About Blockchain
Usage of a
Blockchain Phone – An expert’s advise
The publicity surrounding
Blockchain for last couple of years is frantic and only limited technologies
have been able to match it. Even though blockchain is intricately linked with
cryptocurrency as viewed by public, still advocates contend that it goes beyond
that, however a deep dive into the topic about blockchain leaves a big
potential of this actually happening. An attempt to find about Blockchain
Phone, and who may want it, or what it can do and which companies are making
one is worth making an effort. HTC’s Exodus Smartphone is one such phone that
may help explore aforementioned queries.
Blockchain Phone –
What is meant by this?
Phil Chen, one of the chief
officers at HTC explained to Digital Trends that this phone is all about
internet, where it is heading for and what is erroneous with it at the moment.
According to him something is terribly wrong as people do not own their digital
identities, their data whether digital or personal. Most of the data whether
behavioral, commercial, health, browsing data is owned by only a handful of
companies. We seemingly use free services from online giants like Google and
Facebook and believe it not to be free as the process is more like trading the
data for services rendered. No wonder giants with tremendous data are creating
business models to leverage it and convert it into a bounty.
Chen is highlighting the
importance of internet, where it is heading and what may be wrong with it. He
finds the absence of digital property even in this age of internet extremely
terrible. He refers to the growth of agriculture, the turnaround of real estate
property, the industrial revolution with intellectual property and the distance
that has been covered in the information age and finds it amazing that people
still do not find their data of any worth. There is a great belief that the man
today has given away all his data, and the way forward from here is hazy. Let
us come back to where we started – What does a blockchain phone has to do with
this.
Blockchain – Let’s
look at it again.
It’s good to recollect that
blockchain is an immutable, decentralized ledger – a ledger comprising of list
of transactions or blocks that are distributed in a peer to peer network of
different devices instead of being controlled from a centralized server. Each
user possesses a private and a public key which can be used to create a new
block. One by one the blocks keep getting added to make a chain that cannot be
altered. HTC Exodus1 is one such android phone with security features allowing
you to retain your personal keys, virtually your personal data instead of
giants like Google, Apple possessing the same. It is like all other regular
Android phones with this additional security feature offering locked area. Phil
Chen is quite vocal in stating that the features added to the phone are like a
secure operating system. Holding one’s private keys ensures secure transactions
in the crypto space. The foremost application offered by this phone is to allow
holding cryptocurrency or other crypto assets like non-fungible tokens
securely, an opportunity according to Chen to be able to own and hold one’s
digital identity and data.
Digital Copying –
How to prevent it?
One of the primary
applications of this technology can be explained by discussing “CryptoKitties”.
Cryptokitties have completely changed the idea of what actually digital content
is. According to Phil Chen the concept of non-fungible tokens grows on the idea
of digital scarcity. It is a blockchain based phenomenon allowing people to
breed, trade or sell digital cats. Unique thing about this is it leading to a
genuine cat named “Dragon” selling for around $170,000. Idea of blockchain was
to prevent double spending of bitcoin, simply meaning that one will not possess
a bitcoin after giving it to someone. This is something not true for digital files
– giving an option of copying data, with the fact that all may possess it.
“That technology empowered
Steve Jobs to disrupt the whole music industry with the iPod and iTunes” said
Phil Chen. The digital content cannot be copied henceforth since non-fungible
tokens are building on top the irreversible power of blockchain. It gives back
something useful to digital content that could be applied to a song, video or
something else just easily as a digital cat. There is a promise of expanding
blockchain in gaming especially about digital tool, however there is still a
potential for it to spread beyond that. It is seen as a completely new paradigm
as per Phil Chen, currently it is restricted as wallet exchanges and gaming
collectibles with no clue of what the outcome will be in near future.
Outcome of losing
a Phone:
Pertinent question that arises
during any discussion post loss of blockchain phone is what happens post losing
a phone or while it gets stolen? The private keys and the digital may be stored
on that device. The HTC Exodus1 is a versatile device capable of safely storing
your digital data and disconnected from the internet. According to Scotty
Perkins, Quisitive’s senior vice
president for product promotion, the demand for cryptocurrency-enabled phones
having cold storage component will be limited to enthusiasts. Having coin
holdings in cold storage digitally on the mobile phone is dangerous in case the
phone gets stolen or irreparably damaging. Not planning intelligently leaves
the risk of losing more than the valuable phone and a few contacts. HTC does
provide considerably safety limiting the risk of centralized wealth and just
short of completely isolated cold storage. Phil Chen is quite vocal of the fact
that there is no such thing as 100 percent security with there being a strong
balance between security and usability. In addition, he says that at the moment
one’s wealth is stored on some centralized server, and blockchain phones may be
spreading the risk. Any specific failure point giving access to steal digital
content from 150 million people is missing and one has to get physical in case
there is a need to rob someone. HTC has created a Social Key Recovery that is
helpful in case of losing a blockchain phone. During the loss of a normal phone
one can resort to a recovery process initiated by Google or Apple to get back
the keys that may help restore your backed-up data. The key recovery of HTC
employs a well-known algorithm that enables splitting a key into five different
parts and sharing the same amongst the family and close friends. During the
loss of a phone the contacts will be of help in recovering the key. Since the
necessity is of recovery there is a requirement of biometrics or password so
that getting tricked to lose your key and initiating transactions can be
avoided. With cold storage one needs to recover the device to avoid losing the
assets stored on it forever.
The Way Forward
Phil
Chen is confident about the growth of HTC Exodus in future. This can be termed
as a beginning of something new with something additional happening in the
future. Currently the target segment is the select crypto crowd that
understands the intention of holding one’s own private keys according to Chen.
This is start of something new with no one having a sense of where it will
head. The strength of blockchain is exciting that could have a profound effect
on our internet usage, however this is an old knowledge now and powerful
players with vested interest are in plenty to leverage the situation. Current
value of blockchain phones is about managing cryptocurrency and additional
digital assets and additional growth of the phone depends on phone’s ability to
fulfill that strength. This is hard to predict at the moment, but HTC is far from
the only player betting that it will.
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Decentralized web
– End of a tale of two Internets.
Blockchain technology – a
decentralized technology is a well-built solution to the growing problems of
the internet and it is high time people embrace this alternate solution. There
has been a bold prediction by Google’s Eric Schmidt that the internet will
rapidly get divided into two entities steered by United States of America and
People’s Republic of China – the two leaders of today. However, the prediction
is not restricted to just two internets. There is a list of queries that have
cropped up including economist Tyler Cowen’s indirect query of what is it halt
every country across the globe from having own version of internet? In the next
decade what is the likelihood of Russia and North Korea to follow along the
trend of a country specific internet? This forecast compels us to ask another
query that why are we still so focused on the internet as it is? When will the
public outlook about the internet shift towards a modern vision? This ends up
making us accept an alternative solution to the ills of internet – a
decentralized web built with blockchain technology that truly allows one to one
personal data, enables the first global data economy, prevents third party
interference, removes central points of failure, and enables the global
population to access one internet without concern of government controlled
information.
The users are continually suffering
from an abuse of data control from tech-giants – check the Equifax hack or the
Facebook hack that happened a few weeks ago affecting approximately 50 million
users. However, the online activity across the globe for all people has been
censored by government entities. As an instance one can refer to Cambodia,
Turkey, China or America where the citizens’ thoughts, opinions, and access to
actual “free internet” has been controlled. Additionally, Cambodia has created
a new authority to control distribution of information that could be classified
as a threat to the defense and/or security of the nation. The requirement to
monitor Cambodian citizens’ internet usage by all internet service providers
has empowered the service providers to block access to any potential
threatening information that may harm relations with other countries, economy,
or public order, or is against the country’s customs and traditions. This
actually means that the government can actually block people from free speech,
or read anything of their liking. China is one such another country that has
been accused of serious restrictions including preventing the citizens from
sharing Winnie the Pooh memes in a reference to President Xi, leave aside the
social credit system, which creates a “trustworthiness” score for citizens
based on their routine activity including online usage. Turkey was even more
restrictive by preventing its citizens from accessing even an encrypted email
service. This action affected journalists the most, the community most
frequently targeted by Turkish government. United States is another country
that can be termed as controlling the journalists’ access of internet. As an
instance the historic release of the Pentagon Papers during Vietnam War –
leading to a legal case between the New York Times and federal government, to the
recent capture of records of New York Times reporter, Ali Watkins. These issues
may be petty matters to look at, however this fact is undermined by the net
neutrality debate in United States of late, where the government has been
accused of further restricting citizens’ right of internet usage by further
empowering ISPs to control internet. In fact, the foundation for Economic
Education, actually released an article entitled “Net Neutrality is about
Government Control of the Internet”.
The fact that governments are
hostile towards decentralized entities should be of no surprise as this very
concept threatens the power of government to control and filter information
access prior to arrival of the current internet. The arrival of internet has
piloted globalization, altering the manner in which to communicate, transact
and think drastically – but it was not long before third parties found ways to
change its infrastructure to bend to own agendas. However, with the arrival of
decentralized revolution the thoughts have started changing. Instead of sitting
idle as the internet divides one must attempt creating new infrastructure that
scraps the mold and detaches from the current running internet framework. The
arrival of Internet of Things revolution should initiate redesigning the
centralized control of internet by corporations, governments, and points of
failures of vulnerable central servers in this 21st century that
will witness the exponential growth of both users and devices.
Additional
effort needs to be invested to modernize the way to store, own, exchange or
monetize data. Blockchain is one technology that government like United States
is uncertain to understand the benefis of, however there are other like
European Union (EU) that is in the process of leveraging blockchain as depicted
by European Parliament resolution of 3 October 2018 on distributed ledger
technologies and blockchains: building trust with disintermediation. This is
one resolution in which EU’s opinion of distributed ledger technology became
clear empowering citizens to own data, democratize data, create transparency
and trust, reduce cyber attacks and grow the economy. Now is the crucial stage
of data ownership and right to internet privacy, regulators are unaware of
fixing data ownership and privacy rights and majority leaders do not seem to
care to correct it. Re-occurrence of interferences and issues will continue
making headlines, but only frequent investment in decentralized technologies
can the rights, data and yourself be protected.
Alibaba and tie up with world’s biggest player in online luxury
To meet the appetite of
Chinese buyers – world’s biggest luxury purchasers, for high end fashion Yoox
Net-a-Porter group (YNAP) – world’s largest online luxury retailer, has tied up
with online giant Alibaba and created a major partnership. It was Richemont –
big Swiss luxury conglomerate, which owns YNAP in addition to companies such as
Cartier, Chloe, IWC Schaffhausen, and Montblanc, that announced the joint
venture with Alibaba. The financial terms of the deal were however not
disclosed. The tie up has leveraged YNAP’s huge collection of luxury, around
950 of which is currently distributed in China, in addition to Alibaba’s
extensive logistics network. Next to be launched is mobile applications in
China for Net-a-Porter and Mr. Porter, the multi-brand, current-season channels
operated by YNAP. It was also revealed that technology infrastructure,
marketing, payments, logistics and other technology support will be provided by
Alibaba. To bring the same brand exclusivity and tailored shopping experience
of e-commerce world to customers as is provided in brick and mortar stores
Net-a-Porter and Mr. Porter will also open stores on the “Luxury Pavillion” –
introduced by Alibaba last year, on Tmall – its business-to-consumer site.
Additionally the companies are planning to start projects focused on serving
Chinese shoppers, both at home and travelling abroad. This tie up is considered
a victory for Alibaba as it partners with European luxury powerhouses while it
was accused of majoring in counterfeit product sales. It was YNAP that was
aggressively looking for a partner in China and was unsuccessful in its
previous venture in China. The benefit of both is quite visible: Each wants to
target the opportunity presented by China’s luxury shoppers. It has as
highlighted by Bain and Company, Chinese luxury spending accounts for 32% of
the global luxury spending, as per 2017 statistics, more than any other
country. Outcome is evident in the fact that luxury shoppers from China are now
shifting majority of their current spending happening out of China to back
home.
The luxury spending of Chinese
is expected to surge in the future as reported by consultants. As per McKinsey
– world’s leading consultancy firm, the luxury spending is set to grow to
around 44% of global luxury purchase by 2025. By 2025 7.6 million Chinese
households are likely to account for RMB 1 trillion in global luxury sales, a
figure double that of money spent in 2016 and equal to the luxury spending by
buyers of France, Italy, japan, UK and USA put together. Chinese millennials
are the key drivers behind this exponential growth. Just imagine their fantasy
to show-off their wealth for all to look at. Ironically the young Chinese are digital
savvy. The Digital channel and online retailers are slowly influencing the
digital savvy buyers to go online, although stores still account for majority
luxury sales. Good example is the figure recorded by Alibaba that accounts for
jump of about 46% of online sales on Tmall in last 12 months since June 2018
with the total of luxury shoppers accounting for 36% Chinese buyers. One
advantage offered by online retailers is reaching shoppers in smaller cities
where prominent luxury stores, except may be Prada with stores in more than 20
cities, are physically absent.
Real-Time
Transactions Equal to 6.1 Million: A Breakthrough for Milestone
One of the ways to grab the
top spot to create best decentralized public blockchain is to scale up in line
with the volume growth. There is an instance to be quoted wherein a blockchain
project achieved this, though only for a duration of 24 hours. Waves Platform
is that blockchain project, comprising of a digital ledger project and a public
decentralized exchange (DEX) that processed 6.1 million real-time transactions
in a stress test. As an advantage it was found that the network did not face any
disruption or delay while the stress test scaled up. Neither did any of the
transactions conducted by users for DEX orders, transfers, token creation, on
its system experience any slowdown. Based on the information provided by
Pywaves in the Waves blockchain a total of 108,741 transactions were observed,
with majority of transactions (about 60,933) being Mass Transfers which as per
Waves blog post are specialized capable of holding 100 transfers in one go. As
per the post overall there was a processing of 6,141,108 transfers with the
blockchain supporting hundreds of transactions per second during peak times.
Waves NG
There are
numerous projects in the crypto space that are trying to find a replacement to
usually slow transaction confirmation periods of Bitcoin, and one solution that
was proposed as result was Ethereum. However the attempt still posed problems
as Cryptokitties – a decentralized application launched on Ethereum’s
blockchain slowed the transactions launched on the network. To overcome the problem
Bitcoin has chosen third party solutions like Lightning Network to handle
scaled up transactions for the time being, Ethereum is relying on
test-and-implement approach by taking in answers from its community developers.
To achieve similar results that Waves have implemented a tech termed as Waves
NG that helps the grow the Waves Network by selecting miners in advance,
thereby maximizing the throughput while minimizing the latency. The protocol’s
deployment on the blockchain helped process top transactions as quoted by Sasha
Ivanov – CEO and co-founder of Waves. Additionally he claimed that the Bitcoin
is slow as it processes only few transactions per second. However Ethereum’s
speed is in faster with double-digit transactions per second, additionally other
blockchains have upgraded the speed incrementally in several ways. Waves has
implemented tech that enables a visible change in transaction volumes that is
applicable in the real world on MainNet in addition to that in a lab, a
phenomenon proved beyond doubt by these figures. It was observed by the Waves
post that other blockchain projects are limited to 2 million transactions per
day. Still there are partially decentralized blockchain projects that have a
speed of 5 million transactions per day. Regarding its placing a commentator
posted a graph from Blocktivity suggesting that Waves was behind five
blockchain projects in terms of transaction volume, however the figure later
was termed as “bogus” by one of the Waves followers.
