Few new technologies have raised as much discussion as blockchain. One reason is the controversy, concern, and perceived opportunity around blockchain-based cryptocurrencies (such as bitcoin and ether) and crowdfunding via initial coin offerings (ICOs). But what is blockchain’s role in the enterprise?
This article gives some ideas to think about. Take those trends with grain of salt. There will be a crash ans bubble burst on blockchains in few years.
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Tomi Engdahl says:
Kate Rooney / CNBC:
RBI, India’s central bank, bans financial institutions and banks from providing services to businesses and individuals dealing with cryptocurrencies
India’s central bank bans financial firms from dealing with cryptocurrency
https://www.cnbc.com/2018/04/05/indias-central-bank-bans-financial-firms-from-dealing-with-cryptocurrency.html
Regulated financial institutions in India can no longer provide services to companies or individuals dealing with virtual currencies, the Reserve Bank of India says.
The statement comes as other regulators around the world are grappling with how to regulate digital assets like bitcoin.
The Reserve Bank of India was more open to blockchain, the technology that underpins virtual currencies, and says in the statement that it has the potential to improve the financial system.
Tomi Engdahl says:
Who Accepts Bitcoin (Infographic)
https://www.16best.net/blog/who-accepts-bitcoin-infographic/
Everybody will remember 2017 as the year when cryptocurrencies skyrocketed in value, especially Bitcoin. While Bitcoin was slowly rising since its creation, 2017 was the year when its value went from around $1.000 to almost $20.000, making some of the skeptics rethink their stance on cryptocurrencies.
Even though cryptocurrencies faced a lot of backlash in their early years, today almost everyone is on the Bitcoin bandwagon. Of course, some countries are still resisting, but the vast majority have embraced it. In a relatively short time, Bitcoin went from being an obscure currency on the internet to a payment method of the future used by big-name brands in hundreds of countries.
Tomi Engdahl says:
Blog
16 Blockchain Disruptions (Infographic)
https://bitfortune.net/blockchain-disruptions-infographic/
Tomi Engdahl says:
A 200-Year-Old Idea Offers a New Way to Trace Stolen Bitcoins
https://www.wired.com/story/bitcoin-blockchain-fifo-dirty-coins/
Bitcoin’s blockchain provides inalterable evidence, stored on thousands of computers, of every Bitcoin transaction that’s ever taken place. Many of the transactions recorded on that distributed ledger are crimes: Billions of dollars in stolen funds, contraband deals, and paid ransoms sitting in plain sight, yet obscured by unidentifiable Bitcoin addresses and, in many cases, tangles of money laundering.
But a group of Cambridge cybersecurity researchers now argues that one can still distinguish those contraband coins from the legitimate ones that surround them, not with any new technical or forensic technique, but simply by looking at the blockchain differently—specifically, looking at it more like an early 19th century English judge.
Tomi Engdahl says:
Publishing blockchain startup, Po.et hires VP of engineering
https://techcrunch.com/2018/04/02/publishing-blockchain-startup-po-et-hires-vp-of-engineering/?utm_source=tcfbpage&sr_share=facebook
Po.et a startup that wants to put publishing permissions on the blockchain and build a marketplace on top of it
“Po.et represents the chance to liberate creatives from traditional gatekeepers: to more directly connect with revenue sources to enable them to earn money doing what they love to do. It also represents a chance to make it easier for companies to find the resources they’re looking for, and obtain legal license to use the content with the click of a button,” Elliott wrote in a blog post announcing his new position.
Tomi Engdahl says:
Rachel Premack / The Verge:
How South Korea’s 20- and 30-year-olds, according to some researchers, fueled the late 2017 cryptocurrency boom, and how they are reacting to the current bust — For months, Seoul resident Ye-won Oh monitored cryptocurrency markets voraciously, refreshing her phone practically every minute of every day.
South Korean millennials are reeling from the Bitcoin bust
https://www.theverge.com/2018/4/3/17192886/bitcoin-cryptocurrency-south-korea-millennials
Three in 10 salaried workers in Korea had invested in e-currencies
An estimated three in 10 salaried workers in Korea had invested in e-currencies by December 2017, according to a survey by Korean recruiting firm Saramin. Eighty percent of those people were in their 20s and 30s.
But now that the prices of cryptocurrency coins like Bitcoin, Ethereum, and Ripple have tanked, many Korean youths are dealing with the mental and financial aftermath of their losses. Korean psychologists have reported an uptick of patients from the so-called “Bitcoin blues,” divorce counselors say marriages are splitting from failed investments, and even the country’s prime minister said that virtual currencies are on track to cause “serious distortion or pathological social phenomena” among Korea’s young population. “As soon as I break even, I’m out,” Oh says. “It’s just not healthy mentally.”
“The design of Korean society is a big reason why the cryptocurrency became so popular,” says Yohan Yun, a 25-year-old assistant reporter in Seoul who invested around $400 in Ethereum. “People here are generally unhappy with their current status in society.”
Even employed young people are pessimistic about their economic prospects
Thanks in part to the frenzy, some coins cost up to 51 percent more in Korean markets than anywhere else. Bitcoin’s price was up nearly $8,000 in January, Bloomberg reported. The “kimchi premium” drew foreign traders to buy their coins abroad and trade them in the Korean market.
But then came the crash. From January 6th to January 16th, 2018 the price of Bitcoin to Korean won tumbled from a high of a US-equivalent $25,065 to $13,503, according to Korbit. It continued to fall to $7,410 by February 5th, and as of April 2nd, the price of a bitcoin sits at $7,241.
In total, the Bitcoin crash wiped out $44 billion of value in January, or more than Ford’s entire market capitalization, according to Bloomberg. New regulations against cryptocurrency trading, particularly ones from a worried South Korean government, helped usher the fall.
The extreme fluctuations wreaked emotional havoc on many traders, many of whom had invested much their entire life savings.
South Korean media has linked multiple suicides to the cryptocurrency crash.
Tomi Engdahl says:
Gertrude Chavez-Dreyfuss / Reuters:
Research: after the surge in cryptocurrency prices in 2017, capital gains tax-related liabilities may reach $25B this tax season in the US
U.S. tax liabilities for crypto currencies in 2017 seen at $25 billion, to pressure bitcoin: Fundstrat
https://www.reuters.com/article/us-crypto-currencies-taxes/u-s-tax-liabilities-for-crypto-currencies-in-2017-seen-at-25-billion-to-pressure-bitcoin-fundstrat-idUSKCN1HC29Y
Soaring crypto-currency prices last year are estimated to result in U.S. tax liabilities of $25 billion, adding further selling pressure to these assets in the short term, according to a research note by Fundstrat Global Advisers on Thursday.
This could mean a massive outflow from crypto currencies to the dollar by April 15, the deadline for filing taxes this year, the firm said.
“We believe selling pressures (in crypto) have been amplified by capital gains tax-related selling this year,”
Tomi Engdahl says:
Benchmark just funded Chainalysis, the crypto intelligence company that helped crack the Mt. Gox case
https://techcrunch.com/2018/04/05/benchmark-just-funded-chainalysis-the-crypto-intelligence-company-that-helped-crack-the-mt-gox-case/?utm_source=tcfbpage&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29&utm_content=FaceBook&sr_share=facebook
When the virtual currency exchange Mt. Gox collapsed into bankruptcy in 2014 following the disappearance of hundreds of thousands of bitcoins and tens of millions of dollars, those who lost money were understandably furious.
For a small group of people, however, the theft — likely masterminded, we now know, by a Russian cybercrime suspect who was arrested in Greece this past summer — would prove auspicious.
Before long, their young company, Chainalysis, was the official investigator on the Mt. Gox case, hired by its bankruptcy trustee to find all those missing coins.
Its small team “cracked the case probably two months in,” Levin says now.
It’s a “meat and potatoes company,” she says. “All these regulated institutions want to participate [in cryptocurrency transactions], but they need to understand with whom they are transacting and where their funds are originating. We’d solved these traditional compliance requirements in the fiat world.”
