makes me sceptical.

We know little about Facebook’s plans. So far there is just one company statement about a new group set up to look into cryptocurrencies reported by Bloomberg: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”

Some investigative journalism from Bloomberg and the New York Timesreveals a little more. Facecoin (and the similar “Gram” cryptocurrency being developed by the privacy focused messaging app Telegram) will apparently be a “stablecoin”. Rather than having a fixed amount of currency that fluctuates in price, depending on demand, Facecoin will have a fixed price and the amount of it in circulation will vary. So unlike Bitcoin it will not be a vehicle for speculation.

What will the fixed price be? Bloomberg reports it will be fixed against the dollar. The New York Times says that it will be against a combination of dollar, euro and yen. Who will use it? Facebook is apparently focusing on providing a technology solution for the large and lucrative remittance market for payments into India. Will transactions in Facecoin be anonymous like those in Bitcoin? No, they will be associated with Facebook accounts, so they won’t be an easy means to avoid laws and regulations.

Reasons to be sceptical

While this is a fascinating development, some scepticism is in order. If there is one common feature to the many hundreds of crypto and blockchain finance projects announced over the past four years, it is exaggerated early claims. In one ongoing research project, I have found that of 103 projects announced since 2015 applying so-called blockchain technologies to financial services, all but a handful have quietly disappeared. None have yet been taken through to commercial-scale launch (although around half a dozen may achieve that by 2021).

Is there anything about Facebook’s plans to suggest a different outcome? The obvious parallel is with the Chinese payment solution WeChat Pay, globally the largest mobile and internet payment solution used by “900 million active users”. In Beijing and Shanghai “even beggars have QR codes” that allow passers by to scan and give them money using their smart phones. The integration into the WeChat messaging system is what gave WeChat Pay the critical mass to achieve widespread acceptance. Facecoin’s integration with WhatsApp and other Facebook services could support a similarly rapid take-off.

Tina Kanagaratnam@TMK_TinaManiK

Even Shanghai’s beggars take WeChat payments. I gave to the fellow sitting on the ground, and his mates whipped out their QR codes. As ever, Shanghai is the future.

3,172 people are talking about this

But WeChat Pay doesn’t involve cryptocurrency. It uses established server technologies to enable people to transfer money in and out of conventional bank accounts as well as to other users.

The New York Times reports, rather surprisingly, that Facecoin (unlike WeChat Pay) will be based on integration with cryptoexchanges, which trade conventional money for digital currencies, rather than with the conventional banking system. But given that cryptoexchanges are coming under increasing regulatory pressure because of their lack of transparency and irregularities in how they operate, linking with them is hardly likely to encourage people to adopt Facecoin.

It is also difficult to make sense of the intended use of Facecoin for remittances. Major banks already send dollars virtually instantaneously and costlessly from one country to another. Costs and inefficiencies arise in the final mile when converting funds to local currency and allocating them to a local bank account or for cash collection. The Facecoin technology will do nothing to address these problems.

Who pays out?

Another question mark is about the backing for Facecoin. Unlike Bitcoin, which is not pegged to any other currency, Facecoin will need the backing of real money to maintain its fixed price. The safest approach will be full reserving: for every $1 of Facecoin issued, Facebook could hold $1 of reserves in a segregated account.

Fractional or partial reserving is also possible but who then guarantees the safety of those reserves? If reserves do not cover withdrawals, who is then responsible and what compensation is there for holders of Facecoin? Facebook would need a banking licence and subject itself to the full burden of banking regulation. Ideally, reserves would be held with a central bank. But central banks will be reluctant to support a private currency.

Perhaps the biggest reason for scepticism comes from the challenges Facebook already faces over user data, privacy and authenticity. If Facebook takes as big a role in daily payments as it already has in personal communications and social media, then it will become an even bigger target for the growing anti-trust movement that seeks to break upthe tech giants.

Fundamental change is possible. Cryptocurrency technologies could be used to eliminate the instability of fractionally reserved banking. But this will have to be through a state currency replacing fractionally reserved bank transaction accounts and not through a private currency.

It would probably be wiser for Facebook to outsource Facecoin to an established international bank. But then, of course, this wouldn’t be such a major disruption of established financial services.

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IBM’s Blockchain Based World Wire Service Expected to Be Utilized By 40 to 50 banks

… Wire Service, a Stellar-based money wiring service, in the coming years. … to support and issue digital currencies, stablecoins and other currencies.

Several banks have already expressed their interest and intent to use the service for their own banking operations and have also stated that they may be using their own stablecoins along with the IBM World Wire. Lund elaborated on these developments at the Think Expo, stating:

We’ve got a launch announcement coming out soon… we’re going to be supporting more than 50 countries out of the gate, 30-40 currencies, and enough market makers to drag along 30 or 40 banks, so we’ll have a significant portion of the world covered. We’ve got letters of intent with several banks around the world to support and issue digital currencies, stablecoinsand other currencies. Our goal is to continue to expand that network and to provide global coverage within 3-5 years where you can actually send remittances in a consistent way, immediately, at a very low cost, from anywhere in the world to anywhere in the world.

cryptomaniaks

This is only the tip of the iceberg, however, as Lund has reported that there will be more information provided on March 19, most likely at the Money 20/20 conference in Singapore.

