2016 has re-established Bitcoin’s status as a formidable digital innovation, capable of replacing traditional methods of payment. After being crippled by numerous controversies, the cryptocurrency has slowly gained traction with numerous applications. With the adoption of the currency on the rise, more positive news came this week with Bitfinex’s latest decision:
Bitfinex reimburses first wave of customers
On 1st September, the Hong Kong bitcoin exchange revealed it had purchased more than 1% of the blockchain debt tokens it issued to users in August as a way to pay them back for losses it incurred in a debilitating hack. While a small step to recovery, analysts were largely positive about this move. The exchange announced that it would purchase the tokens at an above-market value of $1 each. This is roughly double the market value when the redemption took place. Since issuance, the value of tokens has fluctuated, but never approached the $1 mark promised by the exchange. This sparked prominent concerns, as Bitfinex have to seek to buy back its own liabilities at a discounted market rate.
However, many still harbor doubts about the exchange, which lost roughly 120,000 BTC ($70m) in a security breach. This is mainly centered around how it will navigate its complicated financial situation going forward.While Bitfinex’s efforts are respectable, whether the exchange is committed to “full recovery of lost coins” is to be seen.
California Pension Fund considers Blockchain
California Pension Fund manages over $300bn in assets making it the largest public pension fund of its kind in US. Board members of the California Public Employees’ Retirement System (CalPERS) recently took part in a discussion on blockchain technology. This was as part of a broader conversation about future investment opportunities. CalPERS itself already has some exposure to the bitcoin and blockchain industry indirectly. It has invested in Blockchain based startups like Chain, Blockstream, 21 Inc and BlockScore. Currently whether CalPERS moves to more directly invest in the industry remains to be seen.
China Merchants Bank Joins R3 Blockchain Consortium
China Merchants Bank has become the latest Asia-based bank to join the R3 blockchain consortium. The commercial bank, founded in the late 1980s, is the second financial firm in China to join the initiative. The bank, which claims to hold more than $390bn in assets, has offices in both China and abroad. This includes New York where R3 is headquartered. Tianhong Zhou, IT general manager for China Merchants Bank, expressed his enthusiasm for the project. He believes blockchain holds “great potential” for the financial industry.
“We look forward to working together with R3 to deliver the innovation required to improve a range of financial services and processes.”
After the Baidu’s ban on Bitcoin advertising, this is a welcome change from a financial firm based out of China. What impact all these events would be having on prices is to be seen.