dimanche 21 juillet 2019

Deutsche Bank Collapse Could Crash Global Financial Markets

German financial services giant Deutsche Bank AG is one of the largest and most important economic institutions in the world. Mainly due to self-imposed scandals, the bank is now having to taking drastic measures to stay afloat. Investors everywhere should note that if such a critical piece of the too-big-to-fail banking system falters, it could trigger another global financial crisis.

Also Read: Global Crypto War Is Heating up – Iran Next in Line With Its Own Gold-Backed Coin

Deutsche Bank Struggles to Survive

Deutsche Bank AG, the largest banking services group in Germany with well over a trillion dollars worth of assets under management, has been a major source of concern for international investors, economists and policy makers for more than two years now. In fact, the International Monetary Fund called the bank in 2016 “the most important net contributor to systemic risks” to the global financial system. That same year, various financial publications around the world also started warning that Deutsche might be the “next Lehman Brothers,” referring to the investment bank whose collapse is considered to be a major part of starting the 2008 global financial crisis.

Now the German bank appears to be struggling again, with some commentators fearing it will not be able to survive. Just this month it was announced that Deutsche will undergo a major reorganization in order to stop the bleeding. As was widely reported, the restructuring process of the company will include downsizing about a fifth of its employees around the world, approximately 18,000-20,000 people. Additionally it was revealed that Deutsche will cut its investment in information technology by over a billion dollars per year, a move that will hinder it from catching up with competitors or being able to face new challengers in the fintech domain. Moreover, there are also reports in the market that some institutional investment funds are pulling out their assets from the bank, which might signal a lack of trust in the success of the reorganization efforts.

Costly Scandals and Billions in Fines

Before we ponder how the situation might unfold, let’s review how Deutsche Bank got to its current state. Over the last few years it has been involved in a number of scandals such as facilitating money laundering which cost the bank a fortune in legal expenses, reputational damage and massive fines. Its stock is now trading at a 30-year low, having lost over 70% in value since 2007. The bank also suffered frequent changes at the top because of this, replacing CEOs and other top executives at an alarming rate for a company of its kind in its industry. In November 2018, its headquarters were even raided by law enforcement officers and representatives of the German tax authority.

Deutsche Bank Collapse Could Crash Global Financial Markets

The myriad of legal troubles it’s faced have cost Deutsche Bank an incredible amount of money in the last few years. For example, in April 2015 it had to agree to pay a combined $2.5 billion in fines to American and British authorities for its involvement in the Libor scandal, where several banks were accused of colluding to fix interest rates widely used around the world. And in January 2017, Deutsche reached a $7.2 billion settlement with the U.S. Justice Department over its sale and pooling of toxic mortgage securities. In total, Deutsche Bank has paid more than €12 billion for litigation since 2012.

What Happens When Too-Big-to-Fail Fails?

So what will happen if Deutsche Bank does not succeed with its reorganization efforts and can no longer survive on its own? If it was operating in an economy governed by real free market principles, the bank would just go out of business the same way other companies do all the time. However, it is more than possible that politicians and bureaucrats will feel a need to intervene to prevent that from happening.

Bodies such as the German government and the European Central Bank (ECB) can say that the failure of the largest commercial banking institution in the economic heart of Europe would have disastrous ramifications for the continent and the world as a lack of investor trust will send an economic shockwave from Germany outward. For this reason they may claim to have no choice but to rescue Deutsche Bank with other people’s money. This can be done by several ways, including forcing other banks to buy out Deutsche (there were attempts to merge it with Commerzbank AG in the past), printing more fiat money and giving it away to Deutsche or even outright nationalizing the bank.

Deutsche Bank Collapse Could Crash Global Financial Markets

Whatever the case may be, it will have lasting implications on the global economy. Besides the knock-on effect on other financial institutions, a collapse of Deutsche Bank, as well as a rescue of it with European citizens’ money, could create serious political fallback. As we have seen with the last global crisis financial, disillusioned voters might feel that those in power are sacrificing their savings in order to help rich bankers from too-big-to-fail institutions, fueling a drift to populism in extreme right and left parties, further destabilizing the established order.

A new financial crisis triggered by a collapse of Deutsche Bank can also drive more people to discover cryptocurrency as an alternative to fiat, as the faults of the old system become obvious to understand. A costly and unfair rescue of the failing system will also have such an effect, evoking the Times headline “Chancellor on brink of second bailout for banks” from January 3, 2009, enshrined by Satoshi Nakamoto in the Bitcoin genesis block for a reason.

What do you think about the current state of Deutsche Bank and the likelihood of its possible collapse to crash the global financial markets again? Share your thoughts in the comments section below.


