Spain’s major energy company, Iberdrola, has started using blockchain to track renewable energy, Spanish independent news agency Europa Press reports on Monday, Jan. 14.

The first trial was conducted in cooperation with Kutxabank, a local bank based in the Basque Autonomous Community that owns a substantial part of Iberdrola’s equity, and its subsidiary Cajasur.

During the pilot, Iberdrola monitored the renewable energy delivered from two wind farms and one power station to banks’ offices located in Basque Country and the southern city of Cordoba.

The company used Energy Web Foundation — an open source blockchain platform designed to fit the regulatory, operational and market needs of the energy sector—  in their pilot. They found that blockchain enabled the company to establish a hierarchy of the producers and to automate the process of energy distribution.

According to Europa Press, the test was a success, and Iberdrola believes that blockchain will contribute to the process of issuing guarantee of origin — a certificate that informs a customer about the source of the energy consumed. Moreover, decentralized solutions can help the industry to increase transparency and cut operational costs by eliminating middlemen, the article notes.

In December, another Spanish renewable energy operator that reportedly produces emission-free energy for over 6 million homes, ACCIONA Energia, announced it will deploy blockchain in order to trace electricity generation.

Blockchain is actively used in energy sector worldwide. For instance, German tech giant Siemens has also partnered with Energy Web Foundation to promote the use of decentralized technologies in the sector. As well, the Department of Energy in the United States has recently granted $4.8 million for university research into technologies including blockchain.

*This post is credited to Cointelegraph

At the start of 2018, the International Data Corporation published a report forecasting $2.1 billion in global spending on blockchain solutions for the near future. In July, the research firm followed up with another spending guide, which estimated that blockchain spending would exceed $11.7 billion by 2022.

That forecast is beginning to bear out: Today, blockchain technology continues to appeal to the global corporate institutions looking to fundamentally change the ways in which they handle transactions and manage data.

That appeal makes sense, considering blockchain’s time-stamped, distributed and irreversible benefits. Overall, the technology boasts transparency, reliable tracking, reduced costs and the ability to eliminate intermediaries. It is, therefore, no surprise that financial giants like Bank of America are looking to blockchain to create more efficient financial transactions for consumers and businesses alike. More examples? The global giants Walmart and United Bank of Switzerland are working with IBM to develop blockchain-based finance platforms.

Still, there is a caveat to these positive developments: With cryptocurrency — blockchain’s most popular financial application — continuing to witness sharp highs and lows — confidence around the technology isn’t where it was a year ago. On one side, we have blockchain enthusiasts who swear by the technology; on the other are those raising serious concerns about the various cryptocurrencies, such as regulatory uncertainty and overall trust.

According to a study conducted by PWC last summer, 45 percent of respondents cited “trust” as the biggest barrier to adoption of the technology.

That brings us to the present. And, today, the large number of hacks and thefts, coupled with lax regulatory policies, have not only crippled the crypto economy, but also led people to question the immutability and security of blockchain. So, the obvious conclusion is that while the blockchain is secure in and of itself, it can very much be compromised at the point of access.

What constitutes those security vulnerabilities? Here’s what you need to know about permissioned blockchains, crypto wallets and crypto exchanges as well as how these security gaps can be hardened for greater security.

What makes cryptocurrencies and crypto exchanges vulnerable.

A whopping $9 million is stolen from crypto wallets every day. From DAO to GDAX and Mt. Exchange to Zaif, even the best of exchanges can’t protect themselves from being hacked. As of June last year, $1.1 billion had already been stolen in cryptocurrencies in 2018.

Why do crypto wallets and crypto exchanges continue to fall victim to crypto hacks? The answer is that hackers are adept at manipulating the vulnerabilities that lie within our devices, and within us, as the humans using them. Hackers are increasingly using malware to attack the devices that we use to interact with crypto wallets and exchanges.

Because most people continue to rely on a 30-year-old anti-virus technology to combat threats to their devices, security is falling short. Every four seconds, hackers release a new string of malware, and by the time an antidote is created, another malware has been generated to take its place.

