Daily Bits – identity again, ICOs and thread – June 20th, 2017

My colleague Michael was at a presentation at the UN yesterday that focused on identity. Neil McCann of the UNDP (who was excellent on our “Global Issues” panel at Consensus, which you can see here) stressed cross-industry collaboration, urging the private sector to join the UN initiative to develop a platform for digital identities.

An especially intriguing part is this: the UNHCR representative speaking at the event insisted that the eventual identities need to be owned by the individuals.

While this may seem obvious on the surface, it isn’t when you think about how identities are granted today. Our identities are not owned by us – if our government decides to revoke our passport, it’s very hard for us to prove who we are.

Spinning out a sovereign identity platform for refugees (although they are not the only target “market” for this service) would have a huge impact – not only on how aid is delivered, but also on immigration, education, possibly even finance. The effect could be much wider than we dare to imagine.

To coin a phrase: “bring it”.

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Favourite tweet of the day:

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If you’re contemplating doing an ICO (really????), read Emin Gün Sirer’s take on Bancor first. It’ll provide strong guidelines on what not to do.

Bottom line, you should:

  • Address a real problem
  • …without mumbo-jumbo terminology

He doesn’t attack the code (well, a little bit) as much as the business model. Which, in this manic eurphoria, disconnected from fundamentals, is refreshing. And sensible. Hype cannot stay disconnected from reality for ever…

What’s more, whether you agree with Gün or not, the prose is sharp:

“‘Double coincidence of wants’ is a real problem in economics today in the sense that the ‘itsy bitsy spider’ problem is a real problem in zoology — that is, it’s something one might learn in grade school, and it’s completely irrelevant in the real world.”

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In no way am I into embroidery (I once tried a colouring book for adults… and realized that I’m just not that stressed.) But this is captivating:

3d embroidery

3d embroidery by Justyna Wołodkiewicz, an abstract mix of thread and clay. (Via Colossal.)

3d embroidery 2

Daily Bits – currency, tulips and tables – June 19th, 2017

A fascinating article from JP Koning on his blog Moneyness, on currency:

According to the monetary theorist Henry Dunning Macleod, currency used to be used an adjective, not a noun. Certain types of goods or instruments were considered to be “current” in the eyes of the law and common business practice. They were said to have “currency,” but were not themselves currency.

An item had “currency” if it could not be reclaimed if stolen. Coins, for example, belonged to the holder. (They still do.) But jewellery – at the time McLeod was writing, the 1800s – belonged to the original owner, and so was not “current”. The holder had to be able to prove that he/she had legally obtained the item.

Interestingly, McLeod did not consider bank deposits “currency” since they could not be transferred to someone else (back then). Stock certificates, however, were.

This illustrates that an item didn’t have to be money to have currency (e.g. bonds were considered to be current), nor did it have to be government-issued to be current (banknotes and bills of exchange were privately issued).

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This chart taken from a World Economic Forum post on the future of work is worrying, not for the overall message (because, like, we know), but for the detail offered.

via the World Economic Forum
via the World Economic Forum

I live in Spain (#3 in terms of most-to-lose), where unemployment is already the second highest in the European Union, at over 18% (not far behind Greece, in case you were wondering).

Add that to the almost 12% job loss that the chart shows, and you have an almost 28% unemployment rate. Yikes.

No doubt there will be many jobs created by automation. Someone has to take care of the machines and/or code, after all. But still, ouch.

And yet we hear nothing from the relevant ministries about plans to offset, compensate or handle this.

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Elaine Ou had some pithy observations about the ICO frenzy in her blog Elaine’s Idle Mind (a misnomer if ever I saw one):

“…the money is about as real as unexercised tulip options. Tokens aren’t sold for dollars; they’re sold for ether.”

“Today’s impressive half-billion dollar value is an impractical conversion — You can’t liquidate 1.6 million ETH without crashing the market.”

“The total amount of ether funneled into tokens is but a fraction of the 11.8M ETH dumped into the DAO.”

Worth a read. Unless you have a strong affection for striped tulips, in which case you might find it traumatic.

