SVK CRYPTO PODCAST 148 – 24/05/2018 – Current Crypto Themes?

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

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Top Crypto News – 24/05/2018

Bet vs. Buy? The ICO Market Has a Serious East-West Divide


In the U.S., initial coin offerings (ICOs) are about ideas. In the Asian market, they’re about returns.

“At the very beginning, the information coming from Asia to the US was very limited. We didn’t know what’s really going on,” Zhuling Chen, co-founder of Aelf, a cloud computing startup out of Singapore, told CoinDesk.

So the Asian market took off on its own, informed by the ecosystems around bitcoin and ethereum but also distinct from them, such as when major Asian banks launched distinct efforts starting in early 2016. Some of the differences between the two markets became clearer as CoinDesk spoke to investors and entrepreneurs during Blockchain Week in New York City.

If one common theme ran through our conversations about Asia, it was this: retail and institutional investors all want returns to realize much more quickly than investors do in the U.S., which may help explain why it has always had a vigorous ecosystem of exchanges.

Said more frankly, Jason Fang, managing partner at Sora Ventures, put it this way during a panel at Token Summit III: “Asians love to gamble.”

As he told CoinDesk, they don’t want long lockup periods like so many Western projects expect. Instead, they want to see tokens get released, listed and realize some of the gains that come from retail investors and market makers buying into a new coin.

Investors in Asia move fast into getting coins listed and sell them as they go up, because they know there is going to be an uptick after listing as market makers enter new tokens, but his firm avoids exiting to fiat.

“We’re money in, money out in crypto,” he said.

But Fang wasn’t alone in saying Asian investors want a good shot at a quick return.

Ricky Li, a co-founder of the new blockchain asset management company Altonomy (and an alum of one of the largest crypto funds in Asia, FBG Capital) agreed. He told CoinDesk that one of the Asian market’s problems is a tendency for investors not to diversify their portfolios over time.

“U.S. and Europe ICO project teams are more well invested in terms of financial knowledge,” Li told CoinDesk. Chinese companies and their neighbors will raise funds in ether and largely maintain those positions, sometimes failing to lock in gain or riding volatility through their whole portfolio, he said.

His company helps funds adjust their portfolios so that if there’s a massive loss in one asset it doesn’t threaten their solvency.

Entrepreneurs also illuminated other facets of the East-West divide in crypto, such as why Asian projects mirror Western protocols and the China ICO ban. Still, there was a strong willingness for both camps to find common ground.

Nick Tomaino, of VC firm 1protocol, told Token Summit attendees:

“It could be argued that Asia is kind of the most important part of the world in terms of cryptocurrency.”

Local technology

Language helps to explain another point of relativity in the crypto space: the fact that the market has copied existing protocols from the U.S. market that could theoretically work everywhere.

During the panel, Fang argued that as buzz grew around ethereum, there wasn’t documentation for the software in languages like Chinese or Korean. So, Asian-facing protocols launched and now they have strong communities built around them.

Community is key to all these early efforts and localizing can help some projects get there.

“The best way is to have your own project that’s local,” Li concurred. “That’s very appealing to investors in China culturally.”

In China, the web has history of localization. The state banned the Western internet which enabled the Chinese entrepreneurs to create a mobile business that largely started out by imitating Western products that were a proven success.

Now, though, with the Chinese ban on ICOs, Chinese firms have been forced to take a different approach.

“There’s no domestic market in China so all the companies learned to do globalization,” Chen explained. He called it something of a mixed benefit of the ban.

But still the companies remain focused on business results.

“The whole thing about tokenization, is you create incentives,” Li explained. In other words, a project raises money to do its work. It has those funds to support its staff and an incentive to deliver a product that people want to use so the tokens price will rise again after that first sell-off, as people start to use it. “I wouldn’t call the shorter turnaround necessarily a bad thing,” he said.

What it does mean, he granted, is more “paper projects” in Asia and more work for those interested in ICOs to discern which ones are real and which aren’t.

Fang agreed that shorter horizons can still work over time. “It will always be relative, not absolute,” he said. Plus, Asian tech companies are less hesitant about getting into tokens. Multiple Asian investors told us they liked “reverse ICOs,” where existing tech companies sell a token.

And sometimes entrepreneurs in one country will launch a localized version of another country’s creation for more structural reason. Abhishek Pitti, founder of Nucleus Vision, a $40 million ICO out of India that’s making what he called the “Neo of India” explained that it localized for a more structural reason.

“The Indian government doesn’t want to use any international protocols for security purposes,” he said.

New markets abroad

At a certain point, though, a mature project has to expand beyond the geography where it originated, and that reality is part of what brought so many entrepreneurs to New York for Blockchain Week.

