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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….



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.




Chainalysis raises $100M in Series E funding led by Coatue

Chainalysis secures its second $100 million investment round in three months.



Chainalysis has secured hundreds of millions of dollars in the second quarter as venture firms allocate more resources to the emerging blockchain sector.

Chainalysis raises $100M in Series E funding led by Coatue

Blockchain analytics company Chainalysis has secured $100 million in Series E financing, bringing its total valuation to a staggering $4.2 billion and highlighting once again the tremendous growth of the cryptocurrency industry.

The round was led by global investment manager Coatue, with additional participation from 9Yards Capital, Altimeter, Blackstone, GIC, Pictet, Sequoia Heritage and SVB Capital, Chainalysis announced Thursday.

Chainalysis said the funds will go toward expanding its blockchain data capabilities, which includes investing in new data tools, software and APIs.

“We believe blockchain data is the asset that can help public and private sector organizations understand the risks and opportunities surrounding this asset class and promote its adoption safely and successfully,” the company said.

Chainalysis’ valuation has more than doubled in the last quarter thanks to several strategic investments. As Cointelegraph reported, the company closed out a $100 million Series D round in March led by Paradigm, a crypto-focused investment firm. At the time, Chainalysis’ director of communications Maddie Kennedy told Cointelegraph that the funds will be used to expand the company’s enterprise data offering.

Related: Crypto-finance company Amber Group valued at $1B following $100M raise

Mega-million-dollar funding rounds have become commonplace in the cryptocurrency industry over the last six months. Venture firms have poured billions into crypto startups this year alone, with the likes of Andreessen Horowitz going a step further by announcing a new $2.2 billion crypto venture fund.

What’s more, dealmaking seems to be happening irrespective of current market conditions, which marks an important evolution from the 2017 bull market that saw venture funding dry up once the initial coin offering mania faded.



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Crypto miners eye cheap power in Texas, but fears aired over impact on the grid

Can Texas meet the electricity demands of migrating Chinese Bitcoin miners?



The recent crackdown on crypto mining in China has seen concerns expressed over the potential impact a hashrate migration could have on Texas’ unreliable electricity market, as an increasing number of dislocated miners eye the Lone Star State.

Texas’ abundant sources of renewable energy and highly deregulated power grid make the state an obvious choice for migrating miners from China and elsewhere, with 20% of Texan electricity being generated by wind as of 2019.

Speaking to CNBC, Brandon Arvanaghi, a former security engineer at crypto exchange Gemini, predicted Texas will see “a dramatic shift over the next few months” as miners look to set up shop.

“We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible,” he said, adding:

“Texas not only has the cheapest electricity in the U.S. but some of the cheapest in the globe.”

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:

“Every Western mining host I know has had their phones ringing off the hook. Chinese miners or miners that were domiciled in China are looking to Central Asia, Eastern Europe, the U.S., and Northern Europe.”

Global hash rate has fallen by one-third since early May following reports that China’s mining industry would be subjected to stricter supervision.

But is the Texan power grid up to the challenge of providing power for an influx of more crypto miners? The Electric Reliability Council of Texas (ERCOT) has just requested that Texans curb their electricity usage amid the recent heatwave that saw many residents turning up their air conditioners earlier this week.

Roughly 12,000 megawatts of generation capacity was offline as of Monday — enough to power 2.5 million homes. ERCOT described the scale of forced outages as “very concerning.”

The regulator warned that a failure to heed the request could result in a repeat of the widespread winter power failures that left 69% of Texans without electricity, and roughly half without water in February. According to Buzzfeed, February’s outages could have resulted in up to 700 deaths in the state.

Angela Walch, a Texas research associate at University College London’s Centre for Blockchain Technologies, tweeted her concerns regarding the share of Texas’ electricity being devoted to Bitcoin mining, emphasizing that her family has been “asked to reduce our air conditioning use, not run washing machines & dryers, etc.”

Obviously, Bitcoin is not the sole cause of this cluster*^% that our poor political leadership in Texas has caused.

