Kohlberg Kravis Roberts (KKR) Co-Founder Henry Kravis has decided to try his luck with cryptocurrencies. He follows in the steps of other finance hotshots such as Alan Howard, Louis Bacon, and Peter Thiel, who have all got involved in crypto. Joining the Ranks of Investor Legends Last year, CCN reported that Howard – co-founder of […]
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As Israel arrests hackers with military training over the Bitfinex hack, CT talks with cybersecurity experts about the infamous cyber attack.
One of the most prominent crypto cybercrimes in recent years took a dramatic turn on June 23, when two Israeli brothers were arrested in connection with the 2016 Bitfinex hack and other crypto-related phishing attacks.
Just shy of 120,000 Bitcoin (BTC) were stolen in the attack back in 2016, an amount initially worth $72 million, though after Bitcoin’s meteoric rise in the summer of 2019, the value of the stolen funds now amount to around $1.4 billion. Speaking to Finance Magnates, an Israeli police spokesperson said that Eli and Assaf Gigi bagged tens of millions of dollars from their activities. The product of a police raid, the arrests also located a cryptocurrency wallet containing a much smaller sum than the pair are alleged to have stolen.
According to the spokesperson, the duo lured in their victims by creating clone versions of major online crypto exchanges and wallet providers and shared links to them through both Telegram groups and other cryptocurrency-related communities. The Gigi brothers also stand accused of the Bitfinex hack, which also involved identity theft and compromising of several users’ accounts.
The arrests mark the second time the Bitfinex hack has been brought back into the open in the past few weeks. On June 7, Cointelegraph reported that $1.5 million of the funds stolen in the hack had been moved from the hackers’ personal wallets to an unknown address. Anneka Dew confirmed that the transfers were not related to any current company operations, The Next Web reports. The shifting of the funds was brought to light by crypto transaction tracker Wale-alert.io, which posted:
One of the most headline-grabbing aspects of the arrest was the announcement that Eli Gigi, the elder of the two brothers, had received specialist training from an elite technological unit of the Israel Defence Forces (IDF). While it is all too easy to cast a sinister shadow over the hack, cybersecurity experts believe that such attacks can be carried out with a far more rudimentary level of education and some self-taught skills. Hartej Sawhney, co-founder of Zokyo Labs, a digital product and cybersecurity agency and co-founder of Las Vegas-based smart contract auditing firm Hosho, told Cointelegraph via email that military training would not be necessary for cybercrime in the current environment:
“You don't need ‘military training’ to conduct cybercrime on today’s centralized exchanges. Most recently we have seen hackers gain access to databases holding users’ access tokens and steal their funds. Even as AT&T is being sued for $240 million dollars by Michael Terpin, we continue to see a very large number of sim jackings via social engineering methods. From sim-swapping, phishing, key-logger attacks, crypto jacking, there's an array of low hanging fruit for hackers currently to go after.”
Igor Kotsiuba, a researcher and cybersecurity expert at Cyberdesk, told Cointelegraph that certain hacks could theoretically be carried out with information obtained in school:
“The most prevalent attacks in the crypto world today are DDoS and phishing. Capabilities for man-in-the-middle or DDoS can be obtained in school, after classes with friends, so elite military school is more than enough for that.”
Sawhney also commented on techniques popular among hackers at the moment, many of which are also about stealing user data:
“‘Clipboard hijackers’ are becoming common on wallets and exchanges, operating in the clipboard and replacing copied wallet data with one of the hackers in the midst of transferring Bitcoin. Hackers are still leveraging Slack bots in which they try to convince users to click a notification and type their private key.”
Related: Grand Theft Crypto: The State of Cryptocurrency-Stealing Malware and Other Nasty Techniques
Although hacks are common in the crypto world, their activities naturally bring on repercussions from law authorities. According to Kotsiuba, although it is an uphill battle, a number of taskforces and transnational organizations exist and are continually improving their ability to crack down on cybercrime around the world:
“Europol and another transnational LE Agencies and unions, and their dedicated cyber tasks forces today have enough tools and instruments to track and do rigorous investigations and keep all the indicators forensic ready. Basically, they can’t track all the movement’s even within special fraud technics and wait for the moment when crypto to meet real assets world. It is usually slow and takes some time, also it involves different jurisdictions. Behind the eastern borders of EU we have less cooperative law enforcement thus more attractive territories for crypto criminals, but they are becoming fully integrated in EU law enforcement landscape (i.e. Ukraine, Georgia).”
Although tracking down cyber criminals is one thing, Sawhney believes that taskforces and companies alike need to get into the hacker’s mindset to prevent cyber attacks from happening altogether: “In order to fight cybercrime and maximize cyberdefense, taskforces and companies need to learn to approach things from a hacker perspective, not an information security perspective. Ethical hacking should be part of any organization's cybersecurity strategy, as there is no better way to test the security level of IT systems.”
Although hackers in this day and age do not actually need specialized military training in order to carry out cybercrimes, Kotsiuba said that professionally trained state actors can and do operate online. For Kotsiuba, these actors have their work cut out for them thanks to the growing trend for cooperation and digital awareness in an increasingly globalized world:
“As it is seen now, in the era of open source investigations and effective private, public partnership, and socially networked world, even professional spy can be sloppy enough to be caught. Crypto assets are made to be converted in a point of time, correctly saying, they are stolen to be converted. Most of the jurisdictions require identification of a trader or customer.”