What we need instead is a proactive solution that protects devices inside out with features such as keystroke encryption, anti-clickjacking capability, anti-screen capture and strong password protection.

Only then can we stay a step ahead of the hackers who are continuously coming up with newer, more sophisticated ways to attack wallets and exchanges by gaining access to our devices.

What makes private (permissioned) blockchains vulnerable.

Contrary to common perception, there are inherent vulnerabilities in the private blockchain. A blockchain essentially works as a shared record of information that multiple parties can reference, observe and make additions to. Unlike public blockchains, where anyone can participate in the network, conduct transactions and maintain the shared ledger, permissioned blockchains can be accessed only by those with express authority to the network.

This means that multiple parties can reference, track and alter transactions within a private blockchain, as long as they are authorized to enter it. Each transaction within this shared record is digitally signed, to ensure its authenticity and integrity.

Enterprises looking to deploy permissioned blockchains work with the assumption that only authorized users can access those transactions and that only a legitimate transaction can be permanently added to the record, making the transactions untouchable.

Unfortunately, that assumption is wrong. What these enterprises don’t consider is that malware could be secretly attached to a legitimate transaction made by an authorized user. This move could then become permanent, just like all the other data stored on the now-infected blockchain.

To prevent permissioned blockchains from being compromised, we need to employ a combination of new and existing technologies. For example, tried and tested transaction verification assurance, such as out-of-band authentication, could ensure that only verified transactions would be permanently added to the permissioned blockchain.

In addition, content agents that scan everything entering blockchain could ensure that malware not make its way into the blockchain. Furthermore, each blockchain could benefit from specific rules and policies in place dictating what blockchain users with express authority to access the network could or could not do.

Such goals could be accomplished via a policy engine capable of encoding rules and corporate policies into the blockchain.

Leveraging blockchain’s promise and potential

While blockchain has inherent security issues, industry players with the foresight and capability to leverage the power of blockchain technology should in no way feel discouraged.

In fact, blockchain’s numerous use cases can be and are already shaping up to be a hard reality. However, innovators and entrepreneurs looking to adopt the technology should go in with a thorough understanding of the security issues involved and embark on their blockchain journey by first ensuring that proactive measures are in place to combat the risks. Here are a few pointers to help prepare those looking to implement the technology, especially in payments:

• Blockchain and cryptocurrency are here to stay. While still in the early stages, these technologies are quickly becoming part of the fundamental fabric that businesses will use to gain a competitive edge. So, as an entrepreneur, you should become a zealous student and learn all you can about this expected change.

 Develop a strong cybersecurity posture and practice it all the time, especially when dealing with cryptocurrencies. Crypto-hackers are relentless at developing new schemes to steal crypto. So, remember that a good carpenter will always “measure twice and cut once.” Apply that same preventive practice to your own daily computing habits.

  Embrace the future of blockchain and crypto. Get involved, talk to others about these changes; go to local meetings; and become a proactive part of this new evolution.

*This post is credited to Enterpreneur

2018 was a wild ride. There were negatives like jaw-dropping swings in the price of Bitcoin, and with tokens of thousands of baseless ICO’s getting washed out of the system. And there were positives of unprecedented FinTech innovation, the arrival of institutional players, the SEC (and FinCEN) beginning to provide clarity and taking select enforcement actions, and new use cases for blockchain technology.

And in 2019? A few of my thoughts and predictions on the larger trends we’ll see include…

The tokenization of…everything.

1. STO’s (Securities Token Offerings) are currently the hot item that everyone is talking about. And yes, businesses will raise money and issue tokens instead of stock/bond certificates, and we’ll see new types of exchanges rise up to trade these securities. This trend will accelerate, especially given the easier path to liquidity for investors (see #5 below).

But this is just the tip of the iceberg.

2. Currency will be (and is already being) tokenized. Numerous stablecoins are issued against USD held in trust. This will also happen for EUR, GBP, YEN, SGD and other currencies. Although the current major use-case for stablecoins is as a general store of digital value, that will start to shift as ecommerce merchants begin to move away from expensive credit cards to adopt stablecoins as a low (or even “no”) fee payment method.