But, I am curious to know the portion of the grid it uses. Maybe Bitcoin miners are the first to be shut down in times of grid stress.

— Angela Walch (@angela_walch) June 15, 2021

However Tierion CEO Wayne Vaughan responded by asserting that much of the electricity used to power Texan mining operations comprised stranded resources that “would never be able to reach your home to power your appliances.”

Others argued that wholesale Bitcoin mining operations could actually alleviate Texas’ power issues, with Texas’ seasonal surges in electricity demand incentivizing miners to sell power back to the state’s grid that otherwise go uncaptured.

In September 2020, the Peter Thiel-backed crypto miner Layer1 in West Texas reported it had reaped profits exceeding 700% by selling renewable electricity back to the grid amid surging summer demand.

While up-to-date data for global hashrate distribution is not available, the Cambridge University’s Bitcoin Electricity Consumption Index (BECI) estimates that China represented 65% of the world’s hashing power as of April 2020.

Earlier this month, district regulators in Western Xinjiang and Yunnan issued notices mandating the suspension of virtual currency mining enterprises. BECI estimates the two regions account for 40% of the country’s hash rate.

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:



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Bitcoin price hits $40K as Paul Tudor Jones slams Fed inflation claims

Bitcoin price action is back at $40,000 as Paul Tudor Jones recommends a 5% BTC portfolio.



Bitcoin (BTC) passed $40,000 on June 14 as a consolidation period snapped to unleash a solid breakout.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewBTC price breaks out past $40,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD gaining 3% in under an hour, reaching $40,500 on Bitstamp.

The largest cryptocurrency capitalized on upside which resulted from a new positive tweet from Elon Musk over possible acceptance by Tesla in the future.

Earlier, Cointelegraph reported on traders betting on a leg up to around $47,000 before a correction.

A look at buy and sell positions on major exchange Binance showed support at $38,000, wit resistance at $40,500 the next hurdle for bulls.

Buy and sell levels on Binance as of June 14. Source: Material Indicators/TwitterTudor Jones advocates 5% BTC allocation

Bitcoin reached a $2 trillion market cap because of a “dichotomy” in Federal Reserve policy which “questions” its credibility, says famous trader Paul Tudor Jones.

In an interview with CNBC on June 14, the founder of Tudor Investment Corporation sounded the alarm over advancing inflation.

After last week’s consumer price index (CPI) report showed that U.S. inflation had hit a 13-year high, Bitcoin’s deflationary nature has rarely looked so appealing.

For Tudor Jones, the idea that higher inflation is just temporary due to recent events, as suggested by the Fed and central banks in general, is a myth.

“It’s somewhat disingenuous to say, for them to say, that inflation is transitory,” he told CNBC’s Squawk Box segment.

Today’s environment is entirely different to that which saw episodes of inflation in the past, such as 2013, and as such, there is little sense in the Fed applying the same forecasts.

CPI was much lower then, Tudor Jones noted, while now, unemployment and jobs also roughly equal each other.

Related: Paul Tudor Jones says Bitcoin is ‘like investing early in Apple or Google’

Meanwhile, gold and Bitcoin have provided a refuge for many. Despite the precious metal vastly underperforming Bitcoin in terms of gains, it remains near record highs.

“When you look at the Fed today and the Fed back then, you wonder how can you have such wildly different policy views on what constitutes the right levels for employment, the right levels for inflation,” he continued.

“How can you have that with an eight-year timeframe? It’s almost like a split personality and you wonder why Bitcoin has a $2 trillion market cap and gold’s at $1,865 an ounce. And the reason why is you have this dichotomy in policy that again questions — questions — the institutional credibility of something.”

Ultimately, a 5% Bitcoin allocation is one of the only things he advocates to those seeking portfolio advice.

“I say, ‘OK, listen, the only thing I know for certain is I want to have 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities at this point in time,'” he added.

A look at buy and sell positions on major exchange Binance showed support at $38,000, wit resistance at $40,500 the next hurdle for bulls.



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