ICO Crowd - Issue #10

www.icocrowd.com

ISSUE #10, october 2018

FEATURING : BRX EXCHANGE COINRULE DECIMATED DGRAM AND HOLOCHAIN

Price: 0.01 BTC

FOREWORD

ISMAIL MALIK Editor-in-chief DONOVAN OBOSI Head Analyst ANNEMIEKE DIRKES Managing Editor PAM TATRO Content Editor TZVI SHISHLER Marketing Photo credit © Shutterstock

If you would like to advertise with us or have any other queries please get in touch at info@icocrowd.com Disclaimer. All opinions and views expressed in this publication are those of the author only and do not necessarily represent the views of ICO Crowd magazine, its Management or Advisors. All content of ICO Crowd Magazine, in particular but not exclusively, photographs, businessdetails, facts and figures, names, adresses and dates, historic details and offers, are the sole responsibility of the author of each artice. Copyright violations by the author are the sole responsibility of the author and ICO Crowd magazine can not be held liable, whether on the whole or on particulars. www.icocrowd.com

by ISMAIL MALIK Chairman & Executive Editor ICO Crowd

investment in crypto. The next price increase could be much larger than the one we have just experienced. We have only seen around $650 billion wiped off the value of crypto since its all-time highs, whereas an estimated $1.755 trillion in value was wiped out in the dot com crash.

It has been a difficult month for all involved in crypto. Tokens across the board are down with few exceptions. Funding raised through ICOs is a mere shadow of what it was at the start of the year with current levels at one tenth of the average monthly funding volume in the first quarter of 2018.

When institutional investment starts to flow into the crypto market in earnest, vast swathes of liquidity can be expected to stimulate the market incredibly. It could be that we have not yet experienced the true crypto crash yet. This market movement could be considered merely “the first sell off ” and are now languishing in a bear trap.

What happened to the ICO market? Was crypto in general dragged down by Bitcoin?

Did the hundreds of dubious ICOs of 2017 (that raised over $1 billion US dollars) sour investor sentiment? Or was something fundamentally wrong with the value proposition of most token offerings?

The road to regulation will be rocky and it is hard to draw comparisons between crypto and traditional markets. The world has never seen a disruptive technology like this. It seems clear that what crypto needs to breathe new life into the market is the institutional money.

Last year’s meteoric rise in the valuation of the crypto market saw prices become detached from any realistic valuation that could be provided by fundamental analysis, instead the market was overcome by speculative hope - by a kind of digital tulip mania. Whilst some investors have lost 100% of their investment on scam tokens, the widespread poor performance of the crypto market has seen some investors lose 95% of their legitimate investments that actually do have a value proposition.

Intercontinental Exchange who own the New York Stock Exchange has announced their plans to trade physical Bitcoin futures.

Thus, sidestepping much of the regulation that is yet to be written. Consistent efforts are being made by ambitious institutional investment companies and crypto entrepreneurs alike to get clear guidance on the future regulation of crypto and get the institutional money flowing.

Yet there is hope. The doomsayers are wrong when they suggest that crypto is dead. It could be argued it hasn’t even started yet. As the dust settles and regulation looms both entrepreneurs and investors alike are going to have to look at grounded strategies. It was not until the tech bubble burst that the true flowers of web 2.0 started to bloom. The green shoots of recovery are present in the crypto ecosystem.

We at first glance appear to be at a similar juncture with web 3.0 and crypto as we were around 2001 when the dot com crash occurred.

Will the advent of regulated security and equity tokens breathe new life into the world of crypto, are we witnessing the early pollination of a crypto renaissance? This could just be the start of true institutional

When the world’s largest national securities exchanges make such announcements like they have, it’s significant news and time to sit up and listen.

This could be a signal that digital securities might not just be the next big thing in cryptocurrency: they could be the next megatrend in traditional capital markets too. If you had sold Apple stocks at the wrong point in 2001 you would have missed out on over a 22000 percent return. Some of tomorrows crypto giants most likely will seem incredibly undervalued with the power of hindsight.

Some of cryptos biggest opportunities still lie ahead of us.

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CONTENTS 4 5 6 9 13 16 18 20 22 24 26 28 30 32

Advisory Board Contributing Writers Banking-the-Unbanked with Algorithmic Trading FITBLOX dGram: Standard Disruption, Crypto Innovation // DANIEL STEEVES

Fracture Labs: How to Accelerate the Adoption of Blockchain Technology? With Online Games of Course!

Preventum What is Holochain?

Blockchain and Organised Religion

Blockchains and Genomics HealthDex – Unleashing the Power of Health Data // DR. MOHSIN CHAUDHRY

China Leads Blockchain Patent War

Ethereum Standards Explained

Free Society and Floating Cities

34 36 40 42 44 46 48 52 54 56 58 59 62 64 66 68 70 72 74 76 78

Soluna UK Lenders Warm to the Idea of Mortgage Deposits Funded Through Crypto Gains Do the Police and Government Have the Right to Seize Your Cryptocurrencies, When They’re Supposed to be Decentralized?

Why Do Crypto Prices Follow Bitcoin?

LQDEX Platform Supports Trading Digital Assets Across Multiple Blockchains // JAMES SOWERS

Lessons Crypto Investors Can Learn from the .com Crash UK Government Drives Blockchain Innovation for Social Good Sports Clubs and Blockchain LLoyds of London Explores Crypto-Insurance Proof of Work, Stake and Authority

Do Hard Forks Damage Crypto Who is John McAfee Space Exploration and Blockchains The Fall and Rise of Mt Gox RecordGram Strikes the Right Chord With Tune! // JAMES SOWERS

What You Need to Know About the Bitcoin Halving ERC999: A Simple Way to Form Composite Assets What is EOS? How Alt-Tech Has Embraced Crypto Blockchains are Forever Blockchain and the Automotive Industry

80 82 84 86 88 90 93 96 98 100 103 106 109 112 114 116 118 120 122 124 126

ICO Crowd’s Who’s Who of LinkedIn Blockchain Influencers Blockchain and Big Data How Can Blockchain Reshape the Art Industry?

Turning the Power of Influence Into Money South Korean Digital Currencies Move into Mainstream The Rise and Fall of the Decentralised Prediction Market Pre-empting a Hack Attack.

10% of ICO Funds Lost to Hack Attacks Public Interest in Crypto Currencies Set to Shift Crypto in Africa Evolving FinTech Opens All Business to Global Liquidity The Competitive Paradox of De/Centralised Exchanges The $495 billion Global Accounting Industry’s Disruptive Holy Grail Smart States and Cities Reinventing Ethereum Crypto Friendly Browsers Crypto Asset Stripping Crypto and Honest Lending Energy Traders and Banks New Blockchain Platforms The Oracle Problem The Crypto Friendly Global Political Movement The Crypto Glossary

ADVISORY BOARD SUSAN POOLE

MARC KENIGSBERG

SIMON COCKING

Founder, BlockBridge Advisory Co-Founder, Blockchain Training Institute

Founder of BitcoinChaser.com

Senior Editor at Irish Tech News Freelance for Sunday Business Post, Irish Times, The Southern Star, Dublin Glob

ANDREY GOLUB, PhD

SEAD MUFTIC

SERGIO A. FERNANDEZ DE CORDOVA

Entrepreneur, CEO & Founder @ELSE Corp- a Virtual Retail company

CEO at Blockchain Information Exchange Security Corp

Chairman – P3SmartCity Partners, Inc Private Sector Advisory Group, SDG-FUND, United Nations

THEODOSIS MOUROUZIS, PhD

MUKHTAR MUSSABETOV

EMMANUEL R. GOFFI, PhD

Program Director of MSc in Business Intelligence and Data Analytics at Cyprus International Institute of Management (CIIM) Research Fellow at UCL Centre of Blockchain Technologies (London,UK)

Blockchain Entrepreneur, Founder at BlockSpace Labs

Associate doctor with Science Po-CERI Research fellow with the Centre FrancoPaix, at the Université du Québec à Montréal

ALEX LIGHTMAN

DANIEL STEEVES

AVI LEVI

Award-winning and Amazon bestselling author.

Canadian-born, German-based consultant and entrepreneur, Strategist, Steeves Solutions

ICO Crowd North America

CONTRIBUTING WRITERS HEAD WRITER

Garry WALKER Garry is an IT professional with a background in both hardware and software. He has worked in FinTech for 18 years, moving ever increasingly into crypto and apps whilst remaining a struggling artist.

CONTRIBUTING WRITER

Marianne LEHNIS Marianne Lehnis is a writer and video journalist specialising in entrepreneurship, startups, climate finance, disruptive and blockchain technology with a focus on its impact on the wider world.

She sources interviews and provides analysis of industry insights and trends for titles including BBC Technology of Business, Startup Magazine, and the Powerlist. Her background is in global B2B and finance reporting and local news video journalism.

CONTRIBUTING WRITER

Michiel MULDERS Michiel is a Blockchain Developer at TheLedger and an avid Writer. His interests are IT security, decentralisation, BigchainDB, Hyperledger Fabric, Stellar and Ethereum.

OCTOBER 2018

Banking-the-Unbanked with Algorithmic Trading One of the core promises of Blockchain technology is the democratization of financial markets.

while preserving asset value. Now, a few years into the blockchain revolution, we are facing a step-up typical of the life cycle of new technologies: big players are coming into the market. They are doing While the early focus in Blockchain has it with bots performing rapid algorithbeen on topics such as payments, bank- mic trades that, inevitably, are pushing ing access for the unbanked and censor- back all the mass of new traders that fell in love with trading. ship-proof digital currency, one huge elephant in the room has gone unnoENTER COINRULE: ticed: In today’s equities markets, PLACING THE POWER BACK INTO at least 65-70% of trading volumes by THE HANDS OF THE ‘REGULARS’ come from algorithmic trading.

ICO CROWD IN THE WORLD OF TRADING. Most of this trading comes from large It has become a truth that in today’s quantitative hedge funds running adtechnology driven markets, algorithvanced trading strategies to which remic traders win. Emotions and feeltail investors have no access. ings, otherwise also known as human nature, can be the worst enemies for At the same time, we live in a time of a new trader. Every trader can experigrowing economic inequality with fewence fear, euphoria, greed and disilluer and fewer young people participating in stock markets or being able to af- sion when experiencing market moveford a home. Cryptocurrencies have giv- ments and that will have a negative effect on his or her capability to make raen millennials the opportunity to retional decisions. think the meaning of money, to deconstruct the banking system from scratch from enabling simple peer-to-peer trans- Algorithm trading strategies on the other hand build on patterns, and the actions to exploring the many logistiability to recognize these patterns cal hurdles involved in trusting others

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quickly. The best algorithmic trading strategies are designed to improve as they learn. ‘Algos’, as they are called, also command perfect discipline, rationality within the boundaries set to them and do not tire, a critical quality in the 24/7 crypto markets. To put it differently, Algos are relentless machines that do not get attached to hodling the wrong coin but execute according to the original framework designed for them. Finally, their sheer speed in execution allows traders to be in multiple places at the same time when needed, not something your regular trader is capable of doing.

The increasingly widespread use of algorithmic trading impacts society more than many would acknowledge.

The ability of the richest parts of society to access financial products that are not available to any of the other groups is a key driver of growing wealth inequality. As economists Moritz Kuhn, Moritz Schularick and Ulrike Steins from the University of Bonn recently wrote, in the 38 years between 1975 and 2013, a $100 in the S&P 500 would

OCTOBER 2018

The average user on the other hand will neither have the time nor technical skill to enter this game against the professionals. In fact, at the moment, it is impossible to structure automatic trading strategies to fight these quant bots unless you have access to similar advanced tools. The implications of this cannot be overstated - yet again in the ‘new’ world of Crypto, an elite class is taking over the driving seat. Many users would remain excluded from the more promising market opportunities.

THIS IS WHERE COINRULE IS COMING INTO THE PICTURE Coinrule is the first and most simple way to create trading strategies based around an “If-this-then-that” logic.

The entire user experience is geared towards regulars who are not trained programmers or traders. Coinrule is a ‘sandbox’ for regular traders to build their own trading algorithms, test them based on historical data and then let them automatically run on connected Crypto exchanges such as Binance, HitBTC, etc. Traders can review the performance of their trading rules in real-time and tweak and adjust the rules as they wish, both on web and mobile. have grown to approximately $1,600, slower pace and in systems and tools compared to significantly more meagre still designed for a time before the inreturns in asset classes such as real esternet. If you are between 20–35, tate (5x over the same period). These chances are you are significantly more S&P 500 gains are of course only the likely to trade crypto in a 24/7 market tip of the iceberg. that feels at times As sophisticated like a Computer investors have acGame than stocks The increasingly widespread of ‘slow’ compacess to advanced use of algorithmic trading products, marnies on legacy kets and hedging stock platforms impacts society more than solutions to prosuch as Charles many would acknowledge. tect themselves Schwab et al. Milagainst risks such lennials, already as inflation or the financially strugcurrent historically low interest rate en- gling with student debt, housing pricvironment. It is once again the retail in- es and job markets, see crypto tradvestors who suffer the most. ing not as a risk but as an opportunity to join the ‘financial party’ to which If Blockchain technology has set out they had previously not been invited. to disrupt every aspect of the financial According to Oleg Giberstein, COO and world, access to financial returns from Co-Founder of Coinrule: investing, not just for a small group of elite investors but for the mainstream, ”It is hugely indicative that Coinbase is a major part of it. now has more user accounts than the stock trading giant Charles Schwab, a Today, 3 out of 5 Millennials don’t incompany founded in 1971”. vest in stocks and the holdings of the other 2 are lower relative to the previBut even in Crypto trading, the playing ous generation. field is starting to shift. Those traders familiar with the intricacies of TechniFor many Coinrule users, Cryptocurcal Analysis and some of the more sperency has been the first asset class they cialized trading language and interfachave ever traded. The numbers show es are able to draw on a pool of sophisone thing: this is a structural issue. ticated trading instruments from platforms such as Coinigy down to proEquities markets are part of an ‘old’ figramming their own Trading Bots with nancial world happening both at a libraries such as Catalyst.

It is hugely indicative that Coinbase now has more user accounts than the stock trading giant Charles Schwab, a company founded in 1971.

OLEG GIBERSTEIN COO and Co-Founder of Coinrule

ALGORITHMIC TRADING CAN WORK FOR EVERYONE The principles are simple: not every casual crypto investor will become the next Wolf of Wall Street. Unless a trader is willing to commit hundreds of hours of work and studies, a strategy focused on ‘Alpha’, meaning an outperformance of the market, is probably not the right approach. But between passively hodling and hoping for the best and active trading of markets with all the risks that come along, strategies focused on tracking markets and ‘Beta’, meaning low-ish volatility vis-a-vis the overall market performance, will work best for most traders.

Such strategies allow mainstream investors to build up significant portfolio returns over time at reduced risk, without having to pay the premium for being part of a fund or taking the risk and complexity of buying off-the-shelf trading bots. Traders looking for Alpha can still use Coinrule but opt for more advanced trading strategies.

But unlike platforms that only provide advanced trading tools for traders seeking lucrative Alpha, most Retail traders will be satisfied with a Beta trading strategy that allows them to manage their risk professionally and occasionally receive a reward. Among the challenges for today’s retail traders are emotions, the idea that one can outperform the market or the opposite idea 7

OCTOBER 2018

Yet this can only become a game-changer in the financial system if the gains are accessible to everyone. Blockchain enthusiasts like to talk about ‘Banking the Unbanked’ as a core Blockchain use-case. But no matter how important this use-case is, financial exclusion comes wearing many hats and does not only impact citizens of developing countries. As many indebted millennials will confirm, financial exclusion is not only a problem in the developing world but can happen anywhere. If Blockchain technology is to make a difference here, tools like Coinrule will need to succeed in their mission to democratize algorithmic trading of Cryptocurrency.

that pure hodling will inevitably lead to riches. On both ends, traders end up losing significantly if they either overestimate themselves and end up ‘gambling’ on coins or end up hodling the wrong assets. An algotrading solution for the masses must therefore achieve two goals: make trading extremely simple and provide access to low-risk strategies that still allow traders to profit from their crypto holdings without having to commit significant amounts of time to learning the game.

Coinrule takes these concepts a step further: it will soon be decentralized. Being a DApp will allow Coinrule to better protect the privacy of its users’ trading strategies and allow to plugin to other decentralized protocols and platforms whose users will benefit from trading via Coinrule, which will also open the system to improvements by third parties.

Unlike social-trading platforms such as eToro with questionable privacy or some of the existing systems with centralized access by the operator, a user’s trading strategies on Coinrule will be stored in a trustless, inaccessible location on the Blockchain.

Coinrule is all about giving extensive access to the tools that have previously only been available for How will this work in practice? By big banks and changing the rules of the game! Trading interfaces do not have to overwhelm uscorporations. ers with graphs, blinking lights and com- As Naval Ravikant said, “Bitcoin is a That’s what plex systems. The terminology in play tool for freeing humanity from oliwe are doing can be commonsensical and not just un- garchs and tyrants, dressed up as a getderstandable for an experienced tradrich-quick scheme.” Quietly yet in plain with Coinrule.

Our vision er. The experiment of Coinrule is that it sight, cryptocurrency trading has beis truly a platform being built by hobby come one of the killer apps of Blockis to invert traders for hobby traders. For example, chain that we have been waiting for. the system, traders can set up rules to automatically Scaling of technology and wider adopsell small amounts of their holdings as tion are unstoppable developments and in favour of a bottom up markets go up and buy small amounts only a question of time at this point, as markets dip - swing-trading withbut the ability to add liquidity to previ- approach. out any emotional attachments and ously illiquid asset classes such as start- Power to the with minimal time involvement. Anaup investments, real estate, organizapeople, without lysing how a Trading Strategy would tional governance and so much more, sounding too work when different patterns emerge in not to mention the fact that these ‘asidealistic. the market will be fast and simple with sets’ are globally tradable 24/7.

Coinrule. For instance, the Backtesting permits users to personalize the time horizon of their interest and in a matter of seconds, check how that strategy would have performed. It will be interesting and surprisingly insightful to observe how the same strategy will yield different results just by changing the starting and ending dates of the back test. Similarly, users can easily create index funds consisting of whatever coin combinations they would like to hold and choose what rebalancing periods they prefer - over time they can continue to fine-tune the strategy, rather than having to trade ad-hoc based on immediate price movements.

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Cryptocurrency trading allows anyone from a family in India to an Investment Banker in New York City to play in the same markets with significantly lower barriers to entry for anyone involved. It is no doubt extremely risky, highly speculative and dangerous, especially for those who fail to do their research. But much of these issues are growing pains.

As new liquidity will gradually enter the markets, volatility will drop. Opportunities like Masternodes or dividend tokens are adding additional avenues for investors to earn safer returns. Everyone, not just the usual privileged suspects, can win on an unprecedented scale.

GABRIELE MUSELLA CEO and Co-Founder of Coinrule

Ultimately, cryptocurrency can become a market that is likely to be significantly more accessible, transparent and democratic in terms of participation than anything that Wall Street or the ‘old’ financial system have ever produced. Retail investors will gain access to returns and opportunities that have never been available to them. Today, thanks to cryptocurrency trading, literally anyone could be the investor into the next Facebook or Google. This trading aspect of Cryptos is therefore not a small, undesirable side-aspect of a bigger list of Blockchain innovations, but literally a game-changer for millions of people.

As Gabriele Musella, CEO and Co-Founder of Coinrule said recently: “Coinrule is all about giving extensive access to the tools that have previously only been available for big banks and corporations. That’s what we are doing with Coinrule. Our vision is to invert the system, in favour of a bottom up approach. Power to the people, without sounding too idealistic.”

If regular people could invest in technological innovation, all supported by a vast and extensive information and education industry that prepares them for it and with access to easy-to-use trading systems, the playing field between the rich and the rest would begin to level. In a time of growing opportunities but also growing economic risks for many, the number of individuals choosing to trade any type of asset for a living will only increase. With greater flexibility, location independence and an ever-wider range of tradable assets, this does not have to be a nightmare scenario.

With trading systems like Coinrule. io allowing more and more traders to compete with professionals and trading bots on a level playing field, the future really could be bright for regular traders and the Blockchain space as a whole.

OCTOBER 2018

FITBLOX FITBLOX aims to revolutionise the health and fitness industry by creating an incentive based social experience that rewards healthy behaviour. Using distributed ledger technology, they aim to provide a safe, secure and private medium of exchange between fitness enthusiasts and strategic partners within their ecosystem.

tem that encourages users to grow their voting and reward power by encouraging participation in their motivational user advancement model.

Users of FITBLOX will gain insights into their health to help them achieve their fitness goals through the DApp. It can track daily exercise routines, help people setting personal goals, provide rewards for progress vs goals, connect people with similar goals, allow people to share their fitness journey, help in organising events, show new workouts FITBLOX, unlike centralized fitness and provides a way of interacting via tracking applications and social media networks, gives you complete control of social media. your identity and your data. By placing this data securely on a blockchain users YOUR FITNESS DATA Most current fitness app users (and net will not suffer from the issues related users in general) are constantly conto centralized data repositories. by nected to “free” online services withICO CROWD out realising the value being extracted The FITBLOX DApp will allow users from the most valuable asset most peoto create an additional income stream ple own, their digital identity. whilst staying physically active. Users are rewarded for interacting and menThe benefits of fitness apps and weartoring other users with similar goals. ables make it easy to overlook or igIt uses a stake-weighted voting sys-

nore the inherent security and privacy risks involved. The fact that so much data is collected through a wearable device, such as an activity tracker, means that there are tangible risks involved.

Most wearables and apps simply aren’t designed with privacy and security features in mind, despite the sensitive nature of the data they collect.

THE HEALTHCARE EPIDEMIC In the United States alone, two-thirds of Americans are classified as either overweight or obese. U.S. health care costs were $3.3 trillion in 2016 - 85% can be attributed to chronic conditions like heart disease and diabetes. One in three American adults is considered to have pre-diabetes or known to be afflicted with the disease.

More than 2 billion adults and children globally are overweight or obese and suffer health problems due to weight. Over 2.2 billion people were classified as obese or overweight in a 2015 study, with more than 710 mil9

OCTOBER 2018

lion of them classed as obese, with 5% of all children and 12% of adults fitting into this category.

Despite a smaller population, the United States had the greatest number of obese adults, with 79.4 million (35% of the population), followed by China with 57.3 million.

This equates to one-third of the world’s population carrying excess weight, fuelled by urbanization, poor diets and reduced physical activity. The United States has the greatest percentage of obese children and young adults, at 13%.

While it may be a simple task to track nutritional intake and monitor one’s diet, tracking daily activities is significantly more challenging. This problem has led to the development of fitness trackers equipped with sensors designed to track fitness levels around the clock with limited user input.

THE CURRENT SYSTEM In current Fitness Tracker Apps the lack of incentive causes user retention issues.

Monitoring and scoring exercise progress can measurably assist in achieving one’s fitness goals. Fitness trackers existing on the market today can record data such as the number of steps taken throughout the day, stairs climbed, calories burned, and distance cycled.

