The digital assets lending field seems to be heating up with Blockchain.com starting to offer lending directly to retail consumers globally. Borrowed USD stablecoins can be used by crypto traders to fund their next trades and thus increase the leverage of their holdings.
Popular Wallet to Offer Crypto Lending for Global Retail Users
Blockchain.com, the provider of cryptocurrency services with over 46 million wallets created to date, has launched Borrow, a product offering retail users to borrow USD-pegged stablecoins against crypto assets held in their wallets. The new lending service is now available to users in more than 180 countries.
This launch follows the launch by Blockchain.com of an institutional lending desk in August 2019, which was handling $120 million a month by November. And the company said it will be offering retail users access to the same liquidity pool as institutional investors.
The company explained that as soon as the collateral is posted, users receive their loan and are free to use the stablecoins however they see fit. This means that retail traders can also use it to fund new trades without cashing out their previous investments and thus increase their leverage.
“Institutional and retail investors have the same financial goals – grow wealth and manage risks – but the tools at their disposal are vastly different,” commented Peter Smith, CEO of Blockchain.com. “Now, with our suite of trading products and Borrow, retail users can trade like the big guys without selling the crypto they’ve stockpiled or leaving their wallet.”
Digital Asset Lending Field Is Getting Crowded
On Thursday, March 5, custody service provider Bitgo announced that it is now offering institutional digital asset lending services after a few months of private beta. The lending service was said to be built by a Wall Street team that understands institutional investors’ needs.
“Our goal was to build a lending business that is similar to lending businesses in the traditional financial markets,” said Nick Carmi, Head of Financial Services, Bitgo. “We are not interested in a high-volume, low-margin business; we are building deep relationships with our clients to drive value for them and to create a long term, sustainable business.”
Babel Finance, a Chinese crypto lending company, also released its 2019 annual report on March 5. In its outlook on 2020 the report noted that “The lending market is increasingly crowded because of the horizontal development strategy adopted by various crypto finance players.” Still, the company’s outstanding loan balance broke a new record high this year, reaching $380 million on February 18, 2020.
Ever since the game CryptoKitties was released in November 2017, the concept of nonfungible token has been ingrained in the minds of developers and investors in the crypto community. However, 2019 has been the year that NFTs have gained mainstream attention. And it should come as no surprise that even huge, multinational companies are currently developing NFT projects.
Recently, Mirosoft’s blockchain-based cloud platform, Azure, released its own nonfungible tokens program called “Azure Heroes” with the aim of rewarding its developer community.
Through Azure Heroes, Microsoft is on a mission to empower technical practitioners of all backgrounds. With that as the objective, it has created a tool to inspire the community to learn, coach and build on Azure while promoting healthy and inclusive behavior.
Issuance and transactions of “Badger” collectibles will be carried out on the Ethereum network, allowing winners to hold them as NFTs. The tokens were created in partnership with Enjin, a platfor that specifically caters to the video game industry.
In order to earn one of these Badgers, Azure developers must first be nominated — either by themselves or by the community. Then, the community moderators will select the best nominees, based on their performance, to be awarded a Badger. Winners will then be provided with a QR code that can be used to redeem their Badgers via their Enjin wallet, where it can then be transferred to any other NFT-compatible Ethereum address.
The rise of NFTs
Fungibility refers to an item that is interchangeable with another, identical item. A dollar bill or a grain of rice is fungible — i.e., mutually interchangeable with other dollar bills or grains of rice. On the other hand, a house or a piece of art constitutes a nonfungible item — i.e., not mutually interchangeable with other houses or other works of art. Keeping this distinction in mind, an NFT is a unique digital asset with a traceable history that differentiates it from other assets that appear similar.
One of the most interesting things about NFTs is their ability to fundamentally change digital ownership. Until now, people never truly had ownership of anything that they purchased virtually. Purchasing in-game items and treating them as real-world assets is one thing, but the reality is that they don’t belong to the players who made the purchase; they belong to the game’s publishers.
