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India’s Largest Bank Goes Big on Blockchain

The State Bank of India is gearing up to implement blockchain solutions in a number of financial processes including the management of its Know Your Customer (KYC) system. As a public sector bank, government-owned State Bank of India (SBI) is India’s largest banking corporation with assets over $460 billion and services in a number of areas including retail and corporate banking as well as financing and insurance. Earlier in February, SBI took the lead to establish ‘Bankchain’, India’s first financial blockchain consortium comprising of India’s biggest banks (both public and private) alongside technology companies including IBM and Microsoft to develop and implement blockchain applications in the financial services industry. SBI is now pressing ahead with its first implementation of the decentralized technology by using an enterprise blockchain solution for managing its Know Your Customer (KYC) system, via a new partnership with Intel that sees the technology giant become the consortium’s official technology advisor. The enterprise blockchain will run on Hyperledger Sawtooth, a modular platform for developing and deploying blockchains, developed by Intel – a member of the open-source Linux Foundation-led Hyperledger project. The blockchain will also be supplemented by Intel Software Guard Extensions (SGX) to boost the blockchain’s privacy, security and scalability. The blockchain solution will be delivered by Primechain, an Indian blockchain startup powering the Bankchain consortium. As reported by the Economic Times, the new blockchain solution will boost the efficiency of financial institutions without comprising on data confidentiality and transaction security. According to SBI’s head of innovation Sudin Baraokar, the public sector bank is keen to develop blockchain use cases through collaborations with other banks to hasten the process of deploying beta platforms. The SBI official stated: By leveraging blockchain components such as Intel SGX and Hyperledger Sawtooth and Primechain’s expertise to build blockchains, we can realize emerging fintech services such as P2P lending, crowdfunding and digital marketplaces that enables financial inclusion. The consortium’s first completed project, revealed in June, saw a working group of major Indian banks develop a blockchain to share customer data. Dubbed ‘Clear Chain’, participating banks will be able to share KYC, ALM and CFT now Your Customer, Anti Money Laundering and Countering the Financing of Terrorism) details.

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The Blockchain Era of Swiss Private Banking

In the near future, the Asset Management industry will go through disruptive changes and transformation, once bankers unlock the full potential of the Blockchain. Today, SwissBorg reinventing the way the Wealth Management ecosystem works, by leveraging the Ethereum Network to build a democratic Decentralised Autonomous Organisation. The project will provide cyber-secure financial services operating in Switzerland, Canada and Japan through a digital branchless platform. “Blockchain technology will be a massively disruptive force in the Financial Sector in the coming years. It will increase competition, improve services, access to information and reduce national barriers and transaction costs. Our mission is to create a cyberbank that offers democratic financial services (it is possible to invest from 1 CHF) accessible to anyone from anywhere at any time in the world”- Cyrus Fazel, Founder, CEO. Main highlights: SwissBorg: the DAO that will issue the CHSB Token, which will give token holder voting and economic rights over the Swiss Cooperative. Token holders are entitled to receive revenues generated by the DAO; Cryptallion: the 1st products is Multi-strategy Token Hedge fund giving participants exposure to advanced investment strategies in cryptocurrencies with a competitive fee structure. The Cryptallion (CSB) Token will be 100% distributed to the network; The Smart Mandate: an Investment Mandate encoded in a Smart Contract. Each client has its own customizable, transparent Smart Mandate that allows collaborating with several Financial Advisors hands-down. The Client can configure their banking requirements and investment strategies; Cyborg Advisor: sophisticated investment strategies with the best technological tools based on Artificial Intelligence algorithms, helping holistically manage your assets with ease. The main goal to innovate the Private Banking by implementing highly secure, transparent and customizable investment solutions.

