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Research: Bitcoin as Stable as “Dollar and Oil”, Cites Cubic Law

New research published in a respected Journal of Nonlinear Science, suggests that cryptocurrencies could soon be as reliable as fiat currency.

Chaos has released a research report titled “Bitcoin market route to maturity?” which maintains that due to the maturing of digital assets over time, many commentators view that Bitcoin and similar cryptocurrencies are volatile, and therefore too unstable to be used as a currency, are largely unfounded.

The basis of many of these commentaries about Bitcoin’s instability stems from the massive price fluctuations of the past year, seeing the flagship cryptocurrency reach a high of almost $20K in December of 2017 only to drop to $6000 in June of 2018.

The report cites influences, not unlike those which effect regular fiat markets, as instrumental in some of the fluctuating fortunes of digital currencies, such as temporal correlations as multi-scaling effects. The authors of the study commented on the Bitcoin movement over time after studying a number of graphic representations:

“Initially, the graphs we got were a bit crooked, which did not augur anything promising … but when we took a closer look at the data, suddenly it turned out that this crookedness originated from the first two years of the analysed period, that is, from the time when the market was just starting to shape itself.” Adding, “Later on, the rates of return fluctuated according to the inverse cubic law.”

Cubic law is a system of judging a market’s maturity where financial analysts plot price changes in one-minute sequences and compare how they match up.

They added that Bitcoin’s maturity was “particularly evident in the last six months of the examined period,” suggesting that the digital currency’s fluctuations corresponded in the same way as rates of return as regular, mature markets, such as the stock, dollar, oil or bond markets; all good news for Bitcoin enthusiasts and cryptocurrency investors in general.

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G20 Crypto Report: Preserve Benefits of Innovation, Contain Risk

The G20 Financial Stability Board (FSB) is rarely upbeat when it comes to cryptocurrency and its latest report won’t disappoint, although there are indications that the regulatory board is beginning to accept that crypto is here to stay.

It states that its observations are primarily based on a “monitoring framework… predominantly based on public data” and it would be interesting to uncover exactly where this data is gathered.

The usual risks to financial stability in that crypto lacks sovereign currency “attributes” and concerns about digital currencies’ price volatility are all to be found in the report, with little reference to their benefits. It also refers to a lack of regulation due to the range of jurisdictions in which cryptocurrency exchanges operate.

The FSB is formed by an amalgamation of 68 finance departments and central banks of the G20 and chaired by Bank of England’s head Mark Varney who has expressed his concerns about cryptocurrency on more than one occasion.

The G20 financial watchdog noted in its July report that previous analysis of crypto-asset markets, which included initial coin offerings (ICOs), had brought forth awareness surrounding significant challenges such as rapid market development, lack of transparency (with regard to identity and location if token issuers), as well as governing laws for white papers and gaps in data.

This latest report has upgraded some of these concerns from early in the year calling for “vigilant monitoring” suggesting that institutionalized cryptocurrency may erode confidence in financial institutions; a clear concern being shown that banks fear an alternative option for their customers. This may not be imminent, but a likelihood that this becomes the status quo in future years is bound to concern major banking institutions around the globe, as represented by the G20 body.

However, it appears there is some consensus from within the group about the value of innovation, if not the benefits of crypto, although this may be limited to the respect currently being shown for the rising swathe of DLT in the fintech space and elsewhere. The report stated:

“FSB members have to date taken a wide variety of domestic supervisory, regulatory, and enforcement actions related to crypto-assets. These actions are balanced between preserving the benefits of innovation and containing various risks, especially those for consumer and investor protection and market integrity.”

The report also goes on to refer to the widespread use of crypto as a payment system but plays down the level of its impact in the financial and commercial sector by using the word “some”, perhaps unaware of crypto’s growing stature as a payment system:

“Importantly, crypto-assets are neither backed by any government or other authority nor are they legal tender in any jurisdiction. However, some private enterprises and some public sector entities have chosen to accept some crypto-assets as payment.”