“The most important thing to us is trying to hire the most talented guy you can find,” Chen said. Beijing he said, is strong on entrepreneurs, but needs other skills, particularly good cryptographers. “Most of them, I think they are in the U.S.,” he said on the panel.

“The general view is that a lot of American companies are pushing the boundaries of technological advancement,” Chen said. “In China, it’s slightly more balanced. More companies are looking from a business point of view.”

Fang summed up the West more succinctly: “I think right now people are betting on professors.”

Plus the U.S. has a giant pool of liquidity. “It’s about the community engagement,” Li argued. “If they want a project to be successful, you have to be global. Even NEO is very well received globally.”

Pitti made the same argument for India, saying that blockchain is still basically unknown there. If Asian capital comes online, it will be another massive pool of liquidity to stabilize the industry with. Still, there’s even more liquidity in the U.S., so more firms seem to be expanding here first.

But it’s not the only place. From the panel, Vansa Chatikavanij, managing director of OmiseGo, said her firm’s mission is to smooth financial frictions, which makes the West a lower priority. She specifically mentioned Vietnam as an opportunity, for example.

She said, “We are providing a wallet SDK as part of our solution. What we need local partners to do is actually implement it themselves,” because of national laws about money transmission.

But everyone is looking for users, wherever they can best be found; it’s a numbers game, Li explained:

“The retail customer is key to the success of the project. The key to the pricing. The key to opinion.”

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Coinbase Is Rebranding Its Crypto Exchange Service


Coinbase announced Wednesday that it is launching a new version of its GDAX platform called Coinbase Pro and acquiring crypto trading relay platform Paradex.

The new platform seeks to “make the trading experience easier and more intuitive,” according to the startup. Other features include a new chart system which provides streamlined access to historical data and a consolidated portfolio view.

Beyond simply trading assets, Coinbase Pro aims to provide a host of new features for investors, according to the release, which reads:

“Our vision is to give customers the ability to participate in services like staking and protocol voting that are distinct to crypto. As the decentralized ecosystem advances, we expect there will be many more opportunities for customers to interact with digital assets in new and unique ways.”

As part of this effort to let customers use digital assets, Coinbase Pro will integrate Paradex support over the next few weeks, which will enable users to “trade hundreds of tokens directly from their wallets,” according to the release.

“Initially, this experience is for our customers outside the U.S. but will be available to U.S. customers as soon as we obtain regulatory clearance, which we’re actively working toward,” the company said.

Paradex enables investors to trade ERC-20 tokens directly from their digital token wallets, by acting as a relay for transfers. Hardware wallets – notably the Ledger wallet – are supported as well.

In order to transfer ethereum tokens, the system requires users to turn them into “wrapped ether,” which is described as “a tradeable version of regular ether.” Users can also transfer other tokens after connecting the Paradex app to their wallet, according to the site.

While Paradex allows users to trade ERC-20 coins held in their wallets, it remains unclear if Coinbase will add direct purchase or trading support for such tokens. In March, the company announced it was adding support for the ERC-20 technical standard, but did not reveal any specific products at the time.

Coinbase/GDAX image via dennizn / Shutterstock
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Banks Lose International Payments Business to Disruptive Solutions Like Blockchain


Transaction banking faces continued pressure from disruptive solutions from blockchain and cryptocurrency ventures, which are taking a significant share of a once-upon-a-time undisputed market.

While bleeding customers and transaction volumes, banks remain confident that its legacy technology is ‘good enough for now.’

Banking Industry in Denial While Losing International Payments Business

Over the last year, banks have lost 40% of market share for consumer-to-consumer (C2C) cross-border payments to non-banks.

Data on consumer-to-business (C2B) and business-to-business (B2B) payments also show that businesses are going around financial institutions in order to have their international payments processed in a fast, secure, and cheaper way. Banks have lost 30% of the C2B payments market and 5% of the B2B market.

Jinal Surti, Director of Business Operations at Ripple, the real-time gross settlement system and remittance network based on distributed ledger technology, is appalled that banks at the annual BAFT Conference this month are okay with their legacy systems in spite of the disruption in the space.

“It worries me that banks believe this. Far too many leaders in the space are missing the forest for the trees — shrugging off advances as not important to their business objectives today, or in the future.”

Non-banks are taking over an increased market share of international payments and are being able to cater to a wider range of client profiles in an increased number of services.

TransferWise used to serve consumers only and is now offering services, including process batched payments, to small- to medium-enterprises (SMEs). The platform’s role has widened from being a cross-border payments service to a multi-currency account holder for businesses and a deposit holder with its customers.

Non-bank institutions are proving banks are no longer essential as they become just a ‘utility’ in the system. The economy no longer needs liquidity services from banks to process international payments as digital assets made it possible for small banks and non-banks to send money with no pre-funded destination liquidity.