3. Lending will be tokenized. This is, I think, perhaps the largest and most disruptive use of blockchain technology. It’s also the one that our current US regulatory regime is least equipped to foster, nurture and oversee. The current process for making loans and then packaging, securitizing and trading them is horribly kludgy and antiquated. This is also true for distributions of interest, principal, rents, revenue share, dividends and other remittances to lenders and investors, which will use new, highly efficient, blockchain-driven processes.

4. Real estate, automobiles, gold, diamonds, art and every asset imaginable will become tokenized such that it is liquid and easy for people to finance, borrow against or invest in. In 2018 we saw Harbor tokenize a 260-apartment student housing project at the Univ of South Carolina, and Indigogo tokenize an offering by the St Regis Aspen hotel, which is the start of what will be a mega-trend in 2019, especially as these tokens start to trade (see next paragraph).

5. Stocks and bonds will be tokenized. How can people buy shares of private companies in secondary markets? How can people in Africa buy shares of USD-priced stock on NASDAQ? How can people in the US buy shares of stock that only trade on an exchange in Asia or Europe and in currencies native to those countries? The answer will be the tokenization of those securities and listing them on digital exchanges globally. tZero is the first exchange to announce the listing and trading of tokenized private securities in compliance with US securities regulations, soon to be followed by tokenized trading of public securities. This will be a major, game-changing trend.

6. There will be fraud in asset tokenization.

The storm clouds are already forming, and it’s exasperatingly unnecessary. “Hey buddy, wanna buy some tokens backed by the Brooklyn Bridge?” – some people are issuing tokens purportedly backed by USD, by real estate, by stocks and bonds, and by other assets without depositing the title to those assets with a regulated, audited, qualified third-party trustee.

Would a bank make a home or auto loan without holding the title to the asset? Of course not. Would a pawn shop make a loan to someone without holding the jewelry in its safe? Of course not. Yet that’s exactly what some people are doing in the early stages of this space, “give me money for tokens backed by this asset, which I’m holding…trust me.”

Most issuers are already using trust companies to hold those assets and build trust in the markets. As has been done for decades with ADR’s and securitization of real estate loans, which employ custodians to hold underlying assets. But sadly, I think it may take well-publicized losses to wake some regulators (and lawyers, accountants, broker-dealers, advisors and exchanges) up to the fact that if the assets aren’t held by a qualified trustee, then the potential for fraud is an unmanageable risk.

7. The SEC and FinCEN will step up their investigations and enforcement actions in the space.

I’m amazed that I continue to have conversations at conferences with otherwise very bright people who seem to have a complete lack of appreciation, and at times even a willful disregard for US rules and regulations. Compliance may be a pain, breaking the rules is far more painful. I agree that there’s quite a bit of gray area that’s yet to be clarified, and that’s what gives entrepreneurs a chance to build unicorns in a formative industry when the major financial firms are too afraid to participate, but some people just continue to do dumb things which are blatant violations of various regulations.

8. Global exchanges and intermediaries will legally poach business from their US counterparts.

International exchanges and platforms have gathered millions of customers who use their services daily. This forms a powerful base to start funding US asset-backed loans and business capitalization from offshore investors. This is fantastic for investors globally, everywhere except the US. Some examples of how this may play out include;

A US business (of any size) wants to raise some capital. It does so using “Reg S”, which permits it to raise money from non-US investors with very few restrictions. Money flows into the company from offshore investors, which is a good thing as the business gets funded and jobs get created. The company doesn’t have to worry about whether those investors are “accredited” or not. The company doesn’t have to make any regulatory filings. And those offshore investors can list their “stocks” or “bonds” (in the form of tokens) on a non-US exchange and start trading them immediately. Those non-US exchanges can even publish investor research reports on the tokens they trade!

A US person wants to buy a house or a car. They do so by getting a loan from an offshore lending platform (which holds title to the home or auto with a US trust company). The offshore lender then tokenizes that real estate (or automobile) loan and sells it on non-US exchanges. And if that’s murky due to US lending regulations? Okay fine, then the offshore lender might perhaps buy the home and enter into a contract where the homeowner rents it and buys it little by little (similar to the model used by Islamic banks). Result is the same, the profits are made by investors globally…everywhere except the US.