_______________________________________________________________________________
About Blockchain
Blockchain has a potential to
grow a lot, yet with no clarity how it will be implemented even though there is
a fact that it has captured the thoughts of many technologists and
industrialists alike. The relatively new concept of blockchain has created queries
with many people as is the case with an individual who wishes to explore this
concept. The information enables answering the queries of technologists or
consultants.
Chiefly blockchain is a
framework for creating business-to-business workflows; essentially it’s a
decentralized database. This setup of database automatically synchronizes the
data across various system with each system receiving the copy of data. The
advantage of this interlinked distributed model is its ability to work even if
one node becomes faulty. There is transparency offered by the blockchain,
additionally it stores an irreversible log of transactions without the change
of facts. The security of the system is enhanced by the usage of cryptography
and consensus mechanism.
Advantage of This New Concept and Its Real-World Examples:
Blockchain is one concept with
an ability to be one source of real facts amongst entities that exchange
enormous data including data in logistics, invoices and the like, also
integrates separate entities. As an example blockchain enables tracking
multiple supplies in a continuous manner in supply chain and logistics. In
addition blockchain has a potential to retain records of all legal and
financial transactions that enforces relationship amongst parties automatically.
There is an exciting record of Walmart requiring its suppliers to leverage
blockchain. One incident of the past (of 2006), in USA of E. coli outbreak
sheds light on how industry took some time to track source of bacteria found in
spinach to a specific farm. The 26 affected states shunned selling spinach due
to outbreak resulting in huge loss of revenue and trust. The usage of
blockchain enables Walmart to trace source of food in seconds compared to day
or weeks. There are additional examples of usage of blockchain in the industry
including its usage by Kodak for digital rights, the tracking of seafood in the
supply chain as part of Intel’s Sawtooth project, diamonds tracking by
Everledger, event based automatic insurance payout by Etherisc, attempt by
healthcare companies to put patient records on blockchain, and international
money transfers, escrow or capital raising by leading fintech companies.
Cryptos And Its Potential Need In Blockchain:
Cryptocurrencies are different
entities but still strongly related to blockchains. Like blockchain
cryptocurrencies have a mechanism to store and exchange values. Cryptos serve a
dual purpose of being a replacement to fiat currencies while still being used
to store and exchange values. Cryptocurrencies are basically empowered by
blockchain. Strong example is that Bitcoin’s underlying protocol is a
blockchain, still it does not mean that blockchains have to be leveraged only
with cryptocurrencies.
Legal Challenges Presented by Blockchain:
United States is one country
where cryptocurrencies are treated as securities by SEC. The SEC registrations
at times forces one to evaluate the implications if a blockchain solution is
created that issues cryptos. Alternatively cryptocurrencies are treated as
property by the IRS. While trading cryptos it is must to pay income tax on any
appreciation of these assets by an individual. Lastly while creating a
consortium blockchain – allowing participation of competitors, one has to
ensure avoiding creation of an environment of collusion and price fixation.
Types of Blockchains:
It you look from the top there
are public blockchains including Bitcoin, Ethereum, and permissioned
blockchains including Hyperledger, Corda and many others. While public
blockchains are a type giving permission to all to participate, however
permissioned blockchains are intended for only few parties typically found in a
corporate environment.
Drawbacks Of Blockchains:
Bitcoin is one such technology
that is in its infancy and still evolving, as of 2018, Bitcoin – an actual
blockchain implementation, is only about ten years old, and other types i.e
Hyperledger and Ethereum have been there in existence since only last three
years. According to an expert the present state of blockchains roughly compare
to the state of internet of 1994 era. To sum it up it is a technology with
promise, however to be of complete value it needs to evolve.
Controlling A Blockchain Database, Checking What Is Visible To Whom:
Much of the activity to
control and manage a blockchain database is dependent on the type of blockchain
that is used. As an example, Ethereum is a public blockchain with access to
everyone on the network to view transactions. This is one such implementation
that is not suitable for most enterprise use cases because of its
characteristics. There are additional frameworks such as Hyperledger Fabric
that allow a much more refined level of authentication, as an instance Fabric
creates a notion of channels. Individual channel allows access to only limited
organizations to access data within the channel. There are notions of private
data collections within these channels that allow only limited organizations to
commit and query private data.
Summary
Aforementioned information is
intended to highlight the knowledge about blockchain and the way to implement
it. It is obvious from the information given that the technology has a strong
ability to impact both the businesses as well as the world at large. Since we
are in the early stage of adoption of this famous technology, only time will
highlight the significance of blockchain technology in the future.
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Enterprise Blockchain Interoperability Is Targeted By Accenture –
Consultancy Firm, With A Fresh Tool
Reference a press release of
October 22, there is a release of new blockchain tool focusing on
interoperability by Accenture – Global management consultancy firm, a release
second in a month. It was announced post supply chain partnership with
Thailand’s Siam Commercial Bank, by Accenture, that its latest offering
facilitated integration of existing blockchain systems with each other. As an
instance the blockchain platform Digital Asset can now work in tandem with R3’s
Corda platform, and Hyperledger Fabric and JPMorgan’s Quorum form another
interoperable pair. The company has already tested the two solutions and David
Treat – Company’s managing director and global blockchain lead, describes these
as “game change.” According to Treat the key challenge was to develop the
ability to integrate without introducing operational messaging between
distributed ledger technologies platforms in an effort to remain true to
principles and benefits of blockchain technology. The strength in application of this
capability is the unlocking of new opportunities to bring ecosystems together,
and putting an end to key concerns about picking a wrong platform or rebuilding
it if a partner uses something different. Essentially the four blockchain
platforms are able to see success in enterprise uptake worldwide, heading into
systems throughout various sectors of global economy. Corda, opted as a single
system by Accenture, was used as the basis for its so called procure-to-Pay
product, as part of its most recent deal in Thailand. Additional quote in this
week’s press release is by R3’s CTO Richard Gendal Brown who has been saying
since beginning that interoperability is key to avoiding trapped assets and
silos of the past.
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Warren Buffet Joined by Alibaba’s Ant Financial in Hot Brazil Fintech
IPO
Ant Financial – Alibaba’s
finance partner controlled by billionaire Jack Ma, joined Warren Buffet to
invest in Brazil’s booming financial-technology startup landscape, as it agreed
to buy stake in the Brazilian payments firm StoneCo Ltd as the company launches
its initial public offering.
Key Highlights:
·
StoneCo, having a model comparable to that of
Jack Dorsey’s Square, is expected to price its initial public offering next
Thursday.
o Offerings
by selling holders and potential underwriters’ sums up to 54.9 million in
shares, and could raise as much as $1.26 billion if it prices at the top of its
range.
·
Based on inputs of regulatory filing, Ant
Financial is likely to buy $100 million in StoneCo’s shares at the IPO price in
up to 30 days after the launch.
·
Berkshire Hathaway Inc. – Warren Buffet’s firm,
is also keen to invest and has shown a strong interest to purchase up to 14.2
million Class A shares.
·
There is another billionaire family in addition
to Warren Buffett and Jack Ma that has shown interest to increase its stake in
StoneCo. Madrone Capital Partners is another firm, backed by heirs to the
Walmart Inc. fortune that has indicated interest to augment its share holding
by adding additionally 2.4 million shares.
o 9.3%
is Madrone’s stake prior to the offering, equivalent to 6.21 million Class A
shares.
Additional Inputs
·
StoneCo is essentially following another
Brazilian payment firm PagSeguro Digital that launched a successful initial
offering this year, raising about $2.6 billion on New York Stock Exchange in
January, the biggest IPO at the time since Snap Inc. in 2016.
·
While Tencent Holdings Limited acquired a
marginal stake at Brazilian credit-card startup Nubank, it generated interest
in another Chinese giant to buy stake in Brazil’s Fintech landscape, earlier
this month.
·
The total
fintech firms in Brazil last year were estimated to be about 210 by Goldman
Sachs, a figure highest in Latin America and up from 54 calculated in the
beginning of 2015. It also estimated that firms are fighting for a revenue pool
of about $75 billion across banking and insurance markets in 10 years.
·
Other shareholders of StoneCo include
billionaire Jorge Paula Lehmann’s 3G Capital Inc., and Arminio Fraga – chief of
Brazil’s former central bank, who is selling a part of his stake in the
offering.
·
The nation’s presidential elections are headed
to a close next Sunday and the year is getting ready for Brazilian companies
seeking to sell shares for the first time. As an instance technology provider
Tivit and mid-sized bank BMG are two companies filing their intent to do an IPO
at the local exchange.
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‘Exodus’ – Blockchain Smartphone Launched by HTC with Flagship Specs
A decade after the launch of
its first ever Android phone, HTC a Taiwanese consumer electronics giant has
launched ‘Exodus’ – a blockchain powered smartphone. There is an official
announcement by HTC about early access release of Exodus1 – company’s first
ever blockchain phone. The phone is available for preorder on its website and
will ship sometime in early December and is available only using cryptocurrency,
specifically bitcoin and Ethereum. The phone has a configuration of 6-inch QHD+
display at an 18:9 aspect ratio, Snapdragon 845 processor with 6 GB of RAM and
128 GGB of internal storage. In addition Exodus1 also packs a 3,500mAH battery
with IP68 waterproof rating the features comparable to mainstream Android
flagships available in the market by Samsung, Google and other mainstream phone
makers. The device is being sold at 0.15 BTC or 4.78 ETH, a price of about $960
comparable to that of Samsung Galaxy Note 9 or the Google Pixel 3 XL. Launched
in early May as world’s first native blockchain phone with much publicity,
Exodus1 enables support for decentralized applications (DApps) such as
CryptoKitties and also works as a hardware wallet for cryptocurrency adopters.
HTC also explained that there
is a feature “secure enclave” – a locked area isolated from the rest of the
phone and the Android operating system, that holds the users’ private
cryptocurrency keys. Additionally there is a ‘Social Key Recovery’ mechanism
allowing the user to regain access to their crypto funds in the event of losing
one’s private keys by picking select trustworthy contacts. HTC is releasing
APIs for third-party developers in addition to inviting cryptographers to test
early access version of the device launched.
HTC’s decentralized chief Phil Chen clarified while speaking to CNBC
that for company blockchain is a new paradigm for smartphones and will form part
of HTC’s wider smartphone strategy. This highlights a change in HTC wherein the
focus of the company has increased on software and IP. There is preorder
availability of the phone in 34 countries including the USA, UK, Hong Kong,
Singapore and a number of European nations, with the exception of China that
has banned the cryptocurrency trading and exchanges. There is one competitor of
HTC Exodus so far with Swiss startup Sirin Labs expected to release its own
blockchain smartphone Finney priced at $1,000 and to be manufactured by iPhone
maker Foxconn, before the end of the year.
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Importance of Blockchain in the Mortgage Industry
$31 trillion is the estimated
worth of global residential mortgage market. The percentage of people having
mortgage on their house is close to 66% of all Americans, while it is about 70%
for UK and China. It is a fragment of the financial markets that hits close to home
for a large portion of the global population. Between 2% to 5% is what the
average mortgage costs would typically vary for the price of the property,
including broker fees, loan origination fees, underwriting fees, surveyor fees,
legal fees, and title fees. A buyer can expect to pay anything between %5,000
and 12,500 just to obtain a mortgage for a house of value $250,000. As a
perfect target for blockchain the mortgage process is heavily centralized and
permeated with middlemen who each add their own markup to the overall costs.
Based on a PWC report a blockchain technology may drastically alter the process
through consumers buy homes, in addition to handling of mortgages of financial
institutions. Essentially the technology could remove cost and friction from
the process, create infallible and incorruptible transaction records and hasten
near prompt settlement. According to Moody the annual cost-savings as a result
of blockchain based application processes could be as high as $1.7 billion and
ex-Barclays boss, Antony Jenkins, also believes that the time savings could be
equally significant. In short period of time one can grant mortgage in 10
minutes, one could also see credit being granted in two minutes. Question
arises about how realistic these claims are and where would blockchain actually
create an impact.
Typical Application Process of Mortgage
The present application
process is heavily paper-based, labor intensive, time-consuming, and expensive.
This has happened because of numerous third party service providers such as
surveyors, solicitors, credit agencies and title deed offices that provide an
input into the process. As part of property transaction between a buyer and a
seller the buyer is supposed to apply for a mortgage from its bank post providing
legal documents and consent for a credit report to be compiled by an external
credit reporting company, documents include bank statements, proof of income,
or any existing loan information. The bank also takes services of a surveyor to
carry out a preliminary property evaluation to find out expected loan amount. Post
receiving information from the buyer and third parties the bank can start the
credit approval process. Next step is confirmation of property ownership by
land registry offices as claimed by the seller. Final property valuation is
then requested by a surveyor to cross check the amount of credit approved by
the bank. Bank finally decides and notifies the buyer and solicitor making
arrangements to sign mortgage loan agreement and the deed. Upon signing the
documents the bank is given right to initiate the drawdown of funds and land
registry offices are informed to update title deeds. This overall application
process is of 30 to 60 days duration in USA.
Mortgage Application process and the Showstoppers
There are three primary
problems of customary mortgage process namely increased costs, extended
processing times, and lack of transparency. The latest transactions require
that credit agencies assess loan eligibility with inputs from third parties,
mortgage drawdowns be accurately calculated by underwriters, up to date
property valuations be provided by surveyors, legal documentation be drawn up
by lawyers, and ownership be confirmed and updated by title offices. All of
these functions require a heavy team of administration staff to deal with
physical paperwork. PWC’s report of 2015 states that a typical mortgage
application includes 500 pages, a volume that has increased in recent years
rather than going down. Still there is a report suggesting the application may
be of as much as 2000 pages. Every processing that the transaction goes through
adds 1% to 2% of the property’s value to its existing fees to the overall cost.
In addition to its fees the days taken to process the transaction also gets added
increasing the processing time leading to a long, drawn-out process. There is
also a lack of transparency over the required application documentation.
Separate entities hold bank accounts, title deeds, and the government records.
This information is used by bank personnel, brokers, and credit agencies and
other third party agents and is critical to the approval of a loan for a person
applying for mortgage. The information is collected in a manual process such as
sending an email request and even receiving the information by emails a few
days later.
Upon approval of mortgage
aforementioned information is updated with appropriate agencies with the title
deeds showing that property has changed hands, and bank keeping the record of
the mortgage against the name of the customer allowing credit agencies to
access the same in case of future loan applications. Again manual process is
used for the above as the information is passed along, moving from one ledger
to another. The manual process requires use of third party agents to confirm
the transactions; however this manual process – mostly paper based, is prone to
human error, leading to further delays and cost accumulation.
Application of Blockchain to The Mortgage process
Reliable information from
surveyors, law firms, and credit agencies helps to approve line of credit. If
every agent updates his part of the information on the distributed network
where it is securely stored, it will ensure that banks, without relying on
individual paper based communication on each of third party providers, are able
to retrieve various pieces of information as required from the network,
including digitized copies of legal documents, property valuations, and title
deeds.
