Off the Blocks | Vol 93, November 12, 2019
|Nov 12||Public post|| 5|
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.
From The Road In Europe
I am on the road in Spain talking about how to usher in some common standards across industries and countries when it comes to the adoption of blockchain technology. As I talk to people, I am hearing a lot about the EU Single Market. A recent report adopted by the European Economic and Social Committee highlighted the opportunities and some of the challenges associated with adopting blockchain across the continent. Notably, there is a big emphasis in alignment with UN Sustainable Development Goals (SDGs) - particularly related to
SDG #1 - No Poverty: Using cryptocurrencies for the unbanked population
SDG #3 - Good Health and Wellbeing: Sharing patient healthcare records more securely and efficiently
SDG #12, 14 & 15 - Sustainable production and consumption: Ensuring provenance throughout supply chains
The document also highlights some challenges to tackle which can be fodder for entrepreneurs. Some of these are highlighted below. The challenge regarding high energy consumption for “proof of work” chains seems to discourage the adoption of bitcoin and might be a red herring.
To unleash the potential of blockchain on the EU single market and for European societies, several issues must be addressed, where the current legal uncertainty is a priority. Some regulatory solutions for cryptocurrencies and ICOs exist; however, the legislative framework remains unclear regarding system design and in areas where blockchain technology is applied, resulting in a fragmented approach at the Member State level. Without a joint EU initiative for legal certainty and clarity across the EU, cross-border opportunities will be limited. Use cases and regulatory sandboxes for certain types of services and usage could be an initial stage to grasp the future legal requirements. The EU experience of developing complex, cross-border regulation and policy may be an advantage with regard to future regulation of blockchain.
Protecting privacy is key. The General Data Protection Regulation (GDPR) was introduced to tackle the most urgent data issues. However, when the GDPR was prepared blockchain technology was mostly unknown, and thus the potential tensions between the GDPR and blockchain need to be reviewed. The EESC calls on the EC to examine the GDPR, and propose revisions and further guidance on the relationship between the GDPR and blockchain.
The legal distinction between anonymized and pseudonymized data concerns the categorization of personal data. Pseudonymous data still allows for some form of re-identification (even indirect and remote), while anonymous data cannot be re-identified. While in permissioned blockchain, pseudonymization is considered as a solution for the relations facilitated by blockchain technology, anonymization is still a regulatory barrier for wider use of permissionless blockchain, which can be resolved through digital identity solutions embedded into the regulatory restrictions.
The proof-of-work consensus mechanism is highly energy-consuming. With the development of the alternative proof-of-stake consensus mechanism, this important environmental sustainability issue can be resolved. Solutions already exist which must be shared and fully applied.
Another technical challenge is interoperability with different blockchain platforms. Different blockchain may not be compatible due to the risk for parties that need to exchange data. Another concern is the compatibility between blockchain platforms and existing government systems, hindering governments switching from their existing platforms to blockchain-based interoperability. Ensuring interoperability should be a priority in the near future for blockchain developers to enable mass adoption.
The take-up rate relies on adoption by the diverse forms of enterprises, with SMEs being the majority in the EU. Today, transaction costs are in many cases prohibitive, making technical and consultative services out of reach for SMEs. Supporting the creation of new BC networks such as cooperatives is crucial to ensure fair access for SMEs and other smaller entities, allowing for improved democratic governance.
It is critical to fully understand and review how blockchain technology impacts consumer protection and rights. Clarity is needed on the relationships between, for example, confidentiality and privacy enforced by legislation (e.g. EU data protection legislation), regulation (client confidentiality) or contract (commercial confidentiality).
Now some significant news from the world this week:
Supply Chain | Coca-Cola Supply Chain Firm Expands Blockchain Effort to 70 Partners: Coke One North America (CONA) says its pilot project with software provider SAP is now set to be expanded from two to 70 of the manufacturers that deliver the 160,000 bottles Coca-Cola shops daily. The blockchain project promises to improve distribution for the participants, as all manufacturers can access a permissioned blockchain containing each others’ orders, capabilities, and requirements. For example, if a bottle maker is short of stock for a looming order, the network quickly provides options for filling the shortfall.