However, 2019 was the tipping point for the adoption of NFTs, and there are a few reasons for this — at least in the gaming community. First of all, games like Gods Unchained were game changers upon their release.
Developed by Australia-based blockchain gaming startup Immutable, Gods Unchained is a turn-based digital trading card game that operates on the Ethereum blockchain. There are other collectible games — such as Decentraland, Etherbots, Spells of Genesis and Rare Pepe — whose popularity rose in 2019. However, outside of the gaming industry, companies utilizing NFTs, such as SuperRare, Zcrafty and Terra0, have also gained prominence.
Marketplaces like OpenSea, RareBits and OpenBazaar have also started to trade NFTs as crypto collectibles. The infrastructure around NFTs is also improving. 0xcert offers developer tools for issuing and managing NFTs. In addition, Codex Protocol has developed a decentralized registry for unique assets like art, fine wine, antiques and more.
Moreover, there are other factors for why NFTs are becoming more popular, one of them being an interest of multinational corporations in blockchain gaming. In September 2018, one of the biggest names in gaming, Ubisoft, sponsored the Blockchain Game Summit in Lyon, France. The following month saw Ubisoft become an inaugural member of Blockchain Game Alliance. When asked about the current use of NFTs in popular products and services, Ethan Pierse, the director at the CryptoAssets Institute, told Cointelegraph:
“Indiegogo and GoFundMe have also shown that people are willing to spend plenty of money supporting causes and products that they believe in. On Indiegogo, the product you get is called a Perk, and on Kickstarter, it is a reward, and people have contributed billions to those crowdfunded projects.”
Pierse went on to add that brand loyalty and self-identification are likely to intensify further, as supporters are also able to show off digital collectibles, concluding that:
“If those tokenized collectibles also have value as an asset to encourage hodling and trading, then we are looking at a digital version of the same craziness seen with Beanie Babies or Magic: The Gathering cards. A $90000 Magic card was just tokenized for 124 investors on collectible assets platform Mythic Markets.”
Diversification of use cases of NFTs
There is a noticeable drive for the development of NFT use cases beyond entertainment. Specifically with the case multi-layer blockchains, the foundational layer — which is the home of assets such as Bitcoin — is increasingly shifting toward being a store of value, presenting a segment of the market in which high-value NFTs can develop.
NFTs can signify ownership of high-value or sensitive physical, illiquid assets such as artwork or real estate. The latter is especially an area that can profit from the use of NFTs. Additionally, there is a drive to use tokenization and fractional ownership to make these investments liquid. For instance, NFTs can represent individual units in a property owned by multiple families.
Even though many look at NFTs as a way of building new financial assets and democratizing access to capital, regulation is likely to act as a hindrance. For example, the NFT platform Codex Protocol aspires to use NFTs as a medium to fractionalize ownership of a piece of art. While this is interesting in theory, there is a risk that doing so would turn these tokenized assets into securities, which would then need to be regulated as such.
Jonathan Brandt, the principal information technology consultant at the Willow Group who designed a course on blockchain at Minnesota State University, told Cointelegraph:
“I believe a major obstacle to the adoption of NFTs for more serious purposes, say, the provenance of antiquities or the tracking of a medical supply chain, is the lack of intuitive or obvious methods for redress and recovery. Ironically, many of the centralized institutions which blockchain stands to dismantle are really good at this. Microsoft, like it or not, has achieved tremendous mass-adoption of Internet Explorer, Windows, and the Office suite. It has the reach and the gravitas to nurture acceptance of NFTs.”
How NFTs can create value for an enterprise
Essentially, the evolution of NFTs is heavily dependent on the underlying blockchain infrastructure. Optimizing for scalability and transaction speeds, for example, is anticipated to have a huge impact on the rate of development for the space. Besides this, the absence of accessibility when it comes to NFTs is a real problem that has yet to be solved, and the entry of big players like Microsoft can go a long way to help.
