Autor Cointelegraph By Wahid Pessarlay

The birth of ‘Ethereum Killers,’ can they take Ethereum’s throne?

The birth of ‘Ethereum Killers,’ can they take Ethereum’s throne?

Uverejnil používateľ | máj 3, 2022 |

Ethereum has proven to be a formidable force. While its major issues have spawned other coins aimed at addressing them, Ethereum looks to shed its old skin with the release of Ethereum 2.0.Despite the fact that Ethereum was created six years after Bitcoin (BTC) and the introduction of blockchain technology, the digital asset Ether (ETH) has grown to be the second most valuable cryptocurrency in terms of market capitalization, surpassing coins such as Litecoin (LTC), Ripple (XRP), Dash (DASH) and Monero (XMR), which were launched before it.The technology behind the Ethereum blockchain is the primary reason for its meteoric rise.Vitalik Buterin, the Canadian-Russian programmer and co-founder of Ethereum, explained to Business Insider that the Ethereum blockchain is intended to address Bitcoin’s “limited functionality.”The Ethereum blockchain seeks to foster innovation by enabling the development of decentralized applications (DApps). This is the foundation of nonfungible tokens (NFTs) and the Metaverse concept.While Ethereum has solved the problem of limited functionality, it hasn’t addressed some of the major concerns associated with Bitcoin and most blockchains because it relies heavily on the proof-of-work (PoW) consensus.Low scalability, network congestion, high gas fees and environmental concerns are some of the major issues, all of which are related to the PoW consensus mechanism used by Bitcoin and Ethereum.As a result, Ethereum has been making preparations to transition to proof-of-stake (PoS) for some time now in the soon-to-be-launched Ethereum 2.0.Proof-of-work vs. proof-of-stakeThe network verifies transactions on a blockchain using a consensus mechanism, which helps to ensure that no one spends the same money twice. The consensus mechanism is used to validate transactions, add them to the blockchain and generate new coins. PoW and PoS are the two main consensus mechanisms used to achieve this.Proof-of-work as a consensus mechanism uses mining to verify transactions. The computers in the network must solve a puzzle, and the first to do so gets to validate the most recent transaction and add it to the blockchain. The network rewards the first person who solves this puzzle and verifies the transaction with a token.While PoW contributes to the security of the blockchain, the issue with this consensus mechanism is its association with mining. The computers involved in mining use a significant amount of energy while attempting to solve these mathematical puzzles.According to data from the University of Cambridge, Bitcoin consumes more power than Argentina, the Netherlands and the United Arab Emirates. This raises significant environmental concerns.Furthermore, due to the reliance on mining, blockchains like Ethereum that run a large number of transactions are slow in terms of transaction speed, resulting in network congestion and, as a result, higher gas fees.The PoS consensus mechanism uses staking instead of mining to verify and include new transactions in the blockchain. PoS requires coin holders to stake their coins in a staking pool, which allows the stakers to validate new transactions to be added to the blockchain.Moreover, PoS eliminates the environmental issues associated with mining, allowing transactions to be completed faster and at a lower cost.Related: DAOs: A blockchain-based replacement for traditional crowdfundingThe birth of Ethereum killersEthereum killers are networks that seek to unseat Ethereum by addressing its blockchain issues such as low scalability, high fees, low transactions per second (TPS) and environmental concerns. They intend to accomplish this through the use of the proof-of-scale consensus mechanism. Cardano, Solana, Polkadot and Tezos are among the most well-known.CardanoCardano, for example, employs Ouroboros, a consensus and security protocol based on PoS. The Cardano blockchain is highly scalable thanks to the use of Ouroboros, allowing for faster transaction speeds and lower fees.Furthermore, Cardano’s Hydra project aims to increase its speed by more than 300%. Currently, Cardano can process about 250 TPS. However, the developers are working on a scaling solution to aim for a 1,000 TPS. The Cardano blockchain is energy efficient and addresses the environmental concerns associated with the Bitcoin and Ethereum blockchains because it uses a PoS consensus mechanism.Cardano also has 579 decentralized applications (DApps), according to Cardano ecosystem tracker Cardano Cube. This number is much lower than Ethereum’s nearly 3,000 DApps with more than 50,000 daily active users and 126,000 transactions per day, according to State of the DApps.TezosTezos is another contender that stands out due to its unique governance model.Tezos, unlike other blockchains, is self-governed in the sense that users are given the opportunity to upgrade and make design decisions. Because the governance is in the network itself rather than a development team, it has been dubbed “the blockchain designed to evolve.”Tezos also uses PoS in addition to its liquid proof-of-stake (LPoS) mechanism, which enables coin holders to transfer validation rights of their tokens to another user without necessarily losing ownership.Furthermore, Tezos has an upgrade ahead called Octez v13 that, according to the team, will increase its transaction speed from 215 TPS to nearly 1,000 TPS. SolanaThe Solana blockchain is compromised on