Malaysia Will not Consider Cryptocurrencies as Illegal, Says Deputy Finance Minister

A lot of countries around the world are actively contemplating Bitcoin regulation. When that happens, one of two things will happen. Either the government bans cryptocurrency altogether, or they allow it to thrive. In Malaysia, there have been conflicting reports about what the future may hold for Bitcoin. Deputy finance minister Datuk Seri Johari Abdul Ghani stated how there is no plan to effectively deem cryptocurrencies to be illegal. That is good news, although the actual regulation has yet to be presented to the world.

Malaysia is not a region most people associate with major cryptocurrency activity. That is not surprising whatsoever. The lack of clear Bitcoin regulation makes it difficult for consumers and businesses to embrace cryptocurrency. Thankfully, that situation will come to change very soon. The local central bank is actively working on regulation. The big question is how positive or negative these new guidelines will be in the end.

Malaysia Won’t ban Bitcoin After all

Some sources claim Malaysia wants to ban all cryptocurrencies. It would appear to be the most logical outcome, after all. However, the local deputy finance minister surprised us all by contradicting such statements. More specifically, there is no plan – or reason  -to consider cryptocurrencies as illegal. The country wants to pursue every option for financial innovation. Bitcoin and other cryptocurrencies can certainly play a big role in this process.

Deputy finance minister Johari comments as follows:

“The government is fully aware of the need to strike a balance between public interest and integrity of the financial system, similar to any financial and investment schemes, there is a need to have proper regulation and supervision to ensure any risk associated with such schemes are effectively contained.”

This semi-positive approach to cryptocurrency regulation is somewhat surprising. After all, Asian countries are mainly leaning toward banning cryptocurrency activity altogether. Malaysia may reap some of the economic advantages of taking this approach. It will be interesting to see what the actual Bitcoin regulation will entail when it is made public, though. For now, there is still no official ETA on when these guidelines will be presented.

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When most people think about high-tech innovation, the former Soviet bloc is probably one of the last places on Earth that springs to mind. However, Belarus is making efforts to change that. Thanks to a progressive piece of legislation that was signed into law last Thursday, President Alexander Lukashenko is hoping that the brightest minds and most innovative companies from the fintech and blockchain space will choose to call his nation home.

The law legalises cryptocurrency transactions amongst other provisions. It’s hoped that these will drive private sector growth in a State that has been burdened with an overbearing bureaucracy that was left behind after the fall of the communist regime in the early 1990s. By liberalising the economy, it’s thought that the nation will be able to attract greater levels of foreign investment. In somewhat poetic language, Lukashenko spoke of his plans to create an environment suitable for technological innovation earlier this month:

“All smart and intelligent people know what stability and order are… They’re all trying to reach that shore. We’re prepared to arrange a dock and even a harbour.”

The presidential decree will make it legal for citizens to participate in initial coin offerings, as well as for companies planning them to run their operations from Belarus. It will also legalise all cryptocurrency transactions, as well as giving those making them a tax break for the next five years.

In addition, provision is being made to allow companies relief from the often-confusing Belarusian legal system. Instead, they will partially be governed by English law. Denis Aleinikov, a partner at a Minsk-based law firm and main author of the law, spoke to Reuters about the hurdles foreign companies encountered, prior to the change in legislation:

“We regularly faced legal problems. When a Western company buys a Belarusian company they try to structure the deal outside Belarus… Investors don’t want to deal with Belarusian legislation.”

It’s hoped that the decree will provide a haven for fintech companies who are often trying to innovate in unsure legal climates around the world. The security provided by a friendly legislative will surely prompt greater innovation. This will be mutually beneficial to the companies, their employees, the industry at large, and the government of Belarus. Anton Myakishev of Microsoft Belarus elaborated:

“It gives the industry the possibility to make a leap forward in its development and allows foreign capital the possibility to come to Belarus and work in comfortable conditions.”

 

It comes as no surprise that governments don’t like Bitcoin and banks and financial institutions like it even less. They cannot control it, track it, profit from it, or tax it. To justify their fears and loathing politicians and bankers will use phrases like ‘fraudulent’, ‘criminal’, and ‘bubble’ to deter the public from gaining an interest in cryptocurrencies.  This week the UK Treasury became the latest to crack down on crypto in what it calls a bid to stop crime such as money laundering and tax evasion.

