- Central bank digital currencies (CBDC), digital versions of national currencies introduced in response to growing cryptocurrency adoption, would be an essential tool for combating crypto, according to the Bank of Indonesia.
- While maintaining a mixed stance on crypto, Indonesian regulators have been increasingly looking at a potential CBDC. In May, the Bank of Indonesia Governor Perry Warjiyo announced plans to launch a digital rupiah as a legal payment instrument in Indonesia.
- In mid-November, Bank of Russia’s governor Elvira Nabiullina said that CBDCs should serve as a good option for governments to replace decentralized cryptocurrencies like Bitcoin.
- The union government today informed the Parliament that it has received a proposal from the Reserve Bank of India last month for an amendment to the RBI Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form.
- The minister further stated that the introduction of a digital currency has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk.
- Through the cryptocurrency and Regulation of Official Digital Currency Bill, 2021, India is also looking to make a framework for the official digital currency that will be issued by the Reserve Bank of India.
- Singapore-based virtual currency exchange Coinstore has begun operations in India.
- Coinstore is the second global exchange to enter India in recent months, following in the footsteps of CrossTower which launched its local unit in September.
- Coinstore has launched its web and app platform and plans branches in Bangalore, New Delhi, and Mumbai which will act as its base in India for future expansion
- Govt to ban cryptocurrencies, make way for India’s own digital currency.
- The government is set to introduce a bill to ban private cryptocurrencies and create a framework for an official digital currency to be issued by the Reserve Bank of India during Parliament’s Winter Session starting November 29.
- RBI said in July it was working towards its own digital currency and the Central Bank Digital Currency.
- The Reserve Bank of India may do a pilot of its central bank digital currency in the first quarter of the next fiscal year.
- While many see CBDCs as a legalised replacement of cryptocurrencies, in reality, CBDCs could just be a digital replica of the physical cash in circulation.
- According to a 2021 BIS survey, quoted in the RBI report, 86 percent of the central banks surveyed are actively researching the potential for CBDCs, 60 percent were experimenting with the technology and 14 per cent were deploying pilot projects.
- Digitalization keeps on coming to one of the oldest games in the world as FIDE, the International Chess Federation, announces its plans for a nonfungible token(NFT) marketplace.
- The group said that the marketplace, which launches at the end of November, will be called ChessNFT. FIDE is the first global sports federation to create its own NFT ecosystem and it does so ahead of the FIDE World Chess Championship 2021.
- Just last month, the reigning world champion, Magnus Carlsen, won an NFT trophy in the Meltwater Champions Chess Tour.
- China’s central bank digital currency, the digital yuan, has been used in transactions worth nearly $10 billion, according to an official with the Chinese central bank, the People’s Bank of China.
- The digital yuan has been used in transactions totaling about 62 billion yuan, Reuters reported.
- Also, the government’s digital wallet has been downloaded by about 140 million people.
- Interestingly, in August last year, Paytm reportedly froze Paytm Payments Bank’s customer accounts, suspecting them of cryptocurrency trading.
- It is worth noting that the Indian government has been working on a cryptocurrency bill for quite some time.
- The Reserve Bank of India had banned cryptocurrencies in 2018 but the order was struck down by the Supreme Court in March 2020.
- This matters for investors, because if rates can be taken deeply negative it would shift the long-term outlook for interest rates and inflation.
- The aim of deeply negative rates would be to stimulate the economy, creating a quicker recovery and allowing the central bank to raise rates again more quickly than if it was stuck at the lower bound for years, as the Fed was from 2008 to 2015.
- Either way, interest rates matter for bond yields, and electronic money can give central banks more freedom with interest rates.
- India’s digital architecture: From infrastructure to superstructure.
- Earlier, the law stipulated that for an NBFC to engage in the factoring business, its: financial assets in the factoring business and income from the factoring business should both be more than 50%, or more than a threshold as notified by the Reserve Bank of India.
- In August, the National Association of Software and Service Companies had brought out a report on India’s digital public goods.
- For India to play a massive role in this upcoming ecosystem, we need to launch ambitious technology moonshots, which will create the innovation ecosystem necessary to dominate the experience economy.
- Else, China, with its almost-ready experience economy ecosystem, will grab half of the estimated $15.7 trillion of new economic value this AI-driven experience economy might provide.
- We can break these moonshots into achievable expeditions in 3-, 5- and 10-year horizon goals like the original moonshots.
- The Reserve Bank of India has been working on a phased implementation strategy for a central bank digital currency and the pilot may be launched by the end of this year.
» NextBigWhat’s #Threadmill brings you curated wisdom from Twitter threads on product, life and growth.
