Hedera is Live, R3 + Mastercard and Music Tokens

Off the Blocks | Vol 85, September 17, 2019

At Proteum, we partner with entrepreneurs to develop and deploy innovative products and solutions built with blockchain technology - advising them on building sustainable companies in a rapidly changing investment, regulatory and tech landscape.

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The Enterprise is On The Move

Hedera Hashgraph, a high-speed alternative to blockchains launched today. Notably, the hashgraph is a variation of a standard blockchain - operations are not recorded as a chain, but as a directed acyclic graph (DAG). And the core tech is not open source, but patented.

It’s a different data structure, different technology and looks nothing like a blockchain, but solves the same kinds of problems with better security and better performance.

- Mance Harmon, CEO, Hedera

Hedera seems to have solved a major bottleneck related to transaction speeds. While regular blockchains are a couple of gigabytes large, the hashgraph is smaller because it does not store all transaction history on the ledger (though it can be optionally stored on a “mirror” network).

Additionally, Hedera boasts marquee enterprise names such as IBM, Boeing, Deutsche Telekom, Tata, Nomura and FIS as members of the governing council, who will participate in running the nodes and vote on major governance decisions. Absence of a strong, fair governance structure thus far has been a limiting factor for CIOs seeking to derive full value from blockchain solutions.

All of this bodes well for enterprise adoption.

In fact, the recently released Gartner hype cycle map for blockchain and distributed ledger indicates that the business impact of blockchain will be transformational across most industries within five to 10 years. 60% of CIOs said that they expected some level of adoption of blockchain technologies in the next three years.

One aspect of blockchain that clearly resonates with enterprises is the factor of trust. Native audit trails built into blockchain solutions provide an extra layer of trust that would ordinarily require significant coding effort for a simpler relational database based implementations. This impacts performance and makes the system less agile when integrating with technology cycles and upgrades.

According to a Deloitte survey, the top challenge, as seen by 48% of CIO respondents revolves around uncertain regulations, although this concern appears to have reduced in 2019. An additional concern revolves around sensitive data and intellectual property, a concern that appears to have grown in 2019. There is ample evidence that governments, worldwide, are taking measures to not thwart the growth of private, permissioned blockchains. On the flipside, most enterprises, across all industries, are well aware of the benefits afforded by blockchain technology and have started taking steps to push for moving their projects from the R&D and pilot stages to live implementations. The winning approach seems to be to go to market as an ecosystem play, rather than do it alone.

Now is the time for any organization that wants to help shape the role of blockchain and the DLT technology at play in their business and their industry to get involved. Bitcoin made blockchain mainstream and brought the hype to the field. Now the hype is passing, and we are observing how enterprises are looking at real life solutions using blockchain.

- Marta Piekarska-Geater, director of ecosystem at Hyperledger

Now some significant news from the world this week:

  1. Regulations | OKEx Korea Delists Monero, Dash, Privacy-Cryptos Over FATF Demands: The South Korean arm of cryptocurrency exchange OKEx is removing support for five major altcoins due to new international regulations. The reason, said the exchange, is that as since they are focused on privacy, the coins fall foul of new guidelines set out by the intergovernmental body the Financial Action Task Force, or FATF.

    Support for trading of 5 different cryptocurrencies, XMR, DASH, ZEC, ZEN, SBTC, will be terminated

    The sweeping changes to crypto transaction rules demand businesses to identify the two parties sending funds to each other if a transaction is worth more than around $1,000. More than 200 countries should theoretically implement the rules by June 2020, despite concerns that doing so is physically impossible for many decentralized blockchains. The five cryptocurrencies outlined by OKEx all make it all but impossible to identify the sender and recipient of a transaction by design. [… Read More on CoinTelegraph]

