Deutsche Bank Report Claims Demand for Crypto to Accelerate in the Next Decade

Banking giant Deutsche Bank has recently published its outlook for the decade ahead – the ‘Imagine 2030’ report – highlighting the dangers of the forces holding the fiat money system unravelling in the next decade, thus fostering the demand for crypto.

According the recent research report from Deutsche Bank, by 2030, the demand for alternative currencies will rise, with digital currencies eventually replacing fiat money.

Deutsche Bank strategist Jim Reid raised awareness, in the recent report, of the challenges the existing fiat system has encountered in recent years, specifically with the emergence of cryptocurrencies. He further claimed that people’s heightened demand for dematerialized means of payment and anonymity could lead to more individuals switching to digital currencies.

According to data provided by the banking giant, nearly two thirds of consumers prefer dematerialized to cash payments and a third are concerned about anonymity, two things unique to digital currencies.

Whilst digital currencies may not have gained as much traction as a means of payment despite their well-known benefits, such as security, speed, minimal transaction fees, ease of storage and relevance in the digital era, this may change in the next decade.

In the meantime, the researcher report noted that cryptocurrencies need to overcome three main hurdles in order to gain wider acceptance. Firstly, digital currencies must become legitimate in the eyes of governments and regulators, which requires bringing stability to the price as well as advantages to both consumers and merchants.

Secondly, cryptocurrencies must allow for global reach in the payment market. According to the report, this could be achieved by forging alliances with key stakeholders. For instance, mobile apps such as Apple Pay, Google Pay, card providers such as Visa and Mastercard, and retailers, such as Amazon and Walmart.

Last but not least, to realize a smooth transition to a fully digitalized platform, the financial system needs to be ready to overcome any kind of electricity shutdown or cyberattack. These are challenges that may arise with mainstream adoption and Reid pointed out that “as that occurs, the line between cryptocurrencies, financial institutions, and public and private sectors may become blurred.”

Deutsche Bank further noted in its research report how prone to inflation and unstable fiat money could be, further suggesting the possibility that inflation could become more embedded in our system and doubts will rise about the sustainability of fiat money.

“Politically it is always too tempting to create money when nothing is backing it. That this current fiat system has survived so long has required a fortuitous set of global forces across multiple decades that have created sizeable natural offsetting disinflationary forces,” they said.

Researchers estimate that by 2030 there could be 200m blockchain wallet users and digital currencies might eventually replace cash , granted that governments back cryptocurrencies, and consumers want them, and if current trends continue.

However, currently, political support remains far from clear. Buying and selling cryptocurrency in countries like China and India is still banned, with the former adopting a singularly hard stance of late.

Chinese Region Hainan to Invest 1 Billion Yuan to Foster Blockchain Development

China’s interest in the blockchain technology continues to grow and the Hainan Free Hainan Free Trade Zone (FTZ) committed to invest 1 billion Yuan to stimulate local businesses.

According to local news outlet Xinhua Net, Hainan’s dedicated economic pilot zone has pledged to foster businesses in the blockchain industry by incentivizing talent and promoting the technology’s implementation in sectors like housing, healthcare, tourism and trade.

Hainan is the first blockchain pilot zone and will be based in the Hainam Resort Software Community. According to Wang Jing, the head of the department, this is also the first pilot to be approved by the local government.

The fostering measures include a fund worth 1 billion yuan, approximately $142 million. The announcement sees Hainan fall in line with various other Chinese provinces which have confirmed financial support for blockchain in recent weeks and months.

In general, the Hainan Free Trade Zone is a pilot economic area established by President Xi Jinping in 2018. The plan set out to make the island a free trade zone by 2020 and eventually turn into a free port by 2025.

Blockchain continues to be a hot topic in China and for Chinese officials with endorsement of technology application. However, the Chinese government remains vigilant on trading activities, iterating their stance that trading needs to be monitored and sanctioned.

In a comprehensive plan to utilize blockchain technology and big data, the government aims to facilitate the development of secure and trusted data sharing and digital governance.

The Hainan zone has seen an influx of blockchain companies, including two major cryptocurrency exchanges in Huobi and OkEX. In total there are over 100 blockchain businesses that joined the Hainan Resort Software Community.

Among the latest funds to come from the local industry was a $140 million injection from OK Group, the parent company of trading platform OKCoin. Prior to that, the government of Guangzhou also said it would inject 1 billion Yuan into the industry.

Carrefour and Nestle Use IBM Blockchain Platform for Supply Chain Tracking

Two European multinational companies have been working together with the IBM Food Trust platform. Retail giants Nestlé and Carrefour revealed that they are working with IBM’s blockchain platform to track the supply chain of baby milk formula.

Leveraging the platform, the companies aim to enhance consumer confidence and credibility in the products’ quality. Based on Hyperledger technology, the platform provides more transparency of the entire supply chain of baby milk formulas.

Following a successful pilot allowing customers to access blockchain data about Mousline purée, the two companies have announced a second product to the service.

Specifically, the GUIGOZ Bio 2 and 3 infant milk will be traced on the blockchain platform as a means to provide consumers with more information on the milk’s origin and transparency on product checks. With a simple scan of a QR code, customers will be able to trace the product’s origin as well as certification tests along the way.

“Blockchain technology enhances transparency and advances the food transition for extremely high-quality products, which parents expect for infant nutrition. For Nestle and Laboratoires Guigoz, this innovative blockchain technology creates a new benchmark for transparency and the high standards of care required to ensure the quality of their products,” Nestle stated.

