[FinTech Magazine] - Special Edition: Immersive FinTech News, Impressive FinTech Club

FINTECH

About Us p.6 The

IMME

R

FIN

Initiative

Featured p.34 The

FinTech

Evolution

Featured p.38 Cryptocurrency: in

E S

Student-Led

FinTech

MAGAZINE

I

1st

T

Concern

Excitement

H

V

E

The

C S

N

W E

IM

P R E SS

IVE

H EC T N I F

C

LU

B

NOVEMBER 2021

T h a n k f o r

y o u

r e a d i n g

t h e

F i n T e c h

M a g a z i n e

VUONG ANH CHIEN

HUYNH PHUONG VY Co-Leader & Designer

Co-Leader

LE TRAN TRONG HUNG

BUI DO MINH NGUYEN

Designer

NGUYEN HONG QUAN Designer

Art Director & Designer

TRAN NGOC HOAI TRUC Content Editor

NGUYEN MINH ANH Content Editor

MAGAZINE

TEAM SPECIAL THANKS TO Our dedicated contributors and interviewees: Tram Do, Vy Dao, Tin Chung, Minh Pham, Nhat Nguyen, Anh Pham, An Phan, Quan Nguyen, Trinh Do, Thanh Khuong, Nguyen Nguyen

2

Cover: Artwork by Anh, Bui. 2020 for RMIT FinTech Club (recreated & designed by Nguyen, Bui. 2021)

04 CON The 1st Student-Led FinTech Initiative 06 A Message from Our Project Leaders Some forewords

Our establishment, vision & mission

Why FinTech Club?

Why you should join this amazing squad

08

TENT 16 How We Survived Online

Lockdown? Nah, we still have fun online

FinTech in The Eyes of...

What different members describe our club

FinTechnicolor: The New Picture in Finance What you need to know about FinTech

The FinTech Evolution A snapshot from 1866 to the 2020s

Cryptocurrency: The Concern in The Excitement How governments regulate cryptocurrency matters

18 32 34 38

Market Manipulation Schemes

46

Bitcoin Manipulation by Bots

50

Pump & Dump, Spoofing and Wash Trading - explained

What, why and a real case of bot manipulation

3

FINTECH MAGAZINE Special Edition 2021

A MESSAGE

PROJECT LE Since we started this FinTech Magazine project 3 months ago, there are 3 things that we want to emphasize: to promote proactive learning from participating members, to emphasize peer-to-peer learning, and to ensure that all participating members feel that they are the one who are making decisions.

We sincerely welcome you to the very first public edition of FinTech Magazine. We hope that this Special Edition, an ingenious synthesis of our ideas, will give you a clearer sense of how FinTech Club is performing and how significant our members are to that exceptional performance.

We also want to give special thanks to Minh Nguyen, our talented art director, along with Hong Quan and Trong Hung, our honor designers, as well as Minh Anh and Hoai Truc, our content writers of this edition. Without you guys, the magazine would not have been successfully completed.

4

A

While I am proud of what our team has accomplished, I am humbled by the imperfections that is still left to be improved.

This is a journey, indeed. The challenges we face in this project will continue to evolve, but we will keep moving. We will keep making progress and get better every step of the way.

E FROM OUR

EADERS

Y

N

N O G U V H

P

A

C H I H E N

5

RMIT Vietnam FinTech Club is THE

1

-

ST STUDENT

LED FINTECH INITIATIVE

in Vietnam

The club was established at the start of 2020 by RMIT Vietnam Saigon South students with 1001 interests and passions in startups, FinTech, finance, and disruptive technologies. With the vision of connecting students from all degree programs and providing them with insights into the emerging field of Financial Technology, RMIT FinTech Club commits to the 3 core values of:

Education

Career

Ideation

To connect Business & Technology students and to learn from each other in related fields through activities such as training workshops, information sessions, meetups, conferences and events.

To build up students’ networks and relations with industry experts, to seek partnerships with Financial services and FinTech firms and to best deliver competitions, internships and jobs for students.

To create platforms, events, projects and chances for students to grow and to initiate proactive learning and knowledge sharing related to FinTech among all internal members.

Dedicated to fulfilling club values and thus committed to the mission of sharing knowledge about Financial Technology to everybody. Since the establishment of the club, there have been numerous educational series, events and projects hosted and led by talented club members.

At RMIT Vietnam FinTech Club, students in the School of Business & Management, School of Communication & Design work and interact harmoniously with students from the School of Science, Engineering & Technology to exchange knowledge and form a genuine camaraderie. Therefore, the commitment to learning above and beyond the university syllabus is at the core of the club’s values and something embodied by all members.

6

Artwork: Vercesi, Chiara. FinTech. 2019

7

FINTECH MAGAZINE Special Edition 2021

WHY FINTE

Personal Finance Training, April 2021

8

ECH CLUB?

Let's get to know more about the reason why FinTech Club should be your first choice when joining a club, how the next generation of FinTech members pursues, develops the initial spirit and brings RMIT Vietnam FinTech Club to the next level.

