4 Trends That Will Shape Bitcoin Regulation in 2016
After an eventful 2015 for #bitcoin and the #blockchain, what’s in store on the regulatory and enforcement front in #2016?
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Crypto 2.0 Musings – Standards and Reference Data Governance DAOs
Last few weeks has seen the rise of The #DAO – an organisation like no other. Part VC fund of about 170 million USD, part crowdfunding platform, part machine. The machine part is the novel piece of the puzzle – effectively all of the governance of this new entity is done by #smart contracts on Ethereum, so whereas before, humans outsourced worked to machines, the machines now outsource work to humans – machines invite humans to fund them and then vote on, and monitor investments on their behalf. Read my PALE blog for more details behind the concept of distributed autonomous organisations.
whereas before, humans outsourced worked to machines, the machines now outsource work to humans
Whilst the idea of machine governance is truly exciting, in the case of a VC fund, folks like BitShares, who have been running a less public but none the less similar scheme for a bit now, have raised concerns such as effective engagement – people like the idea and invest in a fund, but do not have the time or expertise to manage it, so without a clear leader, good decision making is absent – of course on the other hand we have seen plenty of leaders make very bad decisions and whole concept of crowd wisdom argues that even relatively uninformed people, in sufficient numbers will make better decisions than a well informed individual.
The same concept of automated governance e.g. voting, can in my opinion be easily transplanted to many other areas, including standards bodies. Think open source foundations like Apache Software Foundation, Linux Foundation, Ethereum Foundation and #Bitcoin Foundation, or folks like International Organisation for Standardisation (ISO) and BSI Group.
Whilst standard setting activity is far less glamorous than managing a multi-million fund, in my opinion it faces a far smaller risk of rejection – very few people I suspect get excited about operating governance procedures, so automation here is a form of pain relief. The other issue with blockchains today is lack of transaction amount privacy, which may be an issue for VC funds in some cases, but a must-have feature for a standards body. Assuming that either a standards body will be comfortable using virtual currencies or fiat money will be on-chained, a Governance DAO will even be able to manage it’s own funds to pay human staff wages, office leases etc.
And here comes the double whammy – if the standards body is managing reference data, take ISO 4217 currency codes for example, both the codes and their metadata i.e. a living locally stored and replicated document, as well as governance rules like votes for change, can be managed on-chain by smart contracts. Any change is replicated in near real-time to anyone running a node, to make use of as appropriate inside their firewall. Given the importance of reference data and today’s reconciliation issues, a Governance DAO sounds to me like a great value proposition.
[linkedinbadge URL=”https://www.linkedin.com/in/batlin” connections=”off” mode=”icon” liname=”Alex Batlin”] is Senior Innovation Manager and this article was originally posted it on linkedin.
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Alex Batlin’s Briefing of Crypto 2.0 Musings – Standards and Reference Data Governance DAO
Last few weeks has seen the rise of The DAO – an organization like no other. Part VC fund of about 170 million USD, part crowdfunding platform, part machine. The machine part is the novel piece of the puzzle &8211; effectively all of the #governance of this new entity is done by smart contracts on Ethereum, so whereas before, humans outsourced worked to machines, the machines now outsource work to humans &8211; machines invite humans to fund them and then vote on, and monitor investments on their behalf.
Read my PALE blog for more details behind the concept of distributed autonomous organizations.
Whereas before, humans outsourced worked to machines, the machines now outsource work to humans
Machine Governance makes better decisions
Whilst the idea of machine governance is truly exciting, in the case of a VC fund, folks like BitShares, who have been running a less public but none the less similar scheme for a bit now, have raised concerns such as effective engagement &8211; people like the idea and invest in a fund, but do not have the time or expertise to manage it, so without a clear leader, good decision making is absent &8211; of course on the other hand we have seen plenty of leaders make very bad decisions and whole concept of crowd wisdom argues that even relatively uninformed people, in sufficient numbers will make better decisions than a well informed individual.
The same concept of automated governance e.g. voting, can in my opinion be easily transplanted to many other areas, including #standards bodies. Think open source foundations like Apache Software Foundation, Linux Foundation, Ethereum Foundation and Bitcoin Foundation, or folks like International Organisation for Standardization (ISO) and BSI Group.
Governance DAO solves managerial issues based on its smart contract
Whilst standard setting activity is far less glamorous than managing a multi-million fund, in my opinion it faces a far smaller risk of rejection &8211; very few people I suspect get excited about operating governance procedures, so automation here is a form of pain relief. The other issue with blockchains today is lack of transaction amount privacy, which may be an issue for VC funds in some cases, but a must-have feature for a standards body.
