Volume of Bitcoin Trades Continues Surge in Brazil

Bitcoin Magazine
Volume of Bitcoin Trades Continues Surge in Brazil

Volume of bitcoin trades in Brazil increased rapidly in Brazil since May. Over the last few months, the volume of all bitcoin trades have risen from US$1.65 million to US$2.6 million, showing a 158 percent monthly increase in trading volumes across all exchanges.

In August, Mercado Bitcoin, the largest bitcoin exchange in Brazil alone has processed 28.48 percent of all market share or US$740,480 worth of bitcoin trades.

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Image via bitValor

According to BaseBit founder Daniel Novy, the majority of bitcoin-related news presented by major news outlets in Brazil is negative and affects the potent Brazilian population that is underbanked and underserved by financial institutions.

Despite the negative image of bitcoin built by the media, many merchants are becoming more open to using bitcoin, due to its low transaction fees and high international exchange rates. With the strict financial regulations in countries like Argentina and Brazil, it is extremely difficult to move the local currency out of the country. Bitcoin in contrast, has a high international exchange rate, allowing merchants to store their income in a liquid currency or asset.

“The problem we have in Brazil is that the only news that becomes mainstream is the bad ones. Bitcoin has a bad reputation here but anyway the merchants are definitely being more opened to it,” Novy told Bitcoin Magazine.

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Image via bitValor


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Blythe Masters and Wall Street Opt for ‘Permissioned’ Non-Bitcoin Blockchains

Major banks and mainstream financial institutions are warming up to the blockchain technology that powers Bitcoin, and launching internal experiments and pilot projects to find out how they can use the blockchain.

However, most banks frown at the chaotic anarchy of public “permissionless ledgers” like the Bitcoin blockchain, where any individual anonymous user can join and contribute hashpower to verify transactions without having to ask anyone’s permission. Instead, they would prefer “permissioned ledgers” owned and by the banks, which can be operated only by vetted players. Think of “BankCoin” blockchains that only the banks and the authorities have access to.

Since this trend appears to be rising fast, many startups are developing infrastructures for permissioned ledgers.

SETL is a permissioned ledger system that aims to be as palatable to top-tier banks as possible, with a view to moving cash and assets immediately and achieving settlement finality of transactions, International Business Times reports. The brainchild of hedge-fund investor Anthony Culligan and Peter Randall, former CEO of leading equities market Chi-X Europe, the SETL blockchain system runs alongside and can be integrated into existing systems.

“If you make the assumption that the nodes are actually basically benevolent to each other, which they are, of course, if you have got identity attached to it, then the type of cryptography and, therefore, the time it takes gets a lot easier,” said Randall, who is persuaded that vetted identities and capacity within a blockchain system are usefully related. “[I]f you are not talking in the tens of thousands per second, and possibly hundreds of thousands per second, in terms of transactions for financial services globally, you are crazy.”

Following this logic, Randall sees a possible scenario where the major financial players operate their own private blockchains, “a UBS chain and a Deutsche Bank chain and a Morgan Stanley chain and a JP Morgan chain and so on.” But he is persuaded that the BankCoins would eventually have to become interoperable for global reach and increased efficiency.

SETL’s network would work in the same way as the bitcoin blockchain, generated from each participant’s server. The ledger of transactions would be stored on these servers, with encryption, but regulators or auditors would be given access to identify the parties involved. “We want to unlock the power of the blockchain for financial markets,” Randall said an interview as reported by Reuters. The technology will be regulator-friendly and “permissioned,” meaning that participants’ identities can be derived by regulators and auditors if required.

A similar position was recently formulated by two Accenture representatives.

“To be used by financial institutions, including capital markets firms and insurers, blockchains must supplant the costly methods introduced by bitcoin with a mechanism that guarantees security, privacy and speed without paying for anonymous consensus,” they said.

Bloomberg Business is running a profile of Blythe Masters, which is also the cover story in the October 2015 print edition of Bloomberg Markets. Masters, a financial superstar and a former JPMorgan executive, is the CEO of digital economy startup Digital Asset Holdings. In June, Digital Asset Holdings acquired Hyperledger, a company that developed distributed ledger technology to allow banks and other financial institutions to clear and settle transactions in real time. The company’s technology enables financial institutions to create multiple private blockchains across a known group of participants. Unlike other distributed ledgers, Hyperledger does not have an inbuilt cryptocurrency and uses a proven consensus algorithm capable of thousands of transactions per second.

Masters is persuaded that Hyperledger’s private, permissioned blockchain technology will permit developing “gated communities” where trusted users will be able to process transactions themselves rather than depend on the open bitcoin blockchain, which in her opinion is required for mainstream adoption. “With private chains, you can have a completely known universe of transaction processors,” Masters says. “That appeals to financial institutions that are wary of the bitcoin blockchain.”

The Bloomberg article notes that Masters is determined to make the financial system more efficient, using a technology that was initially designed to bypass the financial system – the technology of Bitcoin – without the troublesome openness and potential for privacy.

But it’s wise to bear in mind one simple fact – Bitcoin works. While closed, permissioned blockchains and BankCoins might theoretically work tomorrow, Bitcoin works in practice today, and perhaps the chaotic anarchy of the Bitcoin network is the very reason it works.

Photo Carlos Delgado / CC-BY-SA

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