Thursday, February 28, 2019

#128: What the hell is a blockchain phone?

The first wave of "blockchain phones" is a small step toward the decentralized web. The crypto world is full of buzzwords, but if you can peel away the marketing fluff, you sometimes find innovation beneath the surface. You are often also reminded just how early it is in the history of this technology. Case in point: the "blockchain phone."

All of a sudden, several crypto-focused handsets are hitting the market, or will launch soon. The biggest player in the new game is Samsung, which confirmed this month that the Galaxy S10 will include a secure storage system for cryptocurrency private keys. It joins HTC, which for months has been touting the Exodus 1, Sirin Labs, which used proceeds from a huge ICO to build the Finney, and Electroneum, which this week began selling an $80 Android phone that can mine cryptocurrency.

So what is the point? In the wildest dreams of enthusiasts, these devices will be a gateway drug to something called the decentralized web, or "Web 3.0." In this future version of the internet, blockchains and similar technologies would support decentralized applications—"dapps" that look and feel like the mobile apps we use today but run on public, peer-to-peer networks instead of the private servers of big tech companies.

It's widely thought that a major impediment to mainstream adoption of cryptocurrency and dapps is that these technologies are too difficult to use for people who are not especially tech savvy. Better user experiences, starting with cryptographic key management, could spur adoption. That's not straightforward, given that key security is paramount: you lose your keys, you lose your assets.

This also explains why Ethereum creator Vitalik Buterin seems so excited about one particular feature of HTC's Exodus 1, called social key recovery. Essentially, users can choose a small group of contacts and give them parts of their keys. If they lose their keys, they can recover them piece by piece from their contacts. Buterin, as usual, is looking far down the road, in this case to a future where people use blockchains to maintain more control over their digital identities and personal data than is generally possible today. Social key recovery is "arguably an early step toward formalized non-state-backed identity," he tweeted.

First thing's first, though. To be compelling to users outside the bubble of enthusiasts and speculators, these phones will probably need to be able to do more than just keep your keys safe. This week, Samsung and HTC touted a few things they hope will do the trick. Samsung seemed to reveal partnerships with several blockchain projects, including beauty services dapp Cosmee, and Enjin, a blockchain-based gaming platform. HTC announced that it has partnered with browser maker Opera to make it easier for people to use crypto, whether for making micropayments on websites or for using dapps.

"We are at the dawn of a new generation of the web, one where new decentralized services will challenge the status quo," Charles Hamel, Opera's head of crypto, said in a statement about the company's tie-up with HTC.

Perhaps, but even if these phones take off, the decentralized web will still be mostly a dream. Construction of its foundational infrastructure is in the beginning stages. Perhaps an influx of new users would spawn compelling new applications, which might in turn inspire the development of new infrastructure. But the best the first round of "blockchain phones" can do is give us a glimpse at a potential future that's still a long way off.

Coinbase is facing outrage after acquiring a blockchain analytics firm whose founders previously sold spyware to authoritarian governments. Three founders of the newly acquired firm, called Neutrino, previously worked for a controversial company called Hacking Team, whose products have been used to spy on journalists and human rights activists. Coinbase has released a statement saying it is aware that Neutrino's founders worked for Hacking Team, and that it does not "condone nor will it defend the actions of Hacking Team."

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Loose Change

Fill your pockets with these newsy tidbits.

Sony and Fujitsu are evaluating the use of blockchain technology to create unfalsifiable education records. (CoinDesk)

An improperly configured "blacklist" let a bad actor steal around $7 million worth of cryptocurrency from the smart contract platform EOS. (Breaker)
Coinhive, which created the in-browser crypto-mining application that opened the door to "cryptojacking" attacks, in which hackers hijack computers to mine digital coins, will shut down in March. (The Block)
Online lending startup So-Fi has partnered with Coinbase to let its users buy cryptocurrency. (CNBC)
Fidelity Investments has backed a blockchain analytics startup called Coin Metrics. (CoinDesk)

Artificial intelligence is here. Own what happens next.

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Lightning strikes twice

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STATIC ADDRESSES: The lightning network has taken a big step toward a better user experience courtesy of new work by one of its principal open-source developers.

Widely believed to be the key to helping the cryptocurrency reach a mainstream audience by pushing it to handle millions of transactions, lightning still isn't exactly safe to use yet. No less important is that the current way of generating addresses for accepting payments is not as easy or dynamic as it could be.

But that’s starting to change. Lightning Labs CTO Olaoluwa Osuntokun recently released a rough draft of a code change that would allow users to accept an address that doesn’t need to change each time. It’s a proof of concept, showing that payments can be made with a static address.

“I think it’s a really cool feature. Alice can send to Bob without Bob expecting it or having to do anything at all. Which is cool because it removes some friction,” Osuntokun told CoinDesk.

The feature might be good for games or tips, he added – scenarios where people don't necessarily need all the details an invoice provides. Full Story

TORCH HOLDERS: In other lightning news, a Twitter-based experiment with the network continues to see support from some big name individuals and firms.

The latest to receive a payment in a chain of transaction now known as the ”Lightning Torch” are the digital assets team at financial giant Fidelity Investments and LinkedIn co-founder Reid Hoffman, both of whom joined the effort in the last few days. Twitter CEO Jack Dorsey notably passed the torch on in January.

The Lightning Torch showcases the technology, with Twitter accounts receiving the “torch” – a lightning payment – and passing it on after adding a nominal amount of bitcoin to the total. The experiment has also been called the “LN Trust Chain,” since current holders are supposed to send it on to someone they trust will send the payment on, rather than keep it to themselves.

