Demystifying blockchain: what it means for KYC

Demystifying blockchain: what it means for KYC

Hardly a day goes by without a news item concerning the use of cryptocurrencies for money laundering. In June the Financial Action Task Force (FATF) told countries to tighten oversight of cryptocurrency exchanges amid growing concern among international law enforcement agencies that cryptocurrencies are being used to launder the proceeds of crime. Countries will now be required to register and supervise cryptocurrency-related firms such as exchanges and custodians, which will
have to carry out detailed checks on customers and report suspicious transactions. Many governments are already acting on this; for example, on 5 August the Thai government announced that it would bring cryptocurrencies under existing financial regulations, monitored by its
anti-money laundering office, AMLO. In a statement to the Thai press, Police Major General Preecha, secretary-general of the Anti-Money Laundering Office (Amlo), neatly summarized the
current lack of visibility over the issue, saying, “We may not find any clue, but that doesn’t mean the wrongdoing does not occur.” Elsewhere, there have been successes. Earlier this year, Europol broke up a Spanish drugs cartel that laundered cash using two crypto ATMs, machines that issue cryptocurrencies for cash. The concern is that cryptocurrencies can be used to transfer money across borders, break down large criminal money transfers into smaller amounts that are harder to detect, and to make payments on the dark web. And while some of this money laundering activity is still conducted using well-known cryptocurrencies, notably bitcoin, criminals are increasingly switching to more anonymized
cryptocurrencies. Yet, while cryptocurrencies are further complicating the AML landscape, it has been argued that the very technology supporting them – blockchain – may contribute massively to reducing the costs and
the challenge of know your customer and anti-money laundering (KYC/AML) through what has already been dubbed the KYC blockchain.

The cost of KYC

As is well known, Know Your Customer (KYC) is hideously expensive for banks. The cost of conducting KYC due diligence investigations of a company or individual can run into tens of thousands. KYC processes provide the backbone of financial institutions’ efforts to combat the financing of terrorism and to detect and prevent criminal behaviours around the world, such as trade-based money laundering (TBML). According to recent estimates, in excess of US$25 billion is spent each year on financial crime risk management in the banking sector, the majority of which is due to KYC. The reason for the high cost is simple: KYC at many financial institutions is extremely inefficient, involving labour-intensive manual processes, duplication of effort and a high risk of error. Up to 80
percent of the effort associated with KYC is dedicated to information gathering and processing, and only 20 percent to assessing and monitoring that information for critical insights. It can take weeks or even months to identify a beneficial owner by locating and validating the relevant physical and computer records. Moreover, the work is typically done many times over, even for the same customer. Each Line of Business (LoB) within a bank performs its own customer checks. The legal entity – be it an individual or an organization – typically provides KYC documents each time it requires services from different LoBs within the same institution. It is difficult or impossible for LoBs to share the information in a secure and easy manner while protecting confidentiality and privacy. Poor customer experience and high operational costs for the bank are not a good business model in a competitive environment. In other articles we have considered how machine learning – a subset of artificial intelligence – may help to address this challenge, but a key problem remains, which is that the trail of transactional records that is required to identify money laundering is typically spread across multiple LoBs, financial institutions and legal jurisdictions. And this is precisely where blockchain, the underlying technology for bitcoin and other cryptocurrencies, could reduce inefficiencies and duplication of effort in KYC information gathering
between legal entities within a large financial institution or even between competing banks.

The Singapore trial

But how realistic is such an approach? A prototype tested in Singapore in 2017 involving OCBC Bank, HSBC, Mitsubishi UFJ Financial Group (MUFG) and the Infocomm Media Development Authority (IMDA) was the first KYC blockchain in South-east Asia and the most public trial to date. It was
claimed that the prototype could solve the current practice of collecting and verifying personal information from customers repeatedly, reducing the costs by 25-50%, according to KPMG. Like cryptocurrencies, a KYC blockchain prototype operates on a distributed ledger technology and
enables structured information to be recorded, accessed and shared across a distributed network using advanced cryptography. With the customer’s consent, LoBs can share information accurately and efficiently with a clear audit trail generated on the blockchain. With a KYC blockchain LoBs can securely search customer information, generate requests for KYC
documents from other LoBs that have already verified customers, store validated customer documents and re-use them where required. The infrastructure can also be used for sharing customer profiles and alerts, which can trigger mitigation procedures when required in response to
alerts. The Singapore prototype reportedly remained stable even with a high volume of information, was resistant to tampering and maintained data confidentiality. Some fintech companies have now built their own blockchain technology-based distributed ledger systems.

