Advertisements

Why Use a Blockchain? By Maria Kuznetsov

As the implications of the invention of have become understood, a certain hype has sprung up around blockchain technology.

This is, perhaps, because it is so easy to imagine high-level use cases. But, the technology has also been closely examined: millions of dollars have been spent researching blockchain technology over the past few years, and numerous tests for whether or not blockchain technology is appropriate in various scenarios have been conducted.

Blockchain technology offers new tools for authentication and authorization in the digital world that preclude the need for many centralized administrators. As a result, it enables the creation of new digital relationships.

By formalizing and securing new digital relationships, the blockchain revolution is posed to create the backbone of a layer of the internet for transactions and interactions of value (often called the ‘Internet of Value’, as opposed to the ‘Internet of Information’ which uses the client-server, accounts and master copy databases we’ve been using for over the past 20 years.)

But, with all the talk of building the digital backbone of a new transactional layer to the internet, sometimes blockchains, private cryptographic keys and cryptocurrencies are simply not the right way to go.

Many groups have created flowcharts to help a person or entity decide between a blockchain or master copy, client-server database. The following factors are a distillation of much of what has been previously done:

Is the data dynamic with an auditable history?

Paper can be hard to counterfeit because of the complexity of physical seals or appearances. Like etching something in stone, paper documents have certain permanence.

But, if the data is in constant flux, if it is transactions occurring regularly and frequently, then paper as a medium may not be able to keep up the system of record. Manual data entry also has human limitations.

So, if the data and its history are important to the digital relationships they are helping to establish, then blockchains offer a flexible capacity by enabling many parties to write new entries into a system of record that is also held by many custodians.

Should or can the data be controlled by a central authority?

There remain many reasons why a third party should be in charge of some authentications and authorizations. There are times when third-party control is totally appropriate and desirable. If privacy of the data is the most important consideration, there are ways to secure data by not even connecting it to a network.

But if existing IT infrastructure featuring accounts and log-ins is not sufficient for the security of digital identity, then the problem might be solved by blockchain technology.

As Satoshi Nakamoto wrote in his (or her) seminal work, “Bitcoin: A Peer-to-Peer Electronic Cash System”: “Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable.”

Private key cryptography enables push transactions, which don’t require centralized systems and the elaborate accounts used to establish digital relationships. If this database requires millions of dollars to secure lightweight financial transactions, then there’s a chance blockchains are the solution.

Is the speed of the transaction the most important consideration?

Does this database require high-performance millisecond transactions? (There is more on this point in our guide: “What is the Difference Between a Blockchain and a Database?”).

If high performance, millisecond transactions are what is required, then it’s best to stick with a traditional-model centralized system. Blockchains as databases are slow and there is a cost to storing the data – the processing (or ‘mining’) of every block in a chain. Centralized data systems based on the client-server model are faster and less expensive… for now.

In short, while we still don’t know the full limits and possibilities of blockchains, we can at least say the use cases which have passed inspection have all been about managing and securing digital relationships as part of a system of record.

Authored by Nolan Bauerle; images by Maria Kuznetsov

Source: Why Use a Blockchain? – CoinDesk

Advertisements

Boston Fed Announces Plans To Design a Blockchain ‘Supervisory Node’ – Anna Baydakova

The Federal Reserve of Boston is starting a new blockchain experiment this summer.

The Massachusetts state regulator has been one of the earliest and most involved government bodies to dip their toe into the new technology. It has been quietly developing blockchain systems since 2016 but has said very little about their plans.

Now the first results of those trials are out and the Boston Fed published a white paper on its proof-of-concepts on ethereum and Hyperledger Fabric. Now it’s getting ready for the next stage, Boston Fed’s vice president of IT Paul Brassil told CoinDesk.

The team is going to look into possible opportunities to set up a “supervisory node,” a regulatory surveillance tool that should be able to connect to various banking blockchains in the future. This node will watch the money flows and settlements between different banks, Boston Fed’s senior vice president Jim Cunha said.

“If you look at the future, there might be one blockchain that is holding securities, one that is holding derivatives, one is holding cash or interbank transfer — how do you as a supervisor watch the traffic on all these platforms that also will be on different technology?”

Cunha adds, that Boston Fed is not looking at these explorations from a policy standpoint and that is expects to work with the central Federal Reserve on these rules. But in the meantime monetary authorities have to keep apace with the technology development.

