Blockchain Lets This Startup Trade Gold That’s Still in the Ground

Blockchain Lets This Startup Trade Gold That's Still in the Ground

  

A number of Blockchain Projects have focused on Trading Bullion

During the past year, a number of blockchain projects have focused on trading bullion, but what about gold that's still in the ground? That seemingly unlikely business model is precisely the aim of a new partnership announced last month between Orebits, a startup providing asset-digitization for precious metal reserves, and blockchain product provider Symbiont. The deal would see the creation of so-called smart certificates, or smart contract investment instruments, tied to proven gold reserves (supplies of the metal known to be in the ground, but that haven't yet been processed). Despite the physical restrictions of the gold itself, the smart certificates, known as 'orebits', can now be freely traded and exchanged as tokens on a blockchain platform provided by Symbiont. Michael Zimits, Orebits’ president, and COO, told CoinDesk that each of the certificates will be backed by five ounces of proven gold reserves.

He said:

"Orebits derive their value from the price of traded gold, providing exposure to the price movement of the precious metal without having to deal with the physical properties and logistical concerns of holding the asset in tangible form."

As for how someone might confirm the gold reserves are real, Zimits explained that the smart contracts house this information directly. "This documentation is made available on the distributed ledger as part of the smart contract and includes geological surveys and findings, geologist verification, registered chain of custody, corporate documentation and owner background verification," he said.

As such, the partnership represents the latest effort to bridge the worlds of gold and blockchain. So far this year, companies like Euroclear and long-standing institutions like the UK Royal Mint have revealed plans to launch marketplaces enabling gold exchange via the technology. In this light, Orebits is the latest entry in what is proving to be an attractive use case for blockchain, and further fits into the broader trend of enterprises seeking to leverage blockchain tech to open new revenue streams.

Chuck Reynolds
Contributor

 

Alan Zibluk Markethive Founding Member

Tencent Joins China Blockchain Race With New TrustSQL Platform

Tencent Joins China Blockchain Race With New TrustSQL Platform

  

The Chinese Internet giant Tencent

is building its own Blockchain for enterprise-level services. Its platform, TrustSQL, aims to provide all the tools necessary for developing Blockchain applications for businesses. “It is found that the meaning of the Blockchain is that it can build a more reliable Internet system, fundamentally solve the value exchange and transfer in the existence of fraud and rent-seeking phenomenon,” a translated portion of Tencent’s whitepaper by Investopedia reads.

“More and more people believe that with the popularity of Blockchain technology, the digital economy will be more authentic and credible and the economy and society will become more fair and transparent.” Composed of three layers – core chain, product service, and applications – TrustSQL will include support for all manner of Blockchain-enabled tasks, including “digital assets, shared books, proof certificates, stock swaps and proprietary transactions,” the publication quotes the whitepaper.

Tencent has been somewhat off the radar in terms of Blockchain innovation until now. While fellow Asian tech giants such as Baidu and Samsung have been active in the research field, the company was identified as a potential loser in the ever-evolving regulatory setup in China. Tencent, as part of the so-called BAT group along with Baidu and Alibaba, is known for its tenacity in disruptive financial technologies, with all three outfits working at breakneck speed to update the Chinese domestic market before traditional banks.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Considerations when Pursuing Patent Rights in the Blockchain Technology Space

Considerations when Pursuing
Patent Rights in the Blockchain Technology Space

  

A blockchain is a subtype

of distributed ledger data structure, in which transactions are grouped into “blocks” that reference each other in cryptographic hashes.  Technologies are developing that implement blockchains to solve all sorts of problems related to transactions: privacy, security, data integrity, double-spending, dynamic/smart contracting, payments, interoperability, etc.  I started in this space at a time when there was very little published literature on blockchain technologies, including published patent applications. Times have changed; now patent applications for blockchain technologies are readily available, with many patents granted.  Blockchain technologies are a red-hot investment and development space right now and will be for at least the next couple of years. Many blockchain technology innovators begin with the same concerns. These concerns inspire the following five points of considerations for innovators in blockchain technologies who are interested in securing intellectual property rights.

Time is of the essence.  In 2011, the United States passed the America Invents Act, which was legislation that changed the patenting regime such that between two competing inventors filing an application for patent rights in the same or similar invention, generally the first inventor to file with the United States Patent and Trademark Office (USPTO) is the one who gets to claim patent rights on the invention.  Development in the blockchain technology space is moving at break-neck speed; a  compilation shows that since 2014, there are at least 275 patent applications in the blockchain technology space (and this list is missing quite a few groundbreaking publications).  Notice that blockchain-technology patents granted in the US tie the inventions to the physical computer processors. 