Advanced features might include monitoring the duration and quality of sleep. More advanced devices can even monitor one’s gait, posture, and form, to provide analytical data to trainers and athletes with more advanced fitness goals. By providing real-time feedback, these devices make users aware of their progress and identify shortcomings. As a result, today, more than 39 million Americans currently pay for fitness trackers or wearables. Revenue generated by the e-services fitness industry has grown to $8.3 Billion USD globally in 2017 and is projected to grow by 7.6% annually through 2022 when it’s expected to reach nearly $12 Billion USD.

While it may be a simple task to track nutritional intake and The e-service fitness industry is commonitor one’s prised of 2 areas: Wearables and fitdiet, tracking ness apps. Currently, wearables repdaily activities resent 73% or just over $6.1 Billion is significantly in annual revenue. Fitness apps generated revenues of just $2.2 Billion in more 2017, however that number is projectchallenging. ed to double by 2022 to over $4.4 Billion USD globally. Unfortunately, fitness apps that are currently in the 10

marketplace do not adequately incentivize their users to maintain longterm adoption.

FITBLOX’S INCENTIVE REWARDS MOTIVATOR FITBLOX promotes health and wellness, both mentally and physically, by merging the experience of social media with fitness tracking technology. FITBLOX will enable groups or individuals to earn immediate tangible rewards for their activities, participating in challenges or contests and sharing content related to their fitness journeys.

FITBLOX will inspire participants to lead healthy lifestyles and reward users that contribute meaningfully to the FITBLOX community over time.

Participants that consistently contrib-

ute quality content will be eligible for a rewards multiplier. Increased usage and engagement will occur as users interact on the community platform which will result in higher rewards.

Users that actively participate on the platform ecosystem will be rewarded with FBX Tokens that can be used as tender to access a vast library of health and fitness related content or products, including: live or recorded fitness classes, nutritional products, health conscious recipes, instructional videos, and more.

FBX Tokens can be exchanged for products and services on FITBLOX’s e-commerce digital marketplace.

FITBLOX will hold daily, weekly, monthly and quarterly contests. Users

OCTOBER 2018

will be rewarded with FBX Tokens for participating in contests, community building and achieving goals.

BLOX user community and gain access to verified distribution channels of FITBLOX certified vendors.

The FITBLOX DApp / E-Commerce platform functionality enables users’ access to daily content and promotions.

The FBX Token is designed to efficiently facilitate disparate commercial transactions within FITBLOX’s strategic partner ecosystem.

USER REWARDS PARADIGM FITBLOX will incorporate a Delegated Proof of Stake (DPOS) model native to the EOSIO blockchain. FITBLOX leverages “stake-weighted voting” as the foundation for our tiered user advancement paradigm that will incentivize FITBLOX users to grow and advance on the platform.

Users that actively participate on the platform ecosystem will be rewardThe FITBLOX DApp leverages blocked with FBX Tochain technology to enable transactions such as forming a running club, partic- There will be higher rewards, tiers, and kens that can be used as tender ipating in a 5k, visiting a gym or tryincentives to attain for users, which ing a spin class to occur in a fast, simple will entitle them to higher discount lev- to access a vast and risk-free manner. els for goods and services via FITBLOX library of health strategic partnerships and exclusive acand fitness reThe FITBLOX ecosystem will enable a cess to co-branded events. At each tier dynamic in which individuals can lever- there will be higher rewards growth op- lated content or products. age the reach and influence of the FITportunities. FITBLOX provides an in-

centive-based motivation model for users to "Level Up" or attain higher levels of rewards tiers as community builders, influencers, and ambassadors There are over 32 fitness apps in the market, but none utilizing blockchain technology. FITBLOX is the first real health and fitness related DApp that combines the benefits of blockchain technology with traditional app functionality.

Utilizing the EOSIO blockchain back end platform, the FITBLOX DApp drastically reduces transaction costs and times for the end user.

Unlike traditional fitness apps that store users’ data on 3rd party centralized servers, FITBLOX disintermediates the numerous middlemen re11

OCTOBER 2018

quired to execute a transaction. In subsequent versions, FITBLOX will implement artificial intelligence as a predictive capability to make customized and calibrated suggestions, enhancing overall experience for the individual user.

GOODS, SERVICES, AND POTENTIAL End users can connect with online personal trainers through the FITBLOX DApp to purchase customized training programs. Weekly checkpoints with the trainer will occur online, where the trainer will carefully study progress photos and then make adjustments to the training program. End users will earn rewards from the FITBLOX DApp for achieving their fitness goals.

They can also connect with diet coaches to purchase closely tailored meal plans. Weekly checkpoints will occur online, and adjustments to the diet will be made accordingly. Again, end users earn rewards for achieving their fitness goals.

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Users can connect with purveyors of supplements, vitamins, nutritional products and meals for delivery.

Equipment: End users acquire desired fitness equipment, such as state of the art resistance bands, foam rollers, abdominal toners and glute developers. They can also connect with top brands in fitness apparel to purchase fashionable fitness wear.

Weekly checkpoints with the trainer will occur Users can follow the specific, detailed online, where workout routines and diets of their the trainer will favorite professional athletes and fitcarefully study ness celebrities. progress photos Purchases will occur through the and then make FITBLOX DApp, which enables proadjustments curement of goods and services as to the training well as access to premium promotional content. If an end user prefers program. to use fiat, FITBLOX will support credit/debit cards for purchases. Additionally, FITBLOX intends to integrate a cryptocurrency payment processing gateway to encourage the usage of leading cryptocurrencies for procurement.

STEEMIT REWARDS MULTIPLIER Additionally, FITBLOX plans on integrating with Steemit's already existing user monetized social media rewards platform. FITBLOX users will be provided the optional capability of sharing FITBLOX DApp posts directly on to the Steemit platform, under their established Steemit account name, with click of a button content sharing functionality. Steemit incorporates a similar DPOS rewards-based system in which end users earn both Steem and Steem Dollars (SBD) for upvotes on content curation. FITBLOX DApp users will be enabled to share the same curated content they produced on the FITBLOX DApp across multiple user monetized social media platforms like Steemit, effectively multiplying their potential rewards earnings for content curation.

OCTOBER 2018

dGram: Standard Disruption, Crypto Innovation dGram announces a 100% gold bullionunderwritten cryptocurrency which harnesses the blockchain to fuse the safe harbour of the gold standard with the convenience and investment upside potentials of cryptocurrencies.

by DANIEL STEEVES Canadian-born, German-based consultant and entrepreneur, Strategist, Steeves Solutions

2 Receive direct value into the wallets of token holders directly shared from the business behind these cryptocurrencies

FIRST, PROBLEMS ACROSS THE BOARD But, let’s not get ahead of ourselves with solving the problems before we lay them Paired with a speculative growth token, out a little more clearly. The investment with a prescribed growth / inflation path merits of gold and bitcoin are typicalunderpinned by a token-based value-en- ly viewed as substantially different, with gold in its traditional profile as reliable hancing revenue shares from dGram’s hard asset as a ‘consistent’ store of valmining operations. dGram is poised to ue in a diversified portfolio, particularly change the crypto game. in times of global economic uncertainty (like today, or most other days…).

This combination of DGG, an asset-backed stable cryptocurrency coin with a unique value-assured transaction Crypto, in contrast, plays the opposite role in that diversified portfolio with its model targeted at international trade volatility and highly speculative nature. and DGI, a growth-enabled token, has While consumer entries to the world of been architected to: crypto investments are steadily increas2 Bring viable crypto investment opportunities to traditional gold inves- ing and the institutions are starting to do more than just dip their toes, the tors in the form of DGG fear, uncertainty, doubt and confusion 2 Deliver stability to crypto investors via the value-enhancing growth mod- in the space are also on the rise: el of DGI 1. consumer and investor uncertain2 Remove barriers for investors from ty and the two primary fears: the consumers to institutions – and fear of missing out and the fear of everyone in between losses (combined with standard fear, 2 Deliver value-assured international uncertainty and doubt). Investors trade and commerce transactions

want to get involved – though most know better than to expect to many gains in the 10,000% range, any more – but for a large part of the market it is viewed as gambling, not investing.

2. lack of understanding of coin values amid pressures of a market that writes its own rules and to which knowledge of other financial markets can’t always apply. Stable coins provide certainty to some degree and always subject to inflationary and deflationary pressures and, beyond reduced fees in comparison with fiat transactions, while providing a stepping stone in the right direction, are often seen as contrary to the ethos of cryptocurrency overall, and certainly have no speculative value 3. lack of transparency with most other precious metal-backed or fiat-linked” tokens and coins leading to a lack of confidence and trust in their underwriting. The standard questions about crypto amplify and multiply when it comes to “backed” crypto currencies, ranging from how does it work to how is it different from other cryptos, through to is it safe to buy… and is it really backed / underwritten?

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OCTOBER 2018

dGram in Overview

standard disruption • 100% DGG capital investment underwritten by gold bullion in third-party escrow • solid gold, complete digital liquidity • DGG gold standard + DGI crypto scalability crypto currency innovation • volatility-mitigated crypto investment • unique transactional growth mechanisms unique value-add business model • innovative revenue shares schemes directly and indirectly contributing to DGI token valuation • extended coin-based opportunities for investors 4. lack of “value certainty” for eCommerce transactions: the highly speculative nature of crypto values, resulting in uncertainty at best and losses at worst across all scale of transactions, all of which leads to hesitance in adoption and usage of crypto for commerce. “Stable coins” do exist, of course, but are tied to the upwards and downwards pressures on the fiat currency to which they are tied.

terms of year-on-year growth and creating a gap that can be bridged by the right approach to crypto. dGram is that approach.

ONE QUICK POINT: DISCLOSURE So, here is the true gold-backed stable crypto coin DGG and the DGI growth coin, providing solutions and answers to all of the above problems. But first, full disclosure: I am a principal in the business and have collaboratively architected the business model from a stellar vision with a strong team. We haven’t set out to change the world – but our bridges to these gaps should change the way the world thinks about and uses crypto.

So, while gold still delivers as a pillar in a diversified portfolio, as expected, it also 5. and, finally, simple, plain confutraditionally sion: while it is highly likely that underperforms everyone reading this article is somehow or another well-into the crypin terms of yearto and blockchain space, do take note on-year growth that, for every one of us inside, there Crypto for the masses the natural and and creating a are 250K more outside who are informulative next step as the econoterested (and another 250K who are mies of and commerce around the world gap that can be bridged by the oblivious – and these numbers, pure- adopts and adapts cryptocurrencies… ly fabricated, are quite likely lower but, leave those barriers in place – or right approach than the actuals would be). add more, regulatory or otherwise - and to crypto. that can never happen. dGram is that All of that not to mention that with 2000+ cryptocurrencies out there, I dGram will change the perceptions about approach. challenge any reader here to have knowledge on all of them beyond what Google finds for you… so, how does a traditional institutional investment committee – or an everyday consumer investor – even know where to begin (beyond the top four or five that they might have heard about in the news – or the “sure thing” they saw on LinkedIn)?

And, as it happens, those questions can be seen to overlap also with the views of gold as a safe-haven investment. While it is that traditional stable pillar of a diversified portfolio – or a strong hedge against great fear of the markets of money - it is by nature non-liquid (particularly so, in modern terms). Also, its inherent stability also minimises the potential for large gains.

So, while gold still delivers as a pillar in a diversified portfolio, as expected, it also traditionally underperforms in 14

and the usability of all of this blockchain and cryptocurrency technology stuff that, well, can just make some things work better. So, that is why I am part of it, that is why I am writing about it, that is why I think you are reading (but it is only fair to do that disclosure thing).

Now, in this article I am not going to argue specific merits or realities of the vast set of metal-based altcoins on the market – and on the way, ranging from the antique eGold through to a UK Royal Mint gold token – let alone make comparisons or recommendations (beyond the standard “do your own research”.

I do think, though, that the end to end business model and the blockchain verified gold-holdings will serve to support dGram comparisons with alternatives current and upcoming – and to provide answers to each of the questions posed, and solutions to the problems presented.

THE SOLUTIONS: DGRAM AS BRIDGE So, now, I guess I need to support my claim that the dGram approach actually provides that integrated set of solutions, for each of those problems?

Problems 1 & 2. DGG is an asset-backed crypto currency, with each “minted” coin backed by the purchase of a minimum of one gram of 999.9 gold bullion, purchased with 100% of ICO coin investment capital (excluding fees) and is vaulted in secure, insured escrow in London England with Baird & Co in the dGram Permanent Gold Reserve (PGR).

Problems 2 & 3. DGG backs 100% of capital investment with physical gold, creating a as stable a coin value as possible mitigating most to all risk (beyond standard gold value fluctuations): the speculative DGI tokens fuel the mining businesses behind dGram with valuation risks mitigated by a four-year growth and inflation model designed to drive DGI value.

Problem 3. DGG gold coin purchases and vault transactions will be tracked by open smart contracts tracked directly on the blockchain and verified by Baird & Co, London, our respected and insured vaulting partner.

Problems 2 & 4. the dTrade value-assured transaction mechanism will guarantee end-to-end value of trade, exchange and eCommerce transactions for a defined period of time, removing speculation Problem 5… all of the above plus the unique dShare mechanism which provides direct “dividends” to holders of the dGram DGI growth coin.

As for the gold side of the equation, DGG, tradeable on our home exchange (and in selected third party markets), offers complete liquidity for exchange, sale

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or transactional uses – and dGram commits to purchase any coin at the spot price of gold and/or convert to physical gold holdings or fiat. dGram also maintains an on-going offer to buy-back any and all DGG coins offered.

PERMANENT GOLD STORE The word “permanent” was chosen deliberately: our most simple innovation is visibility: directly from our website and exchange, the public will be able to query and view our smart contract with Baird & Co wherein dGram fuses physical gold assets directly to the base value of the dGram coin. With each gold purchase, refining and storage transaction visibly entered into a public record on the Ethereum blockchain ensure that the gold bullions holdings position of dGram will be verifiable and public.

Paul Clarke Photography

The crypto element of dGram - the ‘air’ value of the DGI token in the marketplace – enhances standard gold investments: when combined with an innovative business model and the diversity of the dGram two-coin offering supports a higher market performance potential than physical gold holdings, converting this solid pillar to a solid but speculative investment

dTrade overview

So, there you have it: a physical gold bullion underwritten cryptocurrency which, in and of itself, provides a strong argument to the question of ‘why do we need another coin?’

THREE ECONOMIES, TWO PILLARS dGram GmbH, the German and Malta-based company behind the dGram coin, is a metals and minerals mining business, offering both conservative and progressive investment strategies to consumer, professional and institutional investors in a single investment vehicle which delivers to the two pillars of a diversified portfolio: - the hard asset of physical gold in its traditional profile as a reliable store of value - the speculation of crypto, underwritten by physical gold maintaining a minimum value

With each gold purchase, refining and storage transaction visibly entered into a public record on the Ethereum blockchain ensure that the gold bullions holdings position of The Coin Economy – dGram coins service dGram will be and increase value across to two separate and standalone but connected busi- verifiable and ness economies: the dGram coin and ex- public. change with an innovative and highly attractive dTrade value-assured transaction mechanism and the planned exchange-based dEscrow and dOTC services, the dGram coin economy is designed to drive uptake from current and new gold and crypto currency investors.

The Contributing economy – the mining and ancillary business interests of dGram GmbH adds risk-free revenue shares directly to the value of the DGI

Wrapping Up dGram, coming very soon, presents an exciting change: building on the strengths and stability of the gold standard while innovatively leveraging the caThe Investors Economy – Investors durpabilities of crypto and the assurance of ing the ICO will be invited to subscribe the blockchain, dGram presents DGG as a as “dClub investors” focusing a percent- solid cornerstone of a new economy, DGI age of their investments, amongst other as a new way of looking at crypto investoffers, directly towards accelerating min- ments and, together, as a door-opener for ing operations and acquisitions and enthe millions of interested by as of yet outjoying a proportional profit share as well side observers of the land of crypto. as benefiting from the resulting contributions to the permanent gold reserve.

Presenting a pair of separate but connected coins offering a stable but specdTrade ulative investment vehicle across all Possibly the most significant innovaclasses of investors dGram, as simtions of the dGram business architecture ply stated, is standard disruption and is dTrade. dTrade is positioned as not crypto innovation: disrupting the gold only an enabler for not only both dGram standard by improving on the working economies but also should well prove a model and extending the business cadriver for the uptake and use of crypto pabilities of cryptocurrency, all for the for international commerce and trading. purpose of delivering – better, stronger, faster and cheaper – consistent valIn short, dTrade transactions guarantee ue for money and a strong potential rethat the receiver of DGG as funds, will turn on investments. receive a precise and specific value for the funds sent, in either fiat or crypto With DGG, dGram delivers a cryptocurcurrency. This means that if I send you a rency safe harbour: the ideal hedge for net $1000 payment then you will receive current bitcoin and altcoin gains; an ala net $1000 deposit in your fiat account ternate safe but, in combination with (less fees).

DGI, a speculative investment with a prescribed growth path. dGram is the perfect Supported by internal market-evaluaplace to ‘dip a toe’ and, particularly durtion algorithms, delivered via smart con- ing the pre-ICO private sale wherein extracts and managed by automated busi- ists a true opportunity for free gold! ness rules, the dTrade value-assurance system operates as depicted in the atFor more information, reach at to the tached diagram. team at info@dgram.io. token via the unique dShare mechanism: “dividends” directly increasing the goldto-coin ratio and in so doing directly increasing the base value of the coin.

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OCTOBER 2018

How to Accelerate the Adoption of Blockchain Technology?

With Online Games of Course!

The world currently sits on the cusp of a blockchain revolution. There is a growing desire for people around the world to free themselves from the shackles of authoritarian single points of failure and democratise and decentralize the money system. We will redefine how we perceive value. 2017 was a significant milestone for the world of crypto as Bitcoin hit an all-time high of just under $20,000 US dollars each.

The parabolic rise of bitcoin ushered in a wave of ICOs that were seeking to raise money for vaporware ideas with very little substance behind them.

Many investors paid a heavy price for their poor decisions fuelled by FOMO by ICO CROWD without doing the proper research.

The crypto market is still suffering be16

cause of these scam ICOs. Most crypto experts agree that the next bull run will only occur when real blockchain products with actual use cases start to emerge. The gaming market seems ripe for this to happen.

The first real serious attempt at creating a blockchain gaming experience was with Cryptokitties. Cryptokitties is a simple game where you collect unique and non-fungible imaginary cats. Their unique features are what give them their value in ETH. After its launch Cryptokitties became hugely popular and almost dragged down the Ethereum Super Computer. What Cryptokitties showed is that there is real demand for blockchain technology in the world of gaming.

A lot of online games already have their own unique and proprietary economic systems. Generally, when players de-

lete their account, fail to keep up their subscription or simply leave, all the in game digital assets are lost. This is an issue across the gaming industry as gamers struggle to get back into a game and must do all the work again to keep up with the current meta. With blockchain technology we can change this system. We can enable players to retain full ownership of their in-game assets and trade them on whatever platform they wish using immutable distributed ledgers. They can maintain an accurate list of all transactions made using a specific item. Here are the key features that a system such as this can bring: IMMUTABLE LEDGER WITH HISTORICAL GAME EVENTS Consider a gaming world containing a complete history and timeline of events backed by a distributed immutable ledger. One that records players choices that permanently affect the game. New

OCTOBER 2018

players could consult past battle oracles and make their own adventures memorable. The blockchain can permanently record this information and create a seamless gaming experience.

PERSONAL ITEM OWNERSHIP BY THE PLAYER NOT THE GAMING COMPANY By utilizing smart contracts, gamers can now store their own in-game digital assets and trade them as they see fit. New users would have the ability to buy their own legendary items directly from their favourite players and streamers creating a secondary market that would not be possible without the use of blockchain technology.

ITEM RARITY AND UNIQUENESS CERTIFIABLE BY BLOCKCHAIN No longer will users be able to hack items and make dupes of legendaries with the advent of distributed ledger technology. The system is essentially tamper proof and it is append only.

Once a unique non-fungible item is stored the system will automatically dismiss dupes at the time of block generation. This functionality will add to the authentic and unique genuine online gaming experience for every player.

UPGRADE SYSTEM BASED ON UNIQUE ITEM INTERACTIONS Imagine a game where a player receives a basic machine gun. As he performs certain actions such as defeating a certain boss with it, these actions are stored on the blockchain as upgrades to

the item. Once the player has reached a certain level he can offload it to someone newer in the game who could use it once again to fight an epic battle. If we look at several changes of ownership up the line and the weapon could end up with legendary status as it has fought so many epic foes.

What games out there are planning to What games out there are planning to implement these features? One such implement game is DECIMATED: The first Online these features?

Survival Game based on a blockchain One such economy. game is DECIMATED: The game starts in a grim future, a post-apocalyptic world where you must The first Online choose which side you are on. On one Survival Game side are the humans who run rampant based on a on the wastelands of our ruined planblockchain et Earth. On the other side are the Cyborg Cops who enforce the law on those economy. attempting to destabilize the small remnants of civilization that remain.

Whatever side you choose you are able to buy and sell items, perform upgrades and make multiple customisations via a cryptocurrency known as DIO. The game has in built scarcity for items.

This allows users to make valuable discoveries in the game, unique to them that can have a direct impact on the real world due to the cryptocurrency DIO which can be traded on exchanges like other digital stores of value. If the system proves popular it is quite feasible that we will someday see players making this game a full-time job.

The game incentivises the human side to scavenge and pillage the world to receive rewards. The Cyborg Cops can band together to bring these rogue humans to justice to achieve individual rankings and items for doing so. Players can set up their own online shop to sell virtual items such as armours, weapons and construction equipment. The prices will be determined through the free market and the principle of supply and demand. Gamers can also monitor their shop from a dedicated mobile app to actively continue trading even when they do not have access to a PC. DECIMATED is a game backed by a dedicated team who have worked on critically acclaimed games like “Injustice 2”, “Star Citizen” and “Batman Arkham Origins”, there are still opportunities on the table for everyone who wants to join in this race, but the Decimated team have a head start and impressive industry experience.

Gamers wanting to participate in this project can do so by registering for the ongoing private sale of DIO tokens that is running till the 31st of October 2018. Currently the price of each token is pegged at 0.05 EUR however this peg will be removed when DIOs start being freely traded on crypto exchanges.

Head over to https://www.decimated. net/ for more details.

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OCTOBER 2018

Preventum

Preventum is the world’s first digital public health platform designed to help governments and organizations deliver effective preventative healthcare campaigns.

Preventum’s first application in the US will focus on reducing opioid use and ultimately preventing chronic addiction.

by ICO CROWD

18

THE PROBLEM Drug overdose is now the leading cause of death among Americans under 50 years of age 75% of these deaths are linked to opioids. 140 Americans die every day from opioid overdose and misuse.

