Tag Archives: bitcoin

90 Percent Of Top Executives Expect Blockchain To Transform Markets In Five Years

90 Percent Of Top Executives Expect Blockchain To Transform Markets In Five Years

   

Most financial firms expect to see the transformative impact of Blockchain technology and its adoption in the next three to five years, according to a study conducted by the Bain and TABB Group. It says that more than 89 percent of financial markets executives interviewed expect distributed ledgers to be adopted by financial institutions by 2020 and its impact on clearing and settlement would be “transformative.”

One of the marked changes that would be expected of the technology is its ability to ensure an estimated $15-30 bln total cost and capital savings to global financial market ecosystems. Much of these savings will come from the ability of firms to replace manual, redundant and error-prone processing methods.

Firms will also be able to quickly and less expensively harness reference data that is both richer in detail and more fully reconciled, the report says, adding that it is hard to predict exactly when and where the technology’s applications will reach scale and what kind of impact it will have across markets.

Deloitte study

Though there have been several studies into the importance of the technology, this study shows that the level of its knowledge among top executives has improved. According to Deloitte, in its “Blockchain Enigma. Paradox. Opportunity” study, the principal challenge associated with Blockchain is a lack of awareness of the technology, especially in sectors other than banking, and a widespread lack of understanding of how it works which has been hampering investment and the exploration of ideas.

In its other report, “Building up Blockchain,” Deloitte notes that nearly 40 percent of executives surveyed know little or nothing about Blockchain. When juxtaposed with the Bain and TABB report, the outcome could be considered as very encouraging.

Conducted among 200 financial executives worldwide, 70 percent of the business leaders polled believe that the industry is suffering from a serious shortage of talent “versed in both the vagaries of the Blockchain and the complex plumbing of the financial services ecosystem.” Some of these executives say they are under pressure to show near-term results and they must gain the attention, understanding and commitment of top management. They are now struggling with business cases and where to apply their efforts.

It says: “It’s unclear how the regulatory environment will evolve in different jurisdictions. Getting ready for DLT requires substantial investment at a time when many firms are facing financial constraints, and it can involve working through tricky and expensive issues with legacy IT systems and processes.”

However, while 38 percent of firms still take a wait and see approach, the report finds that firms can identify “no regret” DLT readiness preparations to navigate uncertainty and to gain a competitive edge. Nonetheless, it established that the biggest impact from the technology will be achieved only when a critical mass of the ecosystem participates.

ConsenSys Reveals Blockchain Future at Dubai Government Summit

 

 

The Ethereum development startup ConsenSys has released a new white paper for its projects in Dubai at the city’s World Government Summit. The paper, titled “Blockchain, Hyperconnectivity and the City of the Future,” details new plans for innovation focusing on smart cities and the Internet of Things. "We are thrilled to see Dubai emerge as a home for fast forward, broad focus Blockchain innovation and are looking forward to ongoing opportunities to work with Dubai government and corporates toward accomplishing many ambitious goals,” ConsenSys founder Joseph Lubin told the International Business Times.

The startup has an established history in Dubai and the United Arab Emirates, having previously participated in the Dubai Future Accelerator scheme. Microsoft and IBM are also active in the space. Further details about the new Blockchain projects are expected in the coming weeks but local government services are likely to lie at the heart of the proposals as Dubai becomes an increasingly active Blockchain hub. What do you think about ConsenSys’ plans for Dubai? Let us know in the comments section below.

Complete Review on SegWit vs. Bitcoin Unlimited: Arguments and Clarity

 

Over the past month, many Bitcoin exchanges, startups, and experts weighed in on the debate between Segregated Witness (SegWit) and Bitcoin Unlimited (BU) supporters. The main claim of SegWit supports is that nearly 60 percent of nodes within the Bitcoin network are supporting the activation of SegWit. According to 21 Inc’s Bitnodes, approximately 56 percent of all Bitcoin nodes are in support of Bitcoin Core 0.13.0 and the other two minor updates of Bitcoin Core which includes SegWit support on testnet.

What is the debate about exactly?

In comparison, BU supporters and developers, including prominent angel investor and Bitcoin.com CEO Roger Ver, claimed that Bitcoin miners are showing increasing support of SegWit. A chart called “Mining Pool Support by Proposal” provided by Coin Dance and shared by Ver, demonstrated that 17.3 percent of miners support BU while the other 16.67 percent supported the activation of SegWit.

Samson Mow, COO of the world’s longest running Bitcoin exchange BTCC, and Alistair Milne, Bitcoin investor at Atlanta Digital Currency Fund, expressed their support for SegWit stating that SegWit’s transaction malleability solution opens the door for Lightning, a micropayment solution, that is ultimately beneficial for the long-term growth of Bitcoin. Milne further emphasized the majority support of Bitcoin nodes for SegWit, requesting Bitcoin miners to start listening to its users.

“Betrayal” to the mining community?

In response, Gang Wu, HaoBTC CEO, offered his strong stance against SegWit, describing the Bitcoin Core development team’s efforts in pushing SegWit development instead of a 2MB hardfork which they previously agreed on at the Hong Kong consensus conference as a “betrayal” to the mining community. Although HaoBTC later published a follow-up statement to explain their neutral attitude towards BU and SegWit, the exchange firmly reaffirmed that it intends to support the Hong Kong agreement that the organization signed.

Opportunities for two-layer solutions

In mid last month, Bitcoin and security expert Andreas Antonopoulos published a blog post in response to Tuur Demeester’s article entitled “Bitcoin: digital gold or digital cash? Both.” In it, Antonopoulos stated that organizations or people that are objecting to Lightning are pushing for off-chain trusted third party custodial or centralized platforms based on trust.

Antonopoulos later acknowledged that he supports SegWit, not necessarily because of its scaling solution but because it provides opportunities for two-layer solutions like Lightning or TumbleBit to enter. “I'm for SegWit, not because of scaling, but because it offers solutions to many technical issues in Bitcoin,” said Antonopoulos.

Efficient scaling solution

Still, Bitcoin developers like Lightning co-author Thaddeus Dryja firmly believe SegWit can be described as an efficient scaling solution, as it increases Bitcoin block size to at least 2.1MB. On testest, Dryja was able to find 3.7MB blocks, a size 3.7x larger than the current block size. “I have a script that will spam testnet and make 3.7MB blocks. It’s not an 800KB regular block with txids and output scripts, and a 2.9MB witness block with just a bunch of signatures. It’s a single block, that looks pretty much the same as old blocks with a few extra requirements, that’s 3.7MB,” said Dryja.

