Saturday, May 2, 2015
Bitcoin-Powered Remittance Startup Wins Deloitte Tech Competition
This Week's Bit Pics: Crypto Time Capsule, US$1000 Tip, Bits on the Strip
Friday, May 1, 2015
Western Union Exploring ‘Pilot Settlement Project’ With Ripple Labs
The global remittance giant Western Union might use the digital currency ripple in a pilot program. Western Union has confirmed it is currently in talks with Ripple Labs, the company behind the digital currency, but details remain scarce. However, if the program comes to fruition, it would be a landmark moment for ripple and the larger digital currency industry.
Vice President of Marketing and Communications at Ripple Labs Monica Long did not confirm the details of the project but did add, “In general, financial institutions and networks use Ripple as a technology that powers real-time settlement in any currency to lower the cost of liquidity and compliance. Ripple was created to enable an Internet of Value in which the world can move value as easily as information moves today.”
Ripple Labs has long promoted the digital currency’s payment network as a way to improve global payments, and many suspect that the remittance giant could use the digital currency as a way to send money faster and cheaper, though this has not been confirmed.
According to a comment made to Bitcoin Magazine by Western Union’s Director of Global Corporate Communications Kristin Kelly, it does appear the remittance giant is interested in using the digital currency for “settlements” but declined to elaborate.
“We have had preliminary discussions with Ripple regarding a pilot settlement project, but it is too early to discuss details at this time,” Kelly said.
Financial Inclusion
The announcement of the possible partnership was made by Ripple Labs’ co-founder and CEO Chris Larsen during a panel at the Milken Institute Global Conference on financial inclusion.
“We’re trying to solve the problem of connecting local banks and financial institutions to the global economy,” Larsen said during the panel. “We have this problem where we have a variety of different networks, whether they are in the U.S. or Kenya or Europe — they’re not connected. You can make a phone call to anyone with a phone number and you can send an email to anybody with an email address, but you can only pay people that are in your payment network. The goal is —how do you get all of these things operating together?”
Other members of the panel were Western Union’s Chief Information Officer and Executive Vice President of Global Operations and Technology David Thompson, MasterCard Center for Inclusive Growth Executive Director Shamina Singh, Safaricom and M-Pesa CEO Bob Collymore, and founder and CEO of Abra Bill Barhydt.
Thompson, who declined to comment, previously admitted to being interested in, and even mining, digital currency in the past. He also has said Western Union was taking note of digital currencies but was taking a passive “watch and see” approach.
If the program does come to fruition, it would mark a dramatic change of policy by the global remittance giant and an advancement for the digital currency industry.
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Why Namecoin Didn't Take Off: A Cautionary Tale
Tsinghua University and Bitcoin Company Huobi Launch Digital Assets Research Initiative
Tsinghua University PBC School of Finance and Bitcoin exchange Huobi have launched a joint Digital Assets Research Initiative. With this initiative, Tsinghua University joins MIT and technology giants IBM and Samsung as one of the world’s major institutions conducting research and development of blockchain technology, decentralized systems and digital assets.
Founded in 1911, Tsinghua University is one of the nine elite Chinese universities, and it is considered the top institution of higher learning in mainland China alongside Peking University. It describes itself as being dedicated to academic excellence, the wellbeing of Chinese society and global development. Often described as “the MIT of China,” Tsinghua was regarded as the top Chinese university by the 2015 Times Higher Education World Reputation Rankings, where it was ranked 26th globally.
The PBC School of Finance at Tsinghua University was founded in 2012, as a joint venture between the University and the People’s Bank of China (PBC), with the mission of promoting excellence in the finance industry and financial regulation through top-notch education and cutting-edge research. In partnership with the central bank and national financial regulators, the PBC School of Finance established the National Institute of Financial Research (NIFR), with the mission of doing top-class research on financial reform and development, and providing policy analysis and advice for financial policymakers and regulators.
Huobi is China’s leading Bitcoin company. With financial backing from Silicon Valley investment firm Sequoia Capital, Huobi operates a Bitcoin exchange and provides services to individual and institutional clients. With a 16.34 market share, the Huobi Bitcoin exchange is one of the most active in the world.
PBC School of Finance Dean Liao Li, PBC School of Finance Vice President and Deputy Party Secretary Zhao Cen, Huobi founder and CEO Li Lin, and other leaders attended the Digital Assets Research Initiative launch event. Li Lin and Liao Li each gave a speech, and Vice President Zhao Cen signed an agreement formalizing the university’s long-term cooperation with Huobi.
The work of the Digital Assets Research Initiative will be jointly conducted by finance and technology experts from Tsinghua University PBC School of Finance and Huobi. It will be hosted at the Tsinghua PBC School’s Internet Finance Research Lab and Huobi will be the official sponsor of the program.
There are evident parallels between Tsinghua University’s Digital Assets Research Initiative and the MIT Digital Currency Initiative, recently launched by the MIT Media Lab to address some of the most critical challenges to creating a safe, stable and secure digital currency and directed by former White House senior adviser for mobile and data innovation Brian Forde. In both cases, a prestigious university with strong ties with the nation’s technical, financial and political establishments takes the lead in the digital currency space, with funding coming partly from the private sector.
It’s important to note that, as revealed by Goldman Sachs’ recent report about the future of money, 80 percent of bitcoin volume is exchanged into and out of Chinese yuan. Therefore, the Digital Assets Research Initiative could influence the positions of the Chinese government on bitcoin and digital currencies.