Enterprises can use NFTs for inventory management, where certain tokens can be combined with other tokens to represent an assembled product with multiple component parts. Another area where NFTs can find application in enterprises such as Microsoft is in licensing software.
Such licenses have been traditionally represented by keys, but NFTs stored in wallets can now be used to grant permissions. Real estate is another example of a unique asset that can potentially be represented as NFTs. Additionally, identity management — both in social media and in enterprises — can leverage nontransferable NFTs.
Microsoft and blockchain
Through Azure, Microsoft has made many pioneering efforts toward blockchain adoption. Over the course of 2018, it has launched a blockchain development kit and the Azure Blockchain Workbench.
In May 2019, the company also unveiled the Azure Blockchain Services, which is a fully managed service that allows for the formation, management and governance of consortium blockchain networks.
Along with these products, the company has launched an extension to Visual Studio Code to help developers create and compile smart contracts based on Ethereum, and then deploy them on the public chain or on a consortium network in the Azure Blockchain Service. Regarding this, Pierse, the CryptoAssets Institute’s director, said:
“Azure is locked in a battle to differentiate itself with AWS, Oracle, and Heroku among others. If nothing else, this creates visibility and further engages Azure’s existing communities. I’m not sure that CTOs that have committed to other development platforms are going to make strategic decisions based on which ‘badger’ they can get, but I do think this could further showcase the engagement of Azure’s developer community.”
Soon after the announcement of Azure Heroes, Microsoft also unveiled new tokenization and blockchain data management services, highlighting the increased adoption of blockchain in enterprises.
Lolli, an affiliate retail startup that gives online shoppers bitcoin instead of regular cash-back perks, just announced its first Asian partnership with Chinese e-commerce giant Alibaba.
Lolli’s in-browser app allows users to shop through merchants’ websites as they normally would, but earn small bitcoin rewards delivered to the in-browser wallet.
CoinDesk reached out to Alibaba for comment and will update the article if we hear back.
This announcement comes on Singles Day, the Nov. 11 Chinese shopping holiday comparable to the U.S.’s Black Friday. Alibaba Group’s online Singles Day sales have reportedly generated more than $23 billion so far this year.
However, Lolli’s head of communications, Aubrey Strobel, told CoinDesk that Lolli perks will only be available to purchases made in the U.S. For Chinese-Americans, foreign students or travelers, this new option could add additional perks if they participate in online holiday sales, but residents in China will be unable to participate.
“Its products would be shipped from China to U.S. users,” Strobel said.
Lolli CEO Alex Adelman referred to this partnership as a milestone for the startup, which plans to expand internationally in 2020.
“This partnership is a great first step to connect the two largest economies, China and the US, through bitcoin and commerce,” he told CoinDesk. “The opportunity is available for US users only for now but we plan to expand internationally soon, letting everyone in the world easily earn and own bitcoin.”
Stepping back, several cash-back crypto startups are gearing up for the holiday shopping season. There are now several bitcoin retail apps, including competitors like Fold, Pei and SPEDN, targeting customers over the 2019 holiday shopping season, offering more bitcoin options than in previous years.
Changpeng Zhao, the CEO of major cryptocurrency exchange Binance, says a price of $16,000 per Bitcoin will happen “soon-ish,” in a tweet sent on Nov. 1. Zhao explains that price predictions are easy, but getting the timing right is hard.
“Lol, price predictions are easy. It’s just hard to be right about the timing. We will see $16k soon-ish. 1.4 billion people working on it as we speak.”
The message was an answer to the tweet of another user who pointed out that the prediction of an anonymous 4chan user predicting Bitcoin’s price would hit $16,000 by the end of October turned out to be wrong. The given prediction also stated that BTC will hit $29,000 in the first quarter of next year, $56,000 in Q3 2020 and $87,000 in Q4 2020.