9

IF YOU CAN USE ONLY ONE WORD TO DESCRIBE FINTECH CLUB? IT WOULD BE

IMPRESSIVE IMPRESSIVE IMPRESSIVE IMPRESSIVE 10

Communication Etiquette Training, April 2021

E E E E

FROM PROFESSIONAL ACADEMIC ACTIVITIES...

RMIT Vietnam FinTech Club is well-known for many activities, both external and internal, revolving around FinTech which are not only informative but also interesting and fun!

Our external projects, such as the FinTech Workshop Series held every semester, provide RMIT students with more exposure to different aspects of FinTech, ranging from blockchain, data analytics, AI to CBDC and cryptocurrency. Moreover, our RMIT FinTech Blockchain Competition, an annual event that we previously collaborated with RMIT School of Business & Management was a successful event with flourishing results and participation from different universities. Most recently, our FinTech Blockchain Forum is also receiving huge attention from the FinTech-Blockchain community.

Meanwhile, our internal projects are amazing opportunities for members to fully take part in the process and self-develop. You will definitely become a FOMO at RMIT Vietnam FinTech Club, because every activity is made with not only love from the organizers, but also enthusiasm in researching, learning and educating others who also love learning. They are interesting enough to keep you motivated to learn from other talented members. Specifically, we provide members with various training sessions every semester in FinTech, Business, Technology and essential soft skills in work and life.

Collaborative Project Training, May 2021

11

FINTECH MAGAZINE Special Edition 2021 Communication Etiquette Training, April 2021

Here in the RMIT Vietnam FinTech Club, we educate each other.

According to Bao Nguyen, one organizing committee of Personal Finance Internal Training: “We find out the most useful knowledge based on the updated information and members' ideas.” Through the teamwork and effort, we bring back the love and the success for all events. One of the greatest success is the Best Academic Club title that we gained consecutively in Semester 1 and 2 of 2021, proving that all members’ determination is worth it.

The "secret recipe" of impressive club events from RMIT Vietnam FinTech Club is The Launcher Initiative - an internal program that allows members to propose and execute their own ideas for club activities. Every semester, each idea and opinion that contribute to the growth of the club in general and yourself in specific, are valued and heard. The program has eventually given rise to exceptional member-driven projects, namely: FinTech Magazine, FinTech Podcast, Virtual FinTech Bear, Mini Panel Discussion: Think, Share & Design.

12

...TO INTIMATE PEOPLE

It is the end of the semester when you often see the phone number or a bunch of messages of HR members on your screen. Because our lovely HR Department will be gathering member’s feedback at the end of every semester about what they have experienced at the club. That's because in FinTech Club, your voice really matters. Because here, you are what makes FinTech Club different.

Not only that, we truly care about YOU, not you as a member, but also as a friend, a sister, a brother that we enjoy working with. To support the new member, the Executive Board will assign a current member a.k.a. a buddy to accompany the newbie throughout the first semester at the club. They might work with tasks together, get feedback and suggestions for better performance.

AND SURPRISINGLY A HOME OF YOURS! Being with the club from the very beginning, after many intense discussions for projects, tasks and events, I found out that the time I have been here is memorable and full of joy, even though I find myself quite busy with all of those little things. I am, at the same time, finding out my own desires, new friends, and peers. I gained skills and the incredible faith that I can do anything, only if I try. I find myself in another home, where I can be the best version of myself.

That's why I believe that you will surely find something during the journey here, a teammate, a lovemate (maybe), or more than that, a new talent, a new opportunity, a new you, a new future.

by Anh Nguyen

13

FINTECH MAGAZINE Special Edition 2021

SOMEBOD T JO

FINTEC "S 14

ODY: "WHAT'S THE POINT OF OINING CLUB ONLINE?"

CH MEMBERS: "SAY WHAT?" 15

FINTECH MAGAZINE Special Edition 2021

50

SHADES OF

WORK FROM HOME

Many members in RMIT Vietnam FinTech Club shared that they were suffering from the WFH’s side effect, which is sadly horrible. “I experienced negative thinking, had no interest in almost anything even if it was something I used to enjoy a lot," one member said, "I was easily frustrated over tiniest things, like misplace objects, and even became sensitive to loud noise. I felt useless, emptiness and tired both mentally and physically”.

Well, not only Gen Z, who usually found themselves “Trầm Zn”, everyone is facing the same problem. An example of America, where people struggling to control the situation. According to a survey among 1,000 U.S. residents, published by TELUS International, 75% of U.S. workers suffered from anxiety caused by COVID-19 and other recent world events.

Staying at home is a must, but it can not be denied that it is a hard thing for any of us, when the face-to-face interaction is missing and also the freedom to do certain things that has usually been so obvious and easy to do. Talking about WFH struggle, most members felt demotivated, lonely and stressed.

16

How We Actually Nailed It! Other people have their own way to tackle it, but our club chose to solve it together by involving members in more club activities. During the online time, RMIT Vietnam FinTech Club has organized several club activities that help members feel energetic, up-skilled and fun.

With Weekly Study Hub, you can join the team on Discord and study together. You are not lonely anymore because there are clubmates by your side who will always support and motivate you. The vibe is is always always full makes thethe study vibe fullof ofjoy, joy,which which makes study process less intense. With lo-fi music in the air, the hub was a perfect working space!