The government is seeking to introduce regulations for the cryptocurrency market to force traders and investors to reveal their identities and report suspicious behavior. The recent surge in interest and price of Bitcoin has forced the Treasury to take a closer look and attempt to bring it in line with current anti-money laundering and counter-terrorism policies.

In a statement, Economic Secretary to the Treasury Stephen Barclay said:

“The UK Government is currently negotiating amendments to the anti-money-laundering directive that will bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation.”

The EU-wide plan would mean that crypto exchanges would have to do due diligence on their customers and report suspicious activity to the relevant authorities. At the moment things are pretty vague but the move has been designed to end the anonymity surrounding crypto trading. A Treasury spokesman told the Telegraph:

“These new forms of exchange are expanding rapidly and we’ve got to make sure we don’t get left behind – that’s particularly important in terms of money-laundering, terrorism or pure theft. I’m not convinced that the regulatory authorities are keeping up to speed. I would be surprised if the committee doesn’t have an inquiry next year.”

Last week the US Internal Revenue Service made similar moves demanding details on customers and transactions from Coinbase for tax purposes from profits of crypto trading. The UK, while asserting that the moves are to prevent crime, has a similar stance. “We have clear tax rules for people who use cryptocurrencies and like all tax rules, these are kept under review” stated a Treasury spokesman.

Bitcoin seems undaunted by regulation and attempts to control it and has risen fourfold since China’s block of cryptocurrency exchanges in September. So far attempts to regulate it by sovereigns and central banks have not hindered the monumental price rise that cryptocurrencies have witnessed in 2017.

High profile Australian investors will soon be able to get exposure to cryptocurrency in a way more familiar to them than currently available. This comes thanks to a new fund founded by Dominent Venture Partners’ Domenic Carosa and Holger Arians, and Herik Andersson, himself an experienced Wall Street trader. Apollo Capital, as they’re known, are attempting to raise a $30 million for use in the blockchain space. They aim to focus on cryptocurrencies, blockchain-based projects, and initial coin offerings. The fund will be Australia’s first to manage crypto assets and will be reserved for investors with a minimum of $50,000AUD available.

For Carosa such funds are inevitable and are all part of providing the necessary legitimacy for the space to flourish. He told the Australian Financial Review:

“It’s still very embryonic, but for us this is part of the market maturing and bringing more credibility to the space… You hear that people like Bill Gates, Richard Branson and funds like Andreessen Horowitz taking long-term bullish views on bitcoin and blockchain … this also adds further credibility.”

Meanwhile, the NEM.io blockchain development fund is also expanding to Australia. Jason Lee, their global director of partnerships and strategic alliances aims to invest around $14 million in Australian fintech ventures. The $80 million fund are also looking for opportunities to bring innovation to their own blockchain XEM through their financing of startups. So far, NEM.io have invested in CopyrightBank, a service aiming to protect digital assets based in Melbourne.

Lee is hoping that the ease with which developers familiar with Javascript should find transitioning to the XEM platform should help with its adoption. This is compared to platforms such as Ethereum which use more obscure programming languages.

The XEM development fund has a unique approach to allocating funds. At least 3% of their network of 20,000 users must agree to a project. Lee explained this community approach:

It came together as a group of people believing in the concept of blockchain. We wanted this to be available for the community as well, which is why we’re a community fund, not a VC or private equity fund.

However, not every Australian venture capital fund have fully warmed up to the idea of cryptocurrency and blockchain just yet – well, not enough to allocate funds to it. Paul Naphtali of Rampersand explained why he remained cautious of the space:

“I worked through the past two boom-and-bust tech cycles. The almost feverish excitement around blockchain and cryptocurrencies reminds me of the heady days of mobile ten years ago, or the web 20 years ago – new tech changed the world, but with the hype also came some spurious companies.”

 

Image: PixaBay

 

The emerging markets have outpaced the mature one’s development significantly, experts say. Let’s check out two of the major trends.

Smartphones’ golden age

The first trend implies that emerging market buyers are shifting from PC, laptops, and tablets with a high penetration in mature countries to new generation technologies. That means that smartphones there have been adopted not only before PCs but instead of them. Due to continuous smartphone penetration on the market, the growth in a number of mobile phones in emerging markets is rising exponentially. According to GSMA Intelligence, for instance, it stands at 76% in Taiwan and 70% in Myanmar. The reason is that smartphones in Asia have recently become rather affordable and its cost varies just from $30 to $50. Moreover, the capabilities of smartphones processors are on par with PCs’ processors, and the applications sometimes wider — photo shooting, for example.

