Tuesday, September 15, 2015
Russia’s New Law Threatens Internet Privacy as LocalBitcoins Volume Spikes
Nine Top Global Banks Pool Resources to Fund R3 to Develop Digital Currency Standards
Nine of the largest investment banks are planning to develop common standards for blockchain technology in an effort to broaden its use across financial services, The Financial Times reports.
The banks – Goldman Sachs, JPMorgan, Credit Suisse, Barclays, Commonwealth Bank of Australia, State Street, Royal Bank of Scotland (RBS), BBVA and UBS – will fund a startup called R3, formed by a New York-based group of trading and technology executives.
The banks will jointly contribute several millions of dollars, according to a person familiar with the talks. The funds are expected to go to a forthcoming Series A capital raising for R3.
The project will be led by R3 Founder and Managing Partner David Rutter, who served as CEO of electronic broking at ICAP, the world’s largest interdealer broker, from 2010 to 2013. Prior to ICAP, Rutter was co-owner of Prebon Yamane, last serving as chief executive officer for the Americas.
The R3 team is composed of a highly specialized team of financial services industry veterans, technologists, subject matter experts and new tech entrepreneurs especially focused on rethinking and improving the modern financial markets ecosystem. Rutter recruited another former ICAP trading executive, Nichola Hunter, to join R3. Richard Brown, a technology expert formerly with IBM UK, and Tim Swanson, a U.S.-based cryptocurrencies consultant, have also joined R3.
In addition to developing commercial applications, the project will seek to establish consistent standards and protocols for this emerging technology across the financial industry in order to facilitate broader adoption and gain a network effect, notes an R3 press release. The group will collaborate on research, experimentation, design, and engineering to help advance state-of-the-art enterprise-scale shared ledger solutions to meet banking requirements for security, reliability, performance, scalability and audit.
R3 and its bank partners will establish collaborative joint working groups to lead these efforts, which will leverage the R3 team as well as experts within the partner banks. The group will work within a collaborative lab environment or “sandbox” to test and validate distributed ledger prototypes and protocols.
“This partnership signals a significant commitment by the banks to collaboratively evaluate and apply this emerging technology to the global financial system,” said Rutter. “Our bank partners recognize the promise of distributed ledger technologies and their potential to transform financial market technology platforms where standards must be secure, scalable and adaptable.”
R3 is an innovation firm focused on building and empowering the next generation of global financial services technology, states the company’s website. R3 focuses on applications of cryptographic technology and distributed ledger-based protocols within global financial markets.
“If you’re looking to introduce applications with distributed ledger technologies to improve the financial markets, you can’t have each participant working to a different pattern,” said Christopher Murphy, global co-head of FX, rates and credit at UBS.
R3 is bringing a consensus, which could establish common standards, he said.
“The collaborative model we’ve established with R3 and the other banks is a very effective way to deliver robust shared ledger solutions to the financial services sector,” said Kevin Hanley, director of design at RBS. “Right now you’re seeing significant money and time being spent on exploration of these technologies in a fractured way that lacks the strategic, coordinated vision so critical to timely success. The R3 model is changing the game.”
“These new technologies could transform how financial transactions are recorded, reconciled and reported – all with additional security, lower error rates and significant cost reductions,” said Hu Liang, senior vice president and head of emerging technologies at State Street. “R3 has the people and approach to drive this effort and increase the likelihood of successfully advancing the new technology in the financial industry.”
Mike Tyson Partners with Bitcoin Direct LLC
Bitcoin Must Be About the Mission Rather than the Money, Says MIT Media Lab Founder Nicholas Negroponte at Scaling Bitcoin
Legendary Internet pioneer Nicholas Negroponte, a founder of the MIT Media Lab and the One Laptop per Child initiative (OLPC), gave a controversial talk at the Scaling Bitcoin workshop in Montreal.
The Scaling Bitcoin workshop has been focused on how to safely improve the scalability and decentralized nature of the Bitcoin network, and included many technical talks on current issues such as the block-size debate and proposed enhancements such as lightning networks.
But Negroponte chose to keep away from these technical implementation details and focus on the big picture, the “raison d’être” of Bitcoin, its political dimension, and its implications for the evolution of society, with a high-level approach similar to that of his 1995 book “Being Digital” on the future of the then-emerging Internet.
Negroponte mentioned his past involvement with DigiCash, an electronic money corporation founded by cryptographer David Chaum in 1989. DigiCash, which pioneered anonymous digital transactions and is often considered a conceptual precursor of Bitcoin, declared bankruptcy in 1998. Negroponte was an investor and the first chairman.
“Chaum’s raison d’être was electronic privacy, and his plans for DigiCash were ambitious,” noted a Forbes article titled “Requiem for a Bright Idea” published after the DigiCash went out of business. “Digital pseudonyms would protect the identity of Netizens as they roamed the Web. Chaum became a hero to cyberlibertarians.”