That’s yet another Alice-inspired patent application drafting adaptation.Strongly consider filing a provisional patent application as soon as feasible.  A provisional patent application does not need to be as detailed as a nonprovisional patent application, thus they are drafted quicker than are non-provisional patent applications.  The earlier a proper patent application is filed, the smaller the body of “prior art” from which the USPTO can pluck references to use against the invention’s patent application. Because time is of the essence, inventors will want to be organized enough to so that their patent attorneys can directly get to the meat of the innovative features of the invention. Patent attorneys benefit greatly from white papers and commented code. The attorney will be more efficient if s/he is able to reference well-drafted technical specifications. Great organization is a leg up in the race to file to the USPTO.

Find an appropriate patent attorney.  Not just any patent attorney– one with a technical background in computing applications.  The laws surrounding software-implemented inventions are quite convoluted and complex since the Supreme Court case Alice (2014) took us all down the rabbit hole.  So much so that many patent attorneys, who do not understand software applications well enough to understand the highly nuanced evolution of case law in this area, will say bizarre and wholly misleading things like “software can’t be patented.”  The intended meaning of the statement is absolutely false; software-related patent applications are granted nearly every Tuesday by the USPTO.  Likewise, if a candidate patent attorney gives the aura of being a master in this patent space, s/he does not have the mindset serve any blockchain technology client.  This space is developing so fast– no one understands or can hope to understand all of it anytime soon.  For now, all attorneys (even those with highly relevant computational technology backgrounds) must lean heavily on their inventors to understand the relevant aspects of blockchain technologies–things are moving rapidly for blockchain technologies.  That being said, though, an attorney who has worked with some clients in this space likely will have some foundation upon which to build an understanding of the invention.  When interviewing attorneys, ask about their relevant technical backgrounds.

If the patent application is simple, it’s stupid. Inventors and their patent attorneys should study granted patents in this space (most of which are well post-Alice!).  Not a single granted patent application in this space is written such that a layperson can easily understand the invention. This is absolutely appropriate because these applications are judged by the examiner under these criteria: they must be written so that a ‘person having ordinary skill in the art’ (PHOSITA) would be able to replicate and innovate off of the allowed patent application after the original invention’s patent term runs out.  Even with a software development background in network science, parallel computing, and trade-settlement technologies, and experience with blockchain technology patents, there are many concepts in the blockchain technology space that are still challenging for me.  I take care to probe my inventors as a PHOSITA.  Be careful about how much the attorney simplifies a patent application in the software-related arts space; it’s this dumbing down that’s led to the rejection of patent applications for truly innovative and nonobvious inventions (and began a progeny of absurd case law interpretation, a la Alice).

But do keep it neatly comprehensible. Remember that examiners and judges at the USPTO that will be reading the patent application, and that an assigned examiner might not know much about blockchain technologies yet.  Good patent applications for cutting-edge technologies set definitions early and conspicuously in the patent application. Define blockchain!  Blockchain networks and distributed ledger systems are not synonymous.  There is even disagreement as to the whether or not ‘blockchain’ is a concrete noun.  If consensus protocols are integral to the invention, patent application drafters should take care to define and describe them.  Many rejections of patent applications are as result of indefiniteness in the language of the application.  Drafters should not assume a USPTO examiner is just going to do an internet search and learn about these fundamental definitions on some widely-used wiki.  Have consistency between the language of the claims and the specification part of the application.  Claims inherit meaning from the relevant sections of the specification.  Patent prosecutors can and remind examiners of that when the examiner strays from proper claim interpretation.

Many inventors will pursue patent protection on the down low as they try to figure out what exactly they’re going to do with the invention.  Maybe the inventors are ultimately going to altruistically share the rights of to the technology for the greater good (altruism is a central cultural ideal and consideration in the original blockchain technology space or to get the network effects of a robust network of nodes.  No one yet knows for sure, however, what the future of blockchain technologies will look like. This is why inventors and their investors may want to bundle the rights in their IP now so that their choices for disposition are not foreclosed at the outset. As examples, opportunities may be foreclosed by another entity claiming the invention or the inventor’s own public disclosure.  Many inventors pursue patents for “defensive” purposes.  In any case, attorneys are bound by the highest level of confidentiality and may not act in ways that are averse to their client’s interests and wishes.  Patent attorneys in this space should seek to understand the culture of inventors and inventions in this space.

Blockchain technology innovators, in my experience, have great foresight and can understand many advanced concepts in patent law, perhaps because one must understand the economics of incentivization/gamification to implement true blockchain technologies.Raina Haque is the founder and lead patent attorney of Erdos Intellectual Property Law. Her technical background is in software engineering and bioinformatics. Prior to joining the legal profession, she was a business analyst and software engineer at a major Wall Street financial firm for global portfolio trading technologies. She was a research fellow at the National Institutes of Environmental Health Sciences in the Neurotoxicology and Nuclear Magnetic Resonance labs. At Wellesley College, her alma mater, she majored in bioinformatics. She serves the intellectual property needs of high tech and design clients. For more information, or to contact Raina, please visit her firm profile page.