Assuming that either a standards body will be comfortable using virtual currencies or fiat money will be on-chained, a Governance DAO will even be able to manage it’s own funds to pay human staff wages, office leases etc.
And here comes the double whammy &8211; if the standards body is managing #reference #data, take ISO 4217 currency codes for example, both the codes and their metadata i.e. a living locally stored and replicated document, as well as governance rules like votes for change, can be managed on-chain by smart contracts.
Any change is replicated in near real-time to anyone running a node, to make use of as appropriate inside their firewall. Given the importance of reference data and today’s reconciliation issues, a Governance DAO sounds to me like a great value proposition.
Source: https://www.linkedin.com/pulse/crypto-20-musings-standards-reference-data-daos-alex-batlin
The post Alex Batlin’s Briefing of Crypto 2.0 Musings – Standards and Reference Data Governance DAO appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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“Blockchain” or Bitcoin: Understanding the differences
In this talk, Andreas explores the rise of the term “#blockchain” as a counterweight to #bitcoin. The term blockchain does not provide a definition, as it has been diluted to be meaningless. Saying “blockchain” simply invites questions, such as “what is the consensus algorithm”. Meanwhile, bitcoin continues to offer an alternative to the traditional financial system. Andreas looks at the value of private ledgers, which he sees as having a small impact on finance, versus open, global and accessible payment and currency systems such as bitcoin which he sees as fostering a global revolution in finance and access to financial
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Microsoft to Develop Identity Platform for Multiple Blockchains
#Microsoft has partnered with two startups to build an #identity #platform aimed to integrating with both the #bitcoin and Ethereum #blockchains.
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R3 Meets Obama Advisors at DC Blockchain Event
A group of #technology #advisors to US President Barack #Obama heard from representatives from the #bitcoin and #blockchain industry earlier this month.
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Why ABN Amro Wants to Separate Bitcoin from the Blockchain
ABN #Amro managing director Karin Kersten discusses her firm’s #blockchain strategy and use cases.
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Why ABN Amro Wants to Separate Bitcoin from the Blockchain
ABN #Amro managing director Karin Kersten discusses her firm’s #blockchain strategy and use cases.
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Blockchain? For me, the coin has dropped
We know by now that tech-land moves at lightning speed. Radio commercials for Digital Transformation consultancy? Check. I’ve heard them.
But over the past few months, there’s been some technological advancements – in the relative margins of the internet – which could potentially cause quite a fundamental stir. I’m talking about #Blockchain.
First a big caveat: I’m not a techie. I can pretend I know the difference between NodeJS and PHP, but I don’t really gét it. I look at #technology for what it means. And recently, I’ve come to realise that this whole Blockchain story is a lot more than Bitcoins, ‘virtual’ currencies and unintelligible tech-geek-babble.
Blockchain, WTF?
The techies will kill me, but let me have an attempt at trying to explain what Blockchain is, to me, the non-techie. Blockchain is a kind of database-technology, the engine behind #Bitcoin for example. It is effectively a decentralised verification system, where a global network of computers verifies and creates transactions, following a complex cryptographic code. Once verified, the transaction cannot be changed. Ever.
Sounds like Chinese? Just remember one thing: ‘decentralised’. It means that transactions no longer need a centralised authority.
There are a few Blockchain versions. And a crucial one is Ethereum. The thing that makes Ethereum different from Bitcoin is that it is effectively a platform, onto which applications can be built. Those applications can utilise such a decentralised computer network ánd the cryptography that comes with it. Ethereum also has a currency, Ether, which serves as the fuel for the system, this engine.
The thing that made me pay attention is that the platform, this network of computers, can create transactions that go beyond digital currencies. The Bitcoin-blockchain does one thing: transfer Bitcoin. But with Ethereum anything’s possible; we’re talking ‘transactions’, any transaction. A crucial aspect of Ethereum is Smart Contracts, programs to well… program and automate transactions. At least, that’s what I think it is.
Example? In Brooklyn, smart citizens have built an energy network with Ethereum’s Smart Contracts. Energy, created by solar panels on one side of the street, is being sold to neighbours on the other side of the street. Again: without the involvement of a central authority.
“That all sounds grand, dear Gerrie. So let them be, those tech geeks”, I hear you think. Well, no. Over the past few weeks I’ve started to get the feeling that as an entrepreneur, government or all round smart person, it is becoming important to stop watching from the sidelines and get more actively involved in this blockchain story. And I see a few reasons.
