James Tylee from CyberFM

Welcome to this week’s Digital Bytes. This week we have analysis on the following topics:

Blockchain and crypto adoption in Latin America - some Latin American countries have turned to virtual money as a safer and more profitable option following the fall in government-regulated currencies. Between 2019 and 2021, the use of cryptocurrencies in Latin America rose by 1,370%; at about the same time, El Salvador approved Bitcoin as an official legal tender, becoming the first country to do so. Meanwhile, we are seeing a growing use of blockchain technology in a variety of business sectors.

Digital assets in vehicles - in February 2022, Porsche became the first auto manufacturer to successfully test blockchain in its cars, with many other car manufacturers also exploring ways to integrate this game-changing technology into their vehicles. Between themselves, they are all aiming to take advantage of its potential to dramatically change how information or data is stored and used, subsequently enhancing transparency and security and improving transactions.

Is decentralisation the next evolution of UK financial regulation? - with the continued growth in both the range and reach of digital assets, how will financial regulation evolve? In this article, the issues and challenges facing those looking to regulate crypto in the UK are summarised with comments on the fact that rather than fight it, regulators need to embrace and learn from crypto and distributed ledger technology.

The Securities Exchange Commission (SEC) fights to stay relevant for the crypto market - the SEC has been actively pursuing crypto firms whom it believes have broken security regulations and has issued over 80 fines ($2billion) so far. However, the role of crypto regulator may pass to the Commodities Futures Trading Commission (CFTC), not the SEC, and thus give the US crypto-regulatory clarity whilst encouraging innovation for digital assets.

Welcome to this week’s Digital Bytes. This week we have analysis on the following topics:

Is the UK more receptive to digital assets than you think? - the Financial Conduct Authority (FCA) has come under pressure to speed up the time it takes to admit new organisations to its crypto register and has also provided greater regulatory clarity around digital assets. Meanwhile, the UK government, Treasury and HMRC have all been vocal in their support for digital assets, as can be seen with the UK looking to issue its first blockchain-based debt instrument.

How blockchain is impacting the electric vehicle market - climate change has been one of the biggest concerns of humankind, our actions very much having fast-tracked these changes over the last century. One such activity is by the transportation of ourselves as humans. This mere activity has caused severe connotations for the environment and climate at large. Electric vehicles have emerged to solve this problem, but the adoption of electric vehicles creates another problem of its own. This article will be looking at the many ways blockchain technology can solve this problem.

How the metaverse will change the world - many companies are engaging with the metaverse, already partnering amongst themselves, pouring capital and raising funds. In 2021, $10 billion was raised by metaverse-related companies, surpassing as much as twice what they raised in the previous year. The global value creation opportunity from the metaverse is predicted to be $1trillion by 2030, and potentially will change our world.

Crypto’s flight to transparency- the decision to freeze withdrawals by Celsius and Three Arrows Capital only weeks after Terra’s algorithmic stablecoin collapsed has dealt yet another blow to investor confidence in crypto. The regulatory and, ironically, transparency puzzle pieces are still missing from the crypto jigsaw.Recent events have been attributed to failings of decentralised finance (DeFi), however, contrary to popular belief, DeFi actually did its job. Investors are now hyper-aware of how their assets are being treated or rehypothecated and are demanding more transparency.

Welcome to this week’s Digital Bytes which as articles on the following topics:

Blockchain and mutual funds: the choice is about to explode - increasingly, investors have access to blockchain technology either by investing in firms which are actively engaged with the technology or by purchasing digitised mutual funds. The use of blockchain technology that powers much of the crypto industry is potentially set to challenge and have a far greater impact on the asset management industry than cryptos ever will. Therefore, your savings and pensions will also be impacted, although many mutual fund holders will not even realise it.

Blockchain in the medical industry - the principle on which blockchain technology functions is very straightforward and constantly evolving, increasing the network of blocks that adapt to industries’ needs and specific characteristics. Alongside being a catalyst for utmost accountability, its accurate, secure, and tamper-resistant nature makes it seemingly impossible to mimic, falsify or manipulate data. Blockchain has unlimited benefits in the medical industry, bringing improvements to different healthcare actors.

Blockchain technology: its impact on the legal profession - the introduction and use of any technology in the legal sector is at risk of being a slow process since lawyers are inherently cautious and reluctant to change - they know only too well the potential legal and financial implications involved. Blockchain technology is creating considerable legal work for lawyers from those organisations involved with NFTs, the metaverse, digitisation of equities, debt instruments, mutual funds, real estate etc. Furthermore, the technology is being used in the form of holding, sharing and storing data as well as smart contracts, all offering the proposition of automating but certainly not replacing lawyers.