Despite his past involvement with DigiCash and the idea of electronic transactions, Negroponte definitely doesn’t come across as a cyberlibertarian. On the contrary, he self-identifies as a socialist. “If it’s not clear, I am about as socialist as you can get,” says Negroponte at the beginning of the Q&A session after the talk. “I come from an era and a part of the world where socialism was viewed as good.”
Negroponte opened his talk with three anecdotes: the spontaneous use of sky lift e-tickets as a parallel currency by the people of a Swiss sky resort; his experience as target of cybercrime by hackers who impersonated him via email and stole a lot of money from his bank account, which he couldn’t recover even after the intervention of his brother John Negroponte, former U.S. Deputy Secretary of State; and his recent experiences in Greece when the banks were closed as a consequence of the Greek crisis.
Negroponte is firmly persuaded of the importance of Bitcoin.
“I can’t think of too many things that are more important than Bitcoin,” he said. “And don’t blow it. Don’t screw it up.”
Many people in the audience applauded at this point, including libertarians and crypto-anarchists, but these didn’t applaud much after Negroponte started to explain his thoughts on how to ensure a bright future for Bitcoin – with a socialist slant.
The worst thing entrepreneurs can do, according to Negroponte, is to consider Bitcoin as a get-rich-quick scheme, because treating Bitcon as such creates large price fluctuations and episodes that scare people away from Bitcoin. On the contrary, Bitcoin should be approached with a sense of mission – a mission to make the world a better place, he said. Negroponte urged the entrepreneurs in the audience to do non-profits.
Similar considerations apply beyond Bitcoin. Negroponte, who has been involved in about 60 startups himself, is critical of the startup culture. Today’s startups, according to Negroponte, cause enormous brain drain.
“Some of the smartest kids are being sucked out of society to do the stupid apps on some iPads with their girlfriends and boyfriends,” he said (another applause here), instead of working on big, hard problems. Here, Negroponte seems to agree with hardcore libertarian venture capitalist Peter Thiel, who, in an interview published on MIT Technology Review, exhorted entrepreneurs to go after bigger problems than the ones Silicon Valley is chasing.
“We wanted flying cars; instead we got 140 characters,” Thiel said.
Though the role of entrepreneurs and philanthropists in technology development is often emphasized, Negroponte thinks civil servants also have an important role to play. He considers roads, public transportation, education and the Internet itself as important parts of the infrastructure of a civil society, which should be developed by the government and made available to everyone at no cost.
Currency – including emerging digital currencies like Bitcoin – should also be part of the essential infrastructure provided by the government, he said. Bitcoin is important from a global point of view, said Negroponte, and could help creating much-needed global governance structures in an increasingly fragmented world.
“What’s wrong in being run by the government?” asked Negroponte, “If you think the government can’t run anything, go to Switzerland and ride a train.” He added that Finland has the world’s best education system, and no private schools. While acknowledging that there are lessons to be learned from libertarians, Negroponte sees an important role for the government to collect taxes and distribute benefits to everyone.
Negroponte’s talk, which is likely to provoke heated debates, can be interpreted as self-serving. In fact, the Digital Currency Initiative at MIT Media Lab, founded by Negroponte, is claiming a role of arbitration and leadership in Bitcoin developments, in prestigious academic settings far from get-rich-quick schemes, and Negroponte hinted at the Media Lab’s role at several points in the talk.
Photo Gin Kai / Wikimedia (CC)
Bitcoin’s Price ‘Melody’ Made Audible in Russia’s Capital
Monday, September 14, 2015
Rebit’s Bitcoin Solutions Targets the $2 Billion Canada-to-Philippines Remittance Market
Universal bitcoin company Satoshi Citadel Industries’ Rebit.ph has partnered with California-based global transaction network and money transfer platform ZipZap to enable Filipino expat workers in Canada to send money back to the Philippines using the ZipZap payment application.
Filipino workers spend around USD$2 billion in transaction and conversion fees when sending money back to their families. The remittance services and outlets such as Western Union and Lhuiller (Filipino Local Remittance Service) can be extremely expensive and inefficient, as it requires 5 percent to 12 percent of the entire transaction to be paid as “service fees.”
Satoshi Citadel Industries and its subsidiary company Rebit.ph aims to break this barrier of the Filipino and Canadian remittance markets to enable Filipino expat workers to send and transfer payments with ease. The company is seeking to get a significant share of the Philippines-to-Canada remittance market and process as many remittance payments as possible using Bitcoin technology.
