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Category: Markethive

Bitcoin Scaling: Jeff Garzik AsicBoost Comments Lead to Frustration

Bitcoin Scaling:
Jeff Garzik AsicBoost Comments
Lead to Frustration

    

Bitcoin Core developer

Jeff Garzik has sparked contention with a post asking if further measures were needed to prevent covert AsicBoost. Addressing the work group (WG) on Github, Garzik put forward a selection of next steps aimed at “testing protocol/software changes that ban/disable/render ineffective this hardware optimization.” However, fellow contributor Greg Maxwell responded accusing Garzik of attempting to allow AsicBoost to, in fact, continue under his “modified version” of Segregated Witness with a hard fork.

Maxwell wrote:

“So to be clear about what you've written between the lines: you have decided that impeding covert asicboost would be a violation of the "SegWit2x charter" and so you will assure that covert asicboost continues to function in your modified version of segwit and HF as people have been alleging you would do? This will require further departure and incompatibility with the segwit proposal.”

Infighting among Core members has continued on the topic of Bitcoin’s future following Barry Silbert’s attempt to ratify an agreement which would see SegWit introduction in September followed by a cooling-off period for a block size increase to 2 MB. Reactions have been mixed, while practicality problems on the Bitcoin network are resulting in greater user calls than ever to initiate a binding solution. Garzik, meanwhile, faced pressure to state whether he intends to have AsicBoost disabled. “Anything that was not discussed is, by definition, A New Issue To Raise And Discuss. Which is what was done here,” he wrote.

Chuck Reynolds
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Alan Zibluk Markethive Founding Member

Ponzi Alert: New Zealand Lawyer Labels “We Grow Bitcoins” Simple Scam

Ponzi Alert:
New Zealand Lawyer Labels
“We Grow Bitcoins”
Simple Scam

    

A New Zealand lawyer has called suspected pyramid scheme

We Grow Bitcoins a “simple scam” after a news investigation. In an article by local platform Newshub, consumer law specialist Prajna Moodley concluded that investors funneling money into the scheme, which promises 62 BTC ($148,300) monthly returns, would never see their cash again.

“I would go as so far as to say it's a simple scam, from what I can work this involves people investing money and never hearing from the company again," she told the publication. The investigation focuses on the story of a New Zealand investor by the name of Daniel Tepania, who sent the so-called “crowdfunding community” the required NZ$30 minimum entry fee and is awaiting payouts. "It's only been here about a month so I thought I would give it a go, sounded quite good," he told Newshub.

New Zealand’s Commerce Commission pointed journalists to its legislation on pyramid schemes when approached about We Grow Bitcoins, such schemes being illegal under local law. “WeGrowBitcoins is a member to member donation platform,” the website states. “Members pay a monthly subscription to have access to the platform. Platform access allows members to receive donations directly into their bitcoin wallet from other members.” Cointelegraph would like to remind readers that investing in projects purporting to deliver unproven profits in return for direct payment should be avoided.

Chuck Reynolds
Contributor
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Alan Zibluk Markethive Founding Member

How Do Bitcoin Transactions Actually Work

How Do Bitcoin Transactions Actually Work

How Do Bitcoin Transactions Actually Work

 

Whether you’re interested in becoming a developer for blockchain applications, or you’re just looking to understand what happens under the hood when you send bitcoin to a friend, it’s good to have a working knowledge of what happens when you create and broadcast Bitcoin transactions to the Bitcoin network. Why?

Because transactions are a basic entity on top of which the bitcoin blockchain is constructed. Transactions are the result of a brilliant collision of cryptography, data structures, and simple non-turing-complete scripting. They’re simple enough that common transaction types aren’t overly-complex, but flexible enough to allow developers to encode fairly customized transactions types as well. Today we’ll take a tour of the former.

As a developer, how does your bitcoin client post a new transaction to the network (and what happens when it’s received)?

What exactly is happening when you send some bitcoin to a friend?

This post will assume that the reader has a basic understanding of hashing, asymmetric cryptography, and P2P networking. It’s also a good idea to have a good sense for what exactly a blockchain is, even if you’re unfamiliar with any specific mechanics.

Bitcoin Transactions and their role in the bigger picture

Bitcoin is comprised of a few major pieces: nodes and a blockchain. The role of a typical node is to maintain its own blockchain version and update it once it hears of a “better” (longer) version. Simply put, the blockchain has blocks, and blocks have transactions.

 

With this simplified but accurate picture in mind, you might be wondering what exactly a transaction is made out of.

How will understanding transactions help me to become a better blockchain developer?How do transactions allow me to transfer some bitcoin to a friend?