Alan Zibluk Markethive Founding Member

How Blockchain Startups Will Solve The Identity Crisis For The Internet Of Things

How Blockchain Startups Will Solve The Identity Crisis For The Internet Of Things

  

The popularity of technologies

like the self-driving car and Amazon Echo are rising; it’s not hard to imagine a world where your coffee maker knows when to summon your morning Uber to work, and it arrives with groceries and laundry detergent, ordered directly by your refrigerator and washing machine, as they have recognized that they were low on supplies.This future will be powered by a set of inanimate objects connected through an emerging network known as the Internet of Things.  However, just as the security around the transfer of data between humans and companies is required to safeguard humans from identity theft, the same will be required for objects within the Internet of Things.

Identity protection is an emerging area for the Internet of Things. Millions of inexpensive consumer devices ship with a default username and password, but some of them end up in your house. Last winter a piece of software called Mirai herded hundreds of thousands of home routers and cameras into the most potent botnet ever, which then generated the first terabit scale distributed denial of service ever seen. What if there were a solution that permitted companies to reliably identify their customer’s devices without putting them in the position of holding customer data? What if there were a way to ensure IoT devices only accepted configuration from their legitimate owners? I talked to HYPR CEO George Avetisov about their biometrics and UniquID CEO Stefano Pepe about their device identity work to get a better feel for how blockchains will be used to solve these problems.

The service HYPR provides is a framework for passwordless authentication via biometric encryption. They don’t develop biometric devices, the focus of their innovation is creating a distributed, secure system based on existing, tested technology. We've covered the concept of cryptographic fingerprints here previously. Any digital item can be subject to some sort of cryptographic hash, then the hash can be used to check the validity of a digital item without the validator needing to have a copy. As an example, your phone's fingerprint reader does something involving a scan and a company that has access to a hash of your fingerprint's digital representation can validate you, but they don’t have the ability to impersonate you.

Digital fingerprints are just the start. HYPR supports all types of biometric data, from simple authentication algorithms for facial and voice recognition to more complex algorithms such as the way you type on a keyboard, the rhythm when you text on your phone, or how you walk on the street. Your home, your car, and your office all have access requirements and there is probably some degree of smarts already included. HYPR positions IoT vendors to include biometric authentication without a huge investment in expertise, money, or time to implementation.

A big part of HYPR's innovation is complete distrust of the internet for transmitting biometric data itself, which never leaves the user's cell phone. A single phone might get cracked and the biometric data used, but there is no path to hitting millions of victims in a single event. Where does the use of a blockchain fit in all this? It will serve as a distributed, trustless store of biometrics validation data. There are several implications and not all are obvious. A blockchain based system is resistant to denial of service attacks that cripple centralized businesses.  Why?  Because instead of bringing down a single server farm hosting with the authentication data, a DOS attack would have to identify and bring down many blockchain nodes hosted by several parties within the same permissioned blockchain environment.

Equally important to DOS protection is business process interoperability. Avetisov explains, “We are building use cases around associative forms of identity through the blockchain.  Right now you can not authenticate between two different corporate entities, such as a bank and a car insurance company because there is not a shared identity between the two companies.  Each company has a different identity stack that is not interoperable.  By using a blockchain, you can have an interoperable ledger for identity between multiple entities without a complex infrastructure.  An insurance company can prove your identity to a bank or a credit card can prove your identity to a streaming service all through biometric data.”

How does it all work?  While the exact mechanics have not been finalized, it would involve each company acting as a validator of the data within the network running nodes that are constantly accepting biometric data. When a company that is not running a node wants to authentic a user, they would look to the network and the nodes would provide data on the last time stamp that a particular user could have been identified with a particular device accepting biometric data.  If the user can prove they had a device that the network has agreed is associated with their identity within a recent timeframe, the user is then authenticated.

The value here is that different companies can identify users based on their specialized identity stack and provide authentication to others without sharing any of their personal data.  Converting your customers to use biometrics is a complex, expensive project. But if 70% of your customers are already using a system from another company, and that system has been built with an eye on assisting third parties to make the jump to biometrics, the barrier to entry is dramatically lowered. Cost savings begin in quarters rather than years.

What sort of benefits accrue if diverse businesses authenticate their users with the same biometrics system? Here's a scenario Avetisov offered that's a nightmare today, but which would have a happy ending in a biometrics enabled world. Children don't typically have identity information until their later teen years when they start driving, so there is a three to five year window where they are allowed to roam widely without a formal ID. If they're brought to a hospital injured and unresponsive there is a delay while they are identified, wasting some of that golden hour in treating shock and trauma. A biometric solution accelerates that process and a blockchain allows that medical institution to authenticate through the identifying information collected from other companies.

