blockchain – The Blockchain Report

For China, it’s all about control

In order for cryptocurrencies and blockchain startups to thrive, they need a favorable (or at least neutral) regulatory environment. That’s why we’re seeing innovation in Japan and struggles in the U.S. It’s also why we saw digital currency prices fall earlier this year after China cracked down on trading and South Korea adopted new KYC measures. But as we’re starting to discover, China isn’t opposed to all cryptocurrencies. China only opposes the ones it can’t control.

What’s new: The head of the People’s Bank of China told reporters Friday that he envisions a time where digital currencies replace cash because they’re faster, cheaper and more convenient. And his (and the government’s) opposition to crytpocurrencies has nothing to do with utility, but rather because they’re used for “speculation and making people have the illusion that they can get rich overnight.” (Bloomberg Technology)

Then on Monday, the Chinese government announced it was setting up a committee to create technical standards for blockchain technology. (OpenGov Asia)

Why does this matter? Taken in tandem, these two announcements indicate that China recognizes the value of blockchain technology and isn’t anti-crypto. It’s just anti-speculation. China doesn’t view existing cryptocurrencies as payment methods. It sees them as speculative investments — almost like gambling. China has been cracking down on money moving from China to casinos in Macau over the past two years (and wrecking Macau’s economy in the process) and this falls in line with that movement.

Be smart: China was against the Internet until they could control it. Once China figured out how to control it, it embraced the Internet. Cryptocurrencies will follow the same path. China will oppose them until it learns how to control them. The cryptocurrencies and companies that understand this will find success in China. The rest will be spinning their wheels.

Stumble

Ripple making a splash in Japan

Ripple, in conjuction with a consortium of 61 Japanese banks, will debut an app this fall in Japan that settles payments instantly. SBI Net Sumishin Bank, Suruga Bank and Resona Bank will test the new app first. If the test is successful, the app will be rolled out to the rest of the banks in the consortium. (CNBC)

Money Tap is the name of the new app.

Ripple said that the app would make it easier for banks to settle round-the-clock domestic payments in Japan. Consumers will require a bank account, phone number or a QR barcode to use the app, Ripple said. (CNBC)

Be smart: There’s a reason this launch is happening in Japan. Japan is adopting one of the most progressive approaches to blockchain technology and fintech. Japan is counting on fintech to be a major driver of its economy in the future and provides regulatory friendly environment to launch blockchain solutions.

Stumble

Commerce Department hops on blockchain train

In a move that slipped a bit below the radar last week, the U.S. Commerce Department issued its first blockchain guidance report. The report, written by the National Institute of Standards and Technology (NIST), attempts to explain blockchain technology to the business set and help executives make “clear-eyed” decisions about investing in it. (NIST)

Why this is important: Guidance reports from the NIST signal both mainstream acceptance and act as a permission slip for many organizations to consider blockchain as a solution. It also shows that the U.S. government is thinking about how to use blockchain technology and not just blockchain policy. That’s a good sign for the long-term health of the industry.

Fun with government names: In the great tradition of dry government nomenclature, the blockchain guidance report, which is just a draft for now, is titled: Draft NIST Interagency Report (NISTIR) 8202: Blockchain Technology Overview.

Stumble

Brazil eyeing blockchain for deed management

Add Brazil to the list of countries turning to block chain for deed management. In the wake of a massive fraud scandal, Brazil’s state-run technology company Serpo is pitching blockchain as the solution to the nation’s titling problems. The hope is blockchain can reduce fraud in a country where much of the population lacks property rights. (Reuters).

They key facts: Tracking property — whether it’s properties or global supply chain management — is one of the most popular uses for blockchain technology. Blockchain’s immutable trust is particularly useful in Brazil, which needs to build trust into the system.

The big question: Tracking property deeds using blockchain technology would be a huge step forward for Brazil. But it doesn’t solve one big problem — who owns the land in the first place. If Brazil is going to rebuild trust in the system, it will need to address this issue as well.

Stumble

SEC not happy with fake blockchain rebranding

As far as the Securities and Exchange Commission is concerned, fake blockchain rebranding is the equivalent of fake news — and they’re not happy about. In fact, the SEC is so unhappy about it that it’s planning on cracking down on companies who change their names to something blockchain related in an effort to make a quick buck — especially when those companies have nothing to do with blockchain technology. (Investopedia)

The money quote

Speaking at the Securities Regulation Institute this week, SEC Chairman Jay Clayton spoke pointedly about the blockchain name phenomenon. “I doubt anyone in this audience thinks it would be acceptable for a public company with no meaningful track record in pursuing the commercialization of distributed ledger or blockchain technology to 1) start to dabble in blockchain activities, 2) change its name to something like ‘Blockchain-R-Us,’ and 3) immediately offer securities, without providing adequate disclosure to Main Street investors about those changes and the risks involved,” Clayton said, according to his prepared remarks. (Investopedia)

The bottom line: Plenty of companies have been doing this. Some apparent, like Long Island Iced Tea becoming Long Island Blockchain to avoid bankruptcy and some, not so apparent. The SEC cracking down on this behavior is a good thing for investors.

Stumble

Bermuda to use blockchain for property deeds

Bermuda is going to modernize its property deed management system by switching to blockchain technology. Bermuda’s premier, David Burt, made the announcement at the World Economic Forum in Davos, Switzerland. (Royal Gazette)

The key facts: Tracking the transfers of properties is a natural fit for blockchain technology. And it’s not the only thing Bermuda is considering blockchain technology for.