Necessary for the long-term growth of Bitcoin

While BU supporters including Ver and Justus Ranvier, lead architect at Stash Crypto, all believe that the elimination of transaction malleability and the entrance of two-layer solutions are necessary for the long-term growth of Bitcoin, they don’t believe SegWit is the best method of doing so.

Ver told Cointelegraph:

“I think ending transaction malleability is great for Bitcoin. The current SegWit soft fork is just one of many many ways that transaction malleability can be ended, but there are many other proposals on the table that may work as well as, or even better than SegWit.”

“BU is not even remotely an option”

In response to Ver’s preference of other solutions, Alex Bergeron from Blockstream stated that other solutions like Tom Zander’s “Flexible Transactions” aren’t viable alternatives, as they aren’t backward compatible, received little to no peer review and aren’t technically sound.

BTCC COO Samson Mow gave Cointelegraph a similar statement:

“The Bitcoin Core contributors, the entire technical community, wallet developers, many mining pools and major exchanges all believe a SegWit soft-fork is the path forward to end transaction malleability and for a safe yet quick way to increase the block size. Flexible Transactions from BU is not even remotely an option as the concept has already been dismissed by the technical community, and more importantly, there is no functioning code available – it's vaporware.”

The lack of peer review has also proven to be an issue for Bitcoin Unlimited, as the Bitcoin Unlimited team recently found buggy codes within the software. The lack of peer review ultimately caused the loss of 13 BTC for Bitcoin unlimited miners.

SegWit – the best alternative so far

At this stage of Bitcoin development, it is of utmost importance to the Bitcoin development community, users, companies and mining community to push for the activation of a safer alternative. Considering Bitcoin Unlimited’s lack of peer review and software which isn’t ready for deployment, SegWit seems to be the best alternative so far.

Industry leaders and large-scale Bitcoin companies like Coinbase and Blockchain have already expressed their support for SegWit. The Blockchain is listed as “SegWit ready” in the SegWit Adoption list of the Bitcoin Core development team.

Chuck Reynolds
Contributor

Blockchain Without Bitcoin: Big Banking Babble

Blockchain Without Bitcoin:
Big Banking Babble

 

There has been a recent change in the mainstream narrative surrounding bitcoin. The message is shifting; what was once a story about get-rich-quick imaginary gold or hacker criminals is turning into a story about banks and regulations. The new story is more widespread and more positive. Bitcoin is slowly becoming part of everyday conversation, although bitcoin itself is often downplayed.

Bitcoin has found new support in the mainstream media, mostly couched in praise for its underlying blockchain technology. From Nasdaq and Blythe Masters to The Economist, finance giants are realizing the value of what bitcoin’s blockchain accomplishes in terms of network security and trustless record-keeping. As a result, bitcoin coverage in the mainstream press is normalizing.

The Talking Points

There are three main themes to the new mainstream message around bitcoin:

  1. Blockchain is important; forget about bitcoin.
  2. Banks must harness blockchain technology.
  3. Blockchain technology is far too dangerous for regular people.

One recent example that hits all these points comes from this IBM advertorial piece in Forbes. In this article, IBM researcher Arvind Krishna presents his argument for the importance of blockchain technology and its transformative power. The piece hits the first talking point very overtly, giving bitcoin a cursory mention before saying that the “blockchain is the more interesting phenomenon.” It differentiates the blockchain from bitcoin and then disparages bitcoin.

For the second talking point, the piece offers a few examples for the use of blockchain technology — such as smart contracts and document verification. These are use cases that bitcoin currently serves, but all the examples take place between companies or banks. Not once in the IBM article are individuals using blockchain technology by or for themselves.

Talking point number three is found in what was cut from the original version of the article, posted to IBM’s Smarter Planet blog, which was two paragraphs longer. These words from Krishna’s original blog post did not make it into the paid Forbes piece:

“To understand the potential of blockchain, consider how global business is typically transacted today. Say a sheep farm in rural Sweden wants to pay a supplier of sheering equipment in New Zealand. The two businesses use different banks, logistics companies, and currencies, and they might also be subject to different government and industry regulators. So their seemingly simple transaction is actually a lengthy chain of interactions between a number of banks, intermediaries, and auditors. Each party maintains its own systems of record. The result is a complex, inefficient process that’s costly and time consuming.

But what if all the parties from the farmer to the supplier to their respective banks participated in a system using blockchain technology? The entire process could be handled within a single, transparent system shared among all parties, minimizing the potential for human error or malfeasance. And the entire process could probably be completed in minutes rather than days.”

These two paragraphs tell a story of slow, inefficient financial transactions and institutions, and how the blockchain can do a better job than those institutions. In terms of narrative, there’s not a big leap between sheep farm and sheep farmer, and by the end of the example, you wonder why they need a bank at all.

Pay no Attention to the Man Behind the Curtain

Banks and other financial institutions do recognize the value of the bitcoin blockchain, as evidenced by the bitcoin projects backed by three major credit card networks, not to mention Nasdaq. Banks also know that they desperately need to improve their electronic security. But once some understanding of Bitcoin’s potential begins to come into view, banks want to divert attention from it. On one hand, it’s embarrassing that the blockchain innovation did not come from them. On the other hand, they want to be the ones at center stage, and that’s difficult since they spent a long time saying how stupid bitcoin was.

The banks see what bitcoin’s blockchain accomplishes in terms of network security and trusted record-keeping. But they are in the uncomfortable position of having mocked this thing they now find useful. They want to keep it for themselves; at the very least, they don’t want to be left behind. Banks want to know how Bitcoin can cut their costs, but they are not interested in actually becoming faster or cheaper or more open. They want to charge high fees. They want a 2-day float. They want to be in possession of your money.

The message is all about banks doing damage control. It is not about disintermediation or disruption; it is about services you can be charged for. The open secret, the fact that the message tries to obscure, is that people don’t need banks to use bitcoin. Bitcoin’s primary advantage is not to do some things faster or more reliably, than a centralized trusted third party, it is to do those things without a third party. Bitcoin empowers individuals to take their finances into their own hands. The revolution will not be centralized.