“We are surrounded by very large financial institutions and banks and we know that all of them are experimenting with the blockchain technology. So the more we can work with them and understand their roadmap, the more we know that we’re moving in a right direction,” Brassil said.

First, the Boston Fed plans to set the agenda and determine the main direction of this experiment and the work on this ideological part will start as early as this summer. Cunha said there are no plans yet for the publicly releasing the project.

“Right now there is very little research on it, so our next goal is to look into what an audit node look like,” Cunha said. “What kind of data we should have access to, how to interact, how to update nodes, can you create operational problems with it? What kind of coding you will need to do to store the information about the movement of funds, so you can do analysis of the flows. We are really starting from scratch.”

In the future, it could be possible that we will see multiple blockchains by various banking institutions, Brassil said, so the Fed’s supervisory node should have a technical capacity “broad enough to cover all the platforms.”

“Startup in the basement mentality”

Boston Fed started blockchain technology trials back in 2016 by experimenting with ethereum. At that time, there were no specialized blockchain developers on staff, so the team of coders educated themselves watching relevant videos on YouTube. Cunha and Brassil called it their “startup in the basement.”

During that period, developers tried to put depository institution balances under the Boston Fed supervision on a blockchain and create mock transactions — a kind of a blockchain-powered back office model. They conducted the testing first on the ethereum blockchain and then on Hyperledger Fabric. In the end, the latter was considered a more suitable option.

Why did they pick Fabric? first of all, a permissioned blockchain is preferable for a government entity. Among other challenges, the necessity to maintain a supply of ether to pay gas in transactions complicated the task and they were also worried about speed limitations.

“The time necessary to create a block was slower than could be tolerated in a production environment,” the white paper said.

Now, with the project of the blockchain back office on hold and the “supervisory node” experiment in the pipeline, Boston Fed is hiring some professionals to ramp up its blockchain testing, Cunha told CoinDesk.

“We are trying to add stuff to do something more robust internally, we need more dedicated resources,” he said. The new blockchain team will not be large, though, only “a handful” of people.

Boston Fed is also actively talking to other monetary authority bodies, though Cunha and Brassil won’t name the particular institutions. That said, they are excited to spread the word about the project.

“We have to share information because the whole industry needs to educate itself,” Cunha said.

Image of the Boston Fed office — courtesy of the Boston Fed. 

Source: Boston Fed Announces Plans To Design a Blockchain ‘Supervisory Node’ – CoinDesk

World’s Largest Business Organization Embraces Blockchain

The International Chamber of Commerce counts members from 130 countries among its ranks.Getty

From the embers of World War I emerged a new kind of organization, led by entrepreneurs, committed to ensuring the free flow of goods across the world’s war-ravaged borders.

The International Chamber of Commerce, whose mission is to streamline global business, is one of last vestiges of the League of Nations, founded in 1920 by U.S. President Woodrow Wilson to peacefully settle international disputes. By 1923, following the League’s lead, the ICC had established international courts to arbitrate business disputes, and in the aftermath of WW II, it represented global business interests at the Bretton Woods conference, which established the current monetary order.

“If goods are able to move across borders without the need to be accompanied by troops,” says John Denton, the ICC’s current secretary general, “there is a higher probability of peace and prosperity.” The Paris-based group, which represents 45 million businesses in more than 130 countries and brands itself the world’s largest business organization, is now making its boldest play in a generation.

With global borders hardening once again, this time behind border walls, broken unions and looming trade wars, Denton signed an agreement with the Singapore-based blockchain startup Perlin Net Group to explore how the technology, made popular by bitcoin for its ability to move value without banks, could help the ICC continue its mission to facilitate the free flow of goods.

“We can trace back the ICC interventions that made a big impact on the global economy in the 20th century,” says Denton, who was a fellow at the Australian Institute of International Affairs before being appointed secretary general of the ICC last year. “We think this might be one which we can look back on in 100 years and say the ICC shifted blockchain in a way that enabled the private sector to function more effectively in a sustainable way and actually create more opportunities for people.”

According to the terms of the agreement, part of which was shown to Forbes, the ICC and Perlin will create a new group, the ICC Blockchain/DLT Alliance, a reference to distributed ledger technology similar to the blockchain that powers bitcoin. The companies are exploring how Perlin’s blockchain platform, which has yet to publicly launch, could be used to shine a light on obscure supply chains and simplify cross-border trade finance.