Up until the early 80s, doctors were only prescribing opioids to relieve pain in dying patients receiving end-of-life care. In 1990 opioid therapy was being used to treat cancer pain. By the

late 90s, prescription opioids were being promoted as the solution for any and all pain. America is now the world’s leader in opioid prescriptions, with prescribed opioids killing more Americans than any illegal drug.

A SOLUTION? Preventum have a software which allows influential personalities and governments to set up campaigns on their tokenized platform. Kevin Lyman (famous rock artist and founder of the Vans Warped Tour) is running the FEND campaign (www.wearefend.com) as the pilot on the Preventum platform.

The interest and engagement have been amazing. over 200,000 young people are signed up to the platform, with over 95% engagement. Young people are engaging with the app and educating themselves about the opioid crisis and earning tokens to use towards merchandise and concert tickets.

The goal of the digital opioid campaign is to reduce the risk for opioid misuse, abuse, overdose and diversion by people prescribed opioids for acute pain relief.

DOC combines evidence-based content and gamification techniques to educate people on safe use, safe storage and safe disposal of newly prescribed opioids.

They believe that Preventum can revolutionize the current public health platform.

PREVENTUMS FEATURES • Intuitive, easy-to-use web and app interface.

• Proven expertise in technology and gamification, and its applicability and efficacy in the public health arena.

• Ability to deliver tailored individual-level messages in community-level public health campaigns.

• HIPAA compliant platform with secure AWS EC2 infrastructure.

OCTOBER 2018

• Real-time reporting shows reach and engagement of targeted audience.

• Direct translation of evidence-based research into a user-friendly health campaign builder.

• Powerful rules-based AI engine providing targeted campaigns.

• Expertise in using social media to recruit participants for research campaigns.

• Easy user-friendly tools for developing marketing collateral i.e. infographics, videos, motion

Lyman said in an interview: “The first phase of this is an education thing.

We’re finding there’s just a general lack of knowledge of what are opioids, the storage of opioids, when you get hurt and they give you something is that potentially addictive? We’re finding kids are becoming addicted because they twist their ankles in soccer, they’re a cheerleader, they’re prescribed something, and no one really explains to them that this is an addictive thing or can be. So, we’re going to start with basically an education. There is a program THE PILOT PROJECT people are finding called “GamificaWarped Tour founder Kevin Lyman tion.” Engaging people in games, cause takes a hard stance on the recent wave we’re in a gaming society, and you can of opioid-related deaths, he says it is teach through games. So, the idea beour responsibility to help struggling in- ing simple things -- download the app, dividuals. His new initiative is FEND. follow prompts almost like a game, but we’re educating you, and then reTheir website states: “Combining cut- warding you. We’re planning on buildting-edge tech, music, and streetwear, ing this out and then going to the point FEND is all about empowering you. where hopefully the next phase will Knowledge is power after all. The be working with people in recovery alFEND app enables you to take the ready and engaging their counsellors, lead, join forces, and beat the opioid their families, their spouses. It’s almost crisis. More than a campaign FEND is like if they stay up and do all the things a movement.” to keep themselves healthy we’re gon-

na reward them on a daily, if not weekly basis. It’s a big plan and we’re gonna get hopefully a baseline here with the Warped tour this summer with our fans. You go to Preventum and then FEND is the app within it.”

Combining cutting-edge tech, music, and streetwear, FEND is all about empowering you. Knowledge is power after all. The FEND app enables you to take the lead, join forces, and beat the opioid crisis. More than a campaign FEND is a movement.”

He went on to say “...it’s gonna have a mental health element and what we’re gonna be doing is similar because a lot of people don’t know where to go get help. So part of the app will be giving your local knowledge, places to go, similar to what we did with A Voice For The Innocent. If you had been sexually harassed or abused, we gave people local resources they could go get help. So that will be part of the app. It’s gonna keep building.”

Preventum in association with FEND is developing practical ways of utilising and capitalising on the unique characteristics of blockchain as a way to address social need and utilize blockchain for good.

By exploring ways to create positive social change by decentralising processes and enabling and motivating populations to participate in on a global scale.

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OCTOBER 2018

What is Holochain?

At the time of writing, one coin that has managed to weather the storm of the crypto bear market is HOT. At the time of writing it is being rumoured that the Holochain team have been in talks with the Mozilla foundation regarding collaborating on a project that could lead to a truly decentralized web. The open source software company behind the Firefox browsby ICO CROWD er has in the past been a strong proponent of a decentralized web and has expressed a willingness to partner with others involved in decentralization to realise their goals.

Although there has been no formal announcement regarding the partnership both parties have expressed an interest in each other’s product and have stated they are “in talks”.

Jim Cook, the Chief Financial Officer of Mozilla said earlier this year: “We believe that power will decentralize in the 20

next cycle. . . “[Holochain’s] agent-centric model really speaks to Mozilla.”

Matthew Schutte, Holochain’s Director of Communications, told listeners in an ‘Ask Me Anything’ (AMA) recently that the project was in early talks with Mozilla’s developers. “It’s experimental, we’re working on it”, he said.

“We’ve chatted with some of the folks at Mozilla”, Schutte admitted but didn't give further details.

Holochain (HOT) has surged around 60% over the past few days. At the time of writing, it had a market capitalization in excess of $185 million.

HOLOCHAIN – BEYOND BLOCKCHAIN Holochain can be considered a framework for Distributed Apps (DApps).

It works using Digital Hash Tables (DHTs) which are more similar in nature to BitTorrents rather than a blockchain. The DHT acts as a fingerprint

that relates to data. If you change the data, you change the DHT meaning that we can quite effectively identify valid data. It is based upon a dual key cryptographic system, where one key is public and the other private.

Holochain could be considered to be a competitor to the Ethereum or EOS Networks. However, it is built on fundamentally different software. The new mechanisms employed by Holochain will provide functionality that is not yet seen in the other Platforms. It is however, completely untested, there may be attack vectors that have not been considered. How a 51% or Sybil attack would play out in a real-world deployment of a Holochain app is still unclear.

The potential to badly code a Holochain DApp is greater because of the high degree of control the developer has over the app. Whilst a DApp on the Holochain network could utilize consensus to validate its data a consensus algorithm is not an integral part of the networks feature set.

OCTOBER 2018

Think outside the blocks!

As the technology behind Holochain is “agent-centric” and because of security concerns, the Holochain network does not lend itself well to anonymity. It is important to identify and track agents to maintain the integrity of the system.

Holochain is truly infinitely scalable as it does not rely on complicated and resource consuming consensus algorithms. In fact, as the network grows the more durable and robust it should become. As an “agent-centric” distributed computing network the “consensus” engine utilizes a validating distributed hash table (DHT), requiring only nodes that are actually exchanging data with each other to reach a state of agreement.

The network is built on the premise that data can remain in localized clusters, instead of being shared with every node. This architecture creates a shortcut to consensus, as finality is reached only on certain segments of the network as nodes interact with one another.

and lisp. Ethereum on the other hand uses the relatively obscure Solidarity language.

If you act as a host on the Holo network, you get paid in crypto-credits known as Holo fuel.

Even at these early stages interested parties are touting potential uses for Holochain including decentralized clones of Facebook, Twitter, AirBnB and Uber.

Their ICO saw the launch of their HoloToken (HOT). As Holo fuel is used to power the Holo network Holochain hopes to achieve price stability for HOT, as these credits represent a means of transacting value backed by computing power.

A core tenet of the project is to help enable people to find new ways of collaborating on their own terms, to run applications as a community. Holochain provides a method of running DApps that only requires the devices of the users. A user is also a host which provides faster downloads than centralized systems and allows users to pay their own way by contributing to the network.

Holochain aims to bring their product to market for a fraction of the cost of EOS. They raised $20 million through their ICO.

As well as developing the Holochain network, the project is introducing a decentralized hosting platform known Another benefit of Holochain is that it as Holo. This can be utilized to allow inallows developers to use well known de- ternet users access to “hApps” via their veloper languages, such as JavaScript web browser.

We believe that power will decentralize in the next cycle... “[Holochain’s] agent-centric model really speaks to Mozilla.

JIM COOK, Chief Financial Officer of Mozilla

It is anticipated that as the network grows, and more hosts come online to share computing power, the networks should increase in value. The Holofuel should increase in value as the service it supports increases in power.

Holochain is not a straight up improvement on blockchain. It is instead a different beast. There are trade-offs against other propositions in both security and scalability. It does however, offer a refreshing alternative to blockchain. Projects like this are what the crypto industry needs to see, if it is to evolve effectively. It will probably not replace Ethereum or EOS, but it may find that specific DApps are much better suited to its environment or be the foundation for an unimagined distributed web 3.0 system.

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OCTOBER 2018

Blockchain and Organised Religion

Crypto enthusiasts often seem to have an unshakable faith in blockchain and are often considered to be similar in nature to a cult to the non-believers. They could be considered to worship the elusive and enigmatic figure that is Satoshi Nakamoto. Matt Listons project 0xΩ by ICO CROWD (Zero ex Omega) has been reported on by many journalists and blockchain/ crypto websites as a blockchain based religion. To call it this is in my opinion to misrepresent the concept and potential of 0xΩ. Whilst the term “blockchain religion” may make good headlines, maybe people have failed to appreciate the actual substance of what is being suggested here.

Rather than being a blockchain based religion with its own pre-described deity/deities, it is in fact a framework for organising believers without the need for top heavy structures. The idea has 22

been widely mocked, but fails to acknowledge the benefits to a congregation, nor the sheer size of what could be called the religious industry or its enduring, seemingly eternal charm.

Few other ideas have such staying power in the history of humanity as religion other than agriculture, medicine and house building. In many cultures religion shapes the decisions you make daily, from who and how you marry, a country's laws and taxation policy. Religion is pervasive and powerful. All other industries seem to have a natural lifespan before being replaced by a superior product and confined to the history books. Whilst religious beliefs may change, there is always religion. It is almost like there is a religion shaped hole in the heart of almost every man.

Can you put a dollar value on religiosity? One Georgetown Universi-

ty researcher has attempted to quantify the economic activity associated with it. He released findings from the study that says organized religion and behaviours associated with it contribute, by one estimate, nearly $1.2 trillion to the United States alone. Even if its only function is as a digital collection plate, the proposition still has incredible value.

“In our secular culture, we have sort of replaced religion with capitalism or, rather, this rampant consumerism,” Liston has stated. “0xΩ isn’t a direct critique of that, but I think it’s definitely a clear point to make.”

Liston said about 0xΩ: “It’s a religious framework that could allow for belief sets to update much more quickly and also to democratize the relationship between membership and convergence on

OCTOBER 2018

what everyone believes in this religion,” at the May 19 launch, according to a Forbes report.

Its founder, Matt Liston, is the former CEO of Augur. Augur is a blockchain-supported prediction platform where you are rewarded for accurately predicting the future. Liston’s departure from Augur was not amicable, and recently he filed a lawsuit for $152 million against his former employer.

er 0xΩ’ would allow followers around the globe to more easily achieve a religious consensus is unknown. It might equally lead to a myriad of hard forks in the 0xΩ blockchain. Abrahamic religions, for example, could all be considered to be hard forks of Judaism. Buddhism and Hinduism could be considered to historically share a common blockchain.

In our secular culture, we have sort of replaced religion with Some new religions have managed to capitalism gather many new followers and signifi- or, rather, The concept behind this framework is cant resources. According to Jeffrey Authis rampant the democratization of faith-based orgustine, author of the blog The Scienconsumerism,” ganisations. You would no longer need tology Money Project, the Church of a leader (although you could still define Scientology has a book value of $1.75 Liston has one if you wished). The Pope, the Dalai billion, about $1.5 billion of which stated. “0xΩ Lama and the Chief Rabbi all proclaim is tied up in real estate, mostly at its isn’t a direct what is divine and that which is sin headquarters in Clearwater and in Holcritique of that, and the concepts flow down through lywood, California. but I think it’s the power structure of the institution of faith until it reaches the followers at In an amusing co-incidence Daoism (or definitely a the bottom. Whilst religions do change Taoism) is a religious or philosophical clear point to over time, their ability to react quicktradition of Chinese origin which emmake ly to social changes is limited. Social phasizes living in harmony with the changes often do not occur at the same time across all continents and a stance of conservatism is often the glue that continues to bind a community together and the catalyst that causes schisms amongst communities. Religions in the past have often fragmented into various denominations and sometimes completely new religions. Wheth-

Dao (or Tao). The Dao is a fundamental idea in most Chinese philosophical schools; in Daoism, it denotes the principle that is the source, pattern and substance of everything that exists. Daoism differs from Confucianism by not emphasizing rigid rituals and social order. Daoist ethics vary depending on the particular school, but in general

tend to emphasize wu wei (action without intention), "naturalness", simplicity, spontaneity, and the Three Treasures: "compassion", "frugality", and "humility".

We in the tech industry understand a DAO to be a digital autonomous organisation. It is a distributed structure run by software within which all participants have a say in the direction of the organisation. Whenever a decision is to be made, stakeholders in the organisation vote and shape the organisations future direction. DAOism seems to share many common features with Daoism.

Most currently, popular religious orders rely on a book to guide them. Prior to the Gutenberg press it was mainly spoken word. Is a web 3.0 based solution religions natural evolution?

We all have our own ideas about where we come from and why we are here, but all religions seem to share one thing a sense of community. As the web becomes increasingly social can the tools we develop assist people in participating in their faith? Religion has time and time again shaped our world and let us not forget that religion can walk where banks dare not tread and regulation often cannot touch.

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OCTOBER 2018

Blockchains and Genomics

The Human Genome Project (HGP) was an international research program whose goal was to completely map and understand of all the genes of human beings. All our genes together are known as our “genome.�

The HGP represented the culmination of the history of genetics research.

In 1911, Alfred Sturtevant, an undergraduate researcher at the laboratory of Thomas Hunt Morgan, discovered that he could - and indeed had to, manage his data - map all the locations of by ICO CROWD the fruit fly (Drosophila melanogaster) genes whose mutations the Morgan laboratory was monitoring over generations. This very first gene map has often been compared to the Wright brothers' first flight at Kitty Hawk. In turn, the Human Genome Project is also compared to the Apollo program taking humanity to the moon.

99.9% of our genetic makeup does not vary across our species. However, the remaining 0.1% contains all the unique 24

variations that define everything from our eye colour, how tall we are to what diseases our bodies may be predisposed to.

In 2003 scientists finally sequenced mankind's entire genome, listing all of the base pairs that make us human in the form of the letters G, T, A and C. It took 13 years of computing power and costed an estimated $3.7 billion USD. Today the cost and time scales have dropped dramatically. An entire genome can be sequenced for less than $1000 and can be done in a matter of days. These costs and timescales will only drop further as technology improves.

Who owns your genetic data and who benefits from it has become a thorny ethical issue. The genomics data market currently is closed and there is proprietary exploitation of the human genomics data market. But what if we could use blockchain to create a secure and open protocol that encapsulated life’s code.

Data regarding people's online habits has already proven itself to be incredibly valuable to everyone from marketing companies to governments. What if we could unlock the value in our genetic code whilst retaining ownership.

Genomic drug design and genomically targeted therapies are an ever-growing market and it is forecast to be a $27.5 billion industry by 2025.

Last year my mother was diagnosed with breast cancer. She was lucky to be accepted on to a trial where NHS patients cancer samples are sent to the USA to give a better treatment plan and prognosis for sufferers.

Upon the return of the data it was identified that my mother would not receive any benefit from traditional chemotherapy as her cancer was oestrogenic and she was instead placed on a course of radiotherapy. We were told that with her type of cancer only one in four people actually benefit from chemotherapy and the genomic test would help us find out if she was one. You will be happy to hear that

OCTOBER 2018

with the help of genomic profiling she Last year researchers at Harvard has made a full recovery. founded the blockchain company Nebula Genomics. One of the lead With a course of chemotherapy costresearchers George Church had for ing up to $30,000 and genomic testyears been trying to kickstart the ing costing around $1,000 it is clear to genomic big data revolution. He had see that the NHS and medical services asked volunteers to donate their gearound the world could spend $4,000 netic data to the Personal Genome on 4 people and identify the 3 peoProject (PGP) and has aggregated ple that would not benefit. They will be around 10,000 samples so far. saved unnecessary suffering, get a better prognosis and the NHS saves itself The PGP relied on the kindness of volup to $90,000 for every 4 people tested. unteers to forgo both their privacy and Almost 360,000 people in the UK alone ownership of their genetic data in order are diagnosed with cancer every year to advance medical science. This relied and the potential for cost savings just primarily on people being altruistic or in this one area of medicine are huge. being too ill to care particularly about Although, not all cancers are equal (and privacy and ownership concerns. hence the 1 in 4 figures do not stand up across the board) through genomic The next step is to get everybody else testing we can create ever more person- involved. It is estimated that only alised treatment plans to improve pa1 million people have had their getients’ lives. I certainly owe a huge debt nomes sequenced. Nebula and anothto the NHS and to OncotypeIQ who er company DNABits have proposed performed the genomic testing. using a blockchain system to allow all people to monetize their DNA. If we have already sequenced the geBy being able to sell your genome to nome, what makes yours valuable? data harvesters the cost of sequencFor us to take full advantage of genom- ing could be brought down to zero, or ics we need huge datasets to establish even make selling your DNA a profitwhich genetic variations actually cause able endeavour. which illnesses. The big data revolution to exploit this information creates Whilst at this stage of development problems that are ethical, scientific and you are still required to pay up front technological which we must overcome. for your genome to be sequenced, once

done you could allow interested parties to bid for access to your genome in return for cash.

The genomics data market currently is closed and there is proprietary exploitation of the human genomics data market. But what if we could use blockchain to create a secure and open protocol that encapsulated life’s code.

You don't have to accept cash there are some much more interesting possibilities. It is quite feasible that if you opened up your DNA to a pharmaceutical manufacturer that you could ultimately be entitled to shares in any subsequently developed drug. Funds could go towards paying expensive medical bills. This could all be managed with smart contracts.

Professor Church has stated that “right now, genome sequencing is like the internet back in the late 1980s. It was there but no one was using it.”

Genomics already has and will in the future raise more questions and concerns that can be settled just by science. Hopefully through the blockchain we can resolve some of these issues. We need to ensure that we create a system that is transparent, fair and gives ownership rights to individuals whilst allowing medical science access to the vast amount of data out there just waiting to be tapped into. Genomic treatment and medical science is, in its infancy but it is about to create a paradigm shift in medicine and I for one am glad that blockchain is at the heart of it.

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OCTOBER 2018

HealthDex – Unleashing the Power of Health Data The health sector is undergoing a revolution fuelled by ‘big data’. The amount of health data in the world is growing so rapidly that it is expected to double every 73 days by the year 2020. [1] Whilst the health sector has always generated huge amounts of data, this data has only relatively recently started becoming available in digital form, triggering an avalanche of useful data that has traditionally been poorly managed.

by DR. MOHSIN CHAUDHRY Co-Founder and CEO

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shown much promise in tackling some improve performance. Governments of the greatest problems facing manare using health data to inform public kind today. At the same time, health health policies and optimise health secdata are overwhelming, not only betor spending. Every stakeholder in the cause of the volume and diversity of health sector is increasingly reliant on data types but also because of the health big data, making it an increasspeed at which they are created. In reingly valuable commodity. sponse, new technologies, including blockchain, distributed ledger, cloud The traditional business model of computing and data science techniques, contemporary health data companies are being increasingly utilised by comis to collect, curate and sell health panies and organidata to buyers. sations to unleash This model genthe full potential erates billions The amount of health of health data like of dollars in annever before. nual revenue for data in the world is health data comIn the health sector and elsewhere, growing so rapidly that Pharmaceutical, panies. Furtherthese massive quantities of data—colit is expected to double biomedical and more, licensing loquially called ‘big data’—are characdeals involving terised by high velocity, complexity and other life sciencevery 73 days by the es companies are remuneration for variability. The growth of big data has year 2020. using health data revenues generatrapidly outpaced storage, distribution, to discover the ed from the utiprocessing and analysis capabilities, lisation of data while simultaneously kicking off an in- next generation of drugs, therapies, diagnostics and othcan generate even greater returns. Information revolution. er medical products. Academics and cli- deed, the health data brokerage innicians are using health data to create dustry alone is estimated to be worth The health sector itself is a multi-trilnew models of healthcare and to enable around $47 billion (USD). The pharlion-dollar machine comprised of nuthe next generation of healthcare deliv- maceutical industry alone has a commerous industries and institutions inery, termed ‘precision medicine’. Health bined market size of nearly $1 trillion cluding life sciences companies, acinsurance companies are using health (USD) and an annual research and deademia, and government organisavelopment budget of over $150 biltions. The availability of health data has data to inform business decisions and

OCTOBER 2018

lion (USD). A single new drug created from the use of health data can generate billions of dollars in revenue.

Similar potential exists for breakthroughs in the multi-trillion-dollar personal-wellness industry. The health IoT market is growing rapidly, and the ‘smart healthcare’ market is expected to reach $169.3 billion (USD) by 2020, with a significant portion expected to be from remote monitoring. [2] Other multi-billion-dollar industries affected directly by health data include the medtech, biotech and healthcare analytics markets. Insights from health data are crucial to informing policy and maximising profits within the multi-trillion-dollar insurance market. Health data are also crucial for informing government health spending decisions and policies. In fact, it is estimated that around 20% of the healthcare spending in OECD countries is wasted and that the healthcare industry could benefit from an estimated $300 billion (USD) in annual savings by making better use of big data. [3],

[4] Therefore, health big data transcends several multi-billion and multi-trillion-dollar industries within the health sector.

Currently, no health data marketplace exists where all stakeholders can easily search, connect, trade and utilise health data. Instead companies purchase, curate and sell data through slow and expensive individually-brokered deals, resulting in large inefficiencies and underutilisation of health data. Additionally, a new generation of blockchain health data companies are providing health data owners with greater control, security and remuneration of their data. Hundreds more of these health data decentralised apps (DApps) are expected to emerge but lack a decentralised platform uniquely tailored to the demands of health data.

HealthDex is a first-of-its-kind health data blockchain platform and decentralised exchange. The HealthDex blockchain platform is the perfect choice for new health data DApps and tradition-

REFERENCES [1] IBM, “Healthcare’s Data Dilemma: a Blessing or a Curse?,” 2018 (accessed).

[2] Technavio, Global Smart Healthcare Market 2016-2020, 2016.

Pharmaceutical, biomedical and other life sciences companies are using health data to discover the next generation of drugs, therapies, diagnostics and other medical products.

al health data companies wanting to migrate to the blockchain. HealthDex provides DApps with a range of on-demand enterprise solutions, such as decentralised data storage and optimal data processing using the uniquely tailored health database, HealthDexDB. The HealthDex decentralised exchange is an off-chain decentralized marketplace where health data vendors, consumers and other participants can easily search, connect, trade and utilise health data. The HealthDex tokenised service layer enables frictionless transactions and remuneration, whilst ensuring appropriate incentivisation of nodes participating in the HealthDex network. Because revenues are primarily generated from commission fees, HealthDex is incentivised to maximise the number of market participants and trading volume on the HealthDex platform. In the process, HealthDex will enable platform participants to generate ongoing medical discoveries, health insights and improved models of healthcare.

