Category Archives: decentralised

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South Korean Banks Initiate Blockchain-Based ID System

The Korean Federation of Banks (KFB), a group of South Korean commercial banks, has announced that a new blockchain-based ID initiative dubbed ‘BankSign’ will be implemented in July later this year.

The initiative will replace the massively outdated current system that has been in place for 20 years that has resulted in an enormous number of fraudulent activities, described by local news outlet Korea Joongang Daily as “notorious for its complexity and inconvenience“.

Blockchain solution

Park Chang-ok, a manager at the department of deposit services and payment systems at KFB described BankSign as giving financial institutions the option to ”choose from in verifying consumer identity, not just the public certification system“.

A spokesperson for KFB explained, ”[It is] the first project co-developed by the local banking sector utilizing blockchain technology. While BankSign will start off by providing the service in the banking sector, we will work with the government and other public organizations to expand its usage.”

The project has been built on the Nexledger blockchain, created by Samsung specifically for businesses. Development began in November 2017, with beta testing following in April 2018.

The current system

The system at present requires a number of identity checks to take place before goods and services can be purchased online in South Korea, with users required to download several security programmes that are only usable on the device they are directly downloaded onto.

While the active software was modern in 1996, there are several reported challenges it now faces. The programmes may slow down computer systems, only working on Internet Explorer for desktop users.

In addition, the outdated technology has led to an estimated 80% of users information compromised in 2014. Research Gate conducted a study the same year that estimated national losses due to these hacks between USD 10 billion and USD 40 billion.

 

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German Finance Regulator: Blockchain Could Be Revolutionary

Chief of the German Financial Supervisory Authority (BaFin), Felix Hufeld, has described blockchain technology as “revolutionary” while stating that he sees it as capable of turning the financial sector ”upside down”.

Speaking during an event in Berlin last week, Hufeld, president of BaFin, outlined his position on both Bitcoin and blockchain.

While holding a skeptical view on the sustainability of Bitcoin’s price and the current initial coin offering (ICO) boom, Hufeld expressed his belief that blockchains capacity to power distributed applications “could actually be revolutionary”.

Highlighting the benefits unique to blockchain, Hufeld noted: “These apps are not only safe from failures of individual computers or providers, they also promote the development of a ”blockchain economy”.

An additional advantage of blockchain Hufeld considers is its potential in providing “effective control mechanisms or trustworthy institutions” in areas such as international aid that lack dependable regulation.

It appears Hufeld’s opinions have developed since April when he stated he merely did not want to ”kill [blockchain] innovation“, as BaFin expanded cryptocurrency regulations on the pretext of money laundering concerns.

Germany’s position on Bitcoin

Earlier this week, members of the German federal government stated that they believed Bitcoin did not provide a threat to financial stability because they view the volume of cryptocurrency asset transactions as too low to have a large impact on the German economy.

However, the representatives said that they believed an increase in regulatory measures was required to control the industry, with the government considering it important to monitor this area closely at the G20 level.

The International Monetary Fund (IMF) published a report in April that cited similar reasoning as that of the German government in regards to not seeing cryptocurrencies as a threat to global financial stability.

 

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Blockchain Compatibility with GDPR’s ‘Right to be Forgotten’

The EU’s new General Data Protection Regulation (GDPR) policies place an emphasis on the ”right to be forgotten”, meaning that at any time an organization should be able to delete users’ personal data at their request. With immutable, decentralized blockchain technology, the question arises as to how blockchain projects will be able to comply with these principles.

Who is in charge of regulating blockchain data?

Indeed, the foundations of trust in blockchain comes from its immutability, something perhaps inherently contradictory to the new GDPR policies. Public blockchain configurations are decentralized, relying on peer-to-peer (p2p) transactions without any control or authorization. This means that anybody participating can be seen as a controller in the eyes of the law because of the copy on their computer.

While private blockchains make it easier to identify the administrator, it is still far different than the classic scheme considered by GDPR that easily identifies a data controller. So, legal responsibilities are transferred to people orbiting around the blockchain, considered as third services, giving them the responsibility to uphold the regulations.

