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Exclusive: Bitcoin – The Killer App in Africa and Latin America?

In driving financial inclusion and FinTech adoption in emerging markets, Ray Youssef, CEO of Paxful explains the key challenges in Bitcoin adoption in Africa and the strategies penetrating into the African markets.

We are glad to have an in-depth interview with Ray, on Paxful’s strategies into Africa and Latin America. He also explained the biggest challenge in driving Bitcoin adoption: how to deal with scammers!

We know that Paxful has been active driving Bitcoin adoption in Africa and Latin America. While these two continents have huge “unbanked” population, how does Paxful penetrates these two continents differently?

That’s a great question, Paxful doesn’t penetrate into those markets or any markets. Those markets are kind of penetrating into us. The people there are teaching us and we talk to them every day. I’m the CEO by doing customer support every day, we’re in the process of completely revamping our customer experience department and customer’s feedback are absolutely invaluable! Their feedback varies across countries and continents. This is because the use cases, customer needs and the understanding of money are different.

We launched a Paxful Campus Tour to listen the needs of everyone and we are amazed at what we can learn from youngsters. They will tell us the problems in their country very clearly and that’s how we can identify potential use cases to them easily. We can then figure out the dominant payment methods in that country, whether it’s cash, bank, online wallets, Visa, or even barter trading. Once we identified customer needs, we can figure out whether the existing product can address their needs or a new product is required.

That’s basically entrepreneurship. First you need information, you need to understand what are the challenges and obstacles that customers are facing; whether the existing solutions can fully address their issues. Then we look at ourselves on how we can help. This applies for any startups, whether it’s crypto, FinTech, or anything. It’s all comes down to the basic formula of identifying a problem, then identifying the community and execution.

Does it mean for Latin Americans and Africans, they’re facing the same problems? Or it really depends on each country?

We have identified 7 use cases for Bitcoin: grey markets, speculation, payments, e-commerce, remittance, wealth preservation and social good.

It’s depends on the country, because look at wealth preservation as a use case. Look at Latin America. Venezuela is driving Bitcoin adoption in Latin America tremendously because of extreme desperation. One million % projected inflation, can you imagine that? The desperation is like someone gets paid, and then literally a week later, that money’s worth half of what it was worth. Can you imagine what’s going through for Venezuelans? That forces them to look up Bitcoin. They don’t want Bitcoin, they’ll prefer USD. Even the value of Bitcoin is unstable, it’s way better than their local fiat currency.

That desperation coming from this wealth preservation use case is driving adoption. Argentina is happening too, people don’t trust their currency Argentine Peso at all but inflation rate is much lower than Venezuela. If you’re going to compare Venezuela, the best example is Zimbabwe, you can see those two markets are linked by the wealth preservation use case.

When you look at America and Europe, what is the use case and similarities there? Speculation! This also happens in the Dark Web where people use Bitcoin to gamble and for speculation!

Same thing applies to China as well. However, China has another prominent use case: Remittance. In China, there are limitations on how much money you can send out of the country. The Chinese are trying to find ways that can move money out of the country to pay their daughter and sons tuition bill overseas.

“Bitcoin’s adoption is based on use cases! Not so much on the market/ethnicity/religion/locations. It’s all about use cases!”

Identifying and knowing those 7 use cases is a huge part of this puzzle, that’s why everywhere we go, I give the same presentation over again on this is what Bitcoin is actually good for. By understanding those 7 use cases, we can understand how each use case can be applied to each country.

During the experience for Paxful to reach those unbanked population in Africa, what are the key challenges such as gaining the trust from the Africans to use Paxful as the surface to buy bitcoin?

Buying Bitcoin is a killer app right now. It is difficult for the unbanked population to buy Bitcoin, as it can be very time consuming and entails high transaction costs even there are exchanges in the country. For example, South Africa has a lot of exchanges that people can use to buy bitcoin.

What about the migrant workers in South Africa that want to send money back home and he doesn’t even have a bank account? He can’t buy bitcoin from the exchange.

As the alternative, he goes to Paxful. Our staffs have built a new version of Western Union and they are focusing on helping migrate workers send money back home, converting the cash into Bitcoin and send to Nigeria or Zambia or Zimbabwe. Then workers are paying their families or get the money in local fiat currency.

The biggest challenge that I can say is because you’re basically letting people transact over the internet. We asked individuals for ID verification when they reach an equivalent of USD 1,500 in trade volume or wallet activity. This basically opens up the possibility that everyone in the world essentially having their financial account.

