Alibaba, Tencent, Five Others To Receive First Chinese Government Cryptocurrency
Weekly Market Recap
Aug — Crypto assets decreased 5.4% this week, bringing the total market cap down to $246 billion. The Crescent Crypto Market Index (CCMIX) was down 8.4% while BTC lost 7.0 % over the same period.
The crypto market saw a significant sell-off after a slight recovery last week. The total value of the crypto market has dropped around 6.8% month-to-date, with Bitcoin dropping 1.2%. Bitcoin performed in the top portion of digital assets as a whole this week. Bitcoin outperformed most other CCMIX constituents and all other Crescent Crypto indices.
Bitcoin vs. CCALT vs. CCDARK vs. CCSMART
Aug 23rd — Aug 29th, 2019
Market Index Constituent Performance
Aug 23rd- Aug 29th, 2019
- BTC outperformed almost all other large-cap constituents, finding itself down 6.12% on the week.
- The CCMIX saw strong losses this week, with all 17 constituents ending the week in the red. 11 constituents ended the week in the red with double-digit losses.
- ONT was the best performer this week with a 5.5% loss. ONT was one of the few smart-contract assets that outperformed other constituents.
- The CCMIX decreased by 8.4% in value outperforming CCALT, CCSMART, and CCDARK indices. The CCALT index performed second best with a 10.2% loss.
- ATOM was the second-worst performer this week down 18.3 %. This comes right after being the worst performer last week posting a 7.4% loss. Smart-contract platforms, in general, saw poor results as ETH and TRX lost around 11% and 12% week-over-week.
- LINK was the worst performer this week down 20.8%. This comes after posting a modest 2.7% loss last week,
- BTC dominance increased slightly to 69.2% of the total crypto market cap compared to 68.9% last week.
China’s central bank plans to launch a state-backed cryptocurrency within the next few months. This currency will initially be issued to seven institutions: including, the Industrial and Commercial Bank of China (the largest bank in the world), the Bank of China (the second largest bank in the world), the Agricultural Bank of China, Alibaba, Tencent, and Union Pay (an association of Chinese banks). Per Forbes, an anonymous source confirmed that the technology behind the currency has been ready since 2018 and could launch as soon as November 11th. The said institutions will be responsible for distributing the cryptocurrency to Chinese citizens. As of now, the currency is dubbed DC/EP (Digital Currency/Electronic Payments). The two-tiered strategy, where the central bank creates the currency and others distribute it, aligns with previously unreported statements made by Mu Changchun, deputy director of the Paying Division of the People’s Bank of China (PBOC).
Why Does This Matter?
The PBOC’s plan to use trusted institutions to distribute their cryptocurrency is similar to other ideas currently percolating around the world. Facebook’s Libra will be backed by a basket of currencies and bonds and supported by companies like Mastercard, Uber, and Vodafone. Another instance of this idea was set forth by Bank of England governor Mark Carney who suggested the idea of a new currency backed by several central banks to replace the U.S dollar as the global reserve currency. The innovation and disruptive developments in money are staggering, and only further solidifies the importance of digital assets in the coming centuries. On one hand, these central bank digital currencies are not necessarily a net positive for society, but on the other, they implicitly increase the value proposition of decentralized assets a la Bitcoin. The DC/EP will ultimately increase PBOC monetary surveillance and control. Bitcoin as an uncensorable, store-of-value asset becomes all the more important.
Binance, one of the leading cryptocurrency exchanges, announced the launch of its lending business. Binance Lending is now available for customer subscription on a first-come-first-serve basis starting on August 28th. Binance Coin, Tether, and Ethereum Classic are the first three assets available for lending at 15%, 10%, and 14% annualized rates. There is a cap on the subscriptions: 200,000 BNB, 5,000,000 USDT, and 20,000 ETC. This equates to around 1150 BNB, 19178 USDT, and 53 ETC in interest payouts. The company said it will be “constantly evaluating new coins and tokens to support as lending products based on demand” and new products will be revealed weekly on Monday and become available for subscription on Wednesday.
Why Does This Matter?
Binance appears to run its lending business similarly to its IEOs by limiting the supply of their offering. This is another move illustrating the overarching trend of exchanges heavily diversifying their business model whether it may be OTC services, lending services, research, margin, futures, custody, and exchange offerings. Binance may be the best in the business when it comes to this. This news came shortly after CZ announced Binance’s move towards margin and futures trading. It remains to be seen whether or not these new business lines significantly increase Bianace’s user retention. It will also be interesting to see whether or not BNB will have new economics designed around these new business lines.
Andrew Yang, one of the democratic candidates for the 2020 U.S presidential election, has gone on the record wanting to modernize the voting process via blockchain technology. Yang stated that it is ridiculous that in 2020, Americans still stand in line for hours to cast a vote in booths, and that blockchain can solve this issue. He went on to say “It is 100% technically possible to have fraud-proof voting on our mobile phones today using the blockchain… This would revolutionize true democracy and increase participation to include all Americans — those without smartphones could use the legacy system and lines would be very short.” Yang concluded, “As President, I will…work to modernize our voting infrastructure to utilize modern technology to make it easier and more secure to vote, thus increasing the number of Americans participating in our democracy.”
Why Does This Matter?
While blockchain voting comes with its own inherent risks and challenges, it is a positive signal that a presidential candidate sees the benefits and use cases of blockchain technology. Yang is known to be one of the few crypto-friendly candidates. His supporters launched a super PAC that accepted bitcoin donations earlier this year. Blockchain voting has some significant hurdles, but with that said, a hybrid approach for verification would most likely offer a better solution than the current voting process.