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A coffee table design based on Princess Leia’s buns??? Okay.

by Zaha Hadid Design, via Dezeen
by Zaha Hadid Design, via Dezeen

Sovereign identity and the Knights of Malta

Palazzo_di_Malta,_Roma 2

While looking into passports for sale the other day (not for me, you understand… not yet, anyway), I came across a name that I had heard before but knew very little about. So I did some digging and almost had my mind blown.

The Sovereign Military Order of Malta – also known as the Knights of Malta, or Knights Hospitaller – is a religious order with ties to the Holy See that dates back to the early 12th century. But, it is also an independent, sovereign subject of international law.

Its mission is still, almost 1000 years later, to care for the sick and infirm, especially those displaced by conflict. As well as its 13,500 members, it has 80,000 volunteers and employs approximately 25,000 medical personnel.

So, it is an NGO with sovereign status. It can negotiate with other governments as a sovereign entity. Other global NGOs such as Caritas, Greenpeace and Médecins sans Frontières need the backing of a sovereign power. The Knights of Malta don’t, because they are one.

It doesn’t have any territory, except for two buildings in Rome, both of which have extraterritorial status (which means that they are technically not part of Italy – much like embassies).

In 1998, however, it signed a treaty with Malta for the use of the upper portion of Fort St. Angelo in the city of Birgu (for the next 99 years). Technically, this will also be a sovereign territory, but the Order will not be able to grant asylum to anyone, and Maltese law applies. At the moment, it appears to be used for historical and cultural activities.

And get this: the Sovereign Military Order of Malta can issue stamps, currency and passports.

Three of them, to be precise. The Order issues passports to the Grand Master, the Deputy Grand Master, and the Chancellor of the Order.

It has diplomatic relations with over 100 states, including the European Union, which means embassies. It also has observer status at the United Nations (along with the Red Cross, the Council of Europe, the African Development Bank, the European Organization for Nuclear Research and a host of other not-for-profit academic and regional associations), which entitles it to participate in the work of the UN General Assembly.

What I find most intriguing about this is the concept of sovereignty being granted to an organization that has no territory and no citizens (sort of). True, it was granted almost a millennium ago, and no government has dared to attempt to alter that.

Personally, I hope that they never do. I find the mix of chivalry and honour, combined with the long reach of history, totally captivating.

And the notion that sovereignty does not always require the traditional parameters of borders and citizens opens up a new understanding of what could become possible as identity is redefined.

Daily Bits – alternative forms of money, governance and glass – June 17th, 2017

My article on CoinDesk this week: Bitcoin, Ethereum and a New Direction for Cryptocurrency Investment.

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From The Denationalisation of Money: The Argument Refined, by F. A. Hayek:

“Although we usually assume there is a sharp line of distinction between what is money and what is not – and the law usually tries to make such a distinction – so far as the causal effects of monetary events are concerned, there is no such clear difference. What we find is rather a continuum in which objects of various degrees of liquidity, or with values that can fluctuate independently of each other, shade into each other in the degree to which they function as money.”

Airline miles? Loyalty points? Gift vouchers?

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The above made me think a bit more about the story on CoinDesk that I mentioned a couple of days ago, about Kazakhstan’s trial of a blockchain-based mobile app that aims to sell government debt directly to investors.

Could government debt be used as a form of payment?

It’s the only idea that I have come up with so far that would justify using a blockchain for this.

Would this then run as a parallel currency? Or would the government debt currency and the traditional fiat currency morph into one? In the end, is there really much of a difference?

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I find myself agreeing more and more with Izabella Kaminska’s comments in the FT. I’m not sure if it’s me changing, or her. Probably me. How frightening.

Her piece this week on governance issues was excellent. She highlighted what I’ve been ranting about for a while now – that the vast majority of us don’t actually want decentralization. We want to be able to hold someone accountable.

“As blockchains become DLTs, shared databases and permissioned consensus networks, what the techies working on these systems fail to publicly highlight is that much of the time, “advance” means returning to tried and tested paradigms, or reintroducing trusted or governance-focused nodes.”