There are a number of transactions that are cross-companies and multi-party that are inefficient, they go through intermediaries, they are very slow and we felt that we could improve this and save some money.
Andrei Semenov, Senior Manager at Coke One North America
Payments | Blockchain in Payments Report: The world today is hyperconnected. With nearly 55% of the world’s population online, it’s never been easier for people to connect, engage with one another and share what’s on their mind. While this ability to exchange information has become customary, the ability to exchange value remains complex, unreliable and expensive. The second annual Blockchain in Payments Report examines how payment service providers use or plan to use blockchain technology and digital assets to overcome these challenges and change the way the world moves money. This year’s findings reveal the widespread adoption of blockchain-based payments by financial service providers. This strong adoption signals that both customers and providers have proven the value and feasibility of blockchain technology. Moreover, trust has been won. To further fuel innovation and increase adoption speed, factors including simplified implementation and regulatory clarity are necessary. These factors are highly likely to be met over the next 24 months given the competitive drive exhibited by survey respondents and the collaborative efforts of providers and regulators. […Get The Report on Ripple]
Banking | Tencent to Build Virtual Bank After Hong Kong Regulator Approves License: Chinese internet giant Tencent is set to open a blockchain-based virtual bank after the Hong Kong Securities and Futures Commission (SFC) approved a new license. The SFC has granted virtual bank licences to 12 entities so far. On the list is Infinium Limited, a joint venture between Tencent, Industrial and Commerce Bank of China (ICBC) and other two Hong Kong-based institutional investors. Tencent renamed Infinium to Fusion Bank in July after it received the license in May. The SFC published details about its new licensing system to regulate virtual asset transactions on Wednesday, creating a similar framework to the one overseeing securities brokers. [… Read More on Coindesk]
India | Tamil Nadu to Present Policies Focused on Blockchain and AI Ethics: The southernmost territory of the Indian subcontinent, Tamil Nadu, is gearing up to frame out a state-level policy for two globally evolving and celebrated new-age technologies, including blockchain and Artificial Intelligence that are distorting public policy and governance. The officials have revealed that the policy is likely to be released in a timeframe of eight to ten days as the necessary approvals are achieved from the authorities. Tamil Nadu has focused its AI and blockchain policies to outline the measures which will guide the government in aiding the development of the two fast-evolving technologies primarily for service dispatch and resolution of governance problems. [… Read More on CryptoNewsZ]
We are working on separate policies on blockchain and AI. The AI policy is going to be perhaps the world’s first policy addressing safe and ethical use of AI.
- Santosh Misra, CEO of TN e-Governance Agency (TNeGA)
E-Commerce: Alibaba Partners with Lolli to Allow US Shoppers Earn ‘Free Bitcoin’: Chinese e-commerce giant Alibaba has partnered with Bitcoin (BTC) rewards shopping app Lolli, enabling its shoppers to earn 5% back in Bitcoin. Alibaba customers can now get Satoshis (sats), the smallest unit of Bitcoin currency, worth 0.00000001 BTC, when shopping “thousands of items online,” Lolli says. The new program will only be available for purchases in the United States. Aubrey Strobel, Lolli’s head of communications, reportedly claimed that residents in China will not be able to participate, and products would be shipped from China to U.S. users. [… Read More on CoinTelegraph]
Regardless of the spread of cryptocurrency speculation, China is clearly enthused about the prospects of blockchain technology—for the time being. Over the last week, local governments in China have tapped into official enthusiasm for blockchain with a plethora of initiatives. According to the Xinhua News Agency (via Global Times), China has created an blockchain-based identification system for its cities. Developed by three institutes in Shijiazhuang city, the system will purportedly roll out nationwide, with each city eligible to apply for their own unique ID code since Sunday. This code will link cities within the ID system, enabling data sharing and interconnectivity between provinces. [… Read More on DeCrypt]
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.