Contrary to all the rules

The second trend covers rising Internet penetration even among people with very low income. The emerging markets show interesting statistics: usually, they have a high percentage of the unbanked and underbanked population and, at the same time, the high level of penetration of the Internet and mobile services.

For example, Asian region overall is expected to become the world’s fastest-growing Internet region by 2020. While Internet industry is flourishing, only 27% of the South East Asian population have a bank account. In 2017, China has 731 million internet users and 53,1 %t of them are online. The country demonstrates a fast development pace but still has 21% unbanked population. In Myanmar, the Internet traffic growth is 58% and, at the same time, Myanmar has one of the lowest banking penetration rates in Asia, with over 70% of adults (aged 15+ years) unbanked.

Traditional banks and alternative fintech projects battle

What is more surprising, these trends have the strong impact on the totally different industries, for example, on the financial markets. Emerging market consumers, in the same way, skip traditional banking services and move to online wallets, payday loans cards, P2P credits and to online applications for loans that can be filled and submitted over smartphones! That happened since people found it is much easier and faster to do it by phones. However, this fact formed a new trend in financial services. As mobile and Internet services do not need paper documentation, therefore, neither financial services nor their customers need such traditional creditworthiness proofs as papers, credit histories, collaterals, persons to vouch and so on. All the traditional banks’ requirements make sense as they are just trying to limit the risk to their businesses, especially in the emerging markets.

In Kenya, for example, M-Pesa financial service lets customers store, transfer and send money via simple text messages. Usage of WeChat Pay and Alipay apps is approximately 7 times greater than average of top five conventional banking apps in China!

However, at the same time, alternative mobile services market is growing rapidly making all the classic rules senseless because the fintech projects found the way not only to accept applications online from mobile devices but to assess their customers online too.

For instance, the blockchain company MicroMoney has developed the mobile scoring system based on neural networks technologies that allow estimating of customer’s creditworthiness remotely by just having access to a customer’s smartphone data. So its clients don’t have to collect a pile of papers, to provide a collateral and one to vouch, or to wait for the bank approval. No struggle to prove that they are reliable credit customers or wasting the time if they had no credit history before (because for a bank it means the obvious rejection). MicroMoney’s mobile scoring system after getting the access to mobile data explores around 12 000 different parameters of data stored on a phone (SMS, contacts, social accounts data, searches and purchases, and even a music a user likes) within just several minutes and approves (or disapproves) a loan. In case it approved, MicroMoney immediately sends money right to a client’s e-wallet.

With the trends we mentioned before, it’s obvious that the banking industry will not stay the same anymore. Moreover, these changes give the banks the key to the audience untapped before — to the unbanked and underbanked people in emerging markets worldwide.

The phrase “He who owns the information, he owns the world” became famous thanks to the desire of the Rothschilds to be the first to know the news. Winston Churchill loved to repeat the same phrase. But all the great men said the phrase knew that information is only precious if you know how to use it further.

Our world thirsts for information. Just a couple years ago the worldwide market went crazy about Big Data and possibilities they might open but dreams became phantoms – no one knew how to work with all the collected information. Now the situation is totally different. There are a lot of tools to analyze the raw data and to turn them into the useful statistics and accurate forecasts now on the market. Companies can use this information to enhance their services, to automate processes, to gain insights into their target market and to improve the overall performance using the feedback they get.

For example, the online retail giant Amazon has access to a massive amount of data about its customers, what kind of purchases they make and what are they searching for. While this data is obviously put to advertising algorithms, Amazon also uses the information to improve customer relations, the area that many Big Data users overlook. General Electric uses the data from sensors on machinery like gas turbines and jet engines to identify ways to improve working processes and reliability. Starbucks uses Big Data to determine the potential success of each new location.