Cryptocurrency is democratizing the global access to finance and liquidity while forcing a re-shuffle of the banking hierarchy. Quality customer experience will dictate the industry leaders in the business as they compete with scalable, real-time, and on-demand infrastructure that reduces the marginal cost of a transaction, potentially to zero.

“The traditional banking infrastructure is failing and banks need to employ new technology today to remain competitive. Because payments are just the beginning. Losing payments leads to losing a lot more,” Ripple’s Surti added, as the company positions itself as a remittance solutions provider for the banking industry.

Featured image from Shutterstock.
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SVK CRYPTO PODCAST 147 – 23/05/2018 – What are the best alt coins in May?

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

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Top Crypto News – 23/05/2018

MIT Is Testing A Smart Contract-Powered Bitcoin Lightning Network


An MIT test is providing a rare glimpse of how bitcoin might truly work at scale.

Revealed to CoinDesk last week, the prestigious U.S. university has been quietly demoing an experimental use case for bitcoin’s lightning network, one that showcases how it might be combined with smart contracts to not only handle millions of transactions, but do so with a greater degree of complexity.

Modeled within the school’s Digital Currency Initiative, started in 2015 as a way to further R&D on cryptocurrencies, the test envisions a system wherein transactions would take place automatically in the case of defined external events, based on say today’s weather or the current price of U.S. dollars.

This is possible due to MIT’s creative use of so-called “oracles,” trusted entities meant to broadcast data to smart contracts. For this demo, researchers Tadge Dryja and Alin S. Dragos built a test oracle to broadcast the recent price of U.S. dollars in satoshis, the smallest unit of bitcoins, which anyone can grab and use for their smart contracts.

It’s a notable step forward for the idea, one first proposed by lightning inventor Dryja last summer. However, this is the first time it’s been implemented as a prototype with working code.

Dragos told CoinDesk:

“We built this as a standalone feature of our lightning network software. We chose data what we thought would be cool, U.S. dollars, but it could be any data you want, whether weather or a stock.”

Dragos stressed that the demo is “experimental” and “shouldn’t be used for real money.” That said, he and other MIT researchers are convinced that with the help of the lightning network, bitcoin might one day scale to capacities originally envisioned by its early users.

As part of that work, MIT researchers have already created an implementation for the lightning network called lit, and this oracle code is an add-on of that work.

“We at DCI, we really believe in the lightning network,” Dragos said. “Bitcoin doesn’t scale very well. I decided there has to be something better. Turns out what’s better is lightning. It’s the way to scale.”

Bitcoin smart contracts

But while lightning provides scale, smart contracts add other new functionality to bitcoin. For example, should the tech in MIT’s test be implemented, you could make some sort of a bet based on what’s happening in the world.

Or, in this case, a futures contract. Alice promises to pay Bob whatever the price of dollars is in satoshis on a certain day, say Friday. If a dollar is worth 12,150 satoshis by the end of the week, then she will end up paying that.

It’s a kind of advanced smart contract use case that is usually not associated with bitcoin.

“When folks think smart contracts, they think ethereum. Their scripting language is much richer,” Dragos admitted.

But, he argues that with some workarounds, bitcoin can do the same thing.

“It’s not as developer friendly because bitcoin didn’t go in that direction, but you can use it. You have to be a little creative,” Dragos said.

In short, it uses Dryja’s “discreet log contracts” scheme to broadcast data to the smart contracts. One of the most important advantages of this scheme is scalability, because most of the data doesn’t need to be stored on the bitcoin blockchain.

The other is privacy, since oracles don’t have any way of knowing who’s using the data they’re broadcasting.

“We’re introducing a model where oracles are not aware of who’s using the data they’re using,” Dragos said.

Some ‘quandaries’

But while this simple demo is now complete, Dragos and Dryja think there are many outstanding questions and “quandaries,” as Dragos put it. “From the individual oracle’s perspective, they’re going to want to make some money. We’re going to have to understand that,” Dragos said.

Another is that the oracle at this point is trusted. But there might be a way to minimize this trust by allowing a user to use many oracles at once.

But there’s a certain point where MIT DCI hopes to stop working on the technology and pass it off to someone else.

“We’re working with companies that might implement this,” Dragos said. And though he couldn’t name names, he mentioned they are “big company” partners of the DCI.

The hope is these bigger companies will be better at understanding what normal users want from the software. So, while MIT DCI built a prototype demonstrating how the underlying technology really works, they haven’t produced an app as mindlessly easy to use as say, Venmo or Facebook.

“UX is not our core expertise,” Dragos said.

Now it’s open for people to use for whatever oracle data they want. So, it’s up to the community to decide if it’s worthwhile to use or not.