a fundamental building block of blockchain technology known as decentralization in order to achieve faster transactions and a more secure blockchain. It does this by incorporating a core node in the network that acts as a secure determinant of time that the entire network agrees on, which is known as proof-of-history (PoH).To achieve even faster transactions, Solana employs a PoS consensus mechanism called Tower BFT, which is based on the PoH mechanism. Also as the blockchain with the highest staked value of $37 billion, Solana can process up to 50,000 TPS with very low fees, ranging from $0.00001 and $0.00025.However, several reports have surfaced of Solana transactions failing due to instability. Major network congestion in the Solana blockchain occurred sometime in January and lasted for more than 30 hours, resulting in transaction failures and subsequent liquidations. This was a result of bots spamming the network with duplicate transactions.Solana still doesn’t have many DApps onboarded. According to DappRadar, the largest PoS blockchain has only 71 decentralized applications in different categories including decentralized finance (DeFi), gaming and decentralized exchanges (DEXs). It’s also important to note that Solana is one of the largest platforms for nonfungible tokens (NFTs). According to CryptoSlam, Solana’s 24-hour NFT sales volume roughly touches the $23 million mark at the time of writing. Ethereum 2.0Ethereum has planned to switch to PoS from the start, and significant preparations have been made. The Ethereum 2.0, or Serenity upgrade, aims to increase the scalability of the Ethereum blockchain, improving transaction speed and lowering the gas fees.Eth2 will be implemented in three stages.The first phase dubbed the Beacon Chain went live on December 1, 2020, signaling the start of the upgrade. Holders are given the opportunity to stake their tokens during the Beacon Chain phases while the launch is being completed.The second phase which is slated to happen in Q2 2022 is called The Merge, which will incorporate the Beacon Chain into the Ethereum mainnetGeorge Harrap, co-founder of Step Finance, however, believes that transaction throughput and fees are still going to be an issue for Ethereum regardless, noting that these are likely to be solved in years to come even though other blockchains and layer 2s have done “exceptionally well” in combating them. Harrap told Cointelegraph that “Ethereum has a long way to go to be competitive there, but The Merge is progressing nonetheless.”Bart, pseudonymous community moment and operation supporter of Harvest Finance, thinks that The Merge is a step forward in solidifying Ethereum as the original blockchain and “the chain” to use. He told Cointelegraph that layer-2s like Arbitrum or Optimism will continue to grow in strength. “Alt-chains like Polygon, Avalanche and Solana have seen strong growth recently and I expect this to continue even after The Merge.” “The biggest impact for users is now anyone will be able to become a validator — as long as you have 32 ETH. This is one of the main draws for switching to proof-of-stake. Proof-of-work requires more technical capabilities, knowledge and hardware to set up,” Bart told Cointelegraph.On the other hand, Komodo chief technology officer Kadal Stadelman doesn’t seem very optimistic about Eth2. Stadelman told Cointelegraph that major Ethereum killers will still thrive even after The Merge happens because they have “the major advantage of extremely low gas fees for end-users.” He noted that “the upcoming merge won’t reduce gas fees on Ethereum. It will only change how blocks are produced,” he said, adding: “I don’t think that The Merge alone will lead to an influx of new Ethereum-based projects. Until Ethereum gas fees are reduced significantly, projects will probably adopt Ethereum layer-2 solutions, rather than layer-1. The more likely scenario is that new projects will continue to use alternative blockchain networks that offer layer-1 scalability and Ethereum Virtual Machine/Solidity compatibility.”Speaking on data validation post-Merge, John Letey, co-founder of KYVE, told Cointelegraph that “while many people are looking at a variety of changes that The Merge will bring, what it means for data validation, while important, has not been a topic of the discussion.” Related: Has New York State gone astray in its pursuit of crypto fraud?Once The Merge takes place, according to Letey, historical data won’t be required for validating the chain. This means there will be no incentive for nodes to carry this data around. Hence EIP-4444 was born, a proposal to automatically prune data older than one year. In other words, full nodes and Remote Procedure Call (RPC) endpoints won’t be able to sync from the chain directly and will have to rely on centralized endpoints. “As such, new nodes will have to get their data from a snapshot. This means that services offering truly decentralized access to validation and storage will become vital for projects, rather than simply an option,” he added.As the problems with the second-largest blockchain increase, the so-called Ethereum Killers see an opportunity. For example, Ethereum’s PoW working mechanism can process only 15 TPS while other competitors aim for thousands of transactions per second.On the other hand, Ethereum 2.0 is said to be the solution to many problems with the current Ethereum mainnet. While the project is expected to be completed next year, the crypto community anticipates the second phase, The Merge this second quarter. It remains to be seen how thoroughly these issues will be addressed.