Despite the growing legal framework to prevent cybercrimes, Sawhney said that the onus is on exchanges and wallet providers themselves to carry out security checks and to continue to decentralize:
“It is imperative that exchanges and wallet providers conduct penetration testing regularly, ideally every-time code changes. Companies need to engage with third-party ethical hackers to conduct red teaming, social engineering, code reviews, data leak monitoring, VAPT, managed bug bounties, and webservice + database assessments. As long as centralized exchanges lack transparency, conduct custody, and refuse to proof of solvency and proof of legitimate trading volumes, the attacks from hackers will only get worse.”
When Bitfinex first announced the hack in August 2016, it was the largest dollar-based exchange for Bitcoin in the world, and the $72 million theft was the second-biggest security compromise in the history of cryptocurrency.
In the days following the hack, Bitfinex offered a handsome reward for either the return of the funds or for information that could lead to them being located. Director of Community and Product Development Zane Tackett announced the exact amount on the Bitcoin subreddit: “5% of recovery and for information leading to recovery (but no bounty if no recovery); if multiple persons lead to recovery, share pro rata.”
Left reeling in the wake of the hack, Bitfinex did not initially know how to deal with the financial loss and the consequent wave of angered customers. After reporting the incident to law enforcement, Reuters reported that the company turned to “top blockchain analytic companies” to track the stolen coins. The hack did not just affect the reputation of Bitfinex alone. With the fatal $387 million hack that killed off MyCoin the previous year, Hong Kong’s Bitcoin market came to be known by its scandals rather than its successes.
The president of the Hong Kong Bitcoin Association, Leonhard Weese, told Reuters that, despite the huge amounts of funds that are often stolen in hacks involving cryptocurrency, having to transfer in so many small pieces often means the payoff for the crime is far smaller: “For an attacker, the cost-benefit strategy is quite easy: How much is in the pot and how likely is it that I’m getting the pot?”
On Aug. 3, 2016, Bitfinex announced a controversial effort for the loss to be “socialized” among its existing customers. Many clients were outraged by the initiative, which would have allegedly resulted in a 36% loss for every account holder. Bitfinex announced that customers would be given “BFX tokens” that could be redeemed on the exchange or be converted into company shares.
At the time, Bitfinex sought to reassure users alarmed by the news of heavy losses being spread across all accounts, stating that numbers quoted in the media were widely overestimated and that the actual figures would be different than the publicly disclosed amount: “The numbers being quoted are erroneous as nothing has been decided as of yet and we are still in the process of settling positions and balances.”
Unsurprisingly, people were not reassured. One of the crypto community’s most vocal members, Cornell University professor and co-founder of IC3 Emin Gun Sirer, tweeted: “Spoke to a lawyer, there is no way Bitfinex's ‘loss socialization’ plan holds up in court. This is going to be...interesting.”
A number of lawyers specializing in securities and financial technology cast aspersions at the time about the legality of Bitfinex’s recovery measures. Ryan Straus, United States-based lawyer at Fenwick & West, said that imposing the company’s losses on unhacked accounts was a breach of Bitfinex’s terms of service. Zach Zweihorn, a securities and trade law specialist at DavisPolk, also told Reuters that the BFX tokens being offered as compensation could also present a problem for the exchange. Zweihorn observed that the tokens, since they were described as redeemable, would put them something between a bond and a security, meaning that Bitfinex would require a U.S. licence that it did not, at the time, possess.
Despite his criticism that the Bitfinex attempt to spread its losses was most probably not legally sound, Sirer suggested a solution that he believed would not break Bitcoin’s irreversibility when dealing with strangers, yet allow someone to take back funds stolen in the event of a hack:
“You can then use your recovery key to undo the hack — you have 24 hours to notice and launch the recovery and get back all the funds. Notice that you cannot fool a merchant with this trick and revert a real transaction. All you can do is take back your own money from someone who is trying to steal it.”
The Bitfinex hack is not all doom and gloom, with the news that U.S. law enforcement tracked down and returned around $104,000, according to a Medium post published on Feb. 25.
The exchange reported that just short of 27.7 Bitcoin were returned. Customers who had taken the option to convert their BFX tokens into company stock also received Recovery Right Tokens (RRT). Bitfinex reported that, having received some of the stolen coins, they had been converted into U.S. dollars and paid to RTT holders.
As per the post, Bitfinex was first informed by the U.S. government that it had accessed the funds believed to be proceeds from the 2016 hack in November 2018.
In a potentially risky move, the 15 member nations of ECOWAS – Economic Community of West African States – have agreed to launch Eco, a “common currency” similar to the method the EU uses. Eco is expected to make its debut in January 2020. In an attempt to create more frictionless trade, West African leaders […]
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Bitcoin is on fire this year but you can’t quite call it a “crypto comeback”… just yet, as The Wall Street Journal points out. Investors are starting to doubt a corresponding return in alternative cryptocurrencies, and for good reason. Altcoins are still well off their 2017 highs. Many alts have, in fact, gone to zero […]
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Despite bitcoin’s recent price surge, the download count of crypto-related mobile applications has seen no increase compared to the first half of last year.
Despite bitcoin’s (BTC) recent price surge, the download count of cryptocurrency-related mobile applications is not increasing, Bloomberg reports on June 28
Data form mobile app analytics firm App Annie shows that, while in the first half of 2018 there were 65.8 million cryptocurrency-related app downloads, in the first six months of this year there were 67 million, an increase of about 1.82%.
This growth is not nearly as sharp as that reported in previous years, considering that the first half of 2017 saw 28.2 million crypto apps downloads from 2016’s 15.3 million, a 45% increase.