One more innovative and promising tool to transform the data from raw to useful is neural networks. Even though they have been established as the well-known method in business, there is enormous space for additional research, and here is the case to show it. In the Southeast Asia, the fintech company MicroMoney uses the neural networks and Big Data tools in its own scoring system for a rapid creditworthiness assessment of a client with no credit history. Instead of papers, certificates, and cross-checking scoring system analyzing personal data from a borrower’s smartphone. All that’s needed is to install the MicroMoney application, sign the agreement to use the personal data and to complete the loan application online. Then the scoring system analyzes all the available data, sets a credit rate and identifies potential credit risks with an accuracy of more than 95%. In case a customer reaches the certain credit score points the system approves the loan automatically and sends the money to a user’s e-wallet.

Scoring system constantly reviewing data within its increasing database. The more data processing, the faster and more accurate is the result of customer’s creditworthiness evaluation. In future self-learning algorithms can provide people with all kind of services even before they think about it. For example, a man announces in his social account that his wife is pregnant. This man is known as a reliable client of the MicroMoney, he has a high credit rating. The scoring systems catch this fact, correlate this information with his recent searches for houses to rent in search engines, evaluate his credit rate and he receives a special offer of mortgage for house buyers, with all interests and payments specified due to his monthly income. Or, let’s say, a girl is graduating with a bachelor’s degree with her marks higher than average score and searches for other universities to continue her education. The systems are able to analyze her bank account, to find that she has not enough money to enroll and offer her a student loan.

There is no doubt that these technologies can change not only banking industry but the way people consume, spend and save their money. We already face all benefits of targeting advertising but it is only beginning of the integration of smart technologies in our everyday life.

By 2020, about 1 million people in Asia will receive their very first loans ever. Crypto economy is the tool that will help them to merge into financial markets and to apply for approximately 3 million payday loans annually. MicroMoney, a global blockchain company and lending services provider, aims to support this process allowing people with no credit rating score to enter Asian banks with positive credit histories.

MicroMoney’s co-founder, Anton Dziatkovsky, is going to form a market for the credit histories creation from scratch and their further support in emerging markets. Now his company works as a microfinance business helping the unbanked and underbanked people to provide their primary needs with payday loans. On the other hand, MicroMoney helps banks and other financial organizations to access new markets in the Southeast Asia and other emerging regions with lower risks providing them with a database of reliable borrowers in each region with all the segmentation by an audience, risk level and costs related to each segment. MicroMoney’s platform uses Big Data methods, all the data is keeping with the help of blockchain technology, and the unique scoring model based on information received from client’s mobile phone with the special application designed by the company.

The process looks quite simple for a lender: The Big Data platform drives all the data received from the phone through neural networks, analyzes the result, and evaluate a customer’s trustworthiness. Clear and full information about a person based on the analysis of a customer’s data available from all the mobile sources and includes career information, interests, social networks accounts (confirming that this particular person is real), travel notes, family status, penalties received and so on. According to Anton Dziatkovsky, this content sounds more truthful and allows predicting a customer’s behavior to avoid excessive risks.

The company chose the mobile phone because of a high level of smartphones’ penetration, even in countries with a low level of banking services distribution. For example, in Africa, 80% of the population does not have a bank account but 63 of 100 people use mobile phones. Secondly, this is a higher popularity of smartphones above laptops and computers. Finally, it’s practically equal capabilities of smartphones’ and PCs processors and features along with significant progress in financial services mobilization, cloud services, and Big Data systems to analyze all these data.

“95% of our clients take their first loan ever,” — Anton Dziatkovsky says. — “Usually, they get stuck in a kind of endless circle: if they need a credit, they need a credit history, and to get a credit score and the history they need a credit. Meanwhile, banks are keeping a focus on medium and large enterprises lending in emerging markets. Microfinance companies embrace the others but the process of loan applications approval in Asia is extremely complicated and long due to the lack of automation. The common practice there is to keep all the data in Excel or even in paper ledgers. For the loan application, a person needs a collateral (in Cambodia and Myanmar, for example, it can be real or land property) and a lot of papers such as references from police, municipality, property owner, income statement, a letter from job manager etc. A person may find four or six friends and band them to achieve a group loan. In Indonesia, Cambodia, Myanmar, and Sri Lanka, for example, the process may last from 1 week to 2-3 months. MicroMoney approve or decline a loan application within 15 minutes without any collaterals or documents required. The first loan will be small — about $23 usually but after 5-10 loans, a borrower can rise up to $200-300”.