Self-sovereign identity systems

A further development of blockchain-based technology that may reduce KYC costs is “self-sovereign identity” (SSI) systems. Through the use of distributed ledger technology, SSI enables individuals to retain control over their data while at the same time being verifiable for banks and other relying parties through the public recording of verified claims. SSI could be the next step in identity management, combining traditional means of identification with new technology-based systems (such as asymmetric key, one-time password, biometrics) in a distributed system. Its relevance to KYC is that it adds a layer of security and flexibility allowing the identity holder to reveal only the necessary data for any given transaction or interaction. Under existing practice, a bank has to access highly centralized pools of data time and again in order to verify identity. This has a high degree of dependence on data sources that are vulnerable to hacking. Data vulnerability is potentially damaging to both the bank and the bank’s customers, whose identity may be stolen and either used to carry out fraudulent transactions or to provide that identity to another person, who
can then use it for (among other things) for the purpose of money laundering. SSI could reduce the bank’s dependence on a centralized data pool and processes that were not designed for a decentralized, distributed and instantly connected world. An identity blockchain in which a bank has node status would provide a solution that resolves the conflicting demands of financial security and personal privacy. Such solutions for managing self-
sovereign digital identities are already in a fairly advanced stage of development.

How much of this is hype?

While there are similarities between the technology behind bitcoin and the proposed systems to assist with anti-money laundering, we should be careful that we are not blinded by the hype. As
Investopaedia recently reported:
Compare that open, permissionless blockchain to the “private” or “permissioned” blockchains that established tech and financial services players, along with a gaggle of start-ups, are developing on their own or through consortia. Rather than a trustless network of thousands of strangers, they propose to build small networks of known, vetted actors – or in some cases, to keep the blockchain to themselves. The result makes compliance with [AML and KYC] laws easier … but at some point, these purported blockchains have little to do with the innovation that underpins bitcoin. The truth is that technological change tends to be incremental and evolutionary, building on earlier advances. In the case of blockchain, this “revolutionary” technology is based on the successful combination of several pre-existing technological approaches: primarily, decentralized networks, cryptography, and consensus models. Blockchain makes it possible to exchange values in a decentralized system. Cryptocurrencies and the proposed KYC blockchains have this in common, but the commonality ends there. The blockchain hype cycle has peaked and is now in what Gartner terms the “trough of disillusionment”. This is inevitable. No new technology has ever solved more than a small fraction of the problems faced by humankind (well, not since the wheel). Blockchain (we will increasingly see the terms distributed ledger systems or hyperledgers) will bring benefits in many areas of human endeavour, including AML and KYC, but it will be no “silver bullet”. Doubts remain about its scalability, and the competitive nature of the market, concerns about confidentiality etc. will set limits on its application. That said, there is no question that these technological developments are highly positive. The bottom line? A realistic assessment is that KYC blockchains and SSI-supported onboarding will
not fundamentally transform due diligence processes but, especially if combined with other technologies, they could reduce the cost of KYC by something in the range 20%-30%. That will have a significant impact on banks’ ability to combat common forms of money laundering.

Any major financial institution would jump at that!

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Utility and Security Tokens: A Growing Case for Crypto Self-Regulation

Utility and Security Tokens: A Growing Case for Crypto Self-Regulation

The early 21st century might very well go down in the annals of history as the gold rush of the modern age. Utility and security tokens are emerging from all corners of the globe and project teams are licking their lips as a new wave of investor funding is born. Capital from Initial Coin Offerings (ICOs) in 2018 has already surpassed the 4x mark compared to 2017. And we’re only just moving into the second half of the year.

Tokenization of assets existed well before the invention of Bitcoin or even the arrival of the Internet. But now they’re taking their place at the forefront of the next digital revolution. For better or worse, the Ethereum project has popularized token creation through its ERC20 standard. Why build your own blockchain when an off-the-shelf solution already exists?

