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Central Bank Wise to Move Cautiously with Digital Currency, Event Hears

‘The Fed seems a little bit more uncertain about’ digital currency versus other nations, another panelist said Tuesday.

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Photo of Eswar Prasad, via Flickr

WASHINGTON, April 21, 2022 – The Federal Reserve is “very wisely moving cautiously” about whether to adopt a central bank digital currency, an American Enterprise Institute event heard Tuesday, as other countries move forward on adopting the latest financial instrument.

“The Fed has been approaching this in a very sagacious manner by putting out the issue for public debate, thinking about the pros and cons and arguing that they will not move forward unless there is broad political and public support. But, I think the reality is this is where we are going, and it’s going to be in some ways an interesting world,” said economist and author Eswar Prasad, who published a book last year called, “The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance.”

“The world of CBDCs is going to be an interesting one,” Prasad said at the think tank event. “And this is certainly what we are moving towards.”

The current conversation surrounding CBDCs in America, which would ride on a digital ledger called the blockchain and are backed by the nation’s dollar, is delayed in comparison with other developed countries that have already made strides in government adoption of federal currencies.

“Among the advanced economies, Sweden’s Riksbank seems nearly dead-set on issuing an e-crono, while the Bank of England, European Central Bank and Bank of Canada are giving CBDCs serious consideration. The Fed seems a little bit more uncertain about it,” Steven Kamin, senior fellow at the AEI, said at the event.

At a Federalist Society event last Thursday, academics argued that such digital currencies backed by other currencies, such as stablecoins, can improve financial inclusion. It has also been said previously that these digital currencies could expedite federal payments to citizens. And because they’re backed by the government, there is a perceived added level of security and trust.

The panelists’ discussion also veered into the developments of China’s CBDCs, which are “nearly operational,” according to Kamin. This could potentially be problematic as the US economy is already grappling with the effects of China being a world leader in the manufacturing and distribution of semiconductors, a key product of important technology.

Experts have previously said that, if the U.S. is to remain competitive on the international cryptocurrency scene, the government must take key steps to solidify its digital currency systems.

Blockchain

IBM Exec Touts Blockchain Technology as Economy Accelerator

Blockchain will be commonplace in the economy ‘within the decade,’ the IBM executive said.

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Screenshot of Jerry Cuomo, IBM vice president of blockchain technologies

WASHINGTON, August 23 – Blockchain technology will speed up the economy in the coming decade in part by making the process of verifying information – such as user identity – more safe, streamlined and efficient, said IBM’s vice president of blockchain technologies at a Tech Forward event on Tuesday.

Jerry Cuomo described blockchain as an “odd duck” type of database with a few defining features, explaining that each blockchain has several administrators, that each transaction must be vetted by the administrators before being recorded to the digital “ledger,” and that transactions, once recorded to the ledger, are essentially impossible to change or delete. Cuomo also explained that each data point – or “block” – in each blockchain is heavily encrypted, which creates high levels of security and user trust.

Although blockchain is most widely associated with the transactions of cryptocurrencies like Bitcoin, Cuomo said it can used for a wide variety of purposes – including identity verification, food safety and intra–supply chain communication. For example, Cuomo suggested that instead of making hundreds of accounts on various websites, a user may soon be able to have a single, blockchain-based identity that would be accessible whenever verification is necessary.

Cuomo said he believes food safety, for example, can be improved by using blockchain technology to document salient information about food conditions during transport. IBM Food Trust is a blockchain-based service that the company says allows participants to track a food product throughout a given supply chain and to ensure that it is safe, fresh, and sustainably sourced.

The company said it offers a wide variety of blockchain services. IBM’s supply chain service, for instance, promises “data integrity and faster reconciliation,” features that are made possible by the immutability of each blockchain record once it is entered into the ledger.

As for the timetable on blockchain technologies becoming commonplace in the economy? “I think its within the decade,” said Cuomo. “This is not an ‘if,’ this is a ‘when.’”

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Commodity Futures Chairman Calls for Single Regulator as Crypto Falls and Fraud Rises

‘Our guiding principle at the CFTC must be to stop fraud or harmful conduct that harms our markets.’

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Screenshot of Rostin Behnam, chairman of the CFTC from Monday's Brookings event

WASHINGTON, July 26, 2022 – In light of dwindling crypto stock prices and reports of the increasing risk of fraud associated with the digital currencies, the chairman of the Commodity Futures Trading Commission said at a Brookings Institution event Monday that there needs to be more regulation.

Rostin Behnam said amid the crypto market chaos, regulation is needed to protect Americans. Since the beginning of 2021, “More than 46,000 people reported losing over a billion dollars in crypto to scams” and that the median loss per individual was $2600 from crypto, Behnam said.

“Our guiding principle at the CFTC must be to stop fraud or harmful conduct that harms our markets,” Behnam said, explaining the need to use CFTC authority to bring justice to those who harm our markets. However, without current regulation, Behnam added that “existing ambiguities force hard decisions at the CFTC.”