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Growing the Garden: How to Use Blockchain in Agriculture

The Blockchain phenomenon is gradually settling into people’s lives, making it imperative to understand its applications and limitations. Today, we’re going to discuss how Blockchain can make the food industry better. Our current food system offers a fertile opportunity to explore how the Blockchain technology can interact with our ecosystems — both human and ecological — to add value to our lives. Fortunately, a number of startups are already hard at work in this area. After the introduction of Ethereum, altcoins became a popular way to showcase ideas for new cryptocurrencies. We are currently in a period of hype, where many developers are proposing crazy ideas to solve either nonexistent or trivial problems. It’s vital that society and developers focus on applying Blockchain to relevant and important projects, rather than assuming Blockchain technology is a one-size-fits-all panacea. Food and eating Food quality is clearly related to chronic illnesses such as heart disease, liver damage, stroke, diabetes and cancer, to name a few. We can significantly reduce chronic illnesses by improving the quality of food available. That requires an answer to the following question: Why do we eat poor quality food? This large problem can be divided in three parts: production, delivery and sale. Food production starts at the farm. Farming always implies high risks — natural disaster, harvest failure, accidents, etc. — that directly affect what a farm can offer. Market conditions and large agricultural corporations can also make the lives of small farmers challenging. The companies often abuse their positions by using expensive fertilizers and patented GMO-seeds to gain competitive advantages over smaller operations. Another problem is in the logistics of food delivery. Modern agriculture is under the siege of large chains’ producer-distributor-consumer model. Large-scale food producers often organize industrial food production in developing countries. They then create large-scale distribution networks to sell the food globally. Producers are often unable to sell their products directly to consumers, having to appeal to traders or distributors who buy their product cheaply. Large companies are able to cheaply mass-produce food and fill the distribution channels, but this food is never completely consumed. The result is the creation of a new problem: food waste and disposal. Resources like fuel and fertilizers are used to produce and distribute food that will never be consumed, creating waste. Solutions are possible Fortunately, health, eating, farming, agriculture and logistics are interconnected, and we can solve these challenges through modern technologies, utilizing experts who understand the systems. We spoke with Liz Reitzig, founder of NourishingLiberty, who has spent 15 years working on food systems from every angle. She is a consumer advocate who has worked in retail, policy, agriculture and farmer support. Blockchain as a Financial Tool Blockchain technologies offer good financial instruments to provide farmers a timely and complete payment for their efforts. Using these technologies will help to avoid risk and make the farmer’s life easier. According to Reitzig:  “Blockchain...offers [a] means for farmers to contract with sellers to grow what is needed. Full or partial payment can go into escrow immediately...to guarantee payment to the farmer without breach of contract and coercion by marketers. Getting paid for labor is a big challenge in the farming world, and Blockchain can alleviate part of that.” Thanks to smart contracts, farmers can get paid all year long, not only in summer and fall. Using a calculation system based on smart contracts, it is much safer to work with pre-orders, food baskets and buying clubs. “Some farms produce something called a community supported agriculture (CSA) share. This is a growing model where the consumers prepay a farm for the whole season. We might pay $500 at the beginning of spring, and we'll get a box of veggies every week for 30 weeks. Blockchain can handle that entire transaction.” One of the first farmers who implemented Blockchain as a financial instrument to develop his economy was Mikhail Shlyapnikov, a farmer from Russia. He introduced his own cryptocurrency for his farm. “A farmer has different tools: Shovels, tractors. Blockchain is also a tool, and it’s up to you if you use it or not.” Simplifying deliveries Smart contracts can include any conditions and any parties without involving lawyers. For example, using a smart contract, the owner of a small café can purchase coffee seeds directly from a Kenyan farmer. All at once, he or she can order delivery to Europe, pay for work of the customs broker and for certification according to the laws of the country of delivery. Smart contracts will free farmers from the long chains of intermediaries and thus lower the final price of the product for the consumer. Origin, quality and certification Implementing Blockchain into the production, certification and food processing steps creates transparency in an otherwise non-transparent system and allows consumers to support suppliers they choose. It is particularly relevant for organic and certified origin products. Liz Reitzig emphasizes the importance of determining the origin of organic products: “If a farm is certified organic, or they want to emphasize a different kind of certification, they can use Blockchain to track products. Consumers want to know what they are buying, and Blockchain can offer that.” Marcel Blankenstein, owner of Naked Organics, believes that origin information may be interesting for the user as long as it’s usable: “Blockchain in agriculture allows the consumer to scan the barcode of a product in the supermarket and instantly view the entire supply chain from supermarket to farmer. In terms of consumer orientated transparency. From a regulatory perspective, agricultural contamination can be very quickly isolated.” Can a farmer sse Blockchain? Reitzig believes that the most difficult obstacles for Blockchain implementation in are complicated work principles and terminology. She says: “The biggest challenge for farmers in using Blockchain is in overcoming the technical understanding of it. Farmers are focused on farming. They are not on the cutting edge of technology.” Ecosystem This means Blockchain technologies must be simple to understand and use. A number of startups have been working in this space. One such company has developed an entire platform to make Blockchain use simpler for farmers. They have united all the Blockchain functions related to food, farming and agriculture. This system includes smart contract libraries, remote identification systems, a digital currency payment processor, a smart cryptocurrency wallet, and their own digital currency token. Gregory Arzumanian, co-founder of 1000Ecofarms, says: “We learned all the opportunities that Blockchain technologies can help with. When the Blockchain technologies are tangible and understandable, we can apply them even to the basic human need for food. [A] key objective is to create a global, comprehensible and safe ecosystem for agriculture and food businesses that would allow them to significantly reduce the expenses related to the production, sales and logistics of the consumable goods.” Blockchain not a panacea Blockchain technologies can alleviate technical difficulties and simplify the farmer’s life, and make our food — and thus our health — much better. There remain problems that only consumers can help them solve, however. Marcel Blankenstein is sure that the main challenge every modern farmer faces is consumers’ ignorance, which must be resolved before Blockchain can reach its full potential: “Unless consumers are taught to understand that conventional farming is “bad,” Blockchain will have very little “good” purpose, from a sustainability perspective. It is important to remember that traceability does not equal good farming techniques and quality food does not equal healthy food.” Fortunately, we see modern farming moving quickly towards sustainability. Healthy and organic food is becoming ever-increasingly popular and affordable thanks to Blockchain technologies, which means that direct transactions with consumers can be profitable for small farms. Peer-to-peer ecosystem Blockchain is a valuable technology, but people must create the rest of the ecosystem. If we display the origin of food while making an open and informed marketplace, we are creating a level playing field where small and medium producers can reach their customers. In turn, when consumers can find products and farmers who meet their needs, and can pay them full value for their product, farmers can make a viable living, which empowers them to remain on the farm and continue the work they love.

