Why is the Traditional Financial System Afraid of Cryptocurrencies?

Here’s another thought-provoking blog submitted by Jitendra Rathod, newsletter contributing editor.

First they ignore you, then they laugh at you, then they fight you, then you win.” Mahatma Gandhi said these famous words to describe how his unique strategy of non-violence that fired a nationalist movement, was perceived by the oppressive British Rule in India. He, however, had ultimate faith in his vision that eventually became instrumental in freeing India from the clutches of the British Raj that ruled over the Indian subcontinent for close to two centuries.

Are cryptocurrencies the present day David?

Time and again, these very words have been instrumental in defining a newcomer underdog that marches forward to challenge the monopolistic institutions, whether in culture, society or even in global economy. Today, the world is poised as it watches another such David take on the mighty Goliath. After centuries of financial hegemony, banks seem to have found their match in cryptocurrencies.

It was the very audacity with which banks, colluding with governments, behaved with peoples’ money, that fuelled the innovation we know today as Bitcoin. It was invented as a novel electronic peer-to-peer system of payment that would require no intermediaries, would be immutable, required no trust and had a decentralized, unregulated currency at its heart. Today, while the world is going gaga over the limitless opportunities and capabilities of cryptocurrencies, banks are losing sleep over the dwindling prospects of their own future.

Banks have played their part in demeriting crypto

While the world was coming to terms with the concept of cryptocurrencies, the banks were busy ignoring it, thinking that it was just a passing fad. However, when the price of Bitcoin started rising since the beginning of 2017 and exploded at the end of that year, banks and other financial institutions laughed cynically. It was a bubble waiting to burst, they said.

Spokespersons of reputed financial institutions around the world stuck their necks out to speak ill about cryptocurrencies, its various features and even the underlying technology. Yves Mersch, member of the European Central Bank’s executive board talked about the fact that bitcoin transactions took several hours to complete. “At these speeds, if you bought a bunch of tulips with bitcoin, they may well have wilted by the time the transaction was confirmed,” he said at an event in London. Mr. Mersch, however, conveniently forgot to mention how the current cross border transactions took 3-5 days to complete.

Augustin Carstens, head of the Bank for International Settlements described bitcoin as “a bubble, a Ponzi scheme and an environmental disaster.” Mr. Carstens probably forgot to mention that the traditional banking system was the biggest Ponzi scheme in human history.

Nouriel Roubini, American economist, has become notorious for being the biggest critic of the crypto phenomenon. He has called cryptocurrencies “the mother of all bubbles” favoured by “charlatans and swindlers.” He has said that the fundamental value of bitcoin is zero. Mr. Roubini seems to have forgotten that same is the case with the United States Dollar.

JP Morgan boss Jamie Dimon has called bitcoin a fraud “that would ultimately blow up.” A few months later, news surfaced that JP Morgan was considering a bitcoin futures product. Now this is hypocrisy of the worst kind.

In a news that came as a slap on the face of traditional financial institutions, the Polish central bank was found secretly funding anti-cryptocurrency campaigns on social media. It had paid famous polish Youtuber Marcin Dubiel more than $27,000 to create fake videos to discredit cryptocurrencies.

The Bank of Russia has called cryptocurrency a pyramid scheme. China has brought a blanket ban on cryptocurrencies. The Reserve Bank of India has asked all of the Indian banks to stop providing services to people who deal in cryptocurrencies, effectively sabotaging the people’s collective attempt to trade in a novel asset type.

But cryptocurrencies are ready for a long, drawn-out battle

We have seen the financial institutions’ attempts to laugh it out and now they trying to fight it out by choking off what is slowly becoming a mass movement. However, what banks do not realize is that the more they try to discourage people, the more people will see for what they truly are. The bank’s cynicism of cryptocurrencies is, ironically, adding fuel to the fire.

There is good reason for financial institutions to fear cryptocurrencies and some banks have been candid enough to admit it. the Bank of America recently said that cryptocurrencies posed a competitive threat to their business.

Why are banks afraid of crypto?