China has come up with its own digital currency — Here’s what all you need to know!
~ Inception: It was first introduced in May 2020 in 4 cities — Shenzhen, Suzhou, Chengdu, Xiongan.
~ Is it the same as bitcoin? No! Unlike bitcoin, which is not controlled by any central authority, e-CNY is controlled by PBOC. Bitcoin is also based on a technology called Blockchain. At this point in time, it is unclear what kind of technology is e-CNY based on.
~ How will it work? Distribution will happen via two levels:
- The People’s Bank of China’s (PBOC) will distribute CBDC to commercial banks.
- Commercial banks will further be responsible for distributing it into the hands of consumers.
~ How will it compete in the local market? The digital currency will be directly distributed into state-owned bank users’ wallets, thereby bypassing apps like Alipay & WeChat Pay. These apps currently rule China’s online payment market.
~ The digital Yuan will also help the Chinese government to weed out tax evasion, money laundering and other financial illegal activities. It’s also trackable and could be traced.
~ Major concern? Since it’s trackable and traceable, the government will be able to monitor each and every important/ big financial transactions, thus raising privacy concerns.
>>> Stay tuned for more such updates & quickbites!
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The Need of The Hour — Central Bank Digital Currency!
NFT in a Nutshell!
There has been a buzz around cryptocurrency, and if or not, should we hold the asset lately. On an interesting note, a lot of big tech giants are investing in cryptocurrencies such as Bitcoin, Ethereum, and more. A lot of technology companies have started accepting Bitcoin as a mode of payment, just like physical cash.
For the past three months, prices of each unit of Bitcoin skyrocketed as much as over $60,000/Bitcoin. This year, Bitcoin rose around 72% after tech billionaire Elon Musk’s electric vehicle company Tesla invested $1.5 billion in it. Twitter CEO Jack Dorsey’s Square also invested $170 million in Bitcoin.
This shows that a lot of people are adapting to a more cashless payment system. However, half the side of the universe finds the concept of cryptocurrency unsafe. This is when the concept of Central Bank Digital Currency is introduced. Let me walk you through CBDC.
Central Bank Digital Currency uses a blockchain-based token to represent the country’s official digital currency. Unlike Bitcoin, which is privately owned, a CBDC would be centralized by a country’s monetary authority. The Central Bank, in the case of India, the RBI, will offer us any non-physical digital token issued as a substitute for cash.
Only Central banks of every country can issue electronic coins or accounts backed by the full faith and credit of the government. CBDC acts as a mouthpiece of a country’s digital currency. It will be aided by monetary reserves such as gold or foreign currency reserves. Each CBDC unit can be used for payments just like cash, coins. Except, it is virtual money.
To prevent imitation, each CBDC unit will have its own serial number. Keeping that aside, let me explain the two types of CBDC that exist: retail and wholesale.
Wholesale CBDCs are meant for use by financial institutions that hold reserve deposits with the central bank. On the other hand, Retail CBDCs are used by individuals, households, and corporations. It can be used by households and businesses to make payments.
Why did CBDC come into existence? To avoid scams, hacks, and thefts of data! It is considered a more convenient and secure mode of payment and can help attain financial stability, financial inclusion, and easy cross-border payments.
CBDC model provides a resilient alternative to consumers because it is less susceptible to attacks, tampering, and technological disruptions. If introduced in India, the CBDC unit will be monitored by our Central Bank, the “Reserve Bank of India.”
There are countries that pilot-tested CBDCs, such as Bank of England (BoE), People’s Bank of China (PBoC), Bank of Canada (BoC), and banks of Venezuela, Thailand, Sweden, and Singapore, among others. Russia is currently working on its own CBDC instrument creation called “crypto-ruble”.
However, no country has launched its own official CBDC instrument so far. Quoted by Coindesk, according to the RBI, an interest-bearing CBDC would improve an economy’s ability to respond to changes in the policy interest rate and enhance monetary policy transmission.
The Indian government, in exploring the world of CBDC, however, has recently condemned people from trading in cryptocurrency. Any individual found holding any digital asset would be penalized.
Traditional paintings, images, video clips, tweets selling for millions have paved the way for a revolution that has become a digital autonomous asset creation and redistribution. Yes, Non-Fungible Tokens (NFT) are cryptographic tokens that generate value because of their uniqueness. From tangible to intangible items, owning an NFT is like owning an original art or a collectable antique.
The difference between owning a physical collectable like a Pokémon card and a digital asset like NFT is that NFTs contain distinguishable information that distinguishes them from any other NFT and is easily verifiable. As each item could be traced back to its original creator, the duplication and circulation of fake collectables become pointless.