As part of the agreement, the ICC will help Perlin recruit members to its nascent blockchain alliance, specifically by making introductions to the organization’s massive member pool, which in addition to most national chambers of commerce includes direct membership from companies like Amazon, Coca Cola, Fedex, McDonalds and PayPal. Also, as part of the agreement, Perlin will join the ICC as an official technology partner, offering free access to its blockchain platform during the early stages of the project.

Denton shared his plans with the ICC Banking Commission at its annual event in Beijing earlier this week, and the agreement, which was signed on March 20, will be formally announced at an ICC event in Singapore later today.

Unlike some early blockchain consortia, the ICC Blockchain/DLT Alliance already had projects under way when it was announced. According to the agreement, the ICC and Perlin will share the results of their first blockchain proof of concept, a collaboration with the fabric giant Asia Pacific Rayon (APR), in May at the Copenhagen Fashion Summit.

For that project, called “Follow Our Fibre,” APR is logging data in the blockchain at every level of its supply chain, from the trees that are harvested to the chemical treatments that turn them into the silk-like rayon substance through to the massive spools that are later sold to clothing producers.

“Globally, there is a dynamic shift in the textiles and fashion sectors calling for a more traceable and transparent supply chain,” says Cherie Tan, vice president of communications and sustainability at APR. “Follow Our Fibre will enable us to leverage powerful blockchain functionality to drive greater efficiencies.”

Other proofs of concept in the works that stand to benefit from the ICC partnership include a project with Mfused, a cannabis processor in Washington State that is using Perlin’s tech to prove the origin of its plants by recording every level of its supply chain, from when they are planted to when the cannabis is inhaled, in a shared, distributed ledger; a project with an unnamed tuna processor in Latin America; and a developing project in Africa to trace the origin of cobalt, which has a long history of being mined by unethical supply chain participants.

Assuming enough supply chains are unified on the Perlin blockchain, businesses could log digital representations of the commodities, called tokens, on the platform. This will enable the counterparties to trade directly, with bills of lading required to move freight and letters of credit, which are typically handled by banks, all tracked directly on the shared ledger.

“An interesting economic model is we could effectively launch governance around this,” says Denton. “If we’re able to tokenize this we could insert ourselves as the trusted intermediary, and there would probably be an admin charge, but not much.” A 2018 report by the ICC, the World Bank and others found that 90% of the world’s trade finance was being provided by 13 banks, something Denton thinks is evidence of a need to decentralize.

Perlin’s blockchain, like ethereum’s, is being designed to let users track and move all kinds of value and write distributed applications (dapps) that don’t rely on centralized processors. Also like ethereum, Perlin will have a native cryptocurrency, called perls, which are expected to be minted over the coming three months or so, depending on regulatory considerations.

While supply chain management is increasingly seen as ripe for disruption by blockchain, models like Perlin’s, which rely on tokens, have had difficulty gaining traction as regulators clamp down on what is required of such tokens. By contrast, models using permissioned blockchains, such as what IBM is doing with a number of industry-specific consortia, and what R3 and Hyperledger are doing more generally, are seeing broader interest.

Perlin founder Dorjee Sun positions the nascent ICC network as similar to competing consortia but for small and medium-size businesses. “This is a massive democratization effort of DLT, because now any company of the 45 million ICC members can give the benefits of DLT a try,” says Sun. “Not just massive companies that can afford IBM’s services.”

Be among the first to get important crypto and blockchain news and information with Forbes Crypto Confidential. It’s free, sign up now.

I report on how blockchain and cryptocurrencies are being adopted by enterprises and the broader business community. My coverage includes the use of cryptocurrencies su

Source: World’s Largest Business Organization Embraces Blockchain

JP Morgan unveils its own cryptocurrency | Crypto Insider

J.P. Morgan might seem like the most unlikely party to create a cryptocurrency asset. Jamie Dimon, J.P. Morgan’s CEO, is known for his negativity toward bitcoin. In a September 2017 article, Fortune reported on Dimon calling BTC “a fraud.” Although, the same article included details of Dimon’s apparent positive sentiment toward blockchain technology solutions, as seen in J.P. Morgan’s previous research and projects in the field.

Source: JP Morgan unveils its own cryptocurrency | Crypto Insider

Taiwan to launch blockchain-based digital ID system in 2020 – TokenPost

The government of Taiwan is planning to roll out a blockchain-powered digital identification system in 2020, local news outlet CNA reported last week. Premier William Lai announced plans to launch the new eID system at a meeting held last week. The initiative is part of the broader efforts aimed at implementing “smart government” to promote the digital transformation of the government.

