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Block chain – from crypto currency to corporate cog

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Block chain – from crypto currency to corporate cog

By Kate Voller, patent attorney at Gill Jennings & Every

Crypto currency has a volatile history. The glory days of late 2017 – where the price of bit coin came close to reaching $20,000 – are long past. Indeed, with prices dropping by more than 80 percent in the following year, its decline was so dramatic that many sceptics felt vindicated in their belief that the surge indicated a bubble about to burst. After all the initial hype, the public appeared to have fallen out of love with crypto currency.

Kate Voller

Kate Voller

While the value of bit coin has been heading downwards, however, the number of applications for patents related to block chain, originally designed to serve as a public transaction ledger, moved in the opposite direction. Large corporations such as IBM, MasterCard and Bank of America are becoming increasingly interested in the use of block chain in applications such as smart contracts, biometric security solutions, and data storage.

When you consider the cost implications of filing a patent, in terms of R&D and legal fees alone,this uptick in patent applications can be read as a good indicator of investment. So, despite its detractors, it appears that block chain may well have a future – although not necessarily related to currency, as was first intended.

Don’t believe the hype?

An open, distributed ledger, block chain is used to permanently and securely record transactions between two parties. It’s little surprise, therefore, that many of the patent applications have come from sectors such as online retail and financial services that depend on visibility and trust around the sharing of information.

Only a year ago, however, Gartner suggested that the technology was not yet capable of justifying the extreme hype around it, and was not yet sufficient for mission-critical use within the enterprise. A lack of standardisation, for example, could prove problematic. A study found that the cloud-based code repository GitHub contained more than 6,500 active block chain projects, using different protocols, platforms, and privacy measures, and written in different coding languages.

Despite such reservations, the number of applications for block chain-related patents almost doubled between 2017 and 2018. The majority of these came from large international corporations, suggesting that they may see a potential in block chain where others do not. Facebook, of course, announced its own intentions to launch a crypto currency called Libra, earlier this year.

However,the majority of organisations are pursuing applications not related to crypto currencies,and some are even doing so while warning the public against crypto currencies. Take the Bank of America, which banned customers from buying crypto currencies using credit cards in 2018 . Yet, its Chief Operations & Technology Officer,Catherine Besant previously told CNBC that having block chain-related patents is “very important […] to reserve our spot even before we know what the commercial application might be”. Indeed, Bank of America is one of the top five global patent holders for block chain technology, suggesting a vast divergence between its attitude toward crypto currency and its private intentions for the underpinning block chain technology.

Monetisation and protection

Ahead of Bank of America, the top international block chain patent holders are IBM, Alibaba, Intel, MasterCard, China Union Pay and Siemens – some of the largest corporations in the world. Of course, this raises a potential risk that, with so many patent applications being filed, block chain could soon be monopolised by a few giants of enterprise. This would be quite a turn for a technology that was often lauded for its potential to decentralise control away from the likes of large banks.

There is also a question over the motivation for these companies in filing these patents.One possibility is that these organisations are securing patents with the intention of licensing the technology out to other companies. If their block chain application successfully addresses a market need, this could prove extremely lucrative for the licensor.

Another potential motivation, which is potentially more disturbing for those who see a promising future in block chain, is that these large organisations are actually filing patents to stop “disruptors” from developing the technology. In some cases, companies will file several patents but never develop the corresponding products or services, knowing that no one else can either because they would be infringing. As block chain becomes more popular, this technique is likely to become more widespread.

Looking ahead

Less than a decade ago, the terms block chain and crypto currency were inseparable, and the public was the general user. Since then, block chain has moved away from its original purpose, and has become increasingly regarded as an enabler for digital businesses. Companies across a range of industries are now exploring how it can be applied to a variety of specific use cases, which will undoubtedly bring some innovative products to market.

However, examining the filing data exposes that the main parties of interest in block chain are some of the largest corporations in the world. It remains to be seen whether their motivations are to genuinely pursue innovative applications of the technology, or actually to block the block chain to avoid its potential for disruptive harm to potential business models. Nevertheless, the movement of block chain from a public tool into corporate hands is important to track, because it will undoubtedly shape the future of the technology.

