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Trade finance: The latest industry to boost DLT adoption amid COVID-19

The COVID-19 pandemic has triggered the adoption of blockchain and DLT-based business solutions in the global trade ecosystem….

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As the coronavirus pandemic continues to push more people out of their offices, many companies across the globe are adopting decentralized ledger technology to mitigate its effects and remain operational.

Emmanuelle Ganne, senior analyst at the World Trade Organization, told Cointelegraph that “The current pandemic, which has a devastating impact on small businesses, is an opportunity to accelerate trade digitalization, to the benefit of SMEs in particular.” Ganne added: “DLTs have the potential to remove many of the inefficiencies that hinder international trade and to slash trade costs, which weigh more heavily on small firms, a fortiori in times of crisis.”

Deepesh Patel, editorial director at Trade Finance Global — a financial broker — believes that “A fully digitalised global trade ecosystem will be seamless and interconnected and probably open source.”

As the global economy continues to be shaken by the pandemic, it’s clear that the most affected businesses are small- and medium-sized enterprises facing the “trade finance gap,” which is a deficit that keeps businesses from performing due to a lack of adequate funding necessary to run operations.

What’s more profound is the fact that the trade finance gap was estimated to be $1.5 trillion U.S. dollars prior to the COVID-19 pandemic, and that number is expected to go up to about $3 trillion or $4 trillion. Göran Almgren, CEO of Enigio — a DLT solutions provider — told Cointelegraph: “The reason for the huge gap in financing is that it is considered too expensive (and too much risk) to finance SMEs especially in emerging markets.”

The pandemic makes it even worse, as more investors are holding back financing due to economic uncertainty. However, DLT seems to be dramatically mitigating these risks thanks to its capacity to reduce fraud and cut the cost of financing and operating businesses.

A recent study published by Trade Finance Global and the WTO shows that the pandemic has not only sparked further overall adoption of DLT but also triggered the increased implementation of DLT platforms, especially in the world of trade and finance.

Although DLT only began to increase in popularity after the advent of Bitcoin’s blockchain, the concept has actually been around for some time and goes beyond blockchain, which is a more recent development to the technology. At its core, a DLT is a decentralized network of computers with a common consensus protocol that allows for seamless communication without a central entity. DLT makes it possible to achieve immutability, security, dynamism and decentralization on digital networks.

Financing both traditional and domestic trade requires a great deal of transparency and efficiency. Given the ubiquity of financial institutions embracing DLT for its accounting efficiency, the trade finance industry seems best suited to benefit from it.

Contour is one of the major players in the sector, providing a platform that allows for the creation, exchange, issuance and approval of letters of credit. Contour’s DLT platform, Corda, is set to allow participants to host their own nodes on the network, co-draft applications for letters of credit, and issue and amend these letters, all in a complete end-to-end workflow. The platform is also designed to enable the resolution and settlement of discrepancies in an autonomous fashion while protecting the documents with bank-compliant security measures.

Unlike a centralized public ledger, transactional data on the Corda platform is only shared with entities involved in the transaction, allowing for a high level of privacy, as sensitive data will be shared on a need-to-know basis.

Skuchain uses DLT to enable collaborative commerce across the supply chain of global trade. Skuchain is the producer of EC3, or Empowered Collaborative Commerce Cloud, which is a blockchain-based platform that offers end-to-end solutions for the trade finance industry. Through EC3, participants can share trade documents and other electronic data with other members in the supply chain ecosystem while maintaining control and data privacy.

The platform uses the Distributed Ledger Payment Commitment, a global standard for payment commitments on a blockchain network, to provide access to financing. The EC3 framework is built on Hyperledger Fabric, which is an open-source blockchain that is fully interoperable with other networks.

Through a partnership with Ping An Technology in Shenzhen, China, eTradeConnect has developed a Hyperledger Fabric-based framework for trade finance. This Hong Kong-based company is a trade finance consortium with a DLT platform that offers a range of trade finance solutions such as duplicated financing checks, payment status updates, preshipment trade finance and invoice creation, to mention a few.

With plans to release a fully interoperable DLT trade platform, the current eTradeConnect technology is currently available in Australia and China, with participants such as the Bank of East Asia, Hang Seng Bank, and the Industrial and Commercial Bank of China.

Based in India with an aim of achieving a global footprint, India Trade Connect is another DLT-based trade finance initiative that is providing a comprehensive set of end-to-end trade and supply chain business solutions on the blockchain.