 

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Advocacy Groups Separate Fact from Fiction as California Passes Crypto Bills

Two pending blockchain and cryptocurrency bills have passed through the Californian Legislature into law, with support from a community advocacy group.

It appears that the two bills, created to clarify cryptocurrency and allow blockchain-based business to have a legal standing in the state, had considerable non-governmental support leading up to their adoption.

The Advocacy Blockchain Coalition is becoming one of a number of community groups now fulfilling an essential role in bringing facts about the industry to the attention of lawmakers. Sensationalist media reports have done little to help the advancement of emerging technologies such as blockchain and cryptocurrency in the US and advocacy groups are beginning to plug the educational gap between fact and fiction.

Lobbyists and advocacy groups manage to cut through the media hype and provide lawmakers with essential information about what blockchain and cryptocurrencies can achieve and how they can be utilized in the financial sector and elsewhere.

The new Californian bills passed, SB 838 and AB 2658, have provided a legal framework for companies to record and transfer stocks using DLT and include legislative support for contracts signed electronically, negating the need for written authorization.

They also define blockchain as “a mathematically secured, chronological, and decentralized ledger or database”, representing a huge step in accepting blockchain in the state and elsewhere in the US. This bill should receive widespread support from the public domain, comprising those from within the industry as well as members of the legal profession, private companies, and consumer groups.

One requirement of bill AB 2658 is the creation of a working group within the State Government of California including members of the cryptocurrency community, as well as legislators, to examine blockchain technology more thoroughly. The group will report back to the Legislature before July 2020 with recommendations on how it could be used at state governmental level and among the Californian business community.

A statement made Senator Roberts Hertzberg, representing the 18th District of California and the author of the first bill, commended the part that advocacy groups were playing in educating lawmakers on the use cases of blockchain technology, particularly given the flow of negative media coverage surrounding emerging technologies.

 

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Australian Red Belly Blockchain to Process 30,000 Cross-Border Transactions Per Second

Australia’s Commonwealth Scientific and Industrial Research Organization (CSIRO) has completed a test with the University of Sydney to improve the speed of cross-border transactions.

The new Red Belly Blockchain network, which has been created with support from the Concurrent Systems Research Group (CSRG) from the University of Sydney, is capable of processing 30,000 cross-border transactions per second.

The CSIRO is an independent Australian federal government agency responsible for scientific research. Its chief role is to improve the economic and social performance of industry for the benefit of the community. The organization has a hugely diverse portfolio of aims across all sectors, even monitoring the risk that plastic pollution poses to the world’s declining sea turtle populations.

The recent network test was carried out by CSIRO’s tech arm, Data61, covering 1,000 nodes across 14 countries in the Americas, Asia Pacific, and Europe. The organization claims its benchmark was set “by sending 30,000 transactions per second from different geographic regions”.

Senior CSIRO researcher at Data61 Dr Vincent Gramoli said, “Real-world applications of blockchain have been struggling to get off the ground due to issues with energy consumption and complexities induced by the proof of work.”

With an average latency of three seconds, the Red Belly Network promises to be capable of facilitating large-scale business in the country and boosting smart contract usage. In keeping with Australia’s push to promote fintech in the country, such research is immensely important if the country is to become the regional blockchain hub that it aspires to be, according to recent government statements.

The new prime minister Scott Morrison has indicated that the country needs to continue on its research and development if its to keep on its current path. Morrison noted that the contributions of distributed ledger technology (DLT) and blockchain in the financial sector would continue to create “massive opportunities”. He maintained that the Australian banking system would also be able to utilize these technologies to transform areas of consumer data rights, open banking reforms, and new legislation.

 

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Fintech Fusion Shows Ireland’s Intent to Promote Blockchain Hub

Fintech Fusion, a new Irish research program costing EUR 7 million is being launched to focus on paytech, regtech and insuretech technologies.

The project is the brainchild of Dublin’s Science Foundation Ireland’s Adapt Centre and will enable more data-driven research into blockchain development and big data, say its creators. The research will also address the impact of current financial technology on business, both financial and technological, including the retail and wholesale sector.