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Two of my favourite things – books and rocks – with slabs of embedded glass, by artist Ramon Todo. I can’t stop staring, and I so want to be able to pick them up. (Via Colossal.)

by Ramon Todo, via Colossal
by Ramon Todo, via Colossal
by Ramon Todo, via Colossal
by Ramon Todo, via Colossal

Citizenship for sale – a blockchain business model?

by Leo Rivas-Micoud for Stocksnap - sovereign identity
by Leo Rivas-Micoud for Stocksnap

According to an article I stumbled on in Fortune, approximately $2bn a year is spent on buying citizenship. The exchange is usually dressed up as real estate or business investment and a certain minimum is generally established, but the purpose is clear, and an increasing number of nations are making good money on this.

For example, an IMF report from 2015 puts the income from selling passports for St. Kitts and Nevis at about 25% of GDP. While the economy is small, that is still a staggering statistic.

A recent report in the Financial Times highlighted this growing global phenomenon from a tax perspective:

“The search for second passports and offshore havens is beginning to take on a last-helicopter-out-of-Saigon urgency as capital controls, tax reporting and visa procedures tighten up around the world.”

Other reasons cited are political instability and fear of persecution. According to the IMF, there has recently been a surge of wealthy Chinese and Russians buyers, with an increasing number coming from the Middle East, where tax avoidance is obviously not the issue.

This raises the question: why shouldn’t citizenship be a commodity?

What does citizenship actually mean?

According to Merriam Webster, a citizen is “a native or naturalized person who owes allegiance to a government and is entitled to protection from it”. So, it’s an exchange of allegiance in exchange for protection.

Why, then, is it not transferable? If your state is not protecting you, why can’t you transfer your allegiance to one that will?

Because citizens are considered resources by the countries they are born into. They work, which contributes to economic development. And they pay taxes, which contributes to public finance. This “what’s mine is mine” mentality also explains the concept of capital controls imposed by some countries to stop citizens from sending their wealth abroad.

In the increasingly free market world in which we live – in which we can choose who gives us our electricity, phone service, groceries – it is extraordinary that a similar philosophy isn’t being applied to citizenship. If governments actually had to convince (rather than force) their people to stay, it’s very likely that there would greater efficiency and less corruption in government spending.

If market incentives came into play, the role of government could evolve to focus more on protection and service. Tax rates would be more directly associated with the amenities offered, and citizenship would become a matter of proud choice rather than limiting obligation.

A totally free market concept, though, would perhaps leave the geopolitical balance vulnerable to instability. If a country cannot, for whatever reason, compete with another then the unstoppable flow of people would leave one poor and bankrupt, which would open up the temptation of annexation or even invasion.

And it’s not hard to envision circumstances beyond a government’s control. Natural disasters, a lack of natural resources or poor geography could condemn a nation to poverty and chaos, no matter how pure the government’s intentions. The resulting flood of people to neighbouring regions would put a strain on the receiving country’s resources in the short term, until the entrants find their feet and start contributing.

Along with aid from international organizations, nations depleted by exodus could be helped by the offering appealing amenities at relatively low prices. Attractive investment opportunities, for example, or education facilities, or simply relative stability. As with businesses, the affected governments would need to develop a differentiating offering to attract citizens.

As the article in Fortune pointed out, the possibility of buying citizenship exists, but the choices are limited and available only to the very rich.

Now, bring into the picture the concept of blockchain-based sovereign identity, in which a person’s official name does not depend on a state-issued document, but can be held securely and electronically by each individual. No government would have the right to take that name away, or to pretend that the person does not exist – a blockchain-based solution could ensure that. This name could be assigned the nationality it chooses. It would also reveal any financial or even criminal history, if applicable, which – on a blockchain-based solution – could not be retroactively altered.

Add the financial commitment of a purchase, and you can begin to imagine a whole new business model. Individuals that cannot afford the initial purchase price could enter into a financing agreement with one of a range of approved institutions, and pay the lender back through future earnings, possibly with the help of subsidies from the receiving government.

This could lead to selection bias – only those with reasonable prospects would be welcomed by their chosen domicile. After all, criminal records would be harder to hide. This could lead to some unfair calls, but since the bulk of anti-immigration sentiment usually stems from fear of increased crime, some sort of filter could end up making immigrants more readily accepted by their new neighbours. Those that through no fault of their own end up being blocked could perhaps be eligible for additional aid and/or the opportunity to seek a sponsor.