Advantage of blockchain is in
creating a digital ID for each property, making it easy to be tracked on the
network. The digital ID created will help make real estate market more liquid,
purely from a mortgage application perspective, in addition to including a
chain of ownership and current market valuation, allowing banks to rapidly
verify the present ownership status or confirm the market price, eventually
removing the need to review title deeds or engage with surveyors. DLT could
even take it a step further by removing the need for certain mediators through
smart contract application. It is possible to pre-program smart contracts to
enable execution only upon completion of specific conditions like making it
possible for funds to be released to the seller upon digitally signing of the
mortgage documentation, approval of mortgage by borrowing bank and transfer of
funds to the seller’s bank. Major outcome is to make redundant certain roles of
costly lawyers in the mortgage application chain. According to Synechron,
digital business consulting and technology services provider, the resulting
cost savings can easily cross billions by virtue of removing these
intermediaries. A blockchain based system, upon getting automated and securing
the mortgage lending processes, will be able to coordinate and identify the
agents and intermediaries, and also reduce operational costs, fees, and fraud
for financial institutions. For a typical mortgage lender, there is an
estimated saving of $177 million on a loan book of $97.7 billion. There is a
strong belief amongst consultants about significant reduction of application
approval time. There is an expectation that blockchain technology will reduce
total transaction time throughout the mortgage value chain by 25 days,
essentially getting reduced from 40 to 30 days. In case of creation of a
blockchain based title registry by national governments this time is expected
to further fall by 25% , to 20 days.
Adoption Cases
Blockchain has been used by
leading banks like the Chinese State bank, Bank of Communications, to issue
digital mortgages worth $1.3 Billion in September 2018, while it was used by
the Agricultural Bank of China, world’s fourth largest bank, to issue a loan
worth around $300,000 for agricultural land on a blockchain network.
Additionally, blockchain platform called Masterchain, an Ethereum based
platform launched by Bank of Russia that ensures speedy and secure
communication between banks and financial institutions, allowing users to
quickly confirm the accuracy of customer data, was used by subsidiary of
Raiffeisen Bank International to issue a totally digital mortgage in
Russia. In another instance complete
mortgage document was published in a DDS (Decentralized depository system)
built on Masterchain, which was eventually verified by an electronic signature
sent to the state property registry for checking purposes. A Mortgage Token was
issued post checking and signing the documents that went into file storage with
the Bank. Another bank, the Bank of China Hong Kong (BOCHK) also uses
Blockchain to process 85% of its mortgage property valuations. Rocky Cheng, the
general manager of information technology of the bank, states that these
property valuations are needed to accurately calculate monthly mortgage
repayments. Blockchain enables one process to be completed in seconds for banks
and real estate appraisers where in the past there was a need to exchange faxes
and emails to produce and deliver physical certificates. There are numerous
startups that use blockchain to streamline the mortgage application process.
Moneycatcha offers two blockchain based solutions and uses blockchain to make
loan applications cheaper and faster. Another end-to-end blockchain solution
Homechain enables retrieving and verifying data fast and securely from
third-party data providers, including land offices and government agencies,
real-time risk monitoring in loan applications is achieved by Regchain. Ruth
Hatherley, a company founder explains that the availability of application
programming interface enables delivery of superior set of data, while also
regularly updating it resulting in giving an up-to-date, accurate view of
home-loan portfolio within 30 seconds to any institution. Another startup
desiring to increase transparency, streamline the deployment of capital, and
overcome geographical lending restrictions wants to use the new technology. Essentially
the requirement is to create marketplace of pre-vetted borrowers that can
eventually be accessed by lenders. Joe Markham, Block 66 CEO, states that there
is an ongoing development of new breed of mortgage lending platform that will
store government regulations, internal guidelines provided by lenders, and
information on applications and the property obtained directly from the source.
Other major startups using blockchain include Homeland that uses it to
crowdfund mortgages through a peer-to-peer platform, and the Viva Network using
similar concept.
Additional Challenges to Overcome Including Information Security and
Legal Frameworks
The primary challenge is
storing major personal and sensitive information on blockchain based mortgage
network. The integral security of blockchain is usually very strong but for
numerous third-party agents that plug into the network creating weak points.
Hence this makes information security a top priority requiring additional
effort to be put to ensure online security of customer data. Finally working
with regulators and complying with legal frameworks in various jurisdictions is
going to be another issue to be resolved it one wants to see blockchain based
mortgages truly going mainstream. It is rightly pointed out by Jay Clayton, SEC
chairman that replacing an old-styled corporate interest recorded in a central
ledger with that of an enterprise recorded through a blockchain entry on a
decentralized ledger may change the form of transaction without changing the
content. Essential meaning of what Clayton says is that certain laws and
regulations apply to a mortgage transaction, regardless of the fact whether
mortgage is issues through traditional channels or on top of a blockchain
network. Regulators will essentially require details such as title transfer or
electronic signature. Still there are questions about the possibility of smart
contracts being legally binding or not, and there is an additional requirement
of energy to be invested to find whether such concept is covered in existing
literature or whether there is a need to write new laws by countries to cover
blockchain and smart contract transactions.
Mortgage lending is not
something that only affects a few people, essentially a large proportion of
population may have to go through a mortgage application process at some point
of time. It is one process that is costly, time consuming and fraught with
complications, friction and opaqueness. An improving interest and desire of
considerable improvement is likely to show significant increase in investment
and use cases in the future. Since this is a process not likely to remove
traditional lenders but rather boost the systems is likely to further fuel
investment and development. Eric Piscini, principal, banking and technology
consulting at Deloitte points out that this might make banks more efficient
than removing them from the process. According to him it is likely that the
banks will be leaner as there would be reduction in strength of employees
managing processes. To sum it up it is wise to say that blockchain has the
potential to transform the mortgage industry and act as a use case benefitting
both the customer and the financial institutions, parties at either side of the
transaction.
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China’s Luxury Shoppers and Minimal Impact of Trade War on Them
USA has taxed around $250
billion worth of Chinese goods entering its borders with China retaliating with
extra levies on about $110 billion of imports from the USA. As per Pascal
Martin – from OC&C Strategy Consultants, luxury goods are least likely to
be impacted as part of the list of products to be affected by first two phases
of trade sanctions. According to OC&C Strategy Consultants China’s luxury
shoppers will also be minimally impacted by the ongoing trade spat between
Washington and Beijing. Pascal has also told CNBC’s “Squawk Box” that the
majority of impact will be indirect, with the overall Chinese economy and
capacity of luxury goods buyers getting affected by trade tariffs. According to
Martin if one looks at the current impact on luxury goods it is minimal as the
items are not included in the list of products taken by USA and China that are
affected by phase one and phase two of trade sanctions. President of USA Donald
Trump has even quoted that USA is “ready” to impose tariffs on all Chinese
products imported to the country, which may amount to $505 billion. According
to Martin the inclusion of luxury goods in the eventual phase three of tariff
increase may result in considerable impact. Currently the impact is really
minimal as goods are not affected by tariff increase. Main point to note is
that luxury shopping is a critical market in China, and the Asia’s largest
economy is likely to have most affluent households in the world by 2021 – as
per China luxury report of last year by McKinsey and Company.
McKinsey report further states
that luxury consumers in China account for over 500 billion yuan ($72 billion)
in annual spending, representing third of the global luxury market. Also the
luxury buyers account for 25% to 35% of all luxury sales across the globe with
most of the sales happening outside China as per OC&C Strategy Consultants.
The firm additionally highlights that the reducing gaps of prices of luxury
products between China and the rest of the world is pushing Chinese shoppers
back home with most of the growth happening online. Still there are rising
concerns about the ongoing trade war impacting the overall Chinese economic
outlook. The IMF – International Monetary Fund, highlights that the trade
pressures can end up removing 1.6 percentage points of the country’s growth
over a period of two years. On November 11 – widely known as “Singles Day”,
Chinese tech giant Alibaba holds the annual mega-shopping event, and this event
will be a true test of the health of Chinese consumption power, even though
luxury goods amount for very small proportion of the sales as per Martin.
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Blockchain to be used to Trace Electricity Generation by Spanish Renewable Energy operator
There is a news regarding
deployment of blockchain to trace electricity generation by Spanish renewable energy
company ACCIONA Energia – Global renewable energy operator. The company
produces emission-free energy for over 6 million homes and is recognized as one
of the largest renewable energy developers with greater than 9,000 MW owned and
installed. The project was started with ACCIONA’s agreement with FlexiDAO,
Barcelona-based startup offering software tools to electric power companies for
digital energy services. The move will help ACCIONA plan to allow its clients
to check the provenance of electricity distribution. Furthermore ACCIONA and
FlexiDAO are working together to develop a commercial demonstrator that will
track the supply chain of renewable electricity generation from five wind and
hydro facilities established in Spain to four corporate customers based in
Portugal.
The latest plan of the company
is to implement the technology in new areas which include the markets lacking
consolidated renewable energy certification system. According to Director of Innovation
at ACCIONA, Belen Linares, blockchain technology has potential to expedite this
service (tracing renewable origin of energy) for clients across the nook and
corner of this world.
Since some time now blockchain
is productively applied by energy and utility companies across the world to
their supply networks and operations. For instance, there is an announcement by
South Korean government to spend 4 billion won ($3.5 million) for establishing
a blockchain powered virtual power plan (VPP) in the city of Busan. VPP is a
cloud based distributed power plant that brings together the idle capacities of
various energy resources for optimization of power generation. Also, some time
back two energy divisions of Siemens – Tech giant from Germany, put together a
blockchain driven energy platform to stimulate the use of decentralized
technologies in the sector. There is a belief amongst Siemens officials the
blockchain technology will enhance interoperability in the region, connecting
the end users with energy producers and network operators.
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Just 37% “Economically Relevant” Bitcoin Addresses from 460 Million
Addresses
According to a recent report
by research company Chainalysis, only 37 percent for Bitcoin addresses in the
network are actually “economically relevant.” Chainalysis further states that
so far the Bitcoin blockchain forms a network of 460 million addresses able to
send and receive the coin. A person in addition to a legal entity can possess
multiple Bitcoin addresses. On the other hand addresses that are economically
relevant are controlled by individuals or services that also own Bitcoin and
constitute 37 percent (about 172 million) addresses, with only 27 million
addresses holding the cryptocurrency. Also out of the aforementioned 32 percent
addresses, 86 percent (about 147 million) are owned by a named service such as
an exchange or darknet market. Furthermore just about 20 percent of Bitcoin
transaction value is an actual economic transfer, while 80 percent if
purportedly “returned as change.”
Chainalysis further states
that from August till October 2018, there was execution of $41 billion worth of
transactions with only $9 billion giving true economic value. According to
Bloomberg when there was a market crash in the month of November it resulted in
increase in the amount of Bitcoin flowing to personal wallets. Bitcoin amount
crossed $400 million by November 1st, a rise from a figure which was
less than $300 million in the month of June. This clearly highlighted that
people were stocking up on Bitcoin due to reduced prices. Recent analysis by
Diar – a research firm, highlights that major institutional investors have
moved to higher liquidity over-the-counter (OTC) physical Bitcoin markets.
Crypto exchange Coinbase supposedly witnessed 20 percent increase in BTC trade
volume during OTC market hours in 2018, whereas Grayscale’s Bitcoin Investment
Trust saw a 35 percent drop in volumes compared to the same timeframe in 2017.
There was an earlier report which highlighted that bulk of the top 25 Bitcoin
trading pairs listed on CoinMarketCap (CMC) are supposedly based on false
volumes that are highly inflated. It was Blockchain Transparency Institute
(BTI) that calculated the true volume of those pairs and also found that over
80 percent of the CMC top 25 BTC pairs volume is wash traded.
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Blockchain Media Project Civil to be Launched Soon Overcoming Failure
of Token Sale
There is recent news that
Blockchain journalism project Civil will be launched in February, despite CVL
token sale failing earlier this year. Civil – based on blockchain, is projected
to develop new media ecosystem with the native CVL token which will reportedly
help partakers to attain financial sustainability and enhance trust in
journalism. Even though the CVL token sale hoping to achieve $8million minimum
was not successful earlier this year, still company announced the project
launch in early February. TechCrunch reported that 1,012 investors Civil raised
only $1,434,491 in CVL tokens while additional 1,738 buyers registered for the
sale never completed the transaction. Civil will soon also begin selling CVL
tokens again and that too without time limits or hard and soft caps. The tokens
are likely to be sold on recurring basis till the company sells all the 34
million tokens available for public allocation.
Additionally there is
likelihood of introduction of two tools by Civil – the Civil Registry and the
Civil Publisher. Civil Registry is an application allowing the newsroom to
pursuit to be a Civil newsroom with the self-governing community. Whereas Civil
Publisher allows Civil newsrooms to index verifiable data
about the publications to the
blockchain. According to company report 18 newsrooms have already partnered
with the organization and 50 more newsrooms are expected to join by February.
The goal is to add 1,000 small to midsize newsrooms across the world by 2020.
Earlier this year Civil had a content licensing tie up with the Associated
Press (AP) in August. The partnership will ensure that AP delivers its content,
including national and international news to Civil, enabling news agencies to
access it on the platform. A short time back At&T - American telecom giant,
also applied for a patent for a blockchain based social media history – “map”.
According to AT&T’s patent application the blockchain powered system may
include a transaction history controller to store subscriber’s data that can be
put to additional use. The documentation also highlights other particular cases
such as creating and sharing information, ideas, and career interests through
virtual communities and networks.
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Launch of Beta Version of Tool Stack by Parity to Build Blockchains
According to a latest press
release in December, Parity – UK based blockchain infrastructure provider, has
launched a beta version of substrate a tool for creating customized
blockchains. The tool is designed to render maximum technical freedom while
building blockchains. Additionally, multiple programming languages are
supported, enabling users to come up with own consensus mechanisms; also it is
compatible with other running algorithms of the time. Subsequent releases will
comprise of additional mechanisms which will be user friendly allowing users to
switch between different mechanisms without much effort. Currently the beta
version is licensed under General Public License (GNU) which will soon be
shifted to an Apache 2.0 license to avail optimum developer freedom.
Professional services will also be offered for businesses considering building
applications with Substrate. According to Gavin Wood –Parity’s founder and
Ethereum’s co-founder, Substrate has used all experience gained while building
Ethereum ecosystem and Polkadot – a protocol allowing users to link diverse
blockchain types. Web3 Summit, held in Berlin in October, was the platform used
by Wood to publicize Substrate launch and describing the characteristic of the
tool as a turning point to transition to a multi-chain world.
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Bloomberg: Development of Cryptocurrency
for Transfers in WhatsApp
Recently in December Bloomberg
came up with a report stating that Facebook is likely to come up with
cryptocurrency for users of widely used messaging application – WhatsApp. The
token generated will be supposedly used for money transfers made within the
application primarily focusing on remittances market in the country. Bloomberg
referred to reliable sources, conversant with the matter, stating the
development of Stablecoin by Facebook. The coin is not likely to be released
soon as per resources, as Facebook is yet to fully develop strategy for custody
assets – an asset to which stablecoin will be tied. India’s remittance market
is very important as identified by World Bank based on recent data; the country
received nearly $69 billion dollars in the year 2017, a significant figure
close to 2.8 percent of country’s GDP. Furthermore there is a huge demand for
WhatsApp in the country with over 200 million active users using the application
services. Most users that got added were from the rural parts of the country
with the number doubling last year due to reduced data and internet costs. Also
there has been a significant change in Facebook’s position towards
cryptocurrency over the last year. The social media network also banned crypto
advertisements since these were promoting financial products and services which
usually result in misleading or deceptive promotional practices. David Marcus –
head of WhatsApp, announced in May that a new exploratory team has been
established at Facebook. At that time Marcus was a board member at San
Francisco – based crypto exchange and wallet service Coinbase. Marcus
established a team groomed to optimally use blockchain across Facebook from
scratch. There was cancellation of crypto advertisement in late June by
Facebook while the company retained the ban on the promotion of Initial Coin
Offerings (ICO). There was a resignation offered by Marcus from Coinbase board
in August in the interest of the company. According to him it was appropriate
to put in his papers since there was a new group established at Facebook
centered around blockchain.