Speedy, speedier, speediest
The tempo at which new things happen in the blockchain world is very, very, very high. Ethereum as software isn’t even a year old. Friends of mine, who’ve been reading on and working in the subject matter for a while now, were perplexed a few weekends ago. That was the moment when the DAO-hub launched. A kind of platform, built on Ethereum to fund and support other blockchain projects. Kind of like a decentralised version of a Venture Capital fund. At least, that’s what I think it is. Today. Maybe I’ll understand it better tomorrow.
But fact is: after 2 weeks it had become the biggest crowdfunding project ever, raising more than 11m million Ether. Current value of 1 Ether: about 12 euros. These are no longer the margins of the internet, methinks.
Profit!
Ethereum’s website says: “like the internet was supposed to work”. Their mission is to develop an internet that is more free, more trustworthy. It is definitely connected to a certain vision of the world. But at the same time, it’s also about profit, making money and business opportunities. That’s what makes it so unique. I think.
For every old school CEO who still doesn’t really believe in the internet or e-commerce, there are smart entrepreneurs who will soon (read: now) start looking at how the transactions involved in for instance ‘shopping in a supermarket’ can be reconfigured when you look at them through a Blockchain lens.
Plus, these transactions aren’t limited to the internet. Connect the Blockchain concept to the internet of things and you’ve just added another billion use cases. At Slock.it – a bunch of leading thinkers and makers in the community – people are working on a smart lock, which only acts when all the conditions of a Smart Contract have been fulfilled.
Take the use case AirBnb. I rent a spare room to you. So when the smart lock know it’s you and it knows you’ve paid, it opens up. At the same time it triggers the financial transaction and – why not – books and pays the cleaning service when you leave.
Another fundamental aspect is that there’s an incentive system built into the core of Blockchain. It is technology after all and that requires hardware. Computer geeks who run the transaction software on their servers get a fee. That’s what keeps the decentralised network rolling. However, the fee is a fraction of the 10-ish% that AirBnB charges or the +20% that Uber deducts from its drivers’ earnings.
A real sharing economy
We need to pay attention because Blockchain is a technology that goes to the core, to the root. The word “revolution” gets mentioned occasionally. So does “Web 3.0”.
And without getting all too excited, I’m starting to see why. The internet was about disintermediation and the democratisation of information etc. But what happened? It became the bedrock for centralised platforms, who facilitated transactions at scale: AirBnB for holiday accommodation, Facebook for communications, Uber for transport,… At a price obviously.
These are amazing applications and I use use all of them. But the decentralised aspect of the blockchain technology makes it possible to redraw and reconfigure the relationships between user and supplier, in other words: the transaction as well as its value. The cost of a transaction decreases. The validation and the trust grows. An “internet of transactions”, “internet of trust”, “internet of value”,… these are all phrases that are being used in the numerous chat boxes and communities.
Example! Consensys is one of those companies who are building applications on the Ethereum framework. Ujo is one of them, “rebuilding the music industry”. Not only does it make the transaction between artist and fan more direct; it can also reconfigure the relationship between artist and session musician, between artist and film-producer-who-wants-to-use-that-song, between artist and whoever or whatever,… It’s not something Spotify is doing.
Arcade City does in a blockchain kind of way what Uber does: match demand for transport solutions to supply. The difference: the value is being distributed in another way.
Certainly, these are all experiments and prototypes. But it is significant that AirBnB has already bought up a Blockchain start-up. Their business model of ‘being the intermediary’ could potentially come under pressure.
The disruptors being disrupted? What’s next? Well, everything that’s a transaction can be looked at through a blockchain lens. Could a brand like Nike pay fees directly to people who watch their ads? And what with a concept like ‘issuing a driving license’, a typical example of centralised validation ánd transaction.
Learn, Unlearn, Relearn
Technology. Ethics. Profit. That’s what it says on the website of DAO Hub. And it’s this mix that makes the matter so complex.
So, show of hands: who has ever tried to buy BitCoin or Ether and moved them to a different wallet? I have a sneaky feeling it won’t be too many of you. And that’s a shame: because ‘that world’ involves different concepts of wallets, transactions, security,… So we have to practice, we have to get used to this new ‘language’, we have to make mistakes, get ripped off, be confused.
Because to be honest: buying Bitcoins is peanuts, compared to understanding Ethereum. And then we haven’t even started on DAO, the concept of a Decentralised Autonomous Organisation.
