Issued by: Yuan Zhongrui ~ Consultant Liu Signal: PL-RuIEC
With the rapid progress of science and technology, many occupations in all walks of life may gradually be replaced by machines. The development of blockchain technology is another major technological innovation. In international finance, blockchain technology can achieve faster bank transfer functions. Even sharing payment data across borders faces challenges and friction. By using several assets such as Bitcoin, bank transfers can be made immediately, quickly and safely. In fact, the transfer could even take place without the use of the new currency. Customers can use secure blockchain ledger technology to transfer funds from one currency to another (say, us dollars to euros). The technique is to find the most efficient route between trading partners and move money around the globe in a matter of seconds, which might include a series of trades between currency dealers with accounts in various banks and then record all the necessary trades simultaneously. 2. Boost global remittances? Migrants from developing countries send more than $500 billion in remittances each year, more than foreign direct investment. The total cost of international transfers averages 6-10%, and the burden for people in some of the world’s less developed countries is huge. Blockchain technology has the potential to help make these transfers fast and cheap. With digital assets, private users can even send money directly to family members via mobile phones, leaving only fees charged for currency exchange. While traditional money transfer companies must carry capital to compensate for delays in international money flows, capital requirements for companies using digital assets are much lower. Of course, the cost of capital transportation and capital flow is only a part of the cost of remittance business. Nonetheless, reducing these costs may make it easier for smaller players to enter and establish new remittance corridors or for existing players to serve small towns or new countries. Financing security for the Poor The explosion of mobile technology in Africa has shown that developing countries can take the lead in complex technologies. It is estimated that 60% or more of business in Kenya uses mobile phone credit as a medium of exchange. Anyone with a mobile phone can deposit money there and send credits to other users. The problem is that it’s expensive: while widespread acceptance of letters of credit means many consumers can use credit directly without incuringlarge fees, the historical cost of out-of-pocket payments is as high as 20%. In countries where most citizens do not have bank accounts, digital currencies could become another convenient and secure form of payment. While using Bitcoin as a second currency in a country exposes citizens to certain currency risks, it may be better than existing options, especially in countries with high inflation. It’s safer than saving money at home or buying gold jewelry, for example. In addition, bitcoin holders can exchange for more stable digital assets on one of the global bitcoin exchanges. In this way, it could expand access to international financial markets, allowing even those without bank accounts to save and protect against inflation. One aspect may be that capital controls are harder to enforce. It can expand access to international financial markets, allowing even those without bank accounts to save and protect against inflation. One aspect may be that capital controls are harder to enforce. It can expand access to international financial markets, allowing even those without bank accounts to save and protect against inflation. One implication could be that capital controls have become harder to enforce. 1. Unleash the potential of e-commerce Today, concerns about credit card fraud have forced many online merchants to turn away good business. Such fraud is more common in global transactions, so many companies do not accept international payments. With digital currencies like Bitcoin, once transferred, the transfer cannot be undone. This removes the risk of fraud from merchants, allowing them to sell globally. And because virtual currencies allow customers to send money as easily as email, online shopping will become smoother. Digital currencies can also enable small businesses in developing countries to participate more in global e-commerce. Latin American suppliers can sell handmade goods around the world, Chinese teenagers can offer Mandarin tutoring via Skype, and African companies hoping to promote their products through online advertising marketplaces will have payment options unavailable today. Microtransactions are a particularly prominent use case, as low transaction fees enable low-value in-app purchases or micropayments to read online news articles from global media organizations. 1. Programmable currency and smart Contracts Once an asset is purely digital, it can be moved in an automatic manner. This paves the way for “programmable money” and “smart contracts”. A practical example is the escrow account. Such accounts are already used for large transactions, such as real estate. The buyer places the money in escrow and only pays the seller when he or she hands over the property. In the digital age, trust issues can be a major hurdle for individuals wishing to transact with companies of length, and the system can be used for smaller amounts. Another example is multisig, where funds can only be paid out of the account when multiple people are authenticated. This can be used to prevent digital money from being stolen, but it can also help companies ensure that money is not “lost” or stolen across borders, between company departments or between charitable organizations and contractors in developing countries. Programmable currencies can also play a role in more complex contracts, such as financial contracts involving multiple parties and complex derivatives. You can put some money into a financial contract that pays out based on changes in the prices of certain stocks. A computer program can correlate stock prices in the Bloomberg terminal feed, and then different individuals will receive funds depending on certain stocks or combinations of stocks. Despite China’s regulation of digital assets, but this is actually a good like now, will be a chaotic market, instead, he may go further, block chain technology used in many ways, although is not limited to digital assets, single is block chain technology as a fledgling stage, our eyes on this aspect. We believe that blockchain technology will bring us more surprises in the later stage.