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#84: Japanese companies are serious about cryptocurrency

Where the rubber meets the road
MIT Technology Review
Chain
Letter
Blockchains, cryptocurrencies, and why they matter
09.04: Where the rubber meets the road

Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. 

Why Line’s new crypto-token is not a surprise: The news that Japan’s popular messaging service will launch its own crypto-token could be a big deal for cryptocurrency adoption. It’s also not surprising. Line revealed its intention to offer digital currency services back in January, and since then has opened its own cryptocurrency exchange and launched a $10 million venture fund for blockchain startups.

Besides that, Line is just the latest big Japanese company to make a serious foray into cryptocurrency. On the same day of Line’s latest announcement, Rakuten, an e-commerce giant that operates more than 70 financial technology services, revealed plans to acquire a local cryptocurrency exchange. Another big Japanese e-commerce company, DMM, and financial services giant SBI Holdings have also opened exchanges. These moves seem like attempts to capitalize on the well-documented popularity of cryptocurrency trading among Japanese retail investors, and take advantage of the nation’s relatively friendly regulatory environment. A law that went into effect last year created a licensing regime for cryptocurrency exchanges—a move that has legitimized the industry to a degree not seen in other major economies.

In a twist, however, Line’s new “Link” token won’t be available to its 75 million Japanese users (most of the rest of its 200 million users are in Taiwan, Thailand, and Indonesia). That’s in part due to the January heist of more than $500 million worth of digital coins from Coincheck, a popular cryptocurrency exchange (which was operating without a license, under an exemption). Japan’s Financial Services Agency has been slow to issue new approvals since that theft—which means Line is still waiting in line.

Blockchains, but for tyrants. Can blockchain technology serve as a “counterbalance” to authoritarian governments that will try to use artificial intelligence, machine learning, and other information technologies to further centralize their power? It’s too early to tell, argues historian and philosopher Yuval Noah Harari in a new essay for The Atlantic entitled “Why Technology Favors Tyranny.” He writes: “Remember that the Internet, too, was hyped in its early days as a libertarian panacea that would free people from all centralized systems—but now is poised to make centralized authority more powerful than ever.” (See also: “Who needs democracy when you have data?”)

Venezuela’s new cryptocurrency doesn’t seem to exist. Venezuelan president Nicolás Maduro claims that sales of the petro, the supposedly oil-reserve-backed national cryptocurrency he launched in February, have already raised $3.3 billion, and that the coin is being used to pay for imports. But an investigation by Reuters has found no evidence to back those claims—or that the petro is even a functional cryptocurrency.

Reuters spent four months speaking with experts on cryptocurrencies and oil-field valuation, visiting oil reserve sites in Venezuela, and analyzing blockchain transactions. It found that the petro is not being sold on any exchange, and no shops accept it. Records on the NEM blockchain, which was supposed to host the token, indicate that it has not been issued. Hugbel Roa, a cabinet minister involved in the project, confirmed to Reuters that “nobody has been able to make use of the petro … nor have any resources been received.” He said that Venezuela is still developing its own blockchain technology, and that instead of acquiring tokens, buyers of the petro have reserved future ones. That may be true, but it doesn’t square with Maduro’s claim that it’s already being used to pay for things. And it makes his recent announcement that salaries, pensions, and the exchange rate for Venezuela’s bolivar are now pegged to the petro all the more confusing.

The experts will be at EmTech next week. Will you?   

What can be done to address massive breaches of personal data, hacked elections, and other rising threats? Join us at EmTech MIT to hear the experts' opinions. Secure your ticket today!

Loose Change

Fill your pockets with these newsy tidbits.

The South Korean province of Geyongsangbuk-do plans to launch its own cryptocurrency. (Finance Magnates)

IBM has launched its cross-border payment network, which uses the Stellar blockchain to settle transactions. (CoinDesk)

Google has added the Ethereum dataset to its big data analytics platform, called BigQuery. (Google)

The Yahoo Finance iOS app now lets users trade Bitcoin, Ethereum, Litecoin, and Dogecoin. (Yahoo)

California’s state legislature has passed a new bill that defines blockchain and cryptocurrency-related terms. (Bitcoin News)

The Money Quote

There are parallels to the Theranos story (big promises about tech for socially critical purposes) relevant to the blockchain space. We seem willing to forgive the 'thought leaders' and promoters of the tech as just enthusiasts rather than fraudsters, but there is a fine line.”

Angela Walch, an associate professor at St. Mary’s University School of Law. In a recent Twitter thread, Walch expressed concern that a coming “second wave” of blockchain-focused academic work might be based on faulty premises about the technology’s capabilities.