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Trump's Fed Chair Nominee Has Publicly Discussed Blockchain

Donald Trump’s reported nominee for Federal Reserve chairman has previously spoken about the topic of distributed ledger technology, signaling a hesitancy to embrace the idea of a Fed-issued digital currency and appearing cautiously optimistic about other DLT use cases in the financial sector. Jerome H. Powell, a governor of the Federal Reserve who the New York Times reports is President Donald Trump’s nominee to be the next Fed chairman, discussed distributed ledger technology (DLT) at some length during a March 3, 2017, speech at the Yale Law School Center for the Study of Corporate Law. Powell, who has occupied his current Fed post since 2012, said at the event (called“A public record or ledger of all transactions that virtually eliminates third-party tampering. While every exchange is public, the identities of those exchanging, and what the money is being exchanged for, is kept private. However, the amount of money is public. New blocks can only be added in chronological order by mining, and the inherent value and information cannot be compromised. For more info see our Resources section on Blockchain.">Blockchain, The Future of Finance and Capital Markets?”) that central banks weighing the possibility of issuing digital currencies “should have serious reservations” about their abilities to combat “cyber attacks, cyber counterfeiting, and cyber theft.” Such acts of malfeasance, he warned, could be committed by actors the world over and could “significantly exceed historical experience with paper currency.” He also argued that a central bank-backed digital currency could have serious implications regarding its users’ privacy: “In today's environment, commercial banks maintain extensive records for individual debit and credit card transactions and increasingly monitor patterns of behavior for fraud. Such records in the hands of a central bank or government entity, however, could raise serious privacy concerns.” Additionally, he claimed, as cryptographic security measures are enhanced to prevent fraud, digital currencies become more effective tools for hiding “illegal activity,” including money laundering. “To my mind,” Powell opined, central bankers “should also consider whether the private sector can substantially meet the same needs.” Should they choose to introduce it, their currency would compete with “private-sector products and may stifle innovation over the long run.” Speaking more generally, he said: “We should be open to the new ideas and innovations that will drive economic growth and improvements in our financial system ... Disruptive new technologies suggest that traditional financial service providers must innovate and adapt or be left behind.” He pointed out that in the financial sector, where he said DLT “may have important implications,” many of the technology’s use cases currently being trialed or conceived involve permissioned systems. While many enthusiasts believe that the technology’s greatest promise lies in its decentralized architecture, Powell defended the finance industry’s current preference for permissioned ledgers, explaining that “safety and confidence must also weigh in the The amount of cryptocurrency belonging to an account.">balance.” He also sought to temper some of the excitement that DLT has spawned, noting that adoption would be slow because “upgrades are often costly, lengthy, and risky,” and network effects “can also affect adoption, since multiple firms may all need to adopt a particular implementation of DLT in order to justify its use in a specific market.” Furthermore, “standardization and interoperability across different versions of DLT will need to be addressed to allow technology integration and avoid market fragmentation.” He added that if DLT adoption ramps up, laws will need to be updated or supplemented in order to make provision for the legal gray area that the novel technology would necessarily generate. Finally: “If automated risk management, An executable distributed code contract (often referred to as a "smart contract") is a computerized transaction protocol that executes the terms of a contract under designated conditions, also referred to as a smart contract. For more info visit our Resources section on EDCCs.">smart contracts, and similar tools are deployed across a network, cascades of rapid and hard-to-control obligations and liquidity flows could propagate across a network and the financial system in response to events. This interdependence will likely call for creative organizational thinking to address the need for governance and strong risk management.”