At the same time, other predictions are actually less modest. John McAfee, for example, doubled down recently on his $1M Bitcoin by 2020 prediction, arguing that Bitcoin’s next price surge will be triggered by its scarcity.
As Cointelegraph reported, the Bitcoin network mined its 18 millionth BTC last month, which means there are only 3 million BTC not yet in circulation.
Bitcoin wallet and blockchain explorer provider Blockchain announced a partnership with the largest bitcoin processor, BitPay.
According to a blog post published today, Blockchain will integrate BitPay’s payment architecture into its wallet service. This partnership will allow Blockchain wallet users to pay merchants online or on mobile.
BitPay processes approximately $1 billion in bitcoin alone every year for businesses and individual clients and over $2.8 billion in other cryptos for institutional clients since 2011. The firm has built an ecosystem of merchants that accept their payments – including Amazon, Delta, and Hotels.com – because, as a payment processor, it offers the option to settle in fiat currencies and provides invoices.
Likewise, Blockchain is often regarded as one of the world’s largest wallet providers with approximately 38 million users, of which more than half are located outside the United States. Further, the firm’s wallet users account for roughly a quarter of all on-chain bitcoin transactions.
“We’re excited to see this new addition connect our Wallet users to the world of merchants that accept Bitcoin (and soon other cryptos) as a payment method — one of the key ways to interact with and grow the digital asset ecosystem,” Blockchain writes in a statement.
Blockchain’s wallet service is non-custodial and offers an optional know-your-customer (KYC) verification for users who want in-wallet trading capabilities. Whereas, BitPay requires its users to undergo KYC requirements.
In July, Blockchain unveiled its crypto exchange platform the PIT, with optionality to connect the firms wallets for nearly instant transfers.
If you’re reading this, you probably already know what’s Blockchain. The term, that became one of the most popular ones in recent years, beholds a whole new world of options and opportunities. Alongside all the good things, it holds a big misconception — Not all Blockchains are the same, and there are many different technologies based on the idea. The same applies to Crypto, where we can assume that all the various digital coins share the same security system, but by going deeper, we can see not only that the situation is totally different, but there’s also two major groups with a vast difference: Private and Public Blockchains. So, what’s all the fuss about?
Public Blockchains are pretty much straightforward: They are using one of the strongest encryptions today, but not in an exclusive way. A lot of Cryptocurrencies use Ethereum’s Blockchain system, which has proven to be a solid and secure way to deal with digital currencies. The pros are obvious: You can save quite a lot of time in using a “template” instead of investing more time and money in creating your own Blockchain technology, thus allowing you to focus on other elements.
But when it comes to private Blockchains, we get a different picture. Why? Because the effort that was given in, created extra advantages, for example:
Faster Transactions: The shared foundation between all cryptocurrencies that use the same Blockchain can be overloaded sometimes. The more coins used, and actions done, the more traffic it needs to host successfully. A private network will only need to monitor its exclusive content, thus ensuring faster rates.
Safer Process: Sure, Blockchain is safe, but if you manage to somehow hack through a private network, chances are all of the cryptocurrencies hosted on it are in grave danger. When there’s a private system, you need to analyze a whole different set if you want to hack it. A similar factor is that open-code systems are usually safer than closed one, due to the various alterations that can be done on it.
Full Customization: Let’s face it, no public system can fully interact with the individual concerns, will and demand. A private Blockchain allows you to fully integrate your ideas and goals with every aspect, thus fulfilling your full potential.
Not losing edge: When there are many players in the field, there needs to be some sort of consolation between all of them. When they’ll demand changes in the masses, you may be one of those who need them, or maybe be the one to lose from them instead. With a private Blockchain, you’re the boss — And you do whatever you need to keep YOUR product at the best state possible. Democracy is nice, but in this case — Being a single ruler is way better.