Tomi Engdahl says:
Nikhilesh De / CoinDesk:
Coinbase says it will be adding support for withdrawing funds from some Bitcoin forks across all of its properties, including GDAX, in the coming months
Coinbase to Let Users Withdraw Funds from Bitcoin Forks
https://www.coindesk.com/coinbase-let-users-withdraw-funds-bitcoin-forks/
Cryptocurrency startup Coinbase said Thursday that, in the coming months, it will let customers withdraw funds resulting from forks of the bitcoin network.
In a blog post, the startup announced that it was adding withdrawal support for the forks, though the post did not announce a firm timeline.
“This change will allow customers to more easily withdraw assets associated with Bitcoin Forks across all Coinbase Products,” the startup wrote, adding
In the announcement, Coinbase explained that it will work to support future bitcoin forks on its Coinbase Custody product, adding that this platform “will likely support more forked assets than GDAX or Coinbase for the foreseeable future.”
Tomi Engdahl says:
Kai Stinchcombe:
Blockchain’s key promise of no-need-for-trusted-parties tech is largely irrelevant; systems built on trust, norms, and institutions inherently function better — Blockchain is not only crappy technology but a bad vision for the future. Its failure to achieve adoption to date
Blockchain is not only crappy technology but a bad vision for the future
https://medium.com/@kaistinchcombe/decentralized-and-trustless-crypto-paradise-is-actually-a-medieval-hellhole-c1ca122efdec
Blockchain is not only crappy technology but a bad vision for the future. Its failure to achieve adoption to date is because systems built on trust, norms, and institutions inherently function better than the type of no-need-for-trusted-parties systems blockchain envisions. That’s permanent: no matter how much blockchain improves it is still headed in the wrong direction.
“There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.”
The number of retailers accepting cryptocurrency as a form of payment is declining, and its biggest corporate boosters like IBM, NASDAQ, Fidelity, Swift and Walmart have gone long on press but short on actual rollout. Even the most prominent blockchain company, Ripple, doesn’t use blockchain in its product. You read that right: the company Ripple decided the best way to move money across international borders was to not use Ripples.
A blockchain is a literal technology, not a metaphor
Why all the enthusiasm for something so useless in practice?
People have made a number of implausible claims about the future of blockchain—like that you should use it for AI in place of the type of behavior-tracking that google and facebook do, for example. This is based on a misunderstanding of what a blockchain is. A blockchain isn’t an ethereal thing out there in the universe that you can “put” things into, it’s a specific data structure: a linear transaction log, typically replicated by computers whose owners (called miners) are rewarded for logging new transactions.
There are two things that are cool about this particular data structure. One is that a change in any block invalidates every block after it, which means that you can’t tamper with historical transactions. The second is that you only get rewarded if you’re working on the same chain as everyone else, so each participant has an incentive to go with the consensus.
The end result is a shared definitive historical record. And, what’s more, because consensus is formed by each person acting in their own interest, adding a false transaction or working from a different history just means you’re not getting paid and everyone else is. Following the rules is mathematically enforced—no government or police force need come in and tell you the transaction you’ve logged is false (or extort bribes or bully the participants). It’s a powerful idea.
So in summary, here’s what blockchain-the-technology is: “Let’s create a very long sequence of small files — each one containing a hash of the previous file, some new data, and the answer to a difficult math problem — and divide up some money every hour among anyone willing to certify and store those files for us on their computers.”
Now, here’s what blockchain-the-metaphor is: “What if everyone keeps their records in a tamper-proof repository not owned by anyone?”
An illustration of the difference: In 2006, Walmart launched a system to track its bananas and mangoes from field to store. In 2009 they abandoned it because of logistical problems getting everyone to enter the data, and in 2017 they re-launched it (to much fanfare) on blockchain.
Blockchain-based trustworthiness falls apart in practice
People treat blockchain as a “futuristic integrity wand”—wave a blockchain at the problem, and suddenly your data will be valid. For almost anything people want to be valid, blockchain has been proposed as a solution.
It’s true that tampering with data stored on a blockchain is hard, but it’s false that blockchain is a good way to create data that has integrity.
In the traditional system, once you pay you’re hoping you’ll receive the book, but once the vendor has your money they don’t have any incentive to deliver. You’re relying on Visa or Amazon or the government to make things fair—what a recipe for being a chump! In contrast, on a blockchain system, by executing the transaction as a record in a tamper-proof repository not owned by anyone, the transfer of money and digital product is automatic, atomic, and direct, with no middleman needed to arbitrate the transaction, dictate terms, and take a fat cut on the way. Isn’t that better for everybody?
Hm. Perhaps you are very skilled at writing software. When the novelist proposes the smart contract, you take an hour or two to make sure that the contract will withdraw only an amount of money equal to the agreed-upon price, and that the book — rather than some other file, or nothing at all — will actually arrive.
Auditing software is hard! The most-heavily scrutinized smart contract in history had a small bug that nobody noticed — that is, until someone did notice it, and used it to steal fifty million dollars.
If cryptocurrency enthusiasts putting together a $150m investment fund can’t properly audit the software, how confident are you in your e-book audit?
It’s a complicated way to buy a book! It’s not trustless, you’re trusting in the software (and your ability to defend yourself in a software-driven world), instead of trusting other people.
realize that’s actually the point. Instead of relying on trust or regulation, in the blockchain world, individuals are on-purpose responsible for their own security precautions. And if the software they use is malicious or buggy, they should have read the software more carefully.
The entire worldview underlying blockchain is wrong
You actually see it over and over again. Blockchain systems are supposed to be more trustworthy, but in fact they are the least trustworthy systems in the world. Today, in less than a decade, three successive top bitcoin exchanges have been hacked, another is accused of insider trading, the demonstration-project DAO smart contract got drained, crypto price swings are ten times those of the world’s most mismanaged currencies, and bitcoin, the “killer app” of crypto transparency, is almost certainly artificially propped up by fake transactions involving billions of literally imaginary dollars.
Blockchain systems do not magically make the data in them accurate or the people entering the data trustworthy, they merely enable you to audit whether it has been tampered with.
How then, is trust created?
In the case of buying an e-book, even if you’re buying it with a smart contract, instead of auditing the software you’ll rely on one of four things, each of them characteristics of the “old way”: either the author of the smart contract is someone you know of and trust, the seller of the e-book has a reputation to uphold, you or friends of yours have bought e-books from this seller in the past successfully, or you’re just willing to hope that this person will deal fairly. In each case, even if the transaction is effectuated via a smart contract, in practice you’re relying on trust of a counterparty or middleman, not your self-protective right to audit the software, each man an island unto himself. The contract still works, but the fact that the promise is written in auditable software rather than government-enforced English makes it less transparent, not more transparent.
The same for the vote counting.
Blockchain makes none of these problems easier and many of them harder—but more importantly, solving them in a blockchain context requires a set of awkward workarounds that undermine the core premise.
A crypto-medieval system
93% of bitcoins are mined by managed consortiums, yet none of the consortiums use smart contracts to manage payouts. Instead, they promise things like a “long history of stable and accurate payouts.” Sounds like a trustworthy middleman!
Same with Silk Road, a cryptocurrency-driven online drug bazaar. The key to Silk Road wasn’t the bitcoins
In the name of all blockchain stands for, it’s time to abandon blockchain
A decentralized, tamper-proof repository sounds like a great way to audit where your mango comes from, how fresh it is, and whether it has been sprayed with pesticides or not. But actually, laws on food labeling, nonprofit or government inspectors, an independent, trusted free press, empowered workers who trust whistleblower protections, credible grocery stores, your local nonprofit farmer’s market, and so on, do a way better job. People who actually care about food safety do not adopt blockchain because trusted is better than trustless. Blockchain’s technology mess exposes its metaphor mess — a software engineer pointing out that storing the data a sequence of small hashed files won’t get the mango-pickers to accurately report whether they sprayed pesticides is also pointing out why peer-to-peer interaction with no regulations, norms, middlemen, or trusted parties is actually a bad way to empower people.