So far the torch has passed through at least 137 countries and has been held 224 times, according to a site set up to track the chain of transactions. A total of 3,700,000 satoshis (a small division of a bitcoin) have been sent, a sum worth around $143. Full Story

WALLET DEAL: Voyager, a crypto brokerage platform that launched and went public this month, has agreed to buy wallet startup Ethos.io for about $4 million.

Announced Thursday, the deal would give Voyager a range of products developed by Singapore-based Ethos, including the Ethos Universal Wallet and the blockchain platform Ethos Bedrock.

Voyager said it will also pick up an allocation of Ethos tokens, which the target company, formerly known as Bitquence, issued through an initial coin offering (ICO) in July 2017, raising $1.6 million.

As part of the deal, Shingo Lavine, founder and CEO of Ethos, will become Voyager's chief innovation officer and join the company's board, and Ethos' former owners will have the right to nominate one director for appointment to the Voyager board at each annual general meeting, once they have amassed at least 3.5 million shares.

The two startups partnered last October to add a self-custody option for Voyager’s users, as well as allowing Ethos users to convert, store and trade cryptocurrencies via Voyager. Full Story

SPRING JOY? Bitcoin has reinforced a bullish triangle breakout witnessed last week with a quick recovery from sub-$3,700 levels yesterday. This “buy the dip” mentality coupled with early signs of bullish reversal seen on the weekly chart indicates the cryptocurrency could see gains in the historically weak month of March. Full Story

BEST OF THE BEST

INFORMATION AGE: “Big Four” financial firm PwC has launched a blockchain-based platform called Smart Credentials allowing company employees to be issued digital copies of professional qualifications. The digital certificates are then kept in virtual wallets and can be accessed on demand, according to a report from Information Age.

The platform is currently under trial by PwC staff who have qualified with the Institute of Chartered Accountants of Scotland (ICAS) in the last two years.

PwC hopes employers can “significantly reduce” staff screening costs by using the blockchain platform to store, share and verify professional qualifications in real time.

THE REST

COMPUTER WORLD: Demand for blockchain engineers rose over 500 percent last year, reports Computer World citing data from job search site Hired.

Hired for the first time carried out an analysis focused solely on software engineering jobs and found that blockchain development skills ranked in the top three job openings in almost every region around the world.

Blockchain coders were followed in popularity by security and embedded engineers, which saw 132 percent and 76 percent year-over-year growth, respectively.

Hired CEO Mehul Patel was quoted as saying that the growth in demand for blockchain skills has gone "through the roof" and tops anything he has ever seen.

ZDNET: Monero cryptocurrency miner Coinhive, which gained notoriety for its use as one of the most popular crypto-jacking malware miners, is shutting down all operations on March 8, according to a report from ZDNet.

Citing a drop in hash rate after Monero’s last hard fork (which plunged by more than 50 percent), a crash in the crypto market (the XMR token’s price fell more than 85 percent) and another hard fork scheduled next month, the company said it had decided to “discontinue Coinhive.”

As such, all in-browser Monero mining functions will cease after March 8, though registered users will still be able to withdraw funds through April 30.

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What bears? 🐻

February 28, 2019

Blockchain Engineer Demand Skyrocketed 517% in One Year as Investment Pours In

According to a new report released by recruiting company Hired, blockchain engineers saw global demand increase by 517% year-over-year.

That performance actually made blockchain the fastest growing software engineer role on the platform.

The standings were:

Blockchain engineer
Security engineer
Embedded engineer

Raking in the dollars

But as demand soars, compensation naturally follows.

That's why blockchain engineers are now the second best-paid software engineers in London and New York, as well as third in San Fransisco and first in Paris.

Worldwide, that compensation averages out to a salary of $105,400.

Where's it coming from?

The investment in headcount is largely being fueled by blockchain-related funds and venture capital.

According to Diar, blockchain-led operations secured $1.6 billion from these capital pools in 2018 alone.

In total, 2018's heavy addition notches the entire industry close to $5 billion raised.

EARNINGS

Square Sold $52 Million Bitcoin in Q4, Surpassing Q3 and Q2

In its annual earnings report, payment provider Square reported $166 million in annual Bitcoin revenue - 31% of which came in the fourth quarter.

These figures contrasted with Square as a whole, however. In total, the firm reported a weak forecast for the first quarter of 2019 and included a profit warning for investors.

Shares of Square fell following the report.

Growth is there

But despite Squares troubles and the crypto market slump, it is interesting to see Bitcoin purchases grow quarter-over-quarter.

Unfortunately, this growth hasn't been too helpful to Square's bottom line since little profit is made from transaction fees.

Still, CEO Jack Dorsey is a fan of Bitcoin and has plans to see them through.

"I think there's a lot more we can do…in terms of making (Bitcoin) more transactional…making it simple enough that I could justify buying a cup of coffee in the morning."

REPORT

After $20 Million in Funding, a Project is Getting Exposed for Fraud

Wednesday, CoinDesk published an investigation that may have uncovered a $20 million fraud in crypto.

The project, called BHB, was already previously accused of running a pyramid scheme. Now, further investigation has revealed inconsistencies in founding team members.

Faking team pictures

After visiting the team's website (which has since been shut down), CoinDesk reached out to three members who were allegedly involved with the project.

Two of the three swiftly denied the report and deemed the project fraudulent for using their photos. In one of the two cases, economics professor Alexander White was renamed to Bobby White by BHB.

In addition, an invalid phone number and fake address were displayed on the website as the project's contact information.

Still chugging along

The report has yet to receive comment by the team.

For now, the project has swallowed about $20 million from investors - an amount that would certainly place BHB high on the list of crypto scams.

BITS

But wait, there's more...

🇨🇳 China's 10th crypto rankings keep EOS in first with TRON sweeping into second.
💸 Open source data startup Coin Metrics raises $1.9 million in first funding round.
🚨 Crypto money laundering reports skyrocketed in Japan last year.

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