So, us, non-technies, need to practice, because this story is getting momentum.
Smart developers are currently learning Solidity to build blockchain-applications and create Smart Contracts.
Smart investors have known for a while who Vitalik Buterin is (inventor of Ethereum, 22 years old, no shit). They’ve been looking at daohub.org for the past few weeks and have been able to decide for themselves whether it’s a good idea to invest in DAO-tokens.
And what do entrepreneurs do? From small start-ups to the Microsofts and IBMs of this world: they’re all trying to get to grips with the blockchain-thinking. The question is: do they recalibrate their value proposition and their added value in a fundamental way? Or are they copying Blockchain technology to implement behind closed doors, like #banks seem to be doing?
And what about governments? Because when it comes to transactions, validation ánd identity, there’s a lot of thinking to be done. In Honduras they’re re-building the concept of land ownership on the blockchain. The innovation unit of Unicef is looking at blockchain to tackle the problem of identity with refugees.
But also closer to home, the penny has dropped. In my hometown of Antwerp, the council’s innovation unit A-Labs is building a blockchain application to facilitate communities. They call it Locals.world and are working on a currency of their own, the LocalCoin.
In the blockchain chat communities, where I spend a bit of time these days, I read things like:
“I’m kind of dreaming of buying Tesla powerwall towers and put smart contracts on them!”
Or
“We could invest in anything and collectively we’d be more informed than an individual to make good investment decisions.”
These guys are on a different level. And if we, laymen, want to get our hands on the wheel, we need to get flight time. We need to read, produce, buy, do. It’s up to us to understand blockchain and to translate it, take it away from the tech-talk. That way the discussion and the learning process will speed up and the possible implementations will become clear much faster.
Anyway, I’m starting to get it. Starting. And I’m going to dig deeper. If you’re interested, here‘s my growing list of blockchain-related bookmarks.
[linkedinbadge URL=”https://www.linkedin.com/in/gerriesmits” connections=”off” mode=”icon” liname=”Gerrie Smits”] is Digital Strategy Consultant (www.gerriesmits.com) and this post first appeared in Dutch on datanews.be)
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Blockchain – to Replace Government in Real Estate
When it comes to #blockchain, the immutable ledger #technology that underpins #bitcoin, much of the limelight thus far has been on its potential to disrupt the finance industry. However, the transformation that #real #estate may experience from applying blockchain could arguably be just as profound. Unlike financial services, where technological innovation has largely been embraced in the pursuit of profit, much of real estate’s business conduct remains firmly stuck in the past. Many operating methods within the industry have remained unchanged for 50 years, if not longer.
What is a land-registry in a blockchain?
Land registry systems contain records of a country’s land transactions, and operate on centralized ledger systems at present, with the centralized entity normally being a #government agency. At their best, the systems guarantee title of all land assets; however, in reality they provide incomplete security of tenure, are marred by corruption and frequently result in ownership disputes. In contrast, a blockchain land registry system would be decentralized.
This would mark a distinct improvement on the incumbent system, in that every authorized network member would have an authenticated copy of the registry, rather than just one centralized party. Given that everyone can see the records, therefore, the process would be more transparent, which again minimizes the potential for foul play. Removal of the centralized entity is also likely to be cheaper and more efficient – the operating cost of the land registry in England and Wales in 2013/14, for example, was nearly £240 million.
Ragnar Lifthrasir, who is President of the International Bitcoin Real Estate Association (IBREA), is among the pioneers in developing a real estate model which can operate on the blockchain. He identifies three specific uses of the technology in the industry – purchasing, escrowing and the recording of title ownership and associated transfers. Escrowing is perhaps the least developed idea currently, although ostensibly it would be similar to a common bank transfer, only in this case the transferable amount is first converted to bitcoins which are then put into escrow. Nevertheless, as long as both parties agree to use the blockchain over a government solution, Lifthrasir argues, then nothing can stop them.
What are the benefits?
A blockchain would allow someone to upload land title documentation to the network, which other users can record and verify if needed. This would provide proof that this person is the first owner of the documents, and decentralised network verification would prevent forgery. When it’s time to transfer title, the document simply requires ‘rehashing’ (encrypting) by the owner to prove he/she is in possession of the document.
During the actual transfer process, a ‘coloured coin’ system – which US stock exchange Nasdaq currently uses to settle securities – would be employed. A concept first outlined by Swiss computer scientist and Bitcoin core developer Mike Hearn, coloured coins are non-fungible tokens which provide the owner with private keys, thus allowing only the owner to transfer ownership while preventing fraudsters from corrupting the process.