There are bad actors in the market. They make it their job to scam people. If you think about what we have to do to make Bitcoin work, the hardest part is getting all this money and value out of the fiat world and into the new economy and that’s extremely challenging.

Challenges dealing with scammers

Think about a guy who makes 100 USD a month, is worth it for him to spend 100 hours a week trying to scam you out of 100 USD. The scammer will try to scam others 24/7. When you banned his account, he will make a new account and jump on another VPN. We will do whatever it takes to stop that person and that is extremely challenging.

Any company needs a way to deal with scammers. Look at PayPal, it is nearly bankrupted in the early days by a Russian mobster who was doing credit card fraud on PayPal. PayPal then built an AI called IGOR to detect credit card fraud. That’s one of the only things that saved the company. Now we have to do the same thing, but we have to do it for 400 different payment methods with a much more complex system. Think about how immensely challenging that is, and that therein lies the value of platforms like Paxful, but we’re making it safe and that is difficult, especially in emerging economies where there’s a lot of desperation. We have to do whatever measures are necessary to keep the marketplace safe for everyone.

How does Paxful ensure safety for over 400 payment methods? Will Paxful escrow both digital assets and fiat currencies?

Paxful will only escrow digital assets but not fiat currencies. There’s no capacity to do that, whether the fiat is money, cash, a gift card code etc. There’s some huge challenges with gift cards such as Google Play, and iTunes. You cannot check the value of those cards and you will check their values only when you try to redeem them. We put a lot of education effort to tell people “If you want to redeem a gift card for Bitcoin, do not choose the two gift cards, because they’re extremely hard to work with.” That’s one of the reasons why sites like Localbitcoins ban gift cards completely because it’s a huge pain in the butt.

The reason we keep it open is because it’s one of the few ways that the unbanked can actually get Bitcoin and we don’t want to abandon them. The only way to fix it is by education and this is the best way to go through these cracks. We’re investing a tremendous amount in education such as campus tour and video contents.

By the way, there’s a reason we have presence in places like Nigeria which PayPal and Coinbase have withdrawn. Because we believe in those economies and Bitcoin can have widespread adoption there. It’s not easy to do so but we never give up.

In Hong Kong, we notice that Paxful has enabled Bitcoin purchase in PayMe (app of HSBC). Can you share with us which payment method is the most popular to Paxful customers in Hong Kong?

I know PayMe is very popular here, one of the top payment methods in Hong Kong. People in Hong Kong have a lot of gift cards, vouchers and the Octopus card etc. Markets like Hong Kong are really interesting because people in Hong Kong can acquire Bitcoin easily through a lot of exchanges. People in Hong Kong have good bank accounts that are connected to the whole world.

Hong Kong is the international financial center which makes it very interesting. That’s why we would like to extend our campus tour here to Hong Kong. We’d like to teach people in Hong Kong about arbitrage and what they can do to basically build their own businesses on top of peer to peer finance, and to use the financial instruments at their disposal to make money. It’s a huge opportunity here, we are still trying to figure out the market and that’s why we will be hosting a lot more events and learn from people in Hong Kong.

Can you share with us the future development plan for Paxful?

We want to focus on the four use cases: payments, remittance, e-commerce and wealth preservation. However, the truth is Bitcoin is still too difficult for a normal person to use. We have to make Bitcoin invisible, and it must abstract away the high volatility and become extremely user friendly.

When we have applications that serve each of those four use cases, these applications will be built and powered by Paxful. It doesn’t necessarily have to be branded as Paxful. At the end of the day, we hope Paxful is the universal translator for money.

Exclusive: Arbitrage – the Key Business Opportunity Brought by Blockchain

Following the latest update of Paxful, Ray took a step back and shared to us his inspiration to set up Paxful and what he learnt from 11 failed startups! He then identified arbitrage as the key business opportunities by blockchain and instead of decentralization, peer to peer should be the core value preposition of Bitcoin!

We noticed that prior to the establishment of Paxful, you have set up 11 startups and failed. Can you share with us the lessons learned and how do these failures inspire you to set up Paxful?

My first startup was successful and after that, I had 11 failures in a row, but every single one of them taught me something. Now We’re trying to build a peer to peer Bitcoin marketplace and there are tremendous challenges in doing that. When I look at PayPal, PayPal is literally three times more complex to build nowadays. Western Union has cash as the only payment method and it took 30 years to become successful.

