Off the Blocks | Vol 67, May 14, 2019
|May 14||Public post|| 7|
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. Get your friends to Subscribe Here.
A Look At Blockchain Adoption
Blockchain is enabling a fundamental shift in how technology is deployed across a wide range of industries. It is increasingly clear that enterprises are moving from exploring blockchain and “blockchain tourism” towards practical business applications. Most of the work has gone into building an under the hood infrastructure that can enable traditional applications to transition and compete in this space. Arguably, financial institutions, traditional laggards stung by the rise of new generation fintech apps, were amongst the first to recognize the importance of blockchain.
Back in 2016, JP Morgan had already started building Quorum, a purpose built blockchain for the financial industry. It is no accident therefore that this week Microsoft and JP Morgan announced a strategic partnership to drive enterprise application of the platform. Forward thinking companies have already begun to build a blockchain based payments into their strategic roadmaps. The Brave and Opera browsers are great examples of how companies are onboarding a new generation of users, integrating crypto payments and wallets that allow access to products and services built on a blockchain first principle. Indeed, a recent Deloitte survey found that executives across the board are now focused on the question, “How can we make blockchain technology work for us?”
The real barriers to adoption seem to be a lack of in-house skillset in understanding the scope of the technology and implementation without completely disrupting the existing legacy framework. Executives are seemingly unable to grasp the business impact of processes being modified and replaced by blockchain. How do these variations percolate through functional departments, company wide operations and finally how the industry is being reshaped and reimagined. Again, the financial sector provides some cues: companies like Flexa, a payments processing startup, are rewriting the rules and shifting the competitive landscape by allowing major retailers to accept crypto payments (see below). These emerging companies are likely to fuel the innovation cycle for many years to come while coexisting with the larger enterprises.
Companies like Ernst & Young and Microsoft are both fundamentally large conservative organizations. So the fact that they’re both embracing this amorphous concept of decentralization is quite important as a tipping point.
- Yorke Rhodes, Principal Program Manager for Microsoft Blockchain
This is in line with the the Deloitte survey which found that the top value drivers for blockchain by a wide margin were new business models and a lower risk
The new business models and value chains being created vary widely along the industry and function where the technology is applied. Hence, it is imperative for executives to stay on top of the rapidly evolving landscape. Executives need to quickly triangulate between the merits of the technology, their own business models and the regulatory landscape that they may encounter as they race towards mass deployment.
Now for some other significant news form the world this week:
Retail | You Can Now ‘Spedn’ Bitcoin at GameStop, Barnes & Noble and More: the payment processing startup Flexa announced the release of its new custodial crypto wallet SPEDN, which allows users to spend bitcoin, ethereum, bitcoin cash or GUSD at a variety of brick-and-mortar retailers. Although the merchants receive fiat in the end, the partnership enables new possibilities for people looking to spend crypto as easily as they might use Apple Pay. Flexa co-founder Trevor Filter told CoinDesk the wallet app works at Nordstrom, Barnes & Noble, Express, Lowe’s, GameStop, Office Depot, Regal Cinemas and Jamba Juice, just to name a few. [… Read More on Coindesk]
The Flexa network is going to be open source so if you’re a merchant anywhere you can integrate to use their network, even without necessarily interacting with the Flexa team directly. This is going to be the first step toward the future of how we transact value.
- Sarah Olsen, head of business development at Gemini
Malta | Registry of Companies Set to Run on Blockchain-Based System Malta’s Registry of Companies is going to be run on a blockchain-powered system. The Registry of Companies is a public registry holding official information and documentation pertaining to new and existing companies. The agency demerged from the Malta Financial Services Authority’s (MFSA) and established itself as a separate entity at the end of last year. According to the Malta Independent, the new agency will be run on a blockchain-based system. The establishment of a standalone agency aims to strengthen the internal management structure of the Registry. [… Read More on CoinTelegraph]
The new system will make possible the provision of new services which with the present system are not being provided bringing the agency the first in the world to be run on a blockchain based system
- Silvio Schembri, Parliamentary Secretary for Financial Services, Digital Economy and Innovation
Security | Binance Publishes Security Incident Update Binance suffered a major and premeditated hack on May 7, which reportedly resulted in the theft of around 7,070 bitcoin (BTC) — worth over $40 million at the time — from the exchange’s hot wallets in a transaction that went undetected by the firm’s security systems. The attack was reported to have been conducted by tactics that included phishing and viruses to obtain a large number of 2FA codes and API keys. Binance had considered — but rejected — the idea of responding to the hack with a re-org: i.e. taking steps to incentivize miners to form a consensus to wield 51% of the network’s hashing power to reorganize the blockchain’s transactions after the loss. Heeding the intense critique of such a move from members of the community and industry experts, the CEO and exchange decided against the attempt, citing the likely reputational damage to bitcoin and threat to its immutability and decentralization principles. [… Read More on CoinTelegraph]
Phones | HTC's new, cheaper blockchain phone will run a full Bitcoin node: HTC is doubling down on its blockchain phone idea. The company has announced a new blockchain phone called the Exodus 1s. Compared to its predecessor, the $699 Exodus 1, the Exodus 1s is a cheaper phone, but it also brings an important feature that was promised from the get-go: full Bitcoin node capability. Launched on Saturday by HTC's Decentralized Chief Officer Phil Chen (I just love that title) in New York, the HTC Exodus 1s will cost around $250 to $300 when it launches in the third quarter of 2019.
Full nodes are the most important ingredient in the resilience of the Bitcoin network and we have lowered the barrier to entry for any person to run a node.
- Phil Chen, HTC's Decentralized Chief Officer
Image courtesy: Mashable https://mashable.com/article/htc-exodus-1s-blockchain-phone/
Regulations | SEC Crypto Czar: Platforms Listing IEOs May Face Regulatory Trouble: The United States Securities and Exchange Commission’s (SEC) Advisor for Digital Assets and Innovation Valerie Szczepanik said that platforms seeking to list initial exchange offering (IEO) tokens for a fee could find themselves in regulatory trouble. Szczepanik delivered her comments at the Consensus 2019 conference. Speaking on IEO, Szczepanik — also known as the commission’s “crypto czar” — argued that platforms seeking to list IEO tokens for a fee and attract buyers for an issuer are likely engaging in broker-dealer activity. Szczepanik further mentioned the case of TokenLot last September, — a cryptocurrency broker-dealer lead by Lenny Kugel and Eli L. Lewitt that marketed itself an “ICO [initial coin offering] superstore” — and said that “it was instructive in this regard. [… Read More on CoinTelegraph]
If they are not registered they will find themselves in trouble in the U.S., if they have a U.S. issuer or U.S. buyers, if they are operating on the U.S. market.
United States blockchain and crypto investor Michael Terpin has won $75.8 million in a civil case against 21-year-old Nicholas Truglia, who reportedly defrauded him of crypto assets. Terpin filed the complaint against Truglia in particular in late December, after first filing a lawsuit against AT&T last August. Terpin accused the firm of negligence that allegedly allowed the suspect to gain control over Terpin’s phone number and steal almost $24 million worth of crypto. Truglia and other participants allegedly took control over Terpin’s tokens by transferring his phone number under their control, resetting passwords and accessing his online accounts. Truglia was reportedly arrested in November for stealing $1 million in crypto also via SIM swapping. [… Read More on CoinTelegraph]
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