[3] OECD, “Tackling Wasteful Spending on Health,” OECD Publishing, Paris, 2017.

[4] IBM, “How Big Data Equals Untapped Opportunities and Savings,” 2018 (accessed).

[Online]. Available: https://www.ibm.com/watson/infographic/discovery/big-data-savings/.

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OCTOBER 2018

China Leads Blockchain Patent War China is a country that historically flouted intellectual property rights. However, research by Thomson Reuters shows that China is now dominating the intellectual property rights arms race. In 2017 roughly, 56 percent of the 406 blockchain patents issued around the world were of Chinese origin. The United States came in second with only 22 percent.

One company, the Alibaba Group Holding company filed more than 10 percent of all blockchain patents in 2017.

This places Alibaba in the top spot for the total number of blockchain related patents filed to date. Alibaba steals the lead by only one place. They have filed by ICO CROWD a total of 90 blockchain patents whereas IBM has filed 89. IBM has been increasing its involvement in blockchain through partnerships across a wide range of industries and government departments.

In third place is Mastercard, who have filed 80 patents. They are followed by the Bank of America with 53. The next place is held by a new entrant on the list, the People’s Bank of China.

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Whilst China appears to have embraced blockchain they at the same time, are rejecting cryptocurrency. There are Implicit bans on cryptocurrency. Current Chinese regulation prohibits financial firms holding or trading cryptocurrencies. On 5th December 2013, the People's Bank of China took its first step in regulating bitcoin by prohibiting financial institutions from handling bitcoin transactions. On 1st April 2014 PBOC ordered commercial banks and payment companies to close all bitcoin trading accounts within two weeks.

In early 2018 the People's Bank of China announced that the State Administration of Foreign Exchange would crack down on bitcoin mining operations. This position is echoed by Jack Ma, founder of Alibaba who has been quick to endorse blockchain whilst maintaining scepticism for cryptocurrencies.

Alibaba's adventures in blockchain relate from everything from food to medical records. They have entered into a partnership with the Wuchang municipal government to attempt to curb food fraud and increase consumer trust. So called “fake rice, where ordinary rice was being sold as a premi-

um product. They are working on similar food related anti-fraud blockchain projects in partnership with Australia and New Zealand. Alibaba has also partnered with the city of Changzhou to store complete medical histories on a blockchain.

Other Chinese companies filing significant numbers of patents include tech giants Tencent and Baidu.

At this stage the USA still is in the lead in terms of the overall number of filed blockchain patents. However, with China's dramatic increase in filings in 2017 they are closing the gap at an astounding rate.

Chinese President Xi Jinping has described blockchain technology as one of a new generation of technologies that is “substantially reshaping the global economic structure.”

The number of crypto and blockchain patent applications have skyrocketed, just as the crypto economy has. There is a strong correlation between the price of Bitcoin and the number of patents filed. In 2017 the number of patents nearly doubled from the previous year.

OCTOBER 2018

Patent filing is not the preserve of billion-dollar companies however, Everyone, from individuals, small corporate entities to universities are pursuing patent protection. Craig Wright who has in the past claimed to actually be Satoshi Nakamoto has filed 70 blockchain related patent applications.

Many of these applications are still awaiting examination. Although the patents thus far granted cover a wide range of crypto related technology.

Coinbase has been granted a range of patents that related towards the use of crypto at point of sale via a mobile device, security systems relating to transactions, identity management systems, tip buttons for bitcoin transactions and tools and techniques for analysing transactions listed on a distributed ledger.

Goldman Sachs has been granted a patent for a system that settles securities using a bespoke cryptocurrency. Bank of America received a patent for a platform to manage exchange rates between various currencies, transfer requests and customer accounts.

Apple has also got involved in the crypto patent war filing various patents including one related to verifying the reporting, maintenance and validation of timestamps using blockchain.

Due to the emerging nature of this technology there are still many unknowns. The laws relating to the validity of these patents and how they can be enforced in many ways remains unknown. On the plus side for crypto enthusiasts, the pursuit of blockchain related patents helps lead to increased public awareness of the underlying technologies and legitimizes them in the eyes of the public.

Chinese President Xi Jinping has described blockchain technology as one of a new generation of technologies that is However, the filings can also restrict “substantially crypto. If companies legally reserve techreshaping the nology and implementations of blockglobal economic chains without having to build useful applications. Large corporations can use structure.� patents as a tool to remove competition from the market. It can be considered a legal form of corporate bullying.

I am not aware of any crypto related patent as yet being litigated. It is at this stage unclear how easy it will

be to enforce a blockchain patent. It is quite possible that these already issued patents end up in a similar state to some recent financial-based patents that struggled at the stage of review. In time the USPTO will have to develop guidelines that enable patent examiners to ensure all blockchain patent applications are treated equally and subject to the same criteria.

The fact that many of these patents are built on the foundations of open source software gives anyone wishing to challenge or object to a patent issued, some significant tools in their armoury.

Much of the interest and money flowing into the cryptocurrency economy is incredibly speculative. Many are betting that blockchain and its related technologies will lead the web 3.0 revolution. The scrambling of large corporations for patent protection, shows the level of confidence that large corporations have in this technology and add credence to the idea that this emerging technology, is about to undergo explosive growth and truly is here to stay.

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OCTOBER 2018

Ethereum Standards Explained Until July 2015, when Ethereum was created, building a blockchain application required complex coding skills, an in depth understanding of cryptography and mathematics as well as some significant resources. At its most basic Ethereum can be described as an open source software platform based upon blockchain technology. It gives developers the ability to build and deploy decentralized applications. With Ethereum’s development came the potential to build previously unimaginable applications with great speed.

Just like Bitcoin, Ethereum is a distributed blockchain network. However, there are significant technical differences between the two networks in both their purpose and capability. Bitcoin is primarily a peer to peer currency and Ethereum is a foundaby ICO CROWD tion on which decentralized applications run.

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Whereas on the Bitcoin network, you solve an increasingly complex cryptographic issue to get bitcoin, on the Ethereum network miners perform work on the Ethereum virtual machine to earn Ether. Ether can also be used by application developers to pay for transaction fees and services on the Ethereum network.

Ethereum allows for smart contracts.

Essentially this is a piece of code that can help facilitate the exchange of money, content, property, shares or anything else that can be recorded and stored on a ledger. Processes can be automated so that only when certain conditions are met, trades can be executed. Running these smart contracts on a blockchain means that you can guarantee a contract will execute exactly as programmed without the possibility of downtime, fraud or third-party interference.

WHAT IS AN ERC? ERCs or Ethereum Request for Comments are technical documents that

are used by smart contract developers working with Ethereum. In them they attempt to define a strict set of rules required to implement tokens on the Ethereum network. The documents are generally created by developers and layout protocol specifications and contract descriptions. Before an ERC is accepted as an Ethereum standard it must go through a process of revision and improvement. One accepted by the community through an Ethereum Improvement Proposal (EIP). Some of the most popular Ethereum standards are listed below: ERC 20 This standard is the most popular and well know standard on the Ethereum network. Almost all ICO tokens issued implement this standard. By implementing this standard all Ethereum blockchain users can interact with other smart contracts on the network without having to have an in-depth knowledge of the other token it is interacting with. This means there is no

OCTOBER 2018

need to build custom developments and write extra code to add new tokens.

All a developer needs to know is the Ethereum token address that implements this standard.

or execute a contract on the Ethereum blockchain platform.

ERC 223 This standard is a proposed improvement upon the ERC 20 standard. Its aim is to solve issues associated with the ERC 20 standard and it has some key advantages.

ERCs or Ethereum Request for ERC-721 Comments This proposal created a standard for non-fungible tokens within the Ethereare technical um ecosystem. The ERC 20 and ERC 223 documents that standards dealt with fungible tokens that were equal to each other in all ways. are used by smart contract These are easily tradable as all tokens can be treated equally. However, there developers are some usage cases where there is a working with need for non-identical tokens. For exEthereum.

Firstly, it provides the opportunity to avoid accidentally losing tokens inside contracts that are not designed to work with sent tokens. These accidental transfers are quite uncommon and are set to become even more so as the Ethereum Name service (ENS) is used more in the future. ENS allows people to use human readable names rather than a long alphanumeric string.

For example: 'aardvark.eth' instead of '0x4cbe58c50480...'

Secondly it uses less gas than ERC-20.

Gas refers to the pricing value required to successfully conduct a transaction

However, as this is a relatively new standard it cannot be guaranteed that it is implemented in all existing DApps on the Ethereum network. This risk will diminish over time.

ample, if a token represented the ownership rights of an original piece of art or represented property title deeds. These tokens need extra parameters and have to be priced individually. Other examples of non-fungible tokens include the popular crypto kitties tokens and energy tokens, neither are created equally. The time of day or energy generation method need to be stored in the token.

ERC 621 This standard is an extension of the ERC 20 tokens standard. It adds two new functions which are increaseSupply and decreaseSupply. Using this standard DApps can increase and decrease the overall token supply, minting and burning tokens as required thus changing the totalSupply.

ERC 827 This standard is also an extension of the ERC 20 standard. The additional functionality allows for the transfer of tokens and also the ability for the original owner to specify the pre-agreed criteria under which the new owner can spend it. As it is an extension of the ERC 20 standard it is also ERC 20 compatible.

OTHER ERC STANDARDS There are many more ERC proposals than there is space to list here. Over time this increased standardisation should decrease development times and increase interoperability between DApps. This can only be a good thing for the crypto economy.

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OCTOBER 2018

Free Society and Floating Cities

Cryptocurrencies history is heavily intertwined with the libertarian movement. Many early adopters and current players in the market believe that government should only have minimal influence in the lives and financial choices of its citizens. They believe in the separation of banking and state, with decisions made bottom up by the citizens rather than by a central regulator. These crypto-enthusiasts are often referred to as the “hippies of the right”.

A group of crypto enthusiasts who have amassed great wealth from crypto have decided to band together to create a project known as Free Society. The proposed crypto utopia was announced by Olivier Janssens and Roger Ver in 2017 and they plan to “purchase sovereignty” from a nation state. Creating the world's first crypto non-country. They believe in free market volunteerism. That interaction with government should happen on a voluntary basis or not happen at all.

In November last year Roger Ver stated that. “Volunteerism represents the difA recent survey revealed that 44% of bit- ference between working for a living or being a slave.” He went on to say that coin owners call themselves libertarian and around 10% of the entire American “all throughout society in all your interactions in your day to day life, everypopulation now identify as such. In the 2016 US presidential election the Liber- body deals with everybody else on a voluntary basis with a few exceptions. tarian candidate had their largest vote Murderers, rapists, thieves and governshare ever with 3.3% of total votes. by ments. So, if we all know that murderICO CROWD ers, rapists and thieves are bad people Even Satoshi Nakamoto wrote in his for dealing with each other via coercive Bitcoin white paper that “it’s very atnon-voluntary means, what does that tractive to the libertarian viewpoint if make you think about government?” we can explain it properly.”

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The founding members hold around 200,000 Bitcoins. At the time of writing that represents roughly $1.5 billion USD. The project has reportedly raised $100 million which will be used to purchase land with sovereignty.

Ver is adamant that this project is not an ICO. THE MINERVA REEF In 1972, Michael Oliver attempted to create a sovereign state, a short distance off the coast of Tonga. He chose a small reef and contracted people to dredge up an island from the seabed.

The small island was named the Republic of Minerva, it declared its independence and minted its own currency. All was going well until the King of Tonga used his army to depose Oliver. As time went by the sea slowly reclaimed the sandy island and as quickly as this millionaires utopia came into being, it was gone.

THE SEASTEADING INSTITUTE Seasteading is the concept of creating permanent dwellings at sea, called

OCTOBER 2018

seasteads, outside the territory claimed by any government. Parti Friendman, a former Google engineer and point man for the Seasteading institute has his own plans for a Minerva 2.0. Friendman is also the grandson of famous free market economist Milton Friedman. He teamed up with Wayne Gramlich in the early 2000s, a software engineer who proposed using plastic bottles to make floating islands. Together they published a book called Seasteading: Homesteading the High Seas. The book detailed plans for a waterborne homestead somewhere in the San Francisco bay. The plans caught the eye of Peter Theil, co-creator of PayPal. The libertarian leaning Silicon Valley billionaire wrote a cheque for $500,000, Friedman quit his job at Google and the Seasteading Institute was born.

It was decided that a stateless ocean society would have major issues relating to ocean currents and reluctantly they turned their focus to calmer waters.

Soon they were looking at French Polynesia. With their strong connection to the internet backbone and expansive lagoons it seemed to be the most achievable location. The Seasteading institute met with Tahitian ministers in January 2017 to sign a memorandum of understanding to build a tax free floating society in Tahitis Atimaono lagoon. The economy would be based upon a new crypto-currency.

Utopian societies have a long and rich history of failure. What makes Free Society and the Seasteading Institute think that their vision will be different? Both the crypto world and the politics of libertarianism have their fair share of problems. With total freedom comes many societal problems that we currently use the government to help us regulate and resolve. How do you operate your prisons? Who pays for them? The position on abortion has to be pro-choice and people would be allowed to own unlimited weapons.

ernment has publicly stated that the agreement was outdated and non-binding. Residents were uneasy at the prosThings didn't progress quite as expected pect of a tax-free zone on the edge of and the San Francisco “Baystead” nevtheir territory. Concerned as to how it er happened. A later plan for a “Clubwould change the Tahitian economy.

Stead” was thwarted by high costs. The There were also concerns that the locals plans were to make a 200-person float- lacked the engineering skills to help ing resort off the coast of California. make the platforms and suggestions of Friedman had stepped down at this massive job creation were being exagpoint, he was succeeded by Hencken. gerated.

Crypto has had its legality called into question on many occasions due to the ability to conduct anonymous trade with it. It has helped black markets flourish in a range of illicit activities including hiring hitmen, gun and drug sales. If we do manage to form these new crypto-nation states, they will have a dramatic effect on traditional government policies. Existing governments will need to consider copying their policies or risk the brightest and richest individuals leaving for pastures greener.

Even Satoshi Nakamoto wrote in his Bitcoin white paper that “it’s very attractive to the libertarian Recently the plan has hit further isviewpoint if we sues. After a campaign to stop it from can explain it opposition politicians the Tahitian govproperly.”

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OCTOBER 2018

Soluna

Crypto mining is an energy intensive business and is increasingly becoming an environmental issue. Mining operations in China are often powered by fossil fuels. But can crypto help kickstart a green energy revolution. One company believes so and have an ambitious plan to generate green energy to mine crypto in one of the windiest and inhospitable environments on earth.

Soluna has acquired a 37,000 acre wind farm site in Morocco that has the potential to generate up to 900 MW of power at any one time. Recent estimates suggest that the total Bitcoin network uses at least 2.55 gigawatts.

So, this array would meet around a by ICO CROWD third of the networks current electrical needs. The site has been purchased from a previous company that started to develop the site, but progress had stalled. Soluna along with German 34

wind power company ALTUS AG wants to install at least 36 megawatts of generating capacity by 2020 and expand the array to the maximum capacity of 900 megawatts within 5 years. Soluna aims to deliver the project in five years at a cost ranging between $1.4 and $2.5 billion U.S dollars, as it promised the Moroccan government. The firm is planning to invest $100 million dollars in the first stage.

own electricity requirements. It is anticipated that there will be a connection to the Moroccan grid by May next year. Soluna will not just participate in crypto mining they will lend their spare computational capacity to whatever is the most profitable usage of its hardware.

"Soluna will provide computing power for whatever is most beneficial for its business, whether that's cryptocurren"Soluna's mission is to power the cryp- cy mining, distributed graphics renderto-economy with clean, low-cost renew- ing, file storage, machine learning, AI able energy. To do this, we are building or other services of the decentralised a blockchain infrastructure and crypcloud of blockchain technologies that tocurrency mining company that owns have yet to be invented," says Soluna. its own renewable energy resources," it "We are prepared to foster this future says in the companies brochure. innovation. Green, renewable, low-cost power will serve as a key component."

The plan is to use the proceeds of crypto-mining by the small array to fund Blockchain based solutions often sufconstruction of the larger array. There fer from energy-based problems. Blockis also the opportunity to sell the spare chains that rely upon Proof-of-Work capacity to the Moroccan grid although consensus such as Bitcoin can burn a Morocco already produces 102% of its huge amount of energy. The Bitcoin

OCTOBER 2018

network is only 10 years old and already consumes as much energy as Ireland. This will increase to Austrian levels before the years end.

Where energy is cheap you will often find bitcoin miners. Due to Iceland’s abundant geothermal energy supplies the country produces more energy for crypto-mining than it actually does for consumers. China is also home to some of the world's largest mining rigs. Electricity there is cheap but is often generated at coal fired power stations.

caused issues within the disputed territory. Their Tarfaya complex stretches over more than 100 square kilometres of the Saharan desert. It was built in only two years and was launched in 2015 and currently holds the record as Africa's largest wind farm. It has 131 wind turbines grinding out enough electricity to power a city the size of Marrakech every day.

Soluna’s mission is to power the crypto-economy with clean, However, the renewable energy project low-cost renewis also controversial with some of the able energy. To Sahrawi people– those who live in the do this, we are west of the Sahara desert – who have Electricity is the largest variable cost for complained that it will further exasper- building a blockmining operations. They are profitable ate the occupation of their land. chain infraas long as the value of the cryptocurrenstructure and cy produced is larger than the electriciThe Western Sahara dispute can be cryptocurrenty expended. Coal fired power in China traced back to November 1975, when cy mining comcan cost as little as $0.03 per KWH. The Morocco oversaw a 350,000-strong pany that owns average price of electricity in the USA is “green march” from Tarfaya across the approximately $0.13 per KWH. region. This occurred as Spain was beits own renewginning a disorderly decolonisation. able energy rePrevious projects within Morocco have Subsequently there was a mass flight of drawn international praise but have Sahrawi refugees and decades of armed sources

conflict, as the UN proclaimed the region a “non-self-governing territory”.

The Tarfaya wind farms 131 wind turbines can at max capacity generate 2.5 Megawatts of power each. There is a total installed capacity of 301 MW. It was listed in the top ten “Most Outstanding African Projects in 2015”, a ranking by Jeune Afrique magazine. It received an Investment of 5 billion dirhams ($530 million US Dollars). Its constructor and operator is Tarec, which sells the power generated to the National Electricity Office.

As you can see the proposed project is much more ambitious than the existing largest project. If Soluna is able to pull this off, it will truly be an amazing mega project putting Africa at the forefront of wind energy generation. It will be in the top 20 largest wind farms currently in the world and the largest wind farm outside of China, India and the USA, the world's three most populous countries.

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OCTOBER 2018

UK Lenders Warm to the Idea of Mortgage Deposits Funded Through Crypto Gains 36

OCTOBER 2018

Since the 2008 banking crisis UK mortgage lenders have been subject to ever increasing regulation. This has been in part due to the reckless lending practices of UK banks and in part due to increasing antimoney laundering requirements.

During the early 2000s fuelled by some of the lowest interest rates ever seen in the Western world and a lack of mortgage regulation, a new market for mortgages appeared firstly in the USA and it quickly spread around the developed world. These mortgagby ICO CROWD es and loans were referred to as “subprime” lending and were tantamount to mega scale organised fraud. Loans and mortgages were knowingly given to NINJAs. These are people with No Income, No Job or Assets. These people had little to no possibility of ever repaying their loans and the borrow-

ers and lenders relied heavily on ever increasing house prices to prevent issues. This extra liquidity and cheap money in the housing market led to a house price bubble.

At the peak of the boom UK banks were offering up to 120% loans to purchase houses. Northern Rock was one of these lenders, their first-time buyer proposition allowed buyers to secure a 95% loan against their property and then offered a further 25% unsecured loan to help borrowers cover the cost of purchase and improve their properties. These loans were often offered with only self-certification of income.

Self-certification was designed to help those who were unable to prove their income as they were self-employed such as taxi drivers or tradesmen. You would merely write your income on your application and sign to say it was accurate. No checks were carried out. These

types of loans and mortgages are now often referred to as “suicide loans”.

Borrowers found themselves in negative equity the moment they were handed the keys. In the two years before the crash Northern Rock lent approximately 200,000 of these products before going bust and having to be nationalised. This makes the government the largest holder of sub-prime mortgages in the UK. HOW COULD THE BANKS BE SO STUPID? As stated previously the loans were made under the erroneous assumption that house prices could only go up.

However, this was not the only factor.

The other issue was a practice known as “securitisation”. Banks around the world packaged these loans, of dubious quality, into interest bearing bonds. Financial institutions around the world traded these, often repackaging them 37

OCTOBER 2018

again and again until it was completely unclear what the underlying quality of the loans contained within these packages, were. The advantage to banks was that it took the loans off of their balance sheets allowing them to create further loans due to the fractional reserve lending system. This allowed banks to lend more money than they actually had.

plex mathematical formulas and leveraged deals made their inner workings opaque and they were often left to do as they wished.

The banks wrongly assumed that they no longer bore any risk of default because they had been sold on to third parties. This turned out to be a huge error of judgement as the debts came winging back. This put the entire financial system in to cardiac arrest and banks could no longer trust each other.

The reality of the situation was somewhat different. These financiers were merely bonus greedy city boys. They gave no thought to the long-term sustainability of the market and took no social responsibility. The city’s bonus culture encourages short term thinking and rewards risk taking. It was in the interest of these financiers to delude themselves that a credit boom could continue indefinitely. Securitisation promised to take the risk out of money lending. The reality is the regulators didn’t even try.

Didn't the regulators see this coming?

The Bank of England and the Financial Services Authority (now the FCA) were caught unprepared. Treasury, BoE and FSA workers are civil servants and have relatively low paid positions in the financial world. Prior to the crash they sat in awe of city financiers and their extravagant lifestyles. There was a belief that banks were almighty, powerful and knew what they were doing. Com-

THE CURRENT LENDING LANDSCAPE In the past lenders had limited responsibility to perform checks on their customers. If there was enough equity in a property there were few issues with lending. Fast forward to today and the onus of responsibility has shifted from brokers to the lending institutions themselves. Anti-money laundering regulation, Know-your-customer rules

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and due diligence are now directly the responsibility of the lender.

At the peak of the boom UK banks were offering up to 120% loans to purchase houses.

Northern Rock was one of these lenders, their first-time buyer proposition allowed buyers to secure a 95% loan against their property and then offered a further 25% unsecured loan to help borrowers cover the cost of purchase and improve their properties.

Banks now have a responsibility to fully check their client’s income. Self-certification mortgages are gone in the UK (although are sometimes still available in continental Europe). Income is proven by showing income tax receipts or wage slips.

Not only must income be proven, but, details must also be provided of where a deposit comes from and how it was raised. This is primarily an anti-money laundering requirement.