In turn, banks, credit, and insurance companies have to spend up to 15% of the budget for the customers’ verification and purchase credit histories from credit bureaus in order to explore their risks and loan percentage to establish for each audience segment. According to statistics, banks make 2-3 requests per one person per year with the price of inquiry $1-10 average. MicroMoney plans to give all these financial organizations an access to its list of the most reliable borrowers from each region with positive credit score rates.

The market seems to be very perspective: 39% of the world’s population doesn’t have a bank account. According to the McKinsey, the most affected regions are Africa, Latin America, and the Middle East (about 65-80% of the adult population are unbanked).

MicroMoney now employs about 200 people in Cambodia, Myanmar, Singapore, Sri-Lanka, and Thailand to service its microfinance business and some software developers, marketing, and PR managers, copywriters from the United Kingdom, Israel, and Russia to promote the company. In Asia, the project works with local partners. The first partner is the adviser to the Prime Minister of Cambodia for Economic Affairs, and CEO of one of the largest development companies in the country Sonatra Group, Okna Sorn Sokna. The second is the East Wing ASA Capital venture fund with about $100 million of capital and its member, the head of Sonatra’s affiliate companies — Mr. Tetsuji Nagata. They both are not only the stakeholders and top-managers of MicroMoney but also enthusiastic advisors for the company’s token distribution campaign that will start this October.

Anton Dziatkovsky is sure to win the game and promises that the company’s tokens will grow constantly supported by the growth in the company’s microfinance business and payday loans approved, along with Big Data platform high demand from banks waiting for an entrance to emerging markets. “We will do our best to raise the price of our tokens up to +1000% for the first year due to our launch in five new markets by the end of 2017”.

MicroMoney plans to issue about 600 thousand payday loans per year and, thus, involve 1 million of unbanked people into crypto-economy by 2020. “Now about two and a half billion people worldwide are unserved and don’t have any access to bank services. Our goal is to connect banks and unbanked”, — notes Anton.

 

When two years ago I found a report by the experts at McKinsey & Company stating that about 2 billion people across the globe today had no access to banking or other basic financial services, I was shocked. Not because it’s the obvious violation of human rights but because that’s mean that global economy is losing potential billions of customers. I’m sure that providing financial services to those who need it the most is one of the main steps on the way of the economy bootstrapping.

However, I understand that it is not easy even for worldwide corporations to enter new emerging markets. Banks and other financial institutions often refuse to deal with unbanked people because considering them too risky and expensive to attract. The majority of the unbanked are people who don’t have credit histories and this is the main block for them to become the classic banks’ customers. However, I hope my company found the answer – the alternative way for people who can’t get access to traditional bank services might be built on new technologies.

MicroMoney, the company I’m managing, is a global digital credit bureau based on the blockchain technology. The company gives an opportunity for unbanked people to start from a blank slate meaning their empty credit histories. It also creates the way for banks, retail, and insurance companies to reduce financial risks when they work with this untapped audience.

In what way? MicroMoney has developed a mobile scoring system for rapid assessment of a client’s creditworthiness. Relying on Big Data, neural networks, and machine learning it has the functionality to approve the very first loans for unbanked people and this way creates their credit histories from scratch a hundred times cheaper than traditional banks. At the same time, financial and other companies get the access to this credit rating database on a fee basis, allowing them to receive a list of reliable and already assessed customers ready to consume their offers.

Now in our company and, I hope, everywhere in the nearest future, the unbanked person doesn’t need to collect a number of paper documents to confirm the ability to repay. He or she just installing the MicroMoney mobile app on a smartphone and completing a loan application within it. Then the scoring self-learning system analyzes the data available from the borrower’s smartphone and identifies potential credit risks with an accuracy of more than 95%. In a few minutes program makes a decision whether a loan should be approved or not, and sends money to a customer’s e-wallet if the answer is yes.

MicroMoney’s scoring system analyzes thousands of different parameters with the help of self-learning algorithms that can predict the outcome quite accurately. When a borrower allows access to the smartphone’s personal data, he or she does not just show us the information like contacts or SMS from banks about any transactions but actually lets MicroMoney come into the personal world. The system runs every piece of information through the neural networks: contacts, geolocation, favorite websites and searches, favorite music and all social accounts — more than 12 000 different parameters. Each parameter has its decreasing or increasing value for the final result. For example, having a profile in LinkedIn reduces the client’s risk by 30% but the love to hip-hop music, on the contrary, worsens creditworthiness. The longer a person fills in a loan application the less chance that he or she will pay it back. And so on.