Chuck Reynolds
Contributor

How Can Bitcoin Help Emancipate Billions And Help Food Security?

How Can Bitcoin Help Emancipate
Billions And Help Food Security

Through the fundamental invention of the Blockchain, we now have a tool that, through the use of planet-wide communications networks and smartphones, can put a Western city-dweller and an Indonesian fisherman on equal footing

 

The Blockchain

Through the fundamental invention of the Blockchain, we now have a tool that, through the use of planet-wide communications networks and smartphones that are available to anybody, can put a Western city-dweller and an Indonesian fisherman on equal footing, to participate in global commerce, maximizing their mutual advantage, and heightening incentives to achieve local and global food security.

The fundamental invention of the blockchain

Until little more than five years ago it was not at all sure that a given mathematical problem had a solution: how could you deliver a consistent and reliable piece of information across a network whose nodes are unreliable? Called the Bizantine Generals Problem — based on the supposed presence of traitors at a hypothetical battle whose plans must be communicated to all the attackers — it was a real surprise when a clever solution was put together by a pseudonymous developer who called himself Satoshi Nakamoto. The solution was based on computers participating in a network and solving hard cryptographic problems that were easy to verify, and creating a public decentralized database, that could be consulted by anybody.

The first application of this innovation is Bitcoin, the digital currency that is gaining popularity in various types of payment and financial applications. However there are many other classes of problems that can now be implemented differently than before. The consequence of the Blockchain is that a group of participants can reach a consensus and an agreement without delegating this to a central authority, but achieving it as a result of the working of the network itself. Identity, property, legal and notary functions, financial activities like lending, insurance, international remittance and more are now possible in a very novel manner, that promises to be more flexible and efficient, much less expensive than previously. Most importantly, all these services are going to be accessible to anybody who has a smartphone connected to the Internet, without any license or authorization.

Inclusivity and emancipation of billions

There are billions of people in the planet who still live in agricultural societies, and not only do not have access to modern financial services, but they have also no possibility of ever accessing them, due to the increasingly hard to satisfy regulatory environment in which they are provided.

The traditional services of the state of providing identity, property, legal and other forms of organization are very often absent, or poorly organized, and when present, inefficient, corrupted, and skewed to advantage the powerful at the expense of the poor and exploitable.Implementing the financial and state services on the Blockchain promises to make them affordable, accessible, streamlined, transparent and more capable of resisting corruption and inefficiencies.

Distributed blockchain enabled food production and trade

In many societies the local farmers know very well what would be needed to make their lives easier, their products more marketable, and the outlook of their families and children brighter. Giving access through Internet connected smartphones to the development of financial and legal tools and support enables those who were previously excluded to participate on equal footing, and to put their own local understanding and wisdom to their advantage, emancipating and empowering them to make the best possible decisions for themselves.

The next generation platforms of micro-loans, lending, crowdfunding and equity investing will extend to orders of magnitude more people than it is possible to do now. The possibility of establishing trust networks whose workings can be verified and followed by anybody is going to extend circles of empathy and participation to include categories that previously were excluded and ignored.

An easier and more direct path to communication will enable a smoother development of commerce, both locally and globally, where a better information symmetry will empower those who would be previously exploited. Food will follow information and knowledge, security will follow trust, prosperity and wealth will follow connectedness complementing self reliance.

Chuck Reynolds
Contributor

 

Blockchain: A Primer and Promises for the Future of Payment Tech

Blockchain:
A Primer and Promises for the
Future of Payment Tech

  

Bitcoin – you might have heard about this digital currency, and it’s gaining some traction in payments. Online retailers like Newegg and Overstock.com accept it. There are services that let consumers convert Bitcoin into gift cards for use at their favorite retailers. And beyond that, bitcoin doesn’t seem to be going away.

Bitcoin, however, is but one piece of the conversation about emerging technologies such as blockchain and distributed ledger technology, thus it helps to first start with a conversation about these concepts. You might even be more curious to learn how blockchain and Bitcoin might feature in the future for your business.

What is blockchain?

The easiest way to understand blockchain is to think of it in terms of a typical bank account. When you spend money, it’s recorded as a transaction in your bank account, right? It’s the same thing with bitcoin or other industries using blockchain technology. A transaction is recorded in a “block.” Think of blocks like your monthly statements, which neatly divide up your transactions for easy reference (month, date, time, vendor, amount, credit or debit). A set of transactions is recorded as a block once it?s been verified by distributed trusted parties.

Once a block of transactions is complete, they become part of the blockchain. They are linked together in proper order (both chronologically and in linear fashion), and each block links to the block before and after it in the sequence – much like your bank statements for each month showing a starting and ending balance. Blocks are impossible to alter once they’re part of the blockchain, which can create a more trusted, unchanged record of transactions or data that a large network of parties can see and verify.

How does blockchain work within the use case of currency?

To understand how virtual currencies such as bitcoin and other blockchain-based systems work, we have to have a look at credit/debit transactions and cash. Credit/debit transactions are what are referred to as “pull payments.” A merchant terminal (virtual, i.e. online, or physical) processes a customer’s credit card using all of the encoded information and then decides how much money to “pull” from a customer’s account to satisfy a purchase.

Cash, and bitcoin are “push” forms of payment. In every bitcoin and cash transaction, a customer decides how much money to hand over to a merchant to satisfy a purchase. There’s no exchange of sensitive personal information, such as what’s found on a plastic card. Bitcoin and cash are not reversible and each can only be refunded by the holder who is initiating a return.

This means that bitcoin and other forms of payments powered by blockchain technology are more like cash than even a debit transaction. It also means that industries outside of payment technology are taking notice of how the foundation, blockchain, could help better manage data and information.

How is blockchain being used outside of payment processing?

The mortgage title industry and diamond industry have begun leveraging blockchain technology to solve some of their most critical challenges. According to a January 2016 report by NASDAQ, these two industries are taking advantage of blockchain technology in a few ways. The diamond industry has long faced challenges around fraud relating to the certification of diamonds, which can dictate the value of one diamond over another. Blockchain technology allows for the recording of diamond certification and for that information to be immutable and shared between insurers, law enforcement, and those who are filing claims.