Another activity that members were extremely fond of is Virtual Hangout Night. It’s a bonding version of online game fair and movie night.

Cong Thanh, a member from Business Department shared that the most enjoyable thing about Virtual Hangout Night is that they had a lot of fun playing various games and connecting online.

Within each department, there are also Weekly Sharing Sessions. Members can talk to another person, have someone who is hearing you out and telling you that they also feel the same way. It is also a way of healing and encouragement. Talking about her department, H.T. expressed that it is the most helpful thing that get her out from the demotivated mood.

17

FINTECH MAGAZINE Special Edition 2021

FINTECH

...

IN THE EYES OF

18

PRESIDENT

MINH AN Started with Minh An who’s currently a second year student, majoring in Economics and Finance and the lovely President of RMIT Vietnam FinTech Club. She has joined many competitions and achieved great accomplishment but still managed to earn our Best Academic Club of the Semester title.

19

FINTECH MAGAZINE Special Edition 2021

. ’

Thank you so much for joining me today heard

about

your

.

wondrous

I ve

achievements

in competitions

Oh, thank you *smile*. Up until now, I’ve participated in a few competitions and luckily to won several prizes: - Build On Vietnam 2021 - ASEAN Data Science Explorer 2021 - The 3M Inspire Challenge 2021

Have you participated in any organizational

?

projects before FinTech Club

Before I studied in RMIT, like before joining FinTech, I did lead some projects.

In high school, I was the Director of Eunoia Project HCM. And, I worked for a SouthAfrica Organization for Protection of Animals. They opened a project in Viet Nam, so I joined and became the Youth Ambassador for Wild Rhino.

FinTech you

Club

feel

is

about

only

1.5

your

years

route

.

old

to

?

How

did

become

a

President of such a young club

It’s quite similar to this present. I was quite new to the club, and everyone was like: “She dropped from the clouds” *smile*. Then I spent time with the members, hanging out on date lunches, something like that. Because I was so willingly learning new things, everyone readily taught me everything. On pitching day, I was complimented for having bright vision and eventually became the President.

20

?

So who is your FinTech best friend

I think I’m close to Chien. We studied in the same class and I asked him to join the club. We stick with each other since then. He’s the one who understands my ideas, my planning and makes them become realistic.

If

you

had

a

chance

to

?

apply

to

clubs

,

again

would you fix on FinTech

Definitely. When I finally decide to choose something, I don’t wait for it to be better. I will improve it. In the beginning, everyone was focusing on building reputation by doing many big projects, events. It’s great, however, I value my studies. I want everyone to join FinTech by its value rather than completing KPI. If someone want to do new projects, recently like Podcast & Magazine, they can propose to EMB then we allocate and help them.

,

Last question in

3

words

?

Incubator

can you describe FinTech Club

Growth-oriented

Agile 21

FINTECH MAGAZINE Special Edition 2021

FINTECH

...

IN THE EYES OF

22

NEWBIE

hong quan And next on with the freshman of FinTech family, Hong Quan - an energetic newbie who are bringing his excellent ideas into our new Virtual Bear.

23

FINTECH MAGAZINE Special Edition 2021

?

First impression of FinTech

I had some of my friends join the FinTech Club. Although the club was still young, they achieved many awards like Best Academic Club with both internal and external events. Very potential to participate in. And I think : So, why not choose the best place to start the journey? *determined face*.

What is it about FinTech Club that makes you

?

feel welcomed

It’s their friendliness. Back then, I misremembered the deadline to apply to the club and was extremely panicked. So I messaged them in the middle of the night and the admin was being helpful and considerate. Through that, I somehow can sense the club culture even before joining the club.

’

,

There s many academic clubs in our school

.

but

you still chose FinTech

I think it’s fate. As I challenged myself to be more active, I went to every single club's induction day. But on FinTech’s Induction day, I missed it.

Coincidently, I also confused the due date for applying to the club. Later on, I regretted it for a week and realize what's important *sad* .

24

,

What if one day

,

completely

FinTech Club just disappears

?

would you join other clubs

Personally, I think what makes a club is not the branding or big achievements but the people in that club. So if one day FinTech Club disappears, I would find those people to continue the journey with them and learn from them. Or maybe together build a new club *hehe*.

Would you recommend

?

FinTech Club to your friends

No, I wouldn’t recommend. Instead, I will directly drag them into the club *hehe*

Is FinTech Club just a club or more like a

?

family to you

I think FinTech Club should change to the FinTech Home. I spent more time with the club than studying at school.

And the members always take care of each other's well-being by simple greetings and words of encouragement.

It’s homelike.

’

What s

your

advice

for

?

newbies

who want to join our club

DON'T MISS THE DEADLINE!!! A lesson I learned is certainly never miss the deadline applying to FinTech Club, 11:59PM 3/11/2021. Only one day left, apply now!

25

FINTECH MAGAZINE Special Edition 2021

FINTECH

...

IN THE EYES OF

26

Old Generation

kieu trinh

Don’t forget our most beloved and important member who has been in the club since our establishment.