ENTER CRYPTOCURRENCY Bitcoin arrived in 2009 seemingly a response to the financial crisis. This also caught the regulators and banks unaware. Stories abounded of individuals making fortunes through crypto and UK crypto traders often used their bank accounts to keep the proceeds of their trades. It was not long before companies and individuals involved in crypto started seeing their bank accounts being closed. Mortgage providers became unwilling to accept the proceeds of crypto gains to be used as de-

OCTOBER 2018

posits for mortgages for fear of falling foul of the FCA’s enhanced mortgage and anti-money laundering regulation.

MORTGAGE PROVIDERS OPINIONS. UK banks and building societies now appear to be quite open to the idea of accepting mortgage deposits from crypto investments. There are a number of provisos which I will detail below: Most lenders will only consider crypto proceeds for the purposes of deposit.

The proceeds cannot be used to prove income and affordability. Concerns remain as to the origin of funds, so a paper trail will be required.

A spokesperson for the Building Societies Association (BSA) has stated “the trading of cryptocurrencies is comparatively new and home buyers funding a deposit in this way was still considered unusual.” However she also said “A number of building societies will consider Sterling payments from a crypto source if the customer can provide the necessary documentary evidence to satisfy anti-money laundering due diligence.”

The unregulated nature of cryptocurrencies means some lenders put them into the highest category of money-laundering risk.

Santander, Skipton Building Society and Royal Bank of Scotland have all stated sources of funding used for mortgage deposits are assessed on a case-by-case basis, including those derived from cryptocurrency investments.

A Skipton Building Society spokesperson said: "To date we have had very few such applications and require the customer to provide evidence from their cryptocurrency exchange so we can review how the proceeds have been obtained, ensuring they have not come from illicit goods or services.”

"As part of this we will consider the legitimacy of the exchange itself and may contact them to verify the information we have been provided with."

Money laundering via crypto may be a major issue, but how different is it from the procurement of funds from stocks and shares?

There are ways to avoid these issues. Crypto proceeds do eventually just become regular savings. It might slow the purchase process down, but simply holding onto your profits in your bank account for six months could make the difference.

Not all Lenders share a positive view of crypto, Barclays and Santander have specified cryptocurrency investments will not be recognised as income for affordability, with the latter also stating deposits in the form of cryptocurrency would not be acceptable.

Halifax appears to have shut its doors altogether to funds derived from cryptocurrencies to procure a mortgage.

There are ways to avoid these issues.

Crypto proceeds do eventually just become regular savings. It might slow the purchase process down, but simply holding onto your profits in your bank account for six months could make the difference. Lenders request bank statements dating back three or six months. Proof of ‘ownership’ for that time should adequately satisfy most lenders, without raising questions about the origin of the deposit.

Last year the UK's first properties were sold using Bitcoin instead of sterling. It is clear that crypto is slowly entering the mainstream property market.

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OCTOBER 2018

Do the Police and Government Have the Right to Seize Your Cryptocurrencies, When They’re Supposed to be Decentralized?

— Part 1

Regardless of whether you believe this practice is right, it is fact that governments and authorities who confiscate crypto holdings are also actually profiting from them.

by NATHANIEL COLE Co-founder BTC Bros.

Not only could this practice be unlawful, but is also a definite double standard, when paired with the fact that, until the surge of 2017, cryptocurrencies were thought of as ‘worthless’ by many governments and authorities around the world.

An article published by Coin Telegraph, on April 29th, 2018, titled; Crypto Auctions: Where Do Arrested Bitcoins End Up? is just one example of many, about the highly controversial practice.

Now, we all know and understand that certain jurisdictions have the powers to confiscate the property of individuals linked to obtaining said properties

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through the proceeds of criminal activity and/or in the interest of national security.

That being said, the authority or government would have to prove that the individual did in fact commit an alleged crime or that they are linked to a matter that could be detrimental to national security. Even further than this, to successfully prosecute an individual through due process, they would also have to unequivocally prove that the person was aware of and/or made aware that the action taken was with the knowledge that it was in fact criminal.

This argument can be skewed even further, when thinking about the laws of certain jurisdictions and the fact that profits or proceeds may be confiscated under seemingly unrelated laws or regulations. On top of this, in many situations’ awareness may not even matter and an individual may still be pros-

ecuted within the full extent of the law.

So, what other laws or rights pertain to this kind of action being taken against an individual in possession of cryptocurrencies?

WHAT ABOUT HUMAN RIGHTS? We had to do some extra digging to look at the link between cryptocurrency, FIAT currency, private property and Human Rights. The possible confiscation of just about anything which we are said to own along with the protection of our ownership rights, is something that has been a challenge since the dawn of humanity. We couldn’t imagine that arguments over the establishment of ownership only came about since paper record keeping and the first cavemen probably argued over ownership of rocks, land, trees and everything in between. Even in religious text such as the Bible, it was outlined, in the story of Cane and Abel, Cane killed Abel over what he believed were his “rights”.

OCTOBER 2018

This beggars’ further question to how Human Rights conventions relate to a decentralized and unregulated world or economy. Yes, it is possible that many countries and states to not have laws which prohibit the use, possession or transfer of cryptocurrencies. However, if this is the case, then it is also possible that the police or government are not breaking any laws themselves in the actions that they take when confiscating your hard earned coins or tokens.

forced to give up your precious coins and tokens, based upon a ‘proceeds of crime’ style legislation. I mean just look at what happened to Ross Ulbricht.

To further the complexity of possible double standard’s look at the case of DEA Special Agent Carl Force, who was arrested for using the criminal investigation of Silk Road to siphon profits, in Bitcoin, which he made from initiatives and operations he constructed under the veil of the investigation.

I know this may seem unreasonable, but these laws may differ from country to country and as we have seen in the US; even state to state. This in turn makes it much more difficult to work out where some of us actually stand, when it comes to our love and need of decentralization.

CIVIL VS CRIMINAL When it comes to the seizure of assets, things can be a minefield and the number of case scenarios or studies

If you live within the UK, a report published by www. parliament.uk on the 19th September, 2018 outlines the UK governments current stance and views on cryptocurrencies in the UK and is a must read.

On the other hand, regulation may be seen as a constriction of the cryptocurrency industry, a violation of human rights and a bid for manipulation of the industry by governments and regulatory bodies alike.

The question on many individuals’ minds is, are the positives really positives? Is there really a need for such regulations to be outlined by current regulators or should new regulatory boards be set up to give the industry a proverbial rule book?

We have seen that many long-time cryptocurrency advocates and originators have come together in bids to create a ‘fair and just’ compilation of regulatory measures within the industry. In 2018, governments seem to be taking more of an interest in cryptocurrency and on a whole seem to be more accepting of groups and bodies of industry veterans outlining

exactly what is and isn’t good for the industry.

The Element Group, ‘— a full-service advisor for the digital asset economy’, has many wonderful blogs and interesting up to date information related to the regulation changes in the crypto space, where they have outlined the current state of law for cryptocurrencies in many jurisdictions. Certainly something worth checking out.

extend beyond the reach of one article. With this in mind, we can have a basic insight to what reasons you could possibly be forced to hand over your crypto stash.

In a civil proceeding, related to assets (provided cryptocurrency is classed as an asset in your jurisdiction), you could be liable to forfeit any cryptocurrency you may have to cover any outstanding civil debts you may have against your name, as with law suits which name you as the defendant. In my opinion defence here would be based on the lawful definition of your crypto and may be the only thing that can save you.

As mentioned in our opening, in the case of criminal proceedings (again this may vary in jurisdiction), you may be

REGULATION: HELP OR HINDRANCE? The topic of regulation for the cryptocurrency industry has been a major discussion since the inception of Bitcoin and regardless of opinion has arguably managed to become the most important issue in cryptocurrency to date.

On one hand regulation offers things such as consumer protection, basic regulatory infrastructure and public/government trust, among a few other positives.

If you live within the UK, a report published by www.parliament.uk on the 19th September, 2018 outlines the UK governments current stance and views on cryptocurrencies in the UK and is a must read.

Whilst the SEC, FCA, FINRA and other regulatory bodies have started looking into regulations, stay diligent and be fully aware of any rights or contravention that may lead to your crypto being seized. Also, lookout for part 2 of this article, coming soon…hopefully before mass adoption. Ha! 41

OCTOBER 2018

Why Do Crypto Prices Follow Bitcoin?

At the time of writing this article the entire crypto industry is tanking. Many people with vested interests in crypto succeeding and failing have produced various articles proclaiming that they understand the reasons behind the market movements.

This writer cannot with confidence, tell you! If I knew I would be very rich. This article does not represent any form of investment advice and are just some ongoing trends I have noticed whilst studying the markets.

Market movements are notoriously hard to predict and there are few more volatile markets than crypto alone.

What is clear is that, as a general rule: When Bitcoin sneezes, the world of crypto catches a cold. by ICO CROWD

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Recent events have seen the total market cap of all crypto dip significantly.

However, bitcoin slightly less than others and has hence achieved 55% dominance of the entire crypto realm. This is the highest level since December last

year. Possibly, as many see Bitcoin as the less speculative and a more stable offering. It has after all been around for the longest amount of time.

Bitcoin is the original crypto currency. It is the most well-known of all the crypto currencies. It has the highest price per coin of all cryptos and is often considered to be the “gold” standard of crypto. Bitcoin has the highest daily volumes, highest market cap and the highest adoption. It also has a relatively restricted supply compared to other tokens. These qualities make it the natural crypto reserve currency. As the market matures over time we may well see this link fade in importance. It is quite possible that the days of “follow the bitcoin” will end soon.

When cryptocurrencies have such different value propositions and vary in how they are categorised, from currencies, utility tokens to security tokens, why do their fates all seem so inextricably linked? Apart from Litecoin most altcoins have very little in common with Bitcoin and its forks. Ripple for example, whilst being a type of

crypto currency (so say most people) it has a significantly different setup to Bitcoin.

One factor binding the price of crypto to the price of Bitcoin is the fact that almost every major exchange offers offers BTC trading pairs, where you trade BTC for alt coins rather than fiat or USDT. This places it firmly at the centre of the crypto currency world. When you look at the price of an alt coin in US dollars you are actually looking at the coins price in relation to Bitcoins exchange rate with US dollars. They don’t always move in unison though.

We have sometimes seen Bitcoin drop as altcoins rise. This is generally caused by investors en masse rushing into rising altcoins. This process also occurs in reverse and this wave effect can go back and forth over a short time period.

When the crypto market at large expands or contracts you tend to see Bitcoin and altcoins moving together in unison. This is not just down to the fact that Bitcoin is the reserve currency of crypto. It is also down to panic buying and selling across the whole crypto sec-

OCTOBER 2018

tor. You can witness similar trends on traditional stock markets. Where one companies bad news can cause all the stocks in the same sector to be subject to sell offs. It is a matter of human psychology.

The cryptocurrency environment is an isolated ecosystem at this moment in time and a lot of the price action you see is based on technical indicators (mathematical calculations based on historical price, volume, or open interest information that aims to forecast financial market direction.) rather than fundamental analysis of things like transaction fees, speeds, fees and tech.

Another reason people flock to Bitcoin is that it has had some of the most successful forks of any crypto to date. The prospect of getting free crypto is always enticing.

It is important to note that altcoins and Bitcoin do not always move togeth-

er in perfect harmony. Instead they seem to follow a rotation. When altcoins are not in rotation they are subpar investment compared to Bitcoin.

When they are in rotation they provide greater gains. Timing the market is an impossible task but it is well worth keeping this trend in mind.

Market manipulation could well play a part in the fact that cryptos and bitcoins seemingly move in unison. Individuals or groups could attempt to spoof all major coins on the major exchanges. Spoofing is a practice involving the placement of fake orders to manipulate the prices.

It seems investors moving into Bitcoin is profit motivated and symptomatic of the fact that other coins have at best poorly tracked BTC’s price, essentially making most of them subpar investments. After the recent sell off and return of bitcoin dominance it could be argued that Bitcoin is now

overbought, and ETH and altcoins are much more attractive buys.

When Bitcoin sneezes, the world of crypto catches a cold.

As an investor in such volatile times it makes sense to adopt a relatively conservative investment strategy. To use the old adage “Don’t put all your eggs in one basket” pick a few different coins to diversify your portfolio and spread risk. Using the “dollar/pound cost averaging” principle you can also smooth out volatility. To implement this strategy, you should pick the crypto you wish to invest in and make regular small investments over time. On days when the market is down you get more crypto for your fiat and on the days the markets are up your fiat buys less but your existing holdings prosper. Try to look at what makes your choice of crypto great, what is its value proposition and how many competing coins are there out there.

Take a more long-term view and you will find yourself in a position of less risk than those who are merely trying to predict which way the wind will blow next.

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OCTOBER 2018

LQDEX Platform Supports Trading Digital Assets Across Multiple Blockchains LQDEX (pronounced “liquid-ex”) is an interblockchain digital asset exchange. It allows trading of digital tokens across multiple blockchains without counterparty risk.

The system does not use atomic swaps and does not require modifications to existing blockchains. It runs on its own high-speed POS blockchain without miner fees.

LQDEX will offer a seamless user interface, making the platform easy for both professional traders and crypto hobbyists.

The LQDEX Blockchain (LB) is a proofof-stake, public blockchain solving this dilemma. LQDEX features fast block creation, and it does not have miner fees. The network can issue native tokens, similar to Ethereum tokens. The main currency of LB is called LQDEX (LQDX), like Ether in Ethereum. LQDX is traded on cryptocurrency exchanges and can be purchased for Bitcoin, Ether, USD, or other currencies. The LQDX token pays a reward. The LQDEX Network generates profits by charging commissions for trades and withdrawal fees. It distributes profits to LQDX token holders as rewards.

tokens issued, there are exactly 1,000 BTC on the balances of all its Collators. To accomplish these objectives, LB introduces a concept of a Lead Node. The Lead Node is the most powerful node among all nodes in the network, capable of executing the highest number of transactions per second.

The Lead Node receives the highest reward out of all LB nodes, so LB encourages the competition on computation power among its nodes. To further increase the network speed, LB uses a modified version of a gossip protocol between its nodes and client connectivity.

HOW DOES LQDEX WORK? WHAT SETS IT APART FROM by JAMES SOWERS OTHER DEX’S? Smart contracts require the manipulation of tokens, thus limiting the trading of tokens within the same blockchain as the smart contract. For example, users can easily trade ERC20 tokens on the Ethereum blockchain with smart contracts. However, this identifies a new dilemma in cross-chain trading.

This works because LQDEX issues proxy tokens, such as lq-BTC or lq-ETH. These correspond to digital tokens on external blockchains. There are always as many outstanding proxy tokens as assets on the balances of the Collators.

When assets are deposited, the corresponding proxy tokens are created.

If assets are withdrawn, the corresponding proxy tokens are destroyed.

For example, if LB has 1,000 lq-BTC

In a typical blockchain, each node connects to several other random nodes.

Let us say that this number is eight nodes. Likewise, end-user client applications transmit their transactions to eight random blockchain nodes.

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In LB, the node connectivity protocol is similar. But, a node or client app always attempts to secure at least one connection directly to the Lead Node. The re-

OCTOBER 2018

by sending withdrawal requests only to that Collator until the ratio becomes at least 200%.

TRADING ON LQDEX To start trading on the LQDEX network, a trader must deposit funds to LB. At the moment, the user wishes to deposit 1 BTC. To process the deposit, the network will perform the following steps:

maining connections are to the seven random other nodes. If the Lead Node refuses a connection, the node or client app seeks a connection to another node closely connected to the Lead Node.

LQDEX uses standard cryptographic primitives that are proven to be scalable with networks like Ethereum. The following are two important choices with respect to cryptographic primitives in a design of any blockchain: 1. Hashing Algorithm.

2. Digital Signature Algorithm.

to the address specified by LB. LQDEX then destroys proxy tokens, such as lqBTC, for external blockchain tokens sent by the Collator.

THINK OF COLLATORS AS COLLATERAL A Collator must maintain a deposit with LB in LQD in the amount of 200% or more of its token balance. For example, if a Collator has a balance of 100 BTC, it must maintain a deposit of 200 BTC or more in LQD with LB. This deposit is used as collateral. The collateral WHAT ARE COLLATORS? makes it unprofitable for a Collator to A Collator is a server hosting an LB core “walk away” with user funds. and a core of another blockchain, such as Bitcoin core or Ethereum core ("exOne way to think about a Collateral ternal blockchain"). The server keeps is as a stake in a proof-of-stake blockthe private key for accessing the exter- chain. To participate in block creation nal blockchain. on any kind of blockchain whether it is PoW or PoS, the participant must make A Collator performs the following func- a capital expenditure, which is substantions: tial.

1. Executes commands it receives from LB. Collators must maintain enough col2. Provides information about external lateral in order to perform certain opblockchain transactions to LB. erations including accepting deposits from users. As the value of the exterA Collator receives the share of profnal asset fluctuates, the ratio of the its from the exchange operations proamount of the collateral to the value portional to its LQD collateral deposof the external asset held by a Collait amount with LB. Collators are analo- tor changes. gous to “miners” in a proof-of-work or proof-of-stake blockchain.

A Collator may also withdraw all or part of its collateral, but only if that the reWhen a Collator receives tokens, such maining amount is at least 200% of the as BTC, it stores them in its wallet. value of the external asset held by the Upon detecting the transaction, LB cre- Collator. LB keeps balance information ates new proxy tokens, such as lq-BTC, of all assets, for which it issued proxy for the amount of external blockchain tokens, of all Collators. It computes the tokens received by the Collator. value of each asset held by a Collator and the value of its collateral. If the raLikewise, when LB instructs the Coltio of the value of the collateral and vallator to send tokens, such as BTC, the ue of the asset held by a Collator beCollator sends tokens from its wallet comes low, LB can increase that ratio

LQDEX will offer a seamless user interface, making the platform easy for both professional traders and crypto hobbyists.

1. LB creates a wallet for the user on its blockchain.

2. LB finds the Collator, which supports Bitcoin and has the highest collateral ratio.

3. LB instructs the Collator to commence a deposit transaction for 1 BTC. 4. Collator provides a Bitcoin address to LB, to which the user needs to send his or her deposit.

5. LB informs the user to send 1 BTC to the Bitcoin address provided by Collator. LB also sets a time window, during which the user needs to perform the deposit.

6. LB keeps querying the provided Bitcoin address to see if a deposit of 1 BTC appears in it.

LB creates lq-BTC tokens for 1 BTC. It places the lq-BTC tokens for 1 BTC in the user’s wallet. If the deposit does not appear during the time window, the received transaction is canceled.

LQDEX is expected to launch in the fall of 2018. LQDEX co-founders, Sergey Nikitin and Yogesh Srihari, regularly appear on Exploring the Block, a program on Fox Business Network.

The Team Yogesh Srihari CEO Co-founded Spankchain in 2017, which raised $11 million in token sales. Prior to Spankchain, Yogesh worked as Lead Software Engineer at ZEFR, Director of Engineering at Wickr, and Software Engineer at Google. Yogesh holds a Masters degree from Stony Brook University, under Joseph Mitchell.

Sergey Nikitin CTO Sergey founded xCoins.io, an innovative peer-to-peer cryptocurrency lending platform that allows nearly instant acquisition of bitcoin. Prior to xCoins. io, Sergey worked at Microsoft. Sergey holds a BS degree in Computer Science and an MBA degree from University of California - Los Angeles.

Checkout LQDEX https://lqdex.com

Disclosure: The author is an advisor on the project.

Disclaimer: This does not constitute investment advice. Please review their case purely on merit and proceed only if you are convinced or interested. Also, I do not encourage folks from USA, China etc. to invest in an ICO unless they speak to their lawyers. I only support genuine good people doing great in Blockchain innovation.

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OCTOBER 2018

Lessons Crypto Investors Can Learn from the .com Crash 2018 hasn’t been a great year for crypto traders. Crypto trading is way down. The crypto market cap is down 75% from its peak. The Blockchain Transparency Institute has claimed that $6 billion US dollars in daily trading is spoofed or otherwise fraudulent.

An estimated 80% of ICOs are scams and less than 1% have developed an actual product/service. Warren Buffet has stated that crypto will come to a bad ending and Jamie Dimon referred to Bitcoin as a fraud before later stating he regretted the comment. Some have by ICO CROWD compared the crypto crash and boom to tulip mania, I would say it was more like the dot com bubble. Tulips have relatively few use cases. Their prices never recovered from their staggering highs, as sanity returned to the market. The dot com boom however was the start of a process that has created some of the largest corporations that the world has ever seen.

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However, rumours of cryptos death have been greatly exaggerated. Crypto is in my opinion still thriving, albeit in a slightly more reasoned and realistic way. As the dust settles on the great crypto crash of 2018 some very interesting projects are just getting started and many major companies are just starting to see the benefits of blockchain.

The hype around ICOs had in many ways detached the valuations from any meaningful measure of a tokens value proposition. The increase that tokens saw in price was a result of speculation and bore little relation to what fundamental analysis would reveal.

This disruptive technology is still only in its infancy. Maybe now we can get back to a world of meaningful valuations.

The dot com boom in the mid to late nineties was a time of excessive speculative investing where money was

poured into anything with a .com after it. Most of these companies failed due to the fact they had no real strategy.

Today's technology industry is dominated by several players who were born in the dot com boom. Amazon, Ebay and Google can all trace their roots back to the time of excessive speculation. It is fair to say that a handful of today's ICO’s will turn into the trillion-dollar giants of tomorrow.

It is my opinion that we are on the verge of a transformative technological revolution. Large corporations are investing heavily in blockchain based solutions which adds great credence to the value of crypto even if some of the more recent ICOs have been of dubious quality.

Whilst this article should not be considered investment advice I would like to discuss where I see the market as being at this moment in time. It looks like at the time of writing that the signif-

OCTOBER 2018

icant losses experienced by the crypto market have stabilized. Hopefully we have reached the bottom. It is a commonly accepted principle in investment circles, that to sell at the bottom of the market should be avoided at all costs. If you are bold, now is the time to invest.

To sell now could be considered analogous to selling Apple stock in 2001.

tralized platforms will move slowly towards decentralization. What we currently consider to be “social media” will dissolve towards truly distributed systems. Facebook will lose its grip on its audience in the same way that MySpace did. The continued and blatant attempts by large tech companies to influence the way we think and interact, will ultimately be the social meWhat can we learn from the likes of dia giant’s downfall…. I struggle to see Amazon and Ebay's early days that alhow their commercial operations value lowed both their creators to become bil- proposition can be maintained when a lionaires and allow them to create some “for the people, by the peoples” social of the first viable corporate space pronetwork exists. Freedom will prevail. grams in the world? What made them It is not going to be possible to get all stand out from the crowd? of humankind to speak with one voice.

I think it is safe to assume that crypto will play a large part in the future of the internet. With the advent of web 3.0 it seems almost impossible for large corporations to retain their control of the value of the flow of information. The very foundation of the internet is built on the idea of anarchy.

Over time, it is my opinion that cen-

ONLY THE STRONG SURVIVE The dot com bubble and resulting crash created a movement. Looking back, I consider it a necessary process to separate the wheat from the chaff. The resulting collapse of badly structured businesses thinned the herd. The future successes of today’s Silicon Valley tech oligarch were forged in these times

of investor despair. The smarter investors looked at the fundamentals of the businesses.