For many of those who have heard this news, the most common question is, why Stellar? According to Lund, Stellar was chosen due to the fact that is scalable, transparent, and offers a wide range of assets that can be traded on the Stellar platform. Although there are some issues such as liquidity, Lund is excited about the project and believes that it will do wonders for the existing banking system as well as for adoption in cryptocurrency.

With cryptocurrency projects gaining traction becoming more commonplace in large institutions, it can be extremely helpful to know how to begin purchasing crypto and investing in the market. However, many individuals simply do not know where to begin their journey. If you are looking to participate in crypto and invest some of your money into the market, visit our comprehensive cryptocurrency investing course to get started today!

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Facebook’s cryptocurrency: a financial expert breaks it down

Or will it be yet another exaggerated “crypto” project, buying into the continuing … Time will tell, but my two decades of research into the economics of …

Facebook is reportedly preparing to launch its own version of Bitcoin, for use in its messaging applications, WhatsApp, Messenger and Instagram. Could this “Facecoin” be the long-awaited breakthrough by a global technology giant into the lucrative market for retail financial services? Or will it be yet another exaggerated “crypto” project, buying into the continuing excitement about decentralised peer-to-peer exchange but, in the end, not delivering very much? Time will tell, but my two decades of research into the economics of payments makes me sceptical.

We know little about Facebook’s plans. So far there is just one company statement about a new group set up to look into cryptocurrencies reported by Bloomberg: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”

Some investigative journalism from Bloomberg and the New York Times reveals a little more. Facecoin (and the similar “Gram” cryptocurrency being developed by the privacy focused messaging app Telegram) will apparently be a “stablecoin”. Rather than having a fixed amount of currency that fluctuates in price, depending on demand, Facecoin will have a fixed price and the amount of it in circulation will vary. So unlike Bitcoin it will not be a vehicle for speculation.

What will the fixed price be? Bloomberg reports it will be fixed against the dollar. The New York Times says that it will be against a combination of dollar, euro and yen. Who will use it? Facebook is apparently focusing on providing a technology solution for the large and lucrative remittance market for payments into India. Will transactions in Facecoin be anonymous like those in Bitcoin? No, they will be associated with Facebook accounts, so they won’t be an easy means to avoid laws and regulations.

Reasons to be sceptical

While this is a fascinating development, some scepticism is in order. If there is one common feature to the many hundreds of crypto and blockchain finance projects announced over the past four years, it is exaggerated early claims. In one ongoing research project, I have found that of 103 projects announced since 2015 applying so-called blockchain technologies to financial services, all but a handful have quietly disappeared. None have yet been taken through to commercial-scale launch (although around half a dozen may achieve that by 2021).

Is there anything about Facebook’s plans to suggest a different outcome? The obvious parallel is with the Chinese payment solution WeChat Pay, globally the largest mobile and internet payment solution used by “900 million active users”. In Beijing and Shanghai “even beggars have QR codes” that allow passers by to scan and give them money using their smart phones. The integration into the WeChat messaging system is what gave WeChat Pay the critical mass to achieve widespread acceptance. Facecoin’s integration with WhatsApp and other Facebook services could support a similarly rapid take-off.

But WeChat Pay doesn’t involve cryptocurrency. It uses established server technologies to enable people to transfer money in and out of conventional bank accounts as well as to other users.

The New York Times reports, rather surprisingly, that Facecoin (unlike WeChat Pay) will be based on integration with cryptoexchanges, which trade conventional money for digital currencies, rather than with the conventional banking system. But given that cryptoexchanges are coming under increasing regulatory pressure because of their lack of transparency and irregularities in how they operate, linking with them is hardly likely to encourage people to adopt Facecoin.

It is also difficult to make sense of the intended use of Facecoin for remittances. Major banks already send dollars virtually instantaneously and costlessly from one country to another. Costs and inefficiencies arise in the final mile when converting funds to local currency and allocating them to a local bank account or for cash collection. The Facecoin technology will do nothing to address these problems.

Who pays out?

Another question mark is about the backing for Facecoin. Unlike Bitcoin, which is not pegged to any other currency, Facecoin will need the backing of real money to maintain its fixed price. The safest approach will be full reserving: for every $1 of Facecoin issued, Facebook could hold $1 of reserves in a segregated account.

Fractional or partial reserving is also possible but who then guarantees the safety of those reserves? If reserves do not cover withdrawals, who is then responsible and what compensation is there for holders of Facecoin? Facebook would need a banking licence and subject itself to the full burden of banking regulation. Ideally, reserves would be held with a central bank. But central banks will be reluctant to support a private currency.

Perhaps the biggest reason for scepticism comes from the challenges Facebook already faces over user data, privacy and authenticity. If Facebook takes as big a role in daily payments as it already has in personal communications and social media, then it will become an even bigger target for the growing anti-trust movement that seeks to break up the tech giants.

Fundamental change is possible. Cryptocurrency technologies could be used to eliminate the instability of fractionally reserved banking. But this will have to be through a state currency replacing fractionally reserved bank transaction accounts and not through a private currency.

It would probably be wiser for Facebook to outsource Facecoin to an established international bank. But then, of course, this wouldn’t be such a major disruption of established financial services.

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