The rise of infrastructure businesses.

Much ado has been made about custodians, and rightly so. Assets need to be held by a regulated trustee. There is a huge need for fiat on-and-offramps. And many investors will want their tokens held on statement just like they do their stocks, bonds and mutual funds. But besides trust companies and banks, there are other unicorns in the making…

Tokenization of assets requires help with creating smart contracts, and with managing them. It requires innovative blockchains that provide faster settlement of transactions, good KYC/AML, and tools to handle/reverse criminal acts. It requires front-end servicers to originate a flow of funds by connecting people who need funds with people who have money. It requires settlement mechanisms. It requires secondary trading exchanges, intermediaries and research. It requires debt (and fractionalized ownership) servicing firms. It requires a new breed of legal and accounting representation. And it requires new types of businesses to handle/create/manage things which we cannot yet imagine.

Many of these businesses are already in play. Some are pivoting their well-established business models to address this market, including StartEngine, Republic, Overstock, Cohen & Co, PwC, and of course Prime Trust. Others are new firms that have been purpose-built for this new era, including HBUS, TrustToken, tZero, OKEX, KOI, CoinList, Polymath, Harbor, TokenSoft, OTCXN, AlphaPoint, Daollar, BHEX, Bitrue, Carbon, Stably, AnchorCoin, Stronghold, Consensys, and countless others across all types of service providers.

2019 is going to be exciting. I think it’s when the rubber truly starts to meet the road, following the shakeout of the vaporware that accumulated in prior years, which I chalk up as proof-of-concept for blockchain. I can’t wait for the new year.

*This post is credited to Equities

Blythe Masters is stepping down as CEO of Digital Asset Holdings, the blockchain startup she joined to great fanfare in 2015. The former JPMorganChase & Co. executive, credited with inventing the credit-default swap, says she is making the decision for personal reasons. But in business terms, her timing is good, too: The Bitcoin bubble of 2017 has burst, and so has that of blockchain.

Masters was the public face of the “blockchain, not Bitcoin” philosophy – the idea that behind the avowedly anti-bank and anti-government cryptocurrency, used to buy dark things in dark places, lay an ingenious technological infrastructure that could be cleaned up and adopted by blue-chip firms and, yes, banks. You’d keep the network of nodes validating transactions securely on a shared ledger, but you’d ditch the coins and the trading. Masters translated this into a story bankers could understand.

It was indeed a compelling tale for firms wanting to cut costs, soup up their tech, and look hip enough to attract smart young graduates who might otherwise flock to Google. Hundreds of pilot projects were launched, stuffy execs eagerly talked up distributed ledgers, and dozens of consultancy reports breathlessly promised rewards. Some said 10 percent of GDP would be on the blockchain by 2027; others said billions of dollars in transaction processing costs would be cut. The bubble inflated.

But, as this column warned several times in 2016 and 2017, the problem was not the idea, but the hard reality of implementing it. Banks could barely handle IT upgrades – how were they going to lead the next tech revolution? Clearinghouses functioned as regulated, centralized entities – why would they disrupt themselves out of existence? And if the priority was cost-effectiveness and security, why on earth would replicating back offices across a network be the solution? As one fintech entrepreneur told me in January: “We tried blockchain for about one day. Everything became three times slower. So we stopped.”

Just as this year marks a reckoning for Bitcoin, which has fallen to about $3,800 from a peak of almost $19,000, so it is proving for corporate blockchains. Forrester Research said in July that 90 percent of blockchain pilots would never fully progress beyond the lab. Gartner Research, which in 2016 put blockchain at the “peak of inflated expectations” on its technology hype cycle, now sees it being in a “trough of disillusionment.”

Does this mean all blockchains will be consigned to the dustbin of history? Not necessarily. Cloud computing went through its own hype cycle before it was reborn as an unsexy but essential piece of IT infrastructure – the “slope of enlightenment,” as Gartner calls it. Maybe this just needs more time: Australia’s main stock exchange, which is working with Masters’ startup on a distributed ledger to process equity transactions, has pushed back its blockchain launch to the middle of 2021 from the end of 2020.