For the real estate sector, title fraud is also a rampant problem. By recording property titles using blockchain technology, title insurance companies can save millions each year fighting title fraud, because titles become permanent and in historical record once they are part of the blockchain. There are other pending applications for medical technology (such as sensitive patient medical information) and the credit ratings industry as well.

What’s next?

Blockchain technology has been gaining attention for some time, and several industry consortiums have developed to track and innovate with the technology and identify applications for it in business. Just a segment of these groups includes R3 and Chain, two consortium groups, and consulting specialist groups such as SolidX. Ultimately, it will take many factors to determine the applications and use cases of blockchain technology in the coming years, but it has become a promising mechanism for data management, record-keeping, and payment processing in its early stages.

Chuck Reynolds
Contributor

LinkedIn Killer? Bitcoin Upstart 21 Takes on Social With Email Play

LinkedIn Killer?
Bitcoin Upstart 21 Takes on Social With Email Play

  

Cryptic bitcoin company 21 Inc has launched a paid email platform that seems far removed from its initial focus on hardware. The move is yet another in a string of pivots by the firm. Since it revealed it had raised $116m in 2015 (accrued over multiple rounds), 21 has evolved its strategy several times. Originally founded as a bitcoin mining company, it soon appointed a new CEO – Andreessen Horowitz partner Balaji Srinivasan – and announced plans to distribute bitcoin mining chips embedded in consumer and enterprise hardware devices. The chips, attached to a Raspberry Pi and called '21 Bitcoin Computers', started shipping in November 2015 and quickly developers began building applications for the device.

Then, in March 2016, the company launched its first proof-of-concept for a network of devices incentivized to monitor websites with bitcoin. Several months later, it launched a software package that allowed any connected device to join the 21 network, enabling capabilities that were once only available to those with a 21 Bitcoin Computer. The new communications platform seems to be yet another evolution for 21 Inc, though Srinivasan said the company has been working on this idea for some time, pointing to an SMS version of the current product that was published in late 2015.

Further, the CEO said, the email platform still aligns with the company’s primary goal.

He told CoinDesk:

"Allowing people to earn bitcoin by responding to emails and completing tasks achieves many of the same goals in that it may get millions of people their first exposure to digital currency."

In the old SMS version, 21 Inc showed users how to set up a 21 Bitcoin Computer to allow them to receive paid text messages from anyone without revealing the recipient’s number. The new platform, which allows users to set their own rate, makes the service accessible for people even without the company’s hardware.

Rewarding the recipient

The new service – available via the website and a MacOS app – looks similar to LinkedIn's InMail (which Srinivasan said is the platform’s closest competitor). And some enthusiasts, including Craig Lauer, an angel investor and mentor to TechStars and EvoNexus, have even made it public that they'd rather use 21’s platform over LinkedIn. That’s probably because, according to Srinivasan, the recipient gets paid instead of the social network giant. On LinkedIn, payments made to send email to people outside your network are taken by LinkedIn itself, but on 21's platform, the money goes straight to the recipient.

Most of it, anyway. When a user sends an email, 21 adds a 10% fee to transactions – for instance, sending an email to someone charging $1 means paying $1.10 total. That small fee, though, has the potential to turn into big revenue for 21. "InMail is nevertheless estimated to be a $300m per year business for LinkedIn, and we think that market could expand if recipient’s can get paid," Srinivasan said.

Premium prices

This is especially true if well-known early adopters keep setting high prices (and people are prepared to pay for access to them). Andreessen Horowitz's Ben Horowitz set his account at $100 via the service. With such high values, some wonder what the benefit of using bitcoin would be since, in these cases, it might be just as easy to add debit and credit payment options.

But Srinivasan contends there are several advantages. "It allows instant receipt of funds without linking a bank account, it works across borders and it can scale up and down to very small and large payments alike," he said. This appreciation is also, it seems, why people have rushed to the new service, since users can make $2 in bitcoin just by reading through how the site works and setting up an account.

This mechanism for offering monetary value for tasks is the real mission of the 21 platform, according to Srinivasan. "The goal is to make it possible to send targeted tasks to people. In the same way that your resume qualifies you for an offline job, a verified 21 profile qualifies you for online tasks, payable in bitcoin," he said. The Gerson Lehrman Group, an expert network that provides independent consulting services, offers a service like this, although it is aimed at survey participants, rewarding users with virtual event credits and monetary reimbursement.

"Think of it like a hybrid of LinkedIn and Amazon Mechanical Turk," Srinivasan said.

Mixed reviews

John Light, head of product marketing at Abra, a bitcoin-based mobile app for remittances, suggested the paid email use case is merely a way to market the tasks platform. "The email application seems like a useful idea, especially for those getting a lot of inbound requests and they need to apply some filter to decide what’s worth responding to – especially if those people are outside your network," Light said. "The messaging product is also useful because it’s public-facing … and acts as a marketing tool."

Although others, like Wayne Vaughan, founder and CEO of Tierion, remain skeptical – not only of the paid inbox, but also of the tasks platform. In today’s world, social signals such as getting introduced by a mutual friend are generally seen as more valuable than monetary compensation, Vaughan suggested. "Putting a price on that … it's like if I want to tell you something interesting, but you ask for $50 to do that, I want to tell you to go screw yourself," he said.

Not to mention, high prices put some people – such as young entrepreneurs or developers and small publication journalists – at a disadvantage. "It’s not a perfect solution," conceded Light, "but it’s a new option for purely unsolicited messages with no pre-applied filter." Of course, there will always be other channels on which people can reach out, such as the public networks like Twitter On these, though, account holders aren’t guaranteed to respond, and surely, said Light, they would if someone paid them to.

As an added incentive for some, the money received from incoming emails or earned from tasks can be donated to three different “tech-savvy and bitcoin-friendly” charities, said Srinivasan. "Because price is a signal, money could be a very interesting way to prioritize messages," he argued. "At the same time, the recipients often don’t actually need the money, so donating it to a good cause is a creative solution."

Exit play?

Yet, some like Vaughan are still doubtful. All in all, Vaughan (and other observers) wonders if 21 isn’t trying to amass a large user base, a new asset so the company can sell. "If you’re trying to sell your company and show fast customer acquisition this might be a way to do it," he said. But maybe it's more about finding a business model that gains traction, allowing 21 to drill down on a specific use case, Light argued.