We’re trying to provide over 400 different payment methods around the world to facilitate peer to peer transactions in every payment method. It is immensely difficult and mentally challenging. When I look back on my startups, they all have their unique challenges.

Billing was always a challenge for my previous 11 startups. Payment giants like Visa and MasterCard may not want to work with you if your products are targeting young teenagers or the unbanked. For example, I sold ringtones in my first startup. I was selling credits and users can buy ringtones with credits. You’d never heard of that 15 years ago and the payment giants want to work with me. To sum up, it was very difficult to launch a billing system from my previous experience of 11 startups.

How I tapped into the blockchain world?

When I first heard about Bitcoin, I read the whitepaper but I can’t figure that out initially. Then I started meeting people in the Bitcoin community, they won me over and that’s how I tapped into the Bitcoin space. It got me into libertarianism and the most important thing I got in Bitcoin by far was it taught me what money actually was and where it came from.

What are the key business opportunities brought by blockchain?

The key business opportunities are always arbitrage! There are 400 different major payment methods representing different networks. With Paxful, you can have full access to them and the markets around them. This is an amazing opportunity and humanity never has this before.

Imagine we have some magical friends in every single country that they have every financial account like banks, Paypal and Alipay. Whenever we need payment, he’ll make the payment for us. We have to pay transaction fees in return but the fact that you can now access every single financial network in the world which powers up peer to peer finance.

Do you think in the future, Bitcoin will remain the poster Coin for cryptocurrencies? Or other altcoins will overtake Bitcoin?

I can’t predict the future and I don’t think any other coins are doing better than Bitcoin. All the issues like transactions per second (TPS), privacy is trivial in comparison to the main use case of blockchain: payment network. Bitcoin is a very good payment network and that’s what the world needs! Bitcoin doesn’t need an immense throughput of billions of TPS and other altcoins can do that.

I don’t think another cryptocurrency will pop up that will replace Bitcoin unless something catastrophic happens to Bitcoin. I don’t see Libra as a huge threat as well, I think the reason people are freaking out over Libra is that we’re fighting with each other and coming out with our own coins, going to war with each other and it is just disgraceful. At the end of the day, Libra is just another satellite revolving around. Bitcoin is currently the clearing layer of all currencies worldwide and I hope it stays that way.

Do you think the lack of scalability for Bitcoin will hinder the mass adoption in the payment network? People view Bitcoin as more like a digital gold as a storage of value. What is the core value of Bitcoin?

I think it’s either of those things, like the people of Blockstream want you to think of Bitcoin is just gold and not scalable so we need to build a lightning network on top of it.

Then there’s people like Roger Ver creating Bitcoin cash and say Bitcoin cash should replace Bitcoin in the future. Then there is a guy like me, who is right in the middle and say “There is an entire world of money trapped in retail economies like Amazon, Apple, bank accounts in cash and all kinds of online wallets. There needs to be something that can circulate that money value around. Gold can’t do that because it’s not something that can move around like Bitcoin. Bitcoin is really the clearing and that’s what peer to peer finance is.”

When people talk about Bitcoin, they always say decentralization is the holy grail.

However, decentralization is just the technical feature but the most important point is two humans are exchanging value.

The core value proposition is we are connecting two humans together and how they actually interact with each other. We missed this fact which is honestly the biggest thing holding us back.

Do you think the emergence of Central bank digital currencies (CBDC) and Facebook Libra Coin will facilitate a world of decentralized finance and why?

Libra is not decentralized. Those validator nodes are controlled by a certain party of people. Central bankers are not going to lose control of this. They’re going to keep fighting and gain back the control eventually.

The only thing that can stop them is educating people. For example, number one: what money actually is and where it comes from. This is the key. Before Bitcoin, I had no idea about these concepts. Once I figured it out that money is not necessarily gold, silver, and fancy paper that central banks are giving us, money is a representation of our work that freed up my mind. All we need is a medium of exchange and that’s what cryptocurrency is. When we focus on that peer to peer aspect instead of decentralization, that’s when we can start to understand what we’re working with here and we can build real applications that will stay ahead of the central bankers.

Donald Trump is “Not a Fan” of Bitcoin and Crypto, Citing High Volatility

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money.” Donald Trump tweeted on 11 July.