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Lay Off of up to 60 Percent Staff at ConsenSys
Verge – leading technology
news agency, reported in December that ConsenSys a blockchain software
technology company ConsenSys is likely to go in for major reductions of its
staff.
Verge’s report, based on sources
familiar with the matter, states that the company is now spinning out the
startups that it backed earlier, some of which were run without financial
assistance. This is the cause of major impact to the company’s workforce,
especially the internal incubator Consensys Labs. The likely lay off figure
could range between 50 percent and 60 percent of the current 1,200 person
workforce. Henceforth ConsenSys Lab is likely to undergo reorganization, will
stop operating as an incubator, and eventually operating as a traditional
investor. The report is released amid the company’s plans to streamline and
strengthen its business style at the time of increasingly “crowded” competitive
blockchain space. Joseph Lubin – company CEO, stated the requirement to retain
and regain the lean and gritty mindset of this mature organization. There is a
likely shifting of workforce from one project to another, but Lubin did not
rule out layoffs. ConsenSys is firm about the layoffs and is trying to ensure
the projects have a path forward whether internally as part of ConsenSys 2.0 or
as an external body.
The source states that Lubin’s
idea of world collapse is not true and there is a need to pivot the company
because it was created for a vision only where Ethereum would be $10,000. There
was a major crash of Ethereum (ETH) and other important cryptocurrencies in
November, with seminal cryptocurrency Bitcoin (BTC) dropping below $5,600 price
for the first time in the year 2018. As per Galaxy Digital – crypto investment
bank, short rallies like the one in progress is usual happening prior to a
“real rally.” The bank also stated that the recent “short” crypto rebound is
more stable than what people think, a statement furthered by upcoming
involvement in the industry by institutional players.
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US Federal Government: Puzzling Regulation for Crypto and Full
Clearance for Blockchain
The states of USA are likely
to compete for the title of being most crypto-friendly state. A recent levy of
imminent crypto tax payment in Ohio is an apt example. The federal authorities
are still trying to figure out a way to define and regulate digital assets.
Stakeholders, crypto buffs and academicians have together regretted the jumbled
federal policies. A leading Journal of Financial Transformation is likely to
publish an article by Carol Goforth – Professor at University of Arkansas, that
highlights an opinion summarizing the advises of experts. Additionally, Goforth
has observed at least four different federal regulators that manage numerous
characteristics of digital asset’s issuance, each highlighting different
interpretation of their nature. There is a different view from each of the
bodies with Commodity Futures Trading Commission (CFTC) treating crypto as
commodities, Securities and Exchange Commission (SEC) labelling these as
securities, Treasury Department’s Financial Crimes Enforcement Network (FinCEN)
refers to currency rules, and the internal Revenue Service (IRS) considering
digital currency as property.
Prof. Goforth is uncertain
about regulatory powers getting consolidated at the earliest and asks for
enhanced coordination between the agencies with an intention to introduce more
nuanced approach for different crypto assets. Real proposed solution is to
treat each asset individually based on its functionality and the users’
motivations. There has indeed been an instance of such change of heart in the
US regulators and policymakers as of late. In one scenario this early December,
there was a public request for input by CFTC seeking actual comments on
multiple aspects of how Ether and the Ethereum Network operate. The document,
will generate feedback giving impetus to the work of Commission’s Lab CFTC
initiative, includes list of 25 objects relevant to Ethereum’s purpose,
functionality, scalability, security, and the details of impending shift of
system to proof-of-stake consensus mechanism. The news disturbed the community
with no clarity of the outcome of regulator’s renewed interest in Ethereum’s
fundamentals. Experts like Mike Orcutt – observer of MIT Technology Review,
recommend a likely danger to the prospects of expected ETH futures due to the
development. CFTC’s likely attempt to rethink status of single asset might not
reflect the intense push towards a more nuanced approach. Other US based
regulators are yet to make similar moves with some signals indicating that
regulators are very much in line with good old catch-all approach. Very
recently Department of Treasury stressed the need for crypto industry players
to reinforce anti-money laundering (AML) and Combating the Financing of
Terrorism (CFT) infrastructure.
US Congress
There is an expectation of
creating a better regulatory framework by the Capitol Hill that has been
fulfilled by proposed bills by blockchain minded Congress members. As an
instance this December Darren Soto and Tedd Budd – Congress representatives,
announced two bills aimed at avoiding crypto price manipulation and fine-tuning
regulatory framework – The Virtual Currency Consumer Protection Act of 2018,
and the U.S. Virtual Currency Market and Regulatory Competitiveness Act of
2018. The acts have recommendations for CFTC that advocates the set of
regulatory changes. The First bill describes possible instances of price
manipulation in crypto markets with relevant corrections, and the second bill
advances a relative study of regulatory arrangements in other national
contexts, with an intention to enhance current deficient regulations likely to
inhibit innovation. Warren Davidson, representative from Ohio is another person
to further crypto legislation by announcing introduction of bipartisan bill
creating new asset class for tokens enabling feds to efficiently manage Initial
Coin Offerings (ICOs). Another announcement from him is for crowdfunding the
border wall between US and Mexico with the usage of blockchain and issuance of
‘wall coins.’
US Federal Government – The Executive and Focus on Non-Financial
Blockchain Applications
Various federal agencies not
concerned with monetary affairs are exploring uses of blockchain technology to
aid daily operations of regulators attempting to efficiently handle digital assets.
The agencies are also eyeing DLT-powered provenance tracing tools to enhance
food safety as supply chain logistics are unique non-financial blockchain
applications. The outbreak of E. coli – associated with California originated
romaine lettuce, made US Food and Drug Administration (FDA) to take frim steps
to improve tracking tools. Frank Yiannas – Walmart’s former food safety boss,
was hired as foods and veterinary medicine deputy commissioner, and is likely
to introduce blockchain powered tracking system to FDA – a system already
successfully tested at Walmart few months ago. Additionally, US Department of
Homeland Security (DHS) found two blockchain applications relevant for certain
activities. One is concerned with forensic analysis of transactions with
concern about potential of ‘privacy coins’ such as Monero and Zcash to help
criminals escape the level of scrutiny available for bitcoin transactions. The
DHS has also kicked off pre-solicitation process for bodies capable of
supplying solutions dealing in such blockchain implementations. The other
interesting matter is relevant to the licensing and certification activities of
the three subsidiaries: US Customs and Border Protection (CBP), US Citizenship
and Immigration Services (USCIS), and Transportation Security Administration
(TSA). To improve the documentation flow, the DHS desires startups to offer
blockchain powered solutions helping combat fraud, counterfeiting and digital
document forgery.
Defense services specifically
US Air Force Institute of Technology (AFIT) has also developed an application
to train armed forces to develop and run blockchain powered supply chain
solutions. Among major decisions likely to be learned is to identify incentive
structure best suited to a given task, or whether system should be permissioned
or permissionless. Defense Advanced Research Projects Agency (DARPA) – US
military’s research arm, is also exploring likely use of permissionless
distributed ledger. The agency is also seeking information on various blockchain
related topics, including security and centrality of distributed consensus protocols
to prepare for a workshop planned for February 2019.
_______________________________________________________________________
“Cryptobottom of 2018” as Stated by Ethereum Co-Founder
This December Joseph Lubin –
co founder of cryptocurrency Ethereum (ETH), claimed that he is “calling the
cryptobottom of 2018.” Lubin states that crypto market’s bottom is full of
fear, ambiguity, and suspicion, especially from industry media and social
commentators – referred as friends in the 4th and crypto-5th
estates. Specific focus of the Ethereum founder was on blockchain focused
software firm ConsenSys and he also clearly addressed the firms recently
announced major layoffs. ConsenSys is doing well and is engaged in rebalancing
of priorities and activities that began about 9 months ago. Also ConsensSys is
consistently investing in projects as a primary blockchain tech incubator and
an investment firm, hiring for internal projects specific its future business.
Lubin also expressed concern about huge amount of inference and anticipatory
fear concerning circumstances where journalists and bloggers do not have real
data for actual insight. Lubin is firm in his opinion about optimistic future
of ConsenSys and Ethereum and states that sky will not fall and future looks
positive, and while peaking into 2019 if one wishes to see landscape through
his eyes then shades would be required. There is latest news from reliable
sources that ConsenSys is spinning out startups it backed a while ago, some of
them without financial support. According to sources the number of employees to
be laid off could vary between 50% and 60% of 1,200 strong ConsenSys’s
workforce.
According to a recent news by
a leading daily, compared to significant layoffs in other global industries the
ongoing collapse of cryptocurrency markets and resulting job cuts in related
companies seem still relatively mild. There was a statement by Ethereum’s
another co-founder Vitalik Buterin who stated that there is little chance for
cryptocurrency and blockchain space to see any “1,000 times growth” in future.
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Coinbase’s CEO the First Crypto Entrepreneur to Join Buffet backed
Billionaire Charity Pledge
Brian Armstrong – Coinbase
CEO, is now the first crypto entrepreneur to join Warren Buffet founded charity
program – The Giving Pledge, as reported by CNBC this December. Giving Pledge
campaign was established by two famous industry moguls – Bill Gates and Warren
Buffet, in 2010 aiming to encourage the rich to donate major portion of their
assets to philanthropic causes, and includes about 180 pledgers with Armstrong
being the new face amongst the likes of Elon Musk, Ray Dalio, Bill Ackman and
Michael Bloomberg. By 2018 the campaign has been able to amass $365 billion of
total charity amount from donors from 22 countries. The campaign prominently
attracts billionaires without the members having any obligation to donate money
perforce according to Wikipedia. Armstrong in his pledge wrote that about ten
years ago he had a dream to establish a billion dollar Tech Company which has
now turned into a multi-billion dollar firm. He always admired those having a
goal to improve the world surpassing any goal to increase personal wealth.
Additionally he quotes that upon achieving certain income level there is hardly
an advantage of spending more on self.
Coinbase is currently ranked
as the 14th top crypto exchange by daily trading volumes and is now
major cryptocurrency trading platform and wallet in United States. As per
recent news the firm has carried largest crypto transfer on record with an
on-blockchain migration of close to $5 billion in value. Earlier this June
2018, Armstrong had publicized the launch of its own charitable program backed
by crypto community to provide assistance to inhabitants of globally emerging
markets. The philanthropic initiative helped people in need by providing
direct-cash transfers in crypto. Also very recently an Irish startup partnered
with the Irish Red Cross to develop new application using blockchain technology
improving transparency for charitable donations. Earlier Binance Charity
Foundation – a philanthropic division of top crypto exchange Binance, has
opened a new fundraising channel on its blockchain-based donation platform.
Also in December 21, Coinbase publicizes the expansion of its services to six
additional markets in the globe including countries such as Andorra, Gibraltar,
Guernsey, Island, the Isle of Man and Lithuania.
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Launch of Beta Version of Tool Stack by Parity to Build Blockchains
According to a press release
published this mid-December, UK based blockchain infrastructure provider Parity
has launched a beta version of substrate, a tool to create custom blockchains.
The article further states that Substrate is aptly designed to provide optimum
technical freedom while creating blockchains. Additionally there is a support available
for multiple programming languages and users are authorized to make own
consensus mechanisms with the substrate being compatible with most used
algorithms. Parity is also likely to add more widely accepted mechanisms in
subsequent releases of the tool, making the releases sell like hot cakes and
allowing users to explore using diverse mechanisms with ease. GNU – General
Public License, has licensed the current beta version of Substrate and soon the
tool’s repository will be moved to an Apache 2.0 license to enabling developers
to take ample leverage. Additionally true professional help is going to be
provided by Parity to certain organizations planning to build applications with
Substrate. According to Gavin Wood – Parity’s founder and co-founder of
Ethereum, Substrate has utilized entire knowledge accumulated while developing
the Ethereum ecosystem and Polkadot – another protocol allowing users to link
various forms of blockchains. The launch of Substrate was first announced by
Wood at a summit held in Berlin in October – named Web3 Summit. Also
highlighted was the quality of the tool as a “turning point” in achieving a
switch to a “multi-chain world.”
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New Money Transfer System Tackling Crypto Volatility While Making
International Payments
According to Atom Solutions
the current options to make overseas remittances are flawed for foreign
workers. The costs to complete transactions through a traditional bank are high
and there is presence of altogether different issues when crypto is used.
Extreme fluctuations from Bitcoin and Ethereum to lesser known altcoins in the
marketplace result in dramatic fall of remittance value in short span of time.
This means the fiat converted to crypto for remittance will be worth lot less
while converting it at the other end. As a solution firm has created Equivalent
Value Overseas Remittance System (EVOR). As per Atom Solutions this has the
worth to eliminate decades of shortcomings in this industry. As an instance
there may be somebody in USA trying to transmit money to someone in England.
The firm’s multicurrency wallet will enable the person buying crypto using US
dollars prior to transferring it to the person in England. This will arrive in
the local fiat currency eventually driving down the costs by alleviating the
risks associated with foreign exchange. The speed to transaction is crucial
factor in ensuring to preserve the value of remittance; additionally EVOR also
offers the lowest cost possible in the world in terms of fees.
A Suite of Financial Services
Atom solutions wishes to offer
a suite of financial services going beyond remittances making crypto even more
practical for everyday use. A new digital asset Eternal Coin (XEC) has been
created. The platform plans to play useful role in remittance process enabling
the people to lend XEC to other users as well on a peer-to-peer basis. There is
a potential to earn interest on loans by getting a share of transaction fee
paid by the borrower. As per Atom Solutions this concept of remittances is a
first implementation in the world. There is a likelihood of company’s products
in combination with multicurrency wallet and official exchange system bringing
in useful industry transformation.
Growth in Remittances
The urgent need of a reform in
remittance industry is based on result of World Bank data survey of remittances
to low and middle-income nations. The remittances hit a record high in 2017,
reaching a figure of $466 billion – 8.5% increase over a 12 month period. If
money remitted to high income nations is also added, the figure soars to $613
billion – 7% increase. Areas having received most remittances include India,
China, Philippines, Mexico, Nigeria and Egypt at the top of the list. As
remittances have been growing in 2018, based on World Bank data, and given the
importance of the amount transferred to recipients, the new concept is likely
to help provide more money without losing amount to exorbitant fees as per Atom
Solutions. The company is based in Tokyo and EVOR is likely to be soon launched
in March 2019. Also now the users are being asked to try EVOR simulator before
the launch of the new service.
