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Here Is How Japan Could be Behind the Current Bitcoin (BTC) Rally?

In an exclusive commentary by eToro’s Senior Market Analyst, Mati Greenspan, a new theory as to where the new Bitcoin (BTC) volume is coming from has emerged. According to Mr. Greenspan, Bitcoin has held the critical level of $8,000 for more than 40 hours and is an indication of a possible sustainable rally that could get the King of Crypto to $10,000.

Greenspan also added that in traditional markets, when there is a strong breakout as the one seen in the crypto-verse, it is considered as a powerful move and a trend reversal. He would also add that the crypto-markets are the riskiest markets that he has ever witnessed in his trading career.

He offered the following words of advice for crypto-traders and enthusiasts:

Of course, trading is always risky and cryptoassets are the riskiest market that I’ve ever known. So it always pays to keep a diversified portfolio.

So how is Japan fueling the Bitcoin rally?

Mr. Greenspan observed that the Japanese bond market had a massive spike earlier this week on speculation that the Bank of Japan (BoJ) is close to announcing measures to scale back on its massive monetary stimulus. Speculation is that the BoJ could revise their interest rates and do their best not to strengthen the Yen. The BoJ is meant to review its policies on July 30 -31.

This means that the savvy traders of Japan, are using Bitcoin (BTC) to hedge from the possibility of the Yen losing value. With BTC being a legal currency in the country, this could be where the extra volume in the crypto markets is coming from.

Another reason – according to Greenspan – for the possible increment of volume in the crypto markets, is the new SBI Virtual Currencies exchange: VCTRADE.

Greenspan had this to say with respect to SBI’s new exchange:

A new virtual currency desk by the financial giant SBI Group opened for business on June 4th. This could definitely be leading to fresh inflows to the market, but I haven’t managed to find any volume stats for them just yet.

In conclusion, the current Bitcoin rally can be confirmed due to the fact that BTC has maintained levels above $8,000 for an impressive time frame. However, due to the historically volatility of the markets, it is always good to be cautious and to not be over confident of a bull run.

Other factors that are responsible for the Bitcoin Rally include:

  • The Bitcoin ETF Frenzy
  • Facebook and Google Ads reversing their blanket ban on crypto ads
  • Blackrock announcing their interest in blockchain technology and cryptocurrencies
Disclaimer: This article is not meant to give financial advice. It is an opinion piece. The opinion herein should be taken as is. Please carry out your own research before investing in any of the numerous cryptocurrencies available.


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Central Banks Say Blockchain Could Shake Up Securities Settlement

A newly published report from the European Central Bank and the Bank of Japan argues that distributed ledger tech (DLT) could be used to create novel securities settlement mechanisms, including “cross-chain atomic swaps” between unconnected ledgers.

The findings are the result of the central banks’ joint DLT research initiative, dubbed Project Stella, which was launched in December of 2016.

While intended to “contribute to the broader debate around the usability of DLT,” this particular phase of the project examined “how the delivery of securities against cash could be conceptually designed and operated in a DLT environment.”

The report focuses on the delivery versus payment (DvP) securities settlement method, in which assets are linked such that the transfer of one asset is executed if and only if the transfer of the other asset also occurs – this is also referred to as “atomicity.”

Researchers designed three prototypes using three platforms: Corda, Elements and Hyperledger Fabric. According to the report, they found that DvP could be executed in a DLT system with cash and securities on both a single ledger and between separate ledgers.

“Conceptual analysis and experiments have proven that cross-ledger DvP could function even without any connection between individual ledgers – a novelty which does not exist in today’s set-up,” the report states, going on to explain:

“Functionalities such as ‘cross-chain’ atomic swaps have the potential to help ensure the interoperability between ledgers (of either the same or different DLT platforms) without necessarily requiring connections and institutional arrangements between them.”

However, the report also cautions that cross-ledger DvP systems could add complexity and operational challenges to settlements. For example, DvP transactions between unconnected ledgers would necessitate “several process steps and interactions between the seller and the buyer,” it says.

Likewise, such a system could affect transaction speed and “require the temporary blockage of liquidity.” The lack of system synchronization could also “expose participants to principal risk if one of the two counterparties does not complete the necessary process steps,” the researchers added.

Indeed, the conclusion that the technology isn’t ready to replace settlement systems was highlighted in last September’s report on Project Stella.

As such, the report concludes, “further analysis on the safety and efficiency of individual approaches [to applying DLT to DvP arrangements] is warranted,” in addition to a full legal analysis, which is beyond the scope of the existing project.

Connected chains image via Shutterstock

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DLT Not Ready to Replace Settlement Systems, ECB and BoJ Say

The central banks for Japan and the European Union have published the results of a months-long assessment of distributed ledger tech (DLT).

Launched in December 2016, “Project Stella” was aimed at exploring whether a distributed ledger-based system could be used to replace the real-time gross settlement (RTGS) systems employed by the Bank of Japan and the European Central Bank (ECB). That specific application has been weighed by other central banks, mostly notably the Bank of England, which said earlier this year that it would pass on replacing its RTGS system with blockchain but would make it compatible with the tech.

The 23-page report published today ends with a similar conclusion: that, as it stands today, the tech shouldn’t be used to replace the systems being used by either central bank. That said, the two institutions dubbed the results “encouraging evidence” that some degree of application could happen in the future.

As stated in the report:

“Findings in relation to efficiency show that,with regard to the specific aspects of RTGS services tested to date, a DLT-based solution could meet the performance needs of current large value payment systems.Given the nature of DLT arrangements, in which the process of validating transactions and reaching consensus is more complex than in a centralised system, this is encouraging evidence.”

Among the findings, the report details, were that an increased number of nodes led to an overall increase in the time it takes to settle transactions across the network. Conversely, investigators also noted that “the distance between validating nodes has an impact on performance”.

Yet an accompanying statement from the central banks ultimately highlights the “immaturity” of blockchain for this purpose, and that the question of whether the Bank of Japan or the ECB will one day move to adopt blockchain remains an open one.

“In conclusion, while the test series produced promising results, it should be taken into account that no direct conclusions can be drawn from the test set-up with respect to a potential usage in production,” the central banks said. “Given the relative immaturity of the technology, DLT is not a solution for large-scale applications like BOJ-NET and TARGET2 at this stage of development.”

The full ECB/Bank of Japan report can be found below:

Ecb.stella Project Report September 2017 by CoinDesk on Scribd

Currencies image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].