Education would also be easier to prove, as verified certification could be added to the identity’s history. Governments could even end up “bidding” for the best-educated immigrants.

The paperwork involved would be eased by the validation inherent in a blockchain platform. And the immigrants would have a much easier time integrating, as access to financial services, accomodation and utilities would be helped by reduced documentation and history requirements.

Cost vs benefit? It would be up to individual governments to decide what they offer, and at what price. This quasi-free market approach would have effects beyond that of economic value. It would make governments more conscious of their role, and see it less as a privilege and more as an opportunity. (Imagine if public salaries were tied to the results of satisfaction polls…). Also, citizens around the world would be more conscious of what their government does for them.

Obviously the idea is a lot more complicated than the brief suppositions laid out here. But passport shopping is already an economic fact. Should it be only available to the very rich?

Blockchain technology could offer the breakthrough that will enable the activation of sovereign identities tied to convenient nationalities – while at the same time incentivizing governments around the world to better understand what their purpose is.

Daily Bits – facepalms, tokens and chess – June 15th, 2017

In the past couple of days I’ve read some staggeringly misinformed interpretations of the potential of digital currencies. It could just be the heat making me fractious, but c’mon, really…

First up: an article in Business Insider on crypto (and cryptic) comments made by the head of the Bundesbank, Jens Weidmann. I disagreed with something in almost every paragraph – I’m assuming that it’s because of poor reporting, Jens seems like a smart guy.

Perhaps the most egregious infraction is his alleged concern that central bank digital currencies will make the financial system more unstable by exacerbating bank runs. It’s so much easier to withdraw your deposits online than having to wait in line at the ATM. (Why would you even have deposits at shaky commercial banks with central bank digital currencies???)

Then came the normally quite good Investopedia, reporting on a proposed bill that hopes to force entrants into the US to declare their cryptocurrency holdings at the border. Um, how would they enforce this? Got that covered: “a global monitoring system could be put in place to watch over blockchain ledgers”. Of course. Yes. That should do it. And the crypto communities won’t mind at all.

One small thing: just who would do the monitoring? Ever heard of JURISDICTIONS?

Deep breath…

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Digital token fever seems to have hit a high this week, with the (perplexing) Bancor issue raising $125m ($150m using the ether price on Monday, the day of the sale) in under three hours.

And then Civic went and sold out of its IPO… before it even started. But, in what is probably an unprecedented move, investors will return one third of their tokens so that others may have a chance to bid for them. Extraordinary.

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Other particularly interesting articles on CoinDesk this week:

Kasakhstan’s central bank wants to use blockchain technology to sell debt directly to investors. Why, I’m not sure. Maybe it’s the rapid settlement? Although that would mean that investors would need blockchain-based currencies with which to pay. I need to look into this some more, it’s perplexing.

A step forward in smart contract deployment came from Thomson Reuters, who released in beta a “smart oracle” that will give smart contracts access to its financial data streams. The question is: how decentralized is this? Thomson Reuters’ data has a reputation for being reliable – but are we supposed to trust that? There’s a lot to unpack here on how we can avoid having to trust one source… and if that is worth the usability complications.

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Whether you like chess or not, this is beautiful: a chess set modeled after New York buildings (via MyModernMet).

Skyline Chess, via MyModernMet
Skyline Chess, via MyModernMet

What blockchain identity can learn from India’s Aadhaar platform

by Timon Studler via Unsplash
by Timon Studler via Unsplash

An issue is currently being debated in India’s courts that could affect the development of blockchain-based identity programs worldwide.

I’m talking about the Aadhaar platform, which is leaving a trail of takeaways for others to learn from.

Given the proliferation of startups and official institutions looking at the problem of self-sovereign, immutable digital identities, a look at Aadhaar’s successes and obstacles could help with the design of lofty goals and sweeping implementation.

In 2010, the Indian government issued the first Aadhaar identity number, a unique rendering of personal data, with the aim of documenting all of India on a digital platform using biometric identifiers.

That in itself is staggering – how do you coordinate the inscription of 1.3bn people, including the scanning of fingerprints and irises for each individual?