Exhibit 1. How Donald Trump views cryptocurrencies

Source: Donald Trump Twitter

The tweet came after the night of “Social Media Summit” which did not include any representatives from social media companies such as Facebook, Twitter or Google. The summit was a closed-door conference inviting many right-wing leaders instead. Trump has been complaining about the slowdown for the number of his Twitter followers during the summit, suggesting a conspiracy without further evidence.

Trump also believed Facebook’s Libra to have little standing or dependability. He added that Facebook must seek a new Banking Charter and comply with all domestic and international banking regulations. He then concluded:

“We have only one real currency in the USA. It is by far the most dominant currency anywhere in the world, and it will always stay that way. It is called the United States Dollar!”

In June, Trump’s tweet demanding Twitter to let banned Conservative Voice back to the platform, and said: “It’s called Freedom of Speech.” Trump also tweeted in May saying he will continue to monitor the “censorship of AMERICAN CITIZENS on social media platforms” after Facebook banned seven users’ accounts including right-wing media personalities Paul Joseph Watson, Milo Yiannopoulos and Laura Loomer for policies against “dangerous individual and organizations”.

Exclusive: Lack of Interdisciplinarity – Culprit for FinTech Talent Shortage

Exclusive interview with Prof. Aris Stouraitis: Part 1

In FinTech, the talent shortage is always a pain point in Hong Kong. It is our pleasure to discuss with Professor Aris Stouraitis, Department Head of Finance & Decision Sciences at Hong Kong Baptist University, to share with us the culprit of FinTech talent shortage. He also highlights how financial institutions, governments, and academic institutions can address this problem.

From a corporate finance background with publications related to corporate governance and related party transactions, what made you switch from corporate finance to the FinTech field? Are there any publications on FinTech you are currently working on?

I have not changed fields, and I am currently still in corporate finance and corporate governance as before. However, I realized that as a department head, I need to be actively involved in FinTech because this is important for the future. I want to work on the new development of FinTech and artificial intelligence, such as the interplay between AI and corporate governance, or new technologies, and corporate governance.

The FinTech talent shortage has been a common issue globally. What is the reason behind it, and how can financial institutions and the government address such a shortage?

In general, what is lacking currently is interdisciplinarity. People who traditionally study and understand FinTech comes from a computer science background. They are not very proficient in finance, and they do not understand how the economy works. People with financial backgrounds do not understand the technical side. I think a lack of interdisciplinary for people working in the field is the main issue for talent shortage. However, this situation is getting improved because we are starting to offer interdisciplinary programs, and this issue will be gradually solved.

I believe most financial institutions are now doing in-house FinTech training as there is a lack of programs at universities.

The government is promoting FinTech in 2 ways:

1) At the industry level to attract more FinTech companies to come to Hong Kong;

2) Encouraging universities to start developing more FinTech programs and more FinTech research.

I think these FinTech programs and research will become increasingly interdisciplinary.

The government can do more by helping us attract more FinTech talent in Hong Kong at the university level. To be honest, the universities in Hong Kong just started to look into FinTech development. If the government injects more funding to academic institutions, we can attract more talents worldwide to work in the FinTech industry in Hong Kong.

What about academic institutions? How can the government help them to foster FinTech adoption?

I think the best way to foster FinTech adoption is attracting foreign talents; by doing so, we need funding from the government.

Academic institutions are launching new programs at a very fast pace. The government can provide funding for FinTech research. However, the impact will be limited because we do not have talents who have had experience in FinTech research.

Research funding is not a problem in Hong Kong, and I believe talent attraction is a more difficult task. If we have one or two FinTech programs, this can accommodate a certain number of faculty members. We need more funding when there are more FinTech programs in the future

What are the 7 Key Takeaways from Facebook's Libra Hearings?

The debate on Facebook’s Libra continues with the hearing with the Senate Banking Committee (“Senate hearing”) on 16 July and the United States House Committee of Financial Services (“House hearing”) on 17 July. Here are the 7 key takeaways from the two hearings.

Libra is centralized

Regulators believed that the composition of the Libra Association has made Libra “highly centralized”. In the House hearing, New York Congresswoman Alexandria Ocasio-Cortez (AOC) questioned if the members of the Libra Association is democratically elected. David Marcus, the Head of Calibra said that the members are not elected but was governed by membership standards. When AOC realized the investment of $10 million as the criteria of founding members, she concluded Libra as “a currency controlled by an undemocratically-selected coalition of largely massive corporations.”