Apps related to the industry were individuated by looking for apps including words like bitcoin, cryptocurrency, or blockchain in their description in the finance category of the Apple App Store or Google Play store. Bloomberg also notes that the number of relevant apps is up 35% from January 2018 and points out that searches for bitcoin are down 73% from the peak registered in December 2017.
The report postulates that low crypto app growth is an indicator of low consumer enthusiasm for the asset class, despite the recent rally. Indeed, recent research from institutional crypto lender Genesis Capital — an affiliate of Genesis Global Trading — indicates that institutional participation in cryptocurrency markets is on the rise, and could be a driver of the recent bull market.
As Cointelegraph reported earlier this week, veteran trader and author Peter Brandt predicted in a recent market forecast that bitcoin will continue to grow, but altcoins will not feel the benefits.
Also this week, Galaxy Digital founder and crypto enthusiast Mike Novogratz predicted that Bitcoin’s price will stabilize between $10,000 and $14,000.
A Coinbase crash interrupts Bitcoin’s parabolic run and a Singaporean exchange is the latest to fall victim to a hacking attack.
Coming every Sunday, the Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions, and much more — a week on Cointelegraph in one link.
After surpassing the $12,000 and $13,000 marks in a matter of hours, Bitcoin’s (BTC) parabolic run was plunged into peril when the Coinbase crypto exchange crashed on June 26. Prices began to tumble shortly before the trading platform confirmed there was a problem — and there was a 51-minute gap between its investigation starting and services returning to normal. The correction now suggests that $13,800 is an important barrier to further gains, as BTC has never achieved a monthly close above this level. Despite the setback, it wasn’t all doom and gloom this week, with data from CoinMarketCap suggesting BTC has achieved market dominance above 60% for the first time since April 2017.
Opera launched the iOS version of its mobile web browser Opera Touch on June 26. As well as accommodating Ethereum-based decentralized applications, it supports all ERC-20 tokens, stablecoins and nonfungible tokens. The browser also reportedly features a crypto wallet for storing ETH. The release comes after an Android version of the Opera Touch was released late last year. Charles Hamel, head of crypto at the Norway-based internet company, said: “We believe that all modern browsers should integrate a crypto wallet. This will enable new business models to emerge on the web.”
A survey by crypto exchange CEX.io suggested 27% of Britons would like cryptocurrencies in “real-world applications,” such as credit card payments and international money transfers. Meanwhile, 32% said they want to see crypto technology better integrated with payment apps and mobile storage. Only 13% of respondents owned any crypto at all. CEX.io said the outlook for reaching the rest of the population was “relatively gloomy,” as just 28% of participants said they would be encouraged to buy digital currencies if they understood it more. All of this comes despite the United Kingdom being one of the countries with the highest number of Google searches for “Bitcoin.”
Square made Bitcoin deposits available on its Cash App, enabling users to add BTC from external wallets. Deposits are currently limited to $10,000 every seven days, and it takes several hours for transactions to be confirmed on the blockchain. Initially, the feature was only available for a small number of users.
Another week, another hack — and this time, it was Bitrue’s turn. It is believed a single hacker exploited a vulnerability to access the personal funds of about 90 users, with 9.3 million XRP and 2.5 million ADA lost from the exchange’s hot wallet. In a statement, the company said the incident had been detected quickly, and the exchanges where the ill-gotten crypto was sent to — Huobi, Bittrex and ChangeNOW — were swiftly notified so they could help freeze the transactions. An emergency inspection of Bitrue’s platform has been taking place, and the exchange has assured users that those affected “will have their funds replaced by us as soon as possible.”
At the end of the week, Bitcoin is at $11,630.22, Ether at $306.05 and XRP at $0.41. The total market cap is at $334,922,039,503.
The top three altcoin gainers of the week are Segwit2x, IrishCoin and Invacio. The top three altcoin losers of the week are Electrumdark, Trunk Coin and the Halo Platform.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
“I think having a company like Facebook, with such tremendous reach and distribution, into all different countries around the world – having them be interested in cryptocurrency and launching one is a very very positive thing for our industry. It brings a ton of awareness to people who have never heard of cryptocurrency.”
- Teck Chia, partner at Binance Labs, at Blockchain Week Rome
“Bitcoin is digital gold and a hedge against inflationary economic crises. If investors believe in this thesis, they should slowly accumulate Bitcoin and hold it for years to come. They should not go all-in or trade frequently.”
- Qiao Wang, director of product, Messari
“This transaction: cost $0.015 USD in fees, took 1.1 seconds, and $1.2 BILLION in value transferred. The future is here.”
- Changpeng Zhao, CEO of Binance
“If central banks are gonna be this aggressive, then alternative currencies do start to become a bit more attractive."
- Jim Reid, head of global fundamental credit strategy, Deutsche Bank
“After months of uncertainty and disruption, we have regretfully decided to shut down all digital assets exchange services and operations today. It is, without a doubt, a sad day for all digital assets and blockchain enthusiasts in India.”
- Rahil Raj, co-founder of Koinex, an Indian exchange that closed because of regulatory pressure
“XBTUSD perp swap open interest is now in the 3 comma club. Welcome to the 2019 bull f---ing market YeeHaw!”
- Arthur Hayes, BitMex CEO
“I’m really excited about doing this. I hope it makes me rich.”
- Stephen Moore, ex-advisor to Trump, about joining a crypto bank
“People will increasingly trust decentralized forms of governance.”