27

FINTECH MAGAZINE Special Edition 2021

How was FinTech Club built from the ground

?

up

?

Was it difficult

It was tough, everything started from 0. The backbones were President (Hao) and Vice President (Han). They were the one exerting themselves to sow the seed, FinTech Club was their fruits. They had to think about what projects or events to do and how to bring FinTech to every student in RMIT.

Marketing Manager is quite a challenging

.

role

?

How did you manage to do that

I couldn’t manage by myself. Han and Hao helped supervise to make sure that every project was on the right track. After the very first recruitment, there was Tran and Minh Anh, and that’s how we managed to build the club image.

It was tough because the club was established at the time COVID-19 and lockdown. We survived with only a small number of people.

28

What was most surprising to you about

?

FinTech Club

Exponential - the growth velocity. Even struggling with COVID-19 and doing almost all events online, FinTech Club grew super fast thanks to innovative and knowledgeable young people.

With internal and external activities being at a high & professional level, FinTech Club is like a startup company with solid structure.

Half of FinTech

'

Club members

are introverts and the other

.

are extroverts Do you think these two

oppositions can work well

?

together

I think everyone in the club is friendly and eager to join me in bonding activities, which comforts me to express myself and chit chat with them. And if I (or any introverts) feel energy-drained, I can just go talk to other introverts to regain my energy.

And also, our FinTech Managers are good at creating a harmonious atmosphere between members, so I think the role of manager is also important to maintain this atmosphere.

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FINAN FINTECH MAGAZINE Special Edition 2021

TECHN The future is here

TECHNO

FINANTF

CUT

FINANCE

30

NCIAL

OLOGY

NOLOGY

NCIAL FINANCIAL ECHNOLOGY

TTING THROUGH THE NOISE AROUND

31

FinTechnicolor: The New Picture in Finance FinTech or Financial Technology is used to describe the technology implications to automate the use of financial services. While most of us think that FinTech is simply cryptocurrency such as Bitcoin, or the implementation of blockchain to the application such as NFT, FinTech is much more than that. Financial Technology consists of the usage of Artificial Intelligence and Machine Learning, Big Data and Data Analytics, Robotic Process Automation and lastly, Blockchain Usage.

FinTech has expanded in scope, now covering the full spectrum of finance and financial services. It can be delineated into five key areas: finance and investment, internal operations and risk management, payments and infrastructure, data security and monetization, and consumer interfaces. Today, FinTech affects every area of the global financial system, particularly in emerging markets like Asia, Africa, with perhaps the most dramatic impact in China, where such technology firms as Alibaba, Baidu, and Tencent have transformed finance.

32

FINTECH MAGAZINE Special Edition 2021

Vietnam: Where FinTech Becomes The Game Changer FinTech is growing around the globe and taking the storm in the Asia-Pacific region, including Vietnam. Within the first half of 2021 alone, the Asia-Pacific region experienced US$8 billion worth of investments in FinTech industries. The FinTech opportunity in Vietnam is obvious, and many companies in the country are getting in on it. Numerous companies in Vietnam also start partnering up with bustling digital companies.

Since 2017, Vietnam's FinTech market has grown 300%. Currently, Vietnam has 800 FinTech startups which accounts for 42% of all startups in Vietnam. Over 66% of Vietnamese FinTech companies are in digital payment services via apps, and they have taken over 87% of the FinTech market share.

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FINTECH MAGAZINE Special Edition 2021

EVOLUTION OF FINTECH Laying transatlantic cable

Worlds first ATM, Barclays cash machine

Interphoto, Alamy

Mirropix, Gettyimages

Transatlantic cable was invented, leading the way of communication by allowing a message to be communicated instantly and overseas. This enables electronic fund transfer through Morse code and telegraph.

The Reserve Bank created the Fedwire Funds Service, which is a dedicated funds transferring network.

With the invention of ATM by Barclays, “Digital money” was accepted for the first time.

Traditional finance experienced the transformation from analog to digital.

A rise in small computers and mainframes, which helps store data about customers, and the growth of online banking has changed the way people do their banking transactions.

1866 1918 1967 1980s 34

1988 2008 2009 2020s PayPal was introduced, signifying a new payment system that offers banklevel securities while being much more transparent.

The first time ecommerce was popularized, and online businesses have slowly become an integral part of any businesses.

Due to the global crisis, people started to lose their trust in banks.

Bitcoin

Changes in the banking industry allowed for new providers to enter the market. Bitcoin followed by other cryptocurrencies that use blockchain technology has revolutionized the secured system of online transactions.

Smartphones become the primary method for payments, changing how bank services are provided and increasing people's finance awareness.

This is the era of startups, and a lot of banks in the 2.0 era had to rebranded themselves and make necessary changes to their banking system. They are now in competition with digital banks banks that have no actual physical locations.

Finhay, Vietnamese FinTech Startup Hoang, L & Kobayashi, K

35

Marcel

Marcel

Marcel

Marcel Marcel Klimo

Marcel 36

l KLIMO

l KLIMO Financial Technology has been visibly evolving in front of our eyes ever since banks went online.