With regards to the eligibility of using Calibra and Libra, Marcus responded to Representative Sean Duffy’s question that anyone can use Calibra and Libra in jurisdictions where Facebook operates after they performed KYC procedures. However, when Marcus was asked by North Carolina Representative Alma Adams on whether any user can become a node on Libra blockchain, he denied and said that only large corporations with blockchain technology or finance backgrounds can become a member of the Libra association and a node on the Libra blockchain.

With the lack of decentralization, Representative Warren Davidson slammed Libra in the House hearing suggesting Libra falls in the same category as a run of the million sh*tcoins.

Can Facebook protect data privacy with its notorious track record?

In the Senate hearing, Ohio U.S. Sen. Sherrod Brown commenced with the poor history of Facebook in privacy protection, saying “Facebook has demonstrated scandal after scandal that it doesn’t deserve our trust.” Such skepticism continued in the House hearing, where committee chair Rep. Maxine Waters condemned Facebook with a “demonstrated pattern of failing to keep consumer data private on a scale similar to Equifax.” For example, Facebook purportedly influenced the 2016 U.S. Presidential elections by allowing malicious Russian state actors to purchase and target ads.

The discussion switched to data portability. Sen. Warner questioned if Facebook allows data portability in wallets.

“If a Facebook user wishes to use a wallet other than Calibra, will you make it easy to allow the export of other data?”

Marcus answered that Facebook will facilitate data export for wallets other than Calibra, and he hedged the same commitment for Whatsapp and Messenger. He added that the Calibra network will separate social and financial data and they will impose the highest privacy standard to earn people’s trust Sen. Warren expressed her concern on Facebook’s ability to monetize personal data among platforms. Senator McSally followed up on this and stressed that there are no grounds for committees to trust Facebook with “the track record of failing and violating and deceiving in the past”.

In the Senate hearing, Senator Robert Menendez asked if Facebook will inform users in 48 hours in cases of the data breach. Marcus replaced “48 hours” with “a reasonable length of time”.

Why Switzerland?

Both hearings questioned the registration venue for Libra Corporation. In the Senate hearing, committee chair Mike Crapo wondered why Libra Corporation is registered in Switzerland but not the U.S. Marcus replied that Libra Corporation will also register with U.S regulators in the future.

The committees are clearly not satisfied with what Marcus said in the Senate hearing. Representative Patrick McHenry raised similar concerns and Marcus explained that Switzerland is an “international place” to conduct businesses. He further addressed Representative Josh Gottheimer’s concern that the choice of Switzerland has nothing to do with evading U.S. regulations.

Several lawmakers also worried about the threat of Facebook’s Libra towards the dominance of USD. Marcus stated that the reserve is 50% backed by USD, with the Euro, the British Pound, and the Japanese Yen included as the collateral.

How about KYC and AML?

In the Senate hearing, Senator Cortez Mastro, former District Attorney of Nevada seek Marcus’s commitment to the compliance of AML and sanction laws. Marcus highlighted that they are working to comply with FinCEN regulation.

In the House hearing, Rep. David Scott explicitly expressed his concern on how Facebook Libra complies with KYC, AML and ensures the safety of the existing financial system. Marcus replied that they will launch AML guidelines to satisfy the needs of AML, KYC, and counter-terrorist financing. With regards to potential illegal activities on Libra blockchain, Marcus believed that this can be improved by system design and proper KYC controls to ensure on and off-ramps are properly regulated.

Can Facebook protect consumer’s funds on Libra?

Senator Tester questioned Libra’s ability to protect consumers against loss of funds or fraudulent purchases, along the line of credit cards or the FDIC.

While Marcus claimed they will try their best to resolve those issues as soon as possible, Tester stressed that proper solutions must be in place before Libra goes live.

Representative Carolyn Maloney asked Marcus if he would at least promise to conduct a pilot test before the full launch of Libra. She assumed the pilot test would involve less than 1 million users and overseen by the Federal Reserve and the Securities and Exchange Commission (SEC). Marcus did not provide a clear response and merely stated that they will work closely with regulators.

Is Libra public good?

AOC asked Marcus if Libra is a public good. Marcus claimed that “sovereign currency should remain sovereign” and said he is not in the position to decide whether Libra is a public good.

Praise for Bitcoin?

House minority leader Kevin McCarthy told CNBC that unlike Trump, he likes Bitcoin and the security of blockchain technology. He believed that lawmakers are skeptical about Facebook’s Libra because Libra is centralized, which can threaten the safety of the financial system. Lawmakers are not hostile towards cryptocurrency, he added.

