Saturday, 22 August 2020

TECH Report finds $50 billion of cryptocurrency moved out of China hinting at capital flight against Beijing rules


  • Over $50 billion of cryptocurrency moved from China-based digital wallets to other parts of the world in the last year, according to a report by Chainalysis.
  • Chinese citizens are only allowed to buy up to $50,000 of foreign currency a year at a financial institution.
  • The report said this could point towards the possibility of Chinese citizens using cryptocurrency to move their money out of the country. 
  • Over $50 billion of cryptocurrency moved from China-based digital wallets to other parts of the world in the last year, pointing to possibilities that Chinese investors are transferring more money than allowed out of the country, a new report claims.
    Chinese citizens are only allowed to buy up to $50,000 of foreign currency a year at a financial institution. In the past, wealthy citizens have circumvented the limit through foreign investments in real estate and other assets. But the government has cracked down on these methods, according to a report by Chainalysis, a blockchain forensics firm.
    “Cryptocurrency could be picking up some of the slack though,” the report said. 
    “Over the last twelve months, with China’s economy suffering due to trade wars and devaluation of the yuan at different points, we’ve seen over $50 billion worth of cryptocurrency move from China-based addresses to overseas addresses,” Chainalysis said.
  • Chainalysis sells compliance and investigation software to businesses and governments. 
    “Obviously, not all of this is capital flight, but we can think of $50 billion as the absolute ceiling for capital flight via cryptocurrency from East Asia to other regions,” the report added.
  • Cryptocurrency holders are using controversial stablecoin Tether to move their money. A stablecoin is a digital currency that is usually backed by another asset or group of assets in efforts to stabilize its value and limit volatility. Tether claims to be pegged to the U.S. dollar. 
    Stablecoins are useful for transferring large amounts of cryptocurrency because, in theory, the value of the cryptocurrency a person is moving should not see wild swings.
    “In total, over $18 billion worth of Tether has moved from East Asia addresses to those based in other regions over the last 12 months. Again, it’s highly unlikely that all of this is capital flight,” Chainalysis said in its report. 
  • Part of this activity can be explained by China-based miners converting their newly-minted coins into Tether and sending them to exchanges abroad, Chainalysis said. Miners are people with specialized computers solving complex math problems to mint new cryptocurrency. When they solve this complex problem, miners are rewarded in cryptocurrency. 
    But the report also found significant spikes in Tether movement on certain news events. Firstly, in October, Chinese President Xi Jinping threw his backing behind blockchain, the technology that underpins many digital coins. 
    Secondly, after a massive sell-off in mid-March, the price of bitcoin began to recover. 
    “Equities in both the U.S. and China were still losing value at this time, as was the yuan itself. It’s possible that the economic tumult may have prompted some capital flight from China, though much of the Tether movement could have been East Asia-based cryptocurrency traders moving their holdings to international exchanges in order to trade at a time when cryptocurrency price volatility was high,” Chainalysis said.
  • Tether itself has been mired in controversy. In April 2019, the New York attorney general accused bitcoin exchange operator Bitfinex and tether issuer Tether Limited of hiding an $850 million loss. Both companies have denied wrongdoing.
    China has previously taken a hard stance on cryptocurrencies. In 2017, Beijing banned fundraising via cryptocurrencies known as initial coin offerings or ICOs and local exchanges. 
    However, Xi has backed the underlying technology known as blockchain. Meanwhile, China’s central bank, the People’s Bank of China, is developing its own digital currency. 

Wednesday, 12 August 2020

Business Owners: Is it Time to Ditch Your Bank?


‘My name’s Mark, and I’m a small business owner. I’d like to tell you about some of the challenges I’ve faced as a self-employed person. My local bank was siphoning more out of my revenue stream than I cared for. So, I went in search of cost-effective alternatives, and this is what I’ve found.’
I run a CMS enterprise where I produce aggregated content for a wide range of industries, including gaming, fashion, and technical operations. My clients are based all over the world, and I subcontract to freelancers and industry experts whenever required. As you can imagine, international transactions factor into my daily business operations. I’ve been engaged in this line of work for the past 15 years, and for the most part I am happy. My client base is steadily growing, and the efficiency of my business has improved.
There was one worrying aspect of my small business that troubled me: fees, commissions, and bank charges. As a sole proprietor or small business, you know that the buck stops with you. You are the first and last line of defense for your own well-being, and you have to take responsibility for all decision-making. Once my business was operating at maximum capacity, I was clearing $150,000 per annum, but I was a veritable workaholic. I never saw a day of rest, even on my wedding day which was interrupted with a morning session of work. Nonetheless, I accepted the challenges because I enjoyed the independence of being able to work from a virtual office.