It turns out that the answers to these questions vary based on many things. Even assuming that we’re talking only bitcoin, we can use transactions in a number of creative ways to accomplish a variety of personalized goals. Let’s start at the beginning, that is, let’s take a look a good old-fashioned pay-to-PK-hash transaction type. After all, this type of transaction accounts for over 99% of all transactions on the bitcoin blockchain.

First, let’s build a mental model. It’s tempting to think of bitcoin as an account-based system. After all, when I send bitcoin to somebody, that person receives money and I’m left with a remaining balance. In the real world though, things are represented a bit differently. Generally speaking, when I send money to somebody I am sending spending all of that money (minus transaction fees). Some of that money will be spent back to my own personal account if there exists a remaining balance. The point is that all of the money moves every single time.

How Do Bitcoin Transactions Actually Work?Save

This was somewhat confusing to me when I first saw it, so I’ll elaborate a bit. When I post a transaction, I’m essentially “claiming” an output and proving that I have permission to spend the amount of money at that output. So if I’m Bob and I want to pay Alice, those inputs are my proof that I have been given a certain amount of money (although this might just be a portion of my total balance), and the outputs will correspond to Alice’s account. In this simple case, there would be only a single input and a single output.

A deeper look into Bitcoin transactions

Let’s understand the mechanics of a real bitcoin transaction. We’ll use the image above as a reference.

If you were to cut open a typical bitcoin transaction, you’d end up with three major pieces: the header, the input(s), and the output(s). Let’s briefly look at the fields available to us in these sections, as they’ll be important for discussion. Note that these are the fields that are in a so-called raw transaction. Raw transactions are broadcast between peers when a transaction is created.

The Header

hash: The hash over this entire transaction. Bitcoin generally uses hash values both a pointer and a means to check the integrity of a piece of data. We’ll look at this more in the next section.

ver: The version number that should be used to verify this block. The latest version was introduced in a soft fork that became active in December 2015.

vin_sz: The number of inputs to this transaction. Similarly, vout_sz counts the number of outputs.

lock_time: We’ll look at this more in later articles, but this basically describes the earliest time at which a block can be added to the blockchain. It is either the block height or a unix timestamp.

Input

previous output hash: This is a hash pointer to a previously unspent transaction output (UTXO). Essentially, this is money that belongs to you that you are about to spend in this transaction.

n: An index into the list of outputs of the previous transaction. This is the actual output that you are spending.

scriptSig: This is a spending script that proves that the creator of this transaction has permission to spend the money referenced by 1. and 2.

 

Output

value: The amount of Satoshi being spent (1 BTC = 100,000,000 Satoshi).

scriptPubKey: The second of two scripts provided in a bitcoin transaction, which points to a recipient’s hashed public key. More on this in the last section of this article.

Transaction verification

One of the jobs of a bitcoin node is the verify that incoming transactions are correct (data hasn’t been tampered with, money isn’t being created, only intended recipients spend UTXOs, etc). A more exhaustive list can be found online, but I’ll list out a few of the important ones here:

 

All outputs claimed by inputs of this transaction are in the UTXO pool. Unspent outputs can only ever be claimed once.

The signatures on each input are valid. More precisely, we’re saying that the combined scripts return true after executing them one after the other. More on this in the last section.

No UTXO is spent more than once by this transaction. Notice how this is different than the first item.

All of the transaction’s output values are non-negative.

The sum of this transaction’s input values is greater than the sum of its output values. Note that if the numbers are different, the difference is considered to be a transaction fee that can be claimed by the miner.

A basic pay-to-PK-hash transaction

Bitcoin has its own custom (Forth-like) scripting language that is powerful enough to allow developers to create complicated and custom types of transactions. There are five or so standard transaction types that are accepted by standard bitcoin clients [5], however, there exist other clients that will accept other types of transactions for a fee. We’ll just cover the mechanics of pay-to-PK-hash here.

For any transaction to be valid, a combined scriptSig/scriptPubKey pair must evaluate to true. More specifically, a transaction spender provides a scriptSig that is executed and followed by the scriptPubKey of the claimed transaction output (remember how we said inputs claim previous unspent transaction outputs?). Both scripts share the same stack.

In the interest of efficiency, let’s use (official bitcoin wiki) a reference as we discuss. When you visit the link, go about halfway down to find a table containing 7 rows. This table shows how the scripts are combined, how execution occurs, and what the stack looks like at each step.

One thing to note is that, because bitcoin addresses are actually hashes (well, it gets even a bit more complicated. See ), there is no way for the sender to know the actual public key to check against the private key. Therefore, the Redeemer specifies both the public key and private key, and the scriptPubKey will duplicate and hash the public key to make sure that the Redeemer is indeed the intended recipient.