“It’s a hard guess. It could be a significant deal if people use it. But we don’t know what people are going to be using it for,” he added.

Dragos stated:

“New technologies are available all the time, that doesn’t mean they end up making it though.”

Lightning image via Shutterstock
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Bank of America Patents Blockchain Security Tools



Bank of America has won a patent for a way to control access to certain aspects of a permissioned blockchain network, newly published documents show.

The patent for a somewhat innocuously titled “system for managing security and access to resource sub-components” explains how security tokens (essentially electronic keys, distinct from blockchain-based assets that mimic physical securities) would be used to grant access to certain users to the information contained in a particular block. According to the text, the system would be automated, effectively meaning that the network itself would grant and track access.

Bank of America was awarded the patent on May 22, according to the US Patent and Trademark Office (USPTO). It represents the latest intellectual property development for the bank, which has filed many blockchain-related applications in recent years.

The focus on security and data privacy is perhaps unsurprising, given the sensitivity of the information that Bank of America might look to transmit across the networks. And it speaks as well to the wider issue of security in the crypto space today, given the all-encompassing need to keep private keys safe from malicious actors.

And, as Bank of America itself notes in the patent document, “with the advent of distributed/decentralized blockchain networks … a need exists to develop systems … that manage control over blocks of resources.”

The bank explained:

“A need exists to provide designated entities/users the ability to readily identify blocks that are relevant to the designated users’ concern and, once blocks have been identified, security features that assure that the designated entities/user that are accessing the blocks are, in fact, authorized users.”

According to the text, the automated features would have the ability to grant access to the blockchain network for certain periods of time, depending on the scope of a user’s reason for plugging in.

“Moreover, a need exists to control the access given to the designated entities/users, such as, by way of example, control over the period of time during which a designated entity may be granted access and/or the amount of access granted to the designated entity/user,” the patent doc noted.

Bank of America image via hans engbers / Shutterstock
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Economics Nobel Laureate Robert Shiller Examines Bitcoin in Historical Context


Historical Precedents

Economics Nobel Laureate Robert Shiller Examines Bitcoin in Historical ContextThe main question Shiller was trying to answer is how cryptocurrency users can maintain a high level of enthusiasm in the face of constant warnings that it’s all just a big scam. Instead of comparing bitcoin to past technological solutions, as has been done many times before, he puts it in the context of time-based and electricity-backed experimental forms of alternative money.

Putting the technology of Bitcoin on the same level as primarily political movements, he also compared it to attempts to reshape how governments and economies operate. And while novel ideas by communist and technocratic thinkers have failed, the Euro – which was devised to help unite former warring nations – is still around.

Revolutionary Zeal Is Not Enough

Economics Nobel Laureate Robert Shiller Examines Bitcoin in Historical Context
Nobel Prize Laureate Robert J. Shiller

After reviewing these past examples, Shiller explains that: “Each of these monetary innovations has been coupled with a unique technological story. But, more fundamentally, all are connected with a deep yearning for some kind of revolution in society. The cryptocurrencies are a statement of faith in a new community of entrepreneurial cosmopolitans who hold themselves above national governments, which are viewed as the drivers of a long train of inequality and war.”

“And, as in the past, the public’s fascination with cryptocurrencies is tied to a sort of mystery, like the mystery of the value of money itself, consisting in the new money’s connection to advanced science. Practically no one, outside of computer science departments, can explain how cryptocurrencies work. That mystery creates an aura of exclusivity, gives the new money glamour, and fills devotees with revolutionary zeal. None of this is new, and, as with past monetary innovations, a compelling story may not be enough,” he concluded.

Whether it’s true or not that only computer scientists understand cryptocurrencies today, it is certainly accepted that having a story is not enough by itself, which is why bitcoin entrepreneurs continue to work on exciting use cases that are only made possible with this revolutionary technology.

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UK ‘Cryptoassets’ Task Force Plots Path Forward at First Meeting


The U.K.’s recently created Cryptoassets Taskforce has taken the first step on its mission to “develop thinking and policy” around blockchain and cryptocurrency.

An inaugural meeting held yesterday saw the group agree on a series of objectives which, according to a post on the website, include assessing the impact of cryptocurrencies, the “potential benefits and challenges” of adopting blockchain technology in the finance sector and determining if – and what – rules might be needed in response to those enquiries.

As reported by CoinDesk, the Cryptoassets Taskforce was first announced in late March by Philip Hammond, the Chancellor of the Exchequer, as part of the government’s Fintech Sector Strategy – an initiative aimed to make the U.K. “the best place for Fintech business.”

According to Dave Ramsden, deputy governor of the Bank of England, blockchain technology has the potential to deliver benefits to both the financial system and the British economy.