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Why Blockchain Can Be Good For Competition

In the endless debate about when do you actually need a blockchain within a specific industry vertical versus not, it is easy to lose sight of the big picture. Proponents of permissioned, distributed ledgers are often quick to point out the shortcomings of permissionless protocols such as Bitcoin or Ethereum. Because of their decentralized nature, they do not fit within existing regulatory frameworks, are difficult to monitor and control, and introduce new trade-offs in terms of speed, flexibility and energy consumption into what could otherwise be a seamless process of transaction reconciliation across organizations. Private blockchains, they say, can deliver all the benefits of this new, exciting wave of technological change without disrupting how businesses run their operations. The catch is that permissioned blockchains take advantage of only one of the two, key costs affected by blockchain technology: the cost of verification. In and of itself, being able to cheaply verify the attributes of a specific transaction (e.g. who is involved, their credentials, etc.) without incurring additional costs or performing an extensive audit can be extremely valuable to society. For markets to thrive, buyers and sellers need to be able to trust the information they use to decide when and with whom to transact. Whenever the asymmetry of information between buyers and sellers is too large, markets unravel, and beneficial trades do not take place. Blockchain technology, by lowering the cost of verification, can make markets more secure and efficient, and expand the types of transactions we are willing to engage in. Many of the systems used today across the globe to settle and reconcile transfers of value and digital assets could theoretically be made more efficient with a distributed ledger. Of course, for verification costs to actually drop, the data recorded on a blockchain needs to be accurate to begin with. While this is easy to achieve when all the information needed is generated and updated digitally (as in Bitcoin), when a distributed ledger is used to track offline events, the question of how to port such analog information back into the digital space is an unresolved one. This “last mile” problem constitutes a sizable entrepreneurial opportunity for startups and incumbents that realize that blockchain does not necessarily remove the need for intermediaries, but instead changes the nature of intermediation. Third-parties can still add substantial value to marketplaces (e.g. through curation), but a revenue model simply based on processing transactions is unlikely to be sustainable in the long run. Where permissioned blockchains fall short is in taking advantage of the other, key cost impacted by the technology: the cost of networking. When combined with a native token, a permissionless blockchain can be used to bootstrap a digital platform without the need for a central intermediary. Driven purely by the incentives embedded within its protocol - which need to be carefully designed! - permissionless platforms enjoy the benefits of a shared network infrastructure, without the main cost it typically involves: market power. As a result of network effects and economies of scale, the digital platforms that shape our lives today have accumulated a high degree of market power. In fact, they often act as the default, “shared infrastructure” within their industry vertical. While this may not always be visible through higher prices for consumers (as many of these products are given away for free), it is typically reflected in adjacent markets (e.g. advertising), and in the amount of data these businesses have accumulated relative to everyone else competing with them. Beyond the privacy risk of exposing large segments of our digital lives to a small number of players, data concentration has implications for competition - not just today, but also in the future. For instance, if we want a competitive market for artificial intelligence applications, we will need to unlock these data monopolies so that more than a handful of players can generate high quality predictions. So How Can Blockchain Increase Competition And Lower Barriers To Entry? To ensure a higher degree of competition, permissionless blockchains can be used to create digital marketplaces without assigning control - both over prices and access to data - to a single operator. When entrepreneurs and developers in this space talk about “censorship resistance”, it is important to realize that censorship is simply an expression of market power. By allowing individuals and firms to transact without assigning market power to a central intermediary, the digital platforms built on top of permissionless ledgers can turn concentrated markets into substantially more competitive ones. This can lower barriers to entry for startups and lead to new products and services. By lowering the cost of networking, permissionless ledgers also allow for a fine-grained definition of digital property rights, including rights to the underlying data. While on current digital platforms the operator by default has access to all information exchanged, in this new regime, users and businesses will have substantially better control over digital privacy. New data licensing and monetization models will also be possible.