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Wall Street bounce, upbeat earnings lift European stocks

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Wall Street bounce, upbeat earnings lift European stocks 1

By Amal S and Sruthi Shankar

(Reuters) – European stocks rose on Wednesday after Dutch chip equipment maker ASML and Swiss luxury group Richemont gave encouraging earnings updates, while investors hoped for a large U.S. stimulus plan as Joe Biden was sworn in as president.

The pan-European STOXX 600 index closed 0.7% higher, getting an extra boost as Wall Street marked record highs.

All eyes were on Biden’s inauguration as the 46th U.S. President, with traders betting on a bigger pandemic relief plan and higher infrastructure spending under the new administration to boost the pandemic-stricken economy.

Tech stocks rallied to a two-decade peak in Europe after ASML Holding NV rose 3.0% to all-time highs on better-than-expected quarterly sales and a strong order intake for 2021.

Meanwhile, Richemont rose 2.8%, after posting a 5% increase in quarterly sales as Chinese splashed out on Cartier, its flagship jewellery brand.

Britain’s Burberry jumped 3.9% after it stuck to its full-year goals, saying higher full-price sales would boost annual margins, while Asian demand remained strong.

The pair boosted European luxury goods makers that are heavily reliant on China, with LVMH and Kering gaining between 1% and 3%.

“Any sign that retail spending is picking up in China is going to be a boost to the Western markets and those heavily exposed to it,” said Connor Campbell, financial analyst at SpreadEx.

The European Central Bank is set to meet on Thursday. While no policy changes are expected, the bank could face more questions about an increasingly challenging outlook only a month after it unleashed fresh stimulus to bolster the euro zone economy.

“With the new round of easing measures fully in place and no new forecasts to be presented tomorrow, it should be a fairly uneventful day for the euro,” ING analysts said in a note.

Italy’s FTSE MIB gained 0.9% and lenders rose 1.6% after Prime Minister Giuseppe Conte won a confidence vote in the upper house Senate and averted a government collapse.

Conte narrowly secured the vote on Tuesday, allowing him to remain in office after a junior partner quit his coalition last week in the midst of the COVID-19 pandemic.

Daimler AG jumped 4.2% after its Mercedes-Benz brand unveiled a new electric compact SUV, the EQA, as part of plans to take on rival Tesla Inc.

Germany’s Hugo Boss added 4.4% after Mike Ashley-led Frasers said it boosted its stake in the company.

(Reporting by Sruthi Shankar and Amal S in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur and Kirsten Donovan)

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Miners lead FTSE 100 higher on earnings cheer

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Miners lead FTSE 100 higher on earnings cheer 2

By Shivani Kumaresan

(Reuters) – UK’s FTSE 100 rose on Wednesday as miners gained after a strong production forecast from BHP Group, while encouraging updates from luxury brand Burberry and education group Pearson drove optimism about the earnings season.

BHP Group Ltd climbed 2.8% after it forecast record iron ore production for fiscal 2021, helped by high prices for the commodity. Other miners Rio Tinto, Anglo American and Glencore rose more than 2%.

Global markets rallied in anticipation of more fiscal spending as Joe Biden prepared to take charge as the 46th U.S. president.

“There is a view in the markets that more spending is in the pipeline, after all, Mr Biden will want to start his presidency on a positive note,” said David Madden, market analyst at CMC Markets UK.

The FTSE 100 index rose 0.4% and the domestically focussed FTSE 250 index added 1.4%.

The FTSE 100 has recorded consistent monthly gains since November after the sealing of a Brexit trade deal and hopes of a vaccine-led economic recovery, but has recently lost steam as tighter business restrictions sparked fears of a slow rebound.

Burberry rose 3.9% as it stuck to its full-year goals and said higher full-price sales would boost annual margins and Asian demand remained strong.

Global education group Pearson jumped 8.6% after its global online sales grew 18% in 2020, helped by strong enrolments in virtual schools.

WH Smith Plc surged 10.4% to the top of the FTSE 250 index as its trading during Christmas was ahead of its expectations.

(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V, William Maclean)

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What we can expect from currencies and markets in 2021

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What we can expect from currencies and markets in 2021 3

By Jeremy Thomson-Cook, Chief Economist at money management specialist Equals Money, part of the Equals Group.

2020 was a year that changed almost every aspect of our lives, and currency markets across the world reacted with volatility. Complacency, panic, and isolation have influenced activity over the last 12 months and most recently, a semblance of hope has been seen as vaccines offer the first glimpse of a ‘way out’.