Each blockchain project must be considered on an individual basis to identify the obligations imposed in regards to respecting data subject’s rights. There is yet to be a consensus in the blockchain community, however, how third services can respect and comply with the right to be forgotten.

Exploring immutability solutions: alternative blockchains

Business and innovation blockchain developers BTL judged a hackathon at the Consensus Conference in New York last month, where developers were challenged to build various applications capable of permanently deleting data on the Interbit blockchain platform.

Interbit differs from public blockchains such as Ethereum and Bitcoin, as it has been purpose-built for business enterprises and meeting GDPR’s requirement of the “right to be forgotten”, hence enabling the permanent removal of information.

BTL even believes that the future of data protection lies in blockchain solutions, arguing “we would go as far as to say that you can only truly meet this (GDPR) requirement with … a blockchain solution…Interbit allows data to be segregated across multiple chains within single applications. Delete a chain, (and the) data is gone, for good.”

The separation of data across several private chains both facilitates GDPR compliance and implements total data privacy that lacks on public blockchains. While Interbit is one just solution now, the industry is sure to follow with many more innovations to come.

 

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EU Terrorist Funding Study: Crypto No Greater Threat Than Traditional Currency, Increased Regulations Required

In a study published Monday, the EU parliamentary think tank has concluded that cryptocurrencies present no more of a threat to terrorist financing than fiat currencies, while improved regulations, industry intelligence, and community relationship building offer the strongest policy actions to combat the threat.

The report was commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs, conducted to asses the risks imposed by the rapidly changing, decentralized space of virtual currencies.

Crypto risks no greater than traditional methods

The paper acknowledges that the cryptocurrency space does not represent a more significant threat than the ‘traditional’ forms of terrorist financing. ”In their current form and at current levels of adoption, [virtual currencies] may not present terrorist actors with substantial advantages over other methods of funding and financing they already utilize,” it reads.

In addition to this, the research notes that there are very few publicly-documented, confirmed cases of virtual currencies being used in regards to terrorist funding. With the recently imposed EU GDPR and AML (anti-money laundering) regulations, these risks posed by cryptocurrency usage are only decreased further.

The threat of crypto-funded terrorism

However, the study highlights the borderless, peer-to-peer (p2p) nature of cryptocurrency trading as offering prospective terrorist actors a platform to transfer funds out of the regulated sector, and beyond the purview of counter-terrorist financing authorities. Dependent on the virtual currency being traded, various levels of anonymity and pseudonymity are offered, making it appealing for those looking to conduct illicit activities.

Several incidents are pointed to, demonstrating that both politically and religiously inspired extremist actors have utilized virtual currencies in the past, although in a ”relatively low-volume and unsystematic fashion.” The research suggests that the nature and scale of the threat are difficult to predict, although potential terrorists may be looking to expand the use of cryptocurrencies in their illicit activities.

Potential illegal activities that these actors could utilize are detailed, notably including soliciting donations in crowdfunding campaigns conducted on social media, as well as transmitting funds internationally among members of terrorist networks using P2P value transfers.

Increased regulation required

To target these threats, the study offers a list of EU policy recommendations, including ensuring comprehensive directives are applied. Particularly emphasized is a need to implement regulations that are relevant and adaptable to the rapidly-evolving technologies behind cryptocurrencies in a way that does not stifle their innovation.

A need to address both established cryptocurrencies such as Bitcoin and altcoins differently is noted: ”Regulators should also draft guidance that takes a nuanced approach to characterizing the risks [virtual currencies] pose in different contexts and for different purposes. For example, the illicit finance risks the traceable cryptocurrencies such as Bitcoin present is generally not as significant as that presented by privacy-focused alt-coins.”

Community-driven industry intelligence

Developing law enforcement knowledge and capacity is also focused on as a key point to countering the usage of cryptocurrencies in terrorist financing. Interestingly, the paper places a significance on the positive potential outcomes of reaching out to the established cryptocurrency community in order to better their industry intelligence.