Both Carrefour and Nestlé have already experimented with the application of blockchain for their logistic processes. The companies began using IBM’s blockchain technology in April in order to track the supply chain of Mousline, a well-known brand of instant mashed potatoes.

Representatives of the two companies also shared their satisfaction with the greater transparency enabled by the system. They commented on the ease with which customers could access information about where products originated and confirm that what they are buying is indeed genuine.

Furthermore, Carrefour reported an increase in sales after a number of blockchain implementations that tracked the supply chains of a range of products including meat, milk and fruit. Reportedly, the enhanced traceability allowed consumers to identify products that contained genetically modified organisms and pesticides.

Singapore Central Bank Develops Cross-Border Payment Rail with JPMorgan

The Monetary Authority of Singapore (MAS), the country’s central bank, in collaboration with investment bank JPMorgan has developed a blockchain-based prototype for multi-currency payments.

According to an official release on Monday, MAS stated that the latest development for its Project Ubin allows for payments to be executed in different currencies on the same network, enabling cross-border payments. This is the fifth phase of the project, which was developed in collaboration with JP Morgan and Temasek – a government-owned investment company.

Started as a collaborative project to test the viability of blockchain and distributed ledger technology, MAS states that the novel implementation is bringing cost and speed benefits.

“There is growing evidence now that blockchain-based payments networks are able to enhance cost efficiencies and create new opportunities for businesses,” said Sopnendu Mohanty, chief fintech officer of MAS.

In its fifth phase, the prototype developed allows for payments settlement and clearing with different currencies. The payments network will also provide an interface for other blockchains to connect and will support delivery-versus-payment (DvP) settlement with private exchanes, conditional payments, escrow as well as payments commitments for trade finance.

Beyond technical experimentation, the fifth phase of Project Ubin sought to determine the commercial viability and value of the blockchain-based payments network. Until now, MAS and its partners have engaged more than 40 financial and commercial companies to explore the potential benefits of the blockchain-based network.

“The inclusion of non-financial services companies has demonstrated applicability of blockchain technology beyond capital markets and trade finance. We look forward to deeper collaboration and support for Singapore’s pioneering efforts in the blockchain space,” stated Chia Song Hwee, Chief Operating Officer at Temasek.

Investment bank JP Morgan, part of project Ubin, acts as the infrastructure provider for the prototype’s development. The banking giant has tipped its toes in the blockchain industry with various initiatives, including the inter-bank settlement network with its own stablecoin JPM Coin.

“J.P. Morgan is excited to be an infrastructure partner of MAS and Temasek for Phase 5 of Project Ubin. By leveraging our key learnings from building the Interbank Information Network® (IIN) and the JPM Coin, J.P. Morgan is well-positioned to support the development of a blockchain-based payments network and operate at scale.” John Hunter, Global Head of Clearing and Interbank Information Network.

Consultancy firm Accenture is set to publish a detailed report with the results of the prototype by early 2020, which will also indicate additional features that could be provided by the network.

Singapore officials hope that the success of their trial will motivate other central banks to explore blockchain-based settlement networks as well. Recently, People’s Bank of China (PBoC) revealed the development of its own digital currency, while the European Union is considering the issuance of a digital Euro.

Standard Chartered Joins Other Banking Giants at Enterprise Ethereum Alliance

British multinational banking giant Standard Chartered, with over $685 billion in total assets, has just announced its partnership with Enterprise Ethereum Alliance – a member-operated organization that works in the development of blockchain technology for consumers and businesses across the globe.

According to a post on the official website, Standard Chartered announced the partnership with EEA, stating that its main goal is to further develop blockchain technology research and its application in the banking sector. In addition to that, the EEA’s charter has indicated that its intent is to develop open blockchain frameworks to push interoperability between businesses and consumers.

Following the announcement, Standard Chartered joins other industry leaders, which are members of the EEA that wish to strengthen blockchain research and its application in the banking sector. Other banking giants include JP Morgan, ING, Citi, and Spanish bank BBVA. The alliance comprises of around 100 other members, all working towards encouraging the use of Ethereum blockchain as an open-standard to empower enterprises.

The post further reads that the bank strongly believes blockchain to be the best way for central banking and commerce as it would allow transactions to be verified, secure, and processed in real-time. Upon the announcement, Dr. Michael Gorriz – Chief Information Officer at Standard Chartered – stated:

“We are excited to be a part of the EEA and look forward to opportunities where we can collaborate to deepen blockchain research and application in the banking sector.”

Certainly, this is not Standard Chartered’s first venture into blockchain technology. The post has cited a lot of global collaboration projects with fintech firms to explore financial systems’ efficiency improvements, build blockchain-enabled financing solutions for supply chain, and assist cross-border remittance services between Hong Kong and the Philippines using blockchain technology.

The bank is a founding member of the blockchain- based trading platform Voltron and has also recently completed its first international letter of credit (LC) transaction on the platform for the oil industry.

The British bank has also invested in blockchain payments firm Ripple and is currently working with China-based Linklogis to develop a blockchain-based supply chain financing solutions. In addition to that, the bank is currently working with the Central Bank of Thailand to aid them in creating a CBDC, as well as backing the Monetary Authority of Singapore’ s initiative to explore DLT use for payment settlements.