Projects based on the elimination of trust have failed to capture customers’ interest because trust is actually so damn valuable. A lawless and mistrustful world where self-interest is the only principle and paranoia is the only source of safety is a not a paradise but a crypto-medieval hellhole.
Tomi Engdahl says:
The Loser’s Guide to Bitcoin
https://medium.com/s/story/the-economics-of-bitcoin-what-why-and-how-180b64585918
Everything you need to know about the digital currency, in 10 minutes or less
There Are Two Sides to a Bitcoin
The first hurdle we’ll tackle is the difference between how a Bitcoin is represented and how it operates.
Bitcoin operates like gold. It’s volatile, openly-traded, and treated like a commodity. The pro to this is that its value is independent of any one nation, the con is that it is not fully embraced and accepted by any one nation.
Double-Spending and Trust
Bitcoin was introduced by Satoshi Nakamoto to solve the problem of trust within the realm of digital payment. (Satoshi Nakamoto was the name used by the person, or persons, who invented Bitcoin, who still remains anonymous today.) With cash, trust isn’t a problem. You exchange cash for a product and the transaction is irreversible. You have your coffee and the vendor has your cash.
The problem with digital transactions is in its impermanence. Someone could
“copy-paste” more money, because digital spending uses digital files that can be copied or forged.
we trust institutions such as banks and credit agencies to regulate, authenticate and standardize the process. They confirm the increase and decrease of credit on behalf of both parties and charge fees for the hassle. It’s both time and resource-intensive, and relies on a central authority. Without national backing, digital currencies were too unstable and insecure for practical use; that is, until Bitcoin came along.
Part 1: Blocks
The terms “block” and “blockchain” are now invariably tied to Bitcoin. The highest level of abstraction of a bitcoin is the block. This is, however, a bit of misnomer; think of the block more so as a page.
Imagine an old-school accountant’s ledger. Each brittle, ink-stained page is filled with line items, listing the amount of money transferred, noting from who and to whom. That’s what a bitcoin block is: one page of a ledger.
However, a single page of an accountant’s ledger is useless. A short-term view of added credits or subtracted debits means nothing by itself. You must consider it in the context of the entire book.
So now we’re here: a bitcoin’s block is to a page, as the blockchain is to the accountant’s ledger. When a reader scans the pages of a ledger from right-to-left, he sees every transaction from most recent to least recent. Likewise, if we scan the blockchain from the most recent to least recent block, we can see all bitcoin transactions by following the blocks before it. Each new block connects to its previous block creating a “chain” of blocks, hence the name blockchain. To summarize, if an accountant’s ledger represents all the transactions of an entity, this means the blockchain represents all the transactions of all bitcoins.
You might ask:“Isn’t it dangerous?” For all the records of all transactions to be held in one place — though it’s distributed, but still in one place
Once authenticated and accepted by the blockchain, a block can never be altered. If a block can never be altered, then the blockchain itself can also never be changed. It is in this manner, that the blockchain securely holds the recorded history of all bitcoin transactions. The only part of the blockchain that can be modified is the tail end of the chain: where the next block is accepted. The acceptance of a new block is called mining.
Part 2: Mining and Miners
Without a central authority — such as a bank — in place to regulate transactions, Bitcoin faced a security threat. So instead of choosing the central authority of an established institution like a bank, Bitcoin chose to rely on the universal authority of mathematics. In place of a senior accountant checking the work of a junior, Bitcoin has the law of mathematics that checks the calculations of workhorse computers called miners.
Part 3: Proof-of-Work
The proof-of-work is an annoying math problem that takes up a large amount of computational power to solve. It’s a brute force test without any shortcuts, that anyone, given enough time, can solve.
One nullifies the desired action and the other nullifies the economics that spam thrives on. Blockchains use this same proof-of-work protocol to authenticate new blocks.
last estimation was that it took a standard computer about one year to solve a single instance of Bitcoin’s proof-of-work.
Part 4: Economy
Banking is a peculiar industry. It’s the only industry that’s paid in the same goods it manages.
Bitcoin emulates this practice. Using a proof-of-work to validate transactions, miners compete with each other to come up with a solution before anyone else. The first miner to solve the current proof-of-work is rewarded with the same currency it authenticates: bitcoins.
It’s estimated that it would take a corruption of 30 to 50% of the miner population to have a significant chance of authenticating a corrupt block. Block corruption is a real threat, however, as the popularity of Bitcoins and mining grows, the more and more unlikely this becomes. That is one of the reasons why people say Bitcoin grows stronger the more people use it.
The more miners compete, the more currency is allotted. The more currency is allotted, the greater the number of transactions. The greater the number of transactions, the more miners are needed to authenticate transactions and the more secure the currency becomes. It’s a self-sustaining loop.
However, if you’re an economist, your alarm bells should start ringing about now. The economics sounds too good to be true, and that’s because it is. The value of a bitcoin hinges on an if, a huge if; the if being if people adopt its use.
Like gold, Bitcoin has no value by itself. As a self-contained economy, Bitcoin has no utility in and of itself.
Tomi Engdahl says:
Bloomberg:
Winklevosses’ Gemini to introduce cryptocurrency block trading on April 12, which will allow for big sales off the exchange to avoid upsetting markets — Off-exchange deals allow big moves without upsetting markets — Service to vie for business from hedge funds, institutions
Winklevosses’ Gemini to Offer Cryptocurrency Block Trading
https://www.bloomberg.com/news/articles/2018-04-09/winklevoss-s-gemini-to-offer-cryptocurrency-block-trading
Off-exchange deals allow big moves without upsetting markets
Service to vie for business from hedge funds, institutions
Tomi Engdahl says:
Catalin Cimpanu / BleepingComputer.com:
Bitcoins worth $3.3M stolen from Indian cryptocurrency exchange Coinsecure, in what is said to be India’s first big crypto theft; CEO accuses its CSO
$3.3 Million Stolen From Coinsecure Bitcoin Exchange, Inside Job Suspected
https://www.bleepingcomputer.com/news/security/33-million-stolen-from-coinsecure-bitcoin-exchange-inside-job-suspected/
The CEO of Coinsecure, an India-based cryptocurrency exchange, has accused his CSO of stealing 438 Bitcoin —around $3.3 million at today’s exchange rate— from the exchange’s main wallet.
Coinsecure announced the theft of the 438 BTC today, via two images posted on its homepage. The first image contained a statement signed by the Coinsecure team announcing the incident, and the second was a scanned copy of a police complaint Coinsecure CEO Mohit Kalra filed with New Delhi police. Both are embedded at the bottom of this article.
Tomi Engdahl says:
Nicholas Megaw / Financial Times:
Santander becomes first international bank to launch cross-border, blockchain-based payments, in Spain, UK, Brazil, and Poland on Friday, uses Ripple tech
https://t.co/t8sqLgO4VJ
Tomi Engdahl says:
Design Houses Bank on AI, Bitcoin
https://www.eetimes.com/document.asp?doc_id=1333176
Global Unichip (GUC) and a host of other Taiwan chip designers are seeing demand for ASICs take off, driven by systems houses that want to differentiate their products for cryptocurrency mining and AI to deliver greater efficiency.
While AI shows long-term potential, GUC’s main ASIC demand so far is for Bitcoin-mining equipment, according to the company. The players in this business are trying to develop ICs rather than using off-the-shelf GPUs, according to the company. Customers are finding that the efficiency of GPUs is not good enough, GUC says.
The Bitcoin-mining business has quickly popped up for foundry Taiwan Semiconductor Manufacturing Co. (TSMC) and other companies in the TSMC ecosystem. GUC customer Bitmain, a privately held Chinese firm that makes Bitcoin-mining hardware and runs its own mining operations, made $3 billion to $4 billion in profits in 2017, according to estimates by Bernstein Research.
New mining equipment vendors have rushed in to capitalize on the boom. The focus now is on developing more customized machines that offer greater efficiency.