“Contrary to commonly held belief, the regulatory environment for operating a Bitcoin business in China is actually more accommodating than the United States,” said Huobi product manager Robert Kuhne in a recent interview on CoinReport. “It can’t be said with absolute certainty what the Chinese government policy will be in the future. It is likely that the government will not do anything until Bitcoin grows significantly. Today, Bitcoin’s total global value is a $4 billion U.S. dollars. This does not appear on the radar of Beijing bureaucrats who are responsible for managing the world’s second-largest economy.”
Boost VC-backed Bitcoin Smart Contract Startup Hedgy Raises $1.2 million
The Boost VC Tribe 4 graduate Hedgy completed a $1.2 million funding round from investors including Tim Draper, Salesforce CEO Marc Benioff and Sand Hill Ventures.
Hedgy, founded in April 2014 is the first Bitcoin startup to create multisig powered smart contracts to protect merchants from the price volatility of bitcoin.
Initially, under the project name Coindash, Matt Slater (co-founder and head of trading) and Juan Pineda (co-founder and head of technology) worked together in Boost VC’s bitcoin hackathon to create prototypes of the world’s first programmable smart contracts for derivatives.
Using a derivative called “over the counter non-deliverable forward contract,” Hedgy allows two parties to agree on a price of bitcoin that will be traded at in the future.
“All it means is that instead of exchanging bitcoin at the end you just exchange the price difference,” Slater explained. Essentially, the agreement would lock the price of bitcoin, say $500 / BTC, for a certain amount of time. This way, merchants or miners will be free from the volatility of bitcoin.
In correlation to the recent funding round, Hedgy launched a product similar to the concept of the original merchant-targeted smart contracts, this time for miners.
Miners using the newly launched derivative can initiate smart contracts to agree upon a future price of bitcoin which they wish to sell after a certain amount of time that will be settled on the bitcoin blockchain.
The new product of Hedgy is mentored by the founder of MegaBigPower Dave Carlson, who has been working with Hedgy to develop the derivative. The U.S.-based bitcoin mining company MegaBigPower is also the first bitcoin mine to use the derivative. The bitcoin mined from MegaBigPower is purchased by London-based Bitcoin derivatives exchange Crypto Facilities.
How Hedgy Works
A bitcoin miner will first “hedge” bitcoins at a price of perhaps $250/BTC for 30 days. Then an indicator of Interest is sent to the Hedgy Chat. To initiate in a smart contract, a pre-contract negotiation is made directly with counterparties. Once the terms are agreed upon by the counterparties, the contract is submitted to the Hedge Oracle to create and settle the smart contract.
After the smart contract has been created, a multisig address is generated where the miner and counterparties each deposit at least 30 percent of the BTC to the designated multisig address. As soon as the deposits are confirmed, it goes live on the blockchain, completing the deal.
Hedgy explains that this could help miners deal with increasing electricity costs, hardware obsolescence and fluctuating prices, which are a major problem facing bitcoin mining profitability.
As a decentralized brokerage for miners and counterparties, Hedgy could provide miners an effective method of dealing with bitcoin volatility in the future.
Bitex.la Opens Bitcoin Branches’ in Argentina and Chile
Through a partnership with Uruguay-based remittance company, More Money Transfers (MMT), Latin American Bitcoin exchange Bitex.la has 19 agents in Argentina and one in Chile who will now sell bitcoin.
Providing services for the non- or underbanked in emerging markets has been regarded as a powerful use case for bitcoin, especially in Argentina. The country’s high inflation and strict economic controls have led many to believe bitcoin as currency and a payment network could succeed there.
According to a company spokesman, Bitex.la had that in mind when they were planning the branches. The exchange currently allows people in numerous Latin American countries to buy bitcoin, but that requires a bank account. The new retail stores allow Argentina’s and Chile’s unbanked population to buy bitcoin with cash.
Offline Then Online
Bitex.la says it has signed an exclusive agreement to use More Money Transfers’ large agent network in Latin America. More Money Transfers has agents in more than 13 Latin America countries and partners around the world.
Customers interested in buying bitcoin will first need to create a Bitex.la account online and go through the know-your-customer process. Once the account is activated, he or she can then go to one of the More Money Transfers branches with a valid ID and pesos. Fifteen minutes later, U.S. dollars will be credited to the user’s account and then he or she will be able to buy bitcoin online.
Currently there are More Money Transfers offices in Chile’s capital, Santiago, and in numerous Argentinian cities, including 12 in the nation’s capital, Buenos Aires. Bitex.la told Bitcoin Magazine they will expand to all of Latin America and that the service will be expanded to Uruguay, Peru and Brazil in the coming weeks.
Bitex.la said More Money Transfers is very supportive of Bitcoin, citing the company’s exclusive deal and further expansion as proof. More Money Transfers says it looks at digital currency as “near-future remittance technology.”
Latin American Powerhouse
Bitex.la was founded in 2014 and quickly became a leader in Latin America’s digital currency industry. The company operates an online bitcoin exchange that is available in nearly every South American exchange and has partnered with AstroPay, one of the largest payments services in the region.
In May of last year, the exchange launched with a $2 million investment from an undisclosed U.K. firm. Later that year, the company bought regional digital currency exchange Conectabitcoin. The company has continued to run and grow the exchange as it seeks to bring bitcoin to Latin America.
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