Blockchain Tech Offers Multiple Paths to Financial Inclusion For Unbanked
TLDR: Millions of people throughout the world live in poverty, but with CBDCs they have an opportunity to get involved in the digital economy.
In many discussions about crypto, financial inclusion, accessible services, and the unbanked are common topics. However, the details may remain somewhat hazy, since crypto is generally spoken about by those who are already entrenched in the financial system. Companies are working diligently to expand financial inclusion and provide services to millions of unbanked people around the world. CBDCs will be utilized for a variety of purposes in different countries. In regions where people have abandoned high levels of cash usage, like the United States and the United Kingdom, retail demand for CBDC is unlikely to be significant, but cash shortages can create fundamental possibilities for prosperity and economic development in certain areas. Physical cash restrictions limit customers to the most basic sorts of transactions. A CBDC would enable micro-and nano-payments and foster the development of new business models by providing access to the digital economy.
A CBDC may save central banks money and time by allowing them to access data in real-time to influence monetary policy. The implementation of the Digital Cash product would offer central banks to dedicate a portion of their reserves as collateral for digital cash. Then, the product would support the central bank by minting and distributing digital cash tokens on a one-to-one basis with collateralized reserve money. It’s critical that the CBDC be non-intermediated because it may be utilized in places where no financial infrastructure exists. As a first step, CBDC would be used to pay civil servants’ salaries. It could also be used by the central bank to make payments such as social assistance and stimulus-related cheques directly to citizens.
The goal of a Digital Money solution is to provide financial services to individuals who would not otherwise have access to them. The Digital Money system is account-based, which means it may model more conventional forms of money. It might be used to bring new financial services to commercial banks and fintechs. It can be utilized for microlending and the tokenization of assets and commodities, allowing individuals to become investors without having to deal with brokers.
JPMorgan to Use Blockchain for Collateral Settlements
TLDR: New use of the Blockchain will allow for a frictionless transfer of collateral assets on a rapid basis, as well as allowing investors to pledge a wider range of assets as collateral and utilize them outside of market hours.
JPMorgan has been a supporter of blockchain technology for some time and, more recently, has started to embrace cryptocurrencies. Now, Bank is looking into tokenizing equities, bonds, and other assets. Its blockchain, over time, might become a bridge that connects traditional investors to decentralized finance systems in the crypto economy. Since late 2020, the bank has used blockchain to conduct intraday repurchase, or repurchase agreement (repo), a sort of short-term borrowing in fixed income. More than $300 billion of repos have been completed on the network so far, with Goldman Sachs among its members. Collateral settlement via the blockchain may be utilized for a variety of activities, including derivative and repo trading, as well as securities lending. The bank will soon expand tokenized collateral to include equities, fixed income, and other asset types. As the crypto industry matures, an expanding number of financial transactions will take place on the public blockchain, necessitating that banks be prepared to not only support but also provide related services.
Why Sustainability Is Emerging As a Key Bellwether of Web3
TLDR: As more attention focuses on cutting-edge blockchain technology, businesses are confronted with the elephant in the room: energy consumption. So, what’s the point of creating a tokenized, decentralized metaverse if you’ll just be criticized for it?
Concerns about Web3’s carbon footprint will return once it matures and truly begins to scale. Bitcoin and Ethereum both rely on the “proof-of-work” system, which requires machines to solve problems as proof of the blockchains’ integrity to be rewarded with tokens. As a result of this immense usage of energy, Bitcoin now consumes more electricity than Norway. Switching to renewable energy, either through a short-term fix with carbon credits or long-term investment in dedicated generation, is one solution. Another option is to migrate from blockchain protocols based on proof-of-work to ones that rely on proof-of-stake, which is far less energy-intensive. A campaign by Greenpeace and the Environmental Working Group (EWG) is attempting to persuade the most popular blockchains to do so. Brands wanting to position themselves as leaders in Web3 should consider supporting them, promising to utilize blockchains with a low carbon footprint, or at least being picky about which one they use.
Now is the time for companies to claim their territory in the metaverse and influence the underlying software toward a more sustainable future, whether it’s within a virtual reality or otherwise. To avoid technological dead ends, companies wanting to start or connect with communities in Web3 should evaluate, select, and promote carbon-neutral blockchains. It’s unusual to have the chance to influence the development of new technology; this one is ours for the taking.
NFT Prices Drop, Leaving Buyers To Just Love Art
TLDR: Things are changing. NFTs created by smaller companies without celebrity appeal and a very strong plan are at risk of getting ‘obliterated’.
Over the previous three years, NFTs have generated a lot of buzz because they are said to tackle difficult issues. Digital images, which were previously considered worthless because they could be readily duplicated, could now be possessed and assigned a monetary value. Collectible art, long seen as elitist in nature, may now be found on decentralized, community-managed networks making them more appealing to a new generation. NFTs, like Internet land deeds, grant owners legal rights to digital art, music, and pictures. People were willing to pay eye-catching sums for them, such as $10.5 million for a pixelated image that resembled the Joker character in Batman. But the frenzy surrounding NFTs has died down recently, as the cryptocurrency market has plunged by $500 billion in recent weeks. While some cryptocurrency investors will avoid selling, they know that if they put it on the market today, it would most likely sell low.
This indicates that the NFT market is consolidating, with only a few firms maintaining an increasing market share. NFTs created by smaller companies without celebrity appeal and a very strong road map are starting to get obliterated. A so-called “bathtub effect” occurs when a huge NFT is put on sale in the market, with other significant projects declining in price as investors sell off their NFT holdings to gain currency to purchase the new NFT. This effect is genuine, but it isn’t nearly as awful as it appears because a portion of these “floors” are still holding strong. When it comes to NFT platforms, even as heavyweights like US crypto exchange Coinbase enter the fray, NFT marketplace OpenSea still has a lock on the market.
DeFi Tokens Continue To Remain In The Red Zone After Crypto Crash
TLDR: The water hasn’t entirely stilled yet, and we’re still recovering from the cryptocurrency downfall.
Even more than Bitcoin, the DeFi tokens have taken a beating as a result of the crypto market’s downward spiral in recent weeks. The majority of alternative coins are down 90% from their ATHs. Despite the fact that the larger crypto market continues to suffer, decentralized finance (DeFI) tokens continue to roam around in red zones. In 2021, when the market was flourishing, Decentralized Finance (DeFi) projects began to shine as major competitors; investors flocked to them, looking at their numerous use-cases and services. The investors’ expectations were definitely met. They provided the highest returns ever seen in the crypto market. However, with the demise of Terra, everything came to a halt. Terra has established a reputation for itself as one of the most popular DeFi platforms in the industry, taking second place behind Ethereum. The crypto market collapse undoubtedly hurt Terra, affecting DeFi projects in the aftermath. It resulted in a lack of confidence in DeFi protocols, which led investors to shift their funds out of DeFi tokens. After that sharp fall in these cryptocurrencies’ values, which persists to this day it became clear that something had gone horribly wrong.