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Roll Out of Blockchain Based Telemedicine, Telepsychology in East
Africa by United Nations
East Africa is likely to
receive basic healthcare services offered by UN Office on Drugs and Crime
(UNODC) in partnership with blockchain based telemedicine and telepsychology
firm doc.com – firm offering blockchain based 24/7 telemedicine and
telepsychology platforms allowing users to tokenize personal data and sell it
return for access to services. Amado Philip de Andres – Regional representative
for UNODC’s Regional Office for Easter Africa (ROEA) wrote in an officially
signed letter in December that organization is willing to cooperate in a new
partnership. The platforms are likely to be rolled out for African market by
second quarter of 2019 as per company reports. Till date the company has
provided services in 20 countries with the most recent office being opened in
USA. The data and healthcare service ecosystem of the company uses an
ERC20-compatible token also known as “MTC,” currently traded on various crypto
exchanges such as Singapore-based Coinbene and Kucoin.
As per company data, till date
over 130,000 users have used the company’s services and almost 70,000 have used
doc.com, “Emotions,” telepsychology platform. Doc.com also plans to expand its
reach and launch tokenized telemedicine service in the UK by March 2019, and
reach Asian market, starting with India by end of 2019. Additionally the
company plans to launch the in house mainnet by Q1 2019 in place of its current
Ethereum based ERC20 token system. There is also a plan to come up with a
subsidiary blockchain-based veterinary services system – doc pets, in USA by Q2
2019. Of late blockchain has been finding usage across healthcare and related
sectors that handle highly sensitive data. Genomics is another area where
numerous initiatives are leveraging the technology’s expertise to provide safe
and equitable means of monetizing and managing the circulation of current data
and incentivizing the generation.
Very recently US based
healthcare companies together ran a trial of blockchain solutions designed to
improve data integrity and security while reducing the costs, the latest of
worldwide developing series of same methodologies. UN as a true humanitarian
body is exploring multiple use cases for blockchain, starting with its use of
Ethereum blockchain to transfer cryptocurrency based coupons to refugees in
Syria, and exploring blockchain-based digital identity system designed to fight
child trafficking globally.
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New Blockchain Patent Revealed by Bank of
America that Targets Cash Handling
Based on recent December news,
Bank of America (BoA) wishes to patent a new system using blockchain technology
to improve cash handling. Previously highlighted in June 2017, the patent
references banking systems managed by data bearing records. Further the details
confirm that features of the disclosure relate to deploying, configuring, and
utilizing cash handling devices to bring about dynamic and flexible operating
functions. According to BOA there are visible communication hitches to managed
cash handling responsibilities across the banks’ large operations which could
be eased out with the help of blockchain. Additionally the patent write up
highlights that purchased cash handling devices may be used in operating
centers and other locations as well, providing numerous advantages including
facilitating both cash withdrawals and deposits. Main point to be noted is that
In various situations it will be difficult to integrate cash handling devices
with technical infrastructure supporting banking and other operations while
also optimizing the proficient and reliable technical operations of devices for
cash handling and various other associated computer systems. As a result BOA is
serious in its efforts to snag intellectual property in blockchain sphere over
the past 2 years. Early this November the bank had most such blockchain patents
– in reality more than 50, under the inquisitiveness to understand whether
these would be put to use as well in the coming time. BoA, while in favor of
blockchain, has embraced a highly risk-averse attitude on cryptocurrency. By
doing so BoA has now become one of the limited numbered institutions to enact
bans on related fiat purchases by customers earlier this year.
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Bitmain and Huobi the Crypto Industry Giants to Cut Down Employee
Strength
The 2018 price depletion of
crypto markets have resulted in a plan to reduce employee strength of
cryptocurrency mining giant Bitmain and leading crypto exchange Huobi. The
layoff report was published this December by Hong Kong based English daily
South China Morning Post (SCMP). SCMP states that Bitmain Technology,
dominating hardware manufacturing based in Beijing, has declared to undergo
major adjustment to the company employees this year – a statement that has been
prompted by Chinese social media coverage of imminent employee reduction
initiative in the company. There was a statement by Bitmain that to meet the
objective of building a robust business there has to be a focus to accomplish
important things core to the mission and not on secondary things. When there is
time to move from one year to the next the organization will continue to double
down to bring in the most talented employees from diverse backgrounds. The
actual number of layoffs has not been disclosed as yet, however the firm has
reportedly denied the organization is likely to lay off over half of its
employees, news first dispersed in Chinese social media.
Additionally there was recent
news by Chinese commentators that stated that Bitmain has laid off the entire
team of Bitcoin Cash (BCH) developers some of whom were just new joiners in the
team. Huobi group has also silently confirmed plans to boost the quality of its
workforce by achieving lay off of the underperforming employees. The company
that operates from Beijing and from Singapore based Huobi crypto exchange has
however highlighted that it is still committed to hire employees for its core
business and emerging markets. The exact figure of employees to be laid off is
not known at the moment, however as of June 2018 SCMP highlights that Bitmain’s
IPO filing shows full time employee strength of 2,594 – with 840 engineers, and
Huobi having a workforce of over one thousand. Additionally SCMP cites a
Bitmain employee (name withheld) who states that the layoffs are likely to
encompass various divisions of the company. The exact number of job cuts was
however not available.
Social media channel Maimai –
a social media platform for employees, that is more widely used compared to
Linkedin in China, has been used for getting updated news.
According to a commentator, if
Bitmain’s employees agree to leave the jobs themselves at the earliest, the
company will pay social security in January 2019, with a salary deadline of
January 10, 2019; also the employees will be compensated with 2 month’s salary.
There is another Maimai user “Downstairs” who claimed that Bitmain has 3,200
employees and likely 1,700 layoffs. Earlier this month Bitmain announced
closure of Israel based development center and layoff of local employees due to
downfall of crypto market in recent months. ConsenSys is another blockchain
software technology firm that is reportedly going in for significant reductions
of staff strengths, news reported just a week ago. Joseph Lubin – company CEO,
has shared letter recently highlighting the company’s plan to streamline the business
and make it more robust and make provisions to stay “lean and gritty” in a
competitive environment. In the midst of restructuring of businesses by major
industry players to face tough times, analysis by leading news site found that
blockchain development still remains the most sought after job in USA.
---------------------------------------------------------------------------
Blockchain Security and Risk Highlighted at 2019 Stanford Blockchain
Conference
The main focus of the third Stanford
Blockchain Conference at world famous Stanford University, USA, to be held
between January 30th and February 1st, is on Security and
“Systemic Risk,” as highlighted by organizers. The 3 day event at the
institution will ensure putting in lot of effort on discussions regarding
blockchain technology with presentations and discussions on variety of other
technical topics as well. The event is likely to be chaired by university
professors and is set to see inputs from multiple businesses focusing on cryptocurrency,
with contributions from famous names like Blockstream, ConsenSys and Polychain
Capital. Speakers are also likely to be represented from other leading business
houses such as Steller-focused startup Intersteller, and Chainspace – smart
contracts platform.
The conference that first took
place in the year 2017 is likely to fully explore the usage of formal methods,
empirical analysis and risk modelling to fully get a sense of safety, security
and systemic risk in blockchain protocols. There will be discussions about
additional interesting topics as well that will help understand the blockchain
and related technologies. According to the event organizers who wrote the
introduction to this year’s event the main theme is aimed at “multidisciplinary
collaboration.” The organizers aim to bring about multidisciplinary
collaboration amongst practitioners and researchers of blockchain protocols,
distributed systems, cryptography, computer security, and risk management.
There was a dedicated
blockchain research center that was inaugurated at Stanford University, earlier
this June that offers students a direct study of blockchain and related
technology. However by October there were numerous such center that mushroomed
with the Stanford establishment rumored to be one of several advanced centers
in USA that invest in crypto funds.
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Confirmation by Altcoin Bitcoin Private of Additional 2 Million Coins
Secretly Premined
According to an official
statement of this December the development team of Altcoin Bitcoin Private
(BTCP) has confirmed creation of 2.04 million units of BTCP proposed to exist on
blockchain. This December Coin Metrics – Digital assets analytics, brought out
a report highlighting that while importing Bitcoin (BTC) chain data, an
additional 2.04 million units of altcoin BTCP – approximately $3.9 million,
were secretly mined. According to the white paper the total supply of BTCP is
close to around 20.4 million coins with secretly premined BTCP bringing the
initial supply to 22.6 million total coins. Upon receipt of the report the BTCP
core team rapidly launched an investigation to ascertain whether the alleged
finding of additional BTCP coins is actually true. Post completion of the
internal audit the team officially confirmed that Coin Metrics’ findings were
actually mathematically accurate. Additionally the team stated that at the stated
time the source, purpose, and recipient of the exploit is currently not known
to the Bitcoin Private Contribution Team.
The team’s statement further
points out that the timeline of events regarding the issue unveils that there
was a bounty posted for a specific issue that was subsequently accepted by a developer
– becoming a BTCP developer, who was promoted to a contributor on GitHub,
allowing him to merge or pull requests. The developer than completed the issue,
brought together own code and received the reward. The BTCP team also found
that one missing line of the code enabled the fork mine to be fully exploited
as the nodes did not properly verified the falsified fork blocks. Upon
collecting the bounty the developer exited the BTCP project. It was only after
this that the threat actor supposedly exploited the bug in the code thereby
creating about 2.04 million coins during the publicized fork mine. In reality
as the code was open source and also information about fork mine was posted on
twitter, this enabled anyone having sufficient blockchain development knowledge
to exploit it.
The BTCP team also highlights
that it is not clear whether the coins that were premined were transferred to
an exchange or stored at some other place or got used elsewhere. The team
concludes that the particular exploitation of the code could only have been of
advantage during the fork mine that occurred earlier this year. Hence this
particular bug exploit is impossible to occur again, nor there is a likelihood
of additional exploitation to happen in future. According to the BTCP team
there was no prior knowhow of the incident before the Coin Metrics’ report got
published. BTCP team also states that it contacted major crypto exchange HitBTC
about the situation; however HitBTC is yet to respond about this. During this
news BTCP was trading at around $1.97, down close to 7% over the last 24 hours
from the report of this news, according to CoinMarketCap. Additionally there
was a report from Bitcoin Core post recent detection of vulnerability in the
software. The identified vulnerability could supposedly have caused a crash of
previous versions of Bitcoin Core if there was an attempt to process a block
transaction that tries to spend the same amount twice.
-------------------------------------------------------------------------
Achieving One Million User Addresses by TRON Within Six Months of
Launch
TRON (TRX) – a blockchain
protocol has passed 1 million user accounts as per this December news, and
executives are continuing with criticism of rival Ethereum (ETH). Misha Lederman
– Cofounder of cryptocurrency’s spin-off project IAmDecentralized.org, has
updated social media with statistics from the TRON blockchain confirming over
one million addresses that are now featured on the network. Additionally
Lederman, while commenting on the achieved landmark, highlighted that the speed
of increase of activity is also higher than that of ETH. Ethereum reached 1
million accounts on January 22nd, in 542 days or approximately 18 months
since Ethereums’ Mainnet launch, slower than what TRON achieved .Now developers
attempting to create decentralized applications (DApps), can use TRON – that
launched mainnet earlier this year, as a go-to ecosystem. Also Justin Sun –
TRON’s CEO and known for publicly chiding Ethereum TRON’s main rival, predicts
a slow collapse of the altcoin this week. Responses received so far highlight
the fact that the rival Ethereum built its user base when interest in
cryptocurrency was nominal compared with what is happening now.
There are other experts who
highlight that despite the growth; TRON’s $0.02 price tag is marginal compared
to high price tag of ETH/USD, which even after a 90% decline from an all-time
high tag maintained a value of around $73. TRON shows a strong daily growth
during the entire period of this week before a correction across cryptocurrency
markets ensured the token loosing 15% in 24 hours to press time. On the other
hand ETH dropped about 12.6% during the same period. Overall TRON has reached a
landmark and is likely to retain the top slot under given circumstances.
-----------------------------------------------
Blockchain to be “Biggest Threat” to Future of US National Security as
per Ex-CIA Official
Blockchain is supposed to be a
super powerful thing that has the potential to threaten America’s national
security, as stated by Andrew Bustamante – Former CIA intelligence officer.
Bustamante is an expert in espionage and specializes in publishing life-hacks
and he gave oblique statement in a subreddit thread in late December. He has
also been a veteran US Air Force officer and a Fortune 10 corporate advisor.
The topic of blockchain was brought up by Bustamante in response to a question
in a subreddit thread, on news site Reddit that highlights multiple sites, and
was dedicated to his “Everyday Espionage” – An integrated education and
training platform that provides training on international espionage strategies
for daily life benefits as per Bustamante.
Answering a query posted by
one Redditor about what is the likely biggest threat to USA’s national security
in the coming years, Bustamante gave possible replies like Russia, climate
change, Iran or North korea, in addition to quoting blockchain technology as a
super powerful threat. He is also the first one to figure out the possibility
to hack it, manipulate it or bring it down wins. There were no additional
elaboration of his remarks; however he did acknowledge another Redditor’s
response asking him for clarification in regard to blockchain compared to
progress in quantum computing, to which there was a fair response from
Bustamante. His explanation gave rise to a discussion of possibility that
quantum computing will always change the cryptographic protection that
reinforces blockchain, thereby specially attributing Bustamante’s “bring it
down” to an argument along this trail. There were few critics however who tried
to infer varied meanings based on little information shared by Bustamante in
his comments. As an instance one Reditor wrongly interpreted Bustamante’s
remarks as referring to a possibility of untraceable, anonymous transactions
happening due to blockchain and turning into an emerging threat to national
security posed by the technology.
Another pointed to a
prospective falsified data, which means more like hijacking blockchain for the
purposes of misinformation, which may likely become more malicious if stored in
an undisputable blockchain based system. Importantly to note that previously
when blockchain, geopolitical machinations and intelligence community made
joint headlines was during charging of 7 officers from Russia’s Main
Intelligence Directorate (GRU) with crypto-funded global hacking and related
misinformation operations early this October by US Department of Justice (DoJ).
Additionally DoJ also charged 12 people, in July earlier this year, from 2
units of the GRU for using crypto – either mined or obtained by fraudulent
means – to back efforts to make inroads into computer networks associated with
the Democratic Party, Hillary Clinton’s presidential election campaign and
other US elections related state boards and technology firms.
-------------------------------------------------------------------------------------------
Category “BITCOIN”
Regulatory
Difficulties Force Bitcoin ATM Producers to Move to Switzerland
A blog published on January 1st
reports that regulatory difficulties in other countries have made Bitcoin
automated teller machine (ATM) manufacturer Lamassu to move to Switzerland. The
rules are properly in place and the regulators are pro-innovation at Swiss
canton of Lucerne, attracting Lamassu – now called Lamassu Industries AG, to
move from its previous location. Lamassu also disclosed that its applications
to open an account were rejected by 15 banks since it only produces terminals
for Bitcoin without taking part in trading or storing digital currencies. In
addition the payment processor Stripe reportedly rejected Lamassu since it had
the word Bitcoin on its site.