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Decentralized credit scores: How can blockchain tech change ratings

Decentralized credit scores: How can blockchain tech change ratings

Uverejnil používateľ | apr 24, 2022 |

The concept of lending and borrowing is as old as time itself. Regarding finances, while some individuals have more than enough for themselves, others barely have enough to get by. As long as there is this imbalance in finance distribution, there will always be a need to borrow and a desire to lend.Lending involves giving out a resource on credit with the condition of it being returned upon an agreed period of time. In this case, such resources would be money or any financial asset.The lender could be an individual, a financial institution, a firm or even a country. Whichever the case may be, the lender, oftentimes, needs a sort of assurance that their resources would be returned to them upon the agreed time.Certain criteria qualify a borrower to take a loan. Among these are the borrower’s debt-to-income (DTI) ratio which measures the amount of money from their income committed to handling monthly debt service, stable employment, the value of the collateral and actual income.Credit rating plays a crucial role in lendingGenerally, most financial institutions and firms rely more heavily on the credit score of the borrower than the aforementioned criteria.Consequently, credit scores are by far the biggest factor in determining whether a loan should be granted to a borrower. In a world of financial imbalance where loans are quickly becoming necessary, particularly due to recent economic hardships, individuals, establishments and even governments are expected to keep their credit ratings as favorable as possible.These ratings or scores can be assigned to individuals, firms or governments that wish to take a loan in the bid to settle a deficit. Defaulting in the payment of the loan at the agreed time generally has an adverse impact on the borrower’s credit rating, making it difficult for them to obtain another loan in the future.In the case of governments, they are likely to face a sovereign credit risk which is the potential of a government to default on the repayment of a loan taken. According to data from Wikipedia, Singapore, Norway, Switzerland and Denmark respectively rank first to fourth among the least risky countries to lend to.Recent: Georgia crypto mining’s potential: What’s driving growth in the industry?Traditional credit rating is barely perfectAs simple as it sounds, the concept of credit rating is far from perfect due in large part to its centralized nature.Credit ratings are carried out by establishments commonly referred to as credit bureaus. The credit rating of individuals can be carried out by agencies including Transunion, Experian and Equifax. Companies and governments are likely to be assessed by firms such as Moody’s and S&P Global, to name a few.While credit bureaus make every effort to assess borrowers’ creditworthiness as transparently as possible, there have been numerous cases of inadequate assessments due to issues such as concealment of material information, static study, misrepresentation and human bias.In a recent article, Dimitar Rafailov, Bulgarian associate professor at the University of Economics Varna, stressed the importance of an adequate and transparent credit rating.However, Rafailov noted that credit bureaus perceived inadequacies in these ratings and such failings have “strengthened the negative effects of the global financial crisis, generating additional systematic risks.” He pointed out that the errors plaguing traditional credit rating as made by credit bureaus are often caused by “business models, conflicts of interest and absent or ineffective regulation of their activities.”The patent need for decentralizationThe advent of blockchain technology revolutionized a lot of sectors, especially the financial sector. Decentralized finance (DeFi), as a product of the burgeoning technology, has revealed the possibility of running financial services with a peer-to-peer (P2P) system, eliminating the idea of an intermediary or central authority.Decentralized credit scoring refers to the idea of assessing a borrower’s creditworthiness using on-chain — at times off-chain — data without the need for an intermediary. The assessment is done on a blockchain run by a P2P system of computers without any central authority or point of control. Moreover, a decentralized credit rating erases