While banks have been harping about the risks of cryptocurrency being used for money laundering and other criminal activities, this submission is completely unfounded. Each transaction is immutably recorded on the blockchain that is accessible by public. Every account has been verified on a cryptocurrency exchange and if the law requires, the exchange can share all of the account details with the authorities. So where is the question of laundering money through cryptocurrencies?

Cryptocurrencies cut down the role of intermediaries and that’s where banks feel threatened. If people start saving in crypto, banks won’t have money to play around with. If people start buying things with crypto, banks won’t make money on debit and credit card fees.

Most importantly, cryptocurrencies are immune to the kind of manipulation you see with fiat currency. Look at the market crash of 2008 and you’ll realize what we’re talking about. It was a classic case of banks manipulating a system that was never transparent in the first place. Also, banks lend more than they have through a neat system called “fractional reserves.” But with crypto, there is no leveraging. Either you have it in your wallet, or you don’t.

Fiat money is prone to inflation. The banks and the government can print as much money as they wish thereby decreasing the value of existing circulating money. Bitcoin, on the other hand is capped at 21 million, so there is no risk of devaluation.

Finally, the state cannot steal your crypto assets. So, isn’t your fiat money safe in banks? Well, if that is what you believe, look at what Cyprus did during its 2013 financial crisis. All account holders who had 100,000 or more euros in their accounts had to lose a sizeable amount of their savings to save the Cypriot economy. You, however, don’t hold crypto in a bank. You hold it in your personal wallet and have access to them every moment of the day.

Parting thoughts

This is a battle that may well determine the future of money itself. For centuries we have been forced to use a medium for payment that has lost much of its backing and isn’t even worth the paper on which it is printed. It’s value is further undermined by the banks who hold them and the governments who print them. We, the people, are held at the mercy of traditional finance to revere a currency that has lost much of its value and charm.

The time is ripe for a revolution and cryptocurrencies are leading the charge. Financial institutions are fighting to survive and it looks like they are losing this all-important battle.

Gameboard Update

“Let’s Give Tools to Families of the Deaf”

We are very excited to tell you that Gameboard.Tech in Guatemala continues to grow its network of alliances. We have a new partner, a young and dynamic company led by two young enthusiasts who want to change the world and achieve a more inclusive society. Charlie Galdamez and Diego Carranza have founded KitSord, an application that teaches sign language to people who live with and/or interact with at least one person with a hearing disability. With its accessible and easily understandable content, it helps those who live or interact with the hearing impaired to meet their communication needs.

Driven by our company mission to contribute to society and to improve the situation of the country, we made a commitment to help with the app. And because we love to play, we managed to integrate a Gameboard solution.

Working together for several weeks, we developed a game design document, which analyzes the application and its players, the type of players, and what motivates them.

We analyzed the strengths of the app and created game dynamics around them. These dynamics became the moves or plays of the game. We then assigned points and created levels. This way the player goes through a process in which he progresses and receives prizes. In this case, prizes are points or keys that can be exchanged throughout the course of or at the end of the game. This motivates players to keep  participating.

All of these game dynamics, and the analysis carried out, helped apply the different motivators to the app. The goal is for users to return and new players to come to use it. We want to inspire loyalty, while supporting the non-listening community throughout Latin America by teaching more people to communicate by sign language.

We are convinced that by working and promoting our values of ethical, fair  and transparent conduct in business, we will achieve a better and more inclusive world.

Slips Update

The  Slips team spent the last week working on a project plan to outline what they want to do over the next two months. As mentioned in the last update, they managed to raise a seed round a few weeks ago (in addition to the pre-seed funding they received from Expanse through the EXP Grants program). So now with added funds, the team wants to create a plan for how they will spend the money. They intend to build the shop, add voice chat and some other cool features, but they are now looking on an April timeline, during which time they are also hoping to raise their Series A round of financing.

Kyle recently moved to San Francisco and has been speaking with investors and other potential stakeholders about Slips. Husain is currently sorting his arrangements for the move and will be joining Kyle next week. The reaction they have received so far has been amazing, and it seems that there’s a lot of appetite in Silicon Valley for a product like Slips.