Ireland currently has a forward-thinking approach to blockchain technology. Recently, National University of Ireland (NUI) authors of a study on the adoption of blockchain approached the government to promote a more widespread use of the technology in the country.

One of the findings of that study showed that only 40% of companies in Ireland had embraced blockchain technology, which the researchers felt was relatively low, despite Ireland’s 13th position on Bloomberg’s 2018 Innovation Index, with high productivity scores and advanced IT infrastructure.

The latest project could take innovation in technology beyond Ireland’s shores with huge implications for the advancement of global financial services in general. The project will be partially funded by Science Foundation Ireland who has pledged to input EUR 2 million, with the remaining EUR 7 million coming from industry partners.

The Fintech Fusion’s academic researchers have managed to land an impressive crew of companies to assist with their work including Deutsche Börse, Fidelity Investments, Microsoft, Gecko Governance, Fineos and Zurich. Also, researchers from three existing Science Foundation Ireland centers will join the project, along with Trinity College Dublin, UCD, DCU, DIT, UL and NUI Galway.

“Fintech is the marriage between finance and technology and offers huge growth opportunities for Ireland both in research reputation and economic impact,” said John Cotter, director of Fintech Fusion at the Adapt Centre. “This will create new opportunities for Ireland, our researchers, and our industry partners.”

Trinity College itself, highly involved in the project, has its own plans for USD 1 billion campus which will be located in the new Grand Canal Innovation District which could provide a home for 400-500 startups, living alongside the offices of multinationals.

 

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Icelandic Crypto Mining: Nucleus of New Technological Age?

Iceland’s Bitcoin mining industry may be cooling off if recent statistic regarding the uptake of blockchain-related products is any indicator, but the centers themselves may create a whole new impetus for new technology.

Iceland has become an iconic name in the industry due principally to the number of companies seeking both cool weather and a cheap power supply – two important factors in Bitcoin mining.

Cryptocurrency miners from warmer climes are reportedly looking to move their operations to Norway and Sweden, with hydroelectricity and other renewables from more developed European countries allowing for cheaper electricity tariffs beneficial to profits as electricity is the main overhead. Iceland has been a popular location due to the low temperatures which naturally dissipate the heat that is generated.

Until now, Iceland has been seen by many as the most profitable location for Bitcoin mining activities in the world but if recent reports are accurate, this might be changing, with blockchain ventures on the increase on the country. Halldor Jorgensson, chairman of Borealis Data Centre located outside the Keflavik International Airport claims that center was seeing huge volumes at the end of last year. He recently commented:

“So you could say that the Bitcoin wave, the big wave of Bitcoin demand, has helped us to build out really fast, because there were really aggressively interested investors who wanted to do things and we managed to do the build-out.”

Jorgensson maintains that, although the huge requirement for Bitcoin pushed the mining industry forward and that it is quite possible a new wave is around the corner, there has been a discernable shift of focus:

“The demand is… shifting more towards the pure blockchain business… We strongly believe that when the whole Bitcoin thing has settled down to some kind of a level that is not as crazy as it was a year ago.”

The data center chief asserts that Iceland is well placed for a further surge in Bitcoin mining due to the infrastructure put in place to cater for the huge impetus created by Bitcoin’s rising fortunes at the end of 2017. However, there are those in the country who feel that Iceland’s economic reliance on Bitcoin carries with it some element of risk.

Johann Snorri Sigurbergsson, business development manager at HS Orka power plant which provides power to crypto mining farms, sees the data centers having a bright future for use in the AI industry in years to come, suggesting that such centers could become the nucleus of future technology. Asgeir Margeirsson, the power plant’s CEO, agrees, arguing:

“The fourth revolution is starting. It would be terrible for us in Iceland not to follow that development. If we were not to take part in the next development into the future, we would slide back.”

 

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Rise of the Blockchain Research Lab: The Latest Trend in Crypto

Blockchain labs are becoming increasingly more prevalent in the industry for research as a backbone to a sound strategy of strong blockchain development.

In the current climate, companies are searching for solid foundations on which to build projects. Research and development projects created in the labs are beginning to offer startups this security. Labs can highlight the opportunities available and long-term potential of a given project prior to companies diving into the deep end untested.