Results of such analysis are much more important and reliable than the fact that a person has a credit history. This way all these alternative data help people outside the economic system to get their first (and tenth) credit ever and a further key to banking services because, finally, they will have a credit score! After a loan is approved, a customer receives the money in just several minutes. In countries like Myanmar and Cambodia, electronic wallet (e-wallet) is a very popular thing, where the account number is the same as the phone number, so the approved loan could be sent directly and immediately. That is one more reason why our lending services are valued so high in the Southeast Asia.

MicroMoney processed more than 95,000 unique customers already, got more than 500,000 likes on Facebook during the first two years of work. Nine customers out of ten took the first loan in their lives and 73% of these people came back for a new one.

Now MicroMoney operates in Thailand, Cambodia, Indonesia, Sri-Lanka, and Myanmar and the company has ambitious plans to enter 5 more emerging markets in the nearest months, including Nigeria and the Philippines. Now the company is going to run a token distribution campaign on 15th of October to support these business plans and to involve new streams of money from the untapped audience to the global economy.

About the Author: Anton Dzyatkovsky is the CEO and co-founder of MicroMoney. 

In our constant lookout for the most interesting blockchain projects, we have come across many. Their ability to spot the drawbacks of traditional methods and provide efficient and cheaper solutions makes them unique. XinFin is one such project that caught our eye in the middle of a regular day. After going through their elaborately written whitepaper, we decided to reach out to their Chief Technical Officer, Karan Bhardwaj, for an interview. He was humble enough to make a window for us that would eventually provide us a detailed overview of their blockchain-based global trade and finance platform. Here are some excerpts from the conversation we had.

Yashu: Thank you for speaking to us on such a short notice Karan.

Karan: The pleasure is all mine Yashu. Thank you for having me.

First of all, I would like to tell you that I’ve read your whitepaper. But for our readers, I would urge you to provide us an overview of XinFin’s blockchain.

We call it the XDC blockchain. It is a hybrid blockchain that maintains both a public state as well as a private state. This distinction is very useful for enterprise use cases because various institutions may prefer to keep their financial transactions private but still be verifiable by an immutable record on the public state of the blockchain. This need is fulfilled by the XDC blockchain where the details of the transaction are available only to the involved participants but the same transaction can easily be verified because of its digital record on the public state of the blockchain.

How do you ensure such privacy? Have you created any unique standard? What is XinFin’s XDC01 Protocol?

Yes, we have. Thanks for mentioning it Yashu. We have developed a protocol here at XinFin. It is called “the” XDC01 protocol. There are many blockchain implementations out there but no real standardization across or even within an industry. The XDC01 protocol seeks to change that by offering a robust and customizable enterprise blockchain solution that has applicability many different industries.

But Karan, how is XDC01 protocol more secure than any other public blockchain?

While public blockchains are secure platforms for carrying out trustless transactions, there is public visibility that can be exploited to compromise sensitive financial information. The Bitcoin blockchain, for instance, has been exhaustively mapped out such that transactions can be traced in ways that subvert the protocol.

The XDC blockchain, thanks to its hybrid functionality, allows for fully private sub-networks to carry out transactions that are recorded as a single hash on the public state of the blockchain. This hash can be used to verify the transaction by the involved parties but cannot be used to derive any meaningful financial details that can compromise the data security of those involved.

The XDC blockchain is a permissioned blockchain. That means the distributed infrastructure that makes up the XDC blockchain will be hosted on the infrastructure of leading financial institutions, corporates, and other kinds of reputed players. There will be stake requirements that will ensure all participants behave in a truthful and reliable manner. There will be punitive measures against the wrongdoers.

Interesting! Could you also tell us the real world applications of XDC01 protocol?

Well, there are many! I’ll try to give an overview. The first one is Trade and Finance. The XDC blockchain can act as a marketplace platform for peer to peer trade and financing. The advantage of using the blockchain, specifically the XDC01 protocol, is to minimize the global infrastructure deficit by enabling peer to peer financing between governments, corporations, buyers, and suppliers to make efficient use of capital and deploy projects without burdening government treasuries. The  platform can help buyers secure capital at globally competitive rates, give suppliers visibility on global tenders, give access to a large customer base, and give financiers real time visibility on their investments through real time monitoring  via IoT devices.