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Digital Currency Raises No “Pressing Regulatory Issues,” Says Reserve Bank of Australia

Unlike those of some other nations, Australia’s central bank expressed tolerance for cryptocurrencies, and claims that blockchain has the potential for widespread use. However, the full-scale national adoption of blockchain systems that is considered inevitable by some may be a ways off. The use of digital currencies remains “relatively limited in Australia, as elsewhere,” stated Tony Richards, head of the Payments Policy Department for the Reserve Bank of Australia (RBA). “Digital currencies do not currently appear to raise any pressing regulatory issues.” The stance taken by the RBA contrasts with positions recently taken by regulatory counterparts in Indonesia, Vietnam, China, and Lebanon – all of which have moved to ban or heavily restrict A digital store of monetary value the primary use of which is for buying and selling goods, services, or property, such as Ether or bitcoin. Cryptocurrencies are cryptographically secured against counterfeit and often are not issued or controlled by any centralized authority.">cryptocurrency. Richards’ statement was part of a speech delivered with his colleague David Emery to the Australian House of Representatives Standing Committee on Tax and Revenue on October 27. Concerns over money laundering, capital flight, speculativeThe public release of a new token or coin. Often referred to as an "ICO," or "Initial Coin Offering," and used to gather capital for a business entity's new endeavors within the blockchain.">token offerings and terrorist financing are influencing many agencies around the world to oppose digital currencies. Though Richards admits that “cryptocurrencies can serve as a means of payment in the illicit economy,” he argues that cautious stewardship of banking and payments systems will accommodate new technologies while proving insurance against gross abuses. “The increased use of electronic payments means more transactions will go through visible channels,” said Richards, pointing to the transparency created by distributed ledger technology. “Distributed ledger and A public record or ledger of all transactions that virtually eliminates third-party tampering. While every exchange is public, the identities of those exchanging, and what the money is being exchanged for, is kept private. However, the amount of money is public. New blocks can only be added in chronological order by mining, and the inherent value and information cannot be compromised. For more info see our Resources section on Blockchain.">blockchain technologies underlying them have potential for widespread use in the financial sector and many other parts of the economy.” Richards also discussed Australia’s soon-to-launch New Payments Platform (NPP), developed from research conducted between 2010 and 2012 and scheduled to begin in 2018. The platform relies upon connective tissue that is not DLT-based, but employs a “distributed clearing” protocol in which validation and confirmation of payments are undertaken on a distributed peer-to-peer network and then processed centrally through the reserve bank. However, NPP may be an interstitial step toward more widespread adoption of blockchain. Richards alluded to innovations pushed for by Australian FinTech companies, saying that the entity responsible for managing the platform, NPP Australia Ltd., “is reaching out actively to encourage the development of new services that will use the NPP. This outreach is directed in particular at non-traditional players in the financial system.” Cheng-Yun Tsang, a research fellow with the University of New South Wales Sydney Law and an assistant professor at the College of Law, National Chengchi University in Taipei, Taiwan, writes in an analysis of the NPP that “it is also noteworthy to observe how it will be impacted (or upgraded) by emerging disruptive payments innovations such as the distributed ledger technology (or the blockchain technology). The platform’s distributed-clearing feature makes it potentially compatible to the blockchain infrastructure and therefore opens the possibility of turning the country’s payments system into the world’s first national Internet of Values.” Additionally, it should be noted that several FenTech companies, such as FlashFX, AgriDigital, and Othera, have approached FinTech Australia, a Refers to a summarized snapshot of all balances and data at a particular point in time on the blockchain, normally referring to the condition arrived at by the most recent block. For more info visit our Resources page on Blockchain.">state-run industry advisory group, with proposals for the Digital Australian Dollar (DAD) in an effort to steer the RBA toward a national digital currency. The RBA has taken no official role in such an endeavor, although it will observe initiatives.