”The public sector cannot develop effective regulation, enhance knowledge and improve intelligence acting alone. Cooperation and interaction with businesses in the VC-industry is essential… Member States should develop dedicated fora for sharing information with local VC industry participants, including sharing of intelligence for operational purposes,” the research notes.

A lack of industry intelligence has been the source of many issues relating to implementing cryptocurrency and blockchain regulations, so an approach such as this suggested may well prove invaluable in assisting authorities to make better-informed decisions.

Reaching out to the cryptocurrency community for their support rather than marginalize their innovations would be hugely beneficial, alongside helping improve what many see as an undeserved bad reputation when it comes to cryptocurrencies and criminal activities.

 

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China to Launch National Blockchain Standardization Committee

An official from China’s ministry of industry and information technology has verified that the country’s plan to launch a national blockchain standardization committee should be ready to launch by the end of this year.

Structurally based on TC 307

As discussed in a keynote speech from Li Ying, head of the IT ministry’s information and software department, the structure of the committee will be based on that of TC 307, the International Organization for Standardization’s (ISO) counterpart blockchain commission, as reported by CoinDesk.

“We have been working closely with the ISO and the International Telecommunication Union (ITU). We should soon have our national technical committee for blockchain standardization ready within this year,” Ying said, commenting on the plans to establish a comprehensive framework for blockchain standards by the end of the year while confirming the Chinese government’s direct involvement.

Ying’s announcement came at the 2018 Guiyang Big Data Expo on Saturday.

China’s blockchain agenda

These comments follow closely the revelations from China’s IT ministry that indicate an agenda to pursue the standardization of blockchain application development. Ying noted the government’s plans to “expedite blockchain deployment in areas that most urgently need the nascent tech”.

While China is currently a participating member of the ISO’s TC 307 commission, the country has plans to provide its own initiative surrounding blockchain standardization. The TC 307 focuses predominantly on authentification and smart contracts; it may be speculated that China wishes to pursue the standardization of blockchain elements beyond these uses.

The IT ministry of China currently directly supervises a research lab responsible for conducting monthly evaluations of significant public blockchains. It has been reported that this is done in an effort to create a standard rating system of these blockchains, a service that would be a huge benefit for businesses looking to utilize blockchain for their company.

 

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Bank of England Governor Openly Considers a Central Bank Digital Currency (CBDC)

Mark Carney, Governor of the Bank of England, spoke at the Riksbank Anniversary conference on Friday, putting forward an open-minded stance about the possibility of a central bank digital currency (CBDC).

Potential CBD for England

As reported by Bloomberg, while Carney appeared open to the idea, he also pointed to several issues that prevented him from offering his full support for a CBDC. Specifically, Carney stressed his view that cryptocurrencies are not a true equivalent of money, and that should a CBDC be adopted, it will not be capable of happening successfully in the near future.

During his speech, Carney went on to explain that the Bank of England is looking to boost diversity within the institution by engaging with people who not only come from a mainstream economic background. “The future of central banking may involve fewer central bankers, ” he said, indicating perhaps a future direction more compatible with the cryptocurrency field.

Sweden’s central bank Riksbank hosted the conference. Risbank is currently researching the practicality of implementing an e-krona, a CBDC for Sweden, with results from the inquiry scheduled to be published in 2019.

Carney and Crypto

The Bank of England issued a working paper earlier this month, detailing results of an extended inquiry into the possible financial risks and stability issues associated with CBDC. The report indicated that there was no probable cause to assume adopting a CBDC would create issues surrounding private credit, or total liquidity provision to the economy.

Carney has not held back on his personal, skeptical view of cryptocurrencies in the past. In February this year, he stated ”[cryptocurrency] has pretty much failed thus far on… the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange.”

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IBM Recruits in Preparation for $176 Billion Blockchain Future

IBM’s pursuit of 1,800 blockchain jobs in France is a signal of intent to expand research and development in several areas, primarily focusing on blockchain technology, AI (Artificial Intelligence) and IoT (Internet of Things), as detailed in an interview with chief executive Virginia Rometty on Wednesday.

