In 2008, an anonymous researcher (or team of researchers) called Satoshi Nakamoto published a nine-page research paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.” The document, known as the Bitcoin white paper, presented a new type of digital currency which could be sent directly between users without reliance on financial intermediaries.
Following the launch of Bitcoin in 2009, people around the world discovered its functionality allowed transactions, specifically cross-border transactions, to be sent faster than most international bank transfers. A bitcoin transaction could be settled in just a few minutes as compared to the 2-3 business days needed by traditional services. By removing banks from the process, Bitcoin mitigated the high costs often associated with cross-border payments.
How bitcoin payments work
Bitcoin network and blockchain
Bitcoin (BTC), the protocol’s native digital currency, circumvents the banking system by relying on a series of interconnected “nodes.”
These nodes are operated by volunteer users that make up the Bitcoin network and help to maintain it by using their computers to perform various tasks on something called the Bitcoin blockchain — a special type of ledger system used to verify and record transaction data.
You can think of these two concepts – the Bitcoin network and blockchain – like a globally distributed group of people all working together on an open Google Document. Whenever new information is added to the document, everyone else has to first make sure there are no errors in it. The document is also totally accessible to anyone who wishes to view it – not just those working on it.
In exchange for fulfilling energy intensive roles like data validation, nodes can earn rewards paid in newly minted bitcoin.
How a transaction works
When a person wishes to send a bitcoin transaction to someone, they first have to broadcast it to the rest of the network. Nodes then independently check the validity of the transaction (whether the sender has sufficient funds to transfer and isn’t attempting to double-spend their funds) and compete to win the right to add that and a batch of other transactions into a new block on the blockchain.
If you want to learn more about the process of validating transactions and adding them to the blockchain, you can check out our Learn Center guide What is bitcoin mining?
Once a transaction is added to the blockchain, it’s finalized. And because there are no banks involved and payments are sent over the internet, it doesn’t matter whether the recipient is in the same country or the other side of the world – transactions take the same amount of time to process. You can think of it as sending an email versus a hand-written letter.
These properties are why cryptocurrencies like bitcoin are ideal for frictionless remittance and cross-border transfers.
Barriers to bitcoin payments adoption
While there are a number of advantages to using bitcoin over traditional currencies, a 2021 survey found that only 13% of U.S customers preferred to use bitcoin and other cryptocurrencies when sending overseas payments. This low level of preference occurs despite figures showing that 42% of surveyed people paid an average fee of 6.2% when sending traditional remittance payments.
So what’s holding people back? It’s possible people are put off by a number of misconceptions surrounding bitcoin payments.
Bitcoin transactions aren’t usually anonymous. When you use an exchange to transfer cryptocurrency you must submit something called Know Your Customer (KYC) data. This data often includes your personal information and a copy of your passport. KYC is important because it ensures that transactions are legal and regulated.
For many years, the pseudonymous nature of bitcoin payments has been abused by criminals to fund nefarious activities. And while it’s impossible to know exactly what percentage of payments are involved in illegal ventures, advancements in detection, tracking and enforcement have made it far less attractive.
A recent report by Chainalysis reported around $10 billion dollars, or 0.34% of all bitcoin transactions, were flagged as being used to fund criminal enterprises.
Looking at traditional currency in comparison, the United Nations figures found up to 5% of global GDP is involved in money laundering and other criminal practices per year. This equates to around two trillion U.S dollars.
High energy consumption
It’s no mystery that the computational power committed to securing the bitcoin network is extremely high — around ~100 TW/h. However, it’s important to note this figure represents the energy consumption of a complete financial system, including issuance and transaction settlement. Moreover, a vast majority of the energy consumed by the network is used to create new units of bitcoin (through mining) which is systematically reduced over time through halvings.
Nobody has attempted to measure how much energy a major currency consumes per hour. Think about the U.S dollar and how many banks, money printers, ATM machines, card payment devices and security vehicles are needed to support just one currency. Now think about how much energy those combined items consume – potentially a lot more than the Bitcoin network!
Bitcoin is renowned for being a particularly volatile asset class. This means its price can fluctuate dramatically within a short period of time.
For remittance payments, the volatility may lead to the recipient receiving less than the intended fiat-denominated amount once the transaction is completed. However, this volatility works both ways and sometimes during bullish market movements, recipients can receive a higher amount.
The effects of bitcoin volatility and transaction speeds can also be mitigated by the sender simply taking a few precautions. Namely, these involve trading during weekends when network congestion is low and avoiding sending remittance payments during particularly bearish episodes.
Overall, while some people may be dissuaded from using bitcoin for cross-border payments, it boasts a number of key advantages over traditional currency that make it an ideal solution; namely speed, cost and transaction finality. Keep in mind that after bitcoin has been sent across borders, it can quickly and easily be converted back to a government currency using a crypto exchange like Kraken.
Need help understanding how to use Kraken to manage your assets? Stop by our Support Center where our support team is available 24/7.
These materials are for general information purposes only and are not investment advice or a recommendation or solicitation to buy, sell, or hold any digital asset or to engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the cryptoasset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your crypto assets and you should seek independent advice on your taxation position.
Cryptegrity DAO (ESCROW) is Now Available for Trading on Hotbit
Hotbit Exchange, a global crypto trading platform, officially listed $ESCROW (Cryptegrity DAO) on January 27, 2023. The ESCROW/USDT trading pair is now available for all users of Hotbit Exchange.