While the move isn't necessarily a desperation play, Vaughan thinks 21's ability to raise money could be limited since its mining equipment business hasn't worked itself into a commercial success as of yet. In Vaughan’s mind, this is the latest pivot that shows a company experimenting with revenue-generating business models.

He concluded

"If there’s a thread of continuity, then they need to do a better job of communicating what they’re all about."

Chuck Reynolds
Contributor

Bitcoin Price Sinks Below $1,000 as Exchanges Cut Services

Bitcoin Price Sinks Below $1,000
as Exchanges Cut Services

Bitcoin's price has fallen sharply, dropping below $1,000 amid news from China that major exchanges had temporarily cut services. At press time, prices were down more than 7% after word emerged this morning that two of China’s biggest bitcoin exchanges – Beijing-based OKCoin and Huobi – are freezing bitcoin and litecoin withdrawals for a month following pressure from the People's Bank of China. Yuan deposits and withdrawals are not affected, the exchanges said.

Markets had been hovering around $1,063 when the news broke, though this has now changed as the market seeks to price in the news. According to the CoinDesk USD Bitcoin Price Index (BPI), prices fell as much as $80, hitting a low of $958.56. BPI data shows that prices had previously hit a high of $1,077.76 earlier today.

At press time, bitcoin prices are at an average of $988. CNY-denominated markets were down more than 13% from their peak on the news at one point, according to the BPI, falling from a high of ¥7,598.92 to an average of ¥6,755.52. However, the price was up 5% on the day at press time, indicating traders were perhaps viewing the news as a buying opportunity.

Real-time response

So far, market observers appear to be reacting with a mixture of surprise and concern when reached for comment. OTC trader Zhao Dong indicated that he expected further price weakening stoked by traders "since you can only deposit coins and sell" in light of the exchange policy changes.

Kong Gao, overseas marketing director at OTC trading firm Richfund, remarked more simply, stating:

"This is big news."

Two of China's Biggest Exchanges
Stop Bitcoin Withdrawals

In public posts that showcase the increasingly coordinated nature of exchange policy in the region, both OKCoin and Huobi said today that the move was a bid to bolster their anti-money laundering (AML) capabilities and prevent "illegal transactions".Both OKCoin and Huobi indicated that their platforms would now go through an “upgrade” to combat “money laundering, exchange, pyramid schemes and other illegal activities”, though no further details were provided.

BTCC, the other ‘Big Three’ domestic exchange, did not issue the update. All told, the move comes amid a rocky period for local exchanges that began with the wider scrutiny of major bitcoin exchanges by the People's Bank of China (PBOC), the country's central bank. Earlier today, China's central bank issued a warning to domestic exchanges, going so far as to state it would move to shutter startups that violated its guidance through the necessary government channels.

In statements provided to CoinDesk, Huobi indicated that the move was a proactive one that found the two exchanges seeking to "promote bitcoin industry self-discipline".

Chuck Reynolds
Contributor

Big Boys Club The Tale of Blockchain, Reinsurance, B3i and Dispute of 9/11 Aircraft

Big Boys Club
The Tale of Blockchain, Reinsurance,
B3i and Dispute of 9/11 Aircraft

Our London correspondent Nick Ayton takes a look at B3i Reinsurance Club and what potential it holds for reinventing the sector on the eve of fresh announcements about new members. Recent catastrophes have shown the reinsurance industry hasn’t moved forward in decades and cannot deal with today’s risks let alone tomorrow’s. There is a clear need for change.

Reinsurance is the practice of insurers transferring portions of risk portfolios to other parties. It is based on the agreement to reduce the likelihood of having to pay a large obligation resulting from an insurance claim. The five-year dispute of the fallen aircraft that hit the twin towers raged on for a long time. Policy conditions were not clear and synchronized between insurers. They did not allow for a double event, as the towers themselves were part of the complex claim.

What is the mandate for B3i exactly?

Is it a ‘consortia’ where members pay into the greater good or a ‘club’ where the blind are leading the blind and all are trying to cram knowledge because someone has said this Blockchain thing is important? There have been several press releases by the initial members Allianz, Aegon, Munich Re, Swiss Re and Zurich Ins talking about signing up but lacks the details.

It is difficult to decipher what is actually going on. On the MunichRe website in October 2016, the press release talks about the opportunity Blockchain presents but doesn’t highlight the specific things B3i will be working on. It is all a bit loose and doesn’t tell us much. Is B3i about standards only according to the Article in Nasdaq on 25 Jan 2017? Do the members of this new club actually know what they hope to gain from the consortia?

Blockchain is a great fit for reinsurance

Just in case the members are not sure, let’s look at a few specific areas where Blockchain can make a significant impact. There is no doubt Blockchain is a great fit for reinsurance given the structure and nature of the business where large expensive things are insured across a number of parties. Large ships, airplanes, and cargo require several insurers to take a share of the risk as these large assets fly through our skies and move across the water delivering cargo and are themselves very expensive assets.

In an industry heavily reliant on brokers to place the business in the market, it strikes me there will be bigger issues ahead as the ethos of Blockchain is to removes the service fringes and middlemen. Does this mean the market structure is up for grabs? Brokers place the risks on the market, the create a market for the business they are trying to place. Hoping other reinsurers will take a piece of the ‘pie’ and put it out on the market – where insurers rely on sharing information and creating policy conditions that tie in several parties that together take on the risk.

Processing costs are high as each reinsurer has different systems and data formats and there is a delay in sharing information and knowing the state of any insurance risk at any single point in time. It is this inefficient System of Record that adds a great deal of friction, time cost to the entire process and brokers want to get rewarded for placing the business.

The potential is huge

There is no doubt the re-insurance market can eliminate 30 percent to 40 percent processing costs quite quickly and the flow of information reduced as each risk is written to a shared ledger called the Blockchain. In practice, reinsurers like most Financial Services and Insurance business are fierce rivals and don’t play nicely together. A factor that has held back the industry and why it is ready to be re-invented or destroyed by a new model.

It is quite obvious Smart Contracts that are neither smart nor contracts can automate the fulfillment of terms and conditions and help to monitor ‘state’ of risks as events happen in real time. The potential is huge. One assumes B3i are looking at a closed permission world where the reinsurers remain the central Validator and use the technology to make things better for themselves and not pass net benefits to the end customer, the agenda of the banking led consortia.

