Kiffmeister’s Fintech Daily Digest (04/19/2020)

Benoît Cœuré on learning the value of resilience and technology: the global financial system after Covid-19
A rapid shift towards digital payments can improve cost, transparency and convenience for billions of consumers. International cooperation is needed to support technological capacity in developing economies, ensure interoperability between national systems, enhance cross-border payments and remittances, and support financial inclusion – in short, to avoid spatial and social fragmentation.

Why A New Breed Of Banks Are Renouncing FDIC Insurance
Avanti Bank and Trust was formed to apply for a charter under Wyoming’s new special purpose depository institution law. The law requires banks to be 100% reserved, because they are not allowed to lend. They are not FDIC insured, but they will be the first banks in the United States that will be permitted to custody crypto assets.

Crypto liquidity following Black Thursday
The widening of the liquidity bands on derivative exchanges during the crash as opposed to the relatively normal bands on spot exchanges indicates that the move down was largely driven by trading on the derivatives exchanges.

The Next Crisis will be in Consumer Credit Scores — and Alternative Data Will Be Essential
Alternative data will be needed to design new kinds of credit modeling and scoring for individuals specifically impacted by coronavirus. Instead of an over-reliance on FICO, lenders will need to consider, where appropriate, data tools that investigate other factors like bank account statements, rental payments, asset ownership, and other customer-permissioned data. In doing so, they can harvest a wider range of information from which to determine a borrower’s eligibility. This might be especially helpful in an age where traditional metrics might be unnecessarily harsh for workers caught in the crosshairs of the pandemic, overestimating their credit risk.

Blockchain project steps up to save businesses hit by coronavirus
Enterprise blockchain developer tool-maker Tatum’s nonprofit Save Your Business project has been launched with partners including Microsoft, and it is designed to deliver much-needed cashflow to firms that saw their income practically dry up overnight. The blockchain-based project gives consumers the opportunity to purchase vouchers for meals out, haircuts, and trips to the zoo. The vouchers can be redeemed once things are back to normal, giving small businesses crucial revenue in the meantime.

Making blockchain-based digital identity retina scans easier
Blockchain-based QuantumCrypt enables users to be identified without biometric information being stored on a centralized system—reducing the risk of highly sensitive data falling into the hands of hackers. It takes iris, fingerprints, and 2D face scans and converts them into a unique biometric code for identification. Eliminating the need for electronic storage is said to make this technology more cost effective for Internet of Things applications, without compromising on security.

How to Securely Prune Bitcoin’s Blockchain
CoinPrune is a snapshot-based pruning scheme that is fully compatible with Bitcoin. By requiring miners to publicly announce and jointly reaffirm recent snapshots on the blockchain, CoinPrune establishes trust into the snapshots’ correctness even in the presence of powerful adversaries. Our evaluation shows that CoinPrune reduces the storage requirements of Bitcoin already by two orders of magnitude today, with further relative savings as the blockchain grows. In our experiments, nodes only have to fetch and process 5 GiB instead of 230 GiB of data when joining the network, reducing the synchronization time on powerful devices from currently 5 h to 46 min, with even more savings for less powerful devices.