The elimination of costs associated with title insurance and fraud, according to Lifthrasir, is the biggest advantage of using blockchain. This has been a persistent problem with the current system of centralised government records. Criminals are able to fake title ownership, often simply by using editing software to stipulate transfer of property ownership in their favour, and at negligible expense. Indeed, title insurance itself is a $ 20 billion industry, and Lifthrasir estimates that at present it is costing around $ 1 billion to combat title fraud.
Some argue for a replacement of the entire common law system, which currently requires a laborious examination process of public land records before a plot of land is transferred from one party to the other. Joe Dewey and Shawn Amuial, attorneys at US law firm Holland & Knight who specialise in real estate and finance, for instance, are in favour of replacing the government recording of deeds, mortgages and other instruments in land records with the blockchain, as government records are prone to human error and corruption.
Reducing Bribery and Corruption
Indeed, corruption within land registry has plagued much of the developing world, with insufficiently secure governmental systems being regularly prone to manipulation. Honduras is among the worst. USAid Land Tenure estimates that 80% of privately held Honduran land is untitled or improperly titled, while only 14% of citizens legally occupy properties, with less than a third of those citizens being officially registered. Land title disputes in Honduras have led to violent conflict and widespread fraud, with cases of the registry system databases being hacked into and bureaucrats being able to secure the most luxurious properties.
As a solution, US technology start-up Factom announced in May 2015 that it had agreed to build a secure land title record system for the Honduran government using blockchain technology, in conjunction with title software company Epigraph. Transferring land records onto the blockchain, therefore, could be a reality in the not too distant future.
In doing so, Factom CEO Peter Kirby believes that Honduras’ land registry system would leapfrog many systems in the developed world. Although recent reports suggest that the partnership has stalled, Factom is adamant that progress is still being made, so it may take longer for the project to come to fruition than initially thought.
Ghanaian NGO Bitland also claims to be developing a blockchain-based system for entering land title records, in a bid to correct for the numerous failed attempts by the government to develop a fair and efficient land administration system. At present, courts in Ghana are reportedly being inundated with land dispute cases.
Bitland hopes to reduce this burden, and will use the Factom/Epigraph technology, as well as satellites and GPS to verify the accuracy of plots of land. Buyers will also be able to discover the last owner of property rights and land ownership disputes, while the disputes themselves can be made visible to the network, thus ensuring greater security. However, as with Honduras, much work is yet to be done.
Registry system problems, moreover, are not solely confined to the developing world. The US State of Massachusetts has a specific court which has jurisdiction over the registration of title to real property, while in Canada, 95% of land in Newfoundland and Labrador is considered Crown Land, which results in land disputes regularly ending up in court. Kirby believes that the most important issue is for courts to have a true history of what has happened during such land dispute cases. Immutable records based on “evidence and precedent” will be instrumental in adjudicating land disputes, and can also then become part of the permanent record of the land, which the blockchain technology can ensure.
In terms of taking land title records away from government and onto the blockchain, it may prove to be more difficult in some countries than others. In the US, for instance, title companies exist and have large databases of land ownership records, in addition to the government’s own records.
The sheer number of landowners (and thus the number of records), coupled with the overall size of the US, makes the task of shifting from government records to blockchain a lot tougher. However, Dewey and Amiual point to the fact that title companies are likely to act as allies in the technology’s development, rather than enemies, especially if title insurance can still play a role in addressing those risks which are not eliminated by the blockchain.
Lifthrasir believes blockchain will offer significant improvements over the current government-administered system. It would allow the industry to avoid the inefficiencies that arise from the presiding record keeping practices used by government. While Kirby is willing to work alongside the government in the Honduran case, Lifthrasir does not think it is a worthwhile investment of people’s time to teach governments about blockchain. The opportunity to transact directly under blockchain means that the role of government becomes redundant.
Conclusion
Instead, IBREA’s intention is to gather together the real estate industry professionals who favour moving elements of the business onto the blockchain, especially operations pertaining to purchasing, escrowing, and recording of transfer of properties. As Lifthrasir puts it, “So, as long as people in the real estate industry start deciding to use the Bitcoin blockchain to record the transfer of properties, why bother with the delay, cost, and inefficiency of the government?” He is convinced that 2016 will be the year that title management moves onto the blockchain, and in turn, that the technology is developed enough to be used in the real estate industry.
The post Blockchain &8211; to Replace Government in Real Estate appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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