Rehashed - #6 From Credit Cards to Cryptocurrencies

The Credit Card Curse

New Zealand appears well on its way to becoming a cashless society. In fact, two-thirds of New Zealanders rarely carry cash anymore. Transferring value more efficiently should be a good thing right? Well strangely, it appears that favouring digital cash over its physical ancestor, is currently costing us more.

Payment goliaths Visa and Mastercard have a powerful grip over merchants in New Zealand. According to Retail NZ, merchants are charged twice as much per transaction as their equivalents in Australia, and between three and six times as much as retailers in the U.K. In most cases, these fees are passed onto the consumer.

The cost for a retailer to accept credit card payment varies wildly between countries, sourced from Stuff NZ

Of course, where there is inefficiency there is opportunity. Many believe that blockchain technology can be leveraged for payments, undercutting major players like Visa and Mastercard in the process. By eliminating the middleman, (in this case the payments processor), fees can be meaningfully reduced for end-users. It’s becoming obvious that public blockchains do not have the throughput to handle payments at scale, but viable off-chain solutions are coming to the party, with the Lightning Network continuing to check off technological milestones.

Furthermore, we’ve seen local projects such as Choice spring up in the face of this issue. And don’t discount Visa and Mastercard, who already boast the scale to implement such technology. Last year, Mastercard filed a patent for instantaneous payments using blockchain technology and Visa has begun trials for its proprietary blockchain payments platform. Inefficiencies in the world of payments won’t be eliminated overnight but will continue to be a targeted use case within the blockchain space.

 

Full Speed Ahead

The cryptocurrency market continues to show increased signs of maturity. In an environment where prices of the top 20 cryptocurrencies (by market capitalisation) currently sit at an average of -55.8% from all-time highs, interest in the crypto ecosystem is showing no signs of slowing down.

This past Wednesday saw the largest volumes to date for Bitcoin futures contracts on the U.S. derivatives exchange, the CBOE. This is a noteworthy, as the futures market is often a good indicator of institutional investor interest. MarketWatch, a popular go-to platform for finance and market information, is adding numerous cryptocurrencies to its offering; releasing tracking tools for Ether, Ripple, Bitcoin Cash, Litecoin, Ethereum Classic, Monero, Dash and Zcash. Prominent U.S. equities exchange, Nasdaq has partnered with Gemini (crypto exchange led by the Winklevoss twins) to leverage their market surveillance technology to detect fraudulent trading activity. Furthermore, Nasdaq CEO, Adena Friedman, stated that Nasdaq would be open to becoming a cryptocurrency exchange. It’s not hard to see why legacy Wall St. is open to such leaps- large global crypto exchanges are making a killing.

Over in V.C (Venture Capital) land-based off their latest job postings, Andreessen Horowitz (a16z) is launching a separately managed fund focused primarily on cryptoassets. This hardly comes as a surprise, considering that a16z have made multiple investments in the blockchain ecosystem and Marc Andreessen was raving about Bitcoin in 2014 but demonstrates further faith in the growing space from a leading V.C. firm. Even Kanye is getting behind the decentralized movement. Seriously though, I’m expecting him to make a big crypto-related announcement after these Twitter hints.

The list of continuous progress goes on and on, and I can’t help but think that the crypto bug is slowly but surely morphing into an antibiotic-resistant probiotic bacteria that is not going away anytime soon. As someone who has been through many cryptocurrency market cycles, it finally feels like we are seeing true organic growth and more widespread penetration throughout the more traditional corners of the global marketplace.  

 

In the News

Researchers from Victoria University in Wellington unveiled a theoretical approach for a quantum blockchain that works like a time machine. Techcrunch reported on their findings and their paper can also be downloaded if you want to test your quantum computing theory.

Fonterra and the NZ Post are teaming up with Alibaba to utilize distributed ledger technology to increase transparency in the food supply chain.

The NZ Herald reported on the Central Bank of Iran banning cryptocurrencies in an attempt to stifle money laundering and terrorism.

V.C. backed and San Francisco-based Stronghold exchange is setting up a secondary base in Canterbury. They are hoping to get a regular local Stellar meetup on the cards.

The 17 millionth bitcoin has officially been mined. As per bitcoin’s code, there will only ever be another 4 million put into circulation in the coming years.

Institutional investors continue to put their weight behind bitcoin’s potential as digital gold, with Pfeffer capital declaring it a superior store of value.

Mt Gox’s bankruptcy trustee has moved 16,000 BTC and 16,000 BCH out of cold wallets to an unknown wallet address.

Bitcoin’s Wikipedia page came in as the 9th most popular page on Wikipedia last year, closely behind the “United States.”

Upcoming Dates

May 3rd - Finance and blockchain workshop with Tech Futures Lab in Auckland

May 5th - Machine Learning Workshop with R in Auckland

May 19-27 - NZ Tech Week, events are nationwide

May 21st - FinTech Regulatory Roundtable Open Banking Panel in Auckland

June 19 - Blockchain Technology Conference in Auckland

Thanks for your company, stay tuned for next week’s edition of Rehashed.
Freddie Archibald


 

About the author:

Capital markets to crypto convert. From Christchurch →  Boston → New York, Freddie became intrigued by the potential of the digital asset economy after plucking a book on Bitcoin off a New York library bookshelf in 2016. Her parents are thrilled that she is chasing magic money on the internet.

Disclaimer:  The above references an opinion and is for informational purposes only. The opinions expressed by the author do not represent the opinion of BitPrime.

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