These use cases could be implemented using Bitcoin's blockchain, but HYPR has chosen a private solution. While individuals are using biometrics to authenticate, they do so with large entities, and HYPR has focused on serving the needs of banks, health care, and insurance providers.  For these enterprises, regulation around data security is a great concern.  While a public blockchain with hashed or encrypted data provides high levels of data security, it is still unclear how managing data in such a way would fit within the current regulatory framework.  As such, private or permissioned blockchains are the fastest way to market without the need to educate regulators.

While HYPR is focused on how to build an interoperable environment for humans to be authenticated via various IOT devices, UniquID is building technology that identifies the devices themselves while they are offline through a very clever use of blockchain technology and smart contracts.

Pepe offered an interesting example of how an offline smart contract might work, “If you want to rent a Zipcar, what happens if neither your phone or the car cannot connect to the internet.  You can’t unlock the car with your smart phone unless the owner of the car comes with the keys in his pocket, drives the car out, and brings the car to a place to download a certificate. This is the only way for the car to establish a secure connection with your phone.  However, with UniquID there is a very different scenario.  Both the car and the smartphone have a UniquID wallet on the blockchain. Zipcar creates a smart contract on the blockchain that unlocks the car for a specific smartphone when a token is received in the car’s wallet.  The smartphone downloads [all or a portion of] the blockchain with the smart contract already executed.  Then when you go to the car without internet, your smartphone uploads the missing blocks of the blockchain that the car does not have, with the executed smart contract, and the car unlocks for the person with the correct smartphone.”

Through this innovative use of blockchain technology, devices do not have to be connected to the internet in order to communicate, identify and authenticate with each other in a secure way.  This is an important mechanic for devices to be able to capture real-time data and communicate with one another in real time.  

Unlike HYPR, which can be built on either a permissioned or public blockchain, this use case relies on the security provided through the proof of work mechanism of a public blockchain.  A private blockchain environment, particularly a small one, may have vulnerabilities that a motivated attacker could exercise, modifying data in ways an offline node could not detect. A public blockchain’s security mechanism, proof of work consensus, costs the same amount to fraud, whether online or offline. Global bitcoin mining capacity is 3.75 million terrahashes per second. Translating that to something you can visualize, an AntMiner T9 will do 12.5 terrahashes per second, costs $1,140, weighs twelve pounds, and consumes 1576 watts. You’d need 300,000 of those to match current global Bitcoin capacity and theoretical attacks could be done with 10% of the total – a hundred and twelve tons of gear consuming 37 megawatts of power costing $34 million.

If you’ve got a $20,000 vehicle but it would take the purchase price of a 220’ yacht to steal it, such attacks are going to remain at the proof of concept stage. However, it is important to note that a downside to the current layout of this plan may require a device to download an entire blockchain, which would be cumbersome for a small IOT device. UniquID has very ambitious plans on how to improve device identity and communication through a new type of secure network that will act as alternatives to SIM networks and certificate authorities that I call decentralized certificate authorities.  Unfortunately, UniquID has not yet released a white paper describing their service, so we’ll save that for another article.

You can see how these technologies will be required for a future with an Uber ordering coffee maker, a grocery ordering refrigerator, or laundry room that makes sure you’re always ready to do the next load. Humans will be identified by biometrics, devices by unique attributes like MAC addresses, likely in combination with the unique attributes of the human that first uses them, imprinting to their new owners the way some newborn animals do with their mothers.  When a service needs to leave a message for a device that isn’t always on if it’s small it’ll be placed directly on a blockchain, while larger data say a software update, will be left as a URL on the blockchain and a cryptographic fingerprint of the file.

We’ve had robotics on factory floors for two generations, lines of carefully laid out systems assembling goods. That sort of automation is going to spread from within a single organization to across multiple enterprises, reaching out to consumers, and eventually imbuing the entire supply chain with situational awareness, speeding deliveries and reducing the need for human interactions.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Blockchain Tracker: Blockchain’s Role In Digital Advertising

Blockchain Tracker:
Blockchain’s Role In Digital Advertising

  

Although it’s still in its infancy stage of being used

outside of the financial arena, blockchain technology is slowly showing signs of impacting other industries. On the tip of everyone’s tongue in the digital advertising arena is blockchain technology. Just as recent as this January, ethereum-based blockchain technology company adChain partnered up with decentralized application studio ConsenSys with the goal of specifically developing a blockchain solution for the online advertising industry.

ConsenSys’ Founder, Joseph Lubin, commented in the joint press release about how blockchain technology adds value to digital advertising: “There is tremendous value and disruption potential of this technology beyond FinTech. The development of smart contract-based applications in digital advertising is an ideal use case for blockchain. Supply chains and value chains are ideal use cases for Ethereum, as it enables many cooperating and competing participants to work fluidly together on a shared platform that they can all trust to realize an efficient and fraud-resistant n-sided marketplace. We’ve been iterating on the adChain blockchain implementation for a year and believe adChain will significantly change the way advertisers and publishers operate their supply chains to exchange ad impressions.” Developed through the Swiss non-profit organization, The Ethereum Foundation, ethereum is a blockchain platform that’s defined as “a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.”

