Tuesday 21 April 2020 9:00 am

Government issued ‘Corona Bonds’ are inevitable. Could blockchain provide the answer to efficiency and transparency of their issue?

City A.M's Crypto Insider

Price Watch

The crypto market has had a positive week with the total market cap once again heading north of the US$200bn mark and at the time of writing, Bitcoin (BTC) was trading at US$7,050.62  / GB£5,685.18; Ethereum (ETH) is at US$179.39 / GB£144.70; Ripple (XRP) is at US$0.1894 / GB£0.1520; Binance (BNB) is at US$15.78 / GB£12.75 and Cardano (ADA) is at US$0.03554 / GB£0.02871.  Overall Market Cap is at US$204.92bn / GB£164.68bn (data source: www.CryptoCompare.com)

City AM’s Crypto Insider

Over the weekend I received an email from me dear friend Ranald Macdonald Founder of the Boisdale group of restaurants in London promoting an innovative way of getting in advanced revenue through the issuance of Boisdale ‘War Bonds’ which pay up to 100% dividend when redeemed after Victory Over Corona Day and for a year thereafter. The beautiful and colourful bond designs are based on the original British Second World War bonds and feature a photo of Sir Winston Churchill holding his hand in the famous hallmark V-sign salute which stands for defiance, hope, determination and victory. I have confirmed that the bonds can be paid in crypto!  It was pretty auspicious timing as the notion of how governments around the world will fund the unprecedented costs incurred by their war on COVID-19 was formulating in my mind.  

It seems inevitable that just as Ranald has created his Boisdale War Bonds, so too will Corona Bonds be issued.  Obviously post-Brexit Britain will be left to do its own bidding whilst President Macron of France and Christine Lagarde of the IMF will be doing their level best to get the necessary Euro bloc support to issue European Corona Bonds.  I caught up with Jonny Fry of Team Blockchain to discuss the potentially vital role blockchain could play.  He informed me that in fact Italy has already announced that they are going to issue an inflation linked Corona Bond albeit without blockchain – are they missing a trick? 

HSBC recently, having issued a ‘green’ blockchain based bond, did a cost comparison (see below) which would seem to indicate that the cost savings could be as much as 90%.  Given that any action our Government takes this saving cannot be ignored. A further advantage of using blockchain technology to issue debt instruments is the added transparency that it offers investors and hopefully would improve the level of trust in the government issuing bonds.  The precedent for global institutions is already there with the World Bank now having successfully issued two tranches of ‘Kangaroo Bonds’ using blockchain technology. 

I’ve been picking up a lot of traffic recently about Cardano, the novel proof-of-stake blockchain built on robust, peer-reviewed science. There’s been a lot of activity around Cardano recently, so I reached out to get the lowdown! 

At the end of March, following the ongoing success of the project’s Incentivised Testnet, with over $420 million staked on the system, Cardano’s Byron Reboot was released, an update for the existing codebase, containing the ‘bridge code’ required for the transition over to the fully decentralised, Shelley-era functionality. 

Cardano’s next steps from the reboot involve launching a Shelley-Haskell testnet,  with the codebase written in ultra-high reliability Haskell code and the final delivery of the Shelley mainnet later this summer.

All of this leads towards the totally decentralised era of Cardano, which Charles Hoskinson is confident can be achieved in the not too distant future. This will mean that no nodes are producing blocks, only stakepool operators. The various stages of development towards this enable easy transitions for users, and the ability to make sure every stage is fully operational. 

The Shelley mainnet is on track to be at least 100 times more decentralised than bitcoin, with a theoretical data throughput of at least 1,000 transactions per second. As such, Cardano is certainly one to watch, as this level of decentralisation and transactional speed/throughput provides, currently, unique potential to eventually replace legacy, global-scale financial systems – no mean feat. At the same time, Cardano is already working on the other elements in the Cardano Roadmap.

On top of this, the latest update to Cardano’s underpinning ‘ouroboros’ consensus algorithm, Ouroboros Hydra was announced last month, which will enable increased transaction speeds and scalability, with the number of users to reach over one million transactions per second. Solving the scalability question is the holy grail for the whole blockchain space, and this work forms part of Cardano’s ultimate goal of creating a blockchain based global financial and social operating system. 

Significantly, IOHK is looking at potential use-cases in a number of developing world locations, including Ethiopia. Not only this, but Cardano is working with the Free University of Tbilsi and the Business and Technology University of Tbilsi in Georgia to provide proof of qualifications. The blockchain giant is also working with New Balance to help authenticate the manufacturing of products through blockchain. This follows last year’s blockchain project with New Balance, which was a consumer-level authentication solution.

Yesterday I caught up with Monty Munford earlier who has invited me to be a guest next month on his new weekly BlockSpeak video podcast, which has already seen John McAfee on the show.  Monty was previously well-known as the BBC writer who had £25K hacked from his wallet, but who is also a fixture on the conference circuit interviewing people on-stage such as Steve Wozniak and Kim Kardashian as well as many in the crypto space including McAfee and others.  Set up with two co-founders Alessandro Benigni and Jean-Michel Azzopardi, BlockSpeak is a 30-40 minute conversation with Munford that promises ‘no bullshit’, in spite of the leading two letters in its branding. Munford says authenticity is important, especially at this time and the show will reflect that honesty in a ‘language we all understand’, which effectively means it will be a little salty in tone.

BlockSpeak is six episodes in and available on all the major podcast distributors as well as Spotify and YouTube. The video podcast is free, but will be bringing on major sponsors as the covid pandemic decreases, but for now wants to be a source of information that is widely available for everybody.  He told me that “John McAfee has agreed to appear monthly on the show and future guests include me, Zug cryptoqueen Olga Feldmeier and Tone Vays.” 

Speaking of Tone Vays, I will be taking part with him on HAYVN’s panel event this coming Thursday at 14:00 GMT for which you can join at the time using Webinar Link: https://loom.ly/1XZC-mQ  HAYVN is a regulated online custodian and OTC broker.  The panel event is to discuss the effect of COVID-19 on the cryptocurrency industry. (Automatic calendar link: https://loom.ly/UpzANaQ )

It was great to find out that friends of Crypto AM, Mode Banking are doing their bit to help the NHS – they are donating their ‘Bitcoin Jar’ revenue to the Imperial Health Charity’s COVID -19 Relief Fund. The money will provide emergency funds to help London hospital staff cope with the extraordinary demands of fighting the virus, and will support vulnerable patients who face financial difficulties as a result of their stay.  Find out here how you can support!

Finally, sticking with fundraising I’d like to remind you again about my local community effort for the elderly and vulnerable living on the Isle of Dogs. I teamed up with BABB (Bank Account Based Blockchain) to raise money to pay for food and care parcels. We’re on course to hit our target of circa £4,000 with the help of Waitrose & Partners of Canary Wharf, our budget will be enhanced by £400 worth of discounts.  Please donate to the campaign via www.bit.ly/IoDFoodCare