“Nowadays, GPUs are used as ASSPs for the AI market,” said GUC Senior Director Lewis Chu, in an interview with EE Times. “But AI is big data, algorithms. If everyone continues to use ASSPs, it means their algorithms are similar. It’s hard for them to do differentiation.”
Tomi Engdahl says:
Mining cryptocurrency with Raspberry Pi and Storj
https://opensource.com/article/17/12/raspberry-pi-cryptocurrency-mining?sc_cid=7016000000127ECAAY
Storj uses a proof-of-retrievability system allowing users “rent out” spare disk space and get paid monthly in Storj coin.
Tomi Engdahl says:
Austin is piloting blockchain to improve homeless services
https://techcrunch.com/2018/04/14/austin-is-piloting-blockchain-to-improve-homeless-services/?utm_source=tcfbpage&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29&utm_content=FaceBook&sr_share=facebook
AdChoices
Austin is piloting blockchain to improve homeless services
Danny Crichton
@dannycrichton / 17 hours ago
Exploring Austin, Texas
While the vagaries of the cryptocurrency markets are keeping crypto traders glued to their CoinDesk graphs, the real potential of blockchain is its capability to solve real human challenges in a decentralized, private, and secure way. Government officials have increasingly investigated how blockchain might solve critical problems, but now one city intends to move forward with an actual implementation.
The city of Austin is piloting a new blockchain platform to improve identity services for its homeless population
The goal of the city’s blockchain pilot program is to consolidate the identity and vital records of each homeless person in a safe and confidential way while providing a means for service providers to access that information. Adler explained that “there are all kinds of confidentiality issues that arise when you try to do that, so the thought was that blockchain would allow us to bridge that need.”
By using blockchain, the hope is that the city could replace paper records, which are hard to manage, with electronic encrypted records that would be more reliable and secure. In addition, the blockchain platform could create a decentralized authentication mechanism to verify a particular person’s identity.
Identity is a popular area for investors interested in blockchain and decentralization more generally.
Tomi Engdahl says:
Yuji Nakamura / Bloomberg:
US-based Kraken, one of the longest-operating cryptocurrency exchanges, is ending its services in Japan by end of June, citing rising costs of doing business — Kraken, one of the longest-operating cryptocurrency exchanges in the world, will end its trading services for Japanese residents.
Cryptocurrency Exchange Kraken Pulls Out of Japan
https://www.bloomberg.com/news/articles/2018-04-17/cryptocurrency-exchange-kraken-pulls-out-of-japan-citing-costs
Tomi Engdahl says:
Shannon Liao / The Verge:
New York AG Schneiderman launches an inquiry into cryptocurrency exchanges, sending a letter to 13 of them, including Coinbase, Gemini, Kraken, and Bitfinex
New York’s attorney general is investigating bitcoin exchanges
https://www.theverge.com/2018/4/17/17247946/bitcoin-new-york-attorney-general-eric-schneiderman-investigation
New York Attorney General Eric Schneiderman launched an investigation into bitcoin exchanges today, his office announced. He’s looking into thirteen major exchanges, including Coinbase, Gemini Trust, and Bitfinex, requesting information on their operations and what measures they have in place to protect consumers.
“Too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” Schneiderman said in a statement. His office sent detailed questionnaires to the thirteen exchanges, asking them to disclose who owns and controls them, and how their basic operation and transaction fees work. The questionnaire also asks for specific details on how exchanges might suspend trading or delay orders, indicating Schneiderman is particularly concerned with exchanges manipulating the timing of public orders.
Tomi Engdahl says:
Christine Lagarde / IMF Blog:
IMF head Christine Lagarde shares thoughts on the upside of cryptocurrencies, following last month’s look at their dark side and potential regulation
An Even-handed Approach to Crypto-Assets
https://blogs.imf.org/2018/04/16/an-even-handed-approach-to-crypto-assets/
The dizzying gyrations of crypto-assets such as Bitcoin invite comparisons with the tulip mania that swept Holland in the 17th century and the recent dot-com bubble. With more than 1,600 crypto-assets in circulation, it seems inevitable that many will not survive the process of creative destruction.
What are some of the potential benefits? Answers are already starting to take shape.
Fast, inexpensive
Crypto-assets enable fast and inexpensive financial transactions, while offering some of the convenience of cash. Some payment services now make overseas transfers in a matter of hours, not days. If privately issued crypto-assets remain risky and unstable, there may be demand for central banks to provide digital forms of money―an idea we explore in the forthcoming Global Financial Stability Report.
The underlying technology of crypto-assets—distributed ledger technology, or DLT—could help financial markets function more efficiently. Self-executing and self-enforcing “smart contracts” could eliminate the need for some intermediaries. Already, the Australian Securities Exchange has said it plans to use DLT to manage the clearing and settlement of equity transactions.
Secure storage of important records is another promising use for DLT. Healthcare companies are studying how to use the technology to maintain confidential medical data while providing access to insurers and other authorized users.
In developing economies, such advances can help secure property rights, increase market confidence and promote investment. In Ghana, where property ownership is often the subject of disputes, a DLT-based platform called Bitland promises to help solve the problem by securely recording land sales.
A better balance
In my view, the fintech revolution will not eliminate the need for trusted intermediaries, such as brokers and bankers. There is hope, however, that decentralized applications spurred by crypto-assets will lead to a diversification of the financial landscape, a better balance between centralized and de-centralized service providers, and a financial ecosystem that is more efficient and potentially more robust in resisting threats.
Even-handed approach
Before crypto-assets can transform financial activity in a meaningful and lasting way, they must earn the confidence and support of consumers and authorities. An important initial step will be to reach a consensus within the global regulatory community on the role crypto-assets should play. Because crypto-assets know no boundaries, international cooperation will be essential.
Here, the IMF, with a membership of 189 countries, can play a key role by offering advice and serving as a forum for discussion and collaboration in the development of a consistent regulatory approach.
Tomi Engdahl says:
Shannon Liao / The Verge:
NY AG launches inquiry into cryptocurrency exchanges, sends letter to 13, including Coinbase and Kraken, seeking information on their operations and more — New York Attorney General Eric Schneiderman launched an investigation into bitcoin exchanges today, his office announced.
New York’s attorney general is investigating bitcoin exchanges
https://www.theverge.com/2018/4/17/17247946/bitcoin-new-york-attorney-general-eric-schneiderman-investigation
New York Attorney General Eric Schneiderman launched an investigation into bitcoin exchanges today, his office announced. He’s looking into thirteen major exchanges, including Coinbase, Gemini Trust, and Bitfinex, requesting information on their operations and what measures they have in place to protect consumers.
“Too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” Schneiderman said in a statement. His office sent detailed questionnaires to the thirteen exchanges, asking them to disclose who owns and controls them, and how their basic operation and transaction fees work. The questionnaire also asks for specific details on how exchanges might suspend trading or delay orders, indicating Schneiderman is particularly concerned with exchanges manipulating the timing of public orders.
Tomi Engdahl says:
Another day, another $50 million ICO exit scam
https://techcrunch.com/2018/04/18/another-day-another-50-million-ico-exit-scam/?utm_source=tcfbpage&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29&utm_content=FaceBook&sr_share=facebook
Savedroid, a German company that purportedly raised $50 million in ICO and direct funding, has exited with a bang.
posted a tweet thanking investors and saying “Over and out.”
Savedroid was originally supposed to use AI to manage user investments and promised a crypto-backed credit card, a claim that CCN notes is popular with scam ICOs. It ran for a number of months and was clearly well-managed as the group was able to open an office and appear at multiple events.
GIVE US MONEY AND WE WILL MAKE YOU A MILLIONAIRE. Anyone who fell for this despite all the warning signs can blame no one but themselves.”
Tomi Engdahl says:
Someone made a game where you ride the rapidly changing prices of cryptocurrencies
https://techcrunch.com/2018/04/16/someone-made-a-game-where-you-ride-the-rapidly-changing-prices-of-cryptocurrencies/?utm_source=tcfbpage&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29&sr_share=facebook
It’s called Crypto Rider, predictably, and is very much a spawn of the popular Line Rider type of game, though (hopefully) different enough that there won’t be any cease and desists forthcoming.