Mike Orcutt
We hope you enjoyed today's tour of what's new in the world of blockchains and cryptocurrencies. Send us some feedback, or follow me @mike_orcutt.
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Stress Test / Silk Road Funds / Sahara / K-Pop

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Here are today's ten most important Bitcoin stories, efficiently ranked & summarized by smart humans, not algorithms:

$BTC (1:26 p.m. EST): $7,373.03 (1.35%) // 90-day high: $8,362.59 // 90-day low: $5,755.25/ / More

$BCH (1:26 p.m. EST): $636.62 (1.74%) // 90-day high: $1,663.91// 90-day low: $513.11 // More

$ETH (1:26 p.m. EST): $288.77 (-0.14%) // 90-day high: $790.72 // 90-day low: $242.75 // More

$LTC (1:27 p.m. EST): $68.40 (5.43%) // 90-day high: $162.87 // 90-day low: $52.78 // More

$XRP (1:27 p.m. EST): $0.33 (-0.48%) // 90-day high: $0.86 // 90-day low: $0.22 // More

Here are the 10 most important stories about bitcoin and cryptocurrencies today

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1. The price of bitcoin cash jumped more than 14 percent over the weekend. The increase coincided with a network stress test where the bitcoin cash community encouraged businesses and developers to deliberately carry out multiple activities at once. The network experienced more than 2.1 million transactions on Saturday alone, making up 34.6 percent of all crypto activity over a 24-hour span. –CCN

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2. About $100 million in bitcoin was transferred to Bitfinex, Binance and BitMEX on Monday. A Reddit user, Sick Slick, first point out the transaction. The original account from which the money was transferred is believed to be linked to one of the Silk Road accounts. The bitcoins have been moved in portions to various accounts to prevent being traced. These wallets have been active for the past four days after being dormant for more than four years. –AMB CRYPTO

$100 million transferred from Silk Road accounts
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3. It has not been a great year for bitcoin's price but the coin has still outperformed three national currencies. Bitcoin has outperformed the Venezuelan bolivar, Sudanese pound, and Argentine peso despite facing a steep decline since last December. The biggest difference, though, comes with the outlook of each coin. Experts believe bitcoin's price will recover based on past price corrections, while the outlook for the other three currencies remains murky at best. –NEWS BTC

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4. A company plans to power a cryptocurrency mining operation with a wind farm in the Sahara Desert. The company, named Soluna, will develop a 900MW wind farm power plant in Morocco which will be combined with the company's private computing facilities to power a blockchain-backed computing infrastructure. Soluma aims to build 36 megawatts of capacity by 2020 and expects to create the 900MW in the next five years. –CCN

Company plans to build mining rig in Sahara
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5. Z-POP Dream Project, a South Korea-based entertainment company, plans to use blockchain to find talent for a K-pop musical group. The company plans to use the ethereum blockchain to allow fans to vote for their favorite entertainers in award ceremonies and auditions. The project will help discover and nuture talent, along with empower fans to support the group. Z-POP plans to establish a "star creation" platform in 10 areas across southeast Asia to find talent. –CCN

K-Pop company to use ethereum to find new stars
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6. Google has added ethereum to its big data analytics platform BigQuery. The new service will allow users to create a Big Data window into ethereum. Users could previously use an API for commonly used functions, such as checking transaction status or wallet balances, it was not conducive to accesses all of the data stored on the ethereum blockchain. –COINDESK

7. Bitcoin's recent price swings have again raised doubts about its stability. The coin has seen its price move more than 10 percent in just a week. –FORBES

8. An airline cabin-crew member took a $100,000 loan at the end of last year to buy cryptocurrency. It has not gone well. –BITCOINIST

9. For your Spotify playlist, here are 10 popular songs that mention bitcoin. Some come from popular artists like Eminem – others are, umm, a little less well known. –BITCOIN.COM

10. Former PayPal CEO Bill Harris called bitcoin a cult. He added that bitcoin will one day end up near zero because "there is just no value there." –CCN

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From the Forums

Blockmagic will be released in alpha soon.

A map of countries where bitcoin is legal.

What is going on with EEA?

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Written and curated by David Stegon. He has been a reporter for 15 years, the past 10 focused on technology. Follow him @davidstegon.

Editing team: Lon Harris (editor-in-chief at Inside.com, game-master at Screen Junkies), Krystle Vermes (Breaking news editor at Inside, B2B marketing news reporter, host of the "All Day Paranormal" podcast), and Susmita Baral (editor at Inside, recent bylines in NatGeo, Teen Vogue, and Quartz. Runs the biggest mac and cheese account on Instagram).

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