During execution, you can see that constants are placed directly onto the stack when they are encountered. Operations add or remove items from the stack as they are evaluated. For example, OP_HASH160 will take the top item from the stack, and has it twice, first with SHA-256 and then with RIPEMD-160. When all items in our script have been evaluated, our entire script will evaluate to true if true remains on the stack, and false otherwise.

All in all, the pay-to-PK-hash is a pretty straightforward transaction type. It ensures that only a redeemer with the appropriate public/private key pair can claim and subsequently spend bitcoin. Assuming that all other criteria are met (see the previous section), then the transaction is a good one and it can be placed into a block.

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member

Walmart Wants to Track Delivery Drones With Blockchain Tech

Walmart Wants to Track Delivery Drones With Blockchain Tech

  

Retail giant Walmart is seeking to patent a system

that uses blockchain technology to track packages delivered by unmanned drones. The US Patent and Trademark Office (USPTO) published the application, innocuously titled "Unmanned Aerial Delivery to Secure Location", on 25th May, and while that title may not give away much of Walmart's plans, the application itself reveals further details. As outlined, the retailer is looking at blockchain tech as a way to track shipments that involve flying drones.

The patent application explains:

"In some embodiments, the delivery box may also include a delivery encryption system comprising a blockchain for package tracking and authentication. Package tracking by blockchain may include elements including but not limited to location, supply chain transition, authentication of the courier and customer, ambient temperature of the container, temperature of the product if available, acceptable thresholds for ambient temperature of the product, package contents placed in the container system (products & goods), or a combination thereof."

It's a notable release from the global retailer, which has revealed some of its work with blockchain in the past. For example, last October, Walmart announced that it was working with IBM to develop a supply chain solution focused on China’s pork market, the largest in the world.

At the time, the retailer indicated that it was looking to apply the tech to other supply chains. And while it provided no hint that it was looking at blockchain as an underlying mechanism for aerial drones, Walmart told CoinDesk that it wanted to leverage blockchain to facilitate "fresher and faster deliveries". The application also details how the tech could be used to establish identity within the package system. "Authentication and access may be restricted to specific blockchain keys to access the contents of a parcel's payload, and may include specific times and locations," the authors write. "Access to the contents may be determined at the scheduling and purchase of a delivery or products."

Chuck Reynolds
Contributor
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Alan Zibluk Markethive Founding Member

How the blockchain could fight grid cyber-threats

How the blockchain could fight grid cyber-threats

  

The recent ransomware saga is a potent reminder

of just how vulnerable our information and data is to cyber-threats. But it’s not just our information that’s vulnerable; these threats extend into the physical world of electricity as well. In fact, today’s electrical grid is incredibly insecure against cybersecurity threats; for example, the massive 2015 cyberattack on the Ukranian power grid that left 230,000 people in the dark and the intrinsic level of insecurity presented by smart meters used all over the world. And with billions of energy-using, Internet-connected devices expected to come online over the next decade (PDF), the grid is about to experience a several-orders-of-magnitude increase in the number of vulnerabilities to

cyber-threats.

As … billions of energy-using devices are integrated into the electricity system, malicious actors will see the potential to exploit these systems and attempt to usurp this new reality.

Fortunately, blockchain technology is inherently robust against cyber-threats, and many energy companies are considering how blockchains may bolster the grid’s cybersecurity. This is because blockchains are built for:

  • Tamperproofing data (PDF): 
    Blockchains make it very difficult to change data after it has been written. This eliminates a number of risks, including man-in-the-middle attacks, in which a hacker modifies data that’s en route to its destination. With a proper blockchain implementation, all computation is "hashed" and made tamperproof at the point of origin, so there is no risk of data being modified while in transit.
  • Disintermediation (PDF): 
    With blockchains, intermediaries (escrow corporations) often are no longer necessary, significantly reducing transaction costs.
  • Complete data availability (PDF): 
    Blockchains can store data in a decentralized fashion across many nodes. With this architecture, even if some nodes or servers are compromised, users still can access a complete dataset.
  • Redundancy (PDF): 
    Blockchains operate without a central point of failure, so reliability through redundancy is intrinsic to this architecture.
  • Privacy and control: 
    Users of a blockchain can choose which data to make immutably transparent and which data to keep encrypted so only the intended recipients can view the contents.
  • Outsourcing computation (PDF): 
    Encrypted data can be sent for processing to a third party, without the contents of the data being revealed.

As the world of energy becomes more digitized and decentralized, the need for solid defense against cybersecurity threats increases drastically. When a blockchain is implemented properly, it offers a strong defense against external and internal threats by mitigating internet-connected and data communications vulnerabilities, and increasing data confidentiality and privacy.