Images courtesy of Shutterstock.


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How the Blockchain Stops Cheaters: Cryptocurrency and Provably Fair Gaming

How The Blockchain Stops Cheaters - Cryptocurrency Allows Provably Fair Gaming

Online casinos and betting sites have proliferated since the first of their kind came on the scene in 1994. Thanks to the convenience of playing from home, the allure of winning real money, and a degree of privacy, these popular sites continue to evolve. There have been major problems, though, regarding perceived fairness and randomness of play. Blockchain technology offers a solution in provably fair gaming, taking trust out of the picture almost entirely.

Also read: Why You Can’t Bet With Bitcoin at Online Casinos in the US

Mistrust of Old Models

Consumer mistrust of online gaming sites has been understandably high in the past, as the relationship between house and player is often shrouded in slick talk and foggy uncertainty. A 2013 survey of online gamblers showed that 91.5% of the 10,000+ interviewed wanted some kind of reputable, third party report to guarantee fairness in play. Things like hashing and open source, blockchain-based code are now making this possible.

How the Blockchain Stops Cheaters: Cryptocurrency and Provably Fair Gaming

What Is ‘Provably Fair’?

Provably fair means that the mechanisms used to generate results on a gaming platform can be vetted by the user independently for authenticity and randomness. Prior to the rise of blockchain solutions, users had to simply trust that their online casino was generating results without altering them according to the player’s bet, or some other arbitrary factor.

The house could stand to win a lot more by knowing how players bet, and purposefully broadcasting results not favorable to the user. With blockchain-based gambling, however, all the information about every single bet and result, and how the outcomes were arrived at, is stored on a public ledger, and these algorithms can be verified by users.

Instead of relying on a website’s bold claim of “third party-verified gaming” players can now prove this fairness to themselves using randomly generated seeds and hashes, as well as verification tools unaffiliated with the site itself. While the words “provably fair” in and of themselves do not necessarily denote a trustless system (some sites can still “rig” outcomes in subtle ways if users aren’t careful), this innovation does take things leagues beyond “just trust us.”

How the Blockchain Stops Cheaters: Cryptocurrency and Provably Fair Gaming

How It Works

Let’s say online gamer Susan wants to play some dice games. She heads to a provably fair site and places her bet. Before her bet is placed, however, the site’s server provides her with a hash (a near impossible-to-reverse, fixed-length output scrambling of data) of the predetermined server-side result or outcome of the roll (server seed). Now, Susan’s browser — or Susan herself — provides a random seed (client seed) which modifies the predetermined hash to something neither she nor the gaming site can predict. When all this has taken place, the dice are rolled.

How the Blockchain Stops Cheaters: Cryptocurrency and Provably Fair Gaming

After Susan has finished her gaming session, she can check the hashes provided by the site against the seeds she provided, using a now unhashed server seed. Via verification tools, she can be sure that the outcomes of her rolls were generated both according to the gaming site’s original seed (unchangeable after being decided prior to the bet or roll), and her own random client seed (existing only in her browser) via a predetermined algorithm.

How the Blockchain Stops Cheaters: Cryptocurrency and Provably Fair Gaming

In essence, the process is like someone writing a math problem on a piece of paper (such as 2 + 2 = ?) but with one of the values written in invisible ink (2 + ? = ?) This person then folds the paper and places it in another person’s pocket. This other person removes the paper, and now secretly writes a new number in black ink, crossing out the first, visible integer. Both people can then examine the paper with identical “magic flashlights.” The intended result “4” can be understood via the original magic ink value of “2,” but now must be adjusted based on the newly placed first value in black ink. In this way, neither party is able to predict the result without the magic lights (open source code, seeds, and hashes) showing the invisible ink (unhashed server seed) and newly written number in black (client seed).

Though much more complex than the simple illustration given above, this is the basic idea. In provably fair gaming, nobody has to trust anyone else about the outcome being random and fair, as long as the underlying mechanisms are transparent.

How the Blockchain Stops Cheaters: Cryptocurrency and Provably Fair Gaming

Transparency Is Paramount

As alluded to earlier, not all sites claiming to be provably fair actually are, so it is important to exercise caution. Most online gamblers and gamers are not programmers, and wouldn’t know how to verify these things without some useful tools to help. Reputable sites include links to open source tools by which to check seeds and verify results. Oftentimes these tools are found on the sites themselves, and utilize the client’s browser. Beyond this, the algorithm used to generate randomness itself should also be clearly defined and open source.

