Monday, September 7, 2015
NASA’s Mining Pool Might Soon be a ‘Constellation of Satellites’
Sunday, September 6, 2015
Gavin Andresen: ‘Nobody Wants to be the High Priest of Bitcoin’
Saturday, September 5, 2015
M-Pesa’s API to Ease Integration with Other FinTech Platforms
4 of Bitcoin's Most Powerful Corporations May Consider Joining Forces
Simon Dixon: ‘Bitcoin Solves 3 Major Problems in the Financial System’
Friday, September 4, 2015
UBS to Develop Yet Another ‘Permissioned Blockchain’ for Banks
In April, Bitcoin Magazine reported that UBS was planning to investigate blockchain technology in a new innovation lab based in London. The innovation lab is located in Level39, Europe’s largest technology accelerator space for finance and cyber-securities, and focuses on exploring the role of blockchain technology in financial services.
UBS, a Swiss global financial services company with its headquarters in Basel and Zürich, is the biggest Swiss bank and is considered as the world’s largest manager of private wealth assets, with more than 2.2 trillion Swiss francs (CHF) in invested assets.
In August, the bank launched a “Future of Finance Challenge” for financial technology entrepreneurs and startups. The Future of Finance Challenge covers a broad range of emerging fintech areas, including blockchain technology and applications, cryptocurrencies, distributed ledgers, security and privacy verification and smart contracts.
Now, the blockchain vision and strategy of the giant Swiss bank are becoming clearer. UBS is working on a prototype virtual currency that it hopes will be used by banks and financial institutions as a basis to settle mainstream financial markets transactions, The Wall Street Journal reports.
The new virtual currency, dubbed “utility settlement coin,” would be used for post-trade settlements between financial institutions on private financial platforms built on blockchain technology. For example, UBS might have its own blockchain-based platform to issue bonds, and another bank might have a blockchain-based stock-trading platform, but both would use the same utility coin for settlement.
The bank doesn’t plan to issue the new digital coin itself but hopes to work with other banks, regulators and financial service providers for an industrywide product. Hyder Jaffrey, the bank’s e-commerce commercial director, said UBS had already reached out to potential partners, but would not comment on specific institutions.
The utility settlement coin is a “permissioned blockchain” similar to the Bankchain project recently announced by Bitcoin exchange itBit. Permissioned blockchains, also endorsed by Accenture and Digital Asset Holdings CEO Blythe Masters, are the new trend in Wall Street’s uneasy flirtation with Bitcoin. Basically, permissioned blockchains would offer the advantages of digital currencies powered by public blockchain – fast and cheap transactions permanently recorded in a shared ledger – without the troublesome openness of the Bitcoin network where anyone can be a node on the network anonymously.
Using the utility settlement coin or similar systems, financial institutions could settle trades in seconds rather than days, which could lead to reduced risk, lower operational costs, and increased efficiency. To achieve this vision, UBS is partnering with blockchain fintech startup Clearmatics, based in London. The key difference between Clearmatics’ implementation of the blockchain technology and Bitcoin is the fact that only authorized participants can validate transactions. “Unlike cryptocurrency blockchains, validators are authenticated and legally accountable,” states the Clearmatics website.
A recent post on the Clearmatics website, titled “No, Bitcoin is not the future of securities settlement,” provides a point-by-point analysis of the original Bitcoin whitepaper by Satoshi Nakamoto from the point of view of the financial establishment, and a clear outline of the reasons why banks and mainstream financial institutions won’t touch permissionless blockchain networks like Bitcoin.
“To serve as a replacement for the legacy technology implementing registered, book-entry assets, a distributed ledger of financial assets will have to ensure a tight correspondence between what the ledger and the law say is the state of who-owns-what,” notes the post. “This is obviously incompatible with a protocol based on anonymous transaction validators; the law will not treat a ledger record as authoritative if everyone knows that the current longest chain contains blocks generated by an anonymous attacker who replaced a bit of history that was chronologically prior. But the bitcoin protocol has no mechanism for dealing with this scenario, no mechanism for bringing ledger state and legal state back into alignment.”
According to the company, Clearmatics’ permissioned blockchain infrastructure is not only “thousands of times more efficient” than the Bitcoin network, but also places a governance structure over the validators to ensure resistance to attacks.
The Wall Steet Journal article wisely mentions critiques to UBS’ approach and permissioned blockchains in general. In particular, former Bitcoin Foundation director Jon Matonis is persuaded that private, permissioned blockchains might fall short of their objectives. “It could end up being very similar to centralized payments networks we have right now, without the benefit of the network effect of bitcoin,” he said.
Chopcoin Launches with New Skill-based Gambling Game
SEP 4 DIGEST: CoinWallet Conducts 'Stress Pre-test’; Hollywood Agency to Adapt MtGox Story
Thursday, September 3, 2015
Gov’t in U.S. First to Record Survey on Bitcoin's Blockchain
GameCredits to Integrate Digital Currencies in TurboCharged Racing and Other Video Games
GameCredits, a cryptographic payments platform for gamers and game developers is set to integrate digital currencies including its own altcoin called GMC in three video games, one of which was released on September 2.
“GameCredits is the first free open source gaming currency made by gamers for gamers and game developers,” explained the GameCredits team. The company believes that the integration of cryptocurrencies in video games could help increase digital currency adoption, and spur mainstream adoption for many alt-coins.
“We at GameCredits are breaching this chasm and are baldly exploring those uncharted waters – all in the name of providing crypto currencies the mainstream adoption they deserve,” GameCredits Monetization Expert Silvio Gucek explained.
The video game industry is one of the few markets that could benefit greatly from the block chain’s ability to send out micro transactions, or small transactions worth less than a dollar.