  2. Payments | Mastercard, R3 to Develop Blockchain Cross-Border Payments Platform: Payments giant Mastercard is to develop a blockchain-powered cross-border payments platform in partnership with enterprise-focused blockchain firm R3. Mastercard said the two firms have inked a deal to “develop and pilot” the payments solution. It will initially be aimed at connecting faster payments schemes and banks backed by Mastercard’s clearing and settlement network. The platform will be built on Corda Enterprise, the commercial version of the platform, as opposed to the open-source Corda Network, R3 told CoinDesk. The partnership is planned to merge R3’s expertise at developing blockchain solutions with Mastercard’s existing payment systems and network. Ultimately, the firms hope the new platform will help tackle industry issues such as costly payments processing, liquidity management and a paucity of standardization and connectivity between banks and domestic clearing systems. [… Read More on Coindesk]

  3. Music | Warner Music to Build Token on New Blockchain by CryptoKitties Creator: Warner Music has joined an $11.2 million investment in CryptoKitties creator Dapper Labs in order to collaborate on the deployment of the company’s new blockchain network called Flow as well as building tokens on top of it. While Warner has reportedly invested less than $1 million in the form of a convertible security, other contributors included major industry investors such as Andreessen Horowitz, Digital Currency Group, Union Square Ventures, and Venrock. Bronikowski reportedly hinted that the new investment intends to unlock a new method for sharing Warner Music’s content as well as a new type of engagement with artists. the first round of fundraising will be spent exclusively on finishing the Flow blockchain and building apps on it, while the accredited investors will receive a cut of company stock. The investors will also have a bonus option to convert the securities into tokens that can be spent on the network as soon as the firm gets regulatory approval from the United States Securities and Exchange Commission. [… Read More on CoinTelegraph]

  4. Health and Wellness | Blockchain health app Lympo secures partnership with Harmony: Blockchain-based health app Lympo has secured a partnership with Harmony, a scalable blockchain consensus platform. Lympo, which is currently available in the US and South Korea, rewards users in the form of LYM tokens for exercising and completing fitness-related challenges. It has gained more than 260,000 users in just eight months. Previously, Lympo had secured a partnership with Samsung Health that would allow users to withdraw LYM tokens directly to Samsung’s blockchain wallet. […Read More on Yahoo! Finance]

  5. Banking| Deutsche Bank joins JPMorgan’s blockchain-based Interbank Information Network: Deutsche Bank has joined banking rival JPMorgan's Interbank Information Network, a blockchain-based network comprised of over 60 banks, according to a Financial Times report.  The IIN allows member banks to exchange information related to international payments on a blockchain. Up until this point, most of the members of the network have been smaller banks and clients of JPMorgan. 

    Having Deutsche join — and hopefully Deutsche will be the first of several other large banks — is going to help us drive towards ubiquity and ubiquity is a prerequisite for the success of the network

    - Takis Georgakopoulos, head of payments, JPMorgan

The Final Word | The First Yearlong ICO for EOS Raised $4 Billion. The Second? Just $2.8 Million

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New cryptocurrencies aren’t raising money like they once did, even during marathon sales.In the first half of 2018, the average initial coin offering (ICO) raised $25.5 million, based on data reported by PwC. The biggest ICO of them all, the yearlong EOS offering, closed during that era and raised a whopping $4.1 billion. But a second ICO that aimed to make EOS more usable and also opted for a yearlong approach hasn’t drawn as much investor interest. LiquidApps is building a second-layer solution for EOS that runs on the company’s DAPP token, which has been sold in daily auctions since February 2019. At the end of its 233rd auction cycle on Aug. 19, the DAPP sale had raised just $2.8 million worth of cryptocurrency.

If $4 billion was not enough to yield an EOS network that is functioning smoothly, the thing to do is not to seek additional funds for more work in the same vein, but to question what went wrong with the original design of the RAM market in EOS

- Emin Gün Sirer, Professor, Cornell University & CEO AVA Labs


About Proteum
Proteum is a global blockchain investment and advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for startups and emerging ideas based on blockchain solutions.

www.proteum.io | info@proteum.io  | Twitter: @proteumio | ProteumX

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