Speaking to Bitcoin Magazine, Satoshi Citadel Industries CEO John Bailon explained:
“We’re aiming high. We want to capture as much as we can, and although this seems farfetched, I truly believe that with the current existing technologies, i.e. ubiquitous smartphones and the Bitcoin technology, this is now achievable. The timing is right, and with partners like ZipZap, building the open remittance network on top of the blockchain is now a reality. Cost of remittances is a huge pain point (USD 2B huge) for a lot of my fellow countrymen, and that is what ultimately motivates us to bring a faster and cheaper service to market.”
Process
The process of sending remittance or, as the company calls it, a “rebittance,” via rebit.ph is simple. Users can use the ZipZap application which acts as an on-ramp interface for remitters.
Then, the users “are asked how much they want to send in Candadian dollars, plus the corresponding recipient details, and as soon as they hit “send,” the transaction goes through the Bitcoin network.
“In a matter of minutes, we process the transaction at Rebit and cash in PHP is made available for the recipient through whatever payout method the remitter nominated,” Bailon said. “For both remitter and receiver, the bitcoin part is invisible, they don’t have to know how the funds were sent accross the network, what they know is that it’s a more convenient and cheaper way to send money back home.
“Because we use Bitcoin at Rebit, we’re open to receive transactions from any individual or company, effectively an open network for remittances,” explained Bailon.
Possible Expansion
Ultimately, Satoshi Citadel Industries intends to expand its services and “target the top 10 locations where there is significant Filipino migrant worker population,” including UAE, Singapore and Hong Kong.
Today, residents of Australia, Canada, Japan, Kuwait, Malaysia, Qatar, Saudi Arabia, South Korea, Taiwan and many other Asian countries can transfer and send money using bitcoin to remittance outlets and banks in the Philippines. Through partnerships with local banks and financial institutions, Rebit.ph has made it extremely easy for Filipino expat workers to send payments, and Filipino residents to receive transactions at remittance outlets, which are available across the country.
“By partnering with companies such as ZipZap, we’ve made sending remittances to the Philippines via Bitcoin easy, cheaper and faster compared to traditional methods.. It’s like Western Union, except it’s open to for anyone to participate in. We jokingly call this network the Eastern Union,” added Bailon.
Adam Back on the Risks of Benevolent Dictatorship in Bitcoin
The idea of a benevolent dictator for Bitcoin has become a topic of conversation throughout the community lately due to Mike Hearn’s role as the final authority for changes in Bitcoin XT. Although it should be made clear that Hearn is able to dictate only policy for that particular implementation of the Bitcoin protocol, some individuals are turned off by the idea of having a single point of failure in the development process.
Blockstream co-founder and President Adam Back is one such person, and he shared some of his views on the subject during a recent interview with Epicenter Bitcoin.
Putting the Entire Bitcoin Economy on One Man’s Shoulders
Back described a variety of issues with a benevolent dictatorship governance model for Bitcoin during the interview, but his main point was that having a single person with a large amount of power in the development process could lead to problems associated with moral hazard.
There’s also the issue of the immense amount of pressure facing any individual who decides to take on the role of benevolent dictator. Back described this dynamic during his appearance on Epicenter Bitcoin:
“I think the danger with Bitcoin is that there’s a lot of other people’s money at stake, right? There’s a $4 billion economy, and as we go into the future — if Bitcoin sees adoption in certain segments for international settlements or as a competitor to gold or something — that could turn into a $4 trillion economy. If you turn around and think for a few minutes about would you personally like to be the final arbiter, I think you’ll find the answer would be no because you would be subject to immense amounts of international pressure, potentially blackmail, people bugging your equipment, [people] trying to sabotage [you.] Even governments and central banks employing Nobel Laureate economists struggle to avoid moral hazard.”
Promoting a Diverse Development Process
Back then discussed some of the other risks associated with having a single person making final decisions on important development matters in Bitcoin. He noted the importance of having a diverse development process to avoid those kinds of issues:
“Another kind of risk is that a particular individual may have a hidden agenda or be working for, you know, a criminal organization or a foreign government with a conflict of interest or something. If there’s a peer-review process where a group of diverse people have to review changes and approve [them] — that’s the best we know how to do in terms of avoiding those kinds of influences creeping in.”
Although many people have demonized the relatively slow development process that has plagued Bitcoin Core for the past few years, the reality is that there may not be better options that don’t introduce new, unforeseen complications.
Gavin Andresen on Being the Benevolent Dictator of Bitcoin
Bitcoin XT Developer and Bitcoin Foundation Chief Scientist Gavin Andresen was interviewed in an episode of Epicenter Bitcoin released one week prior to Adam Back’s appearance, and he also shared his thoughts on the pressure related to being a benevolent dictator for Bitcoin:
“Having been in the position of lead maintainer and knowing that this whole multi-billion dollar industry kinda-sorta rests on your shoulders because you’re in charge of the code that everybody is running — that’s a horrible place to be. It’s insane pressure to make the right decision, which is part of the reason why I think we need to evolve beyond that — so that no one person or group of people feels like the whole weight of the system rests of their decisions, so there is more room to make decisions, to innovate and even make mistakes.”