He added:

“This taskforce will enable us to work closely with the Treasury and the FCA to explore how the opportunities posed by these technologies can be realised, while also tackling the risks arising from cryptoassets.”

The taskforce – which includes the Bank of England, the Financial Conduct Authority and the Treasury – will review existing research from the government and regulators, as well as seek input from trade bodies, academia and consumer and investors groups.

The group will host a roundtable discussion in July and publish its first report in the third quarter of the year.

Bank of England image via Shutterstock
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SVK CRYPTO PODCAST 146 – 22/05/2018 – Eximchain unlocks tokens?

Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

Follow us on Twitter:

Visit our website:

Email us:


Top Crypto News – 22-05-2018

Blockchain’s Killer App? Making Trade Wars Obsolete


On Hainan Island, China’s Hawaii, in the shadow of sanctions, tit-for-tat tariffs and a looming trade war, China’s paramount leader stood up for globalization last month by launching a surprise defense of world trade. Laudable though his position might be, Xi Jinping’s bargaining position – and that of Donald Trump – may soon be irrelevant.

A confluence of technologies is poised to dramatically reshape the world of manufacturing and, in the process, render obsolete the existing international trade regime. A few get a lot attention: the rise of 3D printing, the application of internet-of-things (IoT) devices to shipping and logistics, the increasing prevalence of artificial intelligence and machine learning.

But it’s blockchain technology, with the capacity it gives to non-trusting parties to transact with each other by relying on a common source of digital truth, that will facilitate this disruption. It provides the enabling platform on which a new dynamic, highly fluid global system for exchanging value will emerge, one that’s far outside the purview of the World Trade Organization’s current “rules of origin” model.

Trade warriors are fighting yesterday’s battles. Instead of pitting their smokestack, 20th-century factories and armies of workers against each other, governments should apply blockchain’s ‘Don’t Trust, Verify’ approach to trade arrangements, using it to reduce trade friction and improve cross-border relations to the betterment of their societies.

What might the roadmap look like? That’s what an ad hoc group of Hong Kong’s leading strategists and business thinkers set out to define when they started meeting privately in late 2016  to explore how to fully digitize trade among the 65-plus countries involved in China’s ‘Belt and Road Initiative’.

The Belt and Road Blockchain Consortium, as our group came to be known, recognized that as supply chains evolve into highly automated, data-driven ecosystems, they will need the transparency, immutability and accountability that blockchains provide.

Verifiability and validity

Already, large-scale enterprises like Walmart, IBM and Maersk are deep in blockchain-for-supply chain research and a clutch of exciting startups such as  Provenance and Skuchain are building blockchain-based tools for the supply-chain management industry.

But the consortium recognized two important barriers to the widespread adoption of a global blockchain-based trade architecture. The first concerned the desire for legal certainty, and independent verifiability, of unique blockchain identifiers, which are currently often represented as QR (Quick Response) codes. The second concerned the liability and validity of data written to an immutable blockchain, specifically what to do in the case of erroneous – let’s call it #FakeData.

We felt the history of the Internet’s development offers a useful framework for addressing the question of legal verifiability. We saw that verifying a blockchain address is conceptually similar to resolving cross-border accountability issues with Internet Domain Names, which identified a need for a Blockchain Naming Service (BNS), with common business identity standards to interface with sovereign company registries.

Under this model, if wanted to operate a bitcoin wallet, anyone should be able to verify that a bitcoin address was actually administered by CoinDesk LLC, the U.S. company, and not someone else.

As for the data validity issue, we found that it was useful to borrow some of the thinking behind traditional finance notions of security, specifically the KYC, or know-your-customer concept. The intersection of IoT with blockchains drives a need for hardware integrity, which we call KYM (know your machine).

The need for a mechanism for online dispute resolution (ODR), one that lies outside of the blockchain in question, also became apparent to us. In that case, the blockchain would provide initial evidence to lower the cost of establishing “matters of fact.”

Any new, blockchain-based governance system for the Belt and Road community will need a reliable, trusted jurisdictional home. And for that, we highlighted a key role for Hong Kong, with its access to the free and open Internet, its common law heritage, and a business credo of “public governance/private business.”

Thus we argued that resolving the ‘verifiability and validity’ issues could be addressed by developing open standards for online dispute resolution of blockchain identifiers under Hong Kong law, with legal certainty provided by its Electronic Transactions ordinance (Cap 553).

We adopted an open, bottom-up, opt-in approach inspired by the Internet Corporation for Assigned Names and Numbers (ICANN), which successfully managed a similar global policy endeavor for domain names.

Other standards will also need to emerge in related industries to ensure all parties have confidence in the data being shared in a blockchain environment.