The Nitty-Gritty – What is a Token?

The only difference between a token and the spare change you carry in your wallet is where you can use it. Coins issued by national authorities and governments are considered a legal tender for everyday life and can be exchanged widely. Tokens, on the other hand, are usually issued by a private company for use in a local network.

A great example (that probably brings back childhood memories) is the tickets issued at your neighbourhood funfair. And of course, what article would be complete without a real-world wild west example:

A token used in the Red Dog Saloon brothel


Jokes aside, it should be apparent then that there are no strict rules when defining a token. You could issue your own family token from rocks in your yard. As long as you could get others to buy into the idea, a family tradition of rock tokens could theoretically take off.

In the cryptocurrency space, it’s utility and security tokens which have arrived first to the party.

Utility Tokens

Just as listed in the examples above, tokens represent access to a company’s product or service. In the case of ICOs, companies often don’t have a product or service available upfront and are looking for funding. By offering tokens in exchange for capital, projects are making investors a promise of a future product/service. The investor is taking on the risk that the project will have a usable token sometime in the future of the proposed network. And hopefully, that token will have appreciated in value.

We already see this model in action in the video game industry. Companies will offer ‘early-access’ benefits to video game fans willing to fund development for their next big title. Often these fans will receive bonuses in the form of game skins, behind-the-scenes content, in-game currency, and so on.

Security Tokens

Here’s where things start to get a little fuzzy. The crypto community would be more than happy to have every token regarded as a utility. In that case, they could simply get down to the business of investing without big brother hanging around. Governments and authorities, on the other hand, still view any investment that aims to make a profit as a security.

In a July 2017 testimony in front of the US Senate, SEC chairman Jay Clayton had the following to say about virtual currencies:

Merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security. Tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others continue to contain the hallmarks of a security under U.S. law.

The showdown is real. Fortunately, it’s a lot less bloody than it used to be. Two projects positioning themselves in the regulated token space are Polymath and tZERO. They are well worth checking out.

The Tax Man Cometh

The arrival of the SEC into the cryptocurrency arena is a rather controversial one. On one hand, the completely unregulated ICO market is creating a tremendous opportunity for risk-taking entrepreneurs looking to make a real difference. On the other, just about anyone and their grandmother is setting up shop online with a few bucks and clever marketing hype.

Some level-headed guidelines to direct projects, keep investors safe, and stay decentralized are sorely needed.

You know what they say, nothing is certain except death and taxes!


The Howey Test

The US Supreme Court created the Howey Test in the 1940’s to evaluate whether a transaction qualifies as an investment. By doing so, the SEC and other US authorities have a benchmark to determine what a security is and what requirements are needed under US law. Securities in the US need to be registered with the SEC.

Under the Howey Test a transaction is considered an investment if:

  • It is an investment of money.
  • There is an expectation of profits from the investment.
  • The investment of money is in a common enterprise.
  • Any profit comes from the efforts of a promoter or third party.

The obvious problem with this approach (for US authorities anyway) is that cryptocurrencies by their very nature cross international borders. Trying to regulate projects based completely in the US may work. But regulating projects in another jurisdiction or regulating globally distributed teams is another matter altogether.

Utility and Security Tokens: Closing Thoughts

Most observers of the current ICO craze would agree that some kind of regulation is needed to reduce the rising risks in this wild west of the digital age. At the same, it’s worthy to note that allowing a highly centralized authority like the SEC to regulate a decentralized network is highly suspect.

The SEC itself has come under fire in recent years, particularly in the wake of the 2008/9 economic crisis. Multi-billion dollar companies like Airbnb and Uber have delayed their public IPO listings due to, amongst other reasons, incredibly high listing fees. This illustrates that the SEC seemingly promotes a system which benefits the rich under the guise of accredited investing. Shutting out the common man from investing in the future will only drive them to continue with their reckless investing practices.

The answer, as usual, lies somewhere in the middle. Since decentralization is the theme of the cryptocurrency era we must assume, no, encourage that appropriate regulation will come not from the hands of wealthy special interests but from the cryptocurrency community itself.