Andresen’s view is that a benevolent dictator could allow the development community to avoid delays in the deployment of bug fixes and new features, although he’d also like to see a variety of implementations of the Bitcoin protocol:
“The impact of those mistakes will be smaller if you have a more diverse system where maybe not everybody is running the same version of the code on the network. There are lots of different versions of the code if any one breaks; it’s not that big of a deal because the whole system doesn’t break. Diversity really does bring more robustness in this case.”
For now, Bitcoin Core is still the main implementation of the protocol used by the vast majority of users. Wladimir J. van der Laan is technically the lead maintainer of Bitcoin Core, but he is not willing to act as benevolent dictator at this time. Unless the mining industry changes their minds and begins to support Bitcoin XT, it appears that there won’t be any benevolent dictators of Bitcoin in the near future.
Photo World Economic Forum / Flickr (CC)
The UK Government and IBM Support and Fund Innovate Finance’s Blockchain Lab
In August Bitcoin Magazine reported that the”Innovate Finance Manifesto: 2020,” released by Innovate Finance, an organization focused on promoting U.K. leadership in digital fintech, was praised by British Prime Minister David Cameron.
“This government wants the U.K. to be the leading fintech center in the world. That’s why, at the Summer Budget, we appointed a special envoy for this fast growing sector,” said Cameron. “I’m pleased that Innovate Finance’s manifesto has set such ambitious goals, including the creation of 100,000 jobs. This will ensure we are a world leader in the development of financial services technologies.”
The Manifesto 2020 establishes a generic framework for digital fintech innovation without going into details of specific technologies, and doesn’t mention Bitcoin and blockchain-based digital currencies explicitly.
But now Innovate Finance has announced the establishment of a blockchain lab in partnership with the Hartree Centre, the high performance computing and data analytics research facility founded by the U.K. Government’s Science and Technology Facilities Council (STFC), as a research collaboration in association with IBM.
“We are excited about the prospect of our members openly collaborating to deliver use cases to the wider community,” said Innovate Finance’s CEO Lawrence Wintermeyer. “If we can use the lab to develop open standards for the blockchain in financial services, we will be moving one step closer to accelerating the mass adoption of this breakthrough technology.”
Innovate Finance also has released a video taken at a recent “Blockchain Day” event. In the video, fintech innovators outline the transformative potential of the blockchain technology, and focus on “Bitcoin 2.0” technologies that go beyond bitcoin payments and include “smart contracts” and “trustless” applications where participants can interoperate without necessarily needing to trust each other.
“This is a formidable partnership built on expertise and a hunger to develop innovations that can have a meaningful and sustainable impact on the financial services sector and the U.K. economy,” said David Moss, Advanced Technology Solutions Manager at the Hartree Centre. “The Hartree Centre is very excited about this new initiative and look forward to working closely with Innovate Finance members to learn from the knowledge they bring. We hope to harness the power of our world-class computing systems. Together we will examine how blockchain technology can shape a new and better future for financial services and possibly other sectors, too.”
By participating in the Innovate Finance blockchain lab, scheduled to be up and running in October, digital fintech companies will be able to leverage the power of Hartree’s high-performance computing (HPC) solutions for their blockchain exploration, which use parallel processing to deliver unprecedented computing speeds to solve problems and to provide accurate predictions and data analysis for new applications and technologies.
The involvement of the British government and IBM in the project is especially interesting. The government supports Innovate Finance’s plan to consolidate U.K. leadership in digital fintech and, together with the Bank of England, has made recent moves to support blockchain innovation in Great Britain. IBM is no stranger to blockchain technology, and appears to be interested in integrating its big data analysis, high performance computing and “Watson” artificial intelligence technologies in next-generation blockchain developments.
The Hartree Centre was created in 2012 by the STFC, with a £37.5 million (about $58 million) investment from the U.K. government, to develop, deploy and demonstrate high-performance computing (HPC) solutions. In the Autumn Statement 2014, the U.K. government committed further £113 million ($174 million) to expand the Centre in the next five years.
In June, IBM announced that it will further support the project with a package of technology and onsite expertise worth up to £200 million ($309 million), which brings the total funding to $483 million.
“We’re at the dawn of a new era of cognitive computing, during which advanced data-centric computing models and open innovation approaches will allow technology to greatly augment decision-making capabilities for business and government,” said David Stokes, chief executive for IBM in the U.K. and Ireland. “The expansion of our collaboration with STFC builds upon Hartree’s successful engagement with industry and its record in commercializing technological developments, and provides a world-class environment using Watson and OpenPOWER technologies to extend the boundaries of Big Data and cognitive computing.”
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Sunday, September 13, 2015
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