Mitigating vulnerabilities

Internet-connected energy-using devices have the most room for improvement when it comes to cybersecurity. Between January and April, the research found that over 2 million Internet of Things (IoT) devices in homes were hacked into and rendered useless (bricked). This attack was to protest manufacturers’ poor cybersecurity policies for the devices, chiefly, thousands of devices set by default to use basic login and authentication credentials (username=user and password=password). In this case, hackers could have been much more malicious than simply bricking devices, but they wanted to prove their point: Unsecured IoT devices are unsafe, and should not be allowed to operate in a real-world environment where people’s lives and property are at risk.

Blockchain technology and those working on making it more usable for everyone are paving the way toward a new user-authentication paradigm. The current system of username/password combinations has been obsolete for many years. A much more secure mode of authentication is that of the public–private key pair (also called public key cryptography), the default in systems such as Bitcoin and Ethereum. As these blockchain implementations become more user-friendly, we will see a natural evolution of all login systems toward this more modern and secure method.

With a properly integrated cryptographic key login system for blockchain-based applications, IoT device owners will bear a significantly reduced risk of loss of power, theft of data and threats to privacy. What's more, integrating pricing and settlement on wholesale electricity markets into a secure blockchain significantly minimizes the risk of false data injection and pricing manipulation. This is largely because of the tamperproof characteristic of blockchains, which ensures immutability of a given dataset or series of communications between transacting parties.

The blockchain is also relevant for addressing data privacy and security issues. As more data is collected and transported over the internet, the risk of data exploitation and breach increases, as evidenced by the release of confidential information from hacks of LinkedIn, Yahoo, Target and other large organizations. Blockchains allow for the encrypted transportation of private data, ensuring that data is readable only by the intended recipient.

Introducing a new risk: Key mismanagement

Blockchains are great at mitigating several cybersecurity risks, but they also introduce a new risk that is often overlooked: key mismanagement. Key management is the secure storage of digital keys in a fashion that prevents unauthorized access — something of significance for distributed energy resources, which eventually will be connected to the web and authenticated mostly through asymmetric cryptography (the method used for all blockchain-based transaction and authentication). Many early adopters of blockchain technology that don’t have a background in IT have lost their private keys, rendering their blockchain assets or devices inaccessible.

However, key management is getting some much-needed attention, and innovators are creating new ways to store and recover private keys securely. One innovative way to tackle this problem is to integrate key pairs in actual, physical devices (think key fobs for your car) and use them to activate devices. This minimizes, or in some implementations renders impossible, the risk of hackers accessing private keys that confirm the identity and authority of a signing entity. Keys that exist on a personal device enforce secure signing on, for example, an energy-using internet-connected device (an electric vehicle). For a malicious actor, if all signing must be on a device, then the physical device must be compromised in a way that allows a hacker to remotely execute commands on the device instead of just reading data, which is much more difficult for the hacker and therefore a more secure implementation.

As digitized and distributed systems in energy become more common and billions of energy-using devices are integrated into the electricity system, malicious actors will see the potential to exploit these systems and attempt to usurp this new reality. Therefore, it is paramount that we ditch the "build-then-patch" approach, and build systems integrated with holistic security. Fortunately, much of this security is inherent in a properly implemented blockchain.

Chuck Reynolds
Contributor
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Alan Zibluk Markethive Founding Member

Russia’s Vnesheconombank Reveals Blockchain Product Strategy

  

A state-owned development bank in Russia

has revealed its plans for launching products built around blockchain. Vnesheconombank, an institution backed by the Russian government, is focusing its efforts on the areas of project management and supply chain finance, according to a report by Sputnik International. The publication quoted Vnesheconombank's chairman, Sergey Gorkov, who appeared this week at the St Petersburg International Economic Forum.

What they're doing: 
Gorkov's comments, as quoted, reveal a kind of two-prong approach: developing institutional knowledge and pursuing applications — trade finance in particular — that have captured the attention of a wide range of financial firms worldwide.

Here's how Gorkov framed the bank's project management initiative, according to Sputnik:

"When we started to think about how to manage projects efficiently, we realized that there is no platform. Everything that we had became obsolete. We realized that the blockchain is a good fundamental and qualitative platform for the future."

He said that the bank had since pursued a pilot project centered around the use case, with further iterations to follow. "We are launching the first prototype in terms of project management this fall," he told the publication.

Why it matters: 
That a state-backed bank in Russia is moving to launch services around the tech is a notable one — but perhaps not an altogether surprising one given the pace of blockchain development in the country's finance sector.