The team has also finalized deals with a number of parties, e.g., the developers they were working with last year are on board again, (which was a big deal for continuity’s sake!), and they’ve also got some marketing lined up so people will start to use Slips in the next few weeks.

Slips also plans to introduce Tokenlab to the community they are working with to promote Slips, so this is definitely good news for LAB stakeholders. The team is busy with lots of behind-the-scenes work, which is extremely complicated (legal, shop compliance, etc.). This is primarily what is holding up the official release of Slips.

The Slips team has still not sorted all the bugs out, but it’s getting closer. They need more volunteers to do test sessions on Slips and report issues. The more times they can test Slips, the quicker they would be able to spot and fix problems, which is hampering their launch. They request interested individuals to help them in testing Slips. Please contact them on the Slips channel on Discord.

The entire Expanse community has been asking about when Slips will be released. The team knows the excitement that is surrounding their progress and launch, but they have had a slow start to the year. Trying to raise funding was a complicated process and they also had to factor in big moves (new state for Kyle, new continent for Husain), which slowed them down further. But, the team is finally building up momentum, and lots of interesting things will start to fall into place.

We need to appreciate that while many people in blockchain fall into the anarchist camp, unfortunately, a gambling-related platform like Slips cannot be non-compliant to existing regulations. And getting all the legal and regulatory boxes ticked is lot of work, that is both time- and resource-intensive.

One major issue the team is concerned about is the fact that although the Slips user experience is quite nice, it also means they might be seen as a money transmitter since they directly handle user funds by having access to the private keys. So they will need to do a lot of re-working their existing code for the sake of appeasing the country where most of their userbase will reside. If you are interested, this document is fascinating reading about Virtual Currencies and Online Gambling in the US:

https://cloudfront.escholarship.org/dist/prd/content/qt4m93289m/qt4m93289m.pdf

So on the whole, the team is doing a lot of uninteresting work at the backstage to lay the foundations for a successful fund-raise and release in the next few months. Stay tuned, and thanks for the support.

Developer Updates

Tokenlab

Tokanlab 2.0 is about to be handed off to beta-testers. This version brings many updates and new features, including:

  • Additional templates/protocols
  • New deployment methods
  • Ability to use a coupon code for payment
  • New token management tools through the Admin Panel

Beta-testing begins this weekend, with deployment of 2.0 happening in time for the next newsletter, 3/1.

UKYC

We could not be more proud of the progress made on the alpha version of Universal Know Your Customer (UKYC). Christopher Franko wrote the specifications, followed by wireframe design by Omar Alvarez and coding by @Bitjohn. It’s exciting to watch this BIG Idea come to life.

UKYC is trustless identity middleware. Customers can enter their identity information one time and receive verification badges that are transportable to other systems. This eliminates the hassle of inputting KYC information on multiple platforms and decreases identity fraud possibilities in that information is entered in only one place, with the information encrypted and verified by only one entity. Customers receive badges based on the verification results. Companies can then create gateways they can use to filter traffic based on badge identity criteria.

Exchange Listing Update

Expanse (EXP) and Tokenlab (LAB) are both now trading on Graviex Exchange, Graviex.net. At press time, Beaxy Exchange has communicated that Expanse will be announced as a round-three listing next week. EXP will be available for trading when the exchange first launches later this month.

Tokenlab A – Z

Technology Expert Fills a Client Void – A Tokenlab Story

One of our esteemed community members and Expanse Army officer @AndrewKoski, started in technology at an early age and grew his expertise throughout middle and high school. Over time, he found he was able to monetize certain technology trends that were scalable / repeatable. Since then, he has focused on three distinct markets: cryptocurrency, rapid prototyping and project management.

By any measure, Andrew is an early adopter in regard to blockchain technology in general and cryptocurrency in particular. Back in 2011, a friend of his, Adam Fathelbab (owner of Southlake Computers), told him about his Bitcoin investment ($20 a coin). After doing his own research, he took on Litecoin, which was 50 cents at the time. It has truly been a roller coaster ride that continues for him today―even through the close of Mt. Gox and BTC-e. He continues his involvement in the blockchain community by managing projects, consulting with various businesses and participating in blockchain roundtables and discussions.