This article was originally published on Coincentral.


Ryan Smith


“Top Misconceptions of Cryptocurrency as a Payment System”


Which can be read on Amazon Kindle Unlimited for Free  You can find more interesting articles by visiting us on one of the following platforms: AML Knowledge Centre (LinkedIn) or Anti-Bribery and Compliance at the Front-Lines (LinkedIn)

Bitcoin vs. Fiat, Time for the New Wine

Bitcoin vs. Fiat, Time for the New Wine

Bitcoin vs. fiat is more than an academic argument. It’s a fierce battle between a manipulated monetary regime and one of honest weights and measures. It’s time for you to envision the benefits of a decentralized, non-manipulated monetary system.


Out of Thin Air

Fiat currency is any medium of exchange the government deems as legal tender. A $20 bill in your pocket buys $20 worth of goods and services. It’s only paper (muslin) with ink and a special electronic doodad embedded in it. Probably costs pennies to make. It’s backed by nothing of tangible value (gold, silver, land, etc). It’s money only because the US Treasury and Federal Reserve (Fed) say it is.


From Sound Money to Broken Promises

Before 1913, only the US Congress had currency creation authority. Every new dollar was backed by gold and silver in Fort Knox. This backing of USD with gold and silver ceased on August 15, 1971. That’s when President Nixon refused to honor France’s demand for physical gold in exchange for its USD reserves. The USD has been decoupled from the gold standard ever since. Worse, the national debt is now in a nonstop, parabolic ascent.


Dialing for Dollars

When the US Treasury needs money, they give the Federal Reserve (Fed, a privately owned, for-profit corporation) a ring. Say the Treasury needs $50 billion dollars. The Fed creates an electronic checkbook with a $50 billion account balance. In exchange for the cash, the Treasury gives the Fed $50 billion dollars of Treasury bonds. You can learn more about this financial alchemy in Robert Prechter’s book, Conquer the Crash.


Taxpayers on the Hook

You’re probably wondering who pays the interest on that $50 billion batch of bonds, right? Surprise! You’re the one who pays the interest, via your US federal tax bill.

Can’t be, you say?

You need to consider this quote taken from the Grace Commission Report of 1984:

“….100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services [that] taxpayers expect from their government.”

Let’s say your Federal income tax bill is $9,000 for 2018. Most of your tax liability will pay the Fed interest on the bonds. Part of it will cover federal pension payments. None of your tax payment will pay for any government services.


US Dollar creation and income taxes are inseparably linked. Photo by: Capturing the human heart at


Before 1916, there was no US Federal income tax. The US flourished for 140 years without one. Do you find it interesting that the income tax came to be just three years after the Fed’s creation?


Even More Disturbing

Okay, part of your income taxes is used to pay interest to the Fed. None of your income taxes pay for government services. Where does the money needed to run the US government actually come from? That’s a great question!

The US Treasury sells interest-bearing bonds to investors. Other revenues are generated via import duties, gasoline taxes, airline ticket taxes, etc. The revenue shortfall is covered by additional Fed debt for moneyexchanges. As a result, the US national debt keeps on climbing at an exponential rate. Paying it off is impossible in a debt-based monetary system.

The debt-based fiat monetary system perpetually transfers part of your wealth to the central bank’s owners.


Bitcoin vs. Fiat: Can We Break the Link?

Bitcoin isn’t backed by physical commodity stores of value. However, Bitcoin’s controlled supply lends stability to its value, similar to asset-backed paper currency. But if you buy Bitcoin in USD, sell it in USD, and then pay US taxes on it, your transactions are inseparably linked to the fiat monetary system. Such limitations effectively cripple the vast potential of Bitcoin.


Storm Clouds Brewing

Central banks realize that cryptocurrencies pose a threat to their financial dominance. As more people transact in Bitcoin, the demand for fiat drops. That’s bad news for USD valuation, especially as Russia, China, and others create non-USD financial networks. A sudden devaluation of USD would increase consumer prices. Economic chaos might ensue.


An End Run

Bitcoin transactions might be restricted by law and fiat currency demand would be protected by such legislation. The Central banks may eventually decide to protect their turf with such tactics.