- Joseph Lubin, co-founder of Ethereum
Just before the Coinbase crash sent crypto prices downward, eToro analyst Simon Peters had a bold prediction: BTC could return to its all-time high of $20,000 within one to two weeks, while $50,000 to $100,000 could be achievable by the end of 2019. Peters also said that he believes this rally has been different from past surges because it hasn’t been accompanied by a spike in Google searches for “buy bitcoin,” with much of the capital entering the market coming from institutions and investors who had locked up their funds in stablecoins. Unfortunately, BTC’s rise has been at the expense of altcoins, with the analyst warning they are continuing to be “pummeled” as they languish at significant lows.
Stephen Moore, the economist who advised Trump and was at one point in the running to join the United States Federal Reserve, has joined Decentral — a project that aspires to serve as a new type of central bank. He’s set to become the chief economic officer of the platform, which aims to regulate monetary supply and exchange its own token for other cryptocurrencies. Skepticism reigns over how Decentral will be able to persuade critics that the crypto community needs to bring back self-same intermediaries that Bitcoin was designed to disrupt. Nonetheless, Moore said, “I’m really excited about doing this. I hope it makes me rich.”
5,000! Research from CoinATMRadar suggested the total number of Bitcoin ATMs (BTMs) worldwide has now exceeded 5,000 for the first time. They are spread across 90 countries and enable crypto users to buy or sell BTC on demand. About six per day were installed on average in June, and increased competition is expected to drive down the fees charged to BTM users.
The crypto market provider has requested all exchanges to disclose accurate data in a bid to increase transparency — and warned failure to do so would result in them being delisted. Now that the 45-day grace period has passed, Cointelegraph explores whether the fight against fake volumes is putting the crypto industry on the right track.
The founder of the Canadian exchange, Gerald Cotten, reportedly died in India last December at the age of 30. The bombshell came when QuadrigaCX admitted that it couldn’t access the $145 million owed to users because it was kept in cold storage, and only Cotten knew the password. Ever since, theories have been swirling around about what actually happened to the entrepreneur, where the money is and whether the saga is over.
With significant progress being made in quantum computing, concerns are growing among the crypto community. Cointelegraph examines whether the quantum computer could kill blockchain, and the changes that could be triggered in cryptography as a result.
Quantum computers will not kill blockchain, but they might trigger fundamental changes in underlying cryptography.
The major selling point of blockchain and its applications is that cryptographically secured distributed ledgers are virtually “unbreakable” under normal circumstances, given the current state of computational technology. Its validity, however, is heavily dependent on the “state of technology” assumption. Should a paradigmatic shift in computing occur, contemporary blockchain-based systems may become vulnerable to threats not accounted for in their design. But how urgent is the threat of this happening any time soon?
The strides that physicists have been making for the last three decades toward building an operational quantum computer could soon contribute to such a shift. As the milestone called “quantum supremacy,” in which a quantum computer outperforms a traditional computer on a specific task, could be reached any day now, the question of whether prospective quantum-based devices are capable of “killing” blockchain comes into the spotlight.
A quantum computer is any device that uses the principles of quantum mechanics to perform calculations. To store and manipulate information, regular computers use binary units called bits, which can represent one of two possible states: 0 or 1. Quantum machines rely on quantum bits (or qubits), which can be both a 0 and 1 at the same time. This phenomenon, called superposition, allows such devices to perform certain tasks much faster than their bit-based counterparts.
Another foundational term in quantum theory is entanglement. When two particles are entangled, they exist in the same quantum state, and change in the state if one prompts its peer to change accordingly, no matter how far apart the two are in physical space. Pairing qubits this way leads to the exponential growth in the quantum computer’s computational power.
The state of superposition, which is necessary to perform calculations, is difficult to achieve and enormously hard to maintain. Physicists use laser and microwave beams to put qubits in this working state and then employ an array of techniques to preserve it from the slightest temperature fluctuations, noises and electromagnetic waves. Current quantum computers are extremely error-prone due to the fragility of the working condition, which dissipates in a process called decoherence before most operations can be executed.
Quantum computational power is determined by how many qubits a machine can simultaneously leverage. Starting with a humble two qubits achieved in the first experiments in the late 1990s, the most powerful quantum computer today, operated by Google, can use up to 72 qubits.
Acknowledging all the conventional reservations, the idea of blockchains’ immutability and unmatched security is widely accepted: It underlies the public’s trust in digital assets and promotes mass adoption. However, the advent of quantum computing could potentially jeopardize the integrity of public-key cryptography, which is the backbone of blockchain security.
While the range of quantum computers’ potential applications is vast, the one most relevant in the context of blockchain technology and cryptography more generally is the capacity to run specific algorithms much faster than any existing supercomputer. One of the most widely discussed presumed use cases is running the famous Shor’s algorithm for factor decomposition, which could potentially render many contemporary encryption techniques obsolete.
As a group of researchers from the Russian Quantum Center observed in an article for the journal Nature, one potential risk stems from the fact that blockchain security heavily relies on one-way mathematical functions — the ones that are easy to run, yet much more difficult to calculate in reverse. Such functions are used to both generate digital signatures and validate transactions on the ledger.
A criminal equipped with a functional quantum device would be able to perform reverse calculations immensely faster, which would enable them to forge signatures, impersonate other users and gain access to their digital assets. In the context of mining, such a malicious actor could take over the process of updating the ledger, manipulate transaction history and double-spend coins.