The first main takeaway is that it is possible. In just over 6 years, approximately 1.15bn people have been issued Aadhaar numbers, including almost 100% of the over-18 population. That’s more than the entire populations of the US, Europe, Australia and South Korea combined.

True, it took a massive rollout of administrators and digital readers, but the Unique Identification Authority of India (UIDAI) showed that it could be done. At its peak, over 1 million people were being processed each day.

Second, certain rules need to be set out from the beginning. Is the program mandatory or optional? If mandatory, how will enforcement be carried out? If optional, how will the old and new systems cohabitate?

The Aadhaar program is optional. But a recent amendment to the Income Tax act stipulated that an Aadhaar number was required to file a return – which pretty much makes it mandatory. Last week the Supreme Court upheld this law, but also ruled that those without an Aadhaar number should still be able to pay taxes, until the broader privacy issues can be decided by the Constitutional bench. On the one hand, good news (for now) for privacy activists and for citizens who don’t (for whatever reason) have a card. On the other, an administrative mess for the government, which could have been mitigated with clearer parameters at the outset.

Also, one of the main incentives for the government is the opportunity to streamline administration and reduce “leakage”, the amount of aid paid to “false” identities. However, there is still some confusion as to whether or not an Aadhaar number is a requisite for government aid. Several official agencies seem to think that it is, but the Supreme Court has ruled that it isn’t.

Furthermore, while the first cards were introduced in 2010, legislation backing the project (the Aadhaar Act and the Aadhaar Regulations) did not pass until 2016, and is often criticized as being unclear.

Third, the privacy issue will always be a problem, however great the efficiencies. Concerns have been raised about the lack of clear regulation on the process of sharing identity information, as well as the lack of redress and appeal if you feel your data has been mishandled.

The Aadhaar Act mentioned above authorises any official at the level of District Judge or higher to access an individual’s identity information, excluding the biometric data – that limitation doesn’t apply to officials with rank of Joint Secretary or higher. Given India’s reputation as the “most corrupt country in Asia”, this raises some concerns.

And while the government understandably wants to standardize administration, some groups are raising the alarm over the volume of data on each individual the government would have in its power, the capacity for tracking and the spectre of mass surveillance.

The fourth lesson, a surprising one, is that biometrics are complicated. It turns out that not everyone has fingerprints that lend themselves to being scanned. Apart from the very young, manual labourers often have worn hands due to repeated handling of rough objects. One area in north Delhi reported a 10% fail rate when reading fingerprints.

The same goes for eyes – the elderly often have degraded irises, so getting a clear reading can be challenging.

Fifth, even with biometrics, falsifications will emerge. In some cases, inscription agencies took advantage of a rule that said that biometrics were not always required (if fingerprints or irises were not clear, for instance), In others, hackers were able to bypass the scanning requirements.

Sixth, census statistics are unreliable, which makes it more difficult to plan and implement projects that affect populations. The Aadhaar web page shows what percentage of the population are inscribed, by province. In Delhi, that reaches almost 120%. It turns out that the population figures are “estimates”.

Seventh, “inclusion” is elusive but possible. While bringing undocumented citizens “into” the system was touted as one of the main goals – millions of people don’t even have a birth certificate due to an inefficient registry system – apparently almost all of those who enrolled in Aadhaar already had an official ID.

So, what about those without? Over 200,000 undocumented citizens took advantage of the “introducer” option, in which someone with an Aadhaar number vouches for someone with no official identification.

And, it’s worth noting that the Aadhaar number does not substitute a government-issued ID, so it cannot be used for cross-border travel, for instance. However, Aadhaar holders without any other ID can now get mobile phones and open bank accounts, something that they couldn’t do before.

Takeaway number eight is that any broad platform needs to be designed for growth. Even after the successful rollout and the years of experience with the system, experts admit that they don’t know what else the platform will be adapted for, or what other functionalities will be built on top. However, Aadhaar has been designed to allow other private and public applications, and already innovations and apps are emerging from the ecosystem.

The hope is that Aadhaar will become a “universal id”, in that it grants the holder access to a wide range of services. Also, it aims to reduce onboarding expenses for businesses such as mobile operators, landlords, employers and even banks, allowing them to bypass most of the cumbersome KYC requirements by using information already in the system.