the traditional credit bureaus from the picture.Jill Carlson, an investment partner at Slow Ventures, expressed the importance of a decentralized form of credit scoring. She noted in a 2018 article that “solutions for decentralized credit scoring, therefore, could be extrapolated into larger identity systems that do not rely on a single central authority,” further stating that the issues that have come from a centralized credit scoring concept “have been more deeply felt than ever than ever in the last year,” citing the Equifax hack of 2017.In 2017, credit rating giant Equifax had a security breach caused by four Chinese hackers who compromised the data of 143 million Americans.Antonio Trenchev, former member of the National Assembly of Bulgaria and co-founder of blockchain lending platform Nexo, told Cointelegraph that credit ratings, especially as produced by central authorities, are more problematic than solution-based.Trenchev boasted of how his platform has managed to rule out credit scores via its “Instant Crypto Credit Lines and Nexo Card.”“In this utopian borrowing-scape we hope to create, credit scores will be a rarity, and when they are used, they will be decentralized and fair.”Growing into a realityTwo years ago, blockchain lending protocol Teller raised $1 million in a seed funding round led by venture capital firm Framework Ventures to incorporate traditional credit scores into DeFi. Although it was the first of its kind in the decentralized world, credit scores are expected to help with the problem of over-collateralization that plagued lending in DeFi while making sure that eligible borrowers get what they deserve.In November last year, Credit DeFi Alliance (CreDA) officially launched a credit rating service that would ascertain a user’s creditworthiness with data from multiple blockchains.CreDA was developed to work using the CreDA Oracle by evaluating records of past transactions carried out by the user across several blockchains with the help of an AI. When this data is analyzed, it is minted into a nonfungible token (NFT) called a credit NFT (cNFT). This cNFT is then used to assess incentives or rates peculiar to the user’s data when the user wishes to borrow from a DeFi protocol.Moreover, CreDA was made to operate across different blockchains including Polkadot, Binance Smart Chain, Elastos Sidechain, Polygon, Arbitrum and more, despite being built on Ethereum-2.0.Recently, P2P lending protocol RociFi labs concluded a seed funding of $2.7 million in partnership with asset management firm GoldenTree, investment firm Skynet Trading, Arrington Capital, XRP Capital, Nexo and LD Capital. This is geared toward expanding on-chain credit ratings for decentralized finance.Moreover, RociFi works by using on-chain data and AI in addition to ID data from decentralized platforms to determine a user’s rating. The credit rating, like CreDA’s approach, is turned into an NFT called a nonfungible credit score which could range from 1 to 10. A higher score means less creditworthiness.Recent: Quantum computing to run economic models on crypto adoptionA plethora of benefitsThe judgments made with regard to a borrower’s creditworthiness can have a profound effect on their life. The necessity to have fair and unbiased judgments in this regard cannot be overemphasized.Nonetheless, traditional credit rating bureaus have failed to accurately assess borrowers’ creditworthiness in a lot of cases, either due to inefficiency or just plain bias.Decentralized credit rating brings fairness to the table. Borrowers are certain of being assessed accurately because of the fact that these assessments are carried out by AI on blockchains without the control of any central authority.Furthermore, with decentralized credit rating, the on-chain data of consumers are not collected and stored on a central ledger but scattered throughout a blockchain maintained by a P2P system. This makes it very hard for hackers to steal users’ data, as was encountered in the Equifax hack of 2017.From DeFi to decentralized credit rating, the blockchain industry has brought security and efficiency to the financial world. Although decentralized credit rating is in its early stages, even with the advancements already made, there’s no doubt about its growth into an even better assessment tool in the future.

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How are Afghans using crypto under the Taliban government?

How are Afghans using crypto under the Taliban government?