The lab trend is growing. Cardano, for example, is one platform which has been established with a research-based approach. Blockchain development firm IOHK, led by Charles Hoskinson, launched Cardano last year using its peer-reviewed academic research driven base to consider the needs of both users and regulators. Funding will be utilized to finance research staff, PhD studentships and a virtualized blockchain environment moving into the future.

As reported last month by Bitcoin News, even the Russian military has announced its own blockchain lab, this time targeting cybercrime in the country’s military infrastructure information systems. The ministry has initiated a program to enhance cybersecurity by setting up a special unit using a unique research laboratory at the Anapa-based ERA technopark, in order to track the origins of cyber assaults. The unit will now use blockchain technology to improve the systems database security.

In June, the National Mathematics and Interdisciplinary Science Centre at the Chinese Academy of Sciences created the Big Data and Blockchain Lab, in a partnership with Beijing Tai Yun Technology Company. This new laboratory aims to explore blockchain technology with mathematics in order to make critical improvements.

Again in China, the Digital Currency Research Lab of the People’s Bank of China (PBoC) has announced that it is to expand its blockchain research efforts, by launching a new fintech center in Nanjing, in Jiangsu Province, with other cities yet to be announced, also located outside of the capital Beijing.

The goal of these labs is to develop programs to trial in banks and academic institutions such as PBoC’s Jiangsu branch, the Bank of Jiangsu and the University of Nanjing.

 

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Tech Giants Take on Opioid Addiction with DLT

IBM has announced that it is now planning to use a blockchain-enabled health surveillance system in order to collect data on antibiotics and opioids prescriptions by doctors.

Opioid prescription abuse is becoming a problem worldwide with figures showing that their illicit use has now overtaken heroin. Globally, prescription opioid pain relievers are now among the most commonly misused and abused medicines.

IBM’s blockchain system is now making it easy for public health agencies to track both medical practitioners and their patients in order to try and stem this new epidemic of drug misuse. The healthcare industry is seeing several attempts at developing secure digital platforms for the exchange of patient data, believing that blockchain-based solutions may have the potential to vastly improve current data sharing systems in national hospitals.

Healthcare and clinical research is an expanding area as doctors and hospitals increasingly need secure access to a patient’s entire health history. This new, rapidly evolving field provides fertile ground for experimentation, investment, and proof-of-concept testing.

The implications for the industry are endless. New platforms are emerging almost daily such as a diagnostic blockchain infrastructure aimed to host, train and use artificial intelligence (AI) in healthcare, and a blockchain-powered platform designed to track and protect pharmaceutical data.

Prominent healthcare professionals are also growing increasingly confident that DLT has what is required to vastly improve the security of current centralized forms of data storage, which have been vulnerable to hackers attempting to steal patient data for sale on the black market.

IBM has, for some time now, been looking at applying blockchain solutions to the healthcare industry through its work with the Center for Disease Control and Prevention (CDC). At the end of last year, its chief science officer Shahram Ebadollahi acknowledged how relevant blockchain and AI was becoming in the industry.

“Blockchain is very useful when there are so many actors in the system… It enables the ecosystem of data in healthcare to have more fluidity, and AI allows us to extract insights from the data. Everybody talks about big data in healthcare but I think the more important thing is long data.”

Since then, CDC has run several pilots and is urging the healthcare community to take up the mantle. Another computer giant, Intel, has done exactly that, working with McKesson and Johnson and Johnson to use DLT to trace the pill supply chain. Intel’s Director of healthcare privacy and security commented that the tech could “vastly reduce the opioid epidemic” adding, “I would not say this will eliminate the opioid problem, but this will help.”

Another player in the healthcare space, the leader in blockchain healthcare solutions, Hashed Heath, maintains that blockchain’s most significant asset apart from the obvious tracking advantages, is that a “decentralized database of test results with free access to this data” prevents global duplication and enhances research by others moving forward.