India Trade Connect is built on an interoperable platform that allows for the digitization of letters of credit, collection bills, consumer-to-consumer and business-to-business transactions, bank guarantees and invoice financing. Platform participants are able to simplify Know Your Customer processes with a unified and digitized national identity repository.

Built on the Quorum blockchain infrastructure, Komgo is a fully decentralized commodity trade finance network. Quorum is an enterprise blockchain solution built on the Ethereum protocol with the aim of offering a permissioned, enterprise-grade blockchain with privacy controls suited for financial enterprises.

One of the main features that Komgo offers on its DLT platform is a certification feature that allows users and non-users to verify authenticity by stamping their documents on the network. The platform also has a KYC solution that standardizes the identification process while maintaining user privacy on a need-to-know basis. As well, it enables users to directly submit digital trade data and documents to financing institutions.

Marco Polo Network is a DLT platform built to facilitate working capital finance solutions such as receivables financing and payment commitments for enterprises in trade finance. Powered by the Corda DLT platform, Marco Polo also offers its users secure distributed data storage, bookkeeping and identity management, to mention a few things.

So far, Marco Polo Network consists of about 30 banks along with other institutions such as Microsoft, Mastercard and Pole Star. The platform is a legacy system and an application programming interface that allows banks to ease communications with enterprise clients by integrating corporate clients with enterprise resource planning.

This Europe-based finance consortium offers automation of payments based on preagreed conditions, bank payment undertaking and invoice financing on a Hyperledger-based blockchain network. We.Trade is also set to include an insurance and logistics servicer as well as an additional payments trigger and multipayments solutions in the future.

The We.Trade platform is built in partnership with IBM and now has stakeholders across the globe, including CaixaBank, Deutsche Bank, Belgium’s CBC and Eurobank in Greece, to mention a few.

With a plan to create a DLT network that offers security to international trade, TradeWaltz’s platform features an international trade ecosystem that enables electronic document sharing with guaranteed authenticity of transactions. So far, the platform has attracted a number of participants including Mitsubishi Corporation, as well as banks and a number of Japan-based insurance companies.

UAE Trade Connect is a permissioned DLT project set to launch in December. So far, the pilot tests for the Hyperledger Fabric-based project have attracted up to eight banks that are set to participate in the launch. The UAE Trade Connect platform will include solutions that enable banks to solve issues of fraudulent invoicing.

The platform is set to digitize physical data using a combination of machine learning and optical character recognition while keeping confidential data private throughout the process. Therefore, member banks will be able to check for duplicate and fraudulent invoices on the blockchain.

This China-focused project is the result of a collection of four blockchain applications that originally comprised the Bay Area Trade Finance Blockchain Platform. With 48 banks on board, the platform consists of trade information collection and bill rediscount features, not to mention a tax filing and accounts receivable financing solution.

Despite having representatives such as the People’s Bank of China and China Construction Bank, this platform runs on a nonprofit business model, enabling a deeper focus on offering the best trade finance solutions on the blockchain. The platform also covers accounts receivable solutions for supply chains as well as automated tax filing.

If the current pandemic has accelerated digitalization, what stands in the way of realizing a fully digital global trade ecosystem? Despite the optimism shared by those in the industry, Trade Finance Global’s Patel noted that there are still a number of bottlenecks:

The WTO’s Ganne pointed out that there are two key challenges that slow down digitalization: The first is “a lack of global standards on data models and processes,” and the “second is a lack of legal clarity enabling a regulatory framework.” He added:

So, it seems that realizing the full adoption of DLT will require some push from the private sector and a global dialogue among regulators.

Source: https://cointelegraph.com/news/trade-finance-the-latest-industry-to-boost-dlt-adoption-amid-covid-19

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Cointelegraph

Binance Coin reaches 37% of Ethereum’s market cap: 3 reasons why BNB is soaring

Binance Coin (BNB), the native cryptocurrency of Binance Smart Chain, has been rallying after seeing an uptick in transaction volume.

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Binance Coin, the native cryptocurrency of Binance Smart Chain, has been surging with a massive uptick in transaction volume.

Binance Coin reaches 37% of Ethereum’s market cap: 3 reasons why BNB is soaring

Binance Coin (BNB), the native cryptocurrency of Binance Smart Chain and top digital asset exchange Binance, is starting to close in on Ethereum (ETH) in market capitalization.