Uverejnil používateľ | feb 22, 2022 |

After the Taliban took full control of Afghanistan in August last year, many international non-governmental organizations and services stopped operating in the country. Among them were payment services like Western Union and Swift.Many Afghans subsequently began to learn about cryptocurrencies and the underlying blockchain technology to — at the very least — receive remittances from abroad. As electronic payment services like PayPal and Venmo have never been available in the 5,000-year-old country, Afghans have lost many opportunities in the online business world.“We lost many opportunities like blogging, affiliate marketing and online dropshipping because most of them pay with PayPal,” Heshmat Aswadi, a local crypto trader, told Cointelegraph in an interview. “I learned a lot about blogging but it was of no use since I could not get paid online.”Aswadi is studying business administration at Herat University and wanted to create a fintech blog but as he researched on how to get paid, the 22-year-old lost hope. He later came to know about cryptocurrencies “which was one of the best things to ever happen to him,” he said. Aswadi learned as he went as the crypto industry grew in mid-2021. He now trades small amounts of digital assets that allow him to make some extra money.According to Aswadi, banks and governments, especially developing countries like Afghanistan and Iran, must consider using digital currencies as a legal tender. “They could at least use a central bank digital currency,” he added.“Although there is no need for our government to spend extra money on a central bank digital currency project, if they don’t want decentralized assets, a CBDC could still be an option.”RemittancesWhen the Taliban assumed power, money transfer services like Western Union and Swift stopped their operations in the country, leaving many Afghans who got money from relatives abroad without a source of income. Currently, the only way to receive money from other countries is by using crypto.During the crypto boom in 2021, Afghanistan was ranked 20th among 154 countries in Chainalysis’ 2021 Crypto Adoption Index.Ali Rahnavard, a local crypto dealer and trader in Herat, one of the largest cities of Afghanistan, says he saw immense growth in the number of Afghans using cryptocurrencies. Rahnavard said that he saw his customers increase by “ten times” in the past year.“The main reason behind this growth is that people needed to find a way to receive money from their family and friends who live in other countries,” Rahnavard told Cointelegraph.“It’s much cheaper and faster” than the previous payment systems like Western Union, Rahnavard says. In addition to trading, he has been teaching Afghans how to trade and use cryptocurrencies for the past four years. This knowledge would be useful if the country’s Taliban government decides to start using crypto to open up e-commerce in the country.“Crypto could pave the way for the Taliban to get back to international business as well.” he said, “While the Taliban don’t seem to have the necessary knowledge on how to use blockchain technology at the moment, they could at least help by not banning cryptocurrencies.”Jumah Mosque of Herat, Aghanistan. View from the Eastern roof top. Source: DidierTaisHow is crypto used in Afghanistan?In November 2021, Binance announced that it will not support Swift bank transfers to user accounts in a long list of countries including Afghanistan. Since most people in the country use Binance, it became difficult to deposit or withdraw crypto to or from the crypto exchange.Currently, for the customers to get crypto, they go to a crypto dealer’s shop where they pay the amount in the local fiat currency, afghanis, or U.S. dollars. In order for the dealer to get cryptocurrency, he needs to contact someone abroad to send crypto to his wallet. The dealer usually uses a local Hawala system to deposit the money to the sender’s bank account. The reason dealers don’t use credit or debit cards is that they charge around 11% for international purchases, according to Rahnavard.The dealer then asks for the customer’s wallet address and sends the crypto, mostly Tether (USDT). Did the Taliban ban crypto?The Taliban still haven’t announced any regulations or bans regarding digital currencies. If a top Islamic scholar says that crypto is haram (forbidden), the Taliban would ban it “without thinking twice,” Rahnavard said. If they consider it halal (permissible), “we might use the best tech in the world, forever,” he added.One of the biggest blocks on the way to crypto’s mass adoption in Afghanistan is the low literacy rate: Only 43% of Afghanistan’s population is literate and an even smaller number have regular access to the internet.A crypto trader anonymously told Cointelegraph: “Cryptocurrencies could be our only chance and window to true financial freedom. With all the problems we have in Afghanistan, it’s obviously very hard to teach everyone about crypto but it is not impossible.”“What I love about decentralization is that it takes the power from governments and gives back to the people,” they added.Taliban border guard in Turkham, Afghanistan, 2001.Crypto donationsThe Taliban restricted bank account withdrawals as they took power in an attempt to address the cash shortage caused by the United States sanctions. Consequently, millions of Afghans could not get food. Some even tried to sell their children which led to international media coverage and opening the door to donations.In September of last year, a nonfungible token (NFT) project started by Bookblocks.io and the “Women for Afghan Women” organization. They created digital art to support the education of women in Afghanistan and the ones arriving in the United States as refugees. “This is a generation that grew up hopeful and dreaming about their future through educational opportunities,” said Naheed Samadi Bahram, Women for Afghan Women’s U.S. country director. “We are committed to serving Afghan women and girls in Afghanistan and Afghan refugees arriving in the U.S.”Another social activist and entrepreneur, Fereshteh Forough, has sent cryptocurrencies to Afghan girls in need. Forough is the founder and CEO of a coding academy for girls in Afghanistan called Code to Inspire. The academy was started in 2015 in Herat, Afghanistan.According to Forough, 350 girls graduated Code to Inspire and 65% of them started their careers to put food on their tables. “The girls texted me that all of them had lost their jobs because of the Taliban’s policies,” Forough said. “And, as the sole breadwinners, their families were falling apart.” “We found that actually, there are a bunch of local money exchanges in the financial district of Herat that are accepting crypto and they can cash it out for you in either afghanis or dollars,” Forough said. She then helped 100 girls through Code to Inspire to create Binance and Trust Wallet accounts to receive cryptocurrency as their payments and exchange their digital assets for fiat in a local crypto exchange.Forough is not the only one helping Afghans get paid in crypto. Roya Mahboob is the CEO of Afghan Citadel Software Company and pays her employees in digital currencies. She had previously spoken about her role and was featured for her pact to make a difference:“If young people can learn about computers, they can learn about Bitcoin. And now everybody wants to learn how to access Bitcoin. They need to.”Much more to comeSince August last year, nothing has been the same, not even the country’s name which changed from the Islamic Republic of Afghanistan to the Islamic Emirate of Afghanistan. Many NGOs left the country and many lost their jobs, leading to a financial crisis and, nonetheless, starvation.The only way some families could live was to get money from abroad but without cryptocurrencies, it’s almost impossible now. “Other countries learn about crypto because it’s a new technology and want to learn how to use crypto and blockchain to their favor,” Rahnavard said. “But, it’s different in Afghanistan. We must and need to learn about crypto and its underlying technology because if we don’t, I don’t know what bigger disaster should be expected.”