The Russian researchers suggested that the architects of encrypted systems should start taking precautions against this threat immediately. One solution could be replacing conventional digital signatures with quantum-resistant cryptography — the kind of security algorithms specifically designed to withstand an attack from a sufficiently powerful quantum computer. Another remedy, the Russian physicists proposed, will only be available with the advent of a quantum internet, which is still several decades away. This prospective wireless communication architecture, based on the connection between remote entangled quantum particles, will unlock a wealth of new blockchain models and designs.
This is somewhat consonant with the mind-bending idea that Del Rajan and Matt Visser from the Victoria University in New Zealand expressed in a recent research paper. They proposed to forgo the use of quantum cryptography and leap straight to making blockchain a quantum-based system itself. Their model describes a blockchain based on qubits entangled not just in space, but also in time. The attempt to retrospectively alter the record of transactions, encoded by the history of a single particle’s states over time, would be impossible without destroying the particle altogether. The realization of this model, however, would be impossible until a quantum internet is up and running.
While the futuristic solutions that academics propose may be decades away, a lot of hands-on research and development in quantum computing and quantum cryptography is happening right now. The experts working with quantum computing applications surveyed by Cointelegraph differed in their views on how immediate the quantum threat is. Yaniv Altshuler, an MIT researcher and CEO and co-founder of predictive analytics platform Endor Protocol, said:
“Quantum computers are becoming incredibly powerful, and they are advancing faster than most people expected. However, their capabilities will not break the blockchain. Each year, when new hardware is released, it rekindles concerns about the blockchain’s integrity, but there is no evidence that quantum computing can compromise the blockchain.”
Stewart Allen, the chief operating officer at quantum computing firm IonQ, believes that, by the time a quantum computer grows to become sufficiently powerful to imperil the integrity of today’s blockchains, security systems will have moved to algorithms capable of containing them:
“There is no real threat of quantum computers breaking blockchain cryptography in the short-term. If and when this does happen, cryptography will have moved to more quantum-proof algorithms. We're at least a decade from quantum computers being able to break blockchain cryptography.”
Others, however, did not quite share this optimistic view.
ILCoin's executive director, Norbert Goffa, expressed his concern over the potential emergence of quantum-powered mining pools:
“If somebody has a quantum based mining pool, it’s easy to dominate others. [...]Today we do not have any quantum-based mining machines. On the other hand, a lot of companies have been working on quantum-based computing technology. We believe that in the next five years it could be real. Maybe less, who knows?”
Rakesh Ramachandran, CEO and co-founder of QBRICS Inc, emphasized that quantum computing is poised to have an effect in virtually every sphere in which cryptography is used. In the case of blockchain technology, he said, we might expect a systemic shift:
“Quantum computers will be redefining cryptography of not only blockchain but wherever there is an application of cryptography including simple things like an online banking website. There is a considerable research and work being done to mitigate the effects and move to quantum-resistant cryptography or post-quantum cryptography.
“However, the challenge of blockchain is not just about the threat that quantum computing represents but scope of how blockchain will migrate to the new version of cryptography.”
All experts provided surprisingly similar estimates of how much time we have before quantum computers can pose a threat to blockchains’ integrity, varying within a range from five to 10 years. They were also fairly consistent in their recipes for dealing with potential quantum-powered attacks: Most agree that a gradual shift to quantum-resistant cryptography will be necessary, as well as building infrastructure that will support it. Blockchains will have to evolve, but it is unlikely that quantum computing technology will fundamentally threaten their existence.
As the U.S. and China resume trade talks following the highly anticipated G20 summit, the Dow Jones and the rest of the U.S. equities market have shown strong recovery. In the past 30 days, the Dow Jones has rebounded from 24,819 points to 26,599 points, recording its best June in 81 years. The U.S. has […]
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Top-10 exciting industries undergoing dramatic change due to the introduction of blockchain technology.
After struggling to receive recognition of legitimacy within the mainstream zeitgeist during its sophomoric years, distributed ledger technology (DLT) now comprises the driving force behind a new wave of technological creative destruction. Today, we are going to take a look at some of the industries and processes that are most dramatically undergoing a transformation in response to the advent of blockchain technology.
The opaque nature of global supply chains poses a significant challenge to efforts to ensure that the commodities, labor and inputs required to produce goods are from a safe and ethical origin. In order to tackle these issues, an increasing number of companies are exploring blockchain-based solutions.
On June 25, Walmart China announced plans for the movement of food products throughout its supply chain using the “Walmart China Blockchain Traceability Platform,” which was built on VeChain’s Thor blockchain.
Announced at the Traceability System Construction Seminar during the 2019 China Products Safety Publicity Week in Beijing, Walmart China indicated that “23 product lines” have been test-launched on the platform, with a further “100 product lines” spanning 10 different product categories expected to be incorporated onto the platform before the end of the year. Walmart China anticipates that 50% of its total sales of packaged meat will comprise products tracked using its traceability platform, in addition to 40% of its total sales of packaged vegetables and 12.5% of its total seafood sales by 2021.
The platform will also allow Walmart China customers to acquire detailed information pertaining to the production for a specific item by scanning the barcode of the product with their smartphone. Among the information that will be made available to consumers are facts about a product’s source, geographic location, logistics process and Walmart China’s product inspection report.
During the announcement, Walmart China representatives spoke of the possibility for distributed ledger technology to ensure the quality and safety of edible agricultural produce and to bolster consumer confidence through enhancing supply chain transparency, in addition to facilitating significant efficiency savings in production.
