Tuesday, December 4, 2018

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Discover today what the rest of the world won't know until tomorrow about blockchain technologies.

May 2, 2019
MIT Media Lab
Cambridge, MA

Dear Chain Letter subscribers,

MIT Technology Review invites you to Business of Blockchain 2019 – a one-day conference in Cambridge, MA – for a deep dive into blockchains and their impact.

Business of Blockchain 2019 is your opportunity to join the community of leaders across a wide range of industries and to lend your voice to the important business, ethical, and social questions that come with every new technological breakthrough.

What are the strengths and weaknesses of this emerging technology?
How are legal and regulatory environments around the world adapting to cryptocurrencies?
In what ways can blockchain address pressing social challenges and opportunities?

You'll learn from those who are already leveraging blockchain in the field. You'll learn even more from the hits and misses they made along the way.

Join us as we discover today what the rest of the world won't know until tomorrow, at Business of Blockchain.

Space is limited. Reserve your seat today.

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The mission of MIT Technology Review is to bring about better-informed and more conscious decisions about technology through authoritative, influential, and trustworthy journalism.

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BLACKLIST BLASTED: Mohammad Ghorbaniyan, one of two Iranian residents flagged by the U.S. Treasury Department last week, claims he was wrongfully accused. The bitcoin trader made headlines when he became one of the first individuals to be listed with a bitcoin address tied to his personal information.

While the Treasury Department's Office of Foreign Asset Control contends he laundered funds sent by victims of the SamSam ransomware attacks, he claims he did not know where the bitcoins he traded originated from. After last week’s move, his Blockchain.com and Gmail accounts were both suspended.

Ghorbaniyan did say he converted bitcoin into Iranian rials on behalf of Mohammad Mehdi Shah Mansouri and Faramarz Shahi Savandi, the two individuals accused by the FBI of creating SamSam, but says he had no reason to suspect them of wrongdoing.

He discusses his role in converting bitcoin for the accused individuals in an exclusive interview with CoinDesk. Full Story

BIG BACKERS: The Singapore-registered Conflux network just raised $35 million from firms including Sequoia China, Baidu Ventures, F2Pool, Huobi, Metastable and IMO Ventures to develop a blockchain scalability solution.

The team, which includes Andrew Chi-Chih Yao, a Turing award winner, believes changing how blockchains are ordered can make them more efficient. As Conflux co-founder Fan Long told CoinDesk, the current linear design can cause a bottleneck to form in the chain.

To combat this bottleneck, Conflux proposes producing blocks concurrently, rather than sequentially, and using a directed acyclic graph (DAG) to organize the network and prevent a fork. Full Story

PRIVACY QUESTIONS: The U.S. Department of Homeland Security may be looking into tracing transactions conducted using zcash, monero or another privacy-focused cryptocurrency. In a pre-solicitation published Friday, the department's Small Business Innovation Research program highlighted the potential criminal use of such coins as an issue.

The document notes that privacy coins make it difficult to determine where a transaction originates, and notes that “while these features are desirable, there is similarly a compelling interest in tracing and understanding transactions and actions on the blockchain of an illegal nature.”

As such, the document asks whether it is possible to conduct forensic analysis of privacy-focused blockchains. Interested parties can ask technical questions or present comments until Dec. 18, after which DHS will publish the document as an actual solicitation. Full Story

CoinDesk's Crypto-Economics Explorer aggregates data points across the industry to measure the size and opportunity of crypto markets. In addition to price and market cap, CoinDesk's explorer provides users with a comprehensive way to view the crypto-economic forces that shape an asset's market maturity, growth and potential.

Network interest is important in determining the activity occurring within a blockchain’s internal ecosystem.

After holding the number two ranking in network activity, ETH seems to have slumped down to number three. Its score fell from 47.87 percentage points to 22.4 percentage points.

This was largely due to ETH’s on-chain transaction volume falling from nearly $2 billion to approximately $300 million. For perspective, BCH has about $600 million more volume.

ETH still has one of highest transaction counts (548,000), ranking number three behind EOS (6.4 million) and TRX (1.7 million). EOS has now taken ETH’s slot as number two in network activity with a score of 30.79.

Check out the CoinDesk Crypto-Economic Explorer to learn more.

BOUNCING DOWN: Bitcoin charted a bearish lower-high pattern at $4,410 last week and fell below key support of $3,861 yesterday, confirming an end of the corrective bounce. Sellers, however, seem reluctant to step in at current levels, as indicated by BTC's quick recovery from the one-week low of $3,730 early today. That said, a bullish reversal would be confirmed only if BTC establishes a higher-low and higher-high pattern with a convincing move above $4,410. Full Story

BEST OF THE BEST

HACKER NOON: The crypto space’s obsession with increasing transaction speed is misplaced, argues James Halladay of MyBit in Hacker Noon. While individuals in the space may believe that an increased transaction speed is necessary to scale blockchain networks, such as ethereum, it should not be the overarching goal for a community.

As an example, while PayPal processes millions of transactions every day, it has a speed of roughly 193 transactions per second – and no one is arguing that PayPal needs to scale its network. Rather, there should be more of a focus on security, he argues, citing MyBit CEO Ian Worrall.

At present, there are not enough users on the ethereum network to require high transaction speeds. Of the projects that do run on the platform, a majority are focused on providing financial services, and as such, security is far more important than speed (unlike say, for example, gaming projects where speed may be more necessary).