With an increasingly cashless society, apps and platforms have been created to help us better understand and manage our finances, while new banks have been created that offer us a slicker experience.

l KLIMO

l KLIMO

l KLIMO

37

FINTECH MAGAZINE Special Edition 2021

CRYPTOCURRE

THE CONCE

IN THE EXCITEM

How the goverments regulate cryptocurrency matter

by Tram Do & Vy Dao

The regulatory landscape for cryptocurrency around the world still remains divided and undeveloped. Within the same year, the cryptocurrency market witnessed two majors events: on one side, China prohibits financial institutions and payment companies from providing services related to cryptocurrencies. On the other end, El Salvador made Bitcoin legal tender.

38

ENCY

ERN

MENT

rs

S

ince the launch, cryptocurrency has been heralded by supporters as the start of a new and more equal monetary system. Whereas, critics argue that the role of cryptocurrency in illegal activities and lack of legal legitimacy reflects it is probably a worthless and risky, speculative asset. Legendary investor Warren Buffett has been a vocal critic of cryptocurrencies, blasting Bitcoin as 'rat poison squared’. The reality is probably somewhere in between these two polarizing views.

Cryptocurrencies, by definition, are unconstrained by country borders or government agencies; nevertheless, this commendable nature creates a problem for policymakers who are used to dealing with straightforward asset definitions.

Governments all around the world are keeping a wary eye on the development of the bitcoin and cryptocurrency market, with each country taking a different approach to the regulation framework, in favor or against, cryptocurrency.

39

FINTECH MAGAZINE Special Edition 2021

Why a country allows it...

S

te

G

/

P

FA

se

ro

o sr lF n

emE

lE

On 7th September 2021, El Salvador became the first country to make cryptocurrency as its legal tender. A fifth of El Salvador’s GDP is coming from citizens sending money home from abroad since El Salvador's economy

depends heavily on what are called remittances. According to World Bank data, remittances to the country made up nearly $6 billion — or almost 20% of its GDP in 2019.

k le e

resident N ay 's P r o ib d a B u lv a

ty

Im

a

g

However, this comes along with high transaction costs, and 70 percent of citizens have no bank account. Bitcoin enables quick, cheap payments across borders, which reduces costs, and doesn’t require banks. In addition, this is hoped to improve citizens’ access to financial services.

n ih

n

e

d

is

e

rP

s' a

In the beginning of October, the El Salvador’s president announced that this country will start using geothermal energy, harnessed from volcanoes to power Bitcoin mining. By installing Bitcoin mining facilities at these locations, mining will be very cheap and 100 percent clean. This is believed to be a step for El Salvador to take advantage of bitcoin manipulation due to the increase in bitcoin supply.

C

e

t

X

i

Ji

np

in

g

Thom a

40

...while the other does not

At the end of 2016, the Chinese government was more concerned about potential capital outflows, money laundering, and trade speculation of bitcoinCNY to circumvent legislation, as well as the depreciation of CNY against USD with 7% the highest recorded since 1995.There was increasing attention to this depreciation which together with a large decrease in official reserves contributed to huge capital outflows aided by cryptocurrencies' usage. The governmentthen began to officially intervene in an attempt to monitor the trade operation of bitcoin-CNY. The first moves of China against cryptocurrency started in September 2017, first, initial coin offering (ICO) fundings were barred; second, cryptocurrency exchanges were banned from trading cryptocurrencies and exchanging CNY to cryptocurrencies and vice versa; third, non-bank payment and financial institutions were prevented from providing services for crypto and ICOs. According to a report

by Borri and Shakhnov (2019), before these rules were officially enacted, China utilized its soft power to sway crypto trading platforms by pressuring the heads of the world's biggest crypto exchanges to limit cryptocurrency activity. Only later China enacted those rules that the reality halted trading for CNY.

s ge Ima tty as Peter AFP/Ge

China has cracked down hard on cryptocurrency throughout 2021. In May 2021, China imposed a ban on Bitcoin mining because of the massive consumption of electricity and accelerating speculation with digital currencies, compelling many businesses involved to shut down or move to a more favorable regulatory environment. On September 24, PBOC tightened the regulation further that outright banned all cryptocurrencyrelated transactions in China.

41

FINTECH MAGAZINE Special Edition 2021

What are the impacts of governments interventions

A

on the cryptomarket?

ll types of regional interventions have the potential to fail on cryptocurrency regulation because of the extra-national and decentralized nature of cryptocurrency that is able to spread across multiple nations. Based on the game-theoretic analysis on the adoption (Appendix.1), if one prohibits Bitcoin while another welcomes it, capital and investors will flee to the besttreated country. Hence, the well-done regulation of cryptocurrency primarily necessitates a concerted effort among multiple economies and central banks.

However, it is a difficult challenge in reality since the levels of interest in cryptocurrency and its effect on the economy vary in different areas.

The different action of El Salvador and China is an instance for the challenges in such an approach. Both actions have an effect on cryptocurrency but do not last long.