Cryptocurrency volatility provides an incentive for robust regulatory framework - different jurisdictions have taken a variety of approaches when it comes to regulating cryptocurrencies. Despite the recent falls in cryptocurrency markets, there is still institutions' interest in this asset class. However, in order to achieve largescale crypto adoption by institutions, clarity around how cryptos are regulated is required.

Welcome to this week’s Digital Bytes which as articles on the following topics:

Blockchain and copyright: is the recent brouhaha over Boarded Apes just monkey business? - Andy Rosen has had a highly successful career as a professional photographer in London and Hollywood. He has been a builder of a blockchain-based app who has also analysed and traded cryptos for over six years. This article gives his thoughts on how he believes blockchain technology can help in relation to copyright protection and what is happening with one of the most valuable collections of NFTs - Bored Apes.

Challenges in bridging the institutional divide between TradFi and DeFi -Traditional Finance (TradFi) needs to evolve and adapt to embrace Decentralised Finance (DeFi). Two key challenges exist: firstly, to ensure that the regulation of DeFi has the same, if not better, standards than TradFi whilst being able to harmonise different jurisdictions' regulatory approaches and secondly, blockchain technology makes data potentially more transparent and available but it is fundamental to understand what gaps there are in the data.

How blockchain technology and the metaverse are helping the mental health sector - facemasks and hand sanitisers are not the only things popularised by the COVID-19 pandemic. Mental health became a topic most could relate to during this time as many people’s mental well-being was affected in one way or the other. Both blockchain technology and the metaverse are proving to be able to offer some solutions to growing mental health sector issues. Caution is needed, however, as potential over-use of the virtual lands within the metaverse could exacerbate mental health challenges in the same way in which social media platforms have done so already.

Tokenisation as a solution – A summary of a recent webinar by Chris Luck, a partner at CMS law, that considered the benefits and examples of how digital assets are evolving and technology is being applied in the sector. The webinar addressed some important questions, is the recent crypto news volatility a game-changer? Will tokenisation of assets and digital technology continue to grow if so how, and is technology and regulation in a better shape?

Welcome to this week's Digital Bytes which analysis on the following topics:

Job opportunities for people who wish to work in the blockchain industry - growth in the blockchain industry has been at its the highest over the last couple of years, with blockchain technology bringing new life to other industries as it solves their problems. For those already in the industry this is great news but for those who are not and wish to join, they still have to figure out what jobs and roles are available for them in this industry.

Blockchain's impact on the FX market - the FX market is huge, with over $6trillion worth of trades a day being executed. The systems and procedures to communicate and settle trades globally have remained the same since the 1970s but are now on a change of path. Blockchain technology is at the heart of many of these changes and as we see a growing use of digital currencies, such as stablecoins and CBDCs, could we see regulators actively encourage FX firms to embrace blockchain technology?

DeFi: from niche to mainstream - DeFi has risen from simply servicing holders of cryptos, since it has now begun catering for other asset classes as it potentially goes mainstream. DeFi offers the possibility to reduce cost, automate compliance, increase efficiency, improve transparency and make financial markets more inclusive, and thus turbo-charge open banking initiatives by bringing in greater competition and choice for investors.

Slaying the myth of Bitcoin scarcity - the amount and variety of Bitcoin IOUs and the opaqueness of the collateral used in the mushrooming 24/7 trading venues has resulted in an extremely fragile crypto market. The reality is that Defi and traditional derivative wrappers have slayed Bitcoin scarcity. This messy meltdown and reputational hit are an opportunity for an innovative solution (which is outlined in the end of this article).

Welcome to this week's Digital Bytes which has an analysis on the following topics:

Collapse of crypto price, reality or a buying opportunity - whether or not to ‘buy the dip’ cannot be answered in one word. There are many factors one needs to consider; potentially spreading the buying of volatile assets such as cryptocurrencies over a period of time to smooth out the price you pay can prove to be a lower-risk way to gain exposure. Cryptocurrencies remain a very risky volatile asset class and knowing when to buy and sell is often a matter of luck, not judgement, as sentiment often tends to be the biggest driver of prices.