But Masters’ farewell message still feels like the end of an era. Her replacement, AG Gangadhar, has a pure technology background at start-ups like Uber and Google, perhaps a sign that financial services is no longer hallowed blockchain ground. Bankers spent 2016 and 2017 “going crypto” – maybe hibernating through the winter is a good alternative to reversing course.

*This post is credited to Bloomberg 

Two South Korean government ministries have launched a blockchain pilot for port logistics innovation, according to a press release from the country’s Ministry of Science, ICT and Future Planning (MSIT), published Dec. 18.

MSIT, together with the Ministry of Oceans and Fisheries, are reportedly testing whether the technology can make Korea’s container shipping industry more efficient. As the press release outlines, the pilot will run over a period of one year in the Port of Busan, the country’s largest port, and the fifth busiest container port worldwide.

The initiative aims to ascertain whether leveraging blockchain technology can successfully increase transparency between all parties in the logistics industry, streamline administrative processes in import and export operations and allow for real-time data sharing.

Both ministries have reportedly been collaborating on the project as of early this year, as part of  a “Blockchain Technology Development Strategy,” officially announced by MSIT this June.

As reported, other core pilots in the strategy are planned across the fields of real estate, online voting, livestock record management, customs clearance and international e-document distribution. The strategy overall aims to raise 230 billion won (about $204 million) by 2022.

If the shipping logistics blockchain pilot at Busan will prove successful, both ministries plan to expand the initiative across other ports nationwide.

As reported in June, South Korea has this year announced a partnership with the United States State Department to strengthen the two countries’ cooperation in advancing the so-called “Fourth Industrial Revolution.”

The term has been given by the World Economic Forum (WEF) to indicate a series of technological breakthroughs that “will fundamentally alter the way we live, work and relate to one another… [across] the global polity.” The WEF notably recognized blockchain’s major role in the Revolution as early as 2016.

In other major news for blockchain and the shipping industry globally, this August IBM and Danish transport and logistics giant Maersk launched their global blockchain-enabled shipping solution, which counted 94 participant organizations and 154 million shipping events already captured at the time of launch.

*This post is credited to Cointelegraph

Tuesday brings expansion in Japan, more mining woes in China, blockchain compliance in Abu Dhabi and in Hong Kong and ‘political’ crypto in Malaysia

Hong Kong port embraces blockchain: Hong Kong’s Modern Terminals have signed a deal to use a Maersk-IBM blockchain platform. The TradeLens solution works to process documentation and verification to speed up customs clearance. More than 20 port and terminal operators globally are piloting the solution. The system claims to allow shippers, shipping lines, freight forwarders, port and terminal operators, inland transportation and customs authorities access to operational data – including container temperature and information weight – and also to blockchain smart contracts.

 

World’s first ‘political’ crypto in Malaysia: Bank Negara Malaysia, the country’s Central Bank, says they must approve all new digital currencies. This comes as the crypto-currency Harapan Coin is launched. The team behind the initiative calls it the world’s first “crypto-politic” coin and it is backed by Paratan Harapan, the current government ruling coalition who have created it to elicit “opposing sentiments against the current governing coalition, in preparation for the coming election.” They hope to raise $120 million. And to date? $715.35.

*This post is credited to Asia Times

The shutdowns are the latest instance of China’s continuing crackdown on cryptocurrencies, which began last September with bans on local cryptocurrency exchanges and ICOs, an unregulated crowd fundraising method involved with cryptocurrencies and often associated with scams.

China has shut down numerous blockchain-related news accounts on WeChat, the country’s top social app, in a renewed crackdown on activities related to cryptocurrencies.

At least eight blockchain and cryptocurrency-focused online media outlets – some of which raised several million dollars in venture capital – found their official public accounts on WeChat blocked on Tuesday evening, due to violations against new regulations from China’s top internet watchdog.