Boom or Bust – Banks Are Not on Your Side

Being a home-based business has its merits. You don’t have to answer to a boss, other than your clients, and you don’t have to deal with the employees, since you’re dealing with freelancers. The flipside of the coin is that all complaints are yours to deal with and you cannot shift responsibility to anyone else.
Marketing, invoicing, collections, social media, content management, quality control and all other aspects of the business are my responsibility. When it came time to invoice my clients at the end of the month I realized that my cost structure was being hampered by the extortionary fees, charges, and commissions I was paying to banks, PayPal, and other payments processing companies.
As a small business, you often get clients with small work orders. When these clients are based overseas, the only way you can get the money transferred to you is via a payment system that your client is willing to use, and one which you are willing to use. Unfortunately, many of my clients used banks and PayPal. These are two of the most expensive ways to transfer money. Consider one client that owed me £100 for a work order that I’d completed.
This client had a bank in Cyprus which then had to convert euros into pounds sterling. There were fees associated from the originating bank to my bank, and additional fees were tacked on by the receiving bank. Add currency cross exchange rates into the mix and you can imagine my displeasure when I received the final payment. Many similar examples occurred over the years. At the time, I simply accepted this as part of the process.

Originating banks and receiving banks

I invoiced my clients, accepted that banks were going to fleece me along the way and came out with a lot less than I’d charged them. My overinflated gross income always looked much more attractive than my net income. It didn’t much matter whether I used banks or PayPal – they were equally bad. The problem is that anytime money is transferred across international borders, you have originating banks and receiving banks, fees, margins and all sorts of unfriendly exchange rates to contend with.
It can cost as much as £25 for a UK bank to receive an international wire, and as much is $50 for a US bank. These fees simply don’t make sense. PayPal may not charge the high upfront fee, but their commissions are about as user unfriendly as you can imagine. I guess I had gotten stuck in a rut, accepting that those fees were never going to change and that I should simply charge clients more to come out a little bit ahead.
However, I didn’t want to price myself out of the market.
Then I started searching for options other than banks and PayPal for money transfers. I realize that enemy #1 are the actual currency transfers between my business and my suppliers, or between my clients and myself. The unfavorable rates offered by banks are the problem. Banks will always buy for less than what they sell at. They also tack on many extra charges to make any international currency transfer as unfavourable to the client as possible. I have heard horror stories of two-way money transfers eating up as much is 13% of the value of the currency transfer.
Imagine selling your home in the UK for £100,000, transferring that money to the US and then transferring it back to the UK again and paying £13,000? Some banks will do that to you. That’s why I quickly ran a search on best international money transfer options and I came up with multiple alternatives to High Street banks. The wire fees are significantly lower, if at all, and transfers are far easier and quicker than with banks. I initially had qualms about credibility of non-bank money transfer services, but those are quickly allayed when I realized that the top money transfer companies are reliable, and the latest FinTech disruptors.
Banks are now playing catch-up with these companies because they’re losing sole traders and small business owners like myself by the truckload. I highly recommended cutting costs by switching to non-bank money transfer companies. There are many benefits in this, and you can use those cost savings towards your 401(k) retirement plan.

The Great Battle: Gold Standard vs. Fiat Money


Comparison begets real knowledge, but of course, solely from a proper one. Discussing about these topics in exquisite detail would require several pages, but this article has been written with the purpose of bringing a good overview in a laconic way.
Therefore, I hope this article helps you to learn more about each system, and based on that, arrive to your own conclusions on which one is the best.

About Inflation And Deflation:

Those who support a fiat money system argument that the principal and most dangerous risk of gold standard is that a positive demand shock for gold can bring risky levels of deflation. Nonetheless, most cannot bring solid arguments on how it would happen and if it would be really that dangerous. However, on the other hand, we can consult history and see that the gold standard of the 19th century suffered periods of deflation and inflation, but they were fairly moderate.
In addition, even the ‘wildest’ periods didn’t show a sign of uncontrollable deflation. Therefore, according to history, a gold-standard system doesn’t necessarily mean that gold demand shocks will result in extreme deflation.