As such, it should come as no surprise that the digital advertising realm is beginning to use blockchain to help prevent fraudulent advertising. The first example of the technology’s use in digital advertising comes from Los Angeles-based startup company MetaX. It seeks to fight ad fraud via its new adChain protocol, which enables its own supply chain to adapt in a scalable, trustworthy and secure manner via blockchain. MetaX’s Co-Founder and CEO, Ken Brook, understands how quickly the digital advertising arena is growing and thus believes standard industry procedures just won’t cut it. “Blockchain has a number of exciting implications for digital advertising. Fraud prevention is a natural first application given the transparency and security blockchain brings, and because fraud is such a major issue for the advertising sector,” he said.

Another avenue blockchain technology is being used for in digital advertising is ad-delivery verification. While trust in advertising isn’t at its highest point, some are touting that blockchain has the ability to be used to see if advertisements are being delivered and whether or not they’re going to the correct place. Blockchain also allows advertisers to track who opened the ad, where it was opened and what possible conversion rates are from the promotional push. Through all of this, blockchain ultimately helps out two parties, which include the digital advertising industry, with its budgeting, and streamlining its services and consumers with transparency into ad practices. By removing any third-party interference, access to information on how advertising works internally and the paths it takes to reach consumers will allow the public to likely have more control over incoming targeted messages.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Golem Is 10th Most Valuable Crypto

Golem Is 10th Most Valuable Crypto

Golem, the Airbnb of computing has set yet another record

It appreciated 15.49 percentage points to dislodge MaidSafeCoin from the tenth spot on CoinMarketCap on Friday morning Eastern Time. The Ethereum Token took many people in the industry by surprise when it rose almost 100 percent in February to be at number eleven. Since then, it has not disappointed its holders and investors. It, therefore, did not flabbergast many when it made it to the first ten today.

When Cointelegraph reached out to Julian Zawistowski, CEO and founder of the Golem Project, he was elated but cautious as usual. "This is exciting. But I think we should not get too excited but keep our focus on advancing the technology. I believe that applies to the whole industry," Julian told Cointelegraph.

Sustainability of growth

This was his response when asked whether top ten statuses won't be a flash in the pan: "If you ask me about the future rationality of the crypto market and sanity/insanity of the valuations, the answer is: I do not know. If you ask me about what we are going to do within Golem project, the answer is: we are working hard." There are so many instances where altcoins made it to the elite ranks of CoinMarketCap, only for them to disappear in a short while into the lower echelons never to be seen again. However, Nick Kirk aka ‘Mintegration’, a veteran of IBM Research, who also holds a substantial number of Golem token believes in the case of Golem it is antithetic.

"I love what Golem is doing, and I'm genuinely interested in HPC.(High-Performance Computing) This space is ripe for disruption. I hold a good proportion of my capital in GNT. I'm going to support the network as much as I can. I'll be working on a proof of concept (PoC) very soon – using Golem for Machine Learning tasks (e.g. training my models). No-one knows how much GNT could rise, but it has tremendous potential. If you look at the other top ten coins, Golem is one of the few with real utility." Nick urged the community members to buy some GNT and support Golem since it is the coolest network in the crypto land. It is his conviction that the network's growth rate will be very significant in the coming years.

Will MaidSafeCoin succumb?

If you have observed MaidsafeCoin whom Golem displaced from the tenth position, it is one of the most resilient cryptocurrencies around. Anytime it is dislodged, it comes back strongly to takes its former position. It won't be a surprise to see the Scottish darling boy taking over number 10 again but Golem seems to mean business looking at its growth rate since the February bang that gave it recognition and respect in the ecosystem. In fact, the difference in market cap between the two cryptos is less $1 mln. As usual, only time will tell if Golem will survive as an elite digital currency. Cointelegraph will always keep you updated with the important developments.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

Understanding The Basics Of Blockchain And Why Banks Are Keen To Adopt Them

Understanding The Basics Of Blockchain And Why Banks Are Keen To Adopt Them

  

Although distributed ledger technology

(DLT) has been making news in recent years, its origin dates back to about 10 years ago.  Of the various options available today, blockchain is the most prominent. As its name suggests, blockchain is a chain of “blocks,” where a single block is a set of verified transactions identified by a unique hash number. When a block is completed, a new one begins, and each block is linked to its predecessor and successor in a chain. Whereas a single verified transaction stands as an independent entity in traditional systems, in blockchain, the independent entity is a set of transactions that together make up a block.

A fundamental difference between a traditional transaction and one conducted through blockchain is the nature of contracting parties. The conventional system needs only two parties, who enter into a contract governed by mutually agreed to terms and conditions and verify each transaction against that covenant. No other party (other than a central intermediary or agency, such as a bank) is required to execute the contract.