Final words..

We believe there are some questions not properly answered in both the Senate and House hearings, such as the main reason for Facebook launching Libra. Going forward, the centralization of the Libra Association and the notorious history of privacy breach will be the main obstacles for Facebook Libra to go public.

China Declares Bitcoin as Virtual Property with Monetary Value

A property dispute involving Bitcoin was held in the internet court in Hangzhou, China on July 18, setting a new precedent by declaring that Bitcoin is virtual property with monetary value.

According to the case of plaintiff Wu against defendants FXBTC and Taobao, it has been recognized that Bitcoin has the attributes of virtual property and therefore should be protected according to Chinese laws and regulations.

For the first time, Bitcoin has been recognized as valuable, scarce and disposable which are attributes of property with protection under Chinese law, according to Pang Lipeng – one of the attorneys on the case. The court’s ruling concludes that owning cryptocurrencies in China is still legal and should be protected according to the corresponding property rights.

However, this is not the first case where cryptocurrencies have been deemed legal by the Chinese judicial body. In a previous case, the Shenzhen Arbitration Commission mentioned that cryptocurrency assets should be protected in accordance with Chinese regulations on property ownership in October 2018.

“This is a clear signal that the financial authorities are starting to loosen control over digital currency and virtual currency,” Cao Yin, one of the earliest advocators of blockchain technology in China, told the Global Times on July 18. However, they also officially mentioned that at the People’s Bank of China says that “Indeed, Bitcoin is virtual property, but it’s not fiat money.”

Wu’s case

In 2013, plaintiff Wu purchased 2.657 Bitcoins which was worth around RMB 20,000 at the time from the website “FXBTC” which was operated through a Shanghai technology company through Taobao.

The purchased Bitcoins were stored on a virtual wallet on the FXBTC website. When Wu wanted to access his Bitcoins in 2017, he found that the FXBTC website was shut down and therefore could not gain access to his funds.

Wu claimed that he was not notified of the website’s closure and could not withdraw his funds before the website shut down. Wu was not able to contact the website’s operator and demanded the defendants to pay RMB 76,314, which is the transaction price of 2.675 Bitcoins at the time of prosecution in compensation for his economic losses.

The court rejected Wu’s claims against FXBTC’s operator and Taobao due to the lack of evidence and the entire lawsuit was rejected. However, the court affirmed the legal status of Bitcoin as a virtual property in this case as a legal commodity but not a currency.

Is Blockchain-Based Virtual Reality the Future?

You haven’t uploaded yourself to the Metaverse yet, which begs the question: what’s the deal with VR? Although it’s been around since 1968 and major companies such as Facebook, Google, and Samsung have invested in virtual reality initiatives like the Oculus Rift, headsets plus equipment can still add up to over a hefty $1000 USD; Mark Zuckerberg admits that “VR is locked in a vicious circle of needing enough content to lure in consumers”; and, at the end of the day, you’re fumbling around a room for a couple of hours (taking time to rest your brain from VR-induced motion sickness), emerging with nothing to show but a splitting headache and a harsh realization that you’re back in reality.

Welcome to the future 🙂

Why Virtual Reality Is Just Revving Up
The Dark Side: Why You Wouldn’t Want to Live in Virtual Reality
How Blockchain Transforms the Virtual World
Why Should I Care About Blockchain-Based VR?
In Conclusion…

Just Revving Up

Virtual reality startups are just beginning to launch their offerings to the public, Decentraland’s VR avatar center opened up to users earlier this month, CEEK recently launched their first virtual reality gift card, and competitors such as Vibehub, Nanome, and Revolution VR are hot on their heels. Wonderful. But, you may ask, what’s new about this?

For years, advocates of virtual reality have struggled to overcome several major barriers to mass adoption — centralized corporations controlled user accounts, hackers eliminated digital assets, and developers lacked incentives to create quality VR content.

Now, blockchain is changing the game.

This means that Decentraland, CEEK, Vibe, and other virtual reality startups are introducing what you could call…VR 2.0. Rather than relying on high-def, graphically breathtaking games and visual experiences to attract their user base, they’re banking on their ability to replicate the sense of community of the real world; and, they plan to defeat the dark side of VR with none other than blockchain.