The case of China

The effect of China bans was a significant drop in trading volume on China-based crypto exchanges and an increase in capital flights to other countries which are more friendly-crypto countries. The total daily volume of bitcoin in CNY plummeted to 10% after a month from $8.5 billion accounting for over 90% of global trading in 2017.

During the same period, the trading volume surges in other fiat currencies

Appendix 1: Banning Bitcoin Prisoner's Dilemma

Nasdaq 2021

42

with heterogeneous spillovers, the most for KRW, JPY, and USD, Borri and Shakhov reported.

Regarding the price impact, any announcement of China has immediately led to a sell-off but in the long term, the cryptocurrency prices have started to increase again. Evidently, Bitcoins fell by 8% to $41,000 in the wake of the ban on transactions in September but then bounced back immediately and continued a skyward march towards $57,000, investors expected that the price will pass $63,000 - the highest recorded before the ban on mining in place in early 2021. Investors in such a highly volatile market are accustomed to that repeating cycle, hence, each time the impact of a new crackdown tends to be smaller and short-lived. This combined with as long as the investors' preference is still related to high yield and against inflation will continue boosting the demand for cryptocurrencies especially during the era of COVID-19 transformation and technology.

Besides, China’s crackdowns on crypto regulation have rather changed the global distribution of the cryptocurrency industry. After China's first ban, 88 cryptocurrency exchanges and 85 ICO platforms were withdrawn from the market and many moving overseas by July 2018, said the People's Bank of China (PBOC). Although retail traders are not allowed to access the now-illegal trading platforms in China, cryptocurrency funds have moved their fund management overseas . Moreover, the ban on mining and then harming the network led to the redistribution of global mining hashrate and a rising interest in mining across the board as a result of the reduced network hashrate

which allowed new parties to mine at a lower cost. Hashrate is being distributed around the world with the emergence of North America as the new center with the power of hashrate surged 103% since late June, a report from Luxor Technology Corp said. Many strategists become more optimistic about Bitcoin's resiliency as seen by the rebound in its hash rate.

Borri and Shakhnov (2019) found that Chinese investors moved part of their trading to P2P exchanges where authority control is limited since transactions are not required for a centralized financial intermediation in place. According to a report by blockchain data platform Chainalysis, China has the highest P2P trading volume and remains one of the most active cryptocurrency markets in the world despite its hard crackdowns.

Cryptocurrency prohibition will not impede adoption, however, it will only limit the ability of regulators to guide market operation around these networks and manage their specific potential risks.

El Salvador

Despite those advantages as mentioned above, some downsides are also available due to the characteristics of Cryptocurrency, and economic theory.

First, cryptocurrency is notoriously volatile. When used as a legal tender, countries might suffer rapid changes and heavily affect the nation’s economics. Considering whales, whose transaction can severely impact the bitcoin price within a short period of time. Such unstableness of Bitcoin can be considered as the biggest risk.

43

FINTECH MAGAZINE Special Edition 2021

Another issue El Salvadorians and other adopters will face is the inherent deflationary design of bitcoin. The supply of traditional currencies such as the US dollar can be changed as economic conditions warrant. America’s central bankers manage the supply of money to stimulate, or slow, the economy as needed. And historically the supply of US dollars has increased to reflect population growth. As the total supply of Bitcoin is fixed at 21 millions coin, only some 2.2 million bitcoins are left to be mined. Prices, as expressed in bitcoin, will inevitably fall in the long-run.

Considering the short run, with mining activities like El Salvador using energy from volcano, the price of bitcoin will rise, as both acceptance and demand increase amid decreasing supply. This might affect the social level as citizens acquire and hold bitcoin early may become wealthy, perhaps fabulously wealthy. This has already happened with those lucky enough to have purchased bitcoin before 2010, when it cost less than one dollar.

The crypto market also experienced several changes as the effect of the adoption. On Monday, a day before the announcement, Bitcoin experienced a 2% increase, making its price around 52.600 USD. This is because of the increase in trade volumn, when El Salvador government bought 400 Bitcoins as part of the adoption, along with other investors buying $30-worth Bitcoin to show their support toward El Salvador’s new policy. However, Bitcoin was down 11% in midmorning trading Tuesday. The price of Bitcoin tumbled from over $52,000 to less than $46,000, according to CoinDesk. At one point, it fell to $43,351. This is due to several 44

An owner of La Zontena store, poses at his busines El Salvador June 8, 2021.

Jose Cabezas/ REUTERS

issues related to Chivo, an E-Wallet launched by El Salvador government. El Salvador has taken the advantage of the price, and purchased another 150 Bitcoin, making them holding a total of 550 Bitcoin and very likely to increase in the future. Considering capital surplus from Bitcoin, which is not taxable, and the ability to pay tax by Bitcoin, Bitcoin is expected to have high inflows into the country. To be specific, it will allow people to speculate on price swings, buying Bitcoin when its price drops, then converting it back to dollars if it goes back up, or simply pay tax and other purchasing when Bitcoin price increase.

