EspañolBitcoin, the world’s most famous cryptocurrency, is poised to reach a major milestone before the end of the year: 100 million transactions. As of the morning of December 23, it sits at 99.7 million, with the landmark due in the next two days, and for a virtual currency that has the support of no central bank or government, it’s a remarkable feat.
“Without a doubt, bitcoin was the strongest and fastest-growing currency in 2015,” says Sebastián Serrano, CEO and co-founder of payments processor BitPagos, which has thousands of partners in Argentina, Latin America, and Europe.
Since its inception in January 2009, bitcoin’s growth has skyrocketed. While the first 50 million transactions took place during the first six years, the rest took place in 2015 alone.
This year’s Black Friday eve saw the highest volume of bitcoins traded in as single day, 2.86 million. That is over US$1 billion, based on that day’s average exchange rate.
For Nubis Bruno, entrepreneur and CPO at bitcoin trading-platform Bitex.la, bitcoin’s performance was to be expected: “It’s following the adoption curve of other disruptive technologies when it comes to promotion.” However, he warns that there is “a long transition phase for people who discover bitcoin before they learn how to use it and do so.”
Also, “businesses offering bitcoin-related services have had enough time to mature, and regulatory agencies are gradually reducing uncertainty about how they will treat bitcoin.”
In a clear demonstration of support, the New York Stock Exchange (NYSE) launched a bitcoin price index in May. “We are now going to use our name, reputation, and stature as a global index provider to give bitcoin values that the rest of the market can look to,” announced NYSE’s President Tom Farley.
Reputation is a crucial component of bitcoin, “because it’s a currency that does not depend on any bank or state entity, what gives the network its strength is users’ acceptance and trust.”
Investment Funds Eye Bitcoin
It wasn’t only bitcoin transactions that increased in 2015. Investors injected more than US$1 billion into bitcoin start-ups, almost tripling last year’s funding. Some of the world’s largest finance players ventured into bitcoin: BBVA bank, Goldman Sachs, American Express, Master Card, and even semiconductor manufacturer Qualcomm.
In January, bitcoin exchange Coinbase alone managed to collect US$75 million, the biggest yet for a bitcoin firm. But it was quickly dethroned by 21 Inc., which obtained $116 million from angel investors. In September, the firm delivered: it launched the first computer specifically designed to interact with the bitcoin network.
All about the Blockchain
The most discussed aspect of bitcoin in 2015, however, was neither the funding nor its price. Blockchain, the underlying ledger that keeps track of every bitcoin transaction, was the subject of much debate in the community.
Developers, activists, and entrepreneurs alike pondered whether the network should limit the number of transactions to avoid scalability problems in the future. No one controls bitcoin, so reaching a consensus on changes is critical.
But not only insiders debated the essential technology. The banking system showed interest in adopting the blockchain, not the currency, to handle their transactions more efficiently and cheaply. Giants like JP Morgan, Credit Suisse, and Scotland Royal Bank decided to invest heavily in creating a partnership to set up a “private blockchain.”
British bank Barclays funded three blockchain start-ups, and a Deutsche Bank official said the blockchain could “revolutionize finance,” given that “the speed of execution is so much faster for securities settlement. [And] you can see how it could reduce the capital that banks have to hold against each trade.”
But Bruno of Bitex.la believes all the buzz about “contradictory concepts such as private blockchains or bitcoinless blockchains” is the result of financial institutions trying to adapt to a new environment. Bitcoin firms should “build bridges and present [bitcoin] as a benefit for the whole industry,” he says.
Even though it’s still in its infancy, blockchain applications have the potential to change much beyond the world of finance. Honduras, for instance, is seeking to build a blockchain-based land-titles registry, and other firms are developing solutions to notarize birth certificates and marriages without the need for a central authority.