They might also introduce their own centralized digital currencies. According to this recent quote from Christine Lagarde, director of the International Monetary Fund (IMF):

“I believe we should consider the possibility to issue digital currency,” Ms. Lagarde said in a speech at a conference in Singapore. “There may be a role for the state to supply money to the digital economy.

The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi-anonymous… And central banks would retain a sure footing in payments.”

The IMF is the banker to worldwide central banks. Surely they will protect their members’ financial interests. Therefore, it seems unlikely that their version of a digital currency will resemble Bitcoin.

The more probable outcome is an electronic version of the current fiat monetary system. Therefore, you would continue to pay for the interest due for every debt for money exchange.


Bitcoin Needs a New, Libertarian Nation-State in Which to Flourish

For you to fully realize Bitcoin’s potential, the currency may need to become the lifeblood of a newly-birthed nation.

Imagine the possibilities for your life with:

  • A Libertarian nation based on principles of honesty, accountability, transparency, and egalitarianism.
  • A national currency based on a physical commodity-backed (oil, metals, grains, land, etc.) version of Bitcoin.
  • A fully-backed, auto-adjusted Bitcoin supply tuned to current economic activity.
  • A financial system absent of economic booms and busts.
  • A monetary system free of government deficit spending and central banks.
  • Stable consumer prices and low interest rates.
  • A direct democracy that eliminates the need for presidents, politicians, fiat money, and bureaucrats.
  • Smart contracts for consumers and producers that eliminate the need for government agencies.

You may see the formation of sovereign, Libertarian-ideal nation-states within the next 10-15 years. Cryptocurrencies and the blockchain might provide the honest financial foundation needed for such nation-states to succeed. You would have an equal opportunity to prosper. If your business fails, there would be no bailouts for you. No central bank could profit from fiat currency schemes.

Consider this quote from a widely-read book:

But new wine must be put into new bottles; and both are preserved”

-Luke 5:38 KJV

That simple logic applies to Bitcoin and other cryptos. They can’t harmoniously coexist alongside a fiat, debt-based money system. We must deploy honest, manipulation-free currencies into a corruption-free economic and societal model.

Only then would you enjoy the new wine of Bitcoin. The battle of Bitcoin vs. fiat would finally be over.

This article was originally published on Coincentral.


Donald Pendergast


“Top Misconceptions of Cryptocurrency as a Payment System”


Which can be read on Amazon Kindle Unlimited for Free  You can find more interesting articles by visiting us on one of the following platforms: AML Knowledge Centre (LinkedIn) or Anti-Bribery and Compliance at the Front-Lines (LinkedIn)

The Impact of Upcoming Cryptocurrencies on the Financial Industry

The Impact of Upcoming Cryptocurrencies on the Financial Industry

Upcoming Cryptocurrencies are Causing a Financial Evolution

In 2009, Satoshi Nakamoto created Bitcoin partly in response to the 2008 financial collapse. He envisioned a purely peer-to-peer financial system in which you don’t have to trust third-party institutions to make transactions. Now, there are hundreds (if not thousands) of upcoming cryptocurrencies that have built on Bitcoin’s foundation. They’re here to enhance the financial industry in the same way that Bitcoin did for simple transactions.

In this article, we examine the impact that these upcoming cryptocurrencies are having on the world’s largest industry – finance.

Existing Institutions Operate More Efficiently

With products already available, some cryptocurrencies, most notably Ripple and Stellar, are working with existing institutions to make their systems more efficient.

The Ripple Transaction Protocol (RTXP) is a network of financial institutions on the blockchain. Any company using the protocol can transact with any other participant at a fraction of the time and cost it would take in a traditional system. This is especially ideal for global payments which can typically take 3-5 days and cost participants $1.6 trillion annually.

Started by a Ripple team member, Stellar is making a similar impact on the financial industry. The project has joined forces with IBM to also facilitate better cross-world payments. Some Stellar supporters argue that the project’s token economics lead it to be a more decentralized solution than its counterpart, Ripple. However, there’s room for both in a massively interconnected world.