Source: Taiwan to launch blockchain-based digital ID system in 2020 – TokenPost

The 10 Largest Companies In the World Are Now Exploring Blockchain – Michael del Castillo

1.jpg

In a patent filed with China’s State Intellectual Property Office, ICBC described an idea for using blockchain technology to verify digital certificates using a blockchain, instead of a trusted central authority, according to a CoinDesk report. While nothing else has been publicly revealed about the bank’s mysterious blockchain research, the plans are reminiscent of other blockchain efforts that seek to place stock certificates on a blockchain instead of in the safes of Central Securities Depositories around the world.

Following closely behind ICBC, with what appears to be slightly more advanced public work, is the China Construction Bank Corporation (CCB), which counts $143 billion in sales and total assets of $2.61 trillion. Last September, CCB revealed it was using the IBM Blockchain platform to streamline the way banks and insurance companies jointly sell some of their products.

In third place on the Global 2000 is JPMorgan, the largest company in the diversified financial category, with $118 billion in sales and assets valued at $2.7 trillion. In spite of company CEO Jamie Dimon’s vociferous railing against bitcoin itself, his company has emerged as one of the most visible, and committed enterprises to the underlying blockchain technology. After first contributing its own internally developed blockchain platform, Quorum, to the open-source community, JPMorgan has seen interest among users including pharmaceutical giant Pfizer (#44 on the list with $52 billion in sales) and information giant IHS Markit (#1,211 on the list with $3.6 billion in sales).

Switching places with JPMorgan for the fourth position on this year’s list was Berkshire Hathaway, with $235 billion in sales and  $702 billion in assets, also categorized in the diversified financial category. Similar to Dimon’s vocal doubt of bitcoin, Berkshire Hathaway’s founder and CEO, Warren Buffet is an outspoken cryptocurrency skeptic, comparing bitcoin to rat poison, and chiding those who consider purchasing it a form of legitimate investment. But that hasn’t kept his companies from exploring cryptocurrency’s underlying blockchain technology as a way to trace the provenance of diamonds and even freight delivered on Buffet’s railroads.

3.jpg

 

Rounding out the top-five largest public companies this year is the Agricultural Bank of China Limited, with $3.4 trillion in assets, but a relatively small $129 billion in sales. Earlier this year the state-owned bank revealed it was working on a decentralized network to offer unsecured agricultural loans to e-commerce merchants, according to a CoinDesk report.

Bank of America, Wells Fargo and the Bank of China—at positions six, seven and nine respectively—rounded out the top banks, each undertaking their own blockchain projects to streamline a diverse set of financial workflows.

Sliding in the middle of those banks is U.S. tech giant Apple, the only company in the technology industry to make it into the top ten largest public companies, with $247 billion in sales and $367 billion in assets. Apple too had been largely silent about any potential blockchain projects, until CoinDesk reported on a patent filed by the company for using blockchain technology to timestamp data. While the company itself has been mostly mum on its blockchain work, Apple cofounder Steve Wozniak is an increasingly vocal proponent of cryptocurrencies, though he left the firm years ago.

Rounding out the top-ten on the Global 2000 list is the largest insurance company in the world, China-based Ping An Insurance, with $141 billion in sales and $1.06 trillion in assets. Though Ping An’s blockchain efforts have been kept largely behind closed doors, the firm joined distributed ledger consortium R3 in 2016, and has reportedly been helping China’s Ministry of Industry and Information Technology research the technology.

Looking further down this year’s Global 2000 list, it appears the vast majority of the largest companies in the world are also exploring blockchain. Just to name a few of the most prominent, are Microsoft (#20), Alphabet (#23), and Walmart (#24), among notable U.S. firms, German auto manufacturer Daimler (#29) Japanese auto manufacturer Mitsubishi (#37) and Russian bank, Sberbank (#47).

What is perhaps most striking though, is the diversity of companies on the list that are also exploring blockchain. Having started as a financial technology tool with the creation of bitcoin as a faster, cheaper way to move monetary value across borders has evolved into a technology for moving all kinds of value—and data itself—with less reliance on central authorities. Each of the industry categories on the list—also including oil and gas, telecommunications, semiconductors, food, drink and tobacco, retail and more—include firms exploring blockchain.

If everyone who reads our articles and likes it, helps fund it, our future would be much more secure by your donations – Thank you.

%d bloggers like this:
Skip to toolbar