The unveiling comes months after Russia's prime minister, Dmitry Medvedev, called for more research into the tech by a pair of government agencies. Government officials also said earlier this year that they expect to develop blockchain-specific regulations, looking to an introduction by 2019. That work comes as Russia's central bank drafts new rules around bitcoin and digital currencies, with an eye to regulate them as kinds of digital goods.

Chuck Reynolds
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Alan Zibluk Markethive Founding Member

Blockchain consortium R3 raises $107 million

Blockchain consortium R3 raises
$107 million

  

People may well remember 2017 as the year that blockchain broke.

After years of development and flickering just outside of mainstream consciousness and acceptance, record high prices for the most popular blockchain-based cryptocurrencies Bitcoin and newcomer Ethereum and an embrace of the technology’s core principles by some of the world’s largest institutions may mean that blockchain technology is ready for its close up. Nothing illustrates this more clearly than the just-announced $107 million financing for R3, the blockchain consortium that includes some of the largest financial services firms and technology companies in the world.

Leading investors included SBI Group, Bank of America Merrill Lynch, HSBC, Intel and Temasek, the company said in a statement. R3 represents the largest consortium of global financial institutions working on developing commercial applications for the distributed ledger technology that’s at the heart of blockchain technology. In addition to the big names that committed the most capital, R3 pulled in additional commitments from ING, Banco Bradesco, Itaü Unibanco, Natixis, Barclays, UBS and Wells Fargo.

R3, which opened the first tranches of the company’s planned $200 million financing exclusively to members of the consortium, is one standard-bearer for the mainstreaming of blockchain technology. Indeed, the company already counts among its customers the government of Singapore, the Bank of Canada and other national financial institutions. The company said it will use the funds to accelerate technology development and grow strategic partnerships for project deployment. R3 has its own proprietary ledger that can be used to develop applications, and it also supports an infrastructure network for financial services firms and technology companies to build their own ledger-based applications and services.

“While still in its infancy stages, the emergence of distributed ledger technology comes at a time when the financial services industry is poised to further embrace technological change and efficiencies,” said C. Thomas Richardson, the managing director and head of market structure and electronic trading services at Wells Fargo Securities, in a statement.  That sentiment was echoed by other financial services executives whose firms were members of the R3 consortium. “Innovation in digital technologies is reshaping the banking industry, and this investment is reflective of our belief that distributed ledger technology and smart contracts have the potential to significantly enhance capital markets infrastructure. R3’s collaborative approach is key to the progress of this technology,” said Andrew Challis, managing director of strategic investments at Barclays.

Not all big banks and financial services firms have embraced R3. Goldman Sachs and Santander both dropped out of the consortium, perhaps figuring they’d be better off going their own way. Where R3 has really shined has been in getting governments comfortable blockchain-based applications. Their approach of enlisting banks and financial services companies for projects is light years from the more subversive mindset of some of the developers of the original and the largest blockchain protocol, Bitcoin.

As some investors and entrepreneurs see it, there’s room in the market for both the private blockchains developed by communities around Bitcoin and Ethereum, and the sanctioned corporate ledgers that companies like R3 are developing. For now, the technology that R3 is developing is focused on business applications like verifying transactions between banks, or automating the things like the establishment of the London Interbank Offer Rates. In the future, the company’s technologies could touch consumers more directly — through the creation of a digital fiat currency. While that may be somewhere far off down the horizon, with the company’s connections to the banking industry and to national governments, it’s not beyond the pale.

Chuck Reynolds
Contributor
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Alan Zibluk Markethive Founding Member

Eight Reasons To Be Skeptical About Blockchain

Eight Reasons To Be Skeptical About Blockchain

Given the turbulent, even frothy environment for disruptive digital technologies, one novel entrant promises to be among the frothiest: blockchain. The secure distributed ledger technology behind Bitcoin, blockchain has exploded out of the realm of the dubious cryptocurrency into a hype-driven category of its own. VC money is pouring into numerous blockchain startups. IBM IBM +0.59% is betting the farm on the technology. Pundits around the globe are calling for blockchain to reinvent everything from equities trading to charitable giving. And yet, aside from Bitcoin itself, real-world implementations of blockchain are few and far between. Has the hype exceeded the reality?

Let’s see what a number of skeptics have to say.
 

  

Secure ledger from an earlier century

Blockchain is a Solution Looking for a Problem

As blockchain exploded from its cryptocurrency roots, it quickly took on new life, as proponents rushed to figure out what else it was good for. “‘Blockchain is a solution looking for a problem’ is a sentiment that we heard several times while conducting this research—a fair representation of the reality,” says Axel Pierron, founder and managing director of financial consulting firm Optimas LLC. “Rather than investing in ‘catch all’ blockchain-related initiatives, the industry should focus its attention on evaluating the various solutions that can address the issues that need to be solved.”