The last lesson is to question the technology. Aadhaar is not a blockchain solution. That in itself calls into question the need to use the blockchain for national identity. If the verification of the data needs to be centralized, and if transparency is not a fundamental feature, then a distributed database could suffice.

True, the idea of identity being centralized in the hands of the government may be disquieting to many. But for a digital version to be useful on a national or pan-national scale, it needs to be accepted by the jurisdictions in question. What will incentivize governments to cede control over the fundamental role of granting citizenship?

The Aadhaar project is encouraging in that it is leading the way in showing what can be done today. Blockchain technology, however, allows us to contemplate other forms of identity, new uses for that information, and evolving roles for government. It is inviting us to think about what could be done tomorrow.

Daily Bits – books, crashes and vodka – June 13th, 2017

MoneyConf was fun, and a very slick production (they have an impressive event app, with a smooth signup and easy chat function). It’s intriguing how enmeshed blockchain is becoming with fintech in general. One of the panels had CEOs from both blockchain and non-blockchain companies talking about technology in trading. And I got to interview fintech expert Brett King, not exclusively about blockchain, but obviously that was the focus.

Here are the articles I wrote for CoinDesk on the event:

The best part for me? The incredibly cool, smart and fun people I met. 🙂

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I may have mentioned that I’m a sucker for book lists. Love them. They motivate me to reorganize my life so that I have more time to read. They make me hopeful for a future in which I am smarter and better informed.

Today I came across a website that is NOTHING BUT BOOK LISTS!!

Fivebooks lists the top five books as recommended by a range of thinkers, writers and doers. Addictive, hypnotic and the black hole of time management.

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And speaking of books, check out these stunning libraries, via MyModernMet.

photo by Thibaud Porier, via MyModernMet
photo by Thibaud Porier, via MyModernMet

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A few days ago the International Business Times carried the best explanation of Quorum that I’ve seen:

“As to monetisation, J.P. Morgan insists they are committed to a long term view. If Quorum is Apple’s iOS, then smart contracts are apps like Angry Birds. Giving away the operating system means there’s a huge base to buy into new products later on, and therefore no plans to commercialise the existing platform. Possible interoperability with both public chain and other closed enterprise blockchains like those in development by IBM, Intel, Digital Asset Holdings, and a slew or others means Quorum can have their cake and eat it too.”

It also had a pretty good description of the Enterprise Ethereum Alliance:

“The Enterprise Ethereum Alliance (EEA) is a still-forming, non-profit trade organisation out to define standards so applications built on one Ethereum-derived platform run on another, and also ensure there is enterprise-grade tooling and support when corporates are ready to flip the switch.”

And it had an interesting observation about enterprise interest in blockchains in general:

“Any sufficiently adopted permissioned chain starts to look a lot like a public chain,” said [Amber] Baldet, “and even though it might not be open to the entire world, you are only as secure as your most malicious member.” The more robust the network, they suppose, the less risky it will be to do business in markets currently out of reach. It’s this potential opportunity for top line revenue that gets Fortune 500s excited even more so than simply cutting today’s paperwork load.”

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A lone voice crying “be careful!”. (Ok, not so alone, but with so many ICOs emerging, and ETH prices continuing to go up, it seems like it.)

Whalepanda on Medium – I was wrong about Ethereum.

“At one point it will crash, hard. What the trigger will be? Bug(s) in smart contracts, major hack, big ICO startup that fails/fucks up, network split, even something as silly as not having a decent ICO for a couple of weeks which creates sell pressure from miners and ICO projects can cause a big crash. It’s not a question of “if”, it’s a question of “when”. That being said: Markets can remain irrational for quite a long time.”

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Talk about viral advertising:

 

Daily Bits – healthy bubbles, an ad-free future and cool cakes – June 4, 2017

The Economist magazine published two articles about blockchain technology this past week. One focused on how it can help governments with all sorts of processes, and gave concrete examples from Sweden, Estonia, Georgia and Ukraine. I especially liked this quote from the deputy head of Ukraine’s e-government agency.