Women buy at a store at El Zonte Beach in Chiltiupan, El Salvador June 10, 2021 Jose Cabezas/ REUTERS

ss where he accepts Bitcoins,

As China now banned Cryptocurrency, including other crypto mining activities, a number of miners are now migrating to other crypto-friendly countries, making El Salvador a new ideal destination for crypto-miners and investors. Being the pioneer of making Bitcoin legal tender, El Salvador may witness other Central American nations follow its path. With the similarities between economics, which is the high contribution of remittance to the nation’s GDP, other governments are now watching if El Salvador can successfully reducing cost as well as other known benefits from Bitcoin. Eight other Latin American

countries’ politicians have expressed their desire to pass similar laws in their respective countries.

These policymakers are eager to act now for the benefit of their people and fearful that inaction will leave them behind in a world unkind to countries with slowmoving governments.

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FINTECH MAGAZINE Special Edition 2021

MARKET

MANIP The attention for cryptocurrency is growing significantly across a broad spectrum of players in recent years. The global cryptocurrency market is over $2.3 billion in 2021 and is projected to hit $4.94 billion by 2030, according to a report from Allied Market Research 2021. While there are over 5,100 crypto assets in the world, cryptocurrency is still an immature asset class which is yet fully regulated and voitails. Particularly, various suspicions and direct evidence has pointed out attempts to manipulate the market, which undermines the fairness and efficiency of the markets.

Therefore, a deep understanding of cryptocurrency market manipulations is vital for future research directions, which may further support regulatory decisions and protect the participants in the market.

Pump and Dump

Pump and dump (P&D) is the most common manipulation method, witnessed during periods of high liquidity, and is very relevant given the bullish market sentiment around cryptocurrency. Although P&D is not unfamiliar, emerging technologies around cryptocurrency trading have intensified the problem to a shorter time scale and broader scope. It is a type of fraud in which the offenders accumulate a commodity over a period, then artificially inflate the price through means of spreading misinformation (pumping), before selling off what they bought to unsuspecting buyers at the higher price (dumping). Since the price was inflated artificially, the price usually drops, leaving buyers who bought on the strength of the false information at a loss.

In September 2020, the price of Litecoin (LTC) rose by 35% from $175 to $240, following erroneous reports from major mainstream and crypto news sites, 46

PULATION SCHEMES

by Nguyen Bui

.

including Reuters, Lockworks, CNBC, Bloomberg, Zerohedge, CoinDesk, and Decrypt about retailer Walmart would be introducing a payment option for the cryptocurrency on all of its e-commerce websites.

A fraudulent user account was used to issue an illegitimate press release on GlobeNewswire and Litecoin’s’s Twitter page then retweeted this information without verifying it.

Shortly after the news came out, Walmart announced it was false, Litecoin founder Charlie Lee also said on "Bloomberg Technology" television program and informed Reuters to investigate into the hoax, according to the Times of India (2021).

With a market capitalization of more than $406 billion, Walmart has previously hinted it would be looking into cryptocurrencies. In August, the company posted a job listing for an expert who could develop a digital currency strategy and product roadmap, but did not specifically mention it would be introducing a path for crypto payments. In addition, Walmart has used blockchain technology for supply chain management, customer marketplaces and smart appliances.

A study by Putnins & Dhawan identified 355 cases of P&D schemes involving up to 23 million participants using social media or encrypted message groups like the Telegram App. The study suggests about 15% of all cryptocurrencies traded on exchanges like Binance and Yobit were targeted at least once over a sevenmonth period, with two pumps across altcoin markets per day on average.

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FINTECH MAGAZINE Special Edition 2021 Spoofing

Cryptocurrency spoofing is the process by which criminals attempt to artificially influence the price of a digital currency by creating fake orders. Spoofing is accomplished by creating the illusion of pessimism or optimism in the market.

Traders do this by placing large buy or sell orders without the intention of ever filling them. When investors do this, they trick other investors into either buying or selling, and the price of the cryptocurrency stands the possibility of being adjusted accordingly. The trader cancels the orders once the price of the cryptocurrency moves in the direction they desire.

In the U.S., the Commodities Futures "Spoofing is the Trading Commission (CFTC) first used its anti-spoofing authority under Doddprocess by which Frank in 2013 to prosecute highcriminals attempt to frequency trading firm Panther Energy Trading. The company was forced to artificially influence pay $2.8 million in fines, and Michael Coscia, the owner of the firm, was the price by creating banned from trading for a year. The Financial Conduct Authority also fined fake orders."

Coscia £597,993 for manipulation of commodities markets in the U.K. While spoofing and layering appear to be in use in the crypto markets today, nothing has been verified. However, it was recently revealed that the Justice Department is collaborating with the CFTC to launch a criminal investigation into whether traders were employing spoofing and other methods to manipulate the price of bitcoin and other cryptocurrencies.