Stan Stalnaker, founding director of Bermudian-headquartered Hub Culture, said digital assets such as property title deeds, marriage certificates, vehicle registration documents and ownership contracts will end up on blockchain. (Royal Gazette)

The smart take: Smaller countries like Bermuda are going to be early adopters of blockchain technology — especially for governmental use. Using blockchain both modernizes their systems and makes them thought leaders in the blockchain space.

Stumble

Blockchain gets new use in tracking mortgages

This can’t be a good idea. Remember when bankers bundling home loans and selling them to investors nearly wrecked the global economy in 2008? Well, Credit Suisse, Western Asset Management, Wells Fargo and U.S. Bank want to try doing it again. Except this time, they’ll be using blockchain technology to create a more transparent process and standardize the data. (Bloomberg)

The key facts

In theory, this is actually a smart use of blockchain technology. Blockchain’s distributed ledger technology can be used to simplify the process.

“Structuring securities is complex, involving many different parties, manual processes, duplicated documents and data in different formats,” David Rutter, chief executive officer of blockchain startup R3, which is organizing the consortium. (Bloomberg)

But the real debate isn’t whether blockchain can make this process better. The real debate is whether banks should be back in this business again at all.

The smart take: It’s interesting to note that the powers that be have no problem getting up in arms about the value of bitcoin or the potential for money laundering, yet have no problem with blockchain if banks are using it in potentially ruinous ways — like tracking mortgages to bundle them. It’s more proof that the fight isn’t about the technology, it’s about the people adopting it.

Stumble

IBM, Maersk announce blockchain joint venture

The quick read: Two industry giants, IBM (information technology) and A.P. Moeller-Maersk (shipping) are joining forces to create a global supply chain management platform based on blockchain technology. Their new joint venture, Hyperledger Fabric 1.0, aims to standardize shipping logistics in an efficient manner. Maersk controlls 51 percent of the joint venture. IBM controls 49 percent of the new company, which will be based in New York. (LinuxInsider)

What to look for:

This new blockchain company will have two primary services offered to customers. First, its blockchain will create a digital information pipeline allowing for end-to-end visibility of a supply chain in real time. The second service, and arguably the most attractive aspect of this blockchain joint venture, is Paperless Trade. As the service implies, it’ll automate paperwork filings required in shipping products using blockchain-based smart contracts. This should allow for quicker approval of documents, and also create more legally binding agreements. In short, blockchain offers the potential to make the shipping industry more profitable and efficient. (The Motley Fool)

Smart take: Two of blockchain’s key features, distributed ledgers and immutable trust, are critical components in shipping, logistics and supply chain management. These sectors are natural fits with blockchain technology, and it’s no accident that there are currently several ventures in various stages of gestation trying to enter this same space.

Stumble

Dimon ‘regrets’ bitcoin remarks

The quick read

JPMorgan Chase CEO Jamie Dimon told Fox Business News Tuesday that he shouldn’t have called bitcoin a “fraud” last September. (American Banker) Dimon went on to acknowledge blockchain technology could be useful.

The key details

Dimon still isn’t a big believer in bitcoin however.

The 61-year-old CEO said Tuesday he’s still not very interested in the subject, and thinks that government intervention may eventually hamper bitcoin’s growth and acceptance. (American Banker)

Bottom line

Dimon still isn’t a big fan of bitcoin. But he can’t dismiss blockchain technology, especially with his own company interested in it. So he softened his statement a bit.

Stumble

Kodak set to launch new blockchain platform (and cryptocurrency)

Kodak announced plans Tuesday to launch a new digital rights management platform for images based on blockchain technology and a new cryptocurrency to buy and sell images on that platform. Kodak is calling the rights management system KODAKOne and the cryptocurrency KODAKCoin. Kodak will hold an ICO for KODAKCoin on January 31 that “is open to accredited investors from the U.S., UK, Canada and other select countries,” the company said in a press release. (Kodak) Kodak stock prices surged 30 percent after the announcement. (CNBC)

Key details

Utilizing blockchain technology, the KODAKOne platform will create an encrypted, digital ledger of rights ownership for photographers to register both new and archive work that they can then license within the platform. With KODAKCoin, participating photographers are invited to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, and for both professional and amateur photographers, sell their work confidently on a secure blockchain platform. KODAKOne platform provides continual web crawling in order to monitor and protect the IP of the images registered in the KODAKOne system. Where unlicensed usage of images is detected, the KODAKOne platform can efficiently manage the post-licensing process in order to reward photographers. (Kodak)

Smart take

Shares of Kodak stock rose quickly because anything remotely associated with bitcoin, like the new KODAKcoin, is hot with investors. But the real value here is the KODAKOne platform. Blockchain technology is well-suited for digital rights management. And photographers have been looking for a digital rights solution for almost two decades.

It’s no accident Kodak CEO Jeff Clarke focused on photographers in the company’s press release:

“For many in the tech industry, ‘blockchain’ and ‘cryptocurrency’ are hot buzzwords, but for photographers who’ve long struggled to assert control over their work and how it’s used, these buzzwords are the keys to solving what felt like an unsolvable problem. Kodak has always sought to democratize photography and make licensing fair to artists. These technologies give the photography community an innovative and easy way to do just that.”

Stumble