 

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Japan Latest to Push International Blockchain Voting

In news from Japan, the city of Tsukuba in the south of the country is using a tested blockchain voting system in order to let local residents of the city vote on local programs.

Tsukuba becomes one of Japan’s first cities to utilize blockchain technology in this way. The city is known to Japanese for its role in scientific research and development. Tsukuba Science City represents one of the world’s largest coordinated attempts to accelerate the rate of and improve the quality of scientific discovery, while not claiming to be Japan’s answer to Silicon Valley.

The voting system works by swiping an ID card on to the vote recording machine for verification which then stores the voter’s selected vote on a program of their choice. Once the data is stored, its encrypted via DLT. The system was tested on 8 August, recording 119 responses in relation to voting for different tech applications for a government website.

The city’s mayor, Tatsuo Igarashi, commented that he was surprised at the system’s simplicity. A local news agency reported that local government is measuring its successes before possibly extending its use to remote areas and possibly even overseas.

Only one reported problem emerged from the test, with some voters failing to remember their passwords, meaning counters were unsure if these votes had been entered into the system.

This Japanese test is certainly not the first to link blockchain with the ballot box. Blockchain voting was trialed for West Virginia’s Senate primary election on 8 May, and in a similar trial to Tsukuba’s, the Swiss crypto town of Zug trialed an e-voting system in June, allowing voting on minor social issues and the future of the ID system itself.

Zug’s trial blockchain-powered test vote enabled residents to vote on their annual fireworks display, digital ID library lending, digital entry ID, parking fees and electronic tax returns.

Australian startup Horizon State recently announced that it would be attempting to bring voting clarity to Indonesia with their blockchain system, restoring some faith to the electorate after years of allegations of vote rigging. The next general election in the country is to be held in at the end of this year.

 

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Blockchain Created Over Coffee and Apple Pie in a New Jersey Diner

The Fintech world is now taking blockchain for granted, but the seeds were sown before the Satoshi Bitcoin phenomenon, originating in a New Jersey restaurant in 1990

Amy Whittaker writing for the New York Times delved deep and came up with blockchain’s fascinating origins, and events which almost took place 20 years before the release of Nakamoto’s “Bitcoin: A Peer-to-Peer Electronic Cash System.”

Whittaker’s research takes the reader back three decades to a Friendly’s chain restaurant in Morristown, New Jersey. Physicist Scott Stornetta and his friend cryptographer Stuart Haber had been considering the possibility of working on a system that could transform personal files into an accurate historical and tamperproof record.

The encryption technology which has made blockchain and cryptocurrencies possible has, and will, revolutionize the way money is perceived and used, taking financial systems into uncharted territory in the near future. At the restaurant Stornetta on that day made the connection, realizing that a workable, tamper-proof system would need to share multiple copies rather than be stored with a central recorder, thereby making alteration and interference virtually impossible.

From there the concept of a decentralized record or ledger-a blockchain-was born. The pair had been working at Bellcore at this time but decided to delve into Stornetta’s idea of a decentralized ledger filing system

In 1991 they published their paper “How to Time-Stamp a Digital Document” which basically outlined much of the theories of blockchain which are now well established. The pair published more papers on blockchain and were also named co-inventors of the Bellcore patent, before then moving on to setting up Surety, which linked any piece of information, a contract, into a block of transactions; thus a complete blockchain picture was created.

Despite both cryptographers staying on a few years, four years before Bitcoin arrived on the scene in 2004 the Surety patent lapsed after non-payment of maintenance fees. Haber seems nonplussed at the dizzy heights their ideas finally reached further down the track:

“It was an interesting little paper that turned into a company—which I didn’t expect—and then I went back to being a research scientist.”

Stornetta says that Surety’s connection to Bitcoin is “pretty cool” and that he could have happily contributed any forthcoming royalties to blockchain development had they continued with their work. Stornetta eventually went back to teaching maths at High School.

When “Bitcoin: A Peer-to-Peer Electronic Cash System.” was released in 2008 outlining the concept of peer to peer payments system which would bypass financial institutions, eight citations of previous works were included; three of those were papers by Haber and Stornetta.

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