Of particular value was the foundation last year of the Global Smart Container Alliance in Shenzhen to drive standards both for smart shipping containers that record and report the ambient state of their cargo and for “E-locks,” which are used to electronically seal the container for faster customs and duty clearance.

Since March 2016, E-locks have been successfully used between the customs authorities of Hong Kong and Shenzhen, China’s Silicon Valley. By combining legal certainty with cryptographic certainty, the Belt and Road Blockchain will not prevent trade disputes from occurring –  they will –  but when they do the cost and complexity of having them will be dramatically reduced. And that’s good for business.

Toward ‘pull’ demand chains

One exciting, highly disruptive outcome of blockchain integration into global manufacturing and trade is the prospect that businesses will move from “push” supply chains to “pull” demand chains.

This is the idea that production will be configured in response to – or pulled by – customer demand rather than pre-configured on anticipation of what customers want and then pushed onto them. More than anything, it is going to make trade spats like that of the U.S. and China redundant.

Blockchains’ role in this is to help market participants break up long value chains into shorter ones, with financial exchanges acting as bridges between them. This should result in greater liquidity and enhanced price and market discovery.

I call this “packetizing risk” as the system can automatically dispense fine-grained rewards that can be traced back to the original rights holder based on the presence of appropriate cryptographic evidence.

A model like this could, for example, have allowed businesses waiting on the delivery of goods trapped on the creditor-seized ships of the bankrupt Hanjin Shipping Company in 2016 to liquidate their positions by selling tokenized rights to those immobilized goods.

It’s a demonstration of how finance can be unfrozen at intermediate stages along the chain, breaking them up, and facilitating more flexible and efficient means of aggregating the kinds of suppliers that operate in the ‘pull-based’ Demand Chains used in e-commerce.

Demand chains optimize “made-to-order” manufacturing, and customer fulfillment, to maximize product “variety not volume.” To get an idea of how this alters the current logic of trade rules, imagine we are fully immersed in the era of 3D-printing and IoT-driven manufacturing and a footwear maker gets a Request for Quotation (RFQ) for a batch of customized cleats for Brazil’s national soccer team that must be rushed in time for next month’s World Cup. The cleats might be “Designed In China” – the home of the intellectual property – but “Made in Brazil” by a trustworthy 3D printer somewhere in Rio to produce the product and fulfill this order.

Demand chains are particularly useful when accurate sales forecasts are unavailable and demand is variable. Unfortunately, they are fragile; any unexpected supply disruption risks stopping the whole manufacturing process, leading to dreaded “stock-outs.”

By packetizing risk and increasing a  pool of potential KYM-ed suppliers, blockchain may finally enable demand chains to scale beyond their traditional trust limits and challenge traditional long-standing trust relationships.

Demand chains exploit that fact that digital trade dramatically changes cost equations and economics. A key reason why e-commerce thrives is because it is relatively inexpensive to stock digital bits on computers compared with stocking analog atoms in warehouses.

As such, it makes sense to offer an overwhelming variety of products. The assumption is that any logistic complexity can be managed through computerized automation, throwing in more computers and software as needed to scale. More importantly,  products offered can be “pulled” into production only after they have been sold.

There are several commercial benefits to this approach. For suppliers, there’s an immediate gain in that they get the money up front. Secondly, because they now know real-time sales demand, they avoid the common “bullwhip effect” problem encountered in traditional “made-to-stock” supply chains. This occurs when errors in forecasting demand are amplified up the supply chain, leading to increased waste the higher upstream you go. With demand chains, suppliers see  “effective demand,” not forecasted demand.

One can view demand chains with packetized risk as an evolution of “just-in-time” manufacturing, as they add in the important element of automated “just-in-time” financing. This wouldn’t be possible without a blockchain, since it can automatically reward participants without the risk of funds being stolen or unduly withheld.

Another potential benefit: saving the environment. This stems from a rather non-obvious feature of “pull” demand chains and the exchange markets that power them: the concept of “reverse logistics,” which covers all operations involved in the return or reuse of products and materials.

One might create an exchange for a product’s reuse, recycling or upcycling. Doing so might incentivize the creation of the “circular economy,” greatly improving the resource usage with potentially huge environmental benefits. In this model, products are not optimally priced for the point of sale, but for one step beyond the sale — the point of  reuse.

Taking this idea further, manufacturers might be encouraged to make a market in their own products where it is cheaper to design a product for durability, and buy it back, rather than design for planned obsolescence that externalize the environmental costs.

Since 2017, the Europeans have had a bold plan to kill “planned obsolescence” and encourage products that are end-user serviceable. A blockchain-based model of demand chains, with the added kicker of tokenized incentives, could help them get there.

