Remittances, Car Sharing and Getting Married on the Blockchain

Off the Blocks, Vol 50, January 15, 2019

This newsletter is our weekly roundup of some of the significant blockchain news, that provides an overview of the rapidly changing blockchain landscape to help you map your blockchain strategy and be aware of regulatory announcements globally.

A New “New York State of Mind”

At Proteum, we believe that blockchain and crypto markets are the foundations for a new financial ecosystem. While most transactions today are conducted electronically, the overall structure of finance has not changed in almost half a century. Globally, a handful of banks dominate how money flows, including creation of financial instruments, derivatives, foreign exchange flows etc. This strategy has assured them of huge profits built on ever increasing transaction costs and fees for the average consumer. As a result, people (and micro-enterprises) with not enough money cannot afford the costs of inclusion into these traditional financial systems. While over 70% of micro-enterprises have bank accounts, only 1% have access to working capital loans. Over 2 billion people remain unbanked, mostly in developing countries.

Yet, they participate in economic activity, often receiving remittances from family and friends in other countries, and utilizing the proceeds to pay for services locally. The World Bank estimates that $429B was transferred as remittances to developing countries in 2016. This is a huge market to serve. A savvy combination of technology enabled with well thought incentive models are now creating perfect conditions for disrupting these traditional inefficient and costly markets. In 2018, the on chain transaction volume for Bitcoin was over $410B, well within the range of completely taking over the remittance markets from traditional incumbents such as Western Union. Legacy networks are already feeling the heat from upstarts that have embraced blockchain solutions and cryptocurrencies.

This space is only bound to get more exciting as bitcoin/crypto ETFs, derivatives, crypto-lending and stablecoins etc. start chipping away, bit by bit, at the monopoly of traditional financial institutions.

New York isn’t giving up on the digital-ledger technology that makes Bitcoin and other tokens work even after last year’s collapse of the cryptocurrency market. New York City Economic Development Corporation said its Blockchain Center in Manhattan will open Thursday a part of a partnership with affiliates of venture-capital fund Future\Perfect Ventures and the Global Blockchain Business Council, a trade organization. The city may also start testing the use of blockchain technology in the fall.

We are playing the long game. It’s a nascent technology, so there’s bound to be uncertainty around this evolution from year to year. While we don’t know what the future holds, we want to make sure we have a seat at the table shaping it.

- Ana Arino, chief strategy officer at the EDC

Now for some significant news form the world this week:

  1. A Pakistani Bank Partners with Alipay for Remittances: Pakistan-based Telenor Microfinance Bank, a subsidiary of Norwegian telecoms multinational Telenor Group, has launched cross-border payments using blockchain technology from payments firm Alipay. Claiming it as Pakistan’s first blockchain-based international remittance service, the bank announced that the product is a joint effort between Telenor Group’s Malaysian fintech subsidiary Valyou and its Pakistani mobile banking arm Easypaisa, offering real-time money transfers between the two nations.

    Currently, Pakistan receives about $1 billion in home remittances from Malaysia and this Easypaisa-Valyou collaboration is going to change it for the better

    - Roar Bjærum, senior vice president at Telenor Financial Services

  2. HSBC <> Blockchain <> Forex Trading: HSBC is using blockchain-based tools to handle processes behind foreign exchange trades, a move that indicates banks are finding useful applications for the technology developed to create cryptocurrencies. Known as "FX Everywhere," HSBC's project has been used to coordinate payments across HSBC's internal balance sheets using a shared ledger for a year. The U.K.-based bank has processed more than 3M forex transactions worth about $250B using blockchain in the past year.  

  3. China Gets More Blockchain Censorship Powers: The Cyberspace Administration of China (CAC) has just introduced more regulations for companies dealing with distributed ledger technology. The new guidelines will come into effect on February 15. In the typically draconian way the Chinese government operates, the new regulations demand that startups allow the state to access stored data. It also allows the regime to censor what it deems to be sensitive content under China’s wide sweeping censorship laws. The rules also demand that companies hand over personal details of their users including identification records and phone.

  4. Car Rental and Sharing platform ShareRing: Blockchain-powered marketplace startup ShareRing, has announced a service that will let users book and unlock a rental vehicle within 30 seconds. For its debut, the service is partnering with Keaz to provide a wide selection of rental cars (Keaz works with Toyota, Merchants Fleet Management, Envoy, Yoogo, and others). The Keaz platform currently handles about 70,000 rental bookings per month, but it can take a few days to sign up for the service and gain access to a car. The ShareRing service can verify a new user’s ID and approve a booking almost immediately. The service will debut March 29 and is set to launch in stages, starting with the U.S. West Coast (CA and NV), Australia, and Hong Kong, before expanding to London.

  5. Ethereum’s Constantinople Hard Forks on January 16: Named after the capital of the Byzantine Empire, Constantinople forms part of a three-part upgrade called Metropolis. It combines a total of five Ethereum improvement proposals (EIPs). And while the majority are non-controversial tweaks, one aspect of the upgrade has been the cause of some controversy. In particular, Constantinople delays the “difficulty-bomb,” an algorithm in Ethereum’s codebase that increases mining difficulty over time. Because the upgrade will decrease the mining difficulty, it also takes steps to reduce the reward miners are given for securing the network – down from 3 ETH to 2 ETH per block. One of the most exciting of changes is EIP 1014. Also called Skinny CREATE2, the upgrade is expected to pave way for new kinds of layer two scaling solutions, such as state channels.

    A lot of people will benefit from the improvements (even if they don’t realize it) via cheaper contracts, more efficient opcodes, and opening more possibilities for contract interaction.

The Final Word | People Are Getting Married on the Blockchain

The Washoe County digital marriage certificate program uses the Ethereum blockchain to store marriage certificates primarily due to the fact that Ethereum is the largest smart contract enabled blockchain which makes performing functions like this easy and secure. Bitcoin’s blockchain is optimized for secure monetary transactions, while Ethereum is known as a turing complete blockchain that can run decentralized applications. Phil Dhingra of the San Fransisco based Titan Seal claims that people are happier with the service. Rather than waiting up to 10 business days for a marriage certificate, couples can now receive it digitally via email within 24 hours. When certificates are written to the blockchain it is known as “Proof of Marriage” a similar lingo to the technical Proof of Work and Proof of Stakes aspects of blockchain technology.

Crypto love

About Proteum
Proteum is a global blockchain 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. Let's put blockchains to work for your business. |  | Twitter: @proteumio | Telegram