Payments Archives

Dubai Government to work on citywide Blockchain payments system

Posted on April 19, 2017 | by [email protected]

When it comes to infrastructural development for citizens or technological innovations for smooth governance, Dubai has always managed to strike the perfect balance. One such live example is the advent of the use of blockchain Technology even before any other world government has realized its full potential. With the crowned prince of Dubai focusing heavily on Fintech, one of the leading oil producers is now all set to revolutionize the payments territory. The government has partnered with a blockchain firm to launch citywide payments based on blockchain technology. Let’s dive into the details of how Dubai has come this far and what is the future of blockchain looking like in the country:

Dubai puts government documents on blockchain:

The Crown Prince of Dubai recently announced strategic plan that would see all government documents secured on blockchain by 2020. The prince revealed that the goal of this initiative is to open the platform to other cities around the world. The main objective of this move is to speed up government transactions and be able to provide transparency to public. The transparency will also set in for governments of other countries who are coordinating in this process. All in all the overall result would be the increase in the efficiency of government operations.

The Blockchain Payments system:

The Smart Dubai Office, a government-backed initiative has partnered with a FinTech specialist firm to implement a citywide payments platform built on blockchain technology. The firm Avanza Solutions, signed a MoU in the presence of Hamdan bin Mohammed, the hereditary Prince to the crown of Dubai. The citywide project planned by the Smart Dubai Office will see a rollout of the blockchain payments platform to all existing 38 partner government entities, financial institutions and other departments in the city of Dubai. Avanza’s proprietary blockchain ‘cipher’ has been chosen for carrying out the initiative.

“Smart Dubai Office plans to roll out Cipher across all its existing 38 partner government entities, partner financial institutions and Departments to set up the first blockchain based building block within its financial plumbing.”

Influence of Bitcoin and Blockchain on the Middle East:

Very recently the Bitcoin p2p transaction volumes in Saudi Arabia reached an all-time high, with an increase of over 280%. Dubai’s fintech initiatives have been promising with the crowned prince actively looking into the fintech developments of the state, the ledger based technology has clearly gained traction. With government documents already made available through blockchain, it’s only a matter of time before blockchain finds its place in governance.

Indian Government forms committee to examine framework for Bitcoin: Bitcoin most likely to be made legal

Posted on April 15, 2017 | by [email protected]

India has never legally banned Bitcoin or other cryptocurrencies but traditionally employed a hands off approach towards them. They have always maintained that they are not currently versed with the technology required to monitor digital currencies and would take sufficient time before formulating a framework that enables them to do so. With increasing Bitcoin volumes on Indian exchanges and circulating petitions to legalize Bitcoin, the Indian Government has now been put in a position where inventing a framework to regulate Bitcoin has now become a necessity. Let’s look into how Indian Government is planning to formulate the framework:

The perfect set-up:

In November 2016, when the Prime Minister of India banned higher denomination currency notes and took a good couple of months before bringing new denomination into circulation. During this period, the government’s initiative has been to motivate the populous into shifting more towards digital payments. Digital payments application companies that enable micropayments like Paytm and Freecharge have enabled this transition and helped for more centralized regulation of transactions. However, a byproduct of this move was the rise of Bitcoin transactions within and in and out of the country. The BTCINR trading prices were over 20% than the premium depicting the boost the cryptocurrency received during this period. This has laid down the foundation for consistent adoption of Bitcoin in India and forced the government into finding ways to regulate it.

The proposed committee:

The Inter-disciplinary committee established by the Indian Government includes the Central Bank, prominent members from the ministry of Finance and other prominent financial bodies to delve into the framework requirements of Bitcoin regulation. Earlier in February, India’s Bitcoin ecosystem consisting of young companies and Bitcoin businesses established a private self-regulatory body to proactively prevent illegal use of the cryptocurrency. The formed government committee would produce a report on Bitcoin basing on the underlying technology, its usage in India and regulations across the world. If India goes down the path of legalizing Bitcoin, it would be a valuable addition to the Bitcoin adoption space. The Asian Bitcoin ecosystem is already enriched with Japan and Philippines embracing the cryptocurrency and giving it a legal status. With Russia and India looking forward to regulate the cryptocurrency, things seem very positive for the cryptocurrency.

Task order for the committee:

The announcement from the Indian Government had the following excerpt:

“The circulation of Virtual Currencies which are also known as Digital/Crypto Currencies has been a cause of concern….Reserve Bank of India [the country’s central bank] had also cautioned the users, holders and traders of Virtual currencies (VCs) including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.”

The task order laid out for the committee in the next three months are as follows:

Checking on the present status of Virtual Currencies both in India and globally
Examining the existing global regulatory and legal rules of compliance governing Virtual Currencies
Suggest measures for dealing with such Virtual Currencies in areas such as consumer protection, money laundering, etc; and
Examine any other matter related to Virtual Currencies which may be relevant.

Can Blockchain speed up Post Trade Processing?

Posted on February 28, 2017 | by [email protected]

The inception of cryptocurrencies has added a lot of value to the financial markets and the business of transactions. However what came as a blessing in disguise is the ledger based technology that has huge potential in disrupting trade finance and settlements. Similarly, Post-trade derivatives processing is a complex and important part of everyday global financial markets. As blockchain-inspired technology for financial services continues to mature, post-trade infrastructure providers are collaborating with the industry to explore how it can be used to increase the efficiency of systems and processes driving the contracts of the global derivatives markets.