History Supports It

Unlike the current fiat system that has never been properly run, so to speak, gold-standard has a brief yet successful mark in history. If we stick to the most exact definition, then we can say that the real international gold standard system simply lasted from 1870 to 1914.
And what did happen during those decades? Here is some of the evidence that shows the great potential of this system than in such a short time in history proved more than our current fiat system:
  1. A period of very little inflation that was easier to manage
  2. Increased living standards
  3. Drop in employment rates
  4. More competitive and productive industries
  5. Government interventions were reduce to a minimal expression
Moreover, some countries like England and the Netherlands had already adopted the gold-standard system before 1870, but it was only since the international adoption of it that it could finally show its true potential.
Unlike the current times we live in, none was coerced to subject to it. Every nation was free to join or simply look from the outside.
In addition, we can also point the following benefits this system brought to the nations that adopted it:
  1. International trade experienced one of the highest growth rates in history
  2. Capital mobility experienced its best days
  3. The exchange rates were surprisingly stable
  4. Speculation maintained within ‘acceptable’ boundaries
  5. Income and industrial production experienced an impressive growth
  6. Nations, public and private institutions trusted the international monetary system
  7. Liquidity was bountiful
  8. Excellent levels of price stability along with low levels of inflation
All in all, nations experienced several advantages that made them live some of the best years in their history.
If we compare this against the fiat system, then we will find many displeasing surprises…

Arguments Against The Gold Standard

The supporters of the fiat system have many arguments against the gold standards, however, the majority of them are baseless. But for the purpose of showing why it is the case, here you have the three most popular arguments used against this system:

Argument #1

“Gold is a synonymous of panics, therefore, central banks must be left to their own devices and gold must be avoided at all cost so our economies can be more stable”.
Affirming that panics emerge from gold is wrong in several senses, and that’s why we need to understand how they are created. First off, the causes of panics are several but amongst the most important we have:
  1. Overconfidence
  2. Overexpansion of credit
  3. A big scramble for liquidity
  4. A significant and abrupt loss in confidence
From this it is very easy to understand that the direct relationship between panics and gold is nonexistent, and hence, makes our example argument very weak and easy to refute. Moreover, gold is an excellent investment and should be a mandatory part of your portfolio. If you want to learn more about that specific point, then you should visit Marketreview.com.

Argument #2

“There’s simply not enough gold, therefore, it makes it unsuitable for a global economic system”
This is one of the most popular and weakest arguments out there. The key to refuting it is that our focus should shift from the quantity to the price. Then, there is a vast amount of gold in the world that is valued at the right price.
Now that we have these elements into account we can proceed to do the following conditional comparison: if the ounce of gold was worth $17K USD, then it would be comparable to the combined M1 money supply of the following countries:
  1. China
  2. Japan
  3. USA
  4. UE
Therefore, based on this, we can see that the problem of the quantity of gold in the world is a real issue at all.

Conclusion And Final Words

As we can see, after checking history and real facts, the gold-standard system has several advantages that the current FIAT system cannot offer. However, the supports claim that a well-run FIAT system would beat a well-run gold standard any day of week, but the question is: have we ever seen such a thing like a well-run fiat system? Debt creates increasing, inflation is skyrocketing, people are suffering the consequences and yet those very same supporters cannot see the problem.

Saturday, 8 August 2020

Facebook gives employees $1,000 as it extends remote work to July 2021

Facebook this week announced it will allow its employees to work from home until next July, following in the footsteps of Google, which has also told workers to stay home until summer 2021.
The social networking giant will also give employees $1,000 to expense things like office supplies and furniture.
“Based on guidance from health and government experts, as well as decisions drawn from our internal discussions about these matters, we are allowing employees to continue voluntarily working from home until July 2021,” a Facebook spokesperson said in a statement.
The company added that it will reopen offices where it is able to, but said it does not expect to see a significant return to the office in the US or Latin America in 2020.
Chief executive Mark Zuckerberg in May said he thinks half of Facebook’s employees could be working remotely within the next five to 10 years. The company is already allowing certain employees to work from home on a full-time basis.
Facebook workers who relocate permanently may have their pay adjusted accordingly, however, given that Silicon Valley’s sky-high rental prices are a factor in the company’s generous compensation packages.
“We’ll adjust salary to your location at that point,” Zuckerberg said, adding that the tweak would be necessary for taxes and accounting. “There’ll be severe ramifications for people who are not honest about this.”
Twitter also announced in May that employees would eventually be allowed to work from home indefinitely.