The Open Data Institute also warns about selecting the ‘right tool for the job.’ “We think that the government should go further and think about how it can convene sectors (such as finance, agriculture, or health care), identify common challenges in those sectors and then determine which technology approaches — whether blockchains or not — are the most appropriate in helping to address them,” the ODI blogs. “Blockchain technology is a new tool in our toolbox. We need to use it when it is the right tool for the job at hand.” (Emphasis in both paragraphs is theirs.)

End-Users Don’t Really Want to Use Blockchain

It’s difficult enough to use Bitcoin for any day-to-day task, let alone blockchain. “But still, eight years after Bitcoin launched, Satoshi Nakamoto remains the only creator to have built a blockchain that an appreciable number of ordinary people actually want to use,” opines software engineer Jon Evans, principal at HappyFunCorp and columnist for TechCrunch. “No other blockchain-based software initiative seems to be at any real risk of hockey-sticking into general recognition, much less general usage.”

Perhaps a proof of concept would help? Blockchain aficionados have implemented an online trading card game they call the Rare Pepe Game to explore the potential of the technology. Even this simple example, however, proves wanting. “[The Rare Pepe Game] also shows how a game can be built on a blockchain with virtual goods and characters and more,” explains Fred Wilson, managing partner at Union Square Ventures. “And it shows how clunky this stuff is for the average person to use. Just playing around with this over the last few days showcases to me all of the technical challenges that blockchain technology still has to overcome before it can become mainstream.”

Blockchain Will Increase Transaction Costs

By disintermediating financial institutions, so the reasoning goes, multiple parties can conduct transactions seamlessly, without paying a commission. However, cost savings are dubious. “Moving cash equity markets to a blockchain infrastructure would drive a significant increase of the overall transaction cost,” Pierron continues. “Trading on a blockchain system would also be slower than traders would tolerate, and mistakes might be irreversible, potentially bringing huge losses.”

Unlikelihood of Sufficient Adoption

The promise of blockchain in large part depends upon enough parties using the same implementation of the technology — a classic example of the network effect. However, it’s unclear any particular blockchain solution (other than Bitcoin itself) will ever be able to reach this threshold. Without such universal adoption, blockchain’s practicality is questionable. “It’s obvious that a credit union-only distributed ledger system will require universal adoption to be of any use,” says John San Filippo, cofounder and principal at OmniChannel Communications. “It’s my experience that trying to achieve universal adoption of anything in this industry is an act of pure futility.”

Blockchain is Too Complicated

The technology behind blockchain is complex enough. Add it to the complexity of a heavily regulated business environment, and blockchain may not even get out of the gate. “Blockchain is thus also turning out to be more complicated than most of us thought,” warns Kris Henley, communications manager with the Centre for the Digital Economy at the University of Surrey. “Its tremendous potential is mitigated by its steadfast resistance to being a ‘magic’ solution, and its need for regulation like so many game-changing technologies of the Digital Economy.” Optimas’ Pierron chimes in as well. “Processing trades via blockchain would not simplify the capital markets, but rather move the complexity around,” he adds.

Performance Issues

Because of its inherently distributed, peer-to-peer nature, blockchain-based transactions can only complete when all parties update their respective ledgers — a process that might take hours. As ledgers grow, furthermore, people question whether they will bog down. “Blockchain has a lot to prove in its performance,” says Peter Hiom, deputy CEO at the ASX trading exchange. The transaction delay may also be a deal-killer. “The delay before the final assurance that a transaction has been recorded ‘for good,’ that can be up to a couple of hours, would create too much uncertainty for market participants, especially during time of high volatility,” continues Pierron.

Blockchain Ledgers’ Immutability Isn’t Always a Good Thing

One of blockchain’s most touted benefits is the immutability of its ledgers: once participants record a transaction, no one can change or delete it. Such immutability prevents the correction of mistakes to be sure — but there are other issues as well. In fact, immutability may cause blockchain to run afoul of regulation. “Digital ledger technologies must be chosen based on user needs and legal requirements,” writes the Open Data Institute. “For example; tamper-proof and immutable data stores prevent the modification of stored data, but this may not always be an acceptable property. The EU ‘right to be forgotten’ requires the complete removal of information; if that data is in an unchangeable system like a blockchain, this could be impossible.”