Can Gresham’s Law help predict which crypto to buy? - there is a rather obscure economic law called “Gresham’s Law” and how it applies to blockchain networks. Simply put, Gresham’s Law states that “bad money drives out good”. Whilst this was previously used to explain the way in which those coins with high commodity value (value of the metal) would be taken out of circulation, a modified version of this law can be applied to explain how high value utility tokens will become increasingly scarce over time and how, conversely, lower value tokens will predominate as a medium of exchange.

Is pay to play really an effective business model? - the play-to-earn business model, a recent innovation in the gaming industry, gives gamers ownership over in-game assets and allows them to increase their value by actively playing the game. It avails users the opportunity to not only add value but also reap benefits.

Do not choose between gold and Bitcoin: own both - you don’t need much Bitcoin to make money when things are going well, but you do need quite a lot of gold. Moreover, it is highly unlikely that gold and Bitcoin will both be overvalued at the same time since they are naturally counter-cyclical. There is no need to choose between gold and Bitcoin, but to combine them for their strengths and weaknesses. This combination, on a risk-weighted basis, is a powerful idea and is the liquid alternative offering exposure to gold and Bitcoin.

We are intending to move our weekly mailings to Substack over the next couple of weeks and will be loading our articles on Substack. All current subscribers will be moved to Substack. This link shows how it will appear in Substack - https://digitalbytes.substack.com/p/29th-june-2022-digital-bytes-7a6?sd=pf

Welcome to this week's Digital Bytes which as articles on the following topics:

Buy Now Pay Later embraces crypto and blockchain - there has been considerable growth both in interest and also in the number of users for BNPL and many of the platforms that offer this facility are using cryptos and the blockchain technology as a way to reduce costs and bring greater transparency to customers. Time will tell if BNPL firms can survive as many are currently not profitable, and the potential regulation of the crypto market could prove to be an added challenge for those BNPL firms using these digital assets.

Fine wines on a blockchain: why bother? - Blockchain technology can be used in the wine industry, both to help with provenance and also improve trust for buyers and sellers about fine wines. NFTs are now being used by vintners, whereby making it easier to invest in wine for smaller sums and reach a global audience. Given uncertain times in traditional markets and for cryptos, could investing fine wine prove to be a shrewd ‘liquid’ alternative which, if nothing, else can be drunk or gifted?

Crypto bear markets are not a bubble: they are down, but not out -Despite the recent dramatic fall in cryptocurrencies, they have proved able to keep trading 24/7. Lessons need to be learnt, though, as to how organisations need to communicate with the owners of crypto, and investors clearly need to exercise caution. However, the technology that powers cryptos can and indeed is now being used to create digital assets of real tangible assets, which could well prove to radically alter traditional markets. Turbulent, but exciting times are ahead for all!

Current trends on cryptocurrencies in the English courts - Rishi Sunak, UK Chancellor of the Exchequer, stated his ambition "to make the UK a global hub for cryptoasset technology". If we are to meet that ambition, businesses and individuals (as well as policy makers and government officials) will need to understand the rapidly developing environment for cryptoassets and the risks and opportunities they present. A variety of regulatory developments, including the 4th April 2022 Treasury response to consultation on cryptoassets, have occurred over the past couple of years in the world of cryptoassets and the wider universe of blockchain and distributed ledger technologies. As the law on cryptoassets develops, it will be essential to understand the legal framework within which more new forms of rights and liabilities will be considered. However, a vast amount of legal landscape covering the proprietary nature of cryptocurrencies and the enforcement of on-chain property rights and remedies remains uncharted.

We are intending to move our weekly mailings to Substack over the next couple of weeks and will be loading our articles on Substack. All current subscribers will be moved to Substack. This link shows how it will appear in Substack - https://digitalbytes.substack.com/p/22nd-june-2022-digital-bytes.

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Welcome to this week's Digital Bytes where we have analysis on the following topics:

The role of metaverse as an educational tool - when it comes to education, learning and training, there is always a need for innovation. Schools and education centres do more than simply teach; they actively shape and prepare young people for the future - something which goes beyond the workplace, lecture theatres, classrooms and colleges. The metaverse has many established uses in the digital age but when it comes to education there are speculations as to how the metaverse can significantly improve the sector.

PayPal: super-app or Trojan horse? - PayPal is now allowing its 300million clients to trade crypto. This is presumably being driven by client demand since in a survey in conjunction with Deloitte, 75% of merchants are looking to accept crypto as a form of payment. Are we seeing the rise of a super-app from PayPal, or a Trojan horse, as it creates the infrastructure for others to move between digital assets and traditional fiat currencies?