As of April 12, BNB is valued at $87 billion at the price of just under $600. The valuation of Ethereum is hovering at around $246 billion, which is 2.8 fold larger than that of Binance Coin.

— Joe Grech (@JoeBGrech) April 12, 2021

The technical momentum of BNB has been so strong that it briefly surpassed the volume of the BTC/USDT pair on Binance.

This trend is significant because USDT is the biggest stablecoin in the global market and the BTC/USDT pair is one of the most liquid trading pairs in crypto.

Why is Binance Coin surging so hard?

Binance Coin has been rising due to the three key reasons: an overall uptick in the popularity of Binance Smart Chain, strong technical momentum, and the gap between BSC and Ethereum projects.

Binance Smart Chain transaction volume. Source: BSCScan.io

In recent weeks, the transaction volume on Binance Smart Chain has tripled the volume of the Ethereum blockchain.

Particularly in Southeast Asia, the usage of Binance Smart Chain has been rising, according to Coin98, the biggest venture capital firm in Vietnam that is building a DeFi ecosystem targeted at Asia.

Considering that the price of BNB was much lower than Ethereum until late March, this discrepancy between BNB and ETH likely made BNB a compelling trade.

There is also a big gap in valuations between the Ethereum DeFi ecosystem and Binance Smart Chain, which has been fueling a large portion of the demand for BSC projects.

This has caused the value of BNB to rapidly rise over the past two weeks while ETH has been relatively stable at just over $2,000.

A journalist who covers crypto in China known as “Wu Blockchain” explained:

“BNB broke through an astonishing $600, but Ethereum’s Fees fell to its lowest point in a month. Although the transaction volume of BSC is 3x that of Ethereum, the two are not in a competitive relationship. The top 10 addresses of BNB hold more than 88%, and Eth is 20%. The future of Ethereum depends on the upgrade of EIP-1559 and 2.0. The only two things Binance needs to worry about are the government suppression and hackers.”

Traders foresee BNB to undergo a more explosive rally in the foreseeable future if it breaks out against Bitcoin.

Kaleo, a pseudonymous cryptocurrency trader, said:

“$BNB breaking above this level on the $BTC pair could lead to the type of explosive momentum needed to actually close in on $1,000.”BSC/BTC 1-day price chart (Binance). Source: TradingView.com, KaleoWill the capital rotate back into Ethereum?

However, Kelvin Koh, the managing partner at Spartan Group, one of the largest DeFi-focused funds in Asia, said that for now, he expects the capital to rotate back into Ethereum as BSC projects near the valuation of ETH equivalents.

He emphasized that there is a huge valuation gap between BSC and ETH projects. This gap could be making BSC projects compelling to the market. He said:

“BSC is having its own DeFi summer….so much alpha to be discovered in BSC ($XVS, $CAKE). If you are wondering why Ethereum DeFi coins are lacklustre, its because of the huge valuation gap that still exists between the BSC coins and ETH equivalents. Until this gap closes, money isn’t rotating back to ETH DeFi coins.”

Source: https://cointelegraph.com/news/binance-coin-reaches-37-of-ethereum-s-market-cap-3-reasons-why-bnb-is-soaring

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Our Man in Shanghai: Scandal as $45M of stolen government funds lost using 100X leverage

A blockchain security company’s future is in doubt after its CMO allegedly lost $45M betting on Bitcoin; Chinese netizens turn the other cheek to Peter Thiel’s warnings, and more

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The Chief Marketing Officer a blockchain security company has been charged with embezzlement; Peter Thiel calls Bitcoin a ‘weapon’ of China (but no one cares), and CZ’s net worth rises to $1.9 billion.

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Our Man in Shanghai: Scandal as $45M of stolen government funds lost using 100X leverage

Blockchain security company Beosin has been the focus of a major scandal after its Chief Marketing Officer Gao Ziyang was taken into custody and charged with embezzlement of state-owned assets. He is alleged to have been using government funds to unsuccessfully short BTC, resulting in a massive liquidation of over 300 million renminbi, or $45 million dollars.

Beosin, also known as Lianan Tech, had a working relationship with Chinese authorities and was helping them investigate fraudulent fundraising schemes. After the seizure of funds back in 2020, Beosin was tasked with storing and selling the assets, to be later returned to the state treasury. Instead of selling the assets, CMO Gao Ziyang allegedly opened a short position in late August, hoping to increase the size of the positions for personal gain. At the time, BTC was trading around $12,000.