Switzerland has a customer friendly
city of Zug famous for its blockchain development hub “Crypto Valley” and its
overall crypto-friendly approach making it a place of choice for Bitcoin based
industries. No wonder Zug got top rank amongst the fastest growing tech
community in Europe. Zug was top ranked when compared to year-on-year growth of
attendees to tech-related events for every European city. There was an overall
growth of 177 percent compared to the previous year. There are various
organizations that have relocated to more friendly places as a means of
regulatory arbitrage. In the middle of last year in May, BitBay – once largest
cryptocurrency exchange in Poland, chose to put an end to its activities in the
country as the banks refused to cooperate with the company. The exchange chose
its operations to be run by a new supplier in the Republic of Malta, having
more crypto-friendly local laws. In another instance later in June, Binance –
world’s largest crypto exchange, also relocated and set up a bank account in
Malta, stating that the opening of the account was a significant development.
The move was significant under the circumstance of receiving warnings from
Japanese regulators.
Other significant places having
crypto-friendly regulations and actively adjusting and creating legislation to
welcome blockchain and crypto projects, apart from Switzerland and Malta,
include Bermuda, Estonia and Liechtenstein. In July, Bermuda aggressively
amended the Banking Act in order to establish a completely new class of banks
capable of offering services to local leading fintech and blockchain
organizations.
----------------------------------------------------------------------
Category
“BITCOIN”
Major
Corrections Across the Board for Crypto Markets on Bitcoin’s 10th
Birthday
At the start of the year post some
positive vibes of growth the crypto markets have plummeted back into the red,
with most of the top 20 cryptocurrencies by market cap encountering losses
capped less than 6 percent. TRON (TRX) remains the only exception amongst the
top coins and is the strongest of the top 20 performers of the day, up just 1
percent. There is a positive response from the market with the launch of
TRON-based native token by renowned peer-to-peer torrent client BitTorrent.
This is also company’s first major move to tokenize its content sharing
ecosystem in about 6 months post acquisition by TRON in July 2018. Currently
TRX is ranked 10th largest cryptocurrency by market cap, and is
trading at around $0.02 – representing a resounding performance.
Bitcoin (BTC), 10 years after its
“genesis block” was mined, is currently trading at $3,830 and has seen only a
mild loss of just below 2 percent over the last 24 hours to press time. The
past week has been a little shaky with ample attempts being made by Bitcoin to
again go above $4,000 price point, but overcoming potential losses several
times, having seen a low of close to $3,600 near the start of its 7-day chart.
Nevertheless sharp trading patterns have brought Bitcoin on the top again that
week, with the top coin seeing 3.5 percent growth since late December. Over the
month, Bitcoin has seen even less change, down about 1.5 percent.
--------------------------------------------------------------------------------
Category
“ALTCOIN”
Allegations
of Freezing Accounts in Response to Proof of Keys Event have been Dismissed by
HitBTC
In the start of this year HitBTC – The
cryptocurrency exchange has refused to accept allegations by some of the
best-known figures of the industry, about purposely freezing user accounts.
Peter Swan – key member of exchange’s marketing team, has commented that there
is no connection between account freezes with Thursday’s ongoing Proof of Keys
event. Trace Mayer – organizer of Proof of Keys has openly stated after the
user complaints on social media that HitBTC is most likely purposely disabling
the withdrawals in response to the event. Eventually others also corroborated
Mayer’s statement including John McAfee – wallet manufacturer Bitfi and Tuur
Demeester – renowned entrepreneur.
Mayer’s Proof of keys event strongly
favors massive withdrawal of all funds from exchanges and other centralized
third parties. Based on the report the event was supposedly started to
encourage responsible use of decentralized cryptocurrency by users showing the
control of private keys owned by them. HitTC is yet to come up with any public
response to allegations; however Swen has been firm in his refusal to accept
any association between freezing of withdrawals and Proof of Keys, described as
“flashmob” by him. He further stated that withdrawal freezing is temporary and
is a safety measure, and is due to direct consequence of international KYC and
AML measures. These rules will continue and will be applicable to all concerned
24 hours a day and 365 days of the year. He also stated this as the main reason
of not shutting down any security tools or measures. This will be applicable on
regular days and on special days as well including events and flashmobs such as
January 3rd – Proof of Key Day.
Exchange officials were busy on
Twitter, trying to bring calm to the agitation shown by some users after the
suspicions became public. On January 2nd exchange even published a
message stating that an official statement also may be published immediately.
If looked practically HitBTC is at present the 14th largest crypto
exchange in the world by adjusted daily trade volumes, with over $208.9 million
in trades over the past 24 hours to press time.
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Category
“ALTCOIN”
Irish
Government’s Approved Anti-Money Laundering Bill is Affecting Cryptocurrency
According to Irish Times report of
January 3rd, the chief body of the government of Ireland, the
Cabinet has given a go ahead to a bill that would ensure effect to the European
Union’s (EU) Fifth Anti-Money Laundering (AML) Directive. The directive become
effective on July 9, 2018, and brings into effect a new legal framework for
European financial observers to regulate digital currencies and provide
protection against money laundering and terrorism financing. The directive is
likely to extend the scope to crypto platforms and wallet providers, end the
obscurity of bank and savings account, and bring amendment to information
exchange among authorities. EU member states are required to incorporate the
directive into their particular national laws by January 20, 2020. The Criminal
Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2019, in
addition to bringing EU directive in recognition, would strengthen existing
legislation, including the usage of virtual currencies for terrorist financing
and limiting the use of prepaid cards. According to Charlie Flanagan – Minister
of Justice Charlie, money laundering is a crime in reality enabling serious
criminals and terrorists to become operative, destroying lives in the process.
Criminals are there to exploit EU’s open borders, making EU-wide measures
vital. For him Ireland should strongly support the provisions in the fifth EU
money laundering directive.
The passage of new bill would require
financial institutions to bring in firm due diligence for new customers in
addition to getting stopped to open anonymous safe deposit boxes. Also the bill
will allow the Garda and the Criminal Assets Bureau to fully investigate bank
records while carrying out full investigations of money laundering. It was only
last month that the EU Blockchain Observatory and Forum created a case for
digital versions of national currencies on a blockchain, highlighting that by
doing so will ensure national currencies becoming integral parts of small
contracts. This would also bring forth the innovative feature of blockchain by
allowing parties to come up with automated agreements, including direct
transactions in these currencies in place of using a cryptocurrency as a
standby measure. In addition crypto-friendly fintech startup Revolut obtained
an EU banking license in December through the Bank of Lithuania. Now Revolut is
expected to give real current account and a non-prepaid debit card to its users
in UK, France, Germany and Poland. Additionally the users’ deposits area likely
to be covered up to $113,500 (Euro 100,000) under the European Deposit
Insurance Scheme.
---------------------------------------------------------------------------------
Category
“ALTCOIN”
TrueUSD
– Stablecoin Issuer, Gets Head of Compliance an Executive who Left Coinbase
This January 4th,
stablecoin issuer TrustToken got a head of compliance, a senior executive of
Coinbase – USA’s crypto exchange, who left the industry giant to join the
company. The senior executive named Vaishali Mehta – who served as senior
compliance manager at San-Francisco exchange, reportedly joined her new
employer in December 2018. Trust Token – new employer of Vaishali, is the
issuer of TrueUSD (TUSD), listed on top crypto exchange Binance last May. The
listing thus made is a relatively new entrant amidst the growth in number of
new stablecoins speculatively pegged 1:1 to the US dollar. The increasing
numbers of new stablecoins are striving to compete with firm market leader
Tether (USDT). Vaishali’s professional profile on linked highlights her past as
head of BSA/AML (Bank Secrecy Act/anti money laundering) risk and being part of
Deutsche Bank’s official premises in New York for a four year period, in
addition to compliance roles at Sumitomo Mitsui Trust Bank of Japan and ICICI
Bank of India branches in New York. Vaishali’s current move to Trust Token is
an evidence of increase in significance of stablecoin projects in the world of
cryptocurrency, there are other prominent Coinbase veterans as well who have
taken steps that equally measure wide-ranging changes in the domain.
In October last year there was another
prominent employee Adam White – Coinbase’s fifth-ever employee, also left the
exchange for an altogether new role at Intercontinental Exhange’s (ICE) Bakkt –
the upcoming digital assets platform. Adam further stated that he had a strong
belief that ICE’s new venture will potentially switch the cryptocurrency based
interest from the retail to institutional side. There was another switch this
November when Mike Lempres – past head of policy at Coinbase, also left the
exchange to work at Andreessen Horowitz – another pro-crypto investment giant.
Additional major crypto exchanges such as Huobi, Coinbase and OKEx, alongwith
Binance, have rapidly moved to list multiple fiat-collateralized stablecoins
such as USD Coin (USDC), Paxos (PAX), Gemini dollar (GUSD), and TUSD onto their
platforms. Research firm Diar in its analysis report released in December has
highlighted that entire stablecoins mentioned above had crossed the $5 billion
mark in on-chain transactions within the three months before the results got
published.
----------------------------------------------------
Category
“ALTCOIN”
Freezing
Accounts in Response to Proof of Keys Event by HitBTC was Dismissed as False
Allegation
In an email dated January 3rd
HitBTC – Crytrocurrency exchange, has clearly rejected the allegations by
industry’s prominent figures that there was a purposeful freezing of user
accounts by it. Peter Swen – prominent representative of exchange’s marketing
team, is straightforward in denying the link between freezing of accounts and
Thursday’s ongoing Proof of Keys event. Trace Mayer – organizer of Proof of
keys, on receiving multiple complaints on social media, publicly announced that
the exchange may be purposely disabling withdrawals in response to the event.
There were other prominent figures as well like John McAfee – Wallet
manufacturer Bitfi, and Tuur Demeester – An Entrepreneur, who joined Mayer in
his suspicions.
Mayer’s Proof of Keys event promotes
massive withdrawal of all funds from exchanges and other centralized parties.
Primary intent of the event was to encourage liable use of decentralized
cryptocurrency by users highlighting their grip of their own private keys.
There is no public response to the allegations by the exchange, while Swen
flatly refused to accept any link between the freezing of withdrawals and Proof
of Keys event, with the event being described as a “flashmob.” He further
quoted that the freezing of withdrawals is temporary and more to do with safety
and is direct consequence of international KYC and AML measures. These rules
are applicable to all 24 by 7 and 365 days a year. There is a purpose in not
turning off of any security tools or checks including on regular days or not so
special days with events and flashmobs such as Proof of Key Day (3rd
January) being part of it. The exchange officials were working on twitter to
counter the difficulty expressed by users post publicizing of suspicions. The
exchange gave a hint about publishing an official statement at the earliest as
per January 2nd message. HitBTC is at present the 14th
largest crypto exchange in the globe adjusted by daily trade volumes and is
witness to $208.9 million in trades over past 24 hours to press time.
----------------------------------------------------------------------
Category
“ETHEREUM”
Upcoming
Ethereum Constantinople Hard Fork to be supported by Huobi and OKEx
Based on latest press report soon the
leading cryptocurrency exchanges OKEs and Huobi Global are going to support the
Ethereum (ETH) Constantinople hard fork that is likely to occur between January
14th and January 18th. The Constantinople hard fork is an
upgrade that is likely to fundamentally change the Ethereum blockchain, with
the entire system undergoing synchronous nodes update. It also encloses
discrete Ethereum Improvement Proposals (EIPs) to tender the transition from
proof-of-work (PoW) to the more energy efficient proof-of-stake (PoS) consensus
algorithm. OKEx is likely to take a snapshot of entire OKEx accounts at the
block height 7,080,000, the figure that turned out to be a benchmark for
Ethereum core developer to launch the hard fork in early December last year.
The exchange also has a requirement that traders deposit entire ETH token as it
is likely to manage total technical requirements for the hard fork.
Huobi is also likely to support hard
fork. Just as OKEx, Huobi also guides its clients to deposit ETH to Huobi
Global to accurately manage any technical issues related to the hard fork. The
exchange expects the hard fork at block height 7,080,000. Ethereum was
traditionally designed as a platform for decentralized applications (DApps),
also 4 main upgrades have been lined up in its overall development to make the
network better suit this purpose. The final purpose of the Ethereum Foundation
is to follow the dream of Vitalik Buterin and move from a PoW to a PoS
protocol, thereby eventually addressing mining and scalability related issues.
When released, the improvements will definitely change the Ethereum blockchain
by virtue of multitude of new upgrades preventing any backward compatibility,
eventually resulting in nodes either updating synchronically with the whole
system or will keep working as a discrete blockchain entity. Now, Ethereum core
developers have reached an uncertain consensus to implement a new proof-of-work
(PoW) algorithm, “ProgPoW” which is likely to raise the efficiency of GPU-based
mining on the network. The devs were more inclined to roll out ProgPoW sometime
prior to the launch of Istanbul, that too as a stand-alone but system-wide
upgrade. The exact timing for ProgPoW however will be kept on discussing in the
next scheduled meeting to be held on January 18th.
---------------------------------------------------------
Category
“ETHEREUM”
ASIC-Resistant
PoW Algorithm is to be Chosen by Ethereum Core Devs
There is a new resolution by Ethereum
(ETH) core developers to go in for new proof-of-work (PoW) algorithm eventually
increasing the efficiency of GPU-based mining on the network, unlike
ASIC-based. This is based on January 4th meeting discussions. There
was a point highlighted by Hudson Jameson – a developer, during the meeting
that there was minimum opposition to implementation of “ProgPoW,” which has so
far been used in experiments via client implementations running on the
“Gangnam” testnet. As stated in the past, a testnet is virtually a replicated
version of the primary network that allows developers to go in for upgrades or
start smart contracts with no “gas” (computation fees) being paid for the execution.
Application Specific Integrated
Circuit (ASIC) chips are mining hardware devices especially built for efficient
mining of cryptocurrency based on a specific hashing algorithm. At this time
set-ups that use graphics processing units (GPUs) are not that specialized and
struggle to compete for rewards on the network with those that deploy ASICs.
There are couple of developers from ProgPoW team who gave information related
to the developments happening to algorithm’s specification to date that make it
harder for ASIC miners and have stabilized hashrates. Martin Holst Swende –
security lead, has stated that this algorithm ProgPoW is strong and resistant
to ASICs and to certain accelerators used for GPU-based setups, and that
shifting to ProgPoW would delay the level of ASICs on the network for at least
a year on the network, or perhaps more. In addition Swende highlighted that
Ethereum’s latest PoW algorithm, Ethash, has certain flaws that are being
looked at, making it significant to shift at the earliest to gain time to shift
to proof-of-stake.
After growing through the hybrid
PoS-PoW Casper protocol, it is expected that Ethereum will eventually
transition to PoS (Casper v2). In addition to sharding Ethereum is likely to
put an end to the massive energy consumption associated with PoW, issues with
identical approach to mining hardware, mining pool centralization, and making
available an on-chain scaling solution. The recent meeting of developers comes
just ahead of the prearranged implementation of Ethereum’s fifth upgrade across
the entire system, or hard fork also known as “Constantinople.” The developers
have inclined towards bringing forth ProgPoW sometime prior to the introduction
of the eventual planned hard fork, Istanbul, as a stand-alone but an upgrade
across the entire system. However, the actual time for ProgPoW will continue to
be discussed in the next meeting scheduled for developers on January 18th.
There was a recent post by Vitalik Buterin – Co founder of Ethereum, having
numerous comments about upcoming blockchains with sharding based on
proof-of-stake (PoS), and has highlighted that this will be many times more
efficient that the existing networks.