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Sanctions and trade: Iran aims to develop a central bank digital currency

Sanctions and trade: Iran aims to develop a central bank digital currency

Uverejnil používateľ | feb 14, 2022 |

As payment methods continue to evolve, new innovations are improving financial infrastructures that have been in use for years. Currently, central bank digital currencies (CBDCs) are a topic that has grabbed the attention of many nations worldwide including the Islamic Republic of Iran.The Middle Eastern nation has faced considerable economic and financial hardships due to sanctions imposed on it by the United States and believes that piloting a CBDC can resolve problems associated with the blockade.Furthermore, some view a CBDC as a potential solution to the country’s perceived corruption problem.Corruption allegations have trailed Iran for decades. The Corruption Perception Index published by Transparency International in 2020 had scored Iran 25 out of 100. Among those indicted in corruption allegations are high-profile government officials including top judges and a parliament speaker who have been recently jailed.The path to a CBDC In 2018, Iran began its journey to digitalizing its currency when the Central Bank of Iran (CBI) directed the Informatics Services Corporation, an executive arm of the central bank concerned with payment and automation services, to build a CBDC.Local media outlet Ilna reported in January that the Deputy Governor for Information Technology at the CBI, Mehran Moharamian, said that CBDC development is expected to start soon. However, he declined to provide any exact dates for the pilot.There are reports that the Iranian CBDC was developed with the Hyperledger Fabric protocol hosted by the Linux Foundation, but these reports are unconfirmed by either Hyperledger or the central bank.Ehsan Ghazizadeh, CEO of a local cryptocurrency exchange called Exchange Iran (EXIR), told Cointelegraph that “there is no specific technical data about the Iranian Central Bank’s digital currency.” He added that, so far, the government has not informed anyone about the infrastructure, potential supervisors, the official white paper and/or the number of issuers.Ghazizadeh said that the government’s target audience and market are still not verified and it’s not clear how the CBDC will be available for public use. “Our knowledge of the matter is, in fact, general,” he stated, “But, it seems the pilot version might take over a year to be realized. The closer the day, the more information will be provided.”Iran is crypto-friendly, but power concerns block progressIran was one of the first countries to legalize Bitcoin (BTC) mining to reduce the financial burden that was crippling the country. But, as blackouts persisted as a result of historic droughts and crippling sanctions, the government was left with no choice but to temporarily halt mining activities.“The Energy Ministry has been implementing measures since last month to reduce the use of liquid fuels in power plants including cutting licensed crypto farms’ power supply, turning off lampposts in less risky areas and stringent supervision of consumption,” Mostafa Rajabi Mashhadi, the deputy managing director of National Grid Dispatching, had announced in December of last year.Championing international trade with cryptoAt the beginning of 2020, Iran issued 1,000 crypto mining licenses as local officials realized crypto’s potential to aid the geopolitically isolated country in international trade. Amir Hossein Saeedi Naeini, a member of the Trade Union and Computer Organization, said in January 2020 that “today’s situation in the country is very special and we need foreign exchange earnings; In this situation, the mining and digital currency extraction industry, while importing foreign currency, can facilitate trade…”With cryptocurrencies proving to be quite useful in fostering international trade, Iran recently expressed interest in tapping into this potential. Last month, the Central Bank of Iran and the Ministry of Trade both agreed to link the central bank’s payment portal to a trading system that allows businesses to use digital assets to settle payments.According to Mehr News Agency, Iran’s Deputy Minister of Trade and Development, Alireza Peyman-Pak, who also heads the country’s trade promotion organization, said that the crypto payment method was expected to be completed in a few weeks.