Trade = IP exchange

Cryptocurrency exchanges, which now cover more than 10,000 unique digital assets, can be thought of as providing a market mechanism for pricing intangible property (IP). (Note: I am deliberately applying the acronym “IP” to a wider definition of assets beyond “intellectual property” since most cryptocurrency technology is based on open-source software).

We now have an opportunity to extend this approach to on-demand Industry 4.0 manufacturing technologies such as 3D-printing. Here, the only element that is “shipped” is a digital design, whose provenance can be tracked to the original author of the work using a blockchain (e.g.

A blockchain might also act as a market, one that functions like an efficient collecting society since the monetization event occurs long after the original creation was made.  With a  blockchain, we can now trace and cascade back any royalties to the appropriate beneficiaries, forging a powerful new way to reward the creative process. MIT researcher Prema Shrikrishna calls this  “IP over IP” (Intellectual Property over the Internet Protocol), where manufacturing “supply” moves adjacent to market “demand.”

Thus the very nature of trade changes from shipping tangible property in containers (atoms) to intangible property in packets (bits). This has huge ramifications for the international trade policy regime.

It’s unclear how the existing trade rules under the World Trade Organisation’s Rules of Origin will apply in such cases or whether countries will strategically hoard raw materials such as rare earth elements.

Given the glacial rate of WTO negotiation rounds, measured in multiple years, it is hard to see how the existing regulatory regime will adapt to a world where manufacturing, trade and retail are “all digital,” even less so to a world where smart containers and packages automatically route themselves to their most profitable market.

This emerging paradigm suggests that divergences in manufacturing processes and costs – and the nation-state-led trade wars they trigger – will have decreasing economic relevance, relative to the impact of digital innovation. Already the root cause of labor disruption worldwide, digital automation will have an accelerating impact on people’s lives and livelihoods.

The real danger for policymakers lies in not recognizing when a technical innovation is fundamentally changing the underlying architectural assumptions, and brings with it changes in market structure and competitive landscape. Rarely does a bell ring to tell you it’s underway. That’s what the onset of blockchain technology portends. Governments must have their eyes and ears open.

As for the immediate future, there is certainly a risk of a US-China trade war, with Hong Kong possibly caught in any crossfire. Yet there is also an opportunity for leadership and for a grand bargain between the world’s two great trading powers to identify a common interest in establishing new rules for trading in Intangible Property using a global blockchain-based trade architecture.

Of the two outcomes, it’s clear to me that a trade war is not only powerless in the face of a dramatically changing economic architecture but even more dangerous than ever to common wellbeing.

So to all you trade warriors … “Ding Dong!”

Trade war concept image via Shutterstock
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Japan’s Biggest Bank to Carry Large-Scale Trial of Cryptocurrency ‘MUFG Coin’


The banking arm of the Mitsubishi UFJ Financial Group’s (MUFG), the Bank of Tokyo-Mitsubishi UFJ, is reportedly planning to trial its in-house cryptocurrency in 2019 following years of development.

As Japan’s largest bank, MUFG could become the world’s first major financial institution to deploy its own cryptocurrency after a local report by Japanese publication NHK confirmed plans toward a sweeping trial involving as many as 100,000 MUFG retail bank customers.

Account holders will have to apply to take part in the trial which will enable participants to install a smartphone app which converts their fiat yen deposits in their bank accounts to units of ‘MUFG Coin’. The conversation rate of one unit MUFG coin will be equivalent to one yen.

‘They will be able to use the currency to make payments at places like restaurants, convenience stores and other shops,’ an excerpt from the report read. ‘They can also transfer the currency to the accounts of other participants.’

Bank officials will assess whether settlements and peer-to-peer transfers through the app are secure and efficient at a scale of 100,000 users after conducting successful in-house trials among employees for over a year.

As reported previously, MUFG coins will also look to bring in users of existing prepaid electronic money platforms with low commission fees levied for any payments, including international remittances. Users will also be encouraged to exchange MUFG coins with foreign currencies at airports at markedly lower commission rates.

‘If MUFG coin is used for overseas remittances, it is estimated that the commission will be cut to less than one-tenth of that of the current cost of several thousand yen per (international) transaction,” read an excerpt from a local report after the bank began issuing MUFG coins to employees on an experimental basis last year.

The bank is reportedly developing a two-way ATM machine to allow users to ‘withdraw’ MUFG coins onto their smartphone or exchange the cryptocurrency into yen.

One of the biggest banks in the world with over $2.6 trillion in assets, MUFG first announced plans to develop a cryptocurrency as early as 2015 before publicly confirming the blockchain-powered coin in early 2016.

At this stage, the launch and issuance of MUFG coins is an inevitability, with MUFG president Nobuyuki Hirano previously stressing the in-house cryptocurrency would “overcome issues of [existing] virtual currencies” like volatility “[to] create a highly useful currency”.