Across the pond, Walmart recently announced a collaborative endeavor alongside the United States Food and Drug Administration (FDA), IBM, Merck and KPMG to develop a proof-of-concept blockchain for the purpose of tracking prescription drugs.
On June 27, U.S.-based snack food company Brimhall Foods announced a partnership with Surge Holdings to deliver Brim’s products via a distributed ledger-based ordering system, with the company claiming that SurgePay’s blockchain network will allow it to access tens of thousands of new retailers.
In 2003, a United Nations General Assembly Resolution established the Kimberley Process Certification Scheme (KPCS), which sought to increase transparency in the diamond industry and inhibit the circulation of “blood diamonds” — i.e., diamonds mined in war zones and sold to finance insurgency or the activities of warlords.
Despite the KPCS seeing adoption among more than 80 countries since its establishment, the scheme has received significant criticism for failing to achieve its aims. In December 2011, nongovernmental organization (NGO) Global Witness abandoned the KPCS, following the scheme’s endorsement of unlimited diamond exports in Zimbabwe.
In May 2015, Australian entrepreneur Leanne Kemp founded Everledger — a digital registry for diamonds powered by the IBM Blockchain Platform. The mission of the registry is for Everledger to assess the diamonds using grading reports provided by the Gemological Institute of America.
In 2018, De Beers Group, an international corporation that mines and trades diamonds, announced that it would develop a blockchain-based traceability platform. Named Tracr, the platform would seek to track the diamond supply chain from the mine to the retail store. Later that year, Chow Tai Fook Jewellery Group and Alrosa, a partially Russian state-owned diamond mining company, announced that they had joined the Tracr pilot.
In January 2019, Russian state-backed media outlet Tass reported that Russia’s Ministry of Education and Science had introduced a DLT-enable platform for track and guarantee the authenticity of natural diamond products across its supply chain. The platform was developed by Russian startup Bitcarat, with each diamond given a unique code that is recorded on a distributed ledger. The ledger also records the history of previous transfers of ownership pertaining to tracked diamonds.
Many analysts are predicting that security token offerings (STOs) are poised to drive a revolution in fundraising processes, owing both to the efficiency savings afforded by DLT and the advantages that the adoption of distributed ledger-based systems have in place of the complex web of centralized ledgers that currently underpin the settlement of securities.
In the first quarter of 2019, market research firm Inwara estimated that the number of STOs had increased by 130% when compared with Q4 2018. STOs are expected to further break down barriers preventing small businesses from accessing venture capital, in addition to allowing issuers to access a global liquidity pool. However, despite the excitement surrounding STOs, the foundational infrastructure of the security token industry is still in its developmental stage.
The market for STOs is now emerging. During August 2018, an online retailer and early cryptocurrency adopter, Overstock.com, raised $134 million in an initial coin offering (ICO) for its security token exchange called tZero. The exchange was opened for trading during January of this year, with tZero’s proprietary token comprising the sole crypto asset available for trade at launch. TZero launched just weeks after SharesPost, a regulated alternative trading system and registered broker-dealer that facilitated the first-ever secondary trade of a security token in the form of Blockchain Capital’s BCAP tokens.
In recent years, the art world has increasingly warmed to blockchain technology, embracing the innovative crowdfunding capabilities afforded by STOs. In July 2018, DLT platform Maecenas partnered with London gallery Dadiani Fine Art to sell virtual tokens representing fractional ownership of a piece of art for the very first time. The token sale saw 31.5% of Andy Warhol’s 1980 work “14 Small Chairs” auctioned in exchange for BTC and ETH — valued at approximately $5.6 million.
Several months later, Maecenas announced that it had partnered with John McAfee and crypto asset exchange Ethershift.io to conduct what it described as “the first ‘perpetual’ digitalization and tokenization” of a Picasso artwork. The auctioning process saw the digital artwork represented as a single ERC-721 token, with a fixed number of ERC-20 tokens distributed to designate ownership of the physical asset. Maecenas’ founder and CEO, Marcelo GarcÃa Casil, stated: “As an analogy, you could think of the ERC-721 as the certificate of incorporation of a company, and the ERC-20 tokens as the company shares.”
In November 2018, Christie’s New York became the first auction house to record sales using DLT, with its $318 million sale of a Barney A. Ebsworth collection being recorded using Artory’s blockchain-based registry. Artery’s registry tracks the histories and archival material pertaining to a piece of art, while also facilitating anonymous transactions between buyer and seller.
The following month, Liechtenstein-based TheArtToken announced that it had raised over $11 million through its TAT token sale. The TAT tokens represent fractional ownership in a curated collection of post-war and contemporary art.
During the San Francisco Blockchain Week 2019, it was announced that a security token offering had raised $18 million in venture capital to purchase a fragmented equity stake in a resort in the U.S. city of Aspen.
The offering, dubbed Aspen Coin, saw digital tokens issued via the crowdfunding website Indiegogo, allowing accredited investors to purchase Aspen Coin tokens, which are compliant with U.S. Security and Exchange Commission (SEC) regulations. Each Aspen Coin was listed at the price of $1, with minimum investments set at $10,000.
When announcing the success of Aspen Coin, Slava Rubin, the founder of Indiegogo and president of asset management company Elevated Returns, who assisted in the execution of the offering, spoke of the potential for security tokens to expand the number of investors exposed to real estate:
“You’re actually talking about a real asset that people are paying hundreds of dollars or thousands of dollars every night to stay in, and this already makes tons of revenue. It (real estate tokenization) fragments the asset. If you wanted to buy the St. Regis Aspen before fragmentation, you would have had to write a check for $250 to $300 Million. That limits the number of people that can actually have exposure to the asset.”