“We are finalizing a mechanism for operations of the system. This should provide new opportunities for importers and exporters to use cryptocurrencies in their international deals,” Peyman-Pak reportedly said, reiterating that the government should take the business and economic prospects of the cryptocurrency industry more seriously.Peyman-Pak pointed out that in some of their target markets, especially in countries such as Iraq, Afghanistan or Pakistan, there may be restrictions on the use of cryptocurrencies, while in its main markets such as Russia, China, India and Southeast Asia, the use of digital assets is common. Global progress of CBDCs No one could have predicted the mass adoption and usage of Bitcoin and other altcoins at the early stages of digital assets’ development. The major goal was to provide decentralization and put power in the hands of the users.CBDCs may just be a way of reigning in the decentralization that cryptocurrencies thus far managed to achieve. To some extent, banks may be comfortable with crypto being used as speculative assets, but may not be willing to buy into the idea that these virtual currencies can serve as a medium of exchange.As the idea of digital currency paved the way for financial inclusion, to some extent, it is clear that central banks have seen the advantages and are now aggressively trying to launch Bank-supported digital money.With over three million people adopting the Chivo Bitcoin wallet, El Salvador can serve as a perfect example of a country striving to achieve equal access to financial services, especially in a world where it is estimated that about 1.7 billion people are unbanked. There are arguments that CBDCs are not truly cryptocurrencies, as they are not decentralized. Taking an in-depth look, however, CBDCs are not much different from many cryptocurrencies. Just as Ripple’s XRP can be classified as a centralized coin, CBDCs are similar because their issuance is determined by a centralized entity, in this case, the government.As governments’ interest in digitizing fiat currency grows, some major economies are already in the CBDC pilot stage — investigating and researching its viability. Others, on the other hand, have committed resources to CBDC studies and are exploring other options. According to The Atlantic Council’s CBDC tracker, 87 countries that account for over 90% of the global economy are exploring CBDCs. Nine have launched their digital currencies including Nigeria, the Bahamas and seven other countries in the Caribbean Islands.Some 14 countries are testing the pilot versions of their CBDCs. Among these, the Chinese digital yuan is making a buzz. Some other countries are at the testing stage including Sweden, Thailand and South Korea.The United States is still at the research phase of retail CBDCs and consulting with the Boston Fed and MIT researchers.The Reserve Bank of India is looking to introduce a digital form of the Indian rupee in 2022 or 2023 and the pilot launch is said to begin on April 1 this year. However, there are no in-depth details as to how the digital rupee will work — be it with blockchain or other relevant technologies.“Introduction of a central bank digital currency will give a boost, a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system,” Nirmala Sitharaman, India’s Finance Minister, said.A solution in search of problemsAs the payment system continually evolves with individuals requesting faster transactions and banks seeking to play better roles in facilitating payments, central banks or federal reserves have been urged to develop CBDCs that can be useful to the public.According to Governor Christopher J. Waller of the Federal Reserve Bank who recently spoke at the American Enterprise Institute, Washington, D.C., CBDCs are “solutions in search of a problem.”“One could argue, for example, that the general public has a fundamental right to hold a riskless digital payment instrument, and a CBDC would do this in a way no privately issued payment instrument can,” Waller said. “On the other hand, thanks to federal deposit insurance, commercial bank accounts already offer the general public a riskless digital payment instrument for the vast majority of transactions.”If the CBI’s plan to pilot the CBDC pulls through, Iranians would be able to facilitate seamless local and international trades using digital currencies.

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