The second real-world applications of XDC01 protocol is Digital Wallet and Remittance. The XDC blockchain allows for real-time settlement where individuals, corporates, and financial institutions can carry out cross-border payments for trade, financing, and remittances. The XDC blockchain offers robust security and high transaction throughput making it an ideal solution for financial transactions.

And how can I forget Industrial Applications! The XDC blockchain is use case agnostic and XinFin is currently working with several partners and institutions in energy, travel, aviation, and fintech sectors. Blockchain and IoT based customized solutions can be deployed for business process re-engineering, supply chain, financing, procurement, and settlement.

More questions on XDC01 protocol. Does it run on electricity, or make any similar power demands to function properly?

The XDC blockchain does not achieve consensus based on Proof of Work that is employed by Ethereum or Bitcoin. PoW is a very energy intensive mechanism for achieving consensus. And frankly not appropriate for enterprise blockchain use cases. So the XDC blockchain does not make any additional electricity/energy demands over the necessary IT infrastructure.

So what is the consensus mechanism of XDC, exactly?

The consensus mechanism used in public blockchains(Proof of Work) is entirely unsuitable for the permissioned blockchain use case. The consensus mechanism used in the XDC blockchain is derived from algorithms that ensure BFT.

At XinFin we have an in-house R&D team that is actively developing advanced consensus mechanisms. We collaborate with premier educational institutions in our R&D endeavors and are planning on involving skilled developer talent for this project as well. If you’re a software engineer with expertise in computer networking and looking to get involved in cutting edge financial technologies, we’d love to hear from you.

How big is the XDC developer community?

The blockchain space values its community very highly and XinFin is no exception. We’re closely connected to the larger blockchain community and host various channels for developers to contribute to our project. We’re setting up a new RocketChat server and invite the developer community to come talk and code with us on this very exciting project.

How does XDC plan to be compliant with regulators?

The XDC blockchain has been designed with enterprise use cases in mind. Solutions built on the protocol have to conform to numerous regulatory frameworks that govern these institutions. We have initiated contact with regulators around the globe and shared our technical documents and other business literature. The XDC blockchain has provisions to set up auditing nodes which will be extended to regulatory bodies, with customizable permissions, for the purposes of regulatory compliance. Xinfin will make necessary disclosures and adhere to regulatory guidelines.

Moving to the adoption. How can large institutions work with XDC01 protocol?

Public blockchains, like Bitcoin or Ethereum, run on public nodes. Some of the nodes take part in the activity of mining. Through mining new blocks(of transactions) are added to the blockchain. These mining nodes are set up as clusters and consume a large amount of electricity. The cost of running this infrastructure, including all hardware and ISP fees, is offset by incentives paid to the miners to continue running their nodes. There are two kinds of incentives. One is paid when a miner or mining pool adds a new block. The other is paid as transaction fees charged against individual transactions. Hybrid and Private blockchains do not employ mining to make blocks of transactions. So the incentives and costs are fundamentally different.

The XDC blockchain is a Hybrid blockchain that does not allow public hosting of its nodes. Corporates and financial institutions must obtain a membership by owning stake in the XDC token pool. There are three tiers of membership. Tier 1 is open and available to all participants in the XDC ecosystem. Tier 2 and 3 memberships are obtained by organizations that purchase a certain number of XDC tokens. These members have the ability to host nodes validator nodes that correspond to ‘mining’ nodes in the public blockchain paradigm. They can additionally create and run private blockchain networks that are connected to the pubic XDC blockchain. The private and permissioned sub-networks are highly powerful and secure while simultaneously leveraging the power of the public XDC blockchain.

And how does XDC trade and remittances address the Volatility issue of the crypto markets?

The extreme volatility of cryptocurrencies makes them unsuitable for real-world trade use cases. Any fall in prices may lead to significant losses for involved participants. The XDC blockchain has easily deployable smart contracts written with a unique hedging feature. This feature allows the recipient to receive exact fiat value of the trade (net of commissions) at the time of smart contract closure. 10% of XDC tokens will be reserved for the hedge pool and will be used to guarantee the trade.