Behnam praised recently introduced legislation – the Responsible Financial Innovation Act –which proposes a regulatory framework for cryptocurrency under the CFTC’s authority. “I’m encouraged by the bipartisan, bicameral support for legislation that recognizes the need for guardrails around the digital asset economy,” he said.

Behnam has previously pitched his commission as the preferred regulator. In February, he said there needs to be a single regulator to “fully police conflicts of interest and deceptive trading practices impacting retail customers.

“The CFTC is well situated to play an increasingly central role in overseeing the cash digital asset commodity market,” he said then.

Until then, Behnam said the CFTC is monitoring how it can get mitigate some harms in lieu of legislation. We “need to constantly monitor risky behavior,” he said, adding the commission is thinking “creatively about how [to] use existing regulatory authority to root out fraud and manipulation in the market.”

There has been debate about what type of regulation should be imposed on the digital currencies and who should be administering that. Some have suggested that there should be a singular regulatory body, as there is confusion as to whether the currencies are commodities or securities, which would but them under the purview of the Securities and Exchange Commission.

In June, the Department of Justice announced four cases of criminal offenses of cryptocurrency fraud, one of which was the largest non-fungible token scheme ever brought. All cases involved over $100 million in losses.

“As cryptocurrency marketplaces advance and offer new opportunities for consumers, criminals also seek ways to exploit them,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division.

“We have moved past the stage where digital assets were once a research project,” Behnam said. “There is a critical need to educate and protect the public.”

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Hunter Abramson: Why Ticket Sales are the Next Stage of Non-Fungible Tokens on the Blockchain

NFT ticketing also enables a safer, fairer secondary market.

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Author of this Expert Opinion is Hunter Abramson

Many new technologies tend to evolve rapidly, and that has particularly been the case with non-fungible tokens. It’s a technology that has shown vast potential, and early adopters picked up on this, starting an early — and short-lived — NFT craze that has since passed its initial height. However, new developments in NFTs have led to a possible course correction with exciting implications for the blockchain and every industry it touches.

The issue with early NFTs, and what caused the trend to be met with such initial hesitance, is that the general public is hesitant to accept anything without a tangible benefit to them. However, the recent trend towards utility NFTs — in other words, NFTs that offer some value or benefit to the user beyond the string of blockchain code they are composed of — has opened up the door to numerous opportunities for their implementation in various industries.

Why NFTs are the future of ticketing

The ticketing industry is a perfect match for the NFT revolution. For one, the technology used in the ticketing industry has been around for decades. QR codes, which make up most ticketing operations, were introduced in the 1990s, and the barcode system two decades before. The industry has primarily operated on an “if it isn’t broke, don’t fix it” mindset, but it is time that leaders begin to embrace this shift towards newer, better technologies.

NFT ticketing will help combat many issues plaguing the ticketing industry right now. Fraud will be discouraged — if not entirely eliminated — thanks to the blockchain technology upon which NFT tickets are built. Blockchain code is virtually impossible to replicate, which means that fake tickets cannot be produced. When combined with the revolving QR code technology that has been implemented in NFT ticketing systems, this means that virtually no money will be lost by event organizers, and thus, no unhappy customers being scammed.

From the consumer’s perspective, there aren’t many differences between using an NFT ticket and a standard ticket. Like any other ticket, you simply scan its code and enter the event. But the greater security features will assure customers they aren’t being ripped off, and the pre, during, and post-event benefits that come along with an NFT ticket will be highly desirable.

After a ticket is scanned, the ticket becomes a collectible NFT in the ticket-holder’s Ethereum-based digital wallet. For one, it’s a unique souvenir that fans can keep to remember their experience of going to the event, but the NFT could provide value in and of itself. Trading and selling the collectible NFT after the event could continue its influence long after it is over.

Building a community with NFT ticketing

In addition to these utilities, NFT ticketing benefits from the feeling of community that is associated with going to events. For example, because concerts are generally attended by fans of the artists performing, attendees are relatively like-minded in their interests, creating a built-in audience for NFTs. Many NFT projects fail due to a lack of community support, but with NFT tickets, there is no need to build that community from scratch.

NFT ticketing also enables a safer, fairer secondary market, further establishing that sense of community and protection for the consumer against ticket scalping or fraud. Thanks to the built-in verification of blockchain, Consumers are able to buy tickets on the secondary market without worrying about whether or not they are legitimate. Furthermore, blockchain technology prevents massive purchasing transactions. thanks to its more easily verifiable record-keeping, meaning scalping in the secondary market is substantially reduced, if not outright eliminated.

These advantages offered by NFT tickets show the potential of the technology to make the consumer experience significantly better. Many NFT projects have failed because of their lack of utility — and thus, relevance — to the user and inability to form a community around them. NFT ticketing is not susceptible to either of these issues, making them the future of NFT technology.

Throughout his career as a marketer, Hunter Abramson has contributed to all aspects of experience, from cross-promotional marketing to operations to ticket sales. He always pushes the limits to create positive experiences for both the enterprise and the consumer. He is currently the co-founder and CEO of Relic Tickets, which aims to disrupt the ticketing industry with NFT tickets.This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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