LQDEX will offer a seamless user interface, making the platform easy for both professional traders and crypto hobbyists.

It is likely that 90% of today's ICOs will end up on the scrap heap of history. Its winners will shape the course of human history. Quite possibly making the trillion-dollar market caps of major players in tech look relatively small.

Anyone who is considering investing in cryptocurrency needs to take a longterm approach for the best chances of taking advantage of this emerging market. As our world becomes increasingly more interconnected the tokenization of everything is an inevitability.

Investors who take the view that this is not a fragile economic trend stand the best chance of weathering the current storm. Pay close attention now to the ongoing developments in the market and perform fundamental analysis to have the best chances of investing in the next big thing.

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OCTOBER 2018

UK Government Drives Blockchain Innovation for Social Good Despite being shaken by the crashing waves of political uncertainties, London continues to secure its ranking as the world’s number one financial centre. New York follows closely at The City’s heels, while Hong Kong and Singapore come in at 3rd and 4rth place, according to the Global Financial Centre’s Index. The UK has also seen nearly five times the number of FinTech deals financed in 2018 than its closest European runner up in the domain, Germany.

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London’s world-class financial hub continues to float with flying colors - highlighting the need for competing financial hubs to invest in digital infrastructure.

But the real measure of a nations’ longterm economic and technological capaby ICO CROWD bilities spreads much further than the world of finance.

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, wrote in a report on the Global Agenda of the Fourth Industrial Revolution: “in its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.

“We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.”

London’s reputation as a leading financial hub may be common knowledge, but less well known is what the country is doing to foster technological innovation across social sectors.

How are governments responding to the challenges ahead of adapting societies to technological change? What are the biggest obstacles to technological innovation? And what are the metrics for spotting a blockchain start-up with real potential to benefit wider society? Jonny Voon, Innovation Lead of the UK’s innovation agency, InnovateUK, offers a sneak peak into some of the behind-thescenes workings of the government funded scheme to bring the best ideas in the blockchain and tech space to fruition.

The non-departmental public body aims to drive productivity and economic growth and is funded by a UK government grant-in-aid. Key criteria for

OCTOBER 2018

selecting projects worthy of funding, says Voon, is that the use case and opportunity is long-term and deeply rooted in societal and cultural changes.

ject with Imperial College London called “GIVE”, which Voon says “has great social applications, and cultural ramifications.

“In industries like creative industries, health, or energy and transport, there is a need for blockchain, but the use case or the industry is nowhere near adopting it.

GIVE could help to formalise and put some technology around giving to charities that would allow people to measure how their money is helping to achieve the desired results.

“So, we look at what can we do to build a use case that can eventually be taken through to, say the NHS, and say; look we’ve done research, this shows the technology can do this, would you be interested in taking this to the next step?

“Linking charitable giving to metrics and KPIs and being able to formalise that, means that in theory we should get a better idea which charities are performing,” he says.

Voon says start-ups need a robust business plan, a solid understanding of the market, the potential risks of the project, and how these can be mitigated.

“Too many people tell us ‘We want to develop a blockchain solution’, but we ask, ‘which industries’ and ‘why?’”

Voon says this would also allow corporate investors to report back to their shareholders why they are giving to a charity and what their funding is enabling in real terms.

“So, let’s say you’re a corporate and you donate £1 million each year to charities. Your shareholders go, great, but why those charities? How well are those charities performing?

“That has potential to overwhelmingly transform the way we give to charities and that will have an ongoing and longterm effect on our society and our culture and economy,” says Voon.

“If AI could write a smart contract, why do I need a developer?

Why do I need a web team?

Voon points to digital security as another example of a sector Innovate UK has been looking to boost through funding start-up Metrarc's R&D project Blockchain device Metric ENhanced Security, or “IMmENSe”.

The company has developed novel mechanisms to authenticate and authorise data using the blockchain and ICmetrics - traits surrounding technology, such as runtime of the CPU, the battery, or screen brightness. These can be used to identify and secure a particular device and node: the ICmetrics create a digital fingerprint that can be used to generate an encryption key specific to the device.

“We ask a lot of questions and we try and find out a lot about them.”

“You wouldn’t know how to answer.

This can help to prevent a blockchain networks’ security from being compromised: “blockchain relies on nodes for consensus, but what happens if they’ve been corrupted or compromised?

BLOCKCHAIN START-UP IDEAS SUPPORTED BY INNOVATEUK Alice Si is a blockchain start-up which aims to bring significant transformation to the Third Sector through a pro-

“What if smart contracts and the blockchain allow you to say, yes, we’ve verified that our £1 million has gone to them because they’ve met key targets and metrics.

“Now that won’t work on a huge network. But if you take a private network, where you have a dozen or half a dozen nodes, what would happen if that node is compromised and someone is now 49

OCTOBER 2018

trying to change the validity of the data and the transaction?

“The problem is that once that data is on the blockchain – authenticated and validated - it’s there and it’s seen as the truth. If you can change the first (genesis) block, everything else is going to go wrong,” Voon explains.

But with ICmetrics, “you can authenticate that that node is valid, and should there be any discrepancies with its encryption key, the node can be blocked from the network and not allowed to partake in any other consensus decisions.

“Only devices that have not been tampered with or modified in any way can take part in the blockchain network,” Voon says.

This method of securing devices and blockchain networks is still in early stages of development, but it could have far-reaching implications for society and even the democratic process.

Although the prospect of Evoting isn’t on the cards in the near future, ICmetrics has potential to allow something like a smartphone to be authenticated and take part in verifying identity so we can tell that a vote is correct.

“Imagine we’re voting now and using your smart phone. Just launch the app, scan a barcode, and you can vote on your phone,” says Voon.

BARRIERS TO TECHNOLOGICAL INNOVATION London-based FinTech startups benefit from a combination of programs designed to spur growth along with tax breaks and incentives. This has contributed to the digital sector being among the fastest growing industries in the British economy, and these factors make the UK ideal ground for aspiring FinTech startups.

The country may boast a competitive advantage as the world’s leading financial hub, but significant barriers stand in the way of expanding the benefits of blockchain and technical innovation to society at large.

Voon explains that; “some technologies, like Artificial Intelligence and blockchain, are huge game-changers because they fundamentally change the culture of the workplace, not just a sector.

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“If robots are in some way augmenting or replacing unskilled labour, Artificial Intelligence is enhancing and replacing skilled labour. Why do I need a data analyst and people processing contracts and benefit payments when smart contracts and AI could do that?

“All of a sudden, it’s changing the culture and some sectors, like the public sector, are very protective of their culture and the way they do things, so culture is the first barrier to break through for these disruptive technologies.”

“If AI could write a smart contract, why do I need a developer? Why do I need a web team?

A second barrier, he says, is the speed of the process of adoption; “The NHS is a good example of this. Their approach to technology in the past has been; ‘well we want to invest in tablets for doctors, so let’s begin the evaluation process for a tablet. Two years later they may standardise on that particular make and model.

“The problem is, in two years time, technology has moved on. What some of our blockchain projects do is come up with a quick comparison of side by side technologies, so the NHS can speed up the process of evaluation and begin adoption.

“The challenges within the public sector are not insurmountable – they’re with people and process, not the technology itself,” says Voon.

And yet these are challenges that governments and societies must overcome if they are to survive and thrive in the age of the technological revolution. Ultimately, governments that will win out in the long-term will be those that can effectively drive innovation across all sectors of society, harnessing the powers of new technologies to create an economy and culture in which its citizens have the tools to compete on a global stage.

OCTOBER 2018

Sports Clubs and Blockchain It really was just a matter of time before the beautiful game and blockchain became entangled.

This week two struggling football clubs have announced plans to solve their financial issues through tokenized crowdfunding, according to reports by the Times. by ICO CROWD

Both Newcastle United and Cardiff City (English Premiership Teams) are reportedly in discussions with SportyCo, a decentralized investments and funding platform for sports teams. To help launch their ICOs. Through the reported partnership the clubs would begin to sell their private tokens as either security or utility tokens. Purchasers would either gain a stake in the club or receive benefits by using tokens to gain access to services and purchases not available to non-token holders.

The details of their ICOs are currently not available.

French football club Paris Saint Germain (PSG) has revealed in a press release that it is partnering with Socios, a

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blockchain based platform. Their intentions are to issue Fan Token Offerings (FTO) that will come with some limited voting rights and can be representative of their holder’s VIP status.

Socios’s platform is powered by chiliZ, a sports blockchain venture based in Malta that have already secured support from some major industry players. Binance and OKEx are examples of these industry players. They have reportedly raised $66 million US dollars in funding to date.

The planned FTOs will allow the token holders to vote on certain club matters.

But it appears at this stage they will not allow them to get involved in club transfers and will be limited to more “cosmetic” issues such as kit design, club logo, deciding man of the match, summer tours and friendly matches.

They are not designed to disrupt corporate hierarchies but instead to maximize the monetization of fan engagement through crypto.

The token holders will be able to trade them on the socios.com marketplace, only against the chiliZ native token ($CHZ). Their FTO is reportedly due to

take place sometime before the start of the next football season.

They want to get hundreds of clubs on to the platform. They plan to start with the biggest first. Socios is making exclusive five-year deals with every club they onboard. This will help them ensure they have time to develop and refine their product.

These are not the only football based blockchain ventures. Michael Owen has launched his own crypto currency and Lionel Messi has endorsed a blockchain supporting smartphone. In January 2018, Arsenal FC in collaboration with CashBet Launched a new cryptocurrency, the CashBet Coin. The CashBet coin is specifically been designed for iGaming.

The London Football Exchange has some ambitious blockchain plans.

Charles Pittar, Corporate CEO of the London Football Exchange, has stated: “Our vision is to allow football clubs to take advantage of the token funding economy for their financing needs by providing them with a tokenized financing infrastructure, which involves token-design and issuance services.”

OCTOBER 2018

Pittar then explained: “The LFE aims to become a ‘one-stop shop’ for clubs of all sizes to raise capital via equity sales and also offer LFE contributors a wealth of fan experiences and social interaction.”

The proposed tokens will be incentives for a clubs fanbase to be used both in the local market and with participating partners. Token holders could benefit through discounts and exclusive offers, although at this stage the exact proposition has not been publicly disclosed.

Due to the transparent nature of blockchain technology all information would be publicly available and if correctly implemented empower fans to resist disastrous takeovers and launch their own bids to buy the club. It could help less prestigious clubs successfully float their shares publicly. Due to the international nature of football fandom, smaller clubs can more easily raise funds across international borders.

Blockchain can simplify one of the most important aspects of the game, the sale of players themselves. Back in 2006 two Argentine footballers, Javier Mascherano and Carlos Tevez arrived at West Ham FC. They had transferred from Brazilian side Corinthians. However, it turned out the club did not ac-

"At present, most sports venues do not know exactly who is coming into the stadium. At Premier League football clubs, it is not unknown for people to let friends use their season tickets when they cannot get to games.

tually own the players in the first place.

They were instead owned by a group of companies. The fallout from this saw West Ham being fined £5.5 million GBP. The botched sales resulted in the abolition of third-party ownership in the English Premier League.

Our vision is to allow football Using blockchain and smart contracts clubs to take we could ensure something like this never happened again. advantage of the token Lu Zurawski, practice lead for retail funding banking at ACI Worldwide told The Ineconomy for dependent: their financing “The ledger entry for a single player needs by could be divided into multiple shares, providing each capable of being sold individually them with to create a fractional ownership scheme. a tokenized Depending on the type of ledger technology used, these shares would be trad- financing able and could be bought and sold via infrastructure, exchanges — real folding money being which involves used in exchange for player tokens.” token-design and issuance The LFE has also started to investigate how blockchain could revolutionise services.” ticket sales, season tickets and the illegal resale of tickets.

Football business expert Michael Broughton of the advising firm Sport Investment Partners spoke when talking to the BBC said:

CHARLES PITTAR, Corporate CEO of the London Football Exchange

"The football clubs may know a ticket was used, but not always by whom.

So, they will never be able to target any further club marketing toward these spectators. You will have less fan engagement. Most clubs and stadiums have this issue.

"If you put your ticketing system onto the blockchain, you can verify if people attended or who they gave their tickets to. If people want to transfer these tickets to friends or others, then it has to be recorded on the blockchain."

UEFA has successfully trialled a mobile based blockchain ticket system. The tests reportedly ran smoothly resulting in a second trial involving Real Madrid and Atletico Madrid.

Blockchains must power to disrupt and improve all the world's most popular sports. But with an estimated 4 billion football fans worldwide, it seems that football is where blockchain will have the biggest effects.

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OCTOBER 2018

LLoyds of London Explores Crypto-Insurance INTRODUCING LLOYDS OF LONDON Lloyds of London, often known simply known as LLoyds is a UK based insurance market. It is not actually an insurance company. It holds a special position in the UK and is a corporation governed by an act that shares its name - the Lloyd’s Act of 1871. It operLast year’s losses across crypto exates as a semi-mutualised marketplace changes totalled approximately $266 where financial backers, group together million as a result of hacking. As the first half of 2018 represented an almost in syndicates and spread risk through the pooling of insurable liabilities. The three-fold increase in stolen funds, members are underwriters and can be many investors in the cryptocurrenprivate individuals or corporate bodies. cy space have developed very real conby The individuals involved are commonly cerns regarding the security measures ICO CROWD referred to as names. and standards maintained by crypto trading platforms.

Lloyds of London is active in almost every country in the world, with North The two largest hacks of 2018 so far are the Coincheck hack in Japan, where Korea being a notable exception. The $500 million US dollars was stolen and corporation is a world leader in the the Coinrail hack in South Korea where world of insurance and one of the oldest insurance establishments in the $40 million US dollars in crypto assets was stolen. What both of these ex- world being able to trace its origins back to the late 1600s. changes had in common is that they kept an incredibly large amount of the THE KINGDOM TRUST crypto assets they held in hot wallets, or wallets that had been left connected Kingdom Trust has over 100,000 custo the internet instead of keeping their tomers. It has over $12 billion US dollars in assets under its custody and is, funds stored offline in “cold storage”.

CipherTrace, a blockchain security firm recently reported that $731 million US dollars worth of cryptocurrency was stolen from various exchanges during the first half of this year alone.

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through Lloyds, offering a pioneering insurance product to cover digital currencies and protect investors in crypto against both theft and destruction of assets. It claims to be the first regulated financial institution to be able to offer this service.

Consumers who entrust the Kingdom Trust with their digital assets can now benefit from the protection this insurance provides. Matt Jennings, the CEO of the Kingdom Trust has stated: "Qualified custody by a regulated, insured financial institution is a top priority and critical hurdle for institutions to invest in the digital asset markets. By adding another trusted specialist like Lloyd’s to our platform, we’re ensuring that current and future clients will have access to a highly-secure, complete safekeeping solution tailored to meet the challenges of institutional finance.”

Matt Jennings, in an interview with Reuters did not reveal the identity of the insurer/name or names that have underwritten the Kingdom Trust’s cover. He also refused to disclose the terms

OCTOBER 2018

or cost of the policy. He did however state that the Kingdom Trust had received a drastic discount due to its cold storage methods.

Jennings has also stated: "A lot of people are seeking insurance for hot wallets or what they call warm wallets and some people even call them cold wallets," he said. "But I think the insurance market wants to see an entire safekeeping solution that encompasses the entire atmosphere around the private keys."

Jennings said that getting Lloyd's to underwrite Kingdom Trust was a win for the broader industry, and that their ability to demonstrate a provably robust storage system would start bringing the costs down for everyone.

He said the "KT Icebox" system meant he could offer baseline crypto cover to clients at no additional cost.

Cointelegraph has reported that AIG, Allianz, Chubb and the XL Group are also offering insurance cover to protect businesses involved in crypto. Aon

claims that it currently has 50% of the crypto insurance market.

Last month Lloyds of London issued a directive to its syndicates. They warned them that when it comes to crypto assets to proceed with caution and to ensure that any managing agents have the required expertise to assess the underlying risks.

“Qualified custody by a regulated, insured financial institution is a top priority and critJerry Pluard of the Safe Deposit Box In- ical hurdle for insurance Company (SDBIC) has stated: stitutions to invest in the digital asset "About 10 syndicates in Lloyd's have in- markets. By adddicated a willingness and are somewhat ing another trustactive in evaluating crypto exposures," ed specialist like He continued: Lloyd’s to our platform, we’re ensur"Of those 10, I would say there are five ing that current that have the level of expertise that al- and future clients lows them to be comfortable enough to will have access to a do the analysis and underwriting of the highly-secure, comrisk, and then the other five will folplete safekeeping low on with those leads in writing exsolution tailored to posure." meet the challenges of institutional fiInsurance firms large and small are nance.” keeping an eye on developments within the crypto industry. Interest is being

fuelled by the prospect of institutional investors entering the market when regulation permits. Industry players are not at all surprised to see the Lloyds syndicate underwriters making their way into the realm of crypto insurance.

The Chief Product Officer at the Digital Asset Custody Company, Matt Johnson has said that his company is actively looking at ways of providing insurance products over the last few months.

They are awaiting a decision by the SEC to hand our broker dealer licenses.

"I don't find it surprising that Lloyd's is in this space," said Johnson, He concluded: "You can create an insurance policy that protects no one – you know there are so many caveats to the policy that it's not super protective."

This echoes concerns of potential customers who question the value of policies that do not offer full cover. Only time will allow us to assess the full value of any insurance product as we await the first claims.

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OCTOBER 2018

Proof of Work, Stake and Authority As the world of crypto matures, different methods of maintaining blockchain consensus have arisen. There is intense debate in the crypto community about the strengths and weaknesses of the different methods suggested. The winners of the consensus algorithm battle will shape the entire future of the crypto ecosystem.

Consensus algorithms in public blockchains are required to ensure that all parties agree on the current state of the blockchain without the need of a trusted central authority. by ICO CROWD

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Bitcoin, the original crypto coin has survived over 12,000 attempts to alter transaction records because of the consensus algorithm and the distributed nature of the Bitcoin nodes. The network however, has been successfully hacked in the past. The vulnerability was patched and the code hard forked.

In 2010, 184 billion Bitcoins were cre-

ated. The problem was resolved within 5 hours. The incident did not cause serious issues, due to the fact that at that time Bitcoin was not used by so many people. If this happens today, then it will cause real chaos, many users will suffer heavy losses and Bitcoin would get very bad PR. Proof of Work is the most tried and tested consensus algorithm to date.

THE ORIGINS OF PROOF OF WORK Proof of Work did not actually start off as a computing term. An early example of Proof of Work is the “shell money� of the Solomon Islands. Up to 1882 local trade was carried out using this coinage. Women would grind down shells to a predefined size. This was labour intensive and no more were minted than were actually required. Due to the skill required to make the cash the value of the shell currency was adequately maintained.

Move forward to 1999 The term "Proof of Work" or PoW was first coined and formalized in a paper by Markus

Jakobsson and Ari Juels. It is a concept designed to slow down a computational process by requiring the client to perform a moderately difficult computational task. This can prevent things like denial of service attacks. The concept however remained in relative obscurity until Satoshi Nakamoto produced his Bitcoin white paper. Satoshi had realised that this process could be applied to a type of merkle tree to make a distributed ledger that was incredibly hard to compromise. With this realisation Bitcoin was created and the crypto revolution had begun.

Proof of work mining establishes that any given block on the blockchain requires a certain amount of work to be mined. This allows participants to pick the longest valid chain with the highest amount of work done, as the correct chain and achieve consensus.

Due to the fact that all participants in the network are competing to achieve an ever more complex goal, Proof of

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Work becomes extremely inefficient when it comes to energy consumption.

(Some people argue this is what gives Bitcoin value). This makes mining costly and incentivizes miners to centralize their hashing power. A downside of this is that instead of moving us towards a truly distributed network it has made concentrated mining farms into the de facto rulers of the Bitcoin network.

Before crypto could be anything other than a store of value, a different consensus algorithm was going to be needed.

PROOF OF STAKE Proof of Stake varies from Proof of Work in that it is not about solving a complex computational puzzle and instead works in terms of validation. All nodes in a Proof of Stake algorithm have a chance of becoming a validator. The validator is chosen randomly but the chance of being chosen is dependent upon your coin holding or “stake�. The stake is bonded so validators are unable to spend their bonded coins whilst participating in the validating process.

Some people within the Bitcoin community have suggested migrating the network to a proof of stake system, to address both scaling issues and potentially

improve the networks performance.

This type of system brings with it its own issues. There is no guarantee that the validator with the highest collateral deposited for a block is going to operate the network in its best interests. Could there be an even better method of achieving consensus?

While PoS consumes considerably less energy than PoW, PoW is considered by many to be superior to POS. One of the primary arguments for that position is a security flaw in PoS systems, PoS gives away your public key when you stake.

This argument holds weight because in most cases coins are stored in a small amount of addresses, mostly one, and that address has to be unlocked (unencrypted) for staking. The public key of these unlocked staking addresses then regularly broadcast to the network.

PROOF OF AUTHORITY. Proof of Authority builds upon the Proof of Stake algorithm. It has been designed to solve the issues of trust related to PoS. No longer are validators chosen randomly or weighted by stake, instead a multitude of factors help decide who the validator is.

Consensus algorithms in public blockchains are required to ensure that all parties agree on the current state of the blockchain without the need of a trusted central authority.

After stake is considered, the last time the node acted as a validator is then taken into account. Thirdly it is taken into consideration if the last time they acted as a validator, their decision was approved by the network to achieve consensus.

Each of these systems has their own upsides and downsides. Proof of Stake and Proof of Authority both have different attack vectors. They are however, Quantum computer proof. Quantum computers have the potential to break Proof of Work systems. However, a quantum attack would probably be used to reverse your private key from your public key, so address reuse becomes a problem.

None of the above mentioned consensus methods listed above are fool proof and in time I'm sure we will further improve our consensus algorithms. Even if we do get the perfect model, it will still not prevent a 51% attack; something which was once a theoretical idea has this year affected several crypto currencies including Monacoin, bitcoin gold, Zencash, verge and now, Litecoin cash.

All is not lost in the event of a hack. The solution of last resort has always been to hard fork and rewind the blockchain.

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OCTOBER 2018

Do Hard Forks Damage Crypto Forks in software terms are a relatively common thing. Despite how frequently they occur most people do not fully understand what a fork is. In the world of cryptocurrency there are several different types of forks.

A “fork” is a term that is used to describe a divergence to the underlying blockchain protocol. Essentially it describes a fork in the developmental road leading to two different versions or implementations of a blockchain. by ICO CROWD

Most altcoins in existence today are “children” of previous coins and share a common ancestry. Litecoin is built upon the bitcoin source code but never shared a common blockchain ancestry with bitcoin. As such it is a source-code fork.

name and they are actually an imposter.

Both Bitcoin and Bitcoin Cash consider themselves the “true bitcoin”.