----------------------------------------------------------
Category
“ETHEREUM”
$5
Million Announced as Grant to Parity Technologies by Ethereum Foundation
According to Ethereum (ETH) blog dated
January 7th, $5 million have been granted to UK based company Parity
Technologies by Ethereum Foundation. The grant is focused for scalability,
usability and security work. The money granted is likely to fund Casper,
sharding, light clients, developer tools, QA, audits and infrastructure
improvement work. The funds are to be delivered in several tranches with start
supporting development that is already completed by Parity. Remaining funds
will be distributed when standard eWasm compatibility work is completed, a
light wallet for the mainnet and Phase 0 and Phase 1 of sharding getting
successfully completed.
Most renowned Ethereum clients have
been developed by Parity and it is known for this. Based on November 2017 news
there was mistaken giving of $280 million in ETH which is not reachable
employing the weakness present in underlying smart contracts by Ethereum’s
Parity multisignature wallet user. While during April in the previous year,
while the funds were worth $360 million, there was 7 days of voting resulting
in the reversal of this incident with 55% of participants not voting in favor
which ended up with funds left as it is. Then in October timeframe Parity
demoed a live blockchain launch that too in just 15 minutes on a brand new Mac,
which was tore out of its shrink wrappings by the founder of Parity as part of
the demonstration in an attempt to bring a focus on the speed of the entire
procedure of the platform launch.
-------------------------------------------------------
Category
“BLOCKCHAIN”
Lay
Off of Third of the Team of ShapeShift – A Swiss Crypto Exchange
Erik Voorhees – CEO ShapeShift a Swiss
based cryptocurrency exchange, publicized in a tweet dated January 8th
that the exchange has laid off a third of its team. The company blog post in
addition to the tweet – entitled “Overcoming ShapeShift’s Crypto Winter and the
Path Ahead”, highlighted 37 exchange employees getting laid off resulting in
approximately 3 times reduction of the team size. Voorhees reasoned that the
strength reduction is due to “latest bear market cycle,” highlighting that
exchange’s worst financial decision was to weather substantial exposure to
crypto assets. Voorhees is extremely apologetic to the people affected by this
decision of the company, and is optimistic in stating that crypto assets have
many values including enabling people to store value themselves and transfer
value directly to another individual present anywhere globally. He points out
this capability as wonderful and extraordinary.
There was an investigation result
published by Wall Street Journal (WSJ) in September last year that highlighted
illegal acquisition of $88.6 million funds reportedly funneled through 46
crypto exchanges with ShapeShift transferring $9 million. The indirect
accusations were later disproved by Voorhees and he stated that the team had
worked with WSJ journalist for 5 months, but under simulated impressions, as
information provided by ShapeShift was supposedly either deleted or wrongly
represented. There were also rumors about layoff of employees at ConsenSys –
Ethereum blockchain focused software development company. A trusted source
stated that the strength of employees to be laid off could lie between 50% and
60% of ConsenSys’ 1,200 strong workforce. There was a tweet by Joseph Lubin –
founder ConsenSys, that the even after reported cutting of employee strength
the company has retained its health and is enthusiastically engaged in
balancing the priorities and functions initiated about 9 months back. In
addition there was a statement by Lubin about additional employee hiring for
internal projects that are a crux of the company’s long term growth plan.
------------------------------------------------------------
Category
“BLOCKCHAIN”
Patent
Received for ‘Crypto Integration Platform’ by Overstock’s tZERO
tZERO is a cryptocurrency subsidiary
of ecommerce giant Overstock.com, and is ready to trade digital assets by
virtue of filed patent for a crypto integration platform. The patent was
published on January 1st by USA’s Patent and Trademark Office. There
is introduction of a robust system post patent filing in which there is ease in
receiving orders to trade digital transaction items such as securities, tokens,
digital shares, cash equivalents and digital assets, from broker-dealers that
eventually can get converted into crypto orders on a digital exchange. The
platform reportedly combines huge market data from different cryptocurrency
exchanges and points to the best price in the crypto market for the digital
asset or a problem part of the transaction. Prior to matching the orders the
system reportedly ensures safety of digital transaction assets to be traded and
cryptographically puts signature on the transactions. Eventually the system
confirms availability of funds and digital assets and finally completes the
transaction.
The platform is virtually a link
between legacy trading systems and crypto exchanges. The Crypto Integration
Platform acts as an interface between legacy trading systems and crypto
exchanges that are involved in trading digital transactional items. To achieve
this, platform takes a protocol for trading and communication between
broker-dealers, Alternative Trading Systems (ATS), and exchanges and transforms
the message to ensure completion of trade using cryptographic techniques.
Blockchain technology is used by platform to confirm ownership and availability
of digital transactional items. Additionally the platform can be used to carry
out initial public offerings and various other offerings of securities that are
registered under USA’s Securities and Exchange Commission (SEC), and by the
normal population to trade those securities in secondary market transactions.
Based on news published in December
last year, there was a contract by private equity firm GSR Capital wherein
tZERO was to develop a smart contract token for sale of cobalt – expected to be
launched in 2019. Also there was an announcement by giant Overstock that it
will pay some of its business taxes in the state of Ohio using Bitcoin (BTC)
through OhioCrypto.com – a cryptocurrency taxpayer platform. Patrick Byrne –
CEO and founder of the company, announced that this move is right way to ensure
that USA does not lose the place at the forefront of the ever advancing global
economy.
--------------------------------------------------------
Category
“BLOCKCHAIN”
$1
Million Seen in Content Licensing Claims by KodakOne Blockchain Beta Test
According to January 8th
news by Breaker mag, a blockchain news source, the creator of blockchain based
image rights platform licensed by photographic industry giant Kodak named
KodakOne has virtually amassed over $1 million in licensing claims for image
rights during beta test of its platform. KodakOne’s Image Rights Management
Platform is a platform that ensures monetization, distribution and image
copyright protection secured via blockchain. Eastman Kodak itself is not
running the project but the industry giant has made RYDE Holding (earlier Wenn
Digital) an official brand licensee. During the first announcement of
partnership between Kodak and RYDE Holding the company’s stocks skyrocketed to
a high of $13.25, with the people being critical of the move and stating it as
an attempt to leverage ICO and blockchain hype. RYDE along with ICOx
Innovations has managed the design and development of the KodakONE platform and
the KodakCoin token – An ERC-20 token, also using components of the Steller
blockchain as middleware. A hybrid blockchain infrastructure is used along with
Ethereum, Steller and Hyperledger technology by KodakOne platform.
Last October, beta Post-Licensing
Portal (PLP) was launched by KodakOne, a portal that uses intelligent web
crawler and image recognition technology empowering rights holders to track
images and rights infringements. In an effort to convert infringers into lawful
customers the platform allows rights holders to license image usage
retroactively. In addition the Artificial Intelligence (AI) technology enriches
image data and can forecast licensing value based on similar registered images.
kodakOne is likely to get approximately $400,000 of the $1 million in revenue
generated during the PLP beta, as highlighted by Cam Chell – KodakOne
co-founder. In the coming time the platform is likely to integrate the
KodakCoin token as well for instant license settlement in addition to deploying
smart contracts for license management at scale. Cam Chell also stated to
Breaker Mag that within the existing photographic industry, even professionals
are also just making enough effort to collect licensing fees from only 20% of
the market because of massive costs of managing it manually. There is a plan to
monetize the remaining 80% by the platform by leveraging the granular
automation provided by smart contracts and blockchain. According to the news
KodakChain used an instrument Simple Agreement for Future Tokens (SAFT) that
limits sale to accredited investors, to get registered with USA’s Securities
and Exchange Commission (SEC).
----------------------------------------------------------------
Category
“BITCOIN”
Soaring
of GMO Internet’s Crypto Mining Rewards In Spite of Revenue Losses
GMO Internet Group – A Japanese IT
giant, has reported based on most recent monthly disclosure about its in-house
crypto mining operations, thereby confirming its steep hit in the total mining
revenue. GMO publicized the news on widely used document on January 8th,
and disclosed the increase in its monthly Bitcoin mining rewards. GMO’s overall
losses for Q4 2018 were $320 million (35.5 billion yen), and its unconsolidated
loss was around $334.5 million (38 billion yen). The company has eventually
decided to continue with its in-house mining operations and to shut down its
hardware manufacturing business. The in-house mining operations will reportedly
undergo restructuring and the GMO’s mining center is also likely to be
relocated to a place with cost-effective power supply.
Even though the total revenue from the
mining business of the company has nosedived, the Bitcoin mining reward of the
company has been satisfactorily increasing over a period of time. It increased
from just 21 BTC in December 2017 to 528 BTC in June 2018 to eventually close
at 960 BTC this December 2018. The company clarifies that the mining share rose
with an expansion of mining reward due to total hash rate reduction of the
market. GMO also brings forth the harsh rate, calculated as PH/s, with one PH/s
indicating the amount of calculation as 1 peta (1,000 trillion) times per
second. The hash rate recorded in December 2017 was 22PH/s which increased to
384 PH/s by June 2018 timeframe and further increasing in December 2018 to 670
PH/s. The continuity of increase is now gone static for past few months,
hovering between 674 PH/s in October to 668 PH/s in November and 670 PH/s in
December.
GMO states that the rise in hash rate
in reality does not lead to overall rise of mining rewards, since the profitability
wavers for the currency pair, also an algorithm is deciding factor for
distribution of hash rate. The company also provides complete information on
mining rewards and the hash rate for various different cryptocurrency it mines
the Bitcoin Cash (BCH), which was reportedly never mined in December 2018.
Particularly for BCH there has been massive fluctuation of mining rewards with
BCH wavering from 213 BCH in December 2017 to 62 BCH in June 2018, eventually
rising to 875 BCH in October before finally dropping to 400 BCH in November.
Similarly the BCH rate has also increased and dropped and again increased over
a period of time. Very recently there has been an announcement by GMO about
avoiding sharing monthly reports in the year 2019 about crypto mining business
and will only show the results with the quarterly earnings reports. GMO
remarkably brought forward its historical performance in November last year of
all of its cryptocurrency projects of Q3 2018 including mining hardware sales.
Overall total of profit was quoted as $22.8 million (about 2.6 billion yen).
There are additional prominent mining
industry players which are also feeling the burden of 2018 crypto bear market,
with Bitmain also shutting down its operations in Israel last December, with
repeated reports highlighting impending layoffs in the company.
--------------------------------------------------------
Category
“ETHEREUM”
One
Report Findings – Users’ Private Keys Appropriated by Two Alleged Ethereum
‘Scam Forks’
The private keys of some users are
getting appropriated by Altcoins Ethereum Nowa (ETN) and Ethereum Classic
Vision (ETCV) that are also trying to redeem their alleged forked coins. This
alleged scam was incorporated in a news report by Guarda Wallet Development
team on January 11th. ETN project that has no white paper, describes
the procedure to be used by users to get ETN on the official website. The
detailed procedure requires the user to first send ETH to an address and then
export the private key eventually redeeming the cryptocurrency using a specific
online tool. Etherscan is an Ethereum block explorer whose user has made
comments on the above address, highlighting that the referred address is using
‘scam fork’ even though there is a warning about not sending anything there.
The tool claiming the coins seems to be a duplicate of highly known online
wallet named Ethereum (ETH).
There is another wallet MyEhterWallet
(MEW) that features website title, authentic logo and a page under a different
domain. Compared to original MEW interface all options allowing user to choose
methodology to access wallet is not accessible and only place available to be
accessed is to put in the private key. There are certain browsers available
that will mark the tool as misleading site. The private key is both getting
processed by the tool and is sent to remote server, as highlighted by the
Guarda Wallet team. Furthermore Guarda Wallet team highlights that Ethereum
Nowa gives an easy access to thieves to break into the private information and
penetrate the wallet. According to the project’s white paper Ethereum Classic
Vision’s hard fork will happen on January 11th. There is additional
downloadable Windows and Linux wallet by the side of a web tool as stated by
website. Whatever ETH is held by legal wallet one’s ETCV is first sent to the
official Ethereum Classic Vision wallet. When the negotiation is in progress
with popular wallets, at the moment of the fork it is not likely to send ETCV
to those wallets because of specific differences in the algorithms used.
There was a crux found by Guarda
Wallet that during the time the project got depicted as more solid than ETN,
post deep examination, it was reportedly found that the ETCV team also
appropriated the users of private keys. The code analysis performed by the team
highlights that the part of code available actually sends the private key data
onto Ethereum Classic Vision servers labelling this as an API token. According
to very recent news a Maltese actor and couple of hosts of a famous TV show
have brought to the notice of police post fake news indication of an
involvement in a Bitcoin investment scheme named as Bitcoin Revolution. There
was news the same day highlighting that the Twitter account belonging to a
Belgian non-profit got hacked and cracked into Coinbase – a fake associative
account of United States crypto exchange.
----------------------------------------------------------------------
Category
“ETHEREUM”
According
to a Startup ‘Ethereum’ Gets Blacklisted as a Google Ad Keyword by Google
Based on a January 10th
tweet by Decenter – a smart contract auditing startup, Google on its
advertising platform Google Ads has blacklisted keywords highlighting Ethereum
(ETH). According to reply to the tweet by official Google Ads there is a
likelihood of advertising cryptocurrency exchanges targeting the USA and Japan
on the platform, while other countries getting targeted may be likely cause of
ad getting rejected. There was an explanation by the startup about them being a
group of developers doing smart contract security audits and encountered error
messages while attempting to use couple of keywords “Ethereum development
services” and “Ethereum security audits”, there was an explanation by Google
Ads’ officials that there may not be a chance to confirm eligibility of
keywords to trigger ads, and they would recommend to refer to
‘Cryptocurrencies’ section of their policy on Financial products and services
to get solution.
After Ethereum community was asked by
Decenter on Reddit in a public question about alleged changes in Ads policy of
Google, the team stated that all keywords containing “ethereum” in their
campaigns are not showing ads as of Jauary 9th, and are throwing an
error. The startup’s Reddit explanation went on to explain about testing
keywords for “ethereum smart contract audits” and “eos smart contract audits”
to find that ads was shown only by EOS-referenced keyword. There is a criticism
regarding Google showing up as a neutral third party by Reddit’s post that
further states that there are numerous political and economic agendas of
Google, and there is a willingness to leverage the services for preference
promotion. AdSense and youtube are tow tools infamous for above, however there
are certain incidents regarding the play store as well.
Based on a 2018’s report published in
March, Google had banned all cryptocurrency-related advertising of any type in
June 2018 itself – as per recent update to its policies of Financial Services.
There was another announcement from Google about changing the ad policy in
October that will again allow some crypto businesses to advertise on its
platform – news published in September 2018. Specifically the recommended
changes were likely to allow cryptocurrency exchanges ads in USA and Japan.
According to a very recent news, Bitcoin (BTC) provider Samourai Wallet is
expected to disable few of its security features to be able to keep supplying
its software on Google’s Play store.
-----------------------------
Category
“BITCOIN”
Crypto
Exchange’s US Partner of Crypto Gets Rebranded as Huobi
China-originated crypto exchange
Huobi’s USA based strategic partner – HBUS, has publicized the renaming of its
retail trading service from HBUS.com to Huobi.com. The news regarding
rebranding was dated January 11th. In June, 2018 HBUS got launched
in strategic tie-up with Huobi group – managing the flagship Global crypto
exchange, via “HBUS Holdco, Inc.” freshly formed San Francisco based company.