Indeed, MUFG Coin could be sold and exchanged at MUFG’s own rumored cryptocurrency exchangesometime in the near future.

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Difficult to Charge Cryptocurrency Exchange UPBit Since No Investors Affected: Expert


Experts in the cryptocurrency sector of South Korea have stated that it will be difficult for the government and local financial authorities to file charges against UPbit, South Korea’s biggest cryptocurrency exchange, given that no investors were affected.

Funds Real, No Investors Affected

Last week, CCN reported that UPbit was raided and investigated by local police, Korea Financial Intelligence Unit (KIU) and Financial Services Commission (FSC) due to suspicions of fraud. Local financial authorities accused UPbit of inflating its balance sheet and claiming to have more funds in various cryptocurrencies than their actual amount.

On May 15, various sources confirmed that an audit done by a major accounting firm in South Korea known as Yoojin found that the funds recorded on the balance sheet of UPbit exactly matched the actual holdings of the company and proved that the company is solvent.

“Since early 2018, UPbit created snapshots of its multi-signature wallets and funds stored within them for auditing purposes. Yoojin accounting firm, a major accounting firm based in Seoul, confirmed that all of the funds on the UPbit platform match the cryptocurrency holdings of UPbit stored in its multi-signature wallets,” MoneyToday reported.

South Korea Upbit bitcoin altcoins
Source: Shutterstock

The issue is said to have been caused by the lack of wallets for dozens of cryptocurrencies. UPbit has more than 130 cryptocurrencies listed on its platform but only 90 cryptocurrencies have native wallets that allow users to withdraw and deposit directly from and to UPbit. In order to withdraw the other 40 cryptocurrencies, users are required to convert to major cryptocurrencies like bitcoin and Ethereum.

Insiders have claimed that the police investigation has found no irregularities and due to the official audit report released by Yoojin, the cryptocurrency market of South Korea has already started to recover.

Earlier this week, on May 20, in an interview with Korea Herald, an insider stated that the authorities will not be able to bring any charges against UPbit because no investors were affected in any way.

“As no investors seem to have been affected by Upbit’s alleged business practices, it would not be easy for the authorities to bring any charges to bear,” said the source, who asked to remain anonymous due to the sensitivity of the issue.

The expert added that although the investigation has ultimately found no irregularities, it has significantly impacted the local cryptocurrency market in a negative way, leading investors to lost trust in the market.

“But a series of prosecution probes into the exchanges did effectively hurt the overall credibility of the industry,” the insider added.

Difficult to Regain Investor Trust

Oh Jeong-geun, a professor at Konkuk University, one of the most prestigious colleges in South Korea, stated that the investigation would cause investors to leave the cryptocurrency market permanently and to recover from it, both the exchanges and authorities will have to lead an initiative to convince investors that it is safe to invest in the market. Professor Oh said:

“Along with diversification efforts, priority should be put on ensuring the smooth operation of their trading systems in order to guarantee their growth potential. Lack of reliability would cause investors to leave the market forever.”

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US, Canadian Regulators Launch Dozens of Crypto Scam Probes


An “international crackdown” on cryptocurrency scams was launched Monday by a group of securities regulators in Canada and the United States.

Dubbed “Operation Cryptosweep,” the effort was unveiled during a Monday event hosted by the North American Securities Administrators Association (NASAA). Its existence was first reported by the Washington Post and later detailed in releases from the Tennessee Department of Commerce and Insurance (TDCI) as well as the Texas State Securities Board (TSSB).

Cryptosweep, according to statements, constitutes “nearly 70 inquiries and investigations and 35 pending or completed enforcement actions since the beginning of the month.” More investigations are said to be underway, though it’s unclear when any related enforcement actions will be unveiled.

The effort gathered steam in April when a task force comprised of NASAA members was convened “to begin a coordinated series of investigations into ICOs and cryptocurrency-related investment products,” the TDCI said. Initial coin offerings (ICOs) or token sales were a major focus and officials reportedly identified hundreds for further inquiry.

A representative for the NASAA did not immediately respond to a request for comment, but others involved in the operation painted a picture of a wide-ranging effort to stamp out fraud. Recent examples of state-based regulatory actions include one that touted false endorsements from celebrities like actress Jennifer Aniston.

“The actions announced today are just the tip of the iceberg,” TDCI Assistant Commissioner Frank Borger-Gilligan said in a statement.

Joseph Rotunda, the TSSB’s Enforcement Division director, echoed that sentiment, stating:

“The market for cryptocurrency investments is saturated with widespread fraud, and our work is only revealing the tip of the iceberg.”

Image via Shutterstock
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SVK CRYPTO PODCAST 145 – 21/05/2018 – Countdown to the EOS mainnet launch!

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