No two NFTs are identical. Unlike tangible real-money or digital cryptocurrencies, NFTs can’t be directly traded with one another, even if they exist on the same platform, game or collection.
The term ‘Fungibility’ means replaceable by another identical item; mutually interchangeable. For example, like how the conventional barter system works, we can exchange goods, services, money or cryptocurrency for the same value. In fact, this transactional value makes cryptocurrencies fit for use as a safe and secure medium in the digital economy.
On the other hand, this evolving digital asset is ‘Non-Fungible’, i.e., it is irreplaceable and, like a game token or a ticket, can only be used by the owner.
Most of the NFT tokens are built using two Ethereum token standards named ERC-721 and ERC-1155, enabling the software developers to easily deploy NFTs and ensure they’re compatible with the broader ecosystem.
Characteristics of NFTs include
Non-interoperable: After being sold as an NFT, a CryptoPunk cannot be used as a character on the CryptoKitties game or any other platforms, for that matter. An NFT art, once registered with blockchain, cannot be reused for any other platform.
Indivisible: NFTs can’t be divided into smaller denominations; they exist exclusively as a whole item.
Indestructible: NFT and its owner’s data is stored on a secure distributed database called ‘blockchain’ where each token is indestructible, irremovable, and irreplicable. Also, the gamers and collectors own their NFTs, not the companies that endorse or design them.
Verifiable: The original creator of NFT can be traced via blockchain’s data; you don’t need any third-party verification to authenticate these pieces.
Why do they have value?
Gamers can create, monetize, structure and sell individual digital items they procure for real money during gameplay. Artists get great profits when their artworks are sold directly to global buyers without an auction house. Like all assets, demand and supply are the important factors for price.
For example, gamer on the Decentraland virtual land combined 64 lots into a single estate after purchasing it and labelled it as “The Secrets of Satoshis Tea Garden”. It got sold for a whopping amount of $80,000 only because of its road access and location.
How to create, sell and buy NFTs?
You can create and sell your own NFT artwork, be it a GIF or an image, and it doesn’t require extensive knowledge of the crypto industry. As a plan, you will need to decide which blockchain you want to sell your NFTs on. Ethereum provides the blockchain service for NFT issuance.
Coming to sales, NFTs have become one of the hottest crypto trends of 2021, with overall sales already up by 55% since 2020 with $389 million.
When it comes to buying Non-Fungible Tokens, there are four things you need to be sure of:
- The marketplace you intend to buy the NFTs from.
- The wallet you need to download to purchase NFTs.
- The cryptocurrency you need to fund the wallet to complete the sale.
- The seasonal timings of purchase.
Let’s be clear about one thing: certain NFTs are only available on certain platforms. You will have to wait for one of the card pack drops to be announced; such NFTs can get over in seconds, so you need to have everything ready ahead of time.
Where to buy NFTs?
For NFT traders, here is a list of the most popular NFT marketplaces in 2021:
- Nifty Gateway
- Axie Marketplace
- NFT ShowRoom
Some of the most expensive NFTs
- Dragon the CryptoKitty, valued at 600 ETH, is still the most expensive NFTs.
- The “1-1-1” race car from F1 Delta Time was sold for 415.9 ETH in May 2019.
- The latest sale of Alien #2089 went for 605 ETH. It was also a part of the CryptoPunk collection, the first NFTs ever created.
- Basketball player LeBron James’ NBA digital collectable card was sold for $100,000.
- Angel, an Axie from the NFT-based game Axie Infinity, was sold for 300 ETH.
Popular references of Celebrities who bought NFTs
- Twitter’s CEO, Jack Dorsey, listed his first tweet — “just setting up my twttr” — at auction, with bidding reaching up to $2.5 million.
- Grimes, Elon Musk’s girlfriend, sold some animations she made on a website called Nifty Gateway for a total of more than $6 million.
- American Football player Rob Gronkowski is launching his digital trading cards as NFTs in March.
- $2,08,000 was paid to purchase a video clip that featured the famous Nyan Cat meme, which was sold for nearly $5,90,000 as an NFT.
- A 10-second video clip featuring a fallen Donald Trump sold for $6.6 million on Nifty Gateway.
Future of NFTs
A lot of brands and celebrities like UFC and Shawn Mendez have already signed deals to release their own non-fungible assets soon. It is anticipated that the NFT market will exceed $1.3 billion by the end of 2021 as more artists, brands, and icons utilize this space to create their own tokens. With more blockchains competing to produce better NFT services and a growing range of platforms to choose from, this is a great time to take part in the game!