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Korea’s Banking & Financial Sector Gain Blockchain Security Upgrade

The Korea Financial Investment Association has laid claim to the world’s first commercial blockchain used by financial firms for customer security. Industry body Korea Financial Investment Association (Kofia) has announced the implementation of Chain ID, a blockchain identification platform that will see a number of securities firms and merchant banks securely share customer information for online identification. In a conference on Tuesday, Kofia chairman Hwang Young-key revealed that the decentralized identification service was developed using smart contracts and the private blockchain platform used by a consortium of investment companies and blockchain startups led by Kofia. As reported by CCN in late 2016, the consortium sees 21 financial companies and five blockchain technology collaborating to develop blockchain solutions for the sector, making it the country’s first comprehensive blockchain consortium. In essence, the service will enable customers to use the share their blockchain-based certificates and data across all participating financial institutions of the Kofia consortium without the need for a verifying central authority like the Korea Information Certificate Authority (KICA). Chain ID will see its launch in November via Android and iOS apps ahead of a rollout of desktop versions. Developed by Seoul-based blockchain startup theloop, Chain ID is merely the beginning for what will ultimately be a sweeping adoption of blockchain systems among society, according to the company’s CEO Jonghyup Kim.

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Russian Bank VEB Turns to Blockchain for E-Procurement Project

Russian government-owned development bank, Vnesheconombank (VEB), and e-procurement resource platform Roseltorg are teaming up on a new blockchain project. Using blockchain technology, the project aims to build a platform for transparent electronic transactions between the government departments and businesses. The project would also facilitate new methods for storing and verifying information as part of the move towards a digital economy, a press release states. The new tool is intended to aid the bank in various areas of its business, including investments, project monitoring, procurement, electronic contracting and supply chain. The news comes days after Russian President Vladimir Putin mandated new rules for cryptocurrencies and ICOs, including use of the tech to create a "single payment space" for the Eurasian Economic Union countries. According to Vnesheconombank chairman Sergey Gorkov, the blockchain tool will help in achieving "zero human factor impact" for transactions, helping them become more accurate, secure and transparent. He further added: "The system will be useful not only to the government, but also to business customers. The new mechanism will help businesses interact with their clients and suppliers, improve the document exchange quality, enable stronger data confidentiality and underpin the customers' confidence in the product suppliers." The first phase of the project is expected to be carried out by the end of this year or by the start of 2018, the release adds. Blockchain technology is attracting increased interest from Russian financial institutions and IT companies, among other industries. Government authorities in the country have recently started eyeing potential use cases of the nascent technology in areas of anti-corruption, anti-money laundering, risk management and others. Last week, the Russian government announced plans to begin a blockchain-based land registry pilot test, by early 2018.

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What's The Future Of Online Marketplaces & Blockchain's Technology Impact?

