Crypto’s Last Week
This edition of “Crypto’s Last Week” accounts for the most notable, and crypto-related — institutional, investment, and regulatory — news published between Saturday, October 10, 2020, and Friday, October 16, 2020.
To clearly understand the existence and need for different types of cryptocurrency exchanges, such as Centralized Exchanges (CEx) or Decentralized Exchanges (DEx), it is important to refresh the primordial role that these traded assets provide the individual by promoting self banking and self custody; while encouraging the direct participation of each person in the global market with minimum friction.
Based on these standards, the need for a safe place that reflects the offer and demand of each asset is critical to gauge other individual’s sentiment and create a safe zone where these can be exchanged. Hence, the creation of cryptocurrency exchanges.
Since the early days of crypto, exchanges have existed, allowing users to buy or sell in exchange for their fiat currencies initially, and later for other tokens or coins which they considered to be valuable. This has brought us to 2020, with hundreds of CEx — Kraken, Coinbase, Binance, OKEx, Bithumb, etc. — and dozens of DEx — Uniswap, IDEX, Bancor, Kyber, etc — offering a plethora of options to users in search of either service and best prices to gain the most when buying or selling.
This past month, according to the Coingecko Quarterly Report Q3 2020 there was a sharp increase in monthly trading volumes for DEx, with 197%, while CEx had an increase of 35%, meaning a $155 billion increase for decentralized exchanges.
These impressive numbers can easily be attributed to the DeFi hype and the yield farming frenzy seen in the past months. Nevertheless, there are clear indicators that these platforms have seen exponential growth when it comes to volumes and user base, making the possible overthrow of the clear dominance CEx have to date a very possible scenario in the coming decade or even years.
The rush seen in governments trying not to be left behind by this rapidly evolving industry will certainly continue and could even create potential scenarios that may boost the user base of these DEx. These upcoming years will prove to be critical not only for technological development but also see how governments avoid stifling innovation while protecting investors and earning their piece of the pie through taxes.
Non-fungible tokens (NFT) have been quiet, but an ever-present actor in the blockchain industry. First, there is a need to establish the difference between fungible and non-fungible. Fungible means, this token can be replaced by something identical without any indication of change or can be diluted — i.e. a $1 bill or a bitcoin. Conversely, non-fungible means that it is unique and differences can be clearly noted — i.e a limited edition baseball card or the Mona Lisa painting.
NFTs have been a part of the market since 2016, with their rise in recognition due to the great success of the CryptoKitties platform and the sometimes very negative consequences it had on the Ethereum network. Shortly, CryptoKitties is based on breeding and trading unique digital kittens, which made this a viral sensation and not only achieved individual kitten prices over $100,000 but also clogged the network to a level near collapse.
Since then, a week’s time can witness over $2 million in exchange volumes in the NFT market with NFTs varying among art, collectibles, game, metaverse, sports, and utility. Recently there has been a rise in interest focused on art-related tokens, with the “Block 21” NFT being sold for $131,250 in Christie’s New York auction.
The quantity of information that can be also registered within the tokens in form of metadata is a very special feature these tokens possess, since ownership, creation date, and other important information can all be included, creating 100% verifiable assets with unique characteristics.
Most recently, Dapper Labs, the company behind CryptoKitties, has successfully closed an $18 million token sale of its collectibles game NBA Top Shot to 13,000 people participating in the offering within just a month’s time of the beta version of the platform being released and the latest funding round of $12 million focused on developing this and other blockchain-based games.
This past week there has been plenty of reports referring to the inclusion of blockchain technology in major gears of the global economy, highlighting the benefits in critical sectors of the global markets through the application of this young technological advancement.
Among the most important announcements are the successful integration of CMA CGM and the Mediterranean Shipping Company (MSC) with the joint initiative created in May 2019 by IBM and Maersk, the leading container ship operator worldwide, called TradeLens blockchain.
This is estimated to account for nearly half of global ocean container cargo ($12 trillion) being processed through this platform, with other important industry actors such as Hapag-Lloyd and ONE still in the process of integrating their operations with TradeLens.
Also related to international trade, but specifically focused on the agriculture sector (4% Global GDP) made news due to the joint venture Covantis, created by the world’s largest grains and oilseeds companies — Bunge & Cargill — with the mission of implementing blockchain technology to the agricultural sector in Brazil (7.3% of global agricultural exports).
This joint venture will also include the participation of agribusiness heavyweights Louis Dreyfus Company, Cofco International, and Glencore Agriculture, which would approximately account for over 550 million tons of grains and oilseeds being streamlined and efficiently processed through the Covantis operations platform in 2021.
Finally, one of the world’s largest oil producers, Chinese state-owned Sinochem, publicly disclosed the blockchain-based and internet of things (IoT) integrated warehouse receipt system.
This technological solution brings effective warehouse processing capabilities to the oil and gas industry in China as well as an estimated 40% reduction in cost to the procedure while offering a traceable chain of information to avoid fraudulent financial schemes that have resulted in billions of dollars in the past.
This set of partnership announcements and product unveilings only confirm that the global markets are steadily adapting and updating legacy systems to more advanced technological solutions that will reduce costs and assure investors and governmental organizations compliant exchanges.
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