Lessons to be learnt from Terra's collapse - the downfall of Terra Luna has shocked the cryptocurrency community. Caused by different moving parts eventually hitting equilibrium, the failure could have been avoided. The collapse was dramatic and its effects were felt in the Terra Luna ecosystem and the wider crypto market due to its affiliation with Bitcoin (as a reserve). Mr Do Kwon, the brain behind the project, had developed a brilliant idea, so perhaps there are things we can learn from the collapse of his project. Terra’s birth and death are fraught with lessons for the crypto industry and a cautionary tale for algorithmic stablecoins.

Trading tokenised funds: efficiencies and challenges - Franklin Templeton recently launched the first mutual fund that is solely traded on the blockchain. Although it is a pilot, it provides a powerful proof of concept for an asset class that is both very popular for retail investors and massive in terms of assets under management. In this note, we discuss the potential challenges and efficiencies from using blockchain technology to process transactions and record share ownership in tokenised funds.

Thank you for all the positive feedback and do keep your suggestions as to other topics for us to cover in future editions.

Welcome to Digital Bytes for 1st June 2022 where we have analysis on the following topics:

Insurance and digital asset mining - the digital world is fast-moving, especially if compared to the more traditional financial landscape which can appear glacially slow in keeping up with the latest and greatest cutting-edge technology. Crypto-mining is attracting global multinationals such as ExxonMobil and ConocoPhillips yet, to date, there has been a lack of appetite for underwriters to offer insurance on such business activities. However, as awareness and adoption of digital assets and miners grow, we are beginning to see more interest in engaging in these fast-growing sectors from the insurance industry.

ESG: blockchain technology’s impact - the importance of ESG in determining the value of a company is increasingly becoming evident. Recently, the value of global ESG assets is estimated to exceed $53 trillion by 2025. ESG-rating firms provide corporate social credit scores that rank companies’ negative effects on the world - for instance, pollution, corruption and modern slavery.

How NFTs can help charities - blockchain innovations are becoming a scale wherein ideas and systems are being weighed. The charity industry has not been excluded in this either as it begins to instil NFTs as a means to raise money. For this to work in, what is, an altruistic industry, we must assess where it has succeeded before, the challenges it has faced, and both its advantages and disadvantages. NFTs offer the promise of a set of new digital tools with which to help the charity sector offer greater transparency and appeal to many more ‘digital-savvy’ donors.

How, where and why are blockchain technology and digital assets being used in Africa - despite bans in some African countries, there is considerable interest in digital assets and the use of blockchain technology. Several reasons have contributed to this, mostly infrastructure problems. Whilst some governments are antagonistic, many African governments have begun embracing blockchain solutions. We have seen a huge increase in the number of digital wallets in 2022 so far, but why are digital assets being used in Africa?

Welcome to this week's Digital Bytes which has analysis on the following topics:

Blockchain’s impact on the agriculture sector - the use of blockchain technology in the agriculture sector is giving access to more information, new forms of finance, the ability to enjoy cheaper insurance, and reaches out to the unbanked farmers - all being just a few of the advantages it provides. There are without doubt challenges, but we are already seeing widespread adoption of blockchain technology (together with the use of digital assets) in the agriculture sector around the world. But to have greater adoption we will need to see more education in order to bring about change. The drive will come from consumer demand for greater information about sustainability and the provenance of what is being eaten.

NFTs, an alternative way to raise capital – There has been a huge increase in awareness and demand for NFTs. These digital representations of a wide variety of IP are being used by international brands as well as individuals to raise capital but also as a way to strengthen communities, build customer loyalty and fan bases on a global basis. NFTs do face challenges and legal advice ought to be taken in order to avoid regulatory and copyright infringements. However, as we see the growing adoption of the metaverse we are likely to see NFTs increasingly being used as an alternative tool to raise capital.

How to identify a winning cryptocurrency - perhaps the most important step to take before choosing a crypto to invest in its research. It is imperative to gather information about a coin before putting money into it; you should know that trading or investing in cryptocurrency is a two-sided coin - it can make you poor as much as it can make you rich.

If banks are from Mars, then cryptocurrency and blockchain are from Venus - this has largely been the status quo for over a decade since the birth of the Bitcoin network in 2008. However, could the planets be now aligning themselves as a convergence between traditional finance (TradFi) and decentralised finance (DeFi) becomes a reality?

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