You select your car, then pick a chart to ride — most are a ride from a coin’s humble start to its highest value.
Tomi Engdahl says:
Chloe Cornish / Financial Times:
Interview with Vitalik Buterin, Ethereum’s 24-year-old founder, on his “weird” 2017, which saw ether’s market cap reach $125B+, the broader crypto market, more
https://t.co/j5o3UOLOft
Tomi Engdahl says:
Wall Street Journal:
Sources: cryptocurrency firms and VCs, including a16z and Union Square Ventures, are lobbying SEC to seek exemption from federal oversight of cryptocurrencies
Silicon Valley Is Into Bitcoin. It Wants to Keep Washington Out.
https://www.wsj.com/articles/cryptocurrency-firms-investors-seek-exemption-from-sec-oversight-1524130200
Andreessen Horowitz and other venture-capital backers of digital-currency firms argue against regulation
Tomi Engdahl says:
Crypto-collectibles and Kitties marketplace Rare Bits raises $6M
https://techcrunch.com/2018/04/19/rare-bits-crypto-marketplace/
Rare Bits wants to be eBay for the blockchain, where you buy, sell and trade non-fungible crypto-goods. After CryptoKitties raised $12 million from Andreessen Horowitz last month for its digital collectibles game, there’s been an explosion of interest in the space. But without a popular marketplace, it’s hard to find the goods you want at the right price. Now a team of former Zynga staffers is building out the Rare Bits crypto-collectible auction and commerce site
Tomi Engdahl says:
Founder of cryptocurrency debit card faces new fraud charges for $32 million ICO scheme
https://techcrunch.com/2018/04/20/centra-ico-fraud-sec/?utm_source=tcfbpage&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29&utm_content=FaceBook&sr_share=facebook
The U.S. government is following through on its promise to crack down on initial coin offering scams. On Friday, the SEC announced charges against Raymond Trapani, the third co-founder of Centra Tech Inc., which raised $32 million for a cryptocurrency debit card last year through a flashy ICO endorsed by DJ Khaled and boxer Floyd Mayweather.
“We allege that the Centra co-founders went to great lengths to create the false impression that they had developed a viable, cutting-edge technology,” the SEC’s Cyber Unit Chief Robert A. Cohen said of the ICO. “Investors should exercise caution about investments in digital assets, especially when they are marketed with claims that seem too good to be true.”
fraudulent ICO scheme, which lured investors with claims of major credit card partnerships, misrepresentations about the company’s product, fake founder biographies and price manipulation of its Centra tokens (CTR).
“While investing in virtual currencies is legal, lying to deceive investors is not.”
Tomi Engdahl says:
Proxeus wants to be the WordPress of blockchain
https://techcrunch.com/2018/04/22/proxeus-wants-to-be-the-wordpress-of-blockchain/?utm_source=tcfbpage&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29&utm_content=FaceBook&sr_share=facebook
Proxeus wants to be the WordPress of blockchain
Natasha Lomas
@riptari / 6 hours ago
Blockchain Data Network
Can blockchain technology fix the soul sucking tedium and cost of back-and-forth bureaucracy? The Swiss team behind a blockchain-based platform, called Proxeus, believes it can — and that that will be just the tip of what decentralization brings down the pipe, once components such as crypto identities become an accepted (and legal) standard.
Blockchain’s big picture vision is embedded crypto identities opening up all sorts of additional opportunities — from a new wave of share trading and lending, to frictionless identity verification.
But right now the technology remains nascent, with some fundamental challenges — such as energy efficiency and scalability
https://proxeus.com
Tomi Engdahl says:
5 Blockchain Innovations Wall Street Is Watching in 2018
Financial professionals need to pay attention to how blockchain is impacting their industry.
https://www.entrepreneur.com/article/310878
Blockchain technology was one of this past year’s biggest stories. For example, Bitcoin, the pioneer of cryptocurrencies, closed out 2017 at nearly $15,000. As Bitcoin’s popularity has grown, more blockchain innovations and cryptocurrencies have emerged from the shadows. Now, it’s nearly considered mainstream. Since then, investors and fund managers have flocked to blockchain for fintech.
1. Paying with cryptocurrency
First, one of blockchain’s most exciting applications is its ability to facilitate financial transactions in a very different way compared to legacy financial systems like credit card traditional payment processors. Recently, the rise of cryptocurrency technology has turned cryptocurrency into viable currency.
Right now, over $500 billion in cryptocurrency exists. Yet, current owners have limited ways to spend them.
2. System integrity
Second, the biggest upside for using blockchain is system integrity. Cryptocurrencies and blockchain technology eliminate the need for middlemen. Hence, it’s these middlemen that tend to overcomplicate payments and charge expensive fees on top of large transactions. As such, the very design of blockchain lends itself to security.
Blockchain is a decentralized ledger. Therefore, transactions are not visible to any person besides the two parties engaging in the asset transfer.
For example, the Internet of Services Foundation has created a scalable blockchain infrastructure for the future of online business.
3. Regulatory concerns
Third, for those interested in commercial finance, blockchain’s applications in cross border transactions are particularly exciting. One of the main advantages of cryptocurrencies to fiat currencies is their ability to be sent across borders without any fees. For example, money transfers can be conducted between any two locations in the world. All users need is a connection to the internet.
Therefore, Blockchain technology has the potential to offer a more secure experience than traditional wire services.
4. Mainstream banking adoption
Fourth, large banks are already beginning to develop infrastructures to support the new assets and payment systems based in the blockchain. In June 2017, a group of seven of Europe’s largest banks formed a blockchain consortium. Forming the consortium was necessary for simplifying payments. Therefore, the result has been advantageous for small and medium enterprises across national borders.
5. Financial automation
Fifth, blockchain’s most interesting application is the potential to offer systems where users can automate payments and optimize their finances. For example, by using embedded smart contracts on blockchain ledgers, financial institutions can easily and efficiently collect insurance and mortgage payments. Therefore, the result would mean more on-time payments. Also, consumers could spend less time organizing their finances.
Tomi Engdahl says:
Reuters:
Iran’s central bank bans the country’s banks from dealing in cryptocurrencies over money-laundering concerns, as the country tries to halt a currency crisis — DUBAI (Reuters) – Iran’s central bank has banned the country’s banks from dealing in cryptocurrencies, including Bitcoin …
Iran central bank bans cryptocurrency dealings
https://www.reuters.com/article/us-crypto-currencies-iran/iran-central-bank-bans-cryptocurrency-dealings-idUSKBN1HT0YN
“Banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them,”
Iran moved this month to formally unify its official and open market exchange rates and banned money changing outside of banks
Tomi Engdahl says:
Amazon’s new blockchain service competes with similar products from Oracle and IBM
https://techcrunch.com/2018/04/22/amazons-new-blockchain-service-competes-with-similar-products-from-oracle-and-ibm/
Amazon Web Services announced Blockchain Templates late last week, a “blockchain-as-a-service” offering that competes with similar products from Oracle and IBM. The launch shows how eager the biggest enterprise players are to get ahead in the blockchain game, even if their customers are still trying to pinpoint exactly what blockchain can do for them
“Some of the people that I talk to see blockchains as the foundation of a new monetary system and a way to facilitate international payments. Others see blockchains as a distributed ledger and immutable data source that can be applied to logistics, supply chain, land registration, crowdfunding and other use cases,” he wrote. “Either way, it’s clear that there are a lot of intriguing possibilities and we are working to help our customers use this technology more effectively.
AWS Blockchain Templates give AWS users working on blockchain apps a faster way to set up Ethereum or Hyperledger Fabric networks. Its launch comes six months after Oracle unveiled its cloud service built on the open-source Hyperledger Fabric project during Oracle OpenWorld and about a year after IBM announced its own Hyperledger-based blockchain-as-a-service offering.