The market cap of the currency (GMC) that GameCredits will integrate in its games is currently US$1,574,294, which is substantially smaller than most alt coins in existence. However, the company believes GMC is the right fit for its games, as it has a max number of GMC that will ever exist, like bitcoin.
The first game to adopt the company’s currency is TurboCharged, a hybrid racing game which enables users to bet GMC for races and missions.
“As we launch our initial venture, I expect Turbocharged to act as a catalyst for innovation in this field. TurboCharged permits us to properly vet our betting system and in-game transaction platform, which shall be implemented at a much larger scale in our upcoming game ‘EON,’ currently in development,” announced GameCredits Project Manager Victor Alejandro.
itBit Hires Former NYDFS General Counsel Daniel Alter, Pushes Ahead with Bankchain Project
In April, Bitcoin Magazine reported that Bitcoin exchange itBit had filed for a banking license in New York. Later in May, itBit was granted a trust charter by the New York Department of Financial Services (NYFDS) under New York State banking law, the first such charter granted to a digital currency company by the NYDFS. ItBit also announced the successful completion of a $25 million Series A funding round.
On September 2, itBit announced the appointments of Daniel “Danny” Alter as the company’s new general counsel and chief compliance officer, and Kim Petry as chief financial officer. Petry was previously CFO of global operations and technology at Broadridge Financial Services and, before that, served as CFO and vice president of global commercial/corporate card payment at American Express.
Alter joined itBit after stepping down in February from his most recent post as general counsel of the New York State Department of Financial Services (NYDFS), where he served as principal counsel and strategic adviser to the New York state superintendent of financial services.
The former New York State Superintendent of Financial Services Benjamin Lawsky left the NYDFS after releasing the controversial Bitlicense regulations for digital currency businesses operating in New York. Lawsky’s move to a consulting business was strongly criticized by the libertarian Cato Institute.
“Because of the contacts he made as a regulator, [Lawsky] can hire himself out to Bitcoin companies wanting to signal to other regulators that they have the approval of the regulatory establishment,” noted Cato Senior Fellow Tim Harper.
It seems likely that Alter’s move to itBit might be criticized in the same grounds.
“The New York State Public Officers law requires that I have a two-year recusal before I can appear before the New York Department of Financial Services on behalf of the company,” said Alter in a pre-emptive statement reported by Reuters. “And it will certainly apply to itBit. I will not step near or have any communications with the New York Department of Financial Services. Those will be handled by outside counsel or qualified compliance people within the company.”
“Between Danny’s deep expertise in financial services and virtual currency regulation and Kim’s demonstrated track record as a successful CFO of global financial organizations, I’m confident that itBit will continue to grow and develop innovative blockchain-based solutions to address the financial industry’s greatest pain points,” said itBit co-founder and CEO Chad Cascarilla. “Danny and Kim possess a deep understanding of how to grow and run a successful business within the regulatory framework of the financial services industry, and their expertise will be invaluable as we work toward the launch of our new permissioned distributed ledger product – Bankchain.”
Bankchain, a new high profile project still held under wraps by itBit, will be a closed, “permissioned blockchain” owned and operated by banks and financial institutions – in other words, a private blockchain without bitcoin and anonymous miners. According to itBit claims, Bankchain will automate, accelerate and simplify post-trade processes across the financial services industry, saving institutions time and money.
Bankchain is “the first consensus-based ledger system exclusively for financial institutions,” states the still very basic Bankchain website. “Bankchain is a new clearing and settlement network that leverages blockchain technology to reimagine how financial institutions execute post-trade. The decentralized network is powered by itBit but fully governed by the member participants that join the platform.”
“[Bankchain] is a proprietary itBit protocol, not blockchain based, but is derived off of blockchain,” itBit head of global operations Steve Wager told Coindesk in August. “We will also not be using bitcoin as the native token; it will be an itBit proprietary token.”
Reddit users strongly criticized the “Sinister Bankchain Project,” but it appears that the trend toward private, permissioned blockchains is here to stay, with strong support expressed, among others, by Accenture and Digital Asset Holdings CEO Blythe Masters.
CoinWallet Begins Pre-test of Bitcoin Network, Schedules Largest Stress Test to Begin on September 10
The Bitcoin network took a hit yesterday as CoinWallet ran its “stress pre-test” for about thirty minutes resulting in a “2-day delay and a 50 MB backlog” according to CoinWallet CCO James Wilson.
Reports are still coming in but it seems like most bitcoin exchanges and wallet companies were able to take the test in its stride.
Wilson also told Bitcoin Magazine today that the company will be running a major stress test on the Bitcoin network on Thursday, September 10 starting at 10 a.m. GMT.
The purpose of these stress tests is to see if the Bitcoin network can handle a barrage of very small transactions that will act like a DDOS attack but most observers see this as a “political” statement and CoinWallet’s contribution to the ongoing block size debate.
When Wilson confirmed that CoinWallet ran a preliminary pretest yesterday, he noted:
“The pre-test lasted only about 30 minutes and created a 2-day backlog. As you can imagine, September 10th will indeed be stressful.”
CoinWallet will be analyzing what happened yesterday and what the response was and will let us know the results in a few days.
The test is part of the ongoing debate that is dominating the bitcoin space as companies and communities weigh in on different solutions to the Bitcoin block size.
On September 12 and 13, the first of two Bitcoin scalability workshops “for Bitcoin’s engineering and academic community” will be held in Montreal, Canada, sponsored by a dozen digital currency companies, to try and find consensus on the best block size for bitcoin.
CoinWallet (which is a UK-based Bitcoin mining and wallet) has said in the past that they are concerned that the current block size is inadequate to handle the volume of transactions in a growing bitcoin market.
As reported last week, Bitcoin exchanges and wallet companies are taking steps to prepare and most that we talked to seemed ready and able to handle the expected disruption.
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