@AndrewKoski

Andrew has followed Expanse for a while and is optimistic about the impact Tokenlab will have for his clients’ businesses. The ease with which he can now mint tokens for their projects promises to shorten the path to achieving their business aspirations. Plus, once he introduces clients to the Admin Panel, they have the ability to manage and share their tokens independently and to take advantage of the utility token dApps accessible through the Module Marketplace.

“TokenLab is a great resource, especially since it makes writing tokens to the blockchain so easy,” said Andrew. “There is nothing else like it out there.”

We Have So Much That We Can Give

On Sunday, I had the opportunity to travel to Rio Dulce, Izabal department of Guatemala in the Caribbean Sea, thanks to Expanse. This town is very close to Belize. It borders Peten (the home of the Mayans) and Honduras.

The largest lake in Guatemala, Lake Izabal, has great forts and ports. It was a very important city at the time of the conquest, and is a mixture of Mayan and Garífuna cultures. Besides impressive landscapes, it is a door to the Caribbean. Beauty aside, it also has great needs in terms of health and education.

The group I traveled with is the True North Missions Foundation. It seeks to provide comprehensive medical care to children marginalized by the civil war that lasted 36 years until 1999.

There are more than 200,000 people who sought to live in remote places to avoid being persecuted, and today they have many needs. The United Nations recognizes them as “The Forgotten People.”

From the city, it was a 10-hour bus trip followed by crossing the lake to stay at the shore of Lake Izabal then be ready for a week of challenges.

Every day for five days we travel to remote communities and give medical assistance. Children and women are mainly cared for; husbands are working all day.

The team consisted of five translators, five doctors, an emergency doctor, and a pharmacy with medicines for preventive care. Dr. Alan Barber, the forerunner of this organization, took charge of visits to homes of people who could not come to us due to the state of their health.

We went through five different communities, sometimes by water, sometimes by pickup and sometimes by walking great distances. In numbers:

  • We were a team of 15 people, each donating their time, doctors who came from the United States, local interpreters (Kekchi – Spanish, Spanish – English) and others helping.
  • All travel and transportation expenses are paid by True North Missions.
  • I traveled 680 km by bus and walked a total of 56 km in a week. I traveled by boat approximately 50 km to reach some communities.
  • We attended to approximately 500 children and adults in 5 days, from 9:00 am to 1:00 pm.
  • The clinic and pharmacy were set up at the community school.
  • The main problems were skin (mange and fungus), dehydration, dental problems and parasites.
  • There are no dental or extremely serious services, so these patients are referred to the health center. They usually do not go.
  • Each person was given a dewormer, toothbrush and vitamins for 30 days to the children; besides the treatment of the problem they had.
  • This mission is carried out two or three times a year in the most remote communities. All others have access to the health center.

Compelling quotes from the trip:

“If you are 5 min before, you are in time. If you are on time you are late and if you are late then you are not there.”

Dr. Alan Barber.

“We are wasting the daylight.”

Dr Alan Barber

“Some of us learn on the way to be entrepreneurs, but you always have to study to do it well. You have to go without fear for life and give it a try.”

Olivia Interpreter Spanish – English.

“Respect and honesty open all the doors, you can spend all your money, but not others.”

Marcos the Captain.

“In life you have to travel and discover, alone or accompanied, travel, the world is so small, if you don’t tell me, what do you work for?”

Francisco interpreter Kekchi to Spanish and English.

There were many stories that I had to re-live, from a girl of 15 years with a baby of 2 who will surely have 8 children by the time she turns 40, to a girl with down syndrome without special care and many children with parasites or scabies. But all were very grateful that we were there and with a smile to give.

In the community we were given lunch, a chicken soup that should have 8 Michelin stars because it was made with love. I learned to be grateful. “It is not the same to have 100 and to give 10, as to have 10 and to give 10.” When you can serve, do it.

Omar Alvarez

CCD – Expanse.

Can Blockchain Remove the RoadBlock to a Better Democracy?

Here’s a thought-provoking blog submitted by Jitendra Rathod, newsletter contributing editor.