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Wash-trading

Wash trading occurs through excessive In July, 2020, a Canada-based creation of ghost accounts or other cryptocurrency trading platform deceptive means to feed misleading Coinsquare agreed to settle with the information into the market which Ontario Securities Commission (OSC) inflates volume. While wash trading is over allegations that executives had explicitly prohibited in all regulated stock, employees fake trades to inflate the derivative, or commodity exchanges, platform’s volumes (Sinclair 2020). many cryptocurrency exchanges are According to the OSC, 90% of exempt from similar regulations. Coinsquare's reported volume was wash Therefore, the concern around volume trading. In particular, Coinsquare inflation is significantly greater in the cryptocurrency markets. admitted that around Traders may be artificially 840,000 illicit wash inflating perceived volume trades were conducted in an asset or platform to on the platform, attract additional traders. amounting to a total As market participants value of around 590,000 can hold multiple bitcoin (BTC), which was accounts across several worth almost $5.5 billion venues. This allows for at press time. Similarly, manipulation schemes in Aug, 2020, CoinDesk "33% of all like spoofing or wash reports that Coinbit, trading to be executed transactions are South Korea’s thirdfrom different accounts largest cryptocurrency across venues, since there among traders that exchange, appears to have engaged in is no way to detect if have been seized by accounts are owned by wash trading." police over allegations the same individual.

Aloosh et. al (2021) have found that 33% that it faked most of its trading volume of all transactions are among traders (Palmer 2020). Exchange insiders and that have engaged in wash trading. Wash police said up to 99% of the platform’s trades have a tendency to occur after trading volume was ”manipulated,” or periods of low transaction fees collected washed, using “ghost” accounts – by the exchange, and they dramatically totalling over 100 billion Won ($84 boost subsequent transaction fee million) in faked income. Seoul revenues. Traders who participate in Newspaper states it had been informed wash trading include exchange insiders by insiders of corruption at Coinbit and who have previously been exposed. The that 99% of recorded trades could not be findings support the hypothesis that the associated with deposits or withdrawals. exchange engages in wash trading to enhance apparent trading volume in order to appear more appealing to misled clients and increase fee revenues.

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What are bots and how they influence the cryptocurrency market, explained

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FINTECH MAGAZINE Special Edition 2021

by Tin Chung

?

WHAT ARE BOTS

Trading bots are automated programs that buy and sell cryptocurrencies, usually in the short-term market. Bots may account for a large part of shortterm holdings. The first generation of bots, which sold stocks automatically when they fell below a certain price (stop loss nowadays).

Diffenrent types of bots

1

Arbitrage bots

Helps traders earn profits from the crypto market inefficiency.

2

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Focus on helping their users to create, obtain, and maintain their desired portfolio, instead of active trading.

An automated program that executes buy and sell orders of cryptocurrencies at the right time.

Technical

Portfolio automation bots

Market making bots

4

trading bots

Use indicators and signals to predict future price movements and use them to make a profit.

Why bots Technical analysis

Automation

Time efficiency

+ cryptocurrency?

By writing the program based on the theory of technical analysis in investment, programmers can maximize the income through predictive models (machine learning) and Price Action methodology. However, this approach comes with many challenges. Because the bot can only be appropriate for short-term trading.

With programming, bots can automatically set the stop loss and take profit zone instead of requiring the command from the trader.

Traders save much of their time from focusing on the chart but can still maximize the profit if the bots are good enough.

Yet, there are disadvantages...

No risk management

Emotionless

Risk management is a necessary responsibility of the investor/trader. Relying on the productivity of the bots too much can lead to many risks. Firstly, security risk of the bots on the trading platform. There are always many hackers seizing the opportunity to overtake the bots and execute malicious commands to the trader’s machine. On the other hand, volatility (long-term) risk of the market cannot be predicted by the bot efficiently, therefore, one day the trader opens the portfolio and all of the assets just dump down to zero.

Absolutely bots don’t have any emotion.

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FINTECH MAGAZINE Special Edition 2021

BOT MANIPULATION MECHANISM

B

ots may be causing harm to cryptocurrency is through Pump and dump scams. Scammers use bots to make it appear as if one coin or another is starting a bull run. This doesn't have to be a huge price move either, as these scams usually target small cap coins* that haven't moved much in a long time. When regular traders notice that the price has risen slightly, it frequently starts to induce a

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certain level of FOMO**, which can then feed off of itself. To really get people excited, the perpetrators frequently combine this artificial pump with some sort of social media campaign.

Once the coin has seen sufficient rise, the originators sell and let the market inevitably collapse sooner or later, as the “bull run” was never built on anything but hype and market manipulation.

Following Ethereum's 5,800% rise in 2017, investors flocked to Neo, which is billed as the Chinese equivalent of Ethereum. And Neo quickly became a prime location for a trading bot to operate and exploit overly optimistic and inexperienced investors. On November 29, advanced cryptocurrency trading platforms began detecting abnormal signals indicating the presence of multiple bots trading on Neo. The market's extreme volatility, combined with dozens of bots trading at the same time, caused the price to crash within minutes of the first detected signals. In a matter of seconds, Neo went from $34 to $3.74 before returning to $34. Investors who placed large bets lost almost everything in the blink of an eye. The alltime high of NEO reached to around 200$ and dropped down to 25$ in a short period of time.

TH EC AS EO F

*Low-cap crypto projects are cryptocurrencies that are in the early stages of development and, as a result, have a low market capitalization. **FOMO: fear of missing out - buying triggered by a short squeeze can exacerbate panic buying, into a so-called melt-up.

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