ETHEREUM & ETHEREUM CLASSIC Ethereum's split occurred under slightly different and more contentious cirIn the world of crypto, splits tend to occur when the user base cannot agree on a cumstances. In 2016 a Digital Autonochange or upgrade to the rules governing mous Organisation (The DAO) was implemented on the Ethereum blockchain. the protocol. Changing the protocol too Through a crowdsale The DAO raised an much can lead to incompatibility in the unprecedented amount of funding. The blockchain between competing implementations of a coin or token. When this fund's Ether value as of 21 May 2016 was more than US$150 million, from more happens, it is known as a “hard fork”. than 11,000 investors. The DAO code was poorly written, and a hacker was able Conversely, a soft fork is where two implementations of a cryptocurrency man- to “steal” many of the tokens by moving them to a new DAO implementation. age to maintain the same underlying This was technically allowed by the code blockchain, but one implementation interprets it differently, maybe adding addi- so, could not genuinely be considered a hack. The coins were unusable by the tional features to the service. hacker, but he had essentially spoilt the DAO. The community voted to roll back When a fork occurs, the users choose which version of the code they wish to go the blockchain and restore all the money lost. Not all agreed with this move and with. Crypto forks have often been controversial with some of the most notable some members decided to retain the excrypto forks being the Bitcoin & Bitcoin- isting blockchain, this created a hard fork Cash split and the Ethereum and Ethere- - and what we now know as Ethereum Classic. This was a dark moment in the um classic split. history of Ethereum.

BITCOIN AND BITCOIN CASH Bitcoin Cash came into being after a pro- PROS AND CONS OF FORKS Forks both soft and hard bring with them longed disagreement about the scalabilboth positives and negatives for invesity of the Bitcoin platform. Many influtors. An immediate benefit is that when ential miners, developers and investors were deeply unhappy with the SegWit or a currency hard forks, investors are generally awarded with an equal amount of Segregated Witness upgrade proposed tokens to their existing holding. In the by its developers. They forked off creating another version of the protocol. There case of Bitcoin Cash, it is at time of writing worth $562 US dollars. These extra is much debate about whether the coin tokens represented a significant windfall that retained the Bitcoin brand name is for holders of Bitcoin. the “true Bitcoin” or if they co-opted the 58

How many forked coins actually represent good value to investors is questionable. However, hard forks do create more investment options for potential buyers.

CONCLUSION Whilst Forks often occur because of disagreement and do, at the time cause disruption forcing users to take sides, it does allow blockchain technology to grow in an organic and evolutionary form. As a result of all the spinoffs out there, it’s not surprising that some people have developed a degree of scepticism for forks. But without forks, we would be limited in our ability to amend and enhance software. Forks provide a path when there is disagreement between groups within a crypto community – they provide a way forward.

The freedom to jump ship and create your own ship to sail away on at any point, means that no one will ever again be locked in to a proprietary platform. If at any time you feel your blockchain is going in the wrong direction you can take control and steer it back.

Whilst hard forks have their downsides and are disruptive they prevent troubles down the line. It is the most democratic method of software evolution possible. The Ethereum hard fork showed us that a token can survive a hard fork and flourish post fork. At the end of the day, if you don't like the direction a fork is taking then “don’t participate in that fork”. Forks are an integral part of the development process in crypto and don’t expect them to disappear anytime soon.

OCTOBER 2018

Who is John McAfee The world of crypto has its fair share of eccentric personalities, but few can hold a candle to John McAfee. Johns life story reads like something from a Hollywood movie script and indeed it soon will be one. Johnny Depp is set to play him in an upcoming movie called “King of the Jungle”.

Here, we are going to look at his roller coaster journey to becoming one of the biggest names in crypto. Along the way he has worked for NASA, has been a drug addict, he built one of the worlds most successful antivirus companies, he ran for President of the USA, beby ICO CROWD came an international fugitive whilst accused of murder and eventually became possibly the world's best-known crypto evangelist.

McAfee, the antivirus software company founded by John is a household name although he hasn't had anything to do with the company for over 20 years. It is what happened after he parted ways with them that is the stuff of legends.

John was born in the UK in 1945 and his English mother and American father moved to Virginia whilst he was

still young. His father was an alcoholic and committed suicide when John was only 15. His father's death profoundly affected him.

John started college and also started drinking. In spite of this, he was an astute entrepreneur. He started a business selling magazines door to door which he claims made him a small fortune.

ing voices and tried tripping heavily, trying to hide from confusing and scary people and hallucinations. He has been quoted as saying that part of him still believes he is tripping and that one day he will sober up and find himself back on his sofa in St. Louis listening to Pink Floyd’s Dark Side of the Moon

John made his way to Silicon Valley in the 1970s where he held positions His first venture into I.T was when at various tech companies including he got a job working at a company NASA. Quite an achievement given his that coded punch-card systems in the penchant for abusing drugs and alcolate 60s. This was where he learnt hol. In 1983 he decided to get sober. the fundamentals of digital systems.

He was working at Omex and an averWith his new-found knowledge he ob- age day would involve him drinking a tained a job with the Missouri Pacifbottle of whiskey and snorting coke at ic Railroad where he used a very earhis desk. He decided to get help. ly IBM computer system to calibrate train schedules.

He started work at Lockheed. Personal Computers at this time were still Whilst at the Railroad company he relatively new and it was in 1986 that started to experiment with hard the first PC virus started to spread. drugs. He would often go to work John decided there was something he tripping on LSD and even expericould do about this and started writmented with DMT. This was a dark ing some of the first ever antivirus time for John who found himself hid- software. ing behind a dustbin in downtown St Louis. The drugs he had taken made By the end of the 1980s his company, him unable to understand humans McAfee Associates, was making around let alone computers. He was hear$5 million US dollars a year. Some of 59

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the worlds largest companies relied on his antivirus platform to keep them safe.

In 1992 the worst virus to date known as Michelangelo started to proliferate. Although only tens of thousands of computers were affected, they were primarily business systems. McAfee made the decision to take his company public. In 1994 John resigned from McAfee Associates and two years later he sold his shares for roughly $100 million US dollars.

In 2008 John fell victim to the financial crisis with some estimates suggesting his once giant fortune was reduced to a meagre $4 million US dollars.

John decided to sell up and move to Belize where he apparently intended to explore native plants and find new antibiotics to combat illnesses. He called his company Quorumex.

I’m not going to talk about my financial situation or holdings anymore. However, why would I be suggesting long-term investment and then try to make short-term gains? These coins [that are] selling for cents... If I truly believe that they’re the coins of the future, wouldn’t it make sense to hold on to them for a couple years? What madman would take a 100 percent gain over taking 10,000 times that?

Whilst in Belize John started to think that he was being watched. He would go to a local bar known as Lover’s Bar. Slowly he started to withdraw from all his other activities and became obsessed with watching the people around there, he wrote: “My fragile connection with the world of polite society has, without a doubt, been severed. My attire would rank me among the worst-dressed Tijuana panhandlers. My hygiene is no better. Yesterday, for the first time, I urinated in public, in broad daylight.”

In 2012 he became a person of interest to local police after his neighbour Gregory Faull was shot dead. John fled Belize after being questioned by police.

He was eventually arrested in Guatemala, where police charged him with illegally entering the country. After experiencing a series of heart related problems he was expelled from Guatemala and repatriated to the US. Johns story had spread worldwide. Every media outlet wanted to know who he was, where he was, if he was mad and if he was guilty.

Never one to make things easy for himself, in 2013, he uploaded a video to YouTube entitled “How to Uninstall McAfee Antivirus. It showed him surrounded by semi naked women, taking drugs and surrounded by guns. It seemed to be tongue in cheek and he actively courted the idea he was a drug crazed, gun mad, womanizer.

In 2015, John announced he would seek to become President of the USA. 60

In 1992 the worst virus to date known as Michelangelo started to proliferate. Although only tens of thousands of computers were affected, they were primarily business systems. McAfee made the decision to take his company public.

He initially ran as a candidate of the newly formed Cyber Party. A party based around blockchain government. He later re-announced his candidacy bid saying that he now intended to be the presidential nomination of the Libertarian party losing out to Gary Johnson.

JOHN MCAFEE AND CRYPTO John became interested in crypto as soon as he read Satoshi Nakamoto's white papers. John set up MGT Capital Investment. They initially sought to acquire as much crypto as possible. They soon moved to a model that mined and immediately sold the coins they produced. Cryptos recent stagna-

tion and increased competition mean It’s performance has been lacklustre.

Recently, McAfee ended his relationship with MGTCI. McAfee reassured Bloomberg News in an interview that “the decision was mutual,” and that “[his] interests have shifted almost 100 percent to the crypto world.” In a statement, McAfee stated that he is “… looking forward to toiling in obscurity as the world’s foremost authority of all things cyber crypto!”

Few other than McAfee have the knowledge, influence and celebrity to back up a statement as bold as this. He has a volunteer staff he calls

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“smart kids” who help him vet smaller alt-coins. He takes advantage of his large social media presence to present himself as a crypto investment guru.

His word alone has the power to move markets and a recommendation from John can make a smaller alt-coin jump 50 to 350%.

It is rumoured John has been known to accept large sums of money for recommendations and single tweets.

Many have accused John of contributing to a practice known as a “pump and dump”, taking advantage of marketing to swell the price of coins. John denies this and claims to have read every whitepaper.

John has been a very public proponent of Bitcoin and has publicly stated he will eat a certain part of his own anatomy if Bitcoin does not reach $500,000 by November 2020. He later doubled down and changed his prediction to $1 million.

John has announced his intention to run once again for the US presidency in 2020 and wishes to save crypto from regulation although he currently holds the view that all coins might actually end up being regarded as securities.

John recently stated in an interview “I’m not going to talk about my financial situation or holdings anymore.

John has been a very public proponent of Bitcoin and has publicly stated he will eat a certain part of his own anatomy if Bitcoin does not reach $500,000

by November 2020. He later doubled down and changed his prediction to $1 million.

However, why would I be suggesting long-term investment and then try to make short-term gains? These coins [that are] selling for cents... If I truly believe that they’re the coins of the future, wouldn’t it make sense to hold on to them for a couple years? What madman would take a 100 percent gain over taking 10,000 times that?”

Regardless of your feelings about this larger than life character, John’s media profile means that he is likely to continue to influence the markets for the foreseeable future. It is well worth keeping an eye on this man’s social media accounts and his media appearances. To many he is a crypto god.

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OCTOBER 2018

Space Exploration and Blockchains Launching a rocket into space is a complex business. It is as they say - rocket science. However, rocket science is not the only thing that needs to be taken into consideration when planning a space mission. A space mission is one of the largest and most costly logistical operations mankind is capable of. Behind every space mission is a long chain of contractors and companies all of which must work in harmony together to avoid costly delays or devastating failures.

The supply chain behind a spacecraft is huge. It starts off with the sourcing of the raw materials such as rare earth metals for the electronics and titanium for its frame. The materials are sent from the miners and refineries via distributors to the manufacturers. At this by ICO CROWD stage they are turned into the various component pieces of the space shuttle such as nose cones, steering fins etc‌.

Once manufactured the parts are sent to a facility where they are assembled into the final product, which is tested and finally launched. Every company, person and piece of material in this process is a link within the spacecrafts supply chain.

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The Apollo program cost an estimated $25.4 billion US dollars in 1973 which represents in today's money approximately $107 billion. At its peak the Apollo program employed over 400,000 people. With today's scientific advances and new technology, it is estimated the cost of returning to the moon could be as low as $1 billion US dollars. Elon Musk via his company SpaceX seeks to get these costs even lower using reusable rockets. But costs could be further reduced by improvements to the supply chain. What better way to do this than by implementing a blockchain based solution?

everything from the manufacturing process of rockets to the distribution and delivery of food for astronauts and their space suits.

A series of well implemented smart contracts automatically executing on a blockchain can help make supply chains vastly more transparent, faster and more cost efficient.

NASA is experimenting with blockchain related technology and in the future, we hope to see shortening and strengthening of their supply chains.

NASA is at this time implementing blockchain based solutions to improve The problem with space mission sup“cognitive networking and computing ply chains as with most supply chains infrastructure.� when it comes to deep is that they are costly, complicated and space missions. Their aim is to make time consuming. To implement the better data driven decisions for autonfastest, cheapest and simplest launch omous space probes. Once these techthe government or company overnologies are fully implemented we will seeing it needs to reduce the distancsee the cost of space missions greates between their supply chain links, ly reduced bringing great benefits to for business interactions to be transthe wider economy and making space parent and for the real time tracking more accessible. of all the components involved in the launch.

According to The Space Foundation, in 2016, the global space economy toBlockchain has already started to talled $329 billion worldwide. The inprove its worth in organising supply crease from $323 billion in 2015 was chains and could potentially speed up due to growth in commercial space

OCTOBER 2018

sectors, with negligible declines in non-U.S. government and U.S. government budgets.

Totalling $253 billion, commercial space activities made up 76 percent of the global space economy. The U.S. government spent $44 billion on defence and non-defence space projects in 2016, a 0.3 percent decrease from 2015.

principle that the cosmos need not be the exclusive playground of large corporations and superpowers. Whilst their plans remain vague they wish to democratise the cosmos. Through crowdfunding and crowdsourcing they wish to create a supra-national space agency for the people, by the people.

Their first decentralized space program is named Coral and is led by four former NASA employees. Its primary aim is to facilitate 3D printing structures on the moon for an eventual moon base.

The Apollo program cost an estimated $25.4 billion With such large and ever-growing revUS dollars in enues from space-based industries it is 1973 which not just the likes of SpaceX, Blue Orrepresents in igin, Virgin Galactic and NASA that today’s money are seeking to take advantage of block- SpaceChain is a start-up that is less chain technology. There are some inabout space exploration and more foapproximately teresting new start-ups using blockcused on using the existing infrastruc- $107 billion. chain in space worth a mention too. ture to improve the blockchain experiAt its peak the ence. SpaceChain is building the first Apollo program Nexus is a cryptocurrency and block- open source satellite network that employed over chain enterprise that has partnered runs on blockchain nodes. Their prowith BitSpace, a tech company that ject runs on “cheap” CubeSat technol- 400,000 people. focuses on blockchain and exponential technology. Together they are focusing on bringing decentralized internet access and opportunities to people around the world using satellite technology.

Space Decentral is a start-up based in Singapore and a decentralized autonomous organization. It is based on the

ogy. They hope their open source operating system will become a blockchain sandbox for potential space blockchain developers. They state on their Medium post: “The satellites are used as blockchain nodes for data processing, transmission, in-space data storage and application development. SpaceChain also

integrates with Qtum to provide the basic service API for smart contracts and blockchain application.”

Blockstream are building a blockchain system that is powered by satellites.

It aims to beam blockchain technology to every person on the planet who has a simple satellite setup. Their FAQ states: “Anyone can receive the signal with a small satellite dish (similar to a consumer satellite TV dish) and a USB SDR (software-defined radio) interface […] The total equipment cost for a user is only about $100. The software is free. The software interface is the open-source GNU Radio software, which is the receiver. GNU Radio will send data to the FIBRE protocol, which is the Bitcoin process and is where the blocks reside.”

How much blockchain will affect and improve space exploration remains to be seen. However, these exciting blockchain start-ups and implementations can only help bring blockchain more into the mainstream. The space industry is in its infancy just like Blockchain. Crypto looks set to help us explore the final frontier.

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OCTOBER 2018

The Fall and Rise of Mt Gox

The saga of Mt. Gox has gone down as one of the most memorable episodes in cryptocurrency history. Recently the saga has taken a positive twist that may provide the hacking victims with their very much needed happy ending. The Japanese exchange’s creditors can now file rehabilitations claims.

Due to the explosive growth of bitcoin since the hack it would seem that the approximately 24,000 victims will eventually get their funds back. In fact, it seems quite possible that they may even receive some interest payments to compensate them for their four-year inby ICO CROWD voluntary investment.

The reason for the ability to file rehabilitation claims is due to the work of a group of Mt. Gox credi64

tors. They have mounted a successful effort to extract the failed company out of its bankruptcy proceedings.

The failed exchange is now in a process called “civil rehabilitation”. Some disgruntled creditors are still pushing for criminal proceedings against Mark Karpeles, the former CEO. The funds of the bankrupt estate are now managed by a Japanese lawyer called Nobuaki Kobayashi, who is an independent trustee.

Japanese law dictates that should the company remain in the bankruptcy process upon its winding up, the majority of the money accrued since becoming insolvent should be returned to shareholders. The largest shareholder by far was Mark Karpeles the former CEO with an 88% holding.

Since Mt. Gox was declared insolvent the firms assets had increased to over $1.3 billion US Dollars. This po-

tentially disgraceful outcome was the reason creditors pushed for civil rehabilitation. Even mark Karpeles sought to avoid the bankruptcy route, hoping that not accepting a potential $1 billion USD he had not earned would carry favour with those who still seek criminal proceedings against him.

Mark Karpeles, in an interview with Reuters back in 2017 stated that he would rather do his best to help creditors move the company from bankruptcy to rehabilitation than deal with a tsunami of lawsuits and death threats that were the inevitable consequence of him taking the money and running.

MT GOX’S DOWNFALL Mt Gox’s rise to become the largest exchange in the world of crypto was meteoric. Seemingly coming out of nowhere. The elevated status of this rel-

OCTOBER 2018

atively new exchange brought with it the attention of hackers. Attempted hacks on the exchange increased dramatically.

The first successful hack occurred in June 2011 which forced the exchange offline for several days. The hacker or hackers were able to access the Mt. Gox auditor machine and with stolen credentials they transferred thousands of bitcoins out of the exchange. They used the exchange’s own software to sell the Bitcoin for a nominal price and the accounts containing around $8,750,000 suffered losses.

Mt. Gox attempted to prove their ownership of the coins and moved 424,242 coins out of cold storage to a Mt. Gox address. In October 2011, transactions appeared on the blockchain that sent a total of 2,609 coins to invalid addresses. Subsequently these coins were lost as no private key could ever be assigned to them.

The next hack took place in February of 2014 which resulted in the company declaring bankruptcy. After many complaints by users, Mt. Gox stopped allowing withdrawals and closed their service. They had discovered a latent hack that had been going on for years.

by the time it was noticed the company had lost almost 750,000 of its customer’s BTC. The missing coins represented around 7% of all the bitcoins actively circulating and at the time had a value of around $473 million US dollars.

The first successful hack occurred in June 2011 which forced the exchange offline A NEW HOPE for several days.

Mt Gox reported in March 2014 that The hacker or it had “discovered” 200,000 of the hackers were lost Bitcoins in the old-format digital able to access storage that was used before the June the Mt. Gox 2011 hack. These coins had effectiveauditor machine ly been frozen in the bankruptcy estate. These coins had steadily been in- and with stolen creasing in value ever since. They also credentials they would be entitled to an equal amount transferred of Bitcoin Cash. It was now clear that thousands of the crypto holdings of the bankrupt bitcoins out of company far exceeded any fiat liabili- the exchange. ties incurred under Japanese law.

This created an issue. Japanese bankruptcy procedure is to value a creditor's claim as of the April 2014 market price. This was around $400 million USD in total. The civil rehabilitation procedure was essential to ensuring the creditors benefitted from the rest. This process was approved earlier this summer.

ed that this may have been creating downward pressure on bitcoin.

Mark Karpeles has had to remain in Japan, he occasionally moves within the country, to avoid threats made to his life. He has even spent some time in a Tokyo jail. He has been released on bail on the condition he does not leave Japanese territory. He still faces multiple lawsuits in many different jurisdictions. In the USA a federal judge in Illinois has brought fraud allegation charges against him. Marks legal team has attempted to move to dismiss the case.

Once the pay outs are eventually made, it will mark the end of the road for Mt. Gox. However, the saga will remain a cautionary tale in the world of crypto. A tale with a cautionary message about the inherent dangers of relying on centralized exchanges.

Mark Karpeles did once mention that he was considering re-establishing Mt. Gox under new management. The crypto landscape has changed dramatically since the times of Mt Gox and this writer for one thinks, that this exchange is best confined to the text books of crypto-history.

Mt. Gox’s bankruptcy trustees have already been selling large chunks of This subtle hack had slipped under the the 200,000 coins over the last few radar of the Mt. Gox security team and months and people have speculat65

OCTOBER 2018

RecordGram Strikes the Right Chord With Tune!

Founded by Eric Mendelson, Winston Thomas and Shawn Mims RecordGram is establishing itself as a decentralized mobile application that truly democratizes music collaboration and talent discovery.

Tune the cryptocurrency created by RecordGram’s primary mission is to solve digital songwriter rights and royalty transparency issues for the music industry. by JAMES SOWERS

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Currently the music business has plenty of obstacles and gotchas in a world controlled by a few giant record labels. Before RecordGram, most bands and musicians aspired to get signed up by a major record label.

Much to the surprise of many artists, any advance comes out of future royalties. To make things even worse all your recording costs, video costs, packaging and many promotional costs are deducted before you get paid. These days with new services like iTunes and Spotify, record companies not only want to sign you for record releases, they want a cut of everything – song-writing, merchandising and gig money, and anything else you do. So even with a big hit you will often find you still owe the record

label money. Record labels and their fancy lawyers are saying they can no longer invest in new acts unless they stand a chance to recoup their investment – and the only way to do this is to take a cut from all of the artists revenue.

RecordGram levels the playing field Through distributed registry technology, the Tune token will facilitate and bring together musicians and producers to create music. RecordGram let’s songwriters, producers and recording artists use the Tune token to capture digital rights for their music and monitor compliance with copyright. Token Tune can even be used to convert into loans that can go to pay for clips or tips for artists, as well as for other purposes.

Unlike other music apps, Tune licensed

by RecordGram has enormous street credibility.

The trio is a who’s who of music industry professionals. Mims, along with manager Erik Mendelson and producer DJ Blackout, founded RecordGram in February 2016 with the idea of harnessing the power of smartphones to bring a recording studio to life in your

pocket. For $90 per year or $9.99 per month, producers can upload beats and lease them to aspiring artists for $5 apiece.

Formerly an Executive Music Producer and artist manager, Erik Mendelson has signed, managed, and developed 3 platinum recording artists, generating over $20 million in gross revenue under his direction.

Winston Thomas more likely known as DJ Blackout is a Grammy Award Winning music producer and international DJ who has produced over 30 commercial records including a recent #1 single in India and previous #1 global record.

Shawn Mims is a multi-platinum recording artist, Grammy award winning writer, well-known for his global #1 single This Is Why I’m Hot, and engineer who has generated over $16 million in gross revenue for EMI/Capitol Records.

To handle the technology the group has brought in a CTO Shariar Sikder.

Tune is advised by planet of the Apps judge and Grammy winning musician, rapper, singer, songwriter, record producer, entrepreneur, actor, and philanthropist Will.I.Am.

JStone @ Shutterstock

OCTOBER 2018

Monique Mosley a globally recognized entertainment mogul.

facing, we sought to solve it through technology. “

And Cameo Carlson President mtheory; Previously: Head of Digital Biz Development/Borman Entertainment, Executive Vice President at Universal Records, Label Relations & Music Programming Manager for Apple.