Will the end customer be able to place the risk directly, will they be able to see their policy and who is underwriting it and maybe adjust it in real time to reflect events and changes in condition. Will the client be a node on the B3i network of will the backbone be the reinsurers as read-write nodes and brokers a view (place only) and clients shutout?

A big boys club or something more?

With B3i nobody can be certain where the Club is going and what they will actually deliver for customers. Is it the case of let's get a few organizations together and see what happens? Are reinsurers clambering to find out what Blockchain can do for them as both opportunity and threat? Or is it a case of having to join in as being outside the tent suggests they are missing out, but then missing out on what?

There are significant benefits the reinsurance sector will gain from deploying Blockchain. The same information can be delivered in near ‘real time’ to help all parties adjust their position, reducing human errors from keying data and information flows between participants are date and time stamped, where the provenance is known.

Risks can be shared and the policies document synchronized allowing digital signatures that will go a long way to preventing the five years legal dispute that started on that fateful day. Permissions granted only to those with rights of access that related to the risk will speed up underwriting, claims and policy administration and servicing.

There is no doubt the reinsurance industry has an opportunity and B3i is here. Let’s hope they don’t waste the opportunity and history suggests these rivals don’t play nicely in the playground. Time will tell as new members announced in late 2016 were promised and we expect any day now to get an update on this new big boys club or will they let the smaller players and other market participants in.

Chuck Reynolds
Contributor

Georgia Becomes First Country to Register Property on Blockchain/IBM’s Biggest-Ever Blockchain

Georgia Becomes First Country
to Register Property on Blockchain

 

On Tuesday, in Tbilisi, the government of Georgia signed an agreement to use the Bitcoin Blockchain to verify property transactions. Last April, the Georgian government and Bitcoin company BitFury initiated a project to record land titles on the Blockchain. This is the first time a national government is using the Blockchain to safeguard and authenticate state operations, therefore ushering in a belief in the technology that has wrongfully been painted black.

First-time government Blockchain

As a matter of fact, the private Blockchain that will be an alter-proof ledger will also be provable using the Bitcoin Blockchain that is in the public domain. As of now, a software has been built and tested on some land title registrations. The Georgian National Agency of Public Registry and BitFury signed a memorandum of understanding paving the way to extend services to the registration of new land titles, demolition of property, mortgages, purchases and sales of land titles, rentals as well as notary services.

There are many other projects focusing on Blockchain land title services apart from the BitFury and Republic of Georgia drive. This includes Sweden, Honduras and Cook County in Chicago which are being run by ChromaWay, Factcom, and Velox respectively. Media reports hinted that Peruvian Economist Hernando de Soto is associated with the Georgian project. De Soto, in his book Mystery of Capital, estimates that there is "dead capital" of $20 trillion globally, consisting of buildings and lands without legal title.

24/7 with smartphones

Georgia’s Minister of Justice, Tea Tsulukiani, says that she is optimistic her country will be able to work with Blockchain technology from this coming summer to have real estate quotations in a completely trustworthy and avant-garde. Papuna Ugrekhelidze, chairman of the Georgian National Agency of Public Registry, stated in an announcement that his outfit is “very pleased with the technical progress and looks forward to continuing [their] fruitful collaboration.”

BitFury CEO Valery Vavilov also told the media that the Georgian government is excited about how the whole work was handled and executed with the current method. He explained that all the changes were made on the back end and the only dichotomy for the citizens of Georgia is that they can monitor if a title is legitimate when it is entered into the system.

Vavilov revealed that the current platform is phase one and at a beta stage but the software will be fully operational this year:

“The big goal is to move [the process] to smartphones, so people can use it 24/7 and all transactions are secured, transferrable and accountable.”

So far, BitFury has been able to raise $90 mln funding including a $30 mln investment by Credit China FinTech Holdings in January. Implemented on a property, Blockchain technology maintains agreements in diverse fashions. In Blockchain-based entries, records are time-stamped, as well as consequent modifications to these records. The aforementioned would permit public members interested in a property to examine and establish the date of previous sales.

IBM's Biggest-Ever Blockchain
Trade Finance Trial Could Go Global

Two government agencies funded IBM's latest blockchain implementation, the largest ever in terms of parties involved and arguably one of the more impressive in the sophistication of the offering.With support from both Dubai Customs and Dubai Trade, IBM has so far courted a telecommunications service provider, a letter of credit issuing bank, a responding bank, a freight company and an airline in a trial centered on what major financial firms believe is one of the tech's most promising use cases.

Once the all-inclusive supply chain and trade finance proof-of-concept are completed, it will be integrated with to Watson's AI, making it one of IBM's most pervasive blockchain projects to date. But while all this is exciting, it's what happens once the various players begin to implement the results of the test in other countries around the world that will truly set the project apart.

According to James Wallis, IBM's vice president for blockchain markets and engagements, the real value derived from such a large-scale project is developing the ability to communicate across different nations and multiple industries to achieve a common goal.

Wallis, who helped coordinate the massive, multi-party collaboration, told CoinDesk:

"We don't know exactly where it's going to end up, but the collaboration across different government entities around the world is going to have to happen."

Serious progress

Unveiled yesterday, the proof-of-concept is being designed to track the shipment of fruit from India via a cargo ship to Dubai. Once in Dubai, the fruit will be turned into juice and exported to Spain via airplane, as just one example. To move the required transactions for the simple-sounding shipment to a blockchain, the Dubai government also "sponsored" the participation of UAE-based telecommunications service Du to track data via Internet of Things-enabled devices.

Emirates NBD Bank will then issue letters of credit, Spanish bank, Santander will receive the letters, freight company Aramex will ship the fruit overseas and an unnamed airline carrier will transport the juice. The POC is expected to be powered self-executing code, or smart contracts, on the open-source Hyperledger platform, with data reported via Du's Internet of Things devices being validated by IBM’s Watson artificial intelligence.

The combined trade-finance and supply-chain proof-of concept is not a "legal construct" according to Wallis, but rather a group of companies that have agreed to work together under the sponsorship of the Dubai government. While IBM is not making public the timeline on which the objectives are expected to be deliverable, the Dubai government last October declared it would have all government documents moved to a blockchain by 2020. "That means some serious progress needs to be made this year," Wallis said.