As of this writing, the STO monitoring service Stoscope estimates that there are currently 13 active real estate security offerings providing exposure to a range of investment products, including real estate investment trusts and fragmented ownership in student accommodation.
The immutability and transparency of distributed ledgers provide an attractive solution to the management of land registries for both developed and developing nations. Many developing nations suffer from crippling issues pertaining to the management of land registries, particularly nations struggling with corruption, or those that have experienced regime changes in recent history. As a consequence, there are often conflicting claims of ownership to land, with some claimants possessing crude documentational evidence such as hand-written notes.
In May 2015, Texas-based companies Factom and Epigraph announced that they would work alongside the government of Honduras in what comprised the earliest attempts to build a blockchain-based land title registry. At the time, the initiative was described as only the second instance in which a national government had adopted blockchain technology. However, the project soon stalled, with Factom’s founder and chief architect, Paul Snow, attributing the failure of the venture “political issues.”
One year later, Bitfury began working alongside the National Agency of Public Registry in the Republic of Georgia in an initiative to use the Bitcoin blockchain to validate property-related government transactions. During May of this year, Marc Taverner, global ambassador and head of market development at Bitfury, estimated that more than 2 million land registry transactions have been recorded on the Bitcoin blockchain. Taverner said:
“If you’re a citizen now, you can have comfort that the government is operating the way in which they register land on the blockchain, which makes it entirely transparent and trustworthy. And a citizen now can trust the system rather than having to trust an individual or a particular politician.”
Also, there has been a recent proliferation in state institutions seeking to use blockchain to create digital land registries, with Propy Inc. launching a pilot project to record real estate conveyance documents in the Vermont city of the South Burlington and the Netherland’s Land Registry indicating that a blockchain-based solution will be incorporated into the nation’s registry by the end of 2021. In another instance, Australia’s New South Wales Land Registry Services engaged with blockchain technology provider ChromaWay to develop a DLT-based proof of concept for electronic property conveyancing.
In 2014, Denmark’s Liberal Alliance became the first major political party to utilize blockchain technology to conduct an election. A blockchain was used for internal voting at the party’s annual meeting in Hvidovre, Copenhagen. At the time, a party committee member emphasized the benefits of employing DLT to execute the vote, stating:
“The blockchain removes the need for trust, because the technology can run autonomous without interference from humans, and it is at the same time open source and transparent, so that everybody can look under the hood and see what's going on.”
Last year, a press release circulated by Agora, a Swiss startup comprising a distributed ledger-based voting platform, inspired reports claiming that Sierra Leone had become the first country to use a blockchain to conduct a national election on March 7, 2018. However, on March 18, 2018, the National Electoral Commission (NEC) of Sierra Leone issued a tweet asserting that the NEC had not used blockchain technology “in any part of the electoral process.”
In April 2018, the U.S. state of West Virginia, saw 144 military personnel stationed across 24 different countries participate in primary elections using blockchain-based voting platform Voatz, becoming the first U.S. jurisdiction to employ DLT to facilitate voting. The platform, which was developed by Symantec, was conceived in response to only 13% of overseas U.S. service members signing up to receive ballots during the 2016 federal election — of which only 9% were eligible.
One year later, it was announced that Denver would become the second U.S. state to utilize blockchain in a municipal election, again using Voatz to target overseas service members in addition to voters located internationally — 4,000 individuals in total.
In February 2019, it was revealed that the Australian state of South Australia engaged DLT firm Horizon State to provide the technology and support for a blockchain-based election. Last year, Horizon State was contracted by the Democratic Party of India to consult its base regarding policy positions, in addition to lending its platform for a leadership election conducted by New Zealand’s Opportunity Party.
The DLT revolution is increasingly penetrating governance processes, with the potential efficiency savings and monitoring capabilities afforded by blockchain enticing adoption among many government institutions.
Brazil’s National Bank for Economic and Social Development (BNDES) has been in the development of a virtual currency for the purpose of augmenting the transparency of public spending since late 2018. Named BNDESToken, the token comprises an ether-based stablecoin that is pegged to the Brazilian real — with BNDES holding a monopoly over both the issuance and redemption of the tokens.
Related: As Brazil’s Economy Risks Recession, Regulators and Banks Implement Blockchain
On June 3, Brazilian media outlet State of Sao Paulo reported that Elo Company, a film production company known for its work on Alê Abreu’s Oscar-nominated “Boy and the World,” had participated in a proof of concept for the BNDESToken initiative. BNDES has hired Elo Company to produce a documentary, with BNDESToken expected to be issued to finance many aspects of the film’s development. The proof of concept comprised the simulation of payment of four screenwriters using BNDESToken.
The BNDESToken initiative has been praised by several actors involved in the pilot for increasing the transparency surrounding the distribution of public funding, with the president of Elo Company, Sabrina Nudeliman, stating that the platform provides “real-time accountability.” BNDES systems analyst Fabiano Mattos has argued that the BNDESToken both helps the Brazilian development bank measure the efficacy of its loan issuance and facilitates public monitoring of the society-wide impact and reach of its spending. Mattos asserted:
“It is publicly and irrefutably possible for a citizen, and society as a whole, to monitor the disbursements of public money made by the BNDES — and also to see the impact of this action on the various actors of the Brazilian economy. BNDESToken would vastly improve the way we can measure effectiveness of BNDES funding.”