Remember when Ebay started in 1995, and all anyone could talk about was how the Internet was going to change our lives? Well, almost everyone happened to be proved correct. Today, online marketplaces are dominating product and service distribution channels across the globe - from U.S. e-commerce behemoth Amazon or Alibaba in China. From 2014 to 2016, Jack Ma’s Alibaba enjoyed an incredible 50% annualized growth rate, while Jeff Bezos’ Amazon has grown a similarly praiseworthy 55.8% annually. Some estimates put global e-commerce retail sales at an astounding $4 trillion (trn) by 2020, comprising almost 15% of projected retail spending. While online marketplaces like Alibaba and Amazon are dominating product distribution marketplaces, gig economy growth continues to skyrocket. There are an estimated 34% of the workforce in the U.S. economy deemed as gig economy workers as of this year. Brad Smith, CEO of Intuit (INTU), the owner of TurboTax, remarked during an earnings call earlier this year in May that the number would rise by 43% by 2020. He was referring to freelancers of all sorts - from those working for taxi firms like Lyft and Uber as well more traditional freelancers like electricians and plumbers.   A joint project initiated by Emergent Research and Intuit has indicated that in the U.S. there are about 4 million gig workers, but driven by the newer online platforms they expected that this figure would grow to 7.7 million workers by 2020. However, the exact figure is not easy to gauge precisely. While global consulting firm McKinsey has found that there are roughly 68 million freelancers in the U.S., the U.S. Labor Department has admitted that it has struggled to quantify the number. And, new government statistics on freelancers in the U.S. will not be issued until next year. Before we know it, freelance work could overtake the traditional 9-5 job. And, the rise in digital nomads - folks who use technology to complete their work, independent of a company office - has led many to question where online marketplaces can go from here. Currently, service marketplaces are dominated by names like Fiverr, Upwork, and TaskRabbit, the latter which was acquired recently this September by the home furnishing giant IKEA for an undisclosed consideration. These online platforms allow users to purchase freelance work and services through a centralized marketplace. Services range from Internet marketing help to installing a flat screen T.V. Niche sites like DesignCrowd and Project4Hire respectively focus on marketing designs and traditional business services like accounting and finance. Massive Holes In The System Yet, whether it is Amazon, Upwork, or Project4Hire, each of these platforms have something in common - they run off of centralized platforms. There is one internal system that matches buyer and seller together, whether based upon algorithms, search criteria or other proprietary methods. But oftentimes what is lacking from these platforms are two key elements, namely transparency and social interactions. These twin pillars of commerce - whether online or in person - reflect the most important aspect of making a sale, and that is trust. Traditional online marketplaces can change their internal fee structure as they choose. Many times the result is an ever changing fee structure that hurts buyers and sellers alike. (Note: For the fees of various online marketplaces see this list). Additionally, there is a lack of transparency with these centralized platforms. There is no sure way to know who is behind the “anonymous” username, and there is not an easy way to identify previous transactions. This results in growing amounts of online marketplace fraud. Blockchain Tech: Next Frontier For Online Marketplaces Blockchain technology has been growing at an unbelievable pace over the past two or so years. Through 2021, some see a 61.5% annual growth rate. As the revolutionary technology increases in popularity (see Jamie Dimon’s latest endorsement) more blockchain-based companies are dreaming up the next big step for a variety of industries. Certainly the impact that blockchain has had over in recent years has been nothing short of stellar. And, on the investment front billions of dollars have been poured into blockchain companies so far in 2017. Initial Coin Offerings (ICOs) or token sales have zoomed to around $2 billion (bn) this - versus $256m in 2016. Figures contained in an analyst research note (‘Blockchain: An update on ICOs and VC investment in the blockchain’) for the third quarter of 2017 from PitchBook, revealed that private investments into blockchain companies had topped $4.5bn so far this year to that point in time. This contrasted with the corresponding period last year when 203 transactions raised $624m in aggregate. Against this backdrop, several blockchain-based companies in particular are looking to revolutionize the way business is conducted through online marketplaces. These companies are creating decentralized platforms to foster peer-to-peer (P2P) interactions. For example, take Soma, which stands for ‘Social Market’, is a new Blockchain-based platform that creates a digital community where users are able to buy and sell items or services through a P2P network. By creating ‘cards’ that represent the physical item or service, the platform has created a way for users to sell goods and services with transparent history and feedback. Having started a month-long ICO late this September, it also seeks also to address fraudulent sellers on classifieds platforms such as Alibaba, Amazon, and Ebay. On that score, according to report published from research firm Frontier Economics this February and commissioned by the International Trademark Association (INTA) and the International Chamber of Commerce, it has been estimated that counterfeiting and piracy could rise to $2.3 trillion by 2022. Add in associated social, investment and criminal enforcement costs it could push the total to $4.2 trillion and put around 5.4 million “legitimate jobs” at risk according to the analysis. The latest figure contrasted with the global value of the counterfeit market standing at $1.7 trillion in 2015 and shows no sign of slowing. Indeed, Frontier estimated the global value of counterfeit and pirated goods and services back in 2013 was between c.