Countdown to blockchain

But the sense of urgency felt by Wallis isn't unique in the blockchain industry. Industries as diverse as finance, automobile, supply chain and health insurance built hundreds of proofs-of-concept last year to demonstrate value to both investors and clients alike. In October, IBM announced its own supply-chain pilot built for Walmart to move part of China's pork industry to another implementation of the Hyperledger blockchain. Just a week later Walmart told CoinDesk it was exploring implementing blockchain for additional products.

Around the world, separate supply chain POCs have been built by various companies in India, Singapore, and Australia, just to name few. Evidence of the increasing sophistication of the endeavors can be seen in, Hijro, formerly called Fluent, raising $1.65m to help integrate blockchain into companies’ existing infrastructure, and Microsoft, which last month launched its Project Manifest global initiative to help connect supply chains.

In total, as many as 400 blockchain proofs-of-concept had been built around the world in 2016, according to an executive speaking at the launch of consulting firm Deloitte’s blockchain lab in New York City earlier this month. Days later, an executive at the firm called 2017 a "make or break year" for the industry.

Increasing complexity

But not everyone agreed. Wallis positions the multi-nation, cross-industry proof-of-concept as part of a new caliber of blockchain experiments that will help jump-start the process of integrating distributed ledgers globally. Last week, IBM published a report based on surveys of 200 government executives finding that nine out of 10 respondents believed their governments were likely to fund blockchain projects in a wide range of industries by the end of 2018.

According to Wallis, the main goal of the Dubai proof-of-concept is to "figure out" how international customs agencies can better communicate with trade organizations to build their existing services into a shared, distributed ledger.

Wallis concluded:

"This is a proof-of-concept, but I would say this one is of the most significant ones, if not the most significant one we’ve been involved in, because of the number of players and the whole flow, both import and export."

Chuck Reynolds
Contributor

How Blockchain Technology Could Change The World

How Blockchain Technology Could Change The World

There’s a lot of hype in the air about blockchain technology at the moment. A recent World Economic Forum report predicts that by 2025 10% of GDP will be stored on blockchains or blockchain related technology. This means it’s probably something which everyone involved in business should take notice of. However, there’s still a lack of understanding about what it is, and what it does. 

This makes it difficult for the layman to assess whether it’s something worthy of their time and attention. And for a new technology to become mainstream, let alone change the world (as blockchain enthusiasts claim it will) it must find a fan base beyond the technically-minded. One way people describe blockchain technology is the “internet of value”. I like this term but it deserves closer inspection.

We have become used to sharing information through a decentralized online platform (the internet). But when it comes to transferring value – for example money – we are usually forced to fall back on old fashioned, centralized financial establishments such as banks. Even online payment methods which have sprung into existence since the birth of the internet – Paypal being the most obvious example – generally require integration with a bank account or credit card to be useful.

Blockchain technology offers the intriguing possibility of eliminating this “middle man”. It does this by filling three important roles – recording transactions, establishing identity and establishing contracts – traditionally carried out by the financial services sector.

Worldwide, the financial services market is the largest sector of industry by market capitalization. If blockchain technology can replace just a fraction of that by enabling peer-to-peer transactions in other sectors then it clearly has the potential to create huge efficiencies.

The technology was initially pushed into the headlines several years ago thanks to the virtual currency Bitcoin. The value of one unit of the currency (which is underpinned by blockchain technology) rose from pennies to over £$1,000 between 2011 and 2013, making a handful of early adopter enthusiasts very wealthy. Of course, this generated press interest. Since then, while Bitcoin’s value may have fallen and the currency established a more stable rate of growth, the buzz around the blockchain concept has intensified.

Blockchain technology

IBM, Microsoft and many others have announced services based on blockchain technology. Unsurprisingly, at the moment these are mainly aimed at financial services clients. It may represent the threat of extreme disruption to their industry – but of course they will still attempt to capitalize on it – that’s what they do, after all!

Smart Contracts

In my opinion, though, it’s the third crucial role – the establishing (and verifying) of contracts – where blockchain offers the most exciting possibilities. And it’s also where the value of this type of technology becomes apparent outside of financial services. The ability to securely read and write to a distributed ledger, governed by mathematics and consensus rather than the whims of a centralized operator, has a whole heap of potential in just about every other industry.

The key here is that as well as something as basic as an indicator of value (as with Bitcoin), blockchains can be used to store any kind of digital information, including computer code. This code can be programmed to execute when two or more parties enter their keys – meaning that everyone agrees that a contract has been filled. It can also read from external data feeds – stock prices, weather reports, news headlines, or anything else that can be parsed by computer code – to create contracts which automatically “sign off” when stated conditions are filled. These are known as “smart contracts”.

Obviously the potential here is limitless. Applications could be developed which allow businesses to validate transfers based on delivery of service – for example a certain number of buying orders would signal to the blockchain-based smart contract that conditions had been filled for an invoice to be paid. The payment could then be made automatically through a blockchain based payment system. App ecosystems are already evolving, based around platforms such as Ethereum which aim to give businesses the toolsets necessary to get involved.  

One theory even suggests that blockchain tech will provide the value “fuel” for the Internet of Things. Devices in the home and across industry could automatically pay for the energy they use by writing to the relevant blockchain, creating a transfer of value based on the precise usage of the device. One project involves the creation of “smart” local power grids based on distributed blockchain technology. Of particular use in remote communities, such systems would allow the distribution, metering and billing of electricity to be administered within the community itself, rather than being reliant on external multinational power and finance institutions.

Another, ascribe, aims to use blockchain tech to solve intellectual property issues in the digital age. Blockchains can be used to create a permanent or transferable link between the owner and a piece of IP, handle licensing issues, and even create “limited editions” of digital information, securely limiting the amount of times a piece of information (for example an artwork) can be displayed, shared or copied.

There are, as I previously said, an almost limitless number of applications for the technology. Fraud-resistant voting systems to be put in place, where the owner of one private key is assigned one vote, and no third party referee is necessary. Censorship-resistant distribution of information. Decentralized reputation and recommendation engines, provably free of interference from intermediaries such as moderators or advertisers.