NGOs are increasingly favoring financial aid over material provision, with Australian media outlet Micky reporting that approximately 70% of Syrian refugees have been forced to sell in-kind donations for cash in order to conduct the purchases required by their personal circumstances. However, the issuance of financial aid is marred by a number of challenges, including long waiting times for distribution and verification processes to be established, and poor monitoring and reporting capabilities that obfuscate the ability for donors to verify the efficacy of their donations.
In May 2019, Oxfam International conducted a month-long trial of a disaster relief program in the island nation of Vanuatu that sought to harness DLT to improve the efficiency and outcomes in distributing financial aid. Named UnBlocked Cash, the pilot saw 200 citizens of the natural disaster-prone nation issued tap-and-pay cards loaded with approximately 4,000 Vanuatu vatu (roughly $50) worth of “e-tokens” backed by MakerDAO’s DAI stablecoin. Thirty-four vendors participated in the project, including local stores and schools.
Related: From Clean Water Supply to Rebuilding Notre Dame: Crypto and Blockchain in Charity
The pilot was deemed a success by Oxfam, with the trial’s Vanuatuan participants describing the program as the preferred mode for the delivery of financial aid in future — attributing such to greater ease of use when compared with previous cash aid programs. The enrollment process for UnBlocked Cash took less than six minutes, whereas previous Oxfam cash-assistance programs in Vanuatu have involved approximately hour-long wait times for enrollment. More than 2,000 transactions were recorded during the program.
Following the pilot, Oxfam Australia’s humanitarian lead, Joshua Hallwright, told Cointelegraph that it is “highly likely that Oxfam will use stablecoins or other distributed ledger technologies to provide cash aid in disaster responses in the future, either in Vanuatu or elsewhere.”
While facilitating frictionless cross-border remittances at an individual level has long-comprised a fundamental mission of cryptocurrency, a number of governments and private companies have sought to create centralized blockchain transborder settlements.
In May of this year, the Bank of Canada (BoC) and the Monetary Authority of Singapore (MAS) concluded the first trial of cross-border payments using central bank digital currencies on a blockchain platform.
The trial comprised the linking of BoC’s and MAS’ respective distributed ledger platforms, Jasper and Ubin, using hashed time-locked contracts — facilitating trustless payment-versus-payment (PVP) settlement. Accenture and JPMorgan Chase supported the project by assisting in the development of their respective blockchain platforms, upon which Jasper and Ubin were built. The central banks described the pilot as showcasing “great potential to increase efficiencies and reduce risks for cross-border blockchain payments,” with a joint report published by the BoC and MAS stating:
“A fragmented world, with differing standards, processes, norms, and regulations is the key challenge in cross-border payments today. DLT could offer an easier and faster path towards adoption than a centralized approach because it can leave the different jurisdictions involved in control of their portion of the network while allowing for tight integration with the rest of the network.”
In June 2019, Fnality International announced that its Utility Settlement Coin (USC) project raised $63.2 million in its Series A financing round. The USC project comprises an endeavor on the part of 14 financial firms to develop a digital token for cross-border settlement. Fnality Group’s membership includes Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, MUFG Bank, Nasdaq, Sumitomo Mitsui Banking Corporation, State Street Corporation and UBS.
Related: Bank to Basics: USC Project Seeks to Disrupt Traditional Wholesale Banking
With blockchain technology offering unprecedented opportunities to augment the efficiency and transparency of complex and global systems, DLT is increasingly disrupting how many processes underpinning the organization of daily life are conducted. From how cross-border trade is conducted to how food finds its way to one’s plate, blockchain is redefining the systems that are fundamental to the operations of contemporary society. However, the examples above only cover a small number of the most high-profile applications for blockchain technology, with DLT currently driving widespread creative destruction across nearly all sectors of economic activity.
A Twitter account dedicated to reporting significant bitcoin transactions reported that 25 bitcoin transactions worth $6 billion have been included in just one block.
Several high-value bitcoin (BTC) transactions were included in a single block on June 30.
Bitcoin Block Bot, a Twitter account dedicated to reporting significant bitcoin (BTC) transactions reported that 25 bitcoin transactions worth $6 billion were included in block 583,139 on June 30.
Cryptocurrency news outlet AmbCrypto reported that all the transactions formed a bigger, linear transaction. Wallet 1 initiating the transaction sent 24,392.93062596 BTC to wallet 2, and 300 BTC to wallet 3. This last address received a total of 5,800 BTC, and was a receiving wallet in all 25 transactions.
Wallet 2 also transferred 300 BTC to wallet 3 and 24,092.93013651 to a fourth wallet in a chain that continued for 23 transactions. Curiously, one transaction, coming from vanity address 1BUYBTC1oYQtAjktSRZUtjkeBJ15ABc5bb, contained the following message in its output scripts:
“We'll buy your Bitcoins. sell.buy.bitcoin@protonmail.com”
As of press time, wallet 3 has performed 440,505 transactions, received a total of 5,959,532 BTC, and currently holds nearly 6,445 BTC ($72.5 million).
As Cointelegraph reported earlier this week, Galaxy Digital founder and crypto enthusiast Mike Novogratz predicted that Bitcoin’s price will stabilize between $10,000 and $14,000.
The same day news broke that Fundstrat Global Advisers Co-Founder Thomas Lee suggested that bitcoin’s volatility makes a long-term approach towards it more appropriate for most traders.