Tencent, operator of WeChat, said in a statement that it has shut down these accounts permanently as they are “suspected of publishing information related to ICOs [initial coin offerings] and speculations on cryptocurrency trading.” It cited regulations enacted earlier this month by the Cyberspace Administration of China, which, among other things, demand content providers within chat apps comply with “national interests” and “public orders.”

The shutdowns are the latest instance of China’s continuing crackdown on cryptocurrencies, which began last September with bans on local cryptocurrency exchanges and ICOs, an unregulated crowd fundraising method involved with cryptocurrencies and often associated with scams. Despite government initiatives on adopting blockchain, the central government has made it clear that it does not want retail investors to get involved in cryptocurrencies because of concerns over financial stability.

Blockchain media outlets came to prominence despite the cryptocurrency bans as they fill a niche in providing investors with timely information on cryptocurrency prices, and reviews on blockchain-related projects. Just like other Chinese news services, these platforms rely heavily on WeChat to reach audiences aside from their apps and websites. The blocked accounts on WeChat come from some of the most popular blockchain news platforms including Jinse Caijing and Huobi News, whose apps and sites are still in operation.

In its statement, Beijing-based Huobi, which also operates one of the world’s biggest cryptocurrency exchanges, acknowledged the shutdown of its news account as WeChat’s “broad action targeting industrial media.” Jinse Caijing did not immediately reply to a request for comment.

Blockchain news platforms have attracted venture capital funding in China. Jingse Caijing, which started in 2016 and now boasts 350,000 unique daily visitors, raised more than 8 million yuan (US$1.2 million) from Beijing-based Node Capital in a pre-series A round last August. Also blocked on WeChat is Shenlian Caijing, which was founded earlier this year by several veteran Chinese journalists, and raised 10 million yuan from angel investors including Plum Ventures and Dfund.

A major revenue source for these news services is paid content from blockchain-related projects. Jingse Caijing publishes more than 200 articles per day. A featured article on the site, for example, is said to cost 12 ethereum, which is currently valued at about US$3,500.

In March, a commentary published by the website of the People’s Daily, the mouthpiece of the Communist Party, accused blockchain news outlets of creating articles to manipulate cryptocurrency prices and promote ICO projects. “These ‘media’ outlets have made huge fortune in the speculative waves of cryptocurrencies, but due to their nature, it’s doubtful how long their barbaric growth can keep on going,” according to the commentary.

*This post is credited to South China Morning Post

The Research Institute of Information Technology (RIIT) of Tsinghua University (THU) has partnered with a subsidiary of China’s institutional financial firm to establish a blockchain research center, according to an Aug. 1 press release.

The RIIT has signed an agreement with Sheng Ying Xin Management Consulting Co., Ltd., a contractually controlled and managed company of China Internet Nationwide Financial Services (CIFS). The two organizations will jointly research and develop basic blockchain technologies and models for building enterprise-level applications in a number of industries.

The blockchain-based applications will reportedly address a range of challenges currently facing Chinese companies. The introduction of blockchain into Chinese industries aims to boost transparency and traceability in supply chains, logistics, the pharmaceutical field, and agricultural products, among others.

CIFS CEO and chairman Jianxin Lin claimed that the recent agreement will be an important step for the company in terms of its business strategy, providing a shift from conventional financial service to focus more on fintech. Lin added that fintech will be “the main driver of the next phase of our [CIFS] growth.”

Bin Yang, Vice President of THU, noted that blockchain applications in various fields have become a “vital national strategy for all countries,” stating that distributed ledger technology will accelerate China’s economic transition and upgrade industry standards. He also said that the “digital transformation has only just begun,” and it would bring a “number of positive impacts for the society.”

Founded in 1911, Tsinghua University is one of major research universities in Beijing, China, and a member of the elite C9 League of Chinese universities. In May, 2018, THU set up the Youth Education Chain League and launched China’s first blockchain innovative experiment platform.

Previously, in 2016, Tsinghua University became part of a blockchain-powered food supply project, joining forces with U.S. retail giant Walmart, IBM, and the Chinese Blockchain Food Safety Alliance. The developed blockchain platform intended to identify and remove recalled foods from their products list.

*This post is credited to CoinTelegraph