Blockchain is a ‘Trojan Horse,’
Sent by Radical Libertarians to Undermine the Global Financial System

Take this one with a large grain of salt to be sure — but at least one Bitcoin entrepreneur has stated this position. “I have no problem with the financial industry inviting the Trojan Horse of blockchain technology into their walled garden because I know how powerful the technology is,” says Erik Voorhees, CEO, and founder of cryptocurrency startup ShapeShift.io. I’ve warned about the Libertarian context for Bitcoin before, but if any members of this devoted but misguided group believe that blockchain alone will disrupt the financial industry, they are out of touch with how cautious the industry is.

In fact, the more likely blockchain is to disrupt the global financial system, the less likely it is to succeed. For disruption to be a positive business force, it must drive new competitive advantage, not simple chaos. Blockchain may be disruptive, but it’s still an open question whether it’s too disruptive for its own good. Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx

Chuck Reynolds
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Alan Zibluk Markethive Founding Member

Russia is looking to regulate bitcoin but still doesn’t see it as a currency

Russia is looking to regulate bitcoin but still doesn't see it as a currency

Russia is looking to regulate bitcoin but still doesn’t see it as a currency

Russia is exploring ways to regulate bitcoin, the country's central bank governor has told CNBC, but sees "doubts" over the benefits of the cryptocurrency and even questions whether it should be considered a virtual currency at all.

In an interview with CNBC, Elvira Nabiullina, governor of the Russian Central Bank, explained that she views bitcoin as a digital asset rather than a currency, and this is the way it should be thought about with regards to regulation.

When asked whether the Russian Central Bank is looking to regulate bitcoin, Nabiullina said that the authority is "analyzing" the possibility and needs to "understand more about this internalization of bitcoin and our regulatory systems." She added that there are "risks" with the cryptocurrency.

"We don't consider that bitcoin can be considered as a virtual currency. It's more digital assets with the regulation of assets," Nabiullina told CNBC in a TV interview.

The central banker did not elaborate on what specific regulation would look like and said she is in no rush to put any policy into place. The governor said that the central bank does have doubts about bitcoin.

"We have some doubts, we don't see some huge benefits from introducing digital assets in our economy," Nabiullina said.

Bitcoin recently hit a record high of $2,791, according to data from industry website CoinDesk, marking around a 180 percent rally year-to-date. There's bullishness in the market with some predicting the price could go as high as $6,000 this year and even $100,000 in a decade.

With surging prices and a market capitalization of around $38 billion, governments are becoming increasingly interested in ways to regulate the digital currency, especially as more retail investors are getting involved in the market.

Japan recently passed a law to legalize payments in bitcoin which helped boost the price, with major trading volumes now coming from the country.

The stance of Nabiullina marks a changed view from Russian authorities who have been trying over the years to ban bitcoin. If Russia somehow regulates bitcoin, this could potentially affect the price, especially if more investors get involved in the asset.

Sean Walsh, a partner at Redwood City Ventures which invests in bitcoin and blockchain companies, said that further regulation could boost the price of the cryptocurrency and get rid of the handful of "bad actors" using it for illegal things.

"I agree with the view that for retail and professional investors greater regulatory structure is very supportive because it adds to the legitimacy of the whole network," Walsh told CNBC in a phone interview.

Taxation plan?

Still, it's unclear where Russia plans to go with bitcoin regulation. The country's Deputy Finance Minister Alexey Moiseev recently said the authorities hope to recognize bitcoin and other cryptocurrencies as a legal financial instrument in 2018 in a bid to tackle money laundering.

"The state needs to know who at every moment of time stands on both sides of the financial chain," Moiseev told Bloomberg in an interview.

"If there's a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations."

The Russian Central Bank's Deputy Chairwoman Olga Skorobogatova has also reportedly revealed plans to tax the cryptocurrency.

"(Digital currencies already circulating in Russia will see) certain regulations with regard to taxes, monitoring and reporting, as a digital commodity," Skorobogatova said, according to news agency Interfax.

Blockchain in focus

Bitcoin has traditionally been known to allow users to make payments and money transfers anonymously. So it may seem that any taxation policy from the authorities could be difficult. But Walsh said some developments in the bitcoin community could make this policy feasible.

Firstly, bitcoin transactions have become slower and more expensive. This makes the practice of trying to split up transactions to cover your tracks very difficult. Secondly, several start-ups have emerged that are able to use algorithms to track transactions on the blockchain — the public ledger of bitcoin activity. This could allow authorities to see who owns bitcoin.

While Nabiullina admitted there were still risks with bitcoin, she expressed the Russian Central Bank's interest in blockchain technology. Because of the way blockchain technology can create a tamper-proof ledger of activity, many major banks are looking into how it can be used for tasks such as trading.

"I think it's more important to understand (the) benefits of new technologies … like blockchain which is on the basis of bitcoin," Nabiullina told CNBC.