In a blockchain transaction, on the other hand, the transacting parties, as well as every member of the network (which can run into hundreds of thousands), must validate each transaction before it can go through.

For this reason, a blockchain transaction is immutable and, hence, highly secure and trustworthy. Any change must be approved by the entire network before it can be executed, and is immediately reflected in every member’s copy of the ledger. Because the network validates every ledger entry by consensus, there is no longer a need for a central monitoring agency or any other intermediary.

What Role Does Blockchain Play In The Bitcoin Ecosystem?

Well, the distributed ledger is not just the technology underlying cryptocurrency, (blockchain underlies bitcoin, for instance), it is the very reason cryptocurrency exists. Without the trust and transparency engendered by blockchain, there is no way a bitcoin transaction, which is totally anonymous and involves no intermediary or supervising authority, would have been accepted by the market. It is the blockchain network that assures the transacting parties that the bitcoin exchange they are undertaking is genuine and shall be honored.

Although blockchain started out recording only financial transactions, it has since diversified into document validation. When digital documents and images are uploaded on blockchain and time-stamped, they are automatically “version-controlled” and proven to be in the possession of an individual or business entity at the time recorded.

Why Blockchain Is Important To Banks

It is easy to see why blockchain could be of enormous significance to banks, which process and document millions of transactions each day. The global financial crisis eroded trust in the banking system to an all-time low, while taking regulation to an all-time high. By ushering in a “trust economy” that assures the security and genuineness of transactions, blockchain is giving financial institutions a chance to redeem the lost faith and confidence of their customers.

And, at a time, when some banks are finding it hard to even meet their cost of equity, blockchain offers a way to reduce the cost and lead time of a transaction: one estimate says it could take between$15 Bn-$20 Bn off banks’ annual infrastructure costs by 2022. Other benefits include new process automation opportunities and the creation of new investible assets. These are the principal reasons why banks the world over are taking a very clear interest in distributed ledger technology, despite being cool towards digital currency. Most big banks worldwide have some blockchain initiative in the works in partnership with other banks, fintech startups or established technology companies.

In January 2017, Infosys presented a survey jointly with LTP, on the use cases and challenges surrounding blockchain adoption in banking. Half of the respondent banks had already started exploring blockchain. 50 percent of the surveyed companies were either working with a fintech firm or with a technology company on blockchain, while 30 percent had opted to be part of blockchain consortiums. Cross-border remittance, digital identity, and clearing & settlement were rated the top three use cases, with more than 40 percent of banks working in these areas.

A good example of blockchain in international remittance is the pilot network from Emirates NBD and ICICI Bank, launched in October 2016 on the busy UAE India corridor, which carries about$ 70 Bn of the world’s total $ 580 Bn worth of remittances. Invoice financing and Letter of Credit processing rounded off the top five use cases.

While the banks in our survey recognized the blockchain opportunity, they cited a few challenges in the way of adoption. Their main concerns were that the blockchain ecosystem – without which transactions can never scale – wasn’t quite ready, and that it would be difficult to integrate blockchain applications with other enterprise applications. The financial services industry will have to find a solution to these challenges to turn the blockchain dream into reality.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

‘The’ Blockchain – Reshaping the World of Business

‘The’ Blockchain – Reshaping the
World of Business

  

The first generation of the digital revolution

brought us the Internet of information. The second generation — powered by blockchain technology — is bringing us the Internet of value: a new platform to reshape the world of business and transform the old order of human affairs for the better.

I’m reasonably confident … that the blockchain will change a great deal of financial practice and exchange … 40 years from now, blockchain and all that followed from it will figure more prominently in that story than will bitcoin.

Blockchains come in many shapes and sizes – permissioned vs permissionless, proprietary vs open source, and with a sometimes confusing array of consensus mechanisms underpinning their core functionality. So how does one choose a direction that’s right for different financial applications? Determining how data transparency vs privacy and security plays a role in blockchain choice. We will discuss those topics, and so many more! But, let's get acquainted.

What are Blockchain Technologies?
How do blockchains work?

A Blockchain is a distributed ledger of unchangeable, digitally recorded data. Data of any type can be recorded in a blockchain: financial transactions, titles to real estate, etc. Unlike a traditional database housing the same data, a blockchain does not have to rely on a centralized administrator.

Blockchain Applications
These applications are powered by blockchains

These are the use cases where blockchain technologies can be applied to improve efficiency or unlock capabilities for new technologies.

Blockchain Companies
Innovative companies building with blockchain technologies

200+ Blockchain Companies … and counting….With blockchain venture capital funding well past the $1 Billion mark, the amount of invested capital into new startups is pointing towards blockchain companies being around for quite a while.The following blockchain technology companies are a subset of the many who are blazing the trail for global distributed ledger technology adoption.