“Most officials don’t understand what we’re doing, so they don’t sense the threat.”

Another article asked whether bitcoin’s price rise was the result of speculative mania, or a realisation of value. It points out that, unlike tulips, bitcoins are actually useful.

“If there is such a thing as a healthy bubble, this is it.”

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This article on CoinDesk – A Counterargument to the Value Proposition of Ripple’s XRP Token – helped me understand Ripple better.

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So Google will release its own adblocker… and let publishers charge readers who use other adblockers. Maybe that’s monopolistic, but my takeaway is that the number 1 ad server, a company who’s revenue largely depends on ads, publicly acknowledges that ad-free experiences are the future.

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Apparently “brushstroke cakes” are a big thing now. I can see why – softly aggressive, stylishly informal, deliciously irreverent. And they look like they’d be so much fun to cut into…

via Bored Panda
via Bored Panda

 

via Bored Panda
via Bored Panda

(Via Bored Panda)

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I’m at the MoneyConf conference in Madrid for the next few days, talking and thinking about the increasing overlap of blockchain with fintech… Plus, I get to moderate a Q&A session with Brett King, host of the Breaking Banks podcast (and author of 5 books, and founder of fintech company Moven, and an excellent speaker). Yes, I get to interview one of the best interviewers in the sector. No pressure.

So, I probably won’t have time to post here until the end of the week. But, I imagine I’ll have a lot to say when I resurface… 😉

A blockchain-based identity consortium

by Daniel Monteiro via StockSnap
by Daniel Monteiro via StockSnap

The search for the holy grail of blockchain technology – robust, global and easy-to-use identity solutions – seems to be picking up.

When you think about it, all blockchain applications rely on identity. Your bitcoin wallet, trade finance operation, connected device and energy transaction – they all count on data originating somewhere. The degrees of available information about the identity may change according to the application – but everything needs to have a reliably-identified origin and a destination, even if it’s just aseries of characters.

So it’s understandable that activity in this space is heating up.

At Consensus 2017, Microsoft, Accenture and several startups announced the creation of the Decentralized Identity Foundation.

What’s staggering about this is the public acknowledgement by all involved – competitors as well as tech incumbents – that identity has to be a collaborative effort. From realizing that “data is the new gold” to being willing to share that gold (in this case, identity data) with others in the ecosystem is a huge step. It’s a step encouraged, though, by the knowledge that a solid digital identity is not very useful if it can only be used in limited applications. That’s pretty much where we are today, with different logins for each website, and repetitive information needed for each sign-up.

There is so much more going on in the identity space that volumes could be written (and I will get around to it), but for today I just want to take a brief look at the members of the consortium, to get a feel for the type of products that could emerge:

Microsoft has been working on decentralized identity for some time. Over a year ago it partnered with ethereum consultancy ConsenSys and startup Blockstack Labs (more on them below) to build an open-source identity platform aimed at integrating the bitcoin and ethereum blockchains. Earlier this year it announced a new partnership with startup Tierion (more on them below) to investigate how decentralized identities linked to a blockchain could validate data, claims and agreements.

Professional services giant Accenture doesn’t seem to have been quite as active on the blockchain-based identity front, but its work on blockchain in general has been ramping up, with the unveiling of an innovative hardware solution for the protection of private keys.

Tierion has built a platform that creates a verifiable record of any data, file or business process on the blockchain. It is currently working with Microsoft on blockchain-based attestations (= something that confirms and authenticates) and with Dutch giant Philips on an unspecified project in the healthcare sector.

Gem pivoted in early 2016 away from bitcoin APIs to custom blockchain applications focusing on healthcare and supply chains. It is working with US financial services company Capital One in blockchain-based healthcare claims management, and Philips Healthcare on the creation of blockchain-based wellness apps, global patient ID software and secure electronic medical records. Its web states that it is also working on “global identifiers to link together data belonging to a person or asset, eliminating time consuming reconciliation, providing real-time transparency, reducing risk and creating better outcomes”.

Blockstack is building a “decentralized internet”, in which the content is pulled from peers rather than from centralized servers. Users access locally-owned apps and websites via a login based on identity… that the user owns. The startup began life in 2013 as Onename, which registered blockchain-based domain names. Initially built on the Namecoin blockchain, the system migrated to bitcoin and now also supports ethereum and zcash.