Post Trade Processing Overview:

When a trade between two parties has been confirmed on a trading platform, a ticket is passed to both sides, allowing them to carry out post-trade activities. Both parties receive a digital representation of the commercial contract into which they have entered. As time passes, real-world facts (e.g., price movements) are taken into account and the contract might be revalued. Parties then agree on what action is to be taken (who pays whom, how much of what) and settle the contract.

Traditionally, this process involves multiple systems within each organization, independent data storage etc either directly between the two parties or against a third-party intermediary.

How Blockchain can fit:

Instead of recalculating the market pricing at every step and renegotiating the stance, any calculation performed during the trade’s lifecycle would anyway use exactly the same input data. Hence storing the input data functions into Blockchain by mutual consent would allow for processing even at a very later stage.

This means that the reconciliation of data is built-in at every step, reducing process overheads. Payments can also be made with immediate effect, if the ledger has a representation of the cash or asset being paid. This can also be calculated and disbursed with appropriate mutual consent. This programmable blockchain post processing methodology might be exactly what markets need right now. Built into the foundation of distributed ledgers, the information can be also monitored even after long periods of time to check for compliance issues if required.

Japanese Bank to power payments through IoT Devices, push for a cashless society

Posted on February 7, 2017 | by [email protected]

When it comes to Fintech innovation and regulation, Japan has shown full perseverance over the last decade. It has placed innovation at the core of its developmental objectives and carefully maneuvered through the various challenges the country has faced in terms of calamities. Owing to the convenient technological topography, Bitcoin was able to thrive fluently in Japan. Proponents of the cryptocurrency would surely remember about Mt.Gox debacle and the drama that ensued which affected Bitcoin development for some time. Recently Japan’s Mizuho bank announced the development of Fintech payments platform for IoT devices. Let’s delve into the details of the announcement and the impact:

IoT Payments Overview:

The Internet of things is the internetworking of physical devices, vehicles (also referred to as “connected devices” and “smart devices”), buildings, and other items—embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data. The idea of IoT powering payments is not new and has been under experimentation by various Tech giants. Smart watches, mobile phones and other gadgets have been piloted as simple payment devices by many companies.

Mizuho Bank’s plan:

Mizuho bank is planning to develop a secure Fintech payment platform to be used by connected IoT devices such as smart devices, home devices, phones, cars and wearables. In order to develop the platform for IoT devices, Mizuho will partner with SORACOM Inc., a Japanese IoT platform provider. Cellular SIM cards and circuit cards that are commonly found on all smartphones and communication devices will be used by the bank. This enabled connectivity will be jointly developed by the bank and the connectivity provider, with SORACOM’s IoT platform used as the core technology.

What this would mean for Bitcoin and digital currencies:

A IoT connective payments platform would certainly improve the prospects of Bitcoin adoption. With the evolution of the platform, there would be heavy demand for fiat to cryptocurrency conversion apps and might even pay way for Bitcoin payments platform. Additionally Bitcoin itself has numerous applications in the IoT world owing to its micro-payments feature. This would lead to possibilities where Bitcoin usage oriented applications would power IoT. This might even lead to the development of an IoT Payments platform Bitcoin ecosystem that will thrive on micro-payments and real time applications. How feasible this platform would be and contribute to Japan becoming a cashless society, only time will tell.

Stripe Valuation to reach $9.2 billion, Positive news for Bitcoin?

Posted on November 28, 2016 | by [email protected]

Founded in 2011, ‘Stripe’ is an American technology company, operating in over 25 countries. The company allows both private individuals and businesses to accept payments over the Internet in many forms. Apart from the payment services, Stripe focuses on providing the technical, fraud prevention, and banking infrastructure required to operate online payment systems. Flooding major headlines, Stripe’s valuation has raised $150 million to fund their expansion operations taking the valuation to a total of $9.2 billion. This cements its status as a major player in the crowded digital payments space, heralding a possible initial public offering. Let’s look into the growth of Stripe and its implications on Bitcoin:

What Stripe does?

‘Stripe’ focusses on online payment channels and how various technologies can be leveraged to ease the experience for customers and retailers. Using Stripe, web developers can integrate payment processing into their websites without having to register and maintain a merchant account. For small scale retailers, this offering is a blessing in disguise. Stripe has a two-day waiting period for initial transactions, during which time it profiles the businesses involved. Later it builds a safe shield to protect against potential fraud. Stripe then transfers the funds directly into the bank account linked to the payee.

Stripe’s investors and backing:

The increase in the rate of online transactions and the higher demographic going ‘cashless’ has made this market viable. Understanding the potentiality of the market, John and Patrick Collison founded Stripe in 2010. The list of investors for Stripe includes: Y Combinator, Peter Thiel, Sequoia Capital, Andreessen Horowitz, General Catalyst, Redpoint Ventures, Chris Dixon, and Aaron Levie. Stripe’s valuation depends on the fact that more commerce will move to mobile apps even when people are in stores. Hence the company capitalizes on this open market space of mobile and electronic payments.

Stripe and Bitcoin payment processing:

In March 2014, CEO Patrick Collison announced that Stripe would support bitcoin transactions. Owing to the zero-fee structure of the Bitcoin network, the cryptocurrency immediately became an integral part of the payment app. The current round of funding is aimed at expansion of the company. Wayne Gaybrick, Stripe chief financial officer, said Stripe raised the funds to acquire companies and invest in global expansion. Stripe has acquired three firms and launched in France, Japan, France, Singapore and Spain this year. As Stripe is looking out for cross border transactions with the trail of expansions, this might be positive news for Bitcoin adoption as that would be the fastest and easiest method of payment across borders.