As we can see, the two groups might seem almost identical at first, but in the end — It’s apples and oranges, hardcore mode. Know your differences before you dive in, not only as an ICO entrepreneur, but as an investor or even someone who just checks the surface. Either public or private — Go for the right cause!
“The practical consequence […is…] for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.”
– Marc Andreessen
From a cruising altitude, a blockchain might not look that different from things you’re familiar with, say Wikipedia.
With a blockchain, many people can write entries into a record of information, and a community of users can control how the record of information is amended and updated. Likewise, Wikipedia entries are not the product of a single publisher. No one person controls the information.
Descending to ground level, however, the differences that make blockchain technology unique become more clear. While both run on distributed networks (the internet), Wikipedia is built into the World Wide Web (WWW) using a client-server network model.
A user (client) with permissions associated with its account is able to change Wikipedia entries stored on a centralized server.
Whenever a user accesses the Wikipedia page, they will get the updated version of the ‘master copy’ of the Wikipedia entry. Control of the database remains with Wikipedia administrators allowing for access and permissions to be maintained by a central authority.
Wikipedia’s digital backbone is similar to the highly protected and centralized databases that governments or banks or insurance companies keep today. Control of centralized databases rests with their owners, including the management of updates, access and protecting against cyber-threats.
The distributed database created by blockchain technology has a fundamentally different digital backbone. This is also the most distinct and important feature of blockchain technology.
Wikipedia’s ‘master copy’ is edited on a server and all users see the new version. In the case of a blockchain, every node in the network is coming to the same conclusion, each updating the record independently, with the most popular record becoming the de-facto official record in lieu of there being a master copy.
Transactions are broadcast, and every node is creating their own updated version of events.
It is this difference that makes blockchain technology so useful – It represents an innovation in information registration and distribution that eliminates the need for a trusted party to facilitate digital relationships.
Yet, blockchain technology, for all its merits, is not a new technology.
Rather, it is a combination of proven technologies applied in a new way. It was the particular orchestration of three technologies (the Internet, private key cryptography and a protocol governing incentivization) that made bitcoin creator Satoshi Nakamoto’s idea so useful.
The result is a system for digital interactions that does not need a trusted third party. The work of securing digital relationships is implicit — supplied by the elegant, simple, yet robust network architecture of blockchain technology itself.
Defining digital trust
Trust is a risk judgement between different parties, and in the digital world, determining trust often boils down to proving identity (authentication) and proving permissions (authorization).
Put more simply, we want to know, ‘Are you who you say you are?’ and ‘Should you be able to do what you are trying to do?’
In the case of blockchain technology, private key cryptography provides a powerful ownership tool that fulfills authentication requirements. Possession of a private key is ownership. It also spares a person from having to share more personal information than they would need to for an exchange, leaving them exposed to hackers.
Authentication is not enough. Authorization – having enough money, broadcasting the correct transaction type, etc – needs a distributed, peer-to-peer network as a starting point. A distributed network reduces the risk of centralized corruption or failure.
This distributed network must also be committed to the transaction network’s recordkeeping and security. Authorizing transactions is a result of the entire network applying the rules upon which it was designed (the blockchain’s protocol).
Authentication and authorization supplied in this way allow for interactions in the digital world without relying on (expensive) trust. Today, entrepreneurs in industries around the world have woken up to the implications of this development – unimagined, new and powerful digital relationshionships are possible. Blockchain technology is often described as the backbone for a transaction layer for the Internet, the foundation of the Internet of Value.
In fact, the idea that cryptographic keys and shared ledgers can incentivize users to secure and formalize digital relationships has imaginations running wild. Everyone from governments to IT firms to banks is seeking to build this transaction layer.
Authentication and authorization, vital to digital transactions, are established as a result of the configuration of blockchain technology.
The idea can be applied to any need for a trustworthy system of record.
Authored by Nolan Bauerle; images by Maria Kuznetsov