HBUS Holdco Inc. is likely to continue to operate the platform even after the
name is altered. Based on latest licensing tie-up huobi.com will be the new
domain name of HBUS.com; however hbg.com will remain to be operated as such for
Huobi Global. HBUS is likely to get advantage of raised level of technological
backing from Huobi Global in addition to getting renamed to Huobi brand name.
This is reportedly being undertaken to achieve stability and security features
in addition to getting access to current market makers.
Huobi Group has its origin in 2013 and
continues to be based out of Singapore since September 2017 when China went
with a crackdown on domestic crypto-fiat exchanges. The company came out with a
news in January 2018 regarding plan to open an office in San Francisco, and
later after announcing HBUS in June 2018, there was an eventual go-live in July
2018 by the partner trading service based in USA. HBUS also went ahead to start
an API headed towards experienced traders in an attempt to get into race with
prominent USA based crypto trading services like Coinbase and Robinhood. Later
HBUS also brought on board latest talent from the market for its professional
corporate development and compliance work. Huobi group – with subsidiaries
gathering an overall turnover of more than $1 trillion, during the year gone by
has been aggressive in expanding overseas, while starting a subsidiary in South
Korea in April to add to its running operations in Japan and Hong Kong. The
crypto exchange also launched a crypto trading platform in Australia, started
an office in London, and initiated to manage stock interest in a listed firm by
Hong Kong Stock Exchange, in addition to BitTrade – Japanese FSA-licensed
crypto exchange.
There was news regarding potential
employee lay off by Huobi and Bitmain – cryptocurrency giant, dated December
2018. As per Huobi Global there was a plan for staff optimization by reducing
the employee strength and ensure underperforming employees are not part of the
organization any more. Blockchain Transparency Institute (BTI) had researchers
that produced a report in December 2018 that associated Huobi and another similar
exchange HitBTC in reportedly wash trading actions that artificially inflated
volumes – even though the proof for both referenced exchanges turned out to be
of minor importance than that OKEx the competing exchange. Huobi is at the
moment rated as fourth biggest crypto exchange on CoinMarketCap by adjusted
traded volumes, with around $519 million in trades over 24 hours prior to press
time. However HBUS is placed at 170th rank, with about $65,100
traded during the same timeframe.
------------------------------------------------------------------
Category
“BITCOIN”
Potential
Legalization Of Cryptocurrency Still Undecided By Malaysian Government
Based on January 12th news
from New Straits Times, Malaysian government is still not sure about legalizing
cryptocurrencies. Khalid Abdul Samad – federal territories minister in
Malaysia, stated while addressing query about whether digital currencies are
currently legal or illegal that the current situation is still not clear hence
it is undecided. He further stated that during launching of Harapan Coin (HRP)
– a proposed political cryptocurrency, he was not a finance minister with the
matter not falling under his day to day affairs; still he was actively involved
in the launch. As per December 2018 news, there was a joint statement issued by
finance regulator and central bank of Malaysia with a confirmation about
bringing up ruling on cryptocurrency and initial coin offering (ICO) assets.
During his past tenure Samad had
reportedly recommended to Bank Negara Malaysia and Tun Dr Mahathir Mohamad –
the prime minister, about making use of Harapan Coin – digital currency, for
government transactions. Also based on November 2018 news one Member of
Parliament of Malaysia had requested apt implementation of cryptocurrency
regulations by the government before going in for the Harapan Coin
cryptocurrency project. In a subsequent thorough analysis in December 2018
there was an explanation that nearly 30 percent of the resources collected for
the project were to be directed to system’s administrators, who are not known
as of now.
------------------------------------------------------------------
Category “ALTCOIN”
Security
Report Gives 16% of Major Crypto Exchanges A or A- Rating, None Gets A+
Independent experts and analysts at
ICORating has come up with an Exchange Security Report that has given A rating
to 16 percent of world’s biggest crypto trading platforms with none of them
scoring A+. According to the widely read report created in December 2018, the
rank of top three most secure exchanges globally has been bagged by Kraken (A
rating), Cobinhood (A rating) and Poloniex (A- rating). In total 135 crypto
trading platforms were assessed by ICORating with a criteria that the daily
trade value of these platform surpasses $100,000, and four security categories
are assessed namely user account security, registrar and domain security, web
security and DoS attack protection. A+ rating was scored by none of the
assessed exchanges with only two exchanges – approximately 1.5%, receiving A
rating, and 16% lying between A or A- rating. 55% of exchanges got rating
between B+ and B-, and the remaining exchanges got rated C+, C, or C-.
The four categories considered for
evaluation purposes were further broken down into other concrete testing
factors. Main intent to assess four criteria – including password and two
factor authentication, was user security factor, and the assessment showed only
22% actually meet the criteria chosen for assessment. For the registrar and
domain security factor – which includes a six-month expiration period for high
worth domains and registry lock usage, there were only 3% exchanges that met
all four parameters. Web security was analyzed on the basis of 10 factors –
including safety from clickjacking attacks, man-in-the-middle (MITM) attacks
and HSTS header presence, presented more irregular picture. In addition the
analysis highlights that all considered exchanges were protected from MITM
attacks, POODLE (attack exploiting browsers’ limitation of encryption handling)
and Heartbleed attacks – attack entailing a leak of memory contents from server
to client and vice versa. In the meantime 37% were reported to be using an HSTS
header, with 60% providing protection against clickjacking. Most prominently
about 74% of exchanges fell in the category of safety from Denial-of-Service
(DoS)attacks – these exchanges being more widespread.
Coinbase Pro exchange was rated A-
according to ICORating’s assessment. Crypto derivatives platform BitMEX and
Bitfinex were ranked fourth with A- rating and HitBTC being at 13th
place again with A- rating. Surprisingly the world’s largest exchange by daily
trade volumes – Binance, was placed at 34th place with B+ rating.
Amongst other prominent exchanges Winklevoss twins’ Gemini was ranked 84th
with B- rating and Huobi was placed at 95th again with B-
rating. Based on the latest report of
the current week Cryptopia a leading New Zealand based crypto exchange, got
ranked 60th with B rating, has suspended the services stating a
major hack detection as the main reason that resulted in huge losses. The
incident is currently under investigation by police.
----------------------------------------------------
Category “ALTCOIN”
Stablecoin
USDC’s Dollar Reserves’ Third Audit Report Released by Circle
According to a report dated 16th
January 2019, Circle – Cryptocurrency finance company, has come up with a third
audit report of its fiat-backed stablecoin – USD Coin (USDC). Grant Thornton
LLP – an independent accounting firm, has issued the report about third party
audit of Circle’s US dollar reserves. As per 31st December 2018
report the number of USDC tokens issued and outstanding was 251,211,148, with
the firm holding %251,211,209 in custody accounts – with $61 excess in USD
reserves. Circle highlights that issued and outstanding USDC tokens on the
given date and time are not exceeding the balance of US Dollars reserved in
custody accounts. As per report USDC stablecoin is an Ethereum (ETH) based
ERC20 token that primarily came into existence in May 2018, shortly post
raising of $110 million by the company in an investment round. As per Jeremy
Allaire – Circle CEO, USDC is a fiat version that can move at the speed of the
internet with global scope with minimal costs and high level of security. It’s
an enhancement of fiat money transactions in the world for consumers and
businesses who may want to create value of digital payments with tokens. As per
another December 2018 based report of second third-party audit of stablecoin,
again issued by Grant Thornton, the firm also reportedly had a massive US
dollar reserves to match the circulating coins. The first audit gave
information till October 30th 2018 and was published on November 20th
2018. The token got added to joint stablecoin market of prominent
cryptocurrency exchange Binance, after it was listed on OKEx and Huobi
exchanges in October 2018.
---------------------------------------------------------------------
Category
“BITCOIN”
Changpeng
Zhao – The CEO, States ‘Some’ Tokens Stolen From Cryptopia Frozen By Binance
Tweet dated January 16th
2019, by Changpeng Zhao – CEO, highlights that Binance – a prominent
Cryptocurrency exchange, has frozen tokens sent by an entity that reportedly
hacked Cryptopia – A New Zealand exchange. The hacked exchange Cryptopia has
lost at least $3.6 million in cryptocurrency and is currently not operating as
police is examining the hack. Social media users were alert enough to update
Binance about distrustful transactions from addresses that had resemblance to
Crytopia hack. Zhao also states that the
staff was busy isolating the tokens that were reportedly coming in numerous
batches: 31,320 Metal (MTL) tokens worth
$7,830, and 49,766 KyberNetwork (KNC) tokens worth $6,867. It was stated that
‘some’ of the funds were frozen, and there was a surprise shown on hackers
repeated attempts to send tokens to Binance, that the exchange will freeze with
social media fast in highlighting this. Sending the token repetitively is a risky
affair for them.
Cryptopia officials reported on
January 15th 2019 that the exchange is currently not in a position
to make any comments about the hacking event as the police investigation is
still under progress. Just before the reporting of the hack there were
sufficient suspicions taking round on the social media as the exchange was busy
transferring large amounts of tokens just a few days prior to the hack event
occurrence.
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Category
“BITCOIN”
BitPay
– Crypto Payments Service Reports It Oversaw $1 Billion+ Transactions in 2018
According to January 16th
2019 report Bitpay – major cryptocurrency payment services provider, has
reported in excess of $1 billion in transactions in the past year. There is
additional record established by the company in terms earning sufficient
transaction fee revenue. There were prominent customers added as part of
premium clients list and includes clients like Dish Networks, HackerOne, and
State of Ohio. In addition there is a report of B2B business growth of almost
255 percent from that of 2017. There was a massive decline in crypto business
in 2018 still Stephen Pair – CEO and co-founder of BitPay, highlights that the
firm has seen growth over a period of one year as the product offered by the
firm is cheaper and available at more speed than a bank wire from most part of
the world.
At the moment Bitcoin (BTC) is the
focus of BitPay, there is additional report highlighting firm’s settlement
support for other cryptocurrencies namely Paxos Standard (PAX), stablecoins USD
Coin (USDC), the Gemini dollar (GUSD) and Bitcoin Cash (BCH). There was a
report highlighting securing of $40 million by BitPay in month of April in a
Series B funding round. This included prominent IT industry and crypto players
such as Alvin Liu – co founder Tencent, and Christer Klauss Family Office –
founder of Internet Security Systems (ISS), a 2006 based acquisition by IBM.
CEO of BitPay has highlighted in late last year in 2018 that there is
expectation of massive Bitcoin adoption to happen in coming three to five
years. Sonny Singh – Chief Commercial Officer at BitPay, in November last year
predicted rise in Bitcoin’s price expecting it to soar and lie between $15,000
and $20,000 by 2019 year end. There was additional report in November last year
derived from research from blockchain data Chainalysis that there was a
significant fall in usage of Bitcoin for commercial payments in the year 2018.
--------------------------
Category
“ETHEREUM”
Ripple:
Prior To August 2015 Only The XRP Private keys That Used Software Are
Vulnerable
According to an announcement by Ripple
on January 16th 2019 the Ripple (XRP) software libraries published
prior to August 2015 that rendered private keys which signed multiple
transactions are vulnerable. Only a short time back a joint research was
conducted by University of California and DFINITY Foundation that highlighted
vulnerability in small parts of Bitcoin (BTC), Ethereum (ETH), and Ripple
addresses. Cryptographers are aware about high dependence of security of
Elliptic Curve Digital Signature Algorithms (ECDSAs) used by aforementioned
cryptocurrencies on random data and are known as nonces. The research also
highlights that it is widely known that when an ECDSA private key is used, in
case required, to sign two messages with same signature nonce, the cracking of
available long-term private key is quite trivial. In the past researchers
assert to have been successful in hacking numerous Bitcoin, some SSH (remote
control for unix-like systems), Ethereum, HTTPS and a single XRP private keys
with the help of unfair nonces.
According to researchers there is a
huge penalties of such vulnerabilities with such keys enabling an attacker to
claim funds in associated accounts if talk about cryptocurrencies. Additionally
these keys enable attackers to impersonate the end hosts in case of SSH or
HTTPS. However there is a potential to prevent such vulnerabilities by using
deterministic ECDSA nonce generation that is implemented in the default Bitcoin
and Ethereum libraries. Ripple highlights that deterministic nonce generation
has also been part of their software since August 2015. This capability is
capable of making addresses that intermingle with the blockchain that has newer
software libraries implemented completely secure from the mentioned
vulnerability. The research highlights that a few vulnerabilities do remain in
cryptography the centralized systems like exchanges and single computation
systems are highly vulnerable to attacks than private keys. Additional report
highlights that as part of research access has been acquired of only about $54
of BTC and $14 of XRP.
As per latest report Cryptopia –
cryptocurrency exchange of New Zealand, has also stopped the services after
discovering a major attack due to vulnerabilities that resulted in huge losses.
There was another recent news that the latest sequence of ransomware attacks
have resulted in huge earnings for hackers to the tune of 705.08 Bitcoin ($2.5
million) with potential origin from Russian cybercriminals and not from North
Korean state-sponsored actors as was considered previously.
------------------------------------------------------------
Category
“ETHEREUM”
BitMEX
Research: Loss of 54% of $24 Billion Value of ICO Tokens Allocated by Teams to
Themselves
There was a very recent research
published by BitMEX – cryptocurrency exchange, on January 16th 2019.
It revealed that there is a loss of about 54% from initial figure of $24
billion of value of tokens that over a hundred of initial coin offering (ICO) teams
allocated to themselves. The research was conducted in a tie up with
ToeknAnalyst – an analytics firm, and treasury balances in excess of 100
projects on the Ethereum (ETH) network were looked into. Machine learning tools
were prominently used to carry out the analysis which also was based on
interpretation of smart contract data and transaction patterns on the Ethereum
blockchain. The report specifically highlighted that the total value of all
tokens put together that analyzed projects allocated to themselves has got
reduced to about $5 billion now from the figure of $24.2 billion during the
time when token was issued.
According to BitMEX the 2018 crypto
bear market was the main reason for 54% losses in addition to $1.5 billion
worth of allocation to external addresses and various other reasons that
resulted in further decreasing projects’ holdings. As per BitMEX if one goes by
present illiquid prices, the ICO teams still own about US $5 billion worth of
their own tokens, money that they actually acquired from nowhere.
Simultaneously the teams would have achieved gains of US $1.5 billion with the
sale of tokens, based on coins leaving team address clusters. Additionally
according to the report the historical peak value of the tokens that was
managed by the subject teams in addition to $80 billion, referring to each
coin’s specific price peak.
BitMEX and TokenAnalyst have jointly
concluded from the research that there is a dearth of standards and
transparency followed in the ICO market, especially during the process of
allocation of tokens to the founding teams. Additionally it was found that the
analysis could be made more complex by the ability of ICO teams to mint, burn,
buy, and sell tokens possessed by them. In November 2018 it was found by BitMEX
that there are a minimum of 12 ICO projects, each of which has raised in excess
of $50 million by token sale, that are yet to be launched. Arthur Hayes –
company’s CEO, commented that such deals have huge valuations, and most of the
well-recognized token funds took down large chunks. According to him it is
still uncertain about these deals getting listed on secondary market. Also
going by the large amount of token supply available it is unlikely that
somebody will buy this.
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