Netki was founded in 2014, and early the following year launched an innovative wallet naming service. It has since developed a system for blockchain-based identity in which a user’s details are not recorded on the blockchain itself, but on an application layer that allows for the system to work on multiple protocols. It is also a member of Hyperledger, and has contributed its work on digital identity solutions for worldwide regulatory compliance and legal non-repudiation. Late last year it participated in the launch, together with PwC, Bloq and Libra, of an enterprise platform based on bitcoin, called Vulcan Digital Asset Services. Its service is part of the IBM blockchain ecosystem. And at Consensus last month, it announced its collaboration with Barbados-based exchange Bitt in the compliant on-boarding of customers.

Uport was built by ethereum consultancy ConsenSys, with the aim of creating an open-source identity service on the ethereum blockchain, in the hope of giving users control of their information. Crypto exchange Coinbase has indicated that its messaging app Token (currently in testing) will include support for Uport’s identity service.

Berlin-based BigchainDB was originally Ascribe, a blockchain-based art authentication service. Since then the firm has rebranded, and now focuses on developing blockchain solutions for enterprises. It offers a combination of blockchain-like features with some traditional database characteristics, such as noSQL query language and faster transaction rates. In early 2016 it launched the IPDB Foundation, a non-profit aimed at developing the ecosystem around a new kind of blockchain-based database, built to serve identity and licensing needs.

The not-for-profit Sovrin Foundation (created in 2016 by blockchain startup Evernym) has an international board of trustees that includes representatives from banks, credit unions, education and retail. Its goal is to develop an ecosystem around a ledger (built and contributed by Evernym) on which individuals control their identities. It recently handed over its Project Indy – an identity solution built on a hybrid blockchain platform – to the Hyperledger consortium (of which is is a member). One of the innovations is that the identity information is never written to the ledger. Bits of it get anchored to the ledger, so there’s proof it existed on a certain day.

Civic launched in 2016 to stop identity theft, and recently announced the launch of a login authentication service – a blockchain-based platform that will offer users the chance to develop one digital identity, and use that to log in to any website without being tracked. Civic users will be able to prove their identity when logging in, without sharing that information with the website.

IDEO is an international design and consulting firm. Its research arm IDEO CoLab has identified blockchain technology as one of four key technologies that will impact society.

Mooti has developed a blockchain-based service that not only protects your identity, but will also validate the relevant components for web services or logins, without actually revealing information. Like Netki, its “Identity Chain” is part of IBM’s blockchain ecosystem.

Blockchain Foundry grew out of Syscoin, a cryptocurrency and protocol that allows near-zero cost financial transactions on a wide variety of marketplaces. The foundry focuses mainly on data security, leveraging decentralized networks, and later this year will roll out proof-of-concepts for medical, legal and real estate applications.. Last year it incorporated into Microsoft’s Azure platform, offering e-commerce solution Blockchain Market.

Iceland-based Authenteq offers automatic identity verification that can be installed via an API on just about any online marketplace or website. Its goal is to increase trust in P2P communities.

Taqanu, based in Norway, is developing banking services for people without a fixed address. It offers financial inclusion to refugees and others without a fixed address, by offering them a blockchain-based self-sovereign digital ID and the chance to accumulate a credit history.

Cybersecurity company RSA – known for its work in encryption, identity and cyber threat detection – has been ramping up its involvement in the blockchain space, giving sector startups an increasing amount of attention at the company’s renowned cybersecurity conferences.

South Africa-based Consent initially launched in 2015 with the goal of helping secure the integrity of medical records on a blockchain, but soon widened its scope to include financial know-your-customer (KYC) processes.

Danube Tech was set up in Vienna in 2015 to develop technology related to digital identity, such as blockchain-based identifier registration infrastructure including personal clouds, data transfer protocols and connectivity.

IOTA has focused on developing a blockchain for the Internet of Things, with fast throughput of micropayments. The protocol makes users and validators the same entity, eliminating the need to charge transaction fees. One of its current partners is German electrical utility’s R&D group Innogy Consulting.