Another new competitor in the BaaS market is Huawei, which announced its Blockchain Service, also built on Hyperledger, last week
Tomi Engdahl says:
Nathaniel Popper / New York Times:
Gary Gensler, CFTC’s head from 2009 to 2014, thinks Ethereum and Ripple’s respective currencies may have been issued and traded in violation of securities laws
https://www.nytimes.com/2018/04/22/technology/gensler-mit-blockchain.html?mtrref=undefined&gwh=C0051854CC593D1FCA75807A12609773&gwt=pay
Tomi Engdahl says:
Russell Brandom / The Verge:
Attackers successfully rerouted DNS requests for myetherwallet.com, showing visitors an unsigned SSL cert and apparently taking $13K+ in Ethereum in two hours
Hackers emptied Ethereum wallets by breaking the basic infrastructure of the internet
https://www.theverge.com/2018/4/24/17275982/myetherwallet-hack-bgp-dns-hijacking-stolen-ethereum
At midnight ET last night, MyEtherWallet users started noticing something odd. Connecting to the service, users were faced with an unsigned SSL certificate, a broken link in the site’s verification. It was unusual, but it’s the kind of thing web users routinely click through without thinking.
But anyone who clicked through this certificate warning was redirected to a server in Russia, which proceeded to empty the user’s wallet. Judging by wallet activity, the attackers appear to have taken at least $13,000 in Ethereum during two hours before the attack was shut down. The attackers’ wallet already contains more than $17 million in Ethereum.
MyEtherWallet confirmed the attack in a statement on Reddit. “We are currently in the process of verifying which servers were targeted to help resolve this issue as soon possible,” the company told users. “We advise users to run a local (offline) copy of the MyEtherWallet.”
The attackers don’t seem to have compromised MyEtherWallet itself. Instead, they attacked the infrastructure of the internet, intercepting DNS requests for myetherwallet.com to make the Russian server seem like the rightful owner of the address. Most of the affected users were employing Google’s 8.8.8.8 DNS service. However, because Google’s service is recursive, the bad listing was likely obtained through Amazon’s “Route 53” system.
To intercept those requests, the hackers used a technique known as BGP hijacking, which spreads bad routing information as a way of intercepting traffic in transit.
Thus far, MyEtherWallet is the only confirmed service to have been attacked, although a number of other services were likely also affected by the redirect.
BGP hijacking has long been known as a fundamental weakness in the internet
DNS attacks are also common, and they were used by the Syrian Electronic Army for a string of website defacements in 2013.
Still, it’s highly unusual for both BGP and DNS vulnerabilities to be used in concert, particularly in such a high-profile theft. “This is the largest scale attack I have seen which combines both,”
Tomi Engdahl says:
Theodore Schleifer / Recode:
Job listings indicate Andreessen Horowitz is hiring for “a separately managed fund focusing on crypto assets”
Andreessen Horowitz is preparing to launch a separate fund for crypto investments
https://www.recode.net/2018/4/23/17273766/andreessen-horowitz-separate-crypto-fund
Posted job listings reveal that the firm is hiring for a “separately managed fund focusing on crypto assets.”
Tomi Engdahl says:
Hackers emptied Ethereum wallets by breaking the basic infrastructure of the internet
https://www.theverge.com/2018/4/24/17275982/myetherwallet-hack-bgp-dns-hijacking-stolen-ethereum
At midnight ET last night, MyEtherWallet users started noticing something odd. Connecting to the service, users were faced with an unsigned SSL certificate, a broken link in the site’s verification. It was unusual, but it’s the kind of thing web users routinely click through without thinking.
But anyone who clicked through this certificate warning was redirected to a server in Russia, which proceeded to empty the user’s wallet. Judging by wallet activity, the attackers appear to have taken at least $13,000 in Ethereum during two hours before the attack was shut down. The attackers’ wallet already contains more than $17 million in Ethereum.
Tomi Engdahl says:
Quantum Blockchains Could Act Like Time Machines
Quantum blockchain systems could resist hacks by quantum computers
https://spectrum.ieee.org/tech-talk/computing/networks/quantum-blockchains-could-act-like-time-machines
A newly proposed “quantum blockchain” could lead to blockchain systems impervious from quantum-computer hacking, a new study finds.
This new quantum blockchain can be interpreted as influencing its own past, making it behave like a time machine, the researchers add.
A blockchain is a kind of database that holds records about the past, such as a history of financial or other transactions, that every node in the network can agree on and that does not require a centralized institution to maintain its ongoing accuracy. The most well-known application of blockchains is Bitcoin, but a diverse array of startup companies, corporate alliances, and research projects have explored other potential uses for the technology.
“It’s expected that 10 percent of global GDP could be stored on blockchain technology by 2027,” says lead author Del Rajan, a theoretical physicist at Victoria University of Wellington in New Zealand.
However, blockchains might face trouble from another up-and-coming technology, quantum computers. Whereas classical computers switch transistors either on or off to symbolize data as ones and zeroes, quantum computers use quantum bits or qubits that, because of the surreal nature of quantum physics, can be in a state of superposition where they are both 1 and 0 simultaneously.
Now researchers in New Zealand suggest a quantum blockchain could resist hacking attempts from quantum computers. All the components of this system have already been experimentally realized, they add.
“Previous blockchains that worked with quantum operations were presented, but the blockchain itself was never quantum,” Rajan says. “We are presenting the first fully quantum blockchain.”
Quantum blockchains in theory rely on entanglement. When two or more particles such as photons get entangled, they can influence each other simultaneously no matter how far apart they are, a phenomenon Einstein dubbed “spooky action at a distance.”
Conventional blockchains collect records into blocks of data which cryptography links in chronological order. If a hacker attempts to tamper with a particular block, the cryptography is designed to invalidate all future blocks following the tampered block.
In the quantum blockchain, the records in a block are encoded into a series of photons that are entangled with each other. These blocks are linked in chronological order through entanglement in time.
As the blocks making up a quantum blockchain are transferred within a network of quantum computers, photons encoding each block get created and then absorbed by the nodes making up the network. However, entanglement links these photons across time, even photons that never existed at the same time.
“Records about past transactions are encoded onto a quantum state that is spread across time,” Rajan says.
Tomi Engdahl says:
Amazon’s new blockchain service competes with similar products from Oracle and IBM
https://techcrunch.com/2018/04/22/amazons-new-blockchain-service-competes-with-similar-products-from-oracle-and-ibm/?utm_source=tcfbpage&sr_share=facebook
Tomi Engdahl says:
Morgen Peck / Glamour:
A look at nine influential women in cryptocurrency, who are working towards making the technology more inclusive and less biased by closing the gender gap
Cryptocurrency Is Not Just a Boys’ Club
https://www.glamour.com/story/meet-the-women-of-cryptocurrency
Tomi Engdahl says:
IBM introduces a blockchain to verify the jewelry supply chain
https://techcrunch.com/2018/04/26/ibm-introduces-trustchain-a-blockchain-to-verify-the-jewelry-supply-chain/?utm_source=tcfbpage&sr_share=facebook
Every time I talk to someone about the viability of blockchain, I get challenged to show a real project beyond the obvious bitcoin use case. IBM has been working to build large enterprise projects blockchain and today they offered an irrefutable example that they have dubbed TrustChain, a blockchain that proves the provenance of jewelry by following the supply chain from mine to store.
As you might expect the TrustChain is built on IBM blockchain technology and includes a consortium of companies involved in every step of the supply chain
“What we are announcing and bringing forward has been in the works for some time. It’s the first end-to-end industry capability on blockchain that has its core in trust,”
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IBM introduces a blockchain to verify the jewelry supply chain
Ron Miller
@ron_miller / Yesterday
Rings on Display
Every time I talk to someone about the viability of blockchain, I get challenged to show a real project beyond the obvious bitcoin use case. IBM has been working to build large enterprise projects blockchain and today they offered an irrefutable example that they have dubbed TrustChain, a blockchain that proves the provenance of jewelry by following the supply chain from mine to store.
As you might expect the TrustChain is built on IBM blockchain technology and includes a consortium of companies involved in every step of the supply chain: Asahi Refining, the precious metals refiner; Helzberg Diamonds, a U.S. jewelry retailer; LeachGarner, a precious metals supplier and The Richline Group, a global jewelry manufacturer. It even includes some third-party verification with UL Labs for the skeptical among you.
