Crypto in International Trade

Even though Industrial Revolution 4.0 is on its early stage, the way we live, work, and interact have fundamentally changed.

Moreover, it is inevitable that technologies like Blockchain and AI are here to stay. According to experts, the will energize The Fourth Industrial Revolution.

Technological innovations are crucial for global economic conjuncture; trade and international trade are аn evident empirical case. Trade has always been shaped by technological innovations which enable faster change and progress. According to most investors and market specialists, the brightest technological innovation for this industry in the Fourth Industrial Revolution might be Blockchain and cryptocurrencies.

During this year, several significant developments have already happened in the global crypto market that ensure; cryptocurrency adoption is happening right now.

Day by day, different companies take significant steps forward to commonplace adoption.

Since 2016 till 2018 we have noticed just a few announcements about minor and big companies who were ready to accept cryptocurrencies as a payment method.

In 2019, Germany’s most popular home food delivery app, Lieferando, began accepting Bitcoin as a payment method. Furthermore, Rakuten, often referred to as “Japan’s Amazon,” will be launching its cryptocurrency exchange in the coming months.

The first in history, Argentina and Paraguay, the third and eleventh largest economies in South America, signed a trade agreement on Bitcoin.

To settle the deal, Paraguay has bought pesticides and fumigation products worth $7,100 from Argentina.

It was the first time that two significant nation-states settled trade in crypto.

The good news just keeps flowing! Already large merchants like Starbucks, With Wholefoods, Nordstrom have begun accepting cryptocurrency payments in the form of bitcoin, ethereum, bitcoin cash, and Gemini dollar.

This awaited progress is made with the help of US-based payments startup Flexa and New York-based crypto exchange Gemini. The payment works via Flexa’s Spedn mobile app.

Over the years, there were many retail giants that have integrated crypto, though because of the volatility of cryptocurrencies it didn’t last long. So, will this be one that works out?

These developments prove that after years of skepticism about their security, value, and validation, it seems that cryptocurrencies like Bitcoin are ready to take on world markets.

Advantages of cryptocurrencies over traditional currencies for trade and especially for international trade aren’t few.

First and foremost is simplicity. You trade with the same currency and there is no exchange rate. When the company trades in different countries rising the big headache for managers. Different countries with different exchange rates add to the difficult buying and selling process additional complicity. With Bitcoin (or other cryptocurrencies) the problems with this barrier disappear as Bitcoin provides one single currency for everyone in the world to trade.

The other obstacles that cryptocurrencies take away are high fees with a long waiting time. With the banking system, sending and receiving money takes days, with Bitcoin and other cryptocurrencies it happens if not immediately then surely not during a few days.

The absence of transactions fees is the most favorable one for companies and not only. Dealing with banks for money transaction, businesses might pay high transaction fees. The P2P model of cryptocurrencies solve this problem too, as it removes third parties like banks, so there are no transaction fees.

While there are already significant steps made by some countries and big companies to adapt cryptocurrencies in our life, there still exist legal and cultural obstacles to overcome.

Cryptoenthusiast will say it’s only a matter of time for cryptocurrencies to take a trading industry.

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CRYPTOCURRENCY PORTFOLIO TRACKER [2019]: THE ULTIMATE GUIDE

Titans entering the Game

Though many crypto analysts had prognosis and hopes for mass adoption in 2018, it did not involve significant steps towards it. Furthermore, on January 5, 2018 no one could predict that the price of Bitcoin could plummet down from $16,665 to lower than $4,000 by December.

But the instability of cryptocurrencies and vague future in 2018 didn’t prevent some big companies from starting to create their cryptocurrencies, some have started ever since.

Telegram

First rumors about Telegram’s blockchain platform appeared in December 2017.

It’s called Telegram Open Network (TON), which uses a native cryptocurrency called Gram. On the following February, Pavel Durov formed the TON Issuer Inc. They sold almost 2.2 billion GRAM tokens for a total of $1.7 billion to 175 accredited investors during the pre-sale of Telegram tokens in the two private funding rounds, which makes by far the biggest ICO.

TON challenged a significant number of relevant problems many businesses and people face, eventually offering the following products:

TON Storage — the Decentralized Dropbox,

TON Services — the Decentralized App Store,

TON Payments — Micropayment Currency,

TON DNS — Decentralized Web.

In April 2019 Telegram launched a private beta testing of TON, and only a limited number of developers have access to it.

Telegram isn’t the first and surely won’t be the last company to have its cryptocurrency, but the main question is: Will it be the Wechat of Crypto?

JP Morgan

In 2017, JPMorgan CEO Jamie Dimon declared Bitcoin a “fraud”. On February 14th, 2019 JPMorgan became the first U.S. bank to create and successfully test a digital coin representing a fiat currency.

Umar Farooq, Head of Digital Treasury Services and Blockchain at J.P. Morgan, said:

“JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.”

It is important to state, that the JPM Coin is basically a stablecoin pegged to USD. Within this system, 1 JPM Coin represents 1 USD, and over time, JPM Coin plans to represent other major fiat currencies too. Moreover, unlike conventional cryptocurrencies such as Bitcoin and Etherium, it operates privately and is only used for money transfers between the lender and its clients.

JP Morgan’s Coin will be a massive improvement in efficiency and speed, bringing significant benefits for JPM and their clients, what matters is: will the others follow?

Facebook

Virtual currencies, payments, or peer-to-peer payments via messenger app are in the area of Facebook’s interest . In 2011 they launched Facebook Credits, in 2012 Facebook Gifts (life of each lasted two years). And we can’t forget about Facebook Messenger Payments launched in the US in 2015 and expanded to Europe two years later.

So the question has to be asked, what will change the presence of blockchain technology?

In a video interview with Harvard Law Professor Jonathan Zittrain, CEO of Facebook,

Mark Zuckerberg said :

“I’m thinking about going back to decentralized or Blockchain authentication. Although I haven’t figured out a way to make this work out, but this is around authentication and basically granting access to your information and to different services.”

At the beginning of this month, WSJ reported that Facebook has been working on their cryptocurrency-based payments system for more than a year and planning to dive into the crypto market.

Moreover, Facebook now has a team with more than 32 people working on this project and according to the other reports, it is looking to get VC firms to invest in their project up to $1 billion.

Facebook intends to stabilize the value of its homegrown cryptocurrency by pegging the value of its coin to a basket of different foreign currencies, which will give it a huge advantage over other cryptocurrencies with extreme volatility.  

These projects are exciting, and we must keep an eye on them.

The success of each one might be fascinating and will cause a massive impact not only in their market but also in blockchain and cryptocurrency industries.

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