You Have Full Control of Your Money

One of the greatest values that blockchain brings to the financial industry is monetary control. With this technology, you no longer have to trust a bank with your money. It’s stored on an immutable ledger that’s nearly impossible to manipulate or hack.

Really, any upcoming cryptocurrency serves this purpose. With them all using blockchain technology (or something similar), your faith is in the coin’s open-source code rather than any corruptible institution. With cryptocurrency, it’s impossible for someone to freeze your funds or tell you where and when you can spend your money.

Your wallets, private keys, and funds are entirely in your control. This is rule number one for any reputable cryptocurrency.

Transactions are Truly Peer-to-Peer

Blockchain technology also eliminates the need for middlemen in transactions. And, there are plenty of upcoming cryptocurrencies using that feature for good use. The big players like Bitcoin and Litecoin specialize in these types of transactions, but there are some smaller projects you should be aware of as well.

Nano has gained some popularity for its lack of fees and near instantaneous transaction times. Because Nano uses the directed acyclic graph (DAG) algorithm instead of a typical blockchain, the network becomes more efficient when more people are using it. Although not as battle-tested as big boy Bitcoin, the cryptocurrency could have a promising future for free peer-to-peer payments.

Another project, Request Network, is expanding beyond simple peer-to-peer payments by building a Paypal-like blockchain interface. Using their platform, you send and request money while avoiding third-party intermediaries. But, the team isn’t stopping there. They’ve created an entire mind map for all of the ways they want to change the financial industry. Crowdfunding, payments, point-of-sale – the team is attempting to fix it all.

More People Have Access to Banking Services

Most importantly, upcoming cryptocurrencies are bringing banking services to the 2 billion people around the world without banks. Whether they can’t afford it, they don’t qualify, or the countries they live in are lacking in banking institutions, this group of people is commonly underserved.

Many upcoming cryptocurrencies are making bank services more affordable and more available to the unbanked. With Stellar, financial institutions can afford to offer low-cost accounts as well as loans with more favourable interest rates. Now, a business owner in a developing country can more easily get a loan, stimulating the economy in the process.

Even cryptocurrency exchanges are having an unlikely effect on the financial industries of unbanked nations. For example, Binance recently announced an initiative to transform and improve Uganda’s economic landscape. They’ll be doing so by proving youth employment through blockchain.

An Entire New Financial Infrastructure Could Exist

Moving past traditional financial structures, it’s even possible that a new technological infrastructure will be powering the entire financial sector soon.

Wanchain is just one project attempting to build finance from the ground up. Instead of tying into the current infrastructure, they’re building their own. Their goal is to create an entire blockchain-based ecosystem in which anyone can build financial services on. Wanchain’s success could mean that physical banks disappear, becoming (decentralized apps) dapps on the blockchain instead.

This is Just the Beginning

Blockchain technology is already beginning to have a massive effect on the financial industry. With established cryptocurrencies like Bitcoin, you get a secure store of value, trustless peer-to-peer payments, and complete monetary control.

Other upcoming cryptocurrencies are making significant impacts as well. Beyond digital transactions, newer projects are specifically focusing on helping the unbanked, making blockchain technology more scalable, and providing functional interfaces.

As these and more cryptocurrencies continue to improve the finance sector, it won’t be long before our current financial infrastructure is a thing of the past.

This article was originally published on Coincentral.


Steven Buchko


“Top Misconceptions of Cryptocurrency as a Payment System”


Which can be read on Amazon Kindle Unlimited for Free  You can find more interesting articles by visiting us on one of the following platforms: AML Knowledge Centre (LinkedIn) or Anti-Bribery and Compliance at the Front-Lines (LinkedIn)

How Blockchain Financial Services Will Transform the Global Economy

How Blockchain Financial Services Will Transform the Global Economy

Blockchain technology is transforming what it means to banks in major ways.  People from all over the world are learning about the advantages this technology offers, and every day new and more advantageous blockchain startups are entering the marketplace.  The open nature of the decentralized economy is truly inspiring, and for the first time in history, there is a real opportunity to solve many of the problems associated with our financial system.

A recent study conducted by the World Bank Organization revealed that more than two billion people around the world lack adequate access to financial services.  These individuals are forced to conduct all of their transactions in cash which can be dangerous as most of these areas are located in developing nations.  The study also revealed that over 50% of adults in the poorest households are unbanked.