Authorities say that records obtained from OKEx show the position began using 10x leverage, before increasing to 100x, and eventually ended up in liquidation. They began to ask about the whereabouts of the funds, before finally realizing that the assets were no longer in the wallet. Online, people have marveled at the age of Gao Ziyang, who was described as in his twenties. The future of Beosin, which was once regarded as a credible blockchain security company in China, is now in serious doubt.

Peter Thiel’s Bitcoin claims ignored

On Wednesday, PayPal co-founder and venture capitalist, Peter Thiel warned that the Chinese government may be using Bitcoin as a “financial weapon” to undermine the stability of the U.S. Dollar. The reaction was quite muted, as only 30 comments responded to the story on Sina Finance, a social media account with over 23 million followers. One of the top comments simply pointed out that “Bitcoin wasn’t invented by China” while another comment simply stated “Impossible”.

Binance billionaire

On Thursday, Binance founder Zhao Changpeng, better known as CZ, appeared as #1664 on Forbes’s annual billionaire list. His net worth is now listed at $1.9 billion, an increase of $700 million from the last list in 2020.

Nanjing Ribensi bought by US company

US Company Future FinTech announced earlier this week that they had agreed to a deal to acquire China-based mining company Nanjing Ribensi Electronic Technology Co. Nanjing Ribensi operates a mining farm that can handle up to 30,000 Bitcoin mining machines. The deal was worth approximately $9.1 million dollars and stipulates that the mining company must generate no less than approximately $2.3 million dollars in 2021.

Blockchain standards accelerated

China’s National Development and Reform Commission called for the accelerated implementation of blockchain standards in a new plan released on April 1. The plan was jointly issued by 28 government departments and also included technologies such as cloud computing, IoT, and big data.

This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.

Source: https://cointelegraph.com/news/our-man-in-shanghai-scandal-as-45m-of-stolen-government-funds-lost-using-100x-leverage

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Cointelegraph

CoinMarketCap removes South Korea crypto exchanges from Bitcoin price tracker

The crypto analytics provider also removed South Korean exchanges from the price calculations of cryptocurrencies in 2018 “due to the extreme divergence in prices.”

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“If the prices on South Korean exchanges stabilize, then we will add the data back in, but that hasn’t happened yet,” said a CoinMarketCap spokesperson.

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CoinMarketCap removes South Korea crypto exchanges from Bitcoin price tracker

Crypto price trackin website CoinMarketCap has removed many South Korean exchanges from its calculations for the price of Bitcoin as the coin dipped under $58,000 again.

As of today, CoinMarketCap’s Bitcoin price tracker shows no data from major South Korean crypto exchanges including Upbit, Bithumb, Coinone, and Korbit. The website uses data from many exchanges to estimate the average price for cryptocurrencies. At the time of publication, the price of Bitcoin (BTC) is $57,721, having fallen more than 2% this morning.

Speaking to Cointelegraph, CoinMarketCap content manager Molly Jane Zuckerman said the removal was due to the premium observed on crypto exchanges based in South Korea. The crypto analytics provider estimates the BTC price to be roughly 6% higher than that on other exchanges.

“If the prices on South Korean exchanges stabilize, then we will add the data back in, but that hasn’t happened yet,” said Zuckerman.

The last time the price tracking website took similar action was in 2018, when CoinMarketCap announced it had “excluded some South Korean exchanges in price calculations due to the extreme divergence in prices from the rest of the world and limited arbitrage opportunity.”

During roughly the same time three years ago, the price of XRP was falling significantly after reaching an all-time high of $2.96 on Jan. 2. However, the token is looking bullish today, having briefly surpassed $1.00 for the first time since 2018 after it rose more than 20% in the last 24 hours. The price has since fallen to $0.9694 at the time of publication.

CoinMarketCap said only its Bitcoin price index was affected today, given the large volume of the crypto asset on South Korean exchanges. Last month, the volume of transactions in the South Korean digital currency market — driven in part by the price of BTC reaching an all-time — briefly exceeded the daily average transaction amount of the country’s stock market.

Source: https://cointelegraph.com/news/coinmarketcap-removes-south-korea-crypto-exchanges-from-bitcoin-price-tracker

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