The Dark Side: Why You Wouldn’t Want to Live in Pre-Blockchain VR

Let’s imagine for a moment that you’ve decided to expatriate the real world and move online to a world much like that created by Second Life, a VR platform that gained crazy numbers of adopters back in the early 2000s. Now, everything may be cool and groovy for a while with this centralized setup. But humor me and hang on before you cut all ties with reality.

Would you really want to spend countless hours building up a life complete with a house, possessions, and social connections – essentially, what you spent your 20s doing! – and feel your stomach drop as a gaming platform suddenly fails?
Or, choose to place the final brushstroke on your artistic masterpiece, sell your first business product, or film your first movie…and feel helpless to stop others from copying and profiting off of your creative talent?
Or, remain unsure that the people you interact with on a daily basis are who they claim to be — that is, who’s to say that someone hasn’t suddenly decided to impersonate your beloved mother, business partner, or romantic interest?

(If you answered any of those with a resounding NO, you’re not alone.)

How Blockchain Transforms the Virtual World

// Decentralises power //

According to Decentraland founder Ariel Meilich:

“If this power were put into the hands of the users instead [of big gaming corporations], the true potential of VR might be realised.”

If you’re exploring a virtual reality world, you often have the ability to buy products: clothes, avatars, materials, or land. Those virtual possessions, unfortunately, are usually stored in a central database and controlled by a single entity, which means that if the central company gets hacked, goes under, or decides to change your account holdings, you can’t do anything but utter a few expletives at your screen and start from square one all over again.

But what if you recorded these purchases — virtual land, a hot pair of Rayban sunglasses, a CryptoKitty — on blockchain so that they were stored permanently? After all, blockchains aren’t just used for cryptocurrencies. They can store much more complex information; for example, when you buy a plot of land in Decentraland’s Genesis City, that plot is represented on the Ethereum blockchain as a unique token with specific coordinates and maintained by a smart contract.

It’s like owning a piece of land, or a car, or a rocking pair of shades in real life. Just like how others trust that you possess, (say, a Lamborghini) because they can physically see the proof, anyone can check the global, decentralized blockchain ledger and verify that you’re the rightful owner. What’s more, you can reuse your accessories on other platforms, control their content, and feel confident that a central gaming company won’t lose your information, eliminate your belongings, or change the rules of your world.

That’s the first plus. Here’s the second…

// Provides an incentive to create //

“As an owner, you have full creative freedom and any income generated by anything you make goes straight into your pocket.”

— Ariel Meilich

In a blockchain-based system, users can rely on cryptocurrencies to recreate a trusted economy without needed banks or other middlemen to run transactions. Businesses, entertainment venues, home…with control over your content, you can run and monetize them, with all profits going straight to you. It’s a Digi-human creative renaissance, let’s call it, as described by our friends from AltCoin Mag:

“Companies and individuals could purchase, design, and sell buildings. Designers could create virtual clothing (whose look could far surpass what is possible in the real world) that could be sold to individuals for online identities. Artists could create art displays which surpass all limitations of the physical world.”

— AltCoin Magazine

But let’s say you’re not quite buying land in Genesis City quite yet…

Why Should I Care About Blockchain-Based VR?

Rather than exploring exoplanets and endless reaches of our universe, there are those who think that in the end, humans will choose virtual reality. This means that when the conversation shifts to VR, we’re talking about the creation of worlds that you could potentially live in someday.

In Conclusion…

In order to create VR that takes off, we’re going to need to recreate what really matters to us in reality: people, experiences, connection. Even if we go digital, we’re still human.

Yes, there will be a slow curve of adoption as headset costs fall, content quality increases and blockchain-based social and economic structures provide the incentive for people to join the world of VR. But in the meantime, as this brave new world slowly gains appeal in a wider market, we may see its ripples out into reality. As Simon de la Rouviere predicts:

“we will most definitely see a new surge of people demanding exactly that reality into the real world. Down with corrupt governments. Down with archaic governance. Down with intolerance. Down with all the bull****.”

Until then?

Start designing your virtual avatar.

Heaven for Bitcoin Miners? Iran Officially Legalizes Crypto Mining

The Iran Chamber of Commerce, Industries, Mines and Agriculture recently published a statement that the Iranian Economic Commission has approved a mechanism for digital coin mining. This is in line with Iranian internal laws that facilitate the growth of mining firms across the country.

Crypto mining in Iran is gaining popularity with its cheap electricity prices. The Iranian Economic Commission has finalized a tariff scheme for cryptocurrency miners, in which the electricity costs for crypto mining are similar to the tariffs used for electricity exports. Energy Minister Homayoon Ha’eri said the finalized tariff scheme is subject to the approval from the Iranian cabinet. While the exact price scheme is not specified, Ha’eri believed that the price is subject to market factors such as the fuel prices in the Persian Gulf.