After the end of World War II up till the 1970s, experts and governments alike had immense faith in centralized systems of governance and economic management. This was mostly owing to the success of centralized governance in wading of the Great Depression following the guidelines of the economist John Maynard Keynes.

However, after the oil shock of the 1970s, all this changed and democratic decentralization was perceived to be the panacea which could solve most developmental, political and social problems. Moreover, this idea found its way into most of the literature produced by the developmental organizations and other international bodies including the United Nations.

Soon decentralization, both in terms of political and economic matters, was the bar by means of which the success of governments and societies was to be measured. As it turns out, this approach has proved increasingly efficient in upholding the principles of democracy and liberalism; especially the principles of participatory politics, and that of equity (i.e., equal opportunity) in the social sphere. However, in the economic domain, much equity has not been induced through democratic decentralization.

Blockchain and Decentralization

The blockchain technology inherently is based on the principles of decentralization. It is such a technology which when applied to the economic processes and public service delivery can usher perfect infallible equity which is lacking in the present models of decentralized democracies.

Blockchain systems can help avoid centralization of data which has turned into present-day capital. By preventing this precisely, it ensures that no single authority is capable of controlling the flow of data or benefiting from it singly without sharing the gains from them. Moreover, such a decentralized aspect is ensured through smart contracts, making it fool-proof.

Smart Contracts

Smart contracts are digital contracts which are time stamped documents and are cryptographically created. These contracts cannot be tampered with manually once they are created and the terms of the contract are executed only when the predetermined criteria which were coded initially, are executed. Therefore, by using these contracts instead of traditional documents in diverse spheres of public service delivery, ranging from elections to economic opportunities like license distribution, registration of properties among others, these systems can be made more efficient.

Land records registration systems can be significantly benefited from the introduction of blockchains so that fraudulent claims can be avoided. Even various forms of corrupt practices related to the status of land holdings can be permanently recorded. Such methods will have a significant impact on the overall rule of law.

Other services like tender distribution can also be shifted to smart contracts, ensuring the right criteria are met before handing the tender to any particular applicant.

Cryptocurrencies

The financial system is particularly encumbered with monopolistic tendencies, which, in turn are detrimental to democracy as they lead to different kinds of cronyism. It not only undermines the free market, which is indispensable for the functioning of the democratic system, but also affects the decision making process in other spheres; especially the fiscal and monetary policy decisions, apart from environmental guidelines, etc.

Cryptocurrencies, because of their decentralized nature, can find their way through such fiscal traps. These digital currencies are beyond the reach of any particular financial heavyweights who can monopolize on them.

Most crypto tokens are accumulated in the hands of dedicated community members who have a significant stake in the working of their respective ecosystems. Such practices can enhance the functioning of the free market economy, creating equal economic opportunities for all deserving individuals, thus strengthening the basic democratic structure by making the whole system more inclusive. The crypto-based peer to peer microlending platforms are an example of this.

The decision-making processes will become more democratic within the firms and guilds (among others), and eventually, that will be reflected within society at large. Moreover, the society, by means of the technology, does not have to be restricted within the state boundaries.

Global Democracy and Blockchain

The technology can help expand democratic institutions beyond national borders making decentralization a global phenomenon, not only rendering national coercive power monopolies irrelevant but also the global governance bodies like the UN or the World Bank.

However, that does not necessarily have to mean anarchy. In a society where everybody gets their say, everybody would actually push for peace and stability rather than chaos, because that would be in their mutual interest. This would be a kind of absolute and perfect democracy, the type which our Founding Fathers had envisaged.

Expanse is a vision that is synchronous with the loftiest ideals of democracy that is true to its core beliefs and just not in name. Expanse is not just a blockchain to create life-altering dApps, but is an ecosystem that seeks to uphold the epitomes of everything that we, as humans, have achieved in these thousands of years.

At Expanse, we seek to create an ecosystem that does away with everything that is wrong with the world – our governance models and our resource distributions systems, especially. Through disruptive technological advances, we have envisioned a world that is free from virtual shackles that bind and limit us and to empower every human being to utilize his or her boundless potential to create a world that is worth living in.