THE REST

THE NEXT WEB: Ripple, the NEM Foundation, Fetch.AI and EMURGO are launching a new lobbying organization to help lawmakers better understand blockchain technology. The Blockchain for Europe association is looking to act as a “unified voice for the industry on European soil,” The Next Web reports.

Authorities in the European Union are already starting to get involved in the space, including with the launch of the EU Blockchain Observatory and Forum. The group, which is tasked with monitoring the industry’s growth and possible regulations, has recently published a report outlining how blockchain might conflict with the General Data Protection Regulation (GDPR).

Dan Morgan, Ripple's head of regulatory relations, said in a statement that "this is a critical time for policymakers in Europe as they seek to develop the right regulatory framework to capture the benefits of both digital assets and blockchain technology."

FORBES: More than 100 wealthy and influential individuals attended Forbes Asia’s invite-only “Decrypting Blockchain for Business” event in Singapore Monday to study up on the nascent technology, Forbes reported.

Despite blockchain’s association with cryptocurrencies, a number of use cases were highlighted, ranging from tracking goods on supply chain platforms to automating payments for health case purposes.

During one fireside chat, Anderson Tanoto, a director at manufacturing conglomerate Royal Golden Eagle, said he was not necessarily interested in cryptocurrencies as a speculative asset. “There are two herds of people in blockchain," he said. "Those who want to get rich off crypto, and those who want to change the world with blockchain. I would like to associate myself with the second group.”

WHO WON #CRYPTOTWITTER

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Case is Closed 🏛

December 4, 2018

Federal Court Rules in Favor of ICO, Against SEC in Monumental Court Case

SEC vs ICOs

The Securities and Exchange Commission (SEC) has had a very busy 2018 and has inserted themselves into the cryptocurrency space more than ever before.

The SEC has been hell-bent on enforcing their regulation onto the new and evolving asset class of cryptocurrencies. Within the past weeks, the SEC has penalized two initial coin offerings (ICO), the decentralized exchange EtherDelta, as well as Floyd Mayweather and DJ Khaled for promoting ICOs.

Court rules in favor of ICO

Last week, a US Federal Court held a case involving the blockchain startup Blockvest and the Securities and Exchange Commission. The SEC had recently ruled that Blockvest is a security and froze the company's assets.

Blockvest disagreed with the SEC's decision and claimed that their token should not be considered a security. So, Blockvest took the case to a Federal court.

In the end, the court ruled that the SEC did not have enough evidence to classify Blockvest as a security. In addition, the court ruled that a token's method of distribution can't be used as the only evidence to classify it as a security.

Setting a precedent

The case sets a precedent for the future.

Marco Santori, the president and chief legal officer at Blockchain, analyzed the case and concluded that if there is not a "risk of financial loss," the court would rule in favor of the ICO.

PRIVACY

Department of Homeland Security Wants to Track Privacy Coins

Tracking the untrackable

The Department of Homeland Security recently published a document that discusses the use cases of cryptocurrencies. More notably, the document indicates that the Department wants to know if it is possible to track privacy-focused cryptocurrencies, like Monero and Zcash.

The Department of Homeland Security is wary that privacy coins may be used for illegal activities like money laundering or funding of terrorism.

An excerpt from the document reads:

"This proposal calls for solutions that enable law enforcement investigations to perform forensic analysis on blockchain transactions. This analysis can be approached in any number of ways and may consider different data situation use cases depending on whether additional data from off-chain sources are available."

Good luck

The government has shown that it is able to track transactions on cryptocurrencies like Bitcoin. Bitcoin is only pseudonymous, not anonymous. All transactions and accounts are viewable to anyone.

However, privacy coins are a different beast. No one has yet been able to track the top of the class privacy coins. The Department of Homeland Security will surely be met with disappointment when they realize that they won't be able to crack privacy coins.

GOVERNMENT

Thailand is Testing Blockchain as a Method to Prevent Tax Fraud

According to an article published by the Bangkok Post, the Thai government has been testing an implementation of blockchain technology that would help the country fight tax fraud. If the government decides to actually implement blockchain, it would be the first country ever to use blockchain to prevent tax fraud.

Thailand's Revenue Department (the country's equivalent to the US's IRS) is heading the project. The department envisions using blockchain to track value-added tax (VAT) payments. All VAT invoices will be issued and confirmed on the blockchain in order to bring transparency and stricter compliance to tax laws.

In addition to blockchain, the Thai Revenue Department is also researching Machine Learning and Artificial Technology technologies. The department hopes to utilize these technologies to learn, study, and prevent fraudulent tax reporting efforts.

Blockchain technology gaining credibility

Everyone is aware the cryptocurrency market has been on a year-long slide. However, the crypto market is not nearly an indicator of blockchain adoption.

Despite price declines, adoption of blockchain technology has been on the rise during 2018. As in this case, more and more governments are researching and testing blockchain for real use cases to better the world. Also, blockchain patent applications have been higher than ever. Corporations, like governments, are pondering how they can use the new technology.

It is unclear where blockchain will gain real, live adoption but now it seems certain that the technology will disrupt some areas of traditional government and corporate systems.

BITS

But wait, there's more...

Crypto trading platform ErisX has closed a Series B funding round that raised $27.5 million from notable investors including Fidelity and Bitmain.
Nasdaq has confirmed it plans to launch Bitcoin futures in the first half of 2019.
Malta-based cryptocurrency exchange OKEx has launched a new derivative product called Perpetual Swap trading.

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