$923 billion to $1.13 trillion, a figure equating incredibly to the size of the Spanish economy in 2015. Buyers and sellers benefit from clarity, pricing freedom, and effectively immediate compensation. The platform utilizes a token called the SCT. Here think of a digital ‘coin’ with real value that can be exchanged for traditional funds and currencies like US dollars or Sterling. Buyers purchase SCT and can then use them on the platform, and sellers agree to accept SCT as payment. (Note: Individuals wishing to participate in cryptocurrency or token offerings should be aware that it is highly speculative and that the market is largely unregulated). In this way, and contrary to traditional platforms, users can connect directly without the nebulous middleman involved. Potential clients select and communicate directly with the seller, who will be providing the service instead of working through a third party. The result is lower fees and increased communication. Jukka Hilmola, a Finn who is Co-founder of Soma that has worked in various start-ups during their early phases and possesses an LL.M from Queen Mary University of London, commenting said: “Inevitably, the disruption of C2C-markets is currently happening. By utilizing blockchain to leverage its disruptive business model, Soma will be able to differentiate from the other mobile-first start-ups in the industry." The greatest advantage of these decentralized platforms is the blockchain technology itself. As a blockchain - think of a ledger or database that contains a history of all transactions that take place on the platform - the platforms are completely auditable by all participants. This leads to fairer pricing for clients, as all prices are visible and verifiable. Potential customers are able to select the provider that best suits their needs, both financially and practically. P2P Services Safety Start-ups like CanYa, a recently launched working platform in the home and digital services industry currently made up of mature iOS & Android apps to find, book, pay and review service providers, is among plaforms that offer decentralized service marketplaces powered by blockchains. In CanYa’s case its web app, which is described as a “hybrid between an on-chain cryptocurrency payment layer” using CanYa Coins, was beta-launched in a small Australian city in late December 2016, and subsequently soft-launched in a major city in the country at the start of this year. Such developing platforms connect users directly and allow for enhanced communication between parties. Funds for a service are escrowed (i.e. money, property, a deed or a bond put into custody of a third party) until the task is complete and specified conditions met, at which time the buyer of the service releases the funds directly to the seller/freelancer, eliminating trust issues and fraud. The blockchain technology also allows service providers to offer their skills with a price plan they choose. They can offer one-time services or sell ongoing maintenance plans. Sellers are not bound by a central system that limits what they can and cannot do. Nor are buyers limited to what a third party host puts in front of them. And these services are not simply digital. Want to hire a gardener, an acupuncturist or a nanny? CanYa’s platform allows you to do just that will a fully integrated trust system that protects both buyer and seller. Contracts can be mutually agreed, both in the making and the finalizing, and compensation is immediate and guaranteed. No more stopped checks to hassle with. Reflecting his thoughts on the state of play with the market and what he envisages for the future, CanYa’s Thorbjornsen said: “Everything we know about today is going to be disrupted by blockchain technology as we start to see a prevalence of start-ups raising funds through ICOs and consumers getting in on the ‘ground floor’ of the future tech giants.” Through blockchain platforms that allow direct peer-to-peer interaction, buyers and sellers can conduct business in a more social setting while still maintaining security and transparency. The middleman is eliminated and the “anonymous” user on the other end is no longer a stranger. Thirty plus years ago, Ebay and Amazon stepped onto the scene and sought to revolutionize online marketplaces. Today, blockchain start-ups like CanYa and Soma hope to have a similar effect. Given their flexible platforms and transparent nature, coupled with greater pricing fairness for both buyers and sellers, it is hard to imagine a future where marketplaces have not changed our everyday lives. But for a bright future these new platforms will have to deliver at the end of the day. Carpe diem.

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Cyprus Securities Regulator Trials Blockchain Oversight in OTC Markets

The Cyprus Securities and Exchange Commission, Cysec, has revealed new details about its efforts to explore blockchain technology, hinting live trials might already be underway. According to a report by Cyprus Mail, the agency is particularly interested in the regulatory implications of shared, distributed ledgers, and is testing how the technology could grant it greater oversight of over-the-counter markets. There, the regulator asserts that licensed investment firms are already trading in digital currency derivatives, an offering now in the early stages of development in the U.S. markets, as well as globally. Cysec chair Demetra Kalogirou said: "We have already been using [blockchain] in Cyprus with investment services companies that carry out OTC [over-the-counter] transactions." Kalogirou went on to state that Cysec will consider the wider use of so-called RegTech systems to better facilitate the compliance of supervised entities. Greater fintech adoption will allow Cysec to maintain the country's "dynamics in the provision of financial services and products," Kalogirou added. According to the report, the commission is working on a draft legislation to cover crowdfunding efforts for startups, though it is not clear if any new rules would include initial coin offerings (ICOs).