IBM is one of the largest and most established research organizations in IT and computing alongside companies such as Microsoft and Google. The company currently holds the record for the most patents generated in a year as well as the last 25 consecutive years. IBM assigned 9,043 patents in comparison to Samsung Electronic which filed for 3,300 putting them in second place.

IBM has previously reported working with up to 63 blockchain clients on over 400 projects related to blockchain technology. The tech giant is confident that blockchain will streamline solutions and be a leading innovator in its field. Earlier this year CFO Jim Kavanaugh stated: “For us, blockchain is a set of technologies that allow our clients to simplify complex, end-to-end processes in a way that couldn’t have been done before.”

IBM securing the market

There have been regular headlines of IBM and collaborators looking to enter the blockchain space. IBM started a partnership with Maersk and Agility, a global logistics provider, announcing their plans to track shipping containers using blockchain technology back in February.

IBM has been pushing for the lead in the race for adopting blockchain technology working alongside various industries and supporting giants like VisaHSBC, and Walmart. Walmart’s vice president of food safety and health Frank Yiannas explained that:

“As a global advocate for enhanced food safety, Walmart looks forward to deepening our work with IBM, Tsinghua University, JD and others throughout the food supply chain. Through collaboration, standardization, and adoption of new and innovative technologies, we can effectively improve traceability and transparency and help ensure the global food system remains safe for all.”

Although cryptocurrencies have been met with some skepticism many industries are starting to understand the potential benefits of the underlying blockchain technology. Industry leaders and the European Union are pouring millions into research and exploration of blockchain projects. The EU announced plans in February to increase funding over the next two years from EUR 83 million to around EUR 340 million. IBM’s general manager of blockchain, Marie Wieck previously highlighted research predicting the value-add of the blockchain economy growing to more than USD 176 billion by 2025.

 

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Tim Draper Envisions Blockchain Solution to Government Efficiency Woes

Bitcoin bull and renowned financial investor Tim Draper laid out his vision for a blockchain-based solution to government efficiency problems at the GovTech Pioneers conference in Vienna, Austria on Wednesday.

As reported by Cointelegraph, Draper’s opening speech presented a plan for future political governance, consisting of a shift to the use of blockchain technology that would employ smart contracts and artificial intelligence (AI). He predicted that this combination would be capable of providing ”the perfect bureaucracy”.

Blockchain, AI, and healthcare

“The services provided by the insurance, healthcare, and real estate industries are very bad and require a lot of money. The government that burned a lot of money for the worst service first felt this,” Draper said, outlining the reasoning behind the need for a change in governmental operations.

He emphasized his points with a specific focus on healthcare, outlining the future as decentralized, with patient’s data accessible to them on blockchain. An automated system would utilize AI technology to consistently review the data, sending warnings and advice to individuals at risk.

Draper is not the only person who sees blockchain as a superior solution; several blockchain-backed healthcare projects do already exist, praised for the immutable patient records they can provide.

Hashed Health is a project that works to solve healthcare business problems, while IRIS is a start-up company looking to provide people with a decentralized healthcare record.

Of course, setting up a blockchain project in a country to cover every citizen would be a much larger feat than any of these companies have achieved so far. The cases do prove, however, Draper’s vision is not as unattainable as some may initially think.

Blockchain and voting

As recently reported by Forbes, voting is another area of government inefficiency that could benefit from a blockchain alternative. As demonstrated in previous US elections, the current voting procedure leaves much to be desired.

To illustrate this point, in one case in the state of Virginia, an apparent electoral tie led to the decision of a candidate being chosen by drawing a name from a hat. Another instance is the inefficiency of voting in person, leading to low voter turnout. In the 2016 US presidential election, an estimated 55.7% of eligible voters cast a ballot.

Blockchain voting would mean it would be virtually impossible to hack and could potentially be done at home while verifying the identity of the voter, reducing electoral fraud.