“What we are announcing and bringing forward has been in the works for some time. It’s the first end-to-end industry capability on blockchain that has its core in trust,” Jason Kelley, the GM of blockchain services at IBM told TechCrunch.
While there are trust mechanisms in place to ensure the authenticity of jewelry, they tend to be more piecemeal and this one is designed to be more comprehensive. One of the primary benefits of using blockchain in this instance is that it’s so much more efficient. Instead shuffling paper, the process becomes much more digital and reduces a lot (although not all) of the manual paper-pushing along the way.
Of course, just because it’s on the blockchain doesn’t mean there won’t be attempts to circumvent the system, but the TrustChain has a mechanism for participants to check the validity of each transaction, each step of the way. “If there is a dispute, instead of calling and following back through the process in a more manual way, you can click on a trusted chain, and you’re able to see what happened immediately. That reduces the number of steps in the process, and speeds up what has been a paper-laden and manual effort,” Kelley explained.
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IBM introduces a blockchain to verify the jewelry supply chain
Ron Miller
@ron_miller / Yesterday
Rings on Display
Every time I talk to someone about the viability of blockchain, I get challenged to show a real project beyond the obvious bitcoin use case. IBM has been working to build large enterprise projects blockchain and today they offered an irrefutable example that they have dubbed TrustChain, a blockchain that proves the provenance of jewelry by following the supply chain from mine to store.
As you might expect the TrustChain is built on IBM blockchain technology and includes a consortium of companies involved in every step of the supply chain: Asahi Refining, the precious metals refiner; Helzberg Diamonds, a U.S. jewelry retailer; LeachGarner, a precious metals supplier and The Richline Group, a global jewelry manufacturer. It even includes some third-party verification with UL Labs for the skeptical among you.
“What we are announcing and bringing forward has been in the works for some time. It’s the first end-to-end industry capability on blockchain that has its core in trust,” Jason Kelley, the GM of blockchain services at IBM told TechCrunch.
While there are trust mechanisms in place to ensure the authenticity of jewelry, they tend to be more piecemeal and this one is designed to be more comprehensive. One of the primary benefits of using blockchain in this instance is that it’s so much more efficient. Instead shuffling paper, the process becomes much more digital and reduces a lot (although not all) of the manual paper-pushing along the way.
Photo: IBM
Of course, just because it’s on the blockchain doesn’t mean there won’t be attempts to circumvent the system, but the TrustChain has a mechanism for participants to check the validity of each transaction, each step of the way. “If there is a dispute, instead of calling and following back through the process in a more manual way, you can click on a trusted chain, and you’re able to see what happened immediately. That reduces the number of steps in the process, and speeds up what has been a paper-laden and manual effort,” Kelley explained.
He fully recognizes the hype surrounding blockchain and that it’s the latest shiny tech thing, but he says if you set aside the name, the capability is really what’s important here. “Now we can share this [data] in a permissioned network and we can be sure it’s accurate,” he said.
The notion of the permissioned blockchain is an important one here. It means that you have to be allowed on the blockchain to participate, and everyone on the blockchain has to agree to let any members on. “That’s what exciting with TrustChain. Each point in the supply chain has bought into the consortium,” he said.
He acknowledges that errors could be introduced in any system, whether intentional or not, but he says the beauty of this system is that blockchain is a team sport and many, many eyeballs are acting as a check for each step along the way. If a problem is found, it can be fixed through the same level of consensus.
Tomi Engdahl says:
Overflow error shuts down token trading
https://techcrunch.com/2018/04/25/overflow-error-shuts-down-token-trading/?utm_source=tcfbpage&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29&sr_share=facebook
A recently discovered programming error can make some crypto tokens susceptible to hackers. The exploit allows a hacker to pass an unusually high value to the exchange and get a ridiculous number of tokens in exchange, a problem that has caused the Okex exchange to shut down all token trading, including one called BeautyChain (BEC).
“There is no traditional well-known security response mechanism in place to remedy these vulnerable contracts!” wrote one researcher on Medium. “With that, we further run our system to scan and analyze other contracts. Our results show that more than a dozen of ERC20 contracts are also vulnerable to batchOverflow.”
In response, Okex shut down all ERC-20 tokens, but there are other exchanges and tokens susceptible to the hack.
Tomi Engdahl says:
How to price cryptocurrencies
https://techcrunch.com/2018/01/22/how-to-price-cryptocurrencies/?utm_source=tcfbpage&sr_share=facebook
Predicting cryptocurrency prices is a fool’s game, yet this fool is about to try. The drivers of a single cryptocurrency’s value are currently too varied and vague to make assessments based on any one point. News is trending up on Bitcoin? Maybe there’s a hack or an API failure that is driving it down at the same time. Ethereum looking sluggish? Who knows: Maybe someone will build a new smarter DAO tomorrow that will draw in the big spenders.
So how do you invest? Or, more correctly, on which currency should you bet?
Tomi Engdahl says:
Theodore Schleifer / Recode:
Sources: Coinbase valued itself at $8B when pitching an equity package during Earn acquisition; investors received cash, management received at least some stock
Cryptocurrency exchange Coinbase recently tried to value itself at $8 billion
That’s how much it felt it was worth when it set out to acquire Earn.
http://www.epanorama.net/newepa/2018/01/13/5-blockchain-trends-to-watch-for-in-2018-the-enterprisers-project/comment-page-5/#comment-1589083
Coinbase valued itself at about $8 billion when it made an offer in a recent acquisition deal that included its common shares. That internal estimate is much higher than its last preferred valuation.
Coinbase offered its stock at that approximate price when pitching an equity package to Earn.com investors, according to people familiar with the negotiations; Earn sold to Coinbase for over $100 million earlier this month. Earn’s investors asked for and instead recieved cash, the people said, but Earn’s management took at least some Coinbase stock.
It isn’t 100 percent clear if Earn’s management actually agreed to a deal at that price
Tomi Engdahl says:
Bill Gates warns cryptocurrency has a deadly side
https://www.cnet.com/news/bill-gates-warns-cryptocurrency-has-a-deadly-side/#ftag=CADf328eec
Microsoft co-founder says criminals, terrorists and tax evaders benefit from cryptocurrencies’ anonymous transactions.
Bill Gates is no fan of cryptocurrencies like bitcoin despite the tech community’s growing enthusiasm, linking them to drug-related deaths.
The Microsoft co-founder and philanthropist said during a Reddit Ask Me Anything discussion Tuesday he opposes cryptocurrencies because criminals, terrorists and tax evaders benefit from the anonymous transactions they allow.
“The main feature of cryptocurrencies is their anonymity. I don’t think this is a good thing. The government’s ability to find money laundering and tax evasion and terrorist funding is a good thing,” Gates wrote, responding to a reader’s question.
Gates also said that because cryptocurrency allows anonymous trading in drugs online, it’s “a rare technology that has caused deaths in a fairly direct way.”
Bitcoin, the most popular and oldest digital currency, sprang up in 2009 and grew in popularity partly due to its ability to intentionally avoid the prying eyes of law enforcement and government officials. That reputation grew thanks to it being the sole currency accepted on Silk Road, the Dark Web marketplace for drugs and other illicit goods and services that was shuttered by the FBI in 2013.
Tomi Engdahl says:
Bill Gates: cryptocurrencies have ’caused deaths in a fairly direct way’
https://www.theguardian.com/technology/2018/feb/28/bill-gates-cryptocurrencies-deaths-bitcoin-steve-wozniak-scam
Microsoft founder slams digital currencies as Apple co-founder Steve Wozniak reveals he was victim of bitcoin scam
Bill Gates, the philanthropist and former chief executive of Microsoft, is concerned by the crytocurrency craze, saying that the anonymity offered by the new technology has “caused deaths in a fairly direct way”.
Speaking during a Reddit AMA, Gates argued that “the government’s ability to find money laundering and tax evasion and terrorist funding is a good thing.