How does the XDC protocol architecture address the global Assets and Equipment Financing market?

The XDC protocol adds the efficiency of blockchain tech to the real world asset financing processes. Assets financed on the XDC blockchain are monitored real time to ascertain value depreciation according to standard processes. If the asset needs to be refinanced or sold, the valuation is available in a standardized and appropriately public form.

Before wrapping up, do you wish to say anything to our readers?

Hello readers! We here at XinFin are strong believers in the open-source paradigm. We like to support open source projects and plan to contribute parts of our own development to the open source community. We invite developers and blockchain enthusiasts to join in our project. We also have bounty like programs where we set up problem statements and developers can solve them for rewards, tokens, or prize money. I’ll request Yashu to list our community page links where you can access more information about our project.

Sure, I will.

Thank you, Yashu.


XinFin Community Page:

https://www.xinfin.org/community

Other links:

Slack Channel for Developers :

https://xinfin-public.slack.com/

Gitterchat Channel for Developers :

https://gitter.im/xinfin-public

Github :

https://github.com/XinFinorg

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Q: Anton, your company, MicroMoney, is promising loans for people who have no bank accounts or credit history. What is it about?

A: When two years ago I learned that 2 billion people in the world have no access to banking or basic financial services, I was shocked. They are not included into the global economy; they are deprived of some basic human right. Moreover, this system exists throughout the world and it is very difficult to change anything. It is a catch-22 situation – when a person needs to have a bank account in order to obtain a loan but financial institutions refuse to deal with unbanked people because they consider them too risky. Most unbanked people do not have credit histories and this is the main problem for them to become bank customers. Therefore, my company is here to change that. We provide an alternative solution for people to start building their credit and get loans, based on new technologies.

Q: And how is your company going to achieve this goal?

A: MicroMoney is a global digital credit bureau based on the blockchain technology. The company gives an opportunity for unbanked people to start from a blank slate meaning their empty credit histories. It also creates the way for banks, retail, and insurance companies to reduce financial risks when they work with this untapped audience.

Q: In what way?

A: We have developed a mobile scoring system for fast assessment of a client’s creditworthiness. The system utilizes Big Data, neural networks, and machine learning to help approve social loans for unbanked people. The algorithm helps to create credit histories from scratch and this system is hundred times cheaper than those used by traditional banks. Everything is done via a mobile app on the consumer end – no need for lengthy paper trail – and a million signatures. The MicroMoney mobile app installed on a person’s smartphone is all they need to apply for their first loan. After the application is submitted, a scoring system analyzes data from the applicant’s smartphone and identifies potential credit risks with an accuracy of more than 95%. In a few minutes, the program makes a decision on whether the loan should be approved or not. When approved, the customer gets money through an e-wallet.

Q:  Can you tell more about this scoring system, how does it work

A: MicroMoney’s scoring system analyzes thousands of different parameters with the help of self-learning algorithms that can predict the result quite accurately. When a borrower allows access to the smartphone’s personal data, he or she does not just show us the information such as phone contacts or text messages from banks. The system runs every piece of information through the neural networks: contacts, geolocation, favorite websites and searches, favorite music and all social accounts — more than 10,000 different parameters in total. Each parameter has its decreasing or increasing value for the final result. For example, a LinkedIn profile could reduce risk factors by 30% while some music preferences, on the contrary, could aggravate the score. The longer a person fills out a loan application, the less chance there is that he or she will pay it back. And so on. After a loan is approved, a customer receives money in just several minutes. In countries like Myanmar and Cambodia, electronic wallet (e-wallet) is a very popular thing, where the account number is the same as the phone number, so the approved loan could be sent directly and immediately. That is one more reason why our social lending services are valued so high in the Southeast Asia.

Q: Can you mention any specific numbers, how successful is your service so far?

A: MicroMoney has processed more than 95,000 unique customers already, got more than 500,000 likes on Facebook during the first two years of work. Nine out of ten customers took the first loan in their lives and 73% of these people came back for a new loan. We now operate in Thailand, Cambodia, Indonesia, Sri-Lanka, and Myanmar. We also have ambitious plans to enter 5 more emerging markets in the nearest future, including Nigeria and the Philippines. Now the company is going to run a token distribution campaign on October 18th to support these business plans and to attract new sources of revenue from these untapped resources into the global economy.