Draper did not illustrate the issue of blockchain voting in his GovTech Pioneers talk, but by highlighting the point of blockchain efficiency in regards to government operations, his speech was invaluable in the technology being recognized further in the field.

 

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Crypto Exchange Bitfinex Demands User Tax Information

Prominent cryptocurrency exchange platform Bitfinex has given users until 24 May to confirm their tax status in order to continue using the platform’s services.

BVI legal requirements

According to a message account holders found when they logged into their Bitfinex accounts, as a company operating in the British Virgin Island (BVI), local laws now require that the tax information is collected. The details collected then may potentially be shared with the government of the users home country, should BVI law require it.

The message reads: “Pursuant to BVI law, we are required to obtain self-certifications from our customers in order to ascertain each customer’s tax residence… [we]may then exchange that information with the tax authorities of the customer’s country of residence, consistent with British Virgin Islands law, the U.S. Foreign Account Tax Compliance Act (FATCA), and the Organisation for Economic Co-operation and Development Common Reporting Standard (CRS).”

Centralization of exchanges

While it is crucial to provide legal regulations and safety for those trading cryptocurrencies, many have interpreted this as a step too far, particularly for those advocating the decentralized nature of blockchain trading. Similar criticism fell on peer-2-peer platform Localbitcoins, that announced earlier this month identification documents would be necessary if partaking in significant trading activity.

Unsurprisingly, backlash immediately ensued from the cryptocurrency community, with users taking to Twitter to rally Bitfinex account holders to withdraw their funds. One such user includes crypto personality Whale Panda, who wrote: “Bitfinex is now requiring users to give their tax information so that it can send it to BVI which will exchange it with your country’s tax authorities. We strongly disavow.”

Bitfinex is now requiring users to give their tax information so that it can send it to BVI which will exchange it with your country’s tax authorities.

We strongly disavow.

If you also disagree with this decision, peacefully protest it by withdrawing your money from Bitfinex pic.twitter.com/VkYchg3sqg

— Whalepool (@whalepool) May 17, 2018

Bitcoinist have reported that Bitfinex responded to the criticism by admitted that they were “deliberately targeting” specific users account details, although it is unclear the specifications with which those targeted are being held to.

 

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New York Pursues Initiatives to Become Blockchain Industry Hub

The New York City Economic Development Corporation (NYCEDC) announced on Monday several initiatives that pursue ambitions of becoming a blockchain technology hub.

In time for NY Blockchain Week

With Blockchain Week now underway in New York, city leaders have announced details of their plans for the municipality. The most significant is the development of what is being called a Blockchain Center. This would be purpose-built to educate and raise awareness of the technology, while also providing a space for industry stakeholders to convene.

New York Sate’s BitLicense regulations have received much criticism on the grounds of contributing to a hostile policy stance that has been driving away startups. Should the center be assembled as planned, it would promote a positive regulatory environment for the state, addressing the issues caused by the BitLicense regulations.

In another part of the blockchain initiative, NYCEDC co-sponsored a hackathon in Times Square over the weekend. Participants competed to find blockchain-based solutions for tracking food supplies for farmers markets, similar to the trending real-world use of blockchain in the food supply chain.

The proposal from city leaders also presented plans to launch a competition towards the end of the year, with candidates supplying their own innovations regarding the use of blockchain technology within New York’s service sectors.

The NYCEDC is also a co-sponsor of New York Blockchain Week, alongside cryptocurrency news outlet CoinDesk. The events offered around the city include the Consensus Conference, with lectures held by prominent industry figures, and a free job fair on Wednesday at the Hilton, Midtown.

NYCEDC VP Karen Bhatia spoke out on her ambitions for the city, and the potential industries blockchain could prove a beneficiary of. “We saw an opportunity to be at the forefront of experimentation in blockchain as sustaining more of a foothold,” she said.

Addressing the issue of regulations holding back the development of the blockchain industry in the city, Bhatia anticipated several heated debates in the forthcoming week. As she sees it, this is an opportunity to ‘‘sit down and have a real discussion about how these regulations are affecting innovation and entrepreneurship in New York City“.

 

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