This lack of financial inclusion is seriously hindering world economic development, and in many countries, there has been considerable effort put forth to tackle this problem.  Unfortunately, many of these programs lack the technological ability to solve these problems. Considering that the problem is inherent in the current financial system, there is little hope that a solution will come about using the current centralized economic stance.

Why Blockchain is the Answer

A new decentralized approach is needed to provide these individuals with fair and equal access to financial services.  The centralized nature of our current banking system requires a huge infrastructure to implement and the investment capital to institute these expensive additions is not practical in many poorer nations; many of which, still lack access to basic infrastructures such as roads and hospitals.

Advantages of Blockchain

Blockchain technology could be instituted in a manner that is both cost-effective and highly efficient.  Thanks to blockchain technology, everyone now has equal access to financial services on a global scale.  The transparent and immutable nature of blockchain technology makes it perfectly suited to handle these real-world problems.

Un-Banked Populations

Creating a blockchain-based access point for these unbanked populations would be much easier than attempting to extend the current cumbersome banking system into these regions.  Many of these countries are politically unstable and widespread corruption has curbed the desire for large institutions to enter the market.  Corrupt governments are controlling the funds entering their regions and restricting the people’s ability to economically develop.

Open Banking

The implementation of a blockchain-based banking system in these regions would help to curb the corruption currently running rife in the banking system.  The transparent nature of blockchain technology is ideal in preventing government and banking officials from skewing the books.  Corruption is not regulated to just developing countries, as we have already seen in the multiple banking bailouts of the last few years.

Many of the citizens of developing countries such as Zimbabwe are in this exact position.  The people have lost faith in their government after years of repression and what basically amounts to financial terrorism.  Skyrocketing inflation and corruption have made blockchain alternatives flourish in this country and a new generation of blockchain-aware investors is emerging.

Zimbabwe Soldiers Waiting for Housing

The change throughout Africa is real and in March of this year, South Africa hosted its fourth edition of their Blockchain Africa conference in Johannesburg.  This saw record attendance including representatives from the financial, legal, and technologies sectors of the country.

This growth makes sense as blockchain technology is the smartest alternative for South Africans; many of which rely heavily on remittance payments sent from countrymen working abroad.  These payments can now be sent for a fraction of the cost and directly via blockchain technology.

Business Payments

The Peer-to-Peer nature of blockchain technology makes it the ideal choice for businesses looking for a more efficient solution than the current lackluster systems in place. There are now multiple cryptocurrency merchant processors at a business’s disposal and by implementing these technologies, a business can easily enter the global economy from anywhere in the world.

Global Payments

In its current state, the global economy can be punishing on individuals who attempt to offer their services or products internationally.  The dollar-focused central banking system makes it very difficult for countries with less influential fiat currency to become important players in the world economy.  Converting currency internationally can be an expensive task and this hinders many entrepreneurs’ growth.

During the conversion, a company can lose significant buying power if their currency is not of equal value to the other parties involved.  This is a skewed financial system that leans heavily towards the colonial powers that first instituted these systems in these countries 500-years prior.

Blockchain Technology Allows For Open Access to the Global Economy

Blockchain users can avoid this pitfall.  The decentralized economy is not owned by any country and the largest player in the sector, Bitcoin, isn’t affiliated with any organization or region in particular.  One can only assume that Satoshi, the anonymous creator of BTC, must have had the foresight to see that these corrupt organizations would step in and try to regulate or commodify his creation into another tool for their power-hungry strategies.  To avoid this confrontation, the creator of BTC has decided to stay anonymous for over 9 years.

Due to the fact that there is no way to contact Satoshi, governments are forced to tiptoe around the issues of regulation, whereas, in a usual scenario, they would just confront the company’s owner and demand they meet their demands or else.  The only thing these countries can do to Satoshi is send him BTC to his known BTC address; as that is the extent of the knowledge of this person’s identity they have.