The governor of Central Bank of Iran Abdolnaser Hemmati shared a similar view with Ha’eri and suggested two main conditions for the legalization of crypto mining: crypto mining should be based on the price of electricity exports and mined cryptocurrencies should be circulated within the Iranian economy.

The rate of Iranian electricity export to neighboring countries ranges from $0.7 to $0.10 per kilowatt-hour. However, Bitcoin miners are enjoying subsidized electricity at $0.05 per watt, and it is the same rate as industrial and agricultural operations.

Venezuelans Will Love Bitcoin Even More with 10,000,000% Inflation

Bitcoin’s trading volume has set a record high in Venezuela, thanks to the 10,000,000% inflation rate in 2019 as shown in Statista.

Source: Coin.dance

The data shows Bitcoin’s trading activity in P2P exchanges LocalBitcoins, Paxful and Bisq from Coin.dance. Bitcoin’s trading volume in LocalBitcoins hit a record high of 57 million bolivars on 20 July, beating the previous high of 49 million on 13 July. Venezuela’s inflation rate in 2018 was 929,789.5%, and the projected Venezuelan inflation rate from 2019 to 2024 will be at least 10 times higher. With the weakening of Venezuelan Bolivar, citizens turned to hold Bitcoin as alternate storage of value. Despite President Maduro’s urge towards the Bank of Venezuela to trade Petro crypto nationwide, the adoption of Petro remained poor and Venezuelans appreciate Bitcoin much more than the country-issued crypto.

Image via Shutterstock

Exclusive: How is Blockchain Disrupting the Music Industry Globally?

With the widespread of blockchain technology used in different industries in the past decade, Sean Jong from K-Tune in Korea explains how blockchain can address the current pain points in the traditional music industry. He also explains the role of blockchain in royalty distribution and copyright infringement!

What are the pain points in the music industry and how can blockchain be used to solve them?

There is a range of areas that blockchain technology can help improve the music industry. For instance, reducing transactional costs in the conventional and traditional music industry would be a major improvement. In the traditional methods, if you want to make music, you have to meet professionals from the industry and settle on the royalty shares. For instance, if I were more involved in the development of music then I would claim for 80% of the shares while the other party gets 20%. In the process of doing this involves a lot of intermediaries such as copyright agencies or even lawyers.

Thanks to the nature of blockchain technology, it would be very difficult or virtually impossible to infringe or manipulate data; therefore you will not need to use intermediaries as you can settle and write the division of shares and consensus with other parties on the blockchain.

What is royalty distribution and why is it important?

There are two phases, the first phase of royalty distribution is when they’re making music together, they have to reach a consensus of the division of shares. In the music industry, it is hard to pinpoint, you know, who’s your, what’s your job, and what’s mine. Roles in the music industry are quite arbitrary and hard to pinpoint from the royalty shares perspective. In short, the first stage is to make a consensus between artists.

The second phase is when the music is being sold and release that how to collect the royalties, from streaming companies such as iTunes, Spotify, Pandora or Melon in Korea. Blockchain technology has not been yet adopted around the second phase. A solution has not be found for the second phase but we can take care of at least the first phase of royalty sharing because between artists they must come to a conclusion or a consensus of who owns how many shares. Once they have reached a consensus, conventionally, they have to go to an authority or intermediary and report it. With the use of blockchain technology, artists involved will be able to come to a consensus and write it on the blockchain, and that’s the K-Tune solution.

How can blockchain address the copyright infringement issue in the music industry?

Copyright infringement happens most of the time when music is downloaded illegally. So far with the given technology, no one will be able to track every device that everybody owns. The role of blockchain technology could step in regarding copyright infringement when it comes to streaming engines as it can at least track which song is being played, the number of times being played and this data cannot be manipulated.

How are you encouraging more artists to use K-Tune and how has it been adopted in Korea and across the world?

In Korea, it is at a very nascent stage and not many people know about blockchain technology nor do they understand it. Since I am representing K-Tune, I believe it can be one of the pioneers who can spearhead the market awareness and public education of what blockchain is and how blockchain can disrupt the creative industry. I believe the awareness and the level of understanding will keep growing, we have just started our first step, not only in Korea, but also worldwide.