David Ogden
Entrepreneur

 

Authors :
Arjun Kharpal Technology Correspondent
Geoff Cutmore Anchor, CNBC

Alan Zibluk Markethive Founding Member

Critical Social Strategy Mistakes to Avoid

Critical Social Strategy Mistakes to Avoid

Businesses fail at social media marketing for so many reasons, but more often than not, it is due to weak strategy

  

Research shows that there are currently more than 2.8 billion social media users,

and a whopping 83 percent of Americans use social media. Based on this, it is an easily established fact that social media is a force to reckon with. Despite increasing social media adoption, available data shows that a good percentage of businesses are not getting results from their social media efforts: According to research from Simply Measured, the percentage of businesses “struggling to measure the return on investment” of their social media marketing efforts is as high as 60 percent. Businesses fail at social media marketing for so many reasons, but more often than not, it is due to weak strategy. Below are six really critical social strategy mistakes you should avoid:

Assuming your social media marketing operates in a vacuum

The No. 1 mistake most businesses make with their social media marketing strategies is that of assuming that their social media marketing operates in a vacuum. Many of these businesses believe that simply investing huge amounts in social media marketing, or going viral, will solve their business woes. Usually, it won’t. More often than not, your social media marketing efforts are aimed at achieving a certain goal. Even if this goal is not a direct goal, such as increasing sales, the fact remains that you’re probably not on social media just to be on social media.

To make social media marketing work for you, your strategy must incorporate the big picture. If your goal is to boost sales and conversions, how do your social media efforts tie into your sales and conversion efforts? It is essential to consider this factor when working on your social strategy.

Overextending yourself and your budget on social media

Picture two businesses: Business A spends about $2,000 monthly on social media content and is able to create 200 pieces of content and distribute them to 10 different social media sites. Business B spends just $500 monthly on social media content and is able to create 800 pieces of content and distribute them to 10 different social media sites. Which of these businesses will get the most ROI? I think we can safely assume that it is business B.

While so many factors influence social media ROI, at the end of the day, social media budget doesn’t play as much of a role as many people assume it does. So what mistake is business A making that business B is avoiding? That of overextension. Simply put, business B has mastered the art of maximizing its budget. This is possible in several ways:

  • Repurposing content:
    Whereas business A keeps creating original content, business B repurposes the same piece of content into one-dozen different formats. Costs of production go down while the quantity of content goes up.
  • Content syndication:
    Business B is able to have the same piece of content distributed across multiple different channels, while business A focuses on having original content on every social channel.

Not realizing the importance of the mere-exposure effect

It is a well-established fact that more exposure to something increases our liking for it, regardless of how good it actually is. Psychologists have coined the term “familiarity principle” or “the mere-exposure effect” to describe this phenomenon. Interestingly, BuzzSumo’s recent research that analyzed more than 100 million pieces of content came to support the mere-exposure effect. The study found that sharing old pieces of content over and over again on social media can boost conversions by up to 686 percent.

Not being well prepared on the back end

Every business using social media needs to be familiar with Tina Henson’s story. With her startup taking up, Henson realized that there was an opportunity to generate some viral traffic and boost sales by tapping into the holiday season buzz. So she created a marketing campaign and things went bigger than she anticipated. She suddenly got a lot of attention, and visitors to her site suddenly increased by 40 times what she got on an average day. Unfortunately, she wasn’t prepared. Her site crashed, and she lost several thousand people who came to her site during her campaign.

Henson’s isn’t an isolated incident. Many businesses make preparations to key into a social media buzz, only to end up losing out. While your site might not even crash, being slow by one second could significantly decrease your conversions. There are so many reliable and inexpensive web-hosting options, so make sure your site is prepared.

Only targeting your offers to your followers

If, as a brand, your social media strategy mainly involves simply targeting your offers to your followers, you’re missing out on a lot of sales and conversions. According to research from Edison Research, only 33 percent of Americans have ever followed a brand on social media. It also doesn’t help that most social media sites significantly reduce your reach to followers. If you’re only targeting your offers to your social media followers, then you’re missing out a big deal. Instead, explore targeted advertising options, consider reaching out to influencers and brands that share a similar audience and encourage them to share your offers and regularly tap into trends to promote your brand.

Playing the quantity game

It is essential to realize that social media isn’t simply a numbers game. While numbers indeed do matter, it isn’t only about numbers—channel-audience fit and engagement are more important metrics to pay attention to. If you run a services business that targets professionals, for example, LinkedIn will yield more results compared to Twitter. Focus on being on the right social channels and put in more effort into creating engaged, loyal followers than in boosting your follower count.

Chuck Reynolds
Contributor
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Alan Zibluk Markethive Founding Member