In cases where this information is not transparent, platforms can potentially gather client browser data, and analyze the gambling patterns of individual players to avoid payouts. This is why a gaming site’s transparency and soundness of underlying mechanism is of utmost importance. It’s also why it’s good to manually generate new seeds with each play or session.

Less Trust Equates to More Reliability

Provably fair gaming and betting are continuing to evolve with the aid of blockchain innovation. Newly developing ideas such as atomic, on-chain betting would remove trust elements from transactions even further. As it stands, even on provably fair, completely reliable sites the player is still required to trust that they will indeed receive their payout after a randomly-generated outcome has given them a win. Using the opcode OP_Checkdatasig, however, it may be possible to remove this element completely, automating trustless gaming from start to finish.

How the Blockchain Stops Cheaters: Cryptocurrency and Provably Fair Gaming

Bridge to the Future: Fair Money and Fair Play

As online gaming — and finance itself — continue to evolve, permissionless systems are revolutionizing the way humans conceptualize fairness. Whereas altruistic, trust-based norms have held sway for most of history, it now appears that the best way to build trust might be by removing it completely. That is to say, in creating systems so transparent and understandable that bad actors and scammers will have nowhere to hide.

This is akin to the way people trust a well-tested bridge, and not a blindfolded promise from a stranger of safe passage. There’s always some element of risk, but knowing how the bridge was built, how often it is maintained, and seeing it for oneself is always preferable to being blindfolded and simply invited to walk across a canyon.

What are your thoughts on provably fair blockchain gaming? Let us know in the comments section below.


Image credits: Shutterstock, Fair use


Did you know you can verify any unconfirmed Bitcoin transaction with our Bitcoin Block Explorer tool? Simply complete a Bitcoin address search to view it on the blockchain. Plus, visit our Bitcoin Charts to see what’s happening in the industry.

The post How the Blockchain Stops Cheaters: Cryptocurrency and Provably Fair Gaming appeared first on Bitcoin News.

Bakkt will begin user testing for bitcoin futures on July 22

Bakkt, an Atlanta-based subsidiary of the Intercontinental Exchange (ICE), an American firm that owns the New York Stock Exchange, will begin user acceptance testing for its Bitcoin futures contracts on July 22, 2019.

As mentioned in a blog post published by Adam White, the Chief Operating Officer at Bakkt, the company’s Bitcoin futures will be listed and traded on ICE Futures U.S. and cleared at ICE Clear U.S.

Crypto markets need better trading tools, more regulatory clarity

White, the Former Vice President at Coinbase, noted that institutional investors have not been participating in the digital asset space as active as other financial markets. He believes that crypto market infrastructure must be improved and clear regulatory guidelines should be established in order to attract institutional clients.

White explained that crypto markets have relatively lower trading volumes and insufficient liquidity, and lack price transparency due to regulatory uncertainty and limited availability of proper trading tools for professional investors.

Bakkt to offer physically-settled Bitcoin futures contracts

Bakkt’s management intends to provide compliant financial products by offering regulated custody as part of their daily and monthly margined Bitcoin futures contracts. The company is also planning to build trusted infrastructure for its open, seamless, global network, which will be used to securely buy, sell, and trade digital assets.

One of Bakkt’s most highly anticipated product offerings is physically settled daily futures contracts for Bitcoin. The firm is planning to provide these contracts to investors in over 30 different countries.

Waiting for regulatory approval

In December 2017, the CME Group and Cboe began issuing cash-settled Bitcoin futures contracts. Companies like Bakkt and LedgerX could potentially allow more bitcoin to enter institutional markets by offering physically settled BTC futures.

Crypto traders will be required to pass know-your-customer (KYC) and anti-money laundering (AML) checks before being allowed to acquire Bitcoin futures contracts. Currently, Bakkt’s management is waiting for regulatory clearance from the Commodity Futures Trading Commission (CFTC) before launching its crypto futures products.

Bakkt to list daily and monthly bitcoin futures contracts

According to Bakkt’s official website, the firm’s financial products were developed after obtaining feedback from various stakeholders. Bakkt’s management notes that its BTC futures allow institutions to gain exposure to cryptoassets in a highly secure and compliant manner.

The company’s trading desk is planning to list a daily settlement Bitcoin futures contract, which allows traders to perform transactions in a “same-day market.” Bakkt will also list monthly Bitcoin futures in order to enable trading in the “front month and across the forward pricing curve.”

The post Bakkt will begin user testing for bitcoin futures on July 22 appeared first on CryptoSlate.

Crypto Bullishness Spreads on Capitol Hill

samedi 20 juillet 2019

Why You Can’t Bet With Bitcoin at Online Casinos in the US