The domain name system is vulnerable to censorship and hacking. Maybe a blockchain can help. That's the idea behind the Handshake Network, an open source project aimed at decentralizing power over naming on the internet. I took a look at why the project has generated so much buzz in the crypto world, and how it might succeed where previous attempts at blockchain-based naming haven't turned out. Read the full piece here.
A group of 14 big banks plans to launch its own cryptocurrency within a year. The utility settlement coin might have a boring name, but the project, led by Swiss bank UBS, is one of the most ambitious and much-anticipated blockchain projects in the works.
UBS and thirteen other financial companies—including major banks in the US, Europe, and Japan—have created a new company to lead the new digital currency's development, reports the Wall Street Journal. The firms involved have also collectively invested around $63 million in the venture, which aims to let the banks settle cross-border trades faster and more cheaply. The project was first revealed in 2015.
The WSJ describes the token's function as "both a payment device and a messenger that carries all the information required to complete a trade." It would be backed by bank-owned fiat currency held in central bank accounts. Rhomaios Ram, chief executive of the new company, called Finality International, told WSJ that he believes the currency will be "fully operational" within a year.
The companies in charge say the utility settlement coin will be blockchain-based, and they are working with a blockchain startup called Clearmatics. That company has developed a private version of Ethereum's software that it has tailored to businesses. But in 2017 the Financial Times reported that the effort to build a new digital currency for banks "isn't really a blockchain project as much as a market infrastructure project." Besides, many purists would argue that a network controlled by and only open to banks is not really a blockchain, no matter how it works.
Zero-knowledge proofs could take decentralized exchanges to the next level. Blockchain-based platforms that allow users to trade various crypto-tokens without relying on a third party are supposed to be a more trustworthy alternative to centralized exchanges, which raise big security risks. But these decentralized versions are much slower because they are limited to the speed at which the blockchain can process trades. In Ethereum's case, that's only about three per second.
Now 0x, a startup developing a popular decentralized exchange platform for Ethereum, is trying to use a powerful new cryptographic approach to boost that transaction speed by at least 20 times. To pull it off, it has joined forces with another startup, Starkware, which is developing new technology based on the mind-bending mathematics of zero-knowledge proofs.
Zero-knowledge proofs can be used to prove that a fact, like one's age or the amount of money in their bank account, is true without revealing any other information—not even the fact itself. They let traders execute private transactions in the currency Zcash. In fact, Starkware co-founder Eli Ben-Sasson is one of Zcash's founding scientists.
Starkware's technology is based on a different kind of zero-knowledge proof-based technique than the one Zcash uses. They both come with ridiculous acronyms: one is a ZK-STARK, the other is a ZK-SNARK (if you really must know what they stand for, look here, but beware that it's super nerdy). At a high level, what matters in this case is that while SNARKs are known for their privacy-enhancing capabilities, Ben-Sasson and his team at Starkware think STARKs will bring something else to the table too: the ability to help blockchain applications scale.
StarkDEX is a service run by Starkware that will use STARKS to batch individual 0x transactions into a single proof that goes on Ethereum's blockchain. According to a company explainer, this opens the door to "inexpensive verification of massive computations done off-chain," so as to avoid relying on the main blockchain to do the work. This strategy may have broad applicability. The collaboration with 0x is Starkware's first chance to prove it works.
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Loose Change
Fill your pockets with these newsy tidbits.
- The US SEC has filed suit against the messaging startup Kik, alleging that Kik's 2017 ICO was an unregistered securities sale. (Decrypt)
- Walmart has joined a consortium called MediLedger, which is building a blockchain-based tracking system for pharmaceuticals. (CoinDesk)
- Binance will soon block IP addresses from 29 countries including the US from using Binance DEX, it's "decentralized" exchange. (The Block)