Blockchain Venture Investing
Fund Promising Blockchain Startups

Overall blockchain related venture capital funding just crossed over the $1 Billion mark. This method of blockchain investing can have various levels of entry, with initial seed investments (as little as $5,000), up to Series A investments ($1M+). Venture capitalists can play a more dynamic role, such as providing mentorship and/or providing introductions. If a company is able to drive growth with promising results, a venture capitalist may opt to become a partner in the company, owning equity and joining the company’s board.

Cryptocurrency

Cryptocurrency is the next evolution of money. We know that in ancient days, commodities essential to daily living were considered money (e.g. cows and chickens) and traded among micro-economies. Then the modernization of society and urban cities brought the need to track money and value across large territories of land, which resulted in the birth of paper and coin money issued from the ruling governments. A quarter of a century ago, an invention called the world wide web made it possible for people to buy and sell virtually anything, to anyone around the world using bank-issued credit cards, which are a substitute for paper and coin issued currencies and provide electronic payment. Finally, several years ago, a new form of money that is native to the internet was born – cryptocurrency. Below we explore what this new type of money is, how it works, and how you can get involved.

Cryptocurrencies

can be thought of as a new type of digital commodity or digital money. They can act as a fuel for distributed ledger networks and also be used as mediums of exchange to purchase goods and services. Depending on intent, cryptocurrencies can also be treated as an appreciating long-or-short-term investment. Cryptocurrency values have been subject to extreme periods of volatility (in some cases up to 20%±), creating both risk and opportunity. As such, it is a worthwhile effort to perform in-depth due diligence before making any investments in cryptocurrencies.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

China’s Blockchain Invasion

China’s Blockchain Invasion

  

Word in China is out about blockchain technology,

as the government made clear in an Informatization Strategy published in December of 2016. The strategy states, "The internet, cloud computing, large data, artificial intelligence, machine learning, blockchain … will drive the evolution of everything – digital, network and intelligent services will be everywhere." It was an official endorsement for the new digital age and a big boost for blockchain technology. In a country with $5.5 trillion in digital payments last year (50 times the U.S.), blockchain is now a buzzword among the titans of industry. And in the race to participate, Chinese banks, builders, suppliers and retailers are pumping out blockchain solutions.

Survival of the Fittest

Even with millions of dollars, many of these new blockchains may not make it very far. In a recent WeChat post, Antshares executive Erik Zhang stated that 90 percent of the enterprise blockchains we are seeing are doomed to fail. Without an open-source code that anyone can build upon, Zhang argues, private solutions will not see the network effect of a healthy ledger. The big question for China, however, is whether a country known for its centralized authority, and a penchant for all things made-in-China, will allow an open-source, global standard solution sit on its internet. With Bitcoin, Ethereum and Hyperledger vying for dominance, there are big names within China making moves into the space.

A few of these big names include:

The People's Bank of China (PBOC)

The PBOC is reportedly close to the release of a government-backed digital RMB currency, which would put China at the frontier of digital currency adoption. And there are whispers within China that Shenzhen will be ground zero for the new digital economy. In September, Bloomberg reported that PBOC Vice Governor Fan Yifei wrote: "[T]he conditions are ripe for digital currencies, which can reduce operating costs, increase efficiency and enable a wide range of new applications." This would pave the way for blockchain startups in China to move forward in digital banking, finance, record-keeping, supply chains, IoT, AI and more.

Wanxiang Blockchain Labs

Working with Ethereum, Wanxiang is the largest blockchain development backer in China. After purchasing 500,000 ETH tokens last year, they pledged $30 billion for the development of a smart city in Hangzhou. They offer open-source platforms for anyone to build upon, and launched an accelerator fund for developers, intending to put money into promising projects and integrate digital apps into China's 21st-century cities. At a recent Fintech Summit in Hangzhou, Dr. Xiao Feng, GM of Wanxiang Blockchain Labs, said, "The first generation of internet technology has brought great changes to society. In China great companies like Alibaba, Tencent and Ant Financial have emerged. The blockchain represents the second generation of the internet," adding that big changes will come with artificial intelligence, encryption, decentralization, finance and the transfer of value.

Wanda Group

Wanda Group is the world's largest private property developer, with its own hotels, theme parks, shopping malls, AMC Theatres, media companies and department stores. In 2016 Wanda joined Hyperledger, intending to build smart apps for its businesses. Five months later, Wanda announced its blockchain platform Polaris for smart supply chains, pharmaceutical management, finance and invoicing. Now the company is working with China's Ministry of Industry and Information to draft domestic blockchain standards and a Chinese blockchain white paper. And Wanda insists Polaris will be an open-source blockchain for all. When announcing Polaris at the Shanghai Hyperledger Hackathon in March, Ji Zhoudong, GM of Wanda Feifan Technology Research Center, said, "Wanda attaches great importance to being open source, the core of which is to foster progress through community, openness, collaboration and sharing."