EspañolThe officials who served recently under Cristina Kirchner, Argentina's former president, were probably planning on taking a vacation right about now. Many of them, however, will likely need to revise their plans for the next few summer months. Rather than relaxing on the beach, some of the most recognized figures of the last government will march through courthouse hallways in order to give testimony in more than 1,000 cases of government corruption brought against Kirchner officials. Perhaps the most complicated case involving any of the 164 officials under Kirchner’s command is that of ex-Vice President Amado Boudou. He finds himself mired in a mixed bag of lawsuits, many of which are well advanced in the judicial process. The accusations range from the falsification of identification documents and embezzlement of public funds to being involved with the fraudulent purchase of printing contracts with the illegal intent of producing Argentine pesos. Former President Kirchner's wealth will also return to the forefront of discussion. Without the power to influence the justice system, she will have to explain how she left office with a net worth 32 times larger than when she was first elected. Additionally, she’ll have to defend herself against accusations of omissions in her sworn statements and to answer questions about money laundering at Hotesur, the Kirchner family business. The Perception of Corruption and International Transparency Index ranks Argentina 107th out of 185 countries. The Berlin-based organization suggests that Argentina’s institutions need “a stronger command over those officials investigating allegations.” And the report called on the government to provide “a correct and strict application of the law to avoid impunity” while guaranteeing “a judicial system free of (political) influence.” Laura Alonso, who heads Argentina's Anti-Corruption Office (OA), will run the organization dedicated to investigating and pursuing corruption cases within the federal government. Alonso must revive an organization that should have prevented corrupt acts from the start. Instead, the OA ended up collaborating with the very government officials whom it was supposed to oversee. According to Manuel Garrido, former attorney general and diplomat, this collusion included falsifying sworn statements. The lack of an independent judiciary branch and the weak application of the law are not the only causes of corruption. In a video released last year, the Freedom and Progress Foundation noted the existence of “induced corruption.” They mentioned the “hidden laws that contradict, alter, and multiply one another, leaving much to the discretion of the officials on duty.” In addition to the onerous regulations and excessive bureaucracy, the foundation highlights the need for laws that reward those who expose acts of corruption and the benefits gained by those who commit them. Agustín Ctechebarne, general director o the Liberty and Progress Foundation, believes corruption hinders the development of legal activities and facilitates illegality. In addition, corruption leads to organized crime and, as a result, to an increase in insecurity and a reduction of foreign investment. Ezequiel Spector, professor at Torcuato di Tella University, points to the issue of incentives. “If the state is left with fewer funds and its functions are limited to the fulfillment of very basic needs, there will be less corruption,” affirmed Spector. He argues that a smaller state would be less attractive for union lobbyists, businesses, the mass media, and other rent-seekers. "They wouldn't be able to extract as many benefits from the state apparatus,” he explains. Stop the Impunity Some officials have been able to resolve their judicial problems while still in power, but their situation could become worse. Congressman Jorge D’Agostino has prepared a draft of a legislation proposal that aims to overturn cases with “legal defects and judicial errors.” In other words, those verdicts reached under political pressure would not be subject to res iudicata, the legal notion that a court's decision "will be upheld and not questioned later by the same or a different tribunal." Those cases in which the government is suspected to have affected the outcome , therefore, could be revisited. Spector argues that res iudicata allows corruption to “permeate every aspect of the state apparatus.” Its elimination, he adds, “could incentivize individuals to be more careful and make them believe that impunity is not a given.” Two of Kirchner's former Transportation Secretaries, Ricardo Jaime and Juan Pablo Schiavi, await their sentencing next week after the public prosecutor's office requested nearly 11 years in prison for each. They are accused of administrative fraud due to their involvement in the 2012 train accident which left 51 people dead. The accident also uncovered the irregular management of subsidies, a fraudulent practice through which officials channeled over $10 billion pesos ($US 800 million) this year alone. Jaime has already been convicted twice: once for receiving illegal gifts and a second time for stealing evidence during an ongoing trial. These two government officials are the first of many who held public posts during the 12 years of Kirchner rule and will now face the gauntlet of judicial investigations. Translated by Scott Myers.