While 2021 will hopefully see us on the road to recovery, we’re certain to be dealing with the longer-term economic effects of the pandemic for years to come, while also navigating a post-Brexit outlook. So, what can we expect from currencies and markets in 2021?

A focus on recovery

Once the impact of mass-vaccination starts to be seen across the world, we expect to see a huge focus on recovery this year.

Investors are expected to move away from considering the US dollar and wider developed markets as the best place for their money, with an increased interest in emerging markets. Commodity prices are likely to remain high as demand recovers and the global supply chain gains pace due to growing confidence from consumers to spend their cash.

Successful logistics will play a pivotal role on the road to recovery, with the ability of governments to both reliably and speedily vaccinate the population while driving the global economy from a trade point of view, essential for success.

All this is underpinned by the assumption that interest rates will remaining at ultra-low levels throughout this year, and in certain cases, longer still.

Sector-specific expectations

When it comes to sector-specific recovery, the travel, airline, and leisure industries are expected to make a strong comeback when restrictions ease as consumers look to make up for lost time.

By contrast, commercial property and real estate are likely to face challenges as businesses revaluate how they use office space after nearly a year of successful remote working. This struggle will also be reflected by the increasing amount of empty retail space on British highstreets after the sector, and some of Britain’s most established brands, were hit hard in 2020.

What will we see from currencies across the globe?

GBP

The pound is reacting to a UK economy still very much in the grips of a pandemic, with strict lockdown measures likely to be in place until at least March. Add to that a new relationship with the European Union, and we’re likely to see the pound underperform in 2021, particularly against the euro.

Politics is likely to have less sway over sterling in 2021, with the exception of the upcoming elections in Scotland which are likely to raise the chances of another Sottish referendum on independence.

Despite the expectation that the pound will have a modest year, we do expect to see it move higher against the US dollar in the coming months.

Euro

All signs point to a strong start for the euro, and we expect it will continue the strength it showed at the end of 2020 for the months to come. Its counterparts in Scandinavia (NOK, SEK) and in Central and Eastern Europe (PLN, HUF) may even outperform the single currency as the Eurozone recovery outpaces the US and UK’s.

Markets are pleased that the Eurozone has managed to come together during a time of crisis and offer businesses and consumers both fiscal and monetary policy support. The political agenda looks a lot quieter for 2021, and this lack of political pressure coupled with a central bank that has shown its strength through the Pandemic Emergency Purchase Program, means sovereign risk is very low.

US dollar

The US dollar is likely to remain weak as investors who have bought into the dollar during Trump’s tenure in the White House react to the transition to a Biden Administration – a change that is likely to normalise global trade and expand spending.

US businesses have struggled with international relations under the watch of a Trump administration and a calmer stewardship of trade should help to boost corporate profits in the coming months, allowing for further USD depreciation.

If the UK, Asia or the Eurozone are able to move forward with their pandemic recovery faster than the US, we expect the dollar to lag against both GBP and EUR, as well as other emerging currencies – the Chinese yuan, Russian ruble and Indonesian rupiah – in 2021.

Japanese yen

The Japanese yen has acted as a safe haven from negative investment sentiment throughout the Covid-19 pandemic, and arguably long before that, pushing higher against other currencies in 2020.

While the yen would typically be sold off by investors in favour of more attractive investments, the overall outlook becomes more positive as it continues to show strength as we enter 2021. This could be down to the strange markets that we are currently navigating; vaccine joy tempered by very real near-term pandemic problems. Investors may also be positioning themselves for a wider retreat in the US dollar (USD).

Whilst the Japanese yen may enjoy some strength against the USD in the coming year and remains one to watch, we expect it to slip on a broader basis.

Australian dollar

The Australian dollar has acted as a poster child for the recovery in risk assets since the early days of the pandemic, and its likely to remain ahead of its counterparts for the early part of the year.

Australia’s handling of the pandemic to date gives it an advantage over the likes of the UK and US, and as it enters the summer months with a vaccine rollout all but underway, the outlook is positive.

If market minds are focused on a recovery then we will be looking for a higher AUD, and it is not out of the realms of possibility that it could outperform the majority of the G10.

If 2020 taught us anything, it’s that nothing’s set in stone and as we start the new year in another lockdown, it looks like that’s set to continue for 2021. Either way, we’ll see the uncertainty of the world we live in continue to be reflected in the market and currency activity across the globe.

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