In my opinion, blockchain technology looks set to be one of the most impactful developments on the horizon. I often find myself writing about “buzzwords” – Big Data, machine learning, predictive analytic – and now undoubtedly “blockchain” will join that list. But remember that the word “internet” was a buzzword, too, not so long ago in objective terms (although it seems like another lifetime!). The fact is that with all these concepts, while there may be a lot of hype around them, the potential they offer for change is just too big to overlook

Chuck Reynolds
Contributor

The First Government To Secure Land Titles On The Bitcoin Blockchain Expands Project

The First Government To Secure Land Titles
On The Bitcoin Blockchain Expands Project

In a vote of confidence for a fledgling technology, the Republic of Georgia committed in a signing ceremony in Tbilisi on Tuesday to use the bitcoin network to validate property-related government transactions. In April last year, the government and bitcoin hardware and software firm Bitfury Group launched a project to register land titles via a private blockchain, which is a tamper-proof ledger, and then to make those transactions verifiable using bitcoin’s blockchain, which is public.

It is the first time a national government has used the bitcoin blockchain to secure and validate official actions, signifying a vote of confidence for a technology still somewhat tainted by an early association with illicit activity. Having so far built the software and tested it with a couple dozen land title registrations, Bitfury and the Georgian National Agency of Public Registry have now signed a new memorandum of understanding to expand the service to purchases and sales of land titles, registration of new land titles, demolition of property, mortgages and rentals, as well as notary services.

The Bitfury and Republic of Georgia initiative is just one of several collaborations aimed at creating blockchain-based land-titling services. (Such software is also being created in Sweden, Honduras and Cook County in Chicago with startups ChromaWay, Factom and Velox, respectively.) Peruvian economist Hernando DeSoto, who has also been involved in the project, has estimated that worldwide, the value of “dead capital” — in which people do not have legal title to their houses, cars and other assets — at $20 trillion.

Tea Tsulukiani, Georgia’s Minister of Justice, said in a statement, “We will be able to work with Blockchain technology from this summer [to] place real estate extracts in a totally safe and innovative system." NAPR chairman Papuna Ugrekhelidze said in a statement that his department is “very pleased with the technical progress and looks forward to continuing [their] fruitful collaboration.”

Noting that the Georgian government “like[s] how the work was done and how easy blockchain is implementable in the existing system,” Bitfury chief executive officer Valery Vavilov said in an interview that the changes were all made on the back end, and the only difference for Georgian citizens is that they can now check if a land title is legitimate (if it’s been entered into the system).

Calling the work so far a “phase one, beta stage” and declaring that the software will be “fully operational” this year, he said, “The big goal is to move [the process] to smartphones, so people can use it 24/7 and all transactions are secured, transferrable and accountable.” Bitfury has raised $90 million in funding, including a recent $30 million investment by Credit China Fintech Holdings. Applied to property, blockchain technology holds promise in several ways. In a blockchain-based ledger, records are time-stamped, as are subsequent changes to those records. This would allow enable people interested in a specific property to see and verify the date of past transactions.

Additionally, data on blockchains can be made private or public. In this case, the details of the real estate transactions are placed on a private blockchain network run by known computers, and then, in order for citizens to verify the authenticity of certificates, that data can be turned into a cryptographic “hash” that’s made public on the bitcoin blockchain which is run by thousands of computers worldwide. The hash is a type of digital fingerprint that enables anyone to verify that the data matches what’s on the blockchain without seeing the data itself.

Finally, blockchain technology brings security to real estate transactions because there’s no central point of failure. The ledger is distributed among many computers, so a would-be hacker would need to simultaneously attack at least 51% of the network in order to fraudulently alter records. While many financial institutions and governments have expressed interest in blockchain technology, the vast majority of them have been pursuing private blockchains, some for reasons of privacy and some perhaps because of bitcoin’s early reputation as being the currency of choice for online drug dealers.

However, Bitfury is working with the bitcoin blockchain both because it is public, for purposes of transparency, and because it is the blockchain that would be most difficult to fraudulently alter. Last summer, the company partnered with New America and the National Democratic Institute to create the Blockchain Trust Accelerator to work on pilot blockchain projects that have a positive social impact; the Georgia pilot is the accelerator’s first.

Trust Accelerator co-founder and New America director of the Bretton Woods II program Tomicah Tillemann said of Georgia’s decision to use the public bitcoin blockchain, “Especially at a moment when there’s a global crisis of confidence in institutions, this is a powerful indication of their commitment to transparency and accountability.”

The MOU comes at a time when the future of the bitcoin blockchain is up in the air due to a longstanding rift in the community over how to expand the network to accommodate more transactions. The inability to come to an agreement raises questions about how long the network can be sustained if no process emerges for resolving stalemates. But Bitfury executive vice chairman George Kikvadze said the fact that there was no one at the helm of bitcoin was a strength. “Once you start centralizing it and making decisions fast, the whole point of security and the whole power of the trust protocol goes out the window. ”

Eventually, Bitfury plans to also help put notary services and smart contracts (programmable contracts that self-execute when certain conditions are met) for services such as escrow in Georgia onto blockchains. While many of the technology’s enthusiasts tout the potential for blockchain to improve notary services, processes for verifying the accuracy of information that gets placed on the ledger have yet to be established. However, Tillemann noted that Georgia’s property registration systems were ranked third best in the world by the World Bank, which bodes well for any future notary products there. “We have great confidence that the information coming into the system is valid. They have good controls in place to ensure it’s accurate, that they aren’t going to be registering erroneous data on the blockchain,” he said.

One of the advantages in the pilot, said Bitfury chief communications officer and accelerator co-founder Jamie Smith, was the strength of Georgia’s already existing software. “You want to be in a situation, especially in these pilots, to put the best systems on [blockchain technology],” she said. Kikvadze said the choice of partner enabled the pilot projects to move forward more quickly and efficiently. “We found the right partner in the Georgian government,” he said, relating a story about how Tsulukiani has become so fascinated by blockchain that her assistants say that any time she has a free moment, she watches Youtube videos or takes online courses on blockchain technology.

“If you think about this happening at a time when a lot of people are struggling to separate what’s real from what’s fake, this is a powerful tool to prove what’s real, said Tillemann. “Especially when you’re dealing with something as fundamental as your home or property, it’s important to have that added layer of security that’s provided by blockchain validation.”

Chuck Reynolds
Contributor