Conclusion

With the blockchain technology, we can take all questions directly to the people and would be able to ensure that all the decisions are implemented according to the pre-set norms without any bias. Likewise, it can also work at the smallest units of governance. Therefore, a uniform standard would be maintained in terms of credibility and efficiency in the whole system of human governance. And what’s more, the credibility would be ensured from the bottom up. Blockchain technology in itself is the true embodiment of democracy. Its unhindered use will bring about the true utilization of democratic principles that will create a more inclusive society.


Slips Update

The SLIPS team is currently busy with testing and bug-fixing. There is a “bug bounty” where people can join the SLIPS Discord channel and help with the testing and in turn, earn some EXP in rewards.

The team has decided to add voice chat to the app as it makes a huge difference and a lot of people mentioned during testing that this would be a great and a very helpful feature.

Husain is also busy talking with lawyers about the shop functionality and whether it can be a workaround for the betting issues, until they get a license to run a full-fledged betting platform.

SLIPS was also successful in raising a small seed round and they will be moving to SF as a result to try and raise another round in a few months’ time.

The arbitration and smart contract development has been delayed until they can go live and their focus right now is on fixing existing bugs and improving UI.

Behind the Tech – Alex Zhao

In this edition of Behind the Tech, we are featuring Yue Zhao, better known as Alex, our China Community Manager, who also heads our brand new Expanse office in China, which we mentioned in the last newsletter.

Alex holds a Masters Degree in Technology Management from the University of Bridgeport in Bridgeport, CT. Alex fondly remembers his days at the university where he made many friends, enjoyed all of the diverse activities he participated in and more importantly, learned from some of the best teachers and mentors during his degree program. “I think it is vital that we develop an open mind and a receptive attitude during our education years, because once we enter society as an accountable and contributing member, we are constantly learning from our surroundings and the people we encounter. If we are always in the “learning mode” it helps us to adapt to society faster and better. It also helps to use our knowledge to innovate.”

Alex was fascinated by technology during his formative years and has witnessed the transformation that technologies like the internet have brought to our lives. “We are in an era of rapid advances in science and technology. This progress is promoting the overall development of the entire human society.”

A true technocrat, Alex believes that the value of science and technology has been fully demonstrated and it has had, and continues to have, a profound impact on human
civilization―product development, economic reforms, social progress, national military strength and ecological well-being. “The development of science and technology has changed the face of the whole society and affected the destiny and future of mankind.”

Alex came across blockchain technology in late 2014. It caught his attention and he decided to learn more about it. He became a crypto miner. Asked about his first encounter with Expanse, Alex tells this story: “Because I am an ether miner, I was constantly checking out whattomine.com. I found EXP, and when I learnt more about it, I found it attractive. I did some more research and found that the Expanse project was great! I joined the Discord channel four months ago and it’s been a whirlwind ride since.”

Alex was made the China Community Manager and Ambassador of Expanse. He handles a small team of five people, and together they manage a large Chinese community that has swollen to in excess of 5000 people. At the beginning of the new year, they set up the Expanse office in Handan City, Hebei Province, some 275 miles south of Beijing, China. Alex hopes that he can invite more IT companies from Chia to visit them and get to know more about what Expanse can offer them. His team will also participate in a few blockchain events which, he believes, will be a good opportunity for some much needed brand publicity.

His paramount responsibility, and challenge, is to get as many IT start-ups to join the Expanse ecosystem. He goes about achieving this mandate in step-wise and strategic manner and is confident that he will have exciting news about new alliances and partnerships in the days to come.

When asked about his views on the future of Expanse, Alex seems pretty confident. “I think with Tokenlab, Votelock and some other great Dapps, Expanse is doing splendidly in demonstrating its worth and value to developers around the world, convincing them that they can build better apps on the Expanse chain.” He is confident that in 2019, Expanse will get at least 10 great Dapp projects in China. “As far as the cryptocurrency market is concerned, I believe that the bear trend should pass soon and we would see good consolidation now.


Alex works closely with Marcia, our Expanse CAO. “Alex is a joy to work with,” said Marcia. “He continues to delight and surprise us with his BIG ideas and enthusiasm for Expanse.”