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The Bank of England sees systemic risks connected with cryptocurrencies development. The Supreme Court of India allowed cryptocurrencies free circulation. Bitcoin hashrate peaked at 160 EH/s.
Jon Cuncliffe, one of the leaders of the Bank of England, said that stablecoins can dramatically change the global financial system. He is confident that the current scheme is equivalent to clerks from the 18th century. Eventually, it should give way to more advanced technologies. At the same time, the Deputy Manager for Financial Stability of the department noted that the availability of financial services through blockchain carries significant risks to the entire system.
The stability of the modern economy is based on banks which are now the controlling centers in conducting financial transactions. One of blockchain features is stability, because the information stored in it cannot be faked. The development of new technologies makes it possible not to maintain a huge staff; the data is completely safe without the use of monitoring centers.
Speaking to students of the London School of Economics, John Kankliff noted the high probability of a fundamental change in the existing rules of the game with the distribution of stablecoins. In particular, he noted the importance of a tool such as Libra by Facebook. It can become a systemically important cryptocurrency with unpredictable consequences of mass use. However, last fall, Mark Carney, the Head of the Bank of England, announced the need to create digital currency that can replace the dollar.
Perhaps it was precisely such statements that made the American authorities be active in opposing the Libra project development. However, the British regulators also show some caution. It is expected that this year the Financial Stability Board (FSB) will publish its recommendations on the cryptocurrency market control. Last week, Sarah John, the Chief Cashier of the Bank of England, recommended her colleagues to start the race to launch the digital pound. Otherwise, the country may lose the fight for positions in the top of the global financial system.
In the spring of 2018, the Central Bank of India banned the circulation of any kind of cryptocurrency in the country. This caused a serious blow to cryptocurrency exchanges, which were forced to close or transfer their activities to other regions. Appeal to the judiciary did not give a quick effect and for almost two years the cryptocurrency industry tried to defend its rights. Only now, the situation has changed. The Board of the Supreme Court of India canceled the order of the Central Bank.
It was planned to introduce a punishment of 10 years in prison for storage, purchase, sale and mining in the country. The cryptocurrency ban group has planned to introduce a triple damage penalty in addition to imprisonment. After the adoption of this law, the owner had 90 days to close all accounts.
Experts are sure that if the ban were introduced, the country would have lost $ 12.9 billion. However, now the decision of the Supreme Court completely changes the balance of power. Prior to the introduction of restrictions, the share of Indian investors in the cryptocurrency market reached 7.9%. According to Joe McCann from Microsoft, we should expect a serious increase in market turnover. The country ranks second in the world in terms of population, and its economy takes the third place after the United States and China. Moreover, the dynamics of GDP is at the record levels.
This decision can positively affect the Libra project. The Indian market is one of the most important for Facebook due to its potential audience of 241 million people located here. That is, the social network has a huge number of future owners of new cryptocurrency from India. This is especially important given the underdeveloped financial infrastructure of the country; there are many new free niches for Libra.
Last week was record-breaking since the first cryptocurrency blockchain reached a new maximum. Bitcoin hashrate has reached a level of 136 EH/s. Previous months, miners managed to break the bar of 120 EH/s only few times; however, now there has been a serious leap. Experts attribute this to the launch of a complexity bomb in two and a half months.
Now, miners receive a reward of 12.5 BTC for each block. However, at the end of May this figure will be halved. A reward of 6.25 BTC per block will significantly reduce the market supply, so there is a high probability of an increase in the rate. In such conditions, there is the possibility of a sharp jump in the course. Although bitcoin dynamics in recent weeks is far from positive, the mood of miners suggests a high probability of the implementation of such scenario.
Moreover, bitcoin hashrate growth occurred in difficult conditions. Due to the outbreak of coronavirus, many companies have delayed the supply of mining equipment. It is likely that an improvement in the situation will allow even greater increase in computing power. According to Alex de Vries, Expert at PwC, the effective lifespan of one ASIC is now about 18 months. Their capacity doubles every year and a half; it is economically unprofitable to use outdated equipment.
Therefore, interruptions in the supply can seriously reduce the total hashrate of bitcoin network. One week of delivery delays reduces it by at least 1%. However, in anticipation of increasing complexity and rising prices, miners are more actively using existing ASICs. In this regard, it is worth recalling that blockchain of the first cryptocurrency met 2019 with an information processing speed of a little more than 40 EH/s. That is, the growth over 12 months exceeded 200%.