“Right now cryptocurrencies are used for buying fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way.” In contrast to cash, which is also untraceable, cryptocurrencies can be used remotely, which removes another avenue of control, he added.
Gates also suggested that investing in the sector is a bad idea: “I think the speculative wave around ICOs and cryptocurrencies is super risky”.
But Gates was positive about the overall direction of technology, dismissing concerns that rising automation could have negative consequences for the wider economy, and citing natural language understanding as the technology he’s most looking forward to over the next decade.
Tomi Engdahl says:
Has Your Company’s Infrastructure Been Hijacked by Bitcoin Miners?
https://www.securityweek.com/has-your-companys-infrastructure-been-hijacked-bitcoin-miners
Crypto-mining Malware Exposes Organizations to a Host of Monetary and Reputational Risks
With Bitcoin prices reaching a record high in December, cryptocurrencies have been dominating media headlines. While most choose to invest or trade in cryptocurrencies and bide their time while the prices rise, others find that the real money lies in mining it. And with the current reward at 12.5 bitcoins for mining one block of bitcoin transactions, it is clear why crypto-mining is a lucrative pursuit.
However, due to the enormous amount of required computing power, it’s almost impossible to profitably mine Bitcoin on commodity hardware such as laptops, smartphones, or desktop computers. It takes much too long and, in most cases, the cost of electricity is higher than the anticipated revenue. Profits from crypto-mining are therefore inextricably tied to the cost of electricity, with higher energy costs meaning a cut in profit margins.
Across these incidents, we’ve seen eager crypto-mining attackers surreptitiously penetrate corporate networks by spear phishing, or sneakily planting malware on websites, allowing the malware to spread laterally through a network. Irrespective of the threat vector, the end-goal is the mobilization of an army of crypto-mining machines – a cyber-threat that is notoriously difficult to catch.
Crypto-mining incidents happen daily.
Tomi Engdahl says:
BMW, GM, Ford and Renault launch blockchain research group for automotive industry
https://techcrunch.com/2018/05/02/the-mobility-open-blockchain-initiative-bmw-gm-ford-renault/?utm_source=tcfbpage&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29&sr_share=facebook
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BMW, GM, Ford and Renault launch blockchain research group for automotive industry
Jon Russell
@jonrussell / 6 hours ago
BMW Intel Self-Driving
Car makers BMW, General Motors, Ford and Renault are the big names behind a new group announced today to explore the potential of the blockchain in the automotive and mobility space.
MOBI — the Mobility Open Blockchain Initiative — launches today with over 30 founding members that also include Bosch, Blockchain at Berkeley, Hyperledger, Fetch.ai, IBM and IOTA. The group has a fairly broad goal of making transportation “safer, more affordable, and more widely accessible using blockchain technology.”
Tomi Engdahl says:
Nathaniel Popper / New York Times:
Goldman Sachs to open a Bitcoin trading operation, will begin using its own money to trade Bitcoin futures contracts on behalf of clients in the next few weeks — SAN FRANCISCO — Most big banks have tried to stay far away from the scandal-tainted virtual currency Bitcoin.
Goldman Sachs to Open a Bitcoin Trading Operation
https://www.nytimes.com/2018/05/02/technology/bitcoin-goldman-sachs.html
Most big banks have tried to stay far away from the scandal-tainted virtual currency Bitcoin.
But Goldman Sachs, perhaps the most storied name in finance, is bucking the risks and moving ahead with plans to set up what appears to be the first Bitcoin trading operation at a Wall Street bank.
In a step that is likely to lend legitimacy to virtual currencies — and create new concerns for Goldman — the bank is about to begin using its own money to trade with clients in a variety of contracts linked to the price of Bitcoin.
While Goldman will not initially be buying and selling actual Bitcoins, a team at the bank is looking at going in that direction if it can get regulatory approval and figure out how to deal with the additional risks associated with holding the virtual currency.
Tomi Engdahl says:
Fortune:
Square reports ~$34M in Bitcoin-related revenue in Q1, ~5% of its overall revenue, but earned only $223K more from selling Bitcoin than it paid to buy it
Square’s Bitcoin Business Is Struggling to Make Money
http://fortune.com/2018/05/02/square-bitcoin-earnings/
Square shed light on the state of its fledgling Bitcoin business in its earnings report Wednesday afternoon. The good news for the payment company is that it pulled in $34 million of Bitcoin-related revenue last quarter—the bad news is that Square spent nearly as much to acquire Bitcoin in the first place.
Square, which is best known for its dongle that helps small merchants accept credit cards, began officially offering Bitcoin purchases within its peer-to-peer payment service, Square Cash, in January, following a brief test program.
The Bitcoin trading service appears to be gaining some traction, accounting for nearly 5% of Square’s overall revenue.
Tomi Engdahl says:
Cryptocurrency’s Estimated Draw on World Resources Could Power Bangladesh
http://www.electronicdesign.com/power/cryptocurrency-s-estimated-draw-world-resources-could-power-bangladesh?NL=ED-003&Issue=ED-003_20180502_ED-003_605&sfvc4enews=42&cl=article_1_b&utm_rid=CPG05000002750211&utm_campaign=17046&utm_medium=email&elq2=f8a135d001bd433e8c8c34e45863e79a
Is the phenomenon of cryptocurrency sustainable? A number of factors come into play here, but as it expands, power consumption and requisite cost become the main issues.
When it comes to mining cryptocurrency and how much power is consumed during mining operations globally, nobody knows for sure. However, based on varied utility costs alone, it’s estimated at 53.99 TWh, or enough energy to power the country of Bangladesh annually, according to the Digiconomist Bitcoin Energy Consumption Index—a website dedicated to providing in-depth analysis regarding cryptocurrencies.
Cryptocurrencies are digital assets (currencies) designed for use as a medium of exchange in the same fashion as traditional assets or money. However, they use cryptography to secure transactions as well as control the creation of additional units and the verification of transfer assets. Most, such as Bitcoin and other altcoins, are decentralized, with control mitigated through blockchains. Blockchains are continuously growing lists of records that form blocks (i.e., ledger) containing a cryptographic hash (mathematical algorithm), which makes it tough to alter the data and therefore makes the digital currency secure.
Tomi Engdahl says:
RSA yet to be sold on magic pixie dust qualities of blockchain
https://www.zdnet.com/article/rsa-yet-to-be-sold-on-magic-pixie-dust-qualities-of-blockchain/
Just because you can solve your problems with a blockchain, doesn’t mean you should, according to RSA CTO Zulfikar Ramzan.
While the world rushes to slap a blockchain onto a growing number of applications to generate hype and excitement, RSA CTO Zulfikar Ramzan has told ZDNet that he is not convinced that many use cases of blockchain couldn’t be addressed by more traditional mechanisms, such as a database.
“For example, we talk about like supply chain management, people tout that as a very classic blockchain use case,” he said. “But to me, that seems like that’s a shared database use case — and you know, it’s funny because people who don’t understand the security nuances don’t understand why a database is not worse than a blockchain, in fact I think in many cases it is better.”
Ramzan said that in many cases, blockchain is a “heavy duty model” designed to address problems with a lack of trust, but often the solution has a number of trust assumptions built in. For instance, in the case of tracking an object, the process for assigning identifiers and adding the identifers to the blockchain need to be trusted.
The CTO told ZDNet that blockchain is starting to be regarded as magic.
“It’s become this magical pixie dust, where people think you can solve all problems, and yes, maybe you can use it to address a certain set of problems, but just because you can and doesn’t mean you should.
“You can buy a sledgehammer to push a thumbtack into a wall. You could also just use your thumb. It’s a much cheaper solution, and probably better for other reasons as well. I think that’s where we are.”
However, Ramzan was not prepared to write off blockchain totally.
“I don’t want to discount that there will never be any applications, or there aren’t legitimate use cases where you could try blockchain outside of cryptocurrencies. But I think people who haven’t really spent time understanding the nuances will … use a buzzword to get people excited about technology.”