To increase trust and protect the funds of buyers and sellers, Cryptegrity DAO (ESCROW) has introduced a means to trade crypto for goods and services without fear of theft or services not rendered, providing Security via smart contract technology. Its native token $ESCROW has been listed on Hotbit Exchange at 07:00 AM UTC on January 27, 2023, to expand its global reach further and maintain a secure and reliable platform for the exchange of goods and services using crypto.
INTRODUCING CRYPTEGRITY DAO
Cryptegrity is a blockchain-based platform that aims to increase trust between buyers and sellers of goods and services. The platform utilizes smart contract technology and cryptographic techniques to ensure transactions’ integrity and funds’ security.
Cryptegrity’s web3 platform offers transparency and peace of mind that is impossible with traditional web2 competitors. Buyer funds are locked in an audited smart contract and released to the seller only when goods are received or services are rendered. This ensures that buyers and sellers can have confidence in the security of their transactions and reduces counterparty risk.
25% of revenue is distributed to $Escrow holders in real-time through smart contract technology. This revenue sharing continues for the lifespan of the platform or until all tokens are repurchased from public circulation. The Cryptegrity platform incentivizes the community and holders to help create liquidity and earn rewards by offering $Escrow for creating $Escrow LP pairs and staking them. Additionally, the Cryptegrity DAO rewards participants for contributing and resolving issues on the platform.
In conclusion, Cryptegrity is an innovative platform changing our thoughts about online identity verification. With its cutting-edge technology, user-friendly interface, and listing on Hotbit, this project is poised to make a big impact in the industry.
About $ESCROW Token
The Escrow Token serves dual purposes: it distributes platform fees to Token holders via revenue sharing and functions as a governance token with voting rights in the Cryptegrity DAO. It is the native token of the Cryptegrity Platform and is built on the Bep-20 and Erc-20 standards.
ESCROW has a total supply of 100 million tokens, with the following allocation: 10% to founders, 10% to the team, 10% for marketing and development, 10% for promotions, 10% for partnerships, 10% for liquidity for future DEX and CEX, and 40% available for sale to the public.
The ESCROW token is now available for trading on Hotbit Exchange starting at 07:00 AM UTC on January 27, 2023. Investors can easily buy and sell the token in relation to the Cryptegrity Project. The listing on Hotbit Exchange will aid in expanding the project’s reach and increasing market attention.
Founded in 2018 and holding Estonian MTR license, American MSB license, Australian AUSTRAC license, and Canadian MSB license, Hotbit cryptocurrency exchange is known as a leading trading platform that continues to develop and integrate various forms of businesses such as spot trading, financial derivatives, cryptocurrency investment and DAPP into one platform. Hotbit has already gained over 8 Million registered users from more than 210 countries and regions. Based on its globalized and unified strategies, Hotbit continues to focus on world’s emerging markets, such as Russia, Turkey and Southeast Asia markets and was ranked one of the top 3 most welcomed exchanges by Russian media in 2019. Hotbit is constantly introducing and listing high-quality crypto projects so its users can directly trade, manage, track, and analyze cryptocurrencies, making the entire experience easier for ordinary people.
Start Trading Now: Hotbit.io
Centralized Exchange Tokens Post Solid Gains in January Despite SEC Interest; Bitcoin, Ether, in the Red.
“If demand for trading on the FTX platform increased, demand for the FTT token could increase, such that any price increase in FTT would benefit holders of FTT equally and in direct proportion to their FTT holdings,” the SEC wrote in its complaint. “The large allocation of tokens to FTX incentivized the FTX management team to take steps to attract more users onto the trading platform and, therefore, increase demand for, and increase the trading price of, the FTT token.”
Australian Government Flagged FTX Concerns Eight Months Before Downfall
A new report shows that the fallen crypto exchange FTX had already caused concerns with the Australian regulator months before its collapse. According to a document on The Guardian Australia’s website, the ASIC (Australian Securities and Investments Commission) started investigating the firm’s local operation last March.
An article in the Australian Financial Review prompted the concerns. The article outlined the now-bankrupt exchange’s plans to launch in Australia within a few weeks. FTX caused more concerns when rumors that it would allow users to purchase cryptocurrencies with margin loans of 30 times their investment started making rounds.
In early April 2022, several Australian regulators held meetings with FTX leadership, and at that time, the exchange promised to operate under the stipulated while cautioning its customers about potential scams. However, the regulators somehow remained concerned about the FTX business.
Report Shows ASIC Issued Several Notices to FTX Australia Within a Few Months
In a span of four months, the ASIC had issued about four notices to FTX’s Australian subsidiary, requesting more information about its business operations. However, to avoid interfering with its law enforcement activities, ASIC did not issue the notices via a freedom of information request.
The Guardian Australia’s briefing document released on November 12, 2022, a day after FTX had filed for bankruptcy, indicates that, indeed, the ASIC had been carrying out what’s described in the document as a ‘surveillance activity’ on the fallen exchange since last March.
The document stated that since March 2022, the Australian regulator has been requesting information from FTX Australia regarding its financial offerings. Among the issues raised included the firm’s compliance with the ASIC’s product intervention order alongside pricing and how it registered new users.
FTX Licensing Strategy
It has been discovered that FTX Australian began its operations without ASIC’s approval because it evaded the usual licensing procedures by buying out an existing firm that had possessed an Australian Financial Services License since 2021.
Another revelation shows that IFS Markets, the company acquired by FTX, had also gotten the license by taking over another financial firm called Forex Financial Services a few months earlier.
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