Alibaba

Alibaba took a small step onto the blockchain in March, when it teamed up with PwC to build a pilot platform to prevent counterfeit foods. Food fraud is a big issue in China, as are fraudulent goods across Alibaba's many online platforms. If the pilot is successful, blockchain tracking may be applied to all goods on Alibaba's supply chain. Alibaba's financial arm, Ant Financial, is also embracing blockchain technology, as CEO Eric Jing recently told CNBC . According to Jing, "[T]hese technologies will be used … to bring more, a high level of security," also saying that in the future, artificial intelligence and blockchain will be "deeply" integrated into Ant Financial's business.

ICBC

The largest and most valuable bank in the world, ICBC is adapting quickly to the fintech revolution. Speaking at a conference in March 2017, ICBC's Huiman Yi said, "We place great importance on the research of advanced technology and the cultivation of technical talents. We have established seven innovation labs in ICBC's head office for artificial intelligence, cloud computing, blockchain, bioidentification, big data and internet finance." And according to Yi, a blockchain-based financial trading system is coming to the public soon.

Other Chinese companies making moves onto the blockchain include:

  • Foxconn – The producer of Apple's iPhones (for supply chain finance)

  • JD.com – A leading online retailer (for consumer finance applications)

  • Juzhen Financials – Banking and finance (to bring distributed tech to financial markets)

  • Zhongnan Construction – A property conglomerate (for trading agricultural products)

  • CreditEase – Microfinance and wealth advisors (as a supply chain tool for businesses)

  • Shanghai Insurance Exchange – An insurance trading platform (for securing trades)

  • Qtum – To bring decentralized applications to China

  • Antshares – For decentralized registration and issuing, transactions, settlements and blockchain-based digital payments

Who Will Rule the Kingdom?

Just before Ethereum's Devcon2 in Shanghai, Vitalik Buterin tweeted, "Chinese ethereum community full steam ahead." Since then, blockchain tech has taken Chinese industries by storm. With so many new blockchain solutions, it's hard to keep an eye on the developments in China. Things are moving fast, and it's great to see such energy devoted to the technology. As word continues to spread, expect to see more Chinese blockchains entering the fray, until we see leaders emerge, and then consolidation. In the meantime, grab a noodle bowl and watch it all unfold and marvel at the swiftness of China's blockchain invasion.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member

How to fix the blockchain ‘fail whale’ problem

How to fix the blockchain
‘fail whale’ problem

If you’ve spent any amount of time on the internet

over the past several years, you’re no doubt familiar with the “fail whale” that plagued Twitter in its formative years. Users would log into the service, only to be confronted by a graphic of a whale with the message: “Twitter is over capacity.” Ultimately, Twitter’s fail whale problem came down to scalability, and it’s the same issue that’s facing blockchains today.

Blockchains are in a promising, yet precarious state. As more governments and private entities seek to understand and harness the technology, their shortcomings become more glaring. Growing pains are real indeed, and companies seeking to leverage the undeniable power of the blockchain are being confronted by its scalability limitations. Just as Twitter had to answer tough questions as it prepared to go public, the blockchain industry now must adapt to concerns that accompany many burgeoning new technologies.

So, how do we as an industry confront the scalability issue? Bitcoin and Ethereum were not built to successfully scale because all their transactions and smart contracts exist on a single public blockchain, rather than on state channels. State channels are a two-way transaction channel between users or between machines. Smart contracts inside these state channels dictate how value flows and what's executed automatically, while still keeping the cryptographic properties of a single public blockchain: trustless transactions without intermediaries, here even with the speed of light. Blockchains of the future will require private state channels to scale, in a similar way to how the public court system only deals with contract infringements (edge cases) and not every single contract that's written.

Beyond the issue of state channels, successful blockchains must be willing to provide a platform for applications by third-party developers. Just as Bitcoin was introduced by Satoshi, every decentralized system starts as centralized, and innovations work best when there’s an individual party at the helm.

Whichever blockchain achieves mainstream adoption will also be adopted for private use cases, and the blockchain that is suitable for both public and private use will instill guidelines to build a user-friendly experience. Ethereum has thus far failed at this. Ethereum’s blockchain architecture offers only a ground layer, providing no coherent design, no coherent API for web apps and no straightforward naming system. Much like Apple took over the computing industry by incorporating hardware and software with design and user experience in mind, successful blockchains will need to do better in enforcing guidelines for developers.

By incorporating state channels to enable trustless smart contracts, and maintaining standards for design, blockchains can overcome scalability roadblocks and tackle the “fail whale” issue head-on. We’ve created a modular yet holistic approach to blockchain technology, built from the ground up to be scalable for mainstream adoption and private use cases. Developers will be able to introduce apps (æpps) using private state channels, benefiting from trustless smart contracts and instant transactions. We hope to set a new standard for blockchain development, one that can usher in a new era of decentralization.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member