A Blockchain Future

The undeniable efficiency of blockchain technology makes it the obvious choice to solve the world’s current financial system woes.  A decentralized financial system would allow for equal access on a global scale and further help those who are being drowned in corruption to seek a legitimate alternative to the current system.  Hopefully, blockchain technology can continue to provide untethered access for these individuals who are seeking to become active members of the global economy.

What do you guys think?  Is the world ready for a fully transparent banking system?

This article was originally published on Coincentral.


David Hamilton


“Top Misconceptions of Cryptocurrency as a Payment System”


Which can be read on Amazon Kindle Unlimited for Free  You can find more interesting articles by visiting us on one of the following platforms: AML Knowledge Centre (LinkedIn) or Anti-Bribery and Compliance at the Front-Lines (LinkedIn)


Cryptojacking, Hacks, and Scams: N.Korea Is Ramping up Cyber Attacks

Cryptojacking, Hacks, and Scams: N.Korea Is Ramping up Cyber Attacks

The North Korean government is currently facing a flurry of accusations related to cryptocurrency hacks, cryptojacking attacks, and money laundering. Its regime, which is currently reeling from sanctions imposed by the United States government, is believed to be backing cryptocurrency scams and hacks to obtain badly needed funds.


Cryptojacking in South Korea

According to the latest reports, the South Korean government is blaming the North Korean regime for launching a string of cyber attacks against the country.

Going by an audit carried out by the country’s National Intelligence Service, Pyongyang is using cryptojacking and hacking techniques to mine Monero using computers located in South Korea.

The country is apparently spreading links through social media and emails that send users to malicious websites prepped for cryptojacking attacks. North Korea’s cyber attack units are also accused of relentlessly probing South Korean networks and intelligence systems to obtain sensitive information.

According to the NIS report, their teams may also soon be able to launch attacks using Artificial Intelligence technology.

The Regime Is Sponsoring Cryptocurrency Hacker Groups

Attacks on cryptocurrency platforms have been on the rise in the past two years, with sophisticated hacker groups specifically in China and Russia believed to be behind the schemes. According to a recent report released by the cybersecurity firm, Group-IB, Pyongyang also backs some of the most successful hacker syndicates on the planet, the most notable being the Lazarus hacker unit. In most cases, the syndicates target world financial institutions and cryptocurrency trading platforms.

With over a billion dollars worth of cryptocurrencies stolen from various platforms over the past two years, Lazarus was specifically responsible for syphoning off over $500 million worth of digital assets from exchange networks.

Cryptocurrency exchange platforms that have fallen victim to its schemes include Bithumb, Yapizon, YouBit, Coinis, and Coincheck. Such groups commonly use spear phishing for their exploits.



Lazarus has successfully attacked several cryptocurrency exchange platforms including Bithumb, Yapizon, YouBit, Coinis, and Coincheck. (Image Credit: Kaspersky)


North Korea Backing Scam Coins

Pyongyang cyber units have also been involved in a spate of scam coin setups to illicitly obtain funds from unsuspecting investors. Among recent discoveries was a scam coin dubbed Marine Chain, which the state of Ontario declared as a fraud. Now defunct, it allowed for the tokenization of marine vessels.

Clients lured in by the scheme lost their investments on the platform, allegedly set up by enablers in Singapore. Its website was hosted on four different IP addresses on different occasions. Some users also noted striking similarities with another platform called

North Korean scammers may also be behind another scam coin dubbed Stellar Holdings or HOLD. Unusual activity involving the HOLD altcoin was detected between the months of March and August. Experts started to notice significant data transfer volumes during this period. Several network nodes indicated significant activity, especially during June.

The team behind the coin reportedly generated interest and revenue at the beginning of the year through a technique called stacking. It involves allowing miners to mine the cryptocurrency and add to its value and growth momentum before giving them permission to trade. Participants generally take on significant risks while indulging in such schemes because trades and time-frames are limited by coin developers.

There is also the real risk that the coin will depreciate in value before miners can trade. In August, the HOLD coin was apparently rebranded to HUZU after being listed and delisted on several cryptocurrency platforms. The change reportedly led to major financial losses among its investors.

(Featured Image Credit: Pixabay)

This article was originally published on Coincentral.


Elizabeth Gail


“Top Misconceptions of Cryptocurrency as a Payment System”


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