Mims in the same interview tells Billboard, “Much of this app is based on my own trials and tribulations in the music industry, the things that I like and the things that I didn’t like about it. As I mentioned before, the expense I had to pay after "This Is Why I’m Hot" took off and the money that I had to maintain to be an artist, I realized that if it wasn’t for the money that I was able to make or have around me from business partners like Erik and other people I’ve worked with, I wouldn’t have survived. I had to pay for production, pay for the studio time, pay to be on the road to market and promote, pay for A&R’s to listen.”

RecordGram previously was funded by Lightspeed Ventures and New world Angels.

In May 2017 RecordGram won TechCrunch Battlefield Disrupt in NewYork. An elite group of startups are handpicked to participate in the highly competitive startup competition. They all presented in front of multiple groups of VCs and tech leaders serving as judges for a chance to win $50,000 and the coveted Disrupt Cup. RecordGram beat out some tuff competitors including cyber security blockchain startup Nucypher.

THE RECORDGRAM VISION Once blockchain technology has been implemented, users will be able to convert their TUNE Tokens into Recordgram Credits. Then use the RecordGram Credits to unlock beats, tip artists, etc. Royalty Payments will be paid using TUNE Tokens. All user generat-

ed content will be placed on the blockchain and can be transparently tracked.

This will be a historic moment that could disrupt the music business forever. Currently artists are at the mercy of their publishers and record companies.

Tune is putting the artist back in the driver’s seat and giving them control of their music and financial outcomes. The future collaboration of music will become incentivized and decentralized for artists around the globe.

In a Billboard interview Mendelson states the reason for RecordGram. “We realized that the music business was starting to become stagnant and that there was a need for technology to solve some of the pain points that musicians, producers and songwriters were

“We realized that the music business was starting to become stagnant and that there was a need for technology to solve some of the pain points that musicians, producers and songwriters were facing, we sought to solve it through technology.”

One Billion (1,000,000,000) TUNE Tokens will be allocated! RecordGram has disclosed an efficient plan to utilize the funds from the TUNE token sale on their website. Currently, you can download RecordGram from the App Store or Google Play Store. Users can unlock beats, create songs & videos and share ERIC their content. All this is done using fiat MENDELSON currency.

Check out tune ! http://www.tunetoken.io

Disclaimer: This does not constitute investment advice. Please review their case purely on merit and proceed only if you are convinced or interested. Also, I do not encourage folks from USA, China etc. to invest in an ICO unless they speak to their lawyers. I only support genuine good people doing great in Blockchain innovation.

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OCTOBER 2018

What You Need to Know About the Bitcoin Halving When the elusive Satoshi Nakamoto came up with the concept of Bitcoin and mining rewards he decided to build into his idea an ever-decreasing reward system. As the network matures and (hopefully) the price of Bitcoin increases, the rewards for mining decrease.

The 2016 halvening was the precursor to last year's bull run which peaked in December 2017, with the Bitcoin price reaching an eye-watering $19,000.

Some 12 months after the first Bitcoin halving event in November 2012, the Bitcoin price reached as of then an alltime high of $1,000.

that future halving’s will accelerate this deflation. History indeed suggests that prices will boom after a halvening but future halving’s may not have the expected consequences if investors anticipate the jump and factor that in to their future purchasing decisions.

Eventually the halving’s will stop when all 21 million bitcoins have been mintBitcoins value proposition appears to ed. At this stage miners will be rewardThe act of decreasing the reward by come from the cost of Proof of Work. ed solely by transaction fees. This is 50% is known as a halving or halvenexpected to happen around the year ing. Halving’s occur after every 210,000 As such, one would expect a halving to double the value of a bitcoin. However, 2140. Written into the open source blocks are produced. This can roughBitcoin users can factor in this knowlcode of bitcoin is a limit of 64 halving’s. ly be interpreted as occurring every edge prior to the actual halvening. It If these occur roughly every 4 years 4 years. As bitcoin heads towards its is at this stage unclear if future halvyou would expect halving’s to continue coin-cap of 21,000,000 coins (minus by well beyond 2140. However, due to the ICO CROWD three bitcents) it is expected these hav- ing’s will see the market behave in the number of decimal places we currently ing’s will affect the market significantly same way as previous halving’s. The market has changed, mining operations measure bitcoin, the rewards will effecas they have done before. have become more centralized and the tively disappear in 2140 as stated unworld's eyes are on crypto… less we extend the amount of decimal In less than 2 years time (unless wild points we count bitcoin to. Effectively swings in the mining hashrate change things) the coin reward for mining new As the monetary base cannot be expand- creating micro-satoshis. ed beyond the limited mining rewards, Bitcoin blocks will decrease from 12.5 Bitcoin is generally regarded over time Miners are probably the most affectBitcoin to 6.25 Bitcoin. This is not the as a deflationary asset. Some suggest ed by halving’s. To generate coins, you first time this has happened.

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OCTOBER 2018

need CPU time and electricity but there are also fixed costs such as business overheads and insurance that come along with running a high-power data centre. If after a halving prices do not increase quickly, profitable operations could find themselves running at a loss and must cease operations or switch to a more profitable coin.

The crypto market has shown itself to be incredibly event driven. In anticipation of halving’s in the past we have seen prices creep up prior to the event and then steam ahead following the reward halving.

When all halving’s have occurred a question has to be asked: Without mining rewards in exchange for CPU time will the A major factor in how Bitcoins price link to Proof of Work be maintained? It is will be affected by the next halving, will an event so far in the distant future that depend on the price of Bitcoin in the we cannot be sure if the bitcoin system months leading to the halving as well as would still exist in its current embodithe transaction volume on the network. ment. We may by then have mastered As miners earn fees for facilitating cold fusion reactors creating limitless entransactions as well as their rewards for ergy and have quantum computers that their mining efforts, it is possible that can perform infinite calculations in finite a significant rise in Bitcoin prices could time. Both technologies would force funoffset a mining reward revenue drop. If damental change in the way bitcoins are this occurs the hashrate would be exmade and the network is maintained. pected not to change significantly.

We also must consider how many bitLooking back at the last two halving’s, coins are already lost and how many miners have in general maintained or will be lost ongoing when considering increased computing power through the deflationary nature of Bitcoin. Estithe events because they expected the mates place the number of bitcoins lost future price increases to offset the on old hard drives and with forgotten block reward. passwords at around 4 million.

Supply and demand determine price. As supply is fixed in the world of Bitcoin, demand is the only real variable in its price discovery.

CONCLUSION Halving’s play an important role in determining the ongoing viability of Bitcoin as a digital currency. They help ensure that it retains its deflationary qualities, which pits the coin in ideological opposition to centrally issued fiat currency. This was Satoshi Nakamoto's vision for Bitcoin and an important part of its value proposition. Beyond halving events the Bitcoin proposition still has value as miners can still earn fees by dealing with transactions. All of Bitcoins future viability seems dependent on it maintaining its long-term deflationary path. If Bitcoin cannot maintain a longterm upward trajectory, halving events will have a serious impact on the coins viability. As we move closer to the next halving we need to see, and I expect we will, an ever-strengthening bitcoin price.

As long as there's faith in the principle of Proof of Work. Bitcoin should continue to rise over the long term.

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OCTOBER 2018

Do you remember ERC721 CryptoKitties? The ERC998 standard is not much different from ERC721 as they both handle nonfungible tokens. The ERC998 standard defines four different ways that non-fungible tokens can own non-fungible tokens or fungible tokens, which adds a completely new dimension to this standard.

The standard was designed to work with and be interoperable with the ERC721 standard. It is an extension of the ERC721 standard. This means that ERC998 contracts implement the same functions and events as ERC721 plus some additional ones for composable by ICO CROWD functionality.

There are four different ways to implement composable functionality because different approaches have different advantages and disadvantages. We want people to have the flexibility to implement composability for their use and ensure their use is interoperable with other approaches.

ERC998 provides a simple way to form composite assets on the Ethereum blockchain that retain all the features of a single non-fungible token (NFT) e.g. a Cryptokitty. Use cases include but are not limited to: index funds, baskets of NFTs, tracking the provenance of supply chain goods that are either composed or decomposed along the supply chain e.g. a coffee harvest into specific bags and roasts.

This article is composed with the help of both Nick Mudge and Matt Lockyer, the creators of the ERC998 standard.

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WHAT’S THE REASON FOR CREATING THE ERC998 STANDARD? The standard was created to provide a way for people to implement non-fungible tokens that own other non-fungible tokens and fungible tokens.

All kinds of functionality and applications can be created on top of non-fungible tokens owning other non-fungible tokens and fungible tokens. For example, an avatar can own personal possessions. A large piece of land can be composed of small pieces of land. A composable non-fungible token can act as a wallet to hold various assets, but be sold or transferred as a digital asset itself.

The standard was also created to cause interoperability between composable non-fungible contracts. So that it is possible for someone’s composable non-fungible token to own another composable non-fungible token from a different contract. This works because the contracts implement the same standard. The standard was also created to make it easier for non-fungible token exchanges and wallets and other software to support composable non-fungible tokens.

OCTOBER 2018

another virtual asset. This example shows the great flexibility of implementing this composable interface.

Generally speaking, Matt Lockyer recommends that projects should use the ERC998 standard when they want to create assets on the Ethereum blockchain that are complex and require verifiability of composition and decomposition. If this is a requirement for your project, you should be developing with ERC998 in order to allow your users to trustlessly verify the state of their complex assets and other protocols to interoperate with these assets.

Matt Lockyer, founder of Solobloc Solutions - a company focused on the decentralized creative economy, explained why he started the ERC998 standard, “I saw a number of projects approaching this problem with various solutions. Some a bit hacky, not interoperable with ERC721 and potentially bloated for the Ethereum Blockchain. Before too many projects implemented the concept of composable / complex / composite assets, I thought getting ahead of the community with a standard would be incredibly valuable for all projects. So here we are today!”

Tell us about the four different ways ERC998 can be implemented?

1. Information about child NFTs is stored in the composable contract.

This enables a composable to own any ERC721 token. This is called the ERC998ERC721 Top-Down approach.

2. Information about fungible (ERC20) tokens that are owned by NFT composables is stored in the composable contract. This enables any composable token to own any amount of any ERC20 token. This is called the ERC998ERC20 Top-Down approach.

3. Information about NFTs that own NFT composables are stored in the composable contract. This enables a composable NFT to be owned by any ERC721 token. This is called

the ERC998ERC721 Bottom-Up approach.

4. Information about NFTs that own fungible tokens are stored in the composable contract. This enables a composable fungible token to be owned by any ERC721 token. This is called the ERC998ERC20 Bottom-Up approach.

Compare these fees to those of a traditional IPO on the In addition, the standard provides a NASDAQ and way to discover the Root owner of a col- you will see that lection or tree of composable tokens they charge that are connected by ownership as it as little as can be difficult to travel an extensive tree of composables manually via an ex- $125,000 USD plorer. with a $25,000 application fee.

CAN YOU DESCRIBE AN ERC998 USE CASE? As decentralized gaming is a hot topic, let’s take a virtual game as an example.

Imagine an in-game item like a sword which has 4 mounts for special gemstones which give extra powers. While playing the virtual game, you find gems and mount them to your sword. After some time playing the game, you find a better sword and decide to sell this sword with the gems attached. Using the ERC998 standard, only one purchase is needed thanks to the composable interface.

PROJECTS THAT IMPLEMENT THE ERC998 ETHEREUM TOKEN STANDARD? Nick Mudge has founded the Mokens. io project. Mokens are general purpose crypto composables (like crypto collectibles but they are composable) that are designed and created by people.

Soon, user interface functionality will be added to Mokens.io to enable people to add various crypto collectibles to mokens and remove them. The intention of the Mokens project is to grow and make mokens desirable, useful and valuable, and integrate them with existing and new projects. Mokens.io and mokens will evolve based on user-feedback and what people want.

CryptoRome is a strategic conquest game to create a mega-world of economic, political, and military strategy. They are using ERC998 to compose land pieces that are owned by users.

Bitizens is a virtual world game. They are using ERC998 NFTs for avatars in the game. The avatars can own various other NFTs.

Once the buyer receives the sword, he can even remove the gems and sell them separately or mount them onto

Functionality for transferring a tree of composables to a new rootOwner 71

OCTOBER 2018

What is EOS?

EOS stands for Ethereum Operating System. It is a blockchain based platform for the development of decentralized apps or DApps. Built on the Ethereum network it extends the functionality of the Ethereum network. It provides an operating system like range of services and functions that DApps can utilize.

by ICO CROWD

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The concept behind EOS is to combine the best features of the various smart contract technologies out there and place them all in one scalable and simple to use platform that will allow everyday users to take advantage of the blockchain economy.

The main improvements offered by EOS over the standard Ethereum network relate to providing addition functionality around user authentication, cloud storage and server hosting.

It should have no problem scaling to thousands of transactions per second without issues.

The EOS user accounts can be configured with differing levels of permission. Databases can be shared between accounts and user data can be stored on local machines located off the blockchain. There are built in facilities to be able to recover access to your EOS account in the event your account is hacked.

there are some fees, they are expected to be extremely low and it is up to the DApp developers to decide how these will be paid.

SCALABILITY Most blockchains operate on a system that achieves consensus over state. Under this system, it means that at any point all of the computers can veriCloud storage and server hosting are fy the entire state of the blockchain to integral parts of the EOS platform. This prevent fraudulent transactions. As allows application developers to build new blocks are added, the nodes on the and deploy applications with a web innetwork take the block transactions terface free from the problems of sourc- and update the state of each address asing storage space or providing bandsociated with those transactions. width. Developers have access to analytics regarding storage and bandwidth However, when using a “consensus of and are able to specify limits for indievents� system the focus is on transvidual applications. To have access to actions as opposed to the state. Raththese services you are required to stake er than having to verify the state of the some of your EOS tokens. whole network at any given time, the nodes just verify the series of events Applications built on the EOS platthat have occurred so far to keep track form do not require end users to pro- of the networks state. As a result, the vide micropayments to perform tasks system takes a longer time to completethat affect the blockchain. Whilst ly reconfirm the history of transactions

OCTOBER 2018

but can handle a much higher throughput at any one time.

The EOS developers claim that this process will allow the network to scale to one million transactions per second if using a single machine and possibly infinite scaling is possible in parallel between multiple machines. The EOS network is yet to be tested to anywhere near these limits.

the progress of the development team before making their decision. EOS’s token sale is the largest token sale of its kind (possibly barring the Venezuelan Petro coin, which is marred by much controversy.) The EOS sale itself was a controversial issue. Having an ongoing ICO and tokens available to buy and sell on exchanges at the same time is an uncommon practice and some have suggested that it drove speculation and pitted investors against each other.

The concept behind EOS is to combine the best features of the various THE EOS TOKEN SALE smart contract At the time of writing the EOS toEOS tokens don’t perform a function. technologies ken has a market capitalization of Their sole use is that those who develout there and $4,458,079,612 US dollars. This makes op applications for the EOS platform EOS the fifth largest crypto token by are required to hold a sufficient amount place them all market cap in the world today. The of the coin for the application to run in one scalable EOS token sale operated somewhat smoothly. An applications acceptance and simple to differently to other token sales and on the system is dependent on a votuse platform took place over a year starting in June ing system and is overseen by EOS tothat will allow 2017. There were 350 separate periods ken holders. of distribution and at the end of each everyday distribution period, the total amount ISSUES users to take of EOS tokens minted for that periRecently the EOS Jungle Testnet sufod were divided amongst contributors fered an attack that resulted in it being advantage of based on the amount of ETH they had shut down for at least a day as the net- the blockchain contributed. work resolved the issue. economy.

As EOS tokens were listed on most major exchanges at the same time as being issued directly by the developers the market was able to decide a price. There was no need to get in early and investors could take their time and watch

Also, an EOS based DApp called DEOSBet, a gambling platform operated by DEOSGames was “jackpotted” 24 times in one hour by one “lucky” individual. It is not clear at this stage if the vulnerability was unique to DEOSBet or if

it represents a more significant underlying issue in the EOS smart contract system.

A short while ago a seemingly similar exploit was found in EOSBet. The DApp was forced offline. An investigation into the bug eventually led researchers to find a critical flaw in the EOS blockchain.

Bug bounties paid to researchers digging into EOS’ code have been paid out over $417,000. This represents around two thirds of all bounties on HackerOne (A vulnerability coordination and bug bounty platform that connects businesses with cybersecurity researchers.) paid out this year.

CONCLUSION EOS is an exciting project who have a solid team and big dreams. The $4 billion US dollar budget shows that people have faith in the project. With such a lofty vision the project was always bound to have problems. The project appears to have brushed off the negative headlines that have plagued it and with the funds they have, it should just be a matter of time until they can present a highly polished final product. EOS is sure to be a significant player in the burgeoning DApp market and looks to be around for a long time to come.

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How Alt-Tech Has Embraced Crypto Facebook, Twitter, Apple and Google are the tech-oligarchs that today dominate our commerce and culture. They have recently stepped up their efforts to censor, demonetise and shadow-ban those who use their platforms to spread controversial views. They shape our view of the world whilst at the same time are accumulating capital at a rate, that has never been seen before. They often consume successful tech start-ups and assimilate them into sharing their vision of where our culture should be heading.

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Recently these large tech companies have been actively curating and censoring which people we get to see on the platforms. There have been widespread accusations of de-platforming and shadow-banning people who hold controversial views.

ENTER ALT-TECH As a result of tech censorship, a multitude of platforms have arisen that support free speech and will not cen-

sor posts that do not violate US law.

Some of these platforms have protected posts that are highly controversial and there have been allegations that alt-tech is a haven for the alt-right and neo-nazis.

Gab announced recently that their Coinbase account was closed suddenly, hurting its capabilities to accept Bitcoin and Ethereum which it used to raise funds. The account was made without providing any specific explanation.

GAB.AI - A TWITTER KILLER? Gab.ai is a Twitter-esque platform dedicated to free speech. It has survived despite repeated allegations it supports various far right groups. As a result of Gabs unwillingness to moderate comments on its platform the Google play store and iTunes Store have deplatformed the Gabs app. However, these same platforms have not banned the twitter app which does allow you to see adult content.

Gab has launched their own Gab token ICO. They have raised over $5 million so far.

On Gabs website they state: “This will not be an overnight battle. It will likely be a 5-10 year digital, cultural, and information war. We can and will win.

We've built an incredible community of amazing people who share our values and cherish liberty. That is why we will continue to win. Join us and help keep the internet great for generations to come.�

GabPro allows members to monetize their content through subscription and a tipping system. Currently these payments are processed in USD, however, Gab is working on a cryptocurrency solution.

MINDS.COM - THE NEXT FACEBOOK? Minds is an open source social network. It is community owned and has over a million users worldwide. On the 28th of March they launched their own crypto-social networking application (A DApp) running on the blockchain for both mobile and web.

Minds was founded on the principle of putting user-rights at the forefront

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of their business. This has driven the adoption of blockchain technology for their fast-evolving social network. Their network features a “contribution economy� and a reward system. Minds also has an in built crypto-wallet.

The minds crypto network runs on the Ethereum blockchain and allows users to monetize their content. A non-tracking advertising network has been implemented in response to community feedback and as a portion of advertising revenue is returned to users it incentivizes further user contribution.

Users are rewarded with tokens for the engagement their posts receive on the app every day. Minds is one of only a few blockchain projects that has a fully functional application available at the same time as their white paper.

"Now more than ever, there is a critical need for a platform like Minds. With existing players trampling on rights and enforcing biases of often a minority viewpoint, Minds provides the perfect avenue for free speech, expression, idea sharing and individual liberties all with clear accountability. I am excited for Minds to empower and enable discussion on a global level."

- Elizabeth McCauley, Blockchain Pioneer, Advisor, Minds.com

STEEMIT Steemit is a social media and blogging site that uses a blockchain based system to reward its publishers. The blockchain produces Steem Dollars which are obtained by posting, discovering and interacting with comments.

Now more than ever, there is a Steem Dollars are US Dollar pegged and critical need for remove the need for users to buy in to a platform like a cryptocurrency to start getting some Minds. With tokens. Steemit works with several existing players third party applications such as d.tube, trampling on rights a decentralized video platform. and enforcing biases of often a As of the time of writing Steemit has a minority viewpoint, market capitalization of $208,425,264 Minds provides US dollars. the perfect avenue for free speech, BITCHUTE expression, idea Bitchute is a peer-to-peer video sharsharing and ing site. It brings torrent like function- individual liberties ality to the web browser. Their WebTor- all with clear rent system allows users of the site to accountability. I am share videos amongst themselves with- excited for Minds out placing extra demands on Bitchutes to empower and servers. Their servers act as a peer of enable discussion last resort if another user is not seedon a global level. ing it.

You can contribute to the running costs of the site by mining crypto in your browser when on the site. Although, Bitchute has moved this service to a

third-party domain name as Google is now penalizing domains that do this.

CONCLUSION The sites mentioned above represent just a few of the social media alternatives available and there are sure to be lots more coming online over the next few years. Whilst now their user bases only represent a tiny percentage of total online traffic, if the tech oligarchs continue to pursue their agenda of censorship they are only going to grow. The above sites close integration with crypto can only serve as a conduit to bring more entrants into the world of crypto. How the tech oligarchs will react to these alternative products also remains to be seen. At this moment they are largely being ignored.

ELIZABETH MCCAULEY,

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OCTOBER 2018

Blockchains Are Forever Earlier this year the global diamond giant De Beers announced that they had managed to use blockchain technology to track high value diamonds all the way from the mine to the retailer. According to their 10th of May press release this is the “first time a diamond’s journey has been digitally tracked from mine to retail.”

De Beers new platform known as Tracr, is expected to launch in the later part of this year and is not just an in-house solution but will be open to the entire diamond industry. The motivation behind this project is to increase consumer confidence and public trust that diaby ICO CROWD monds marketed by De Beers were not conflict or “blood” diamonds, whilst increasing the efficiency of the supply chain.

Conflict or "blood" diamonds are diamonds that are illegally traded to fund conflict in war-torn areas, particularly in central and western Africa, according to the World Diamond council, which represents the commercial diamond trade.

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The United Nations defines conflict diamonds as "...diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognized governments and are used to fund military action in opposition to those governments, or in contravention of the decisions of the Security Council."

The diamonds have generally been extracted but have not been cut.

An estimated four percent of the world’s diamond production were conflict diamonds at the height of the Sierra Leone civil war.

During the Sierra Leone war thousands of men women and children were used as slaves to extract diamonds. They were often kept in primitive conditions and forced to perform back breaking work digging with their own hands.

The Kimberley Process came into being when South African diamond producing states met in Kimberley, South Africa in 2000. The discussed ways to stop the trade in blood diamonds and ensure that diamonds were not funding conflict.

Subsequently, the United Nations, European Union, the governments of 74 different nations and a number of interest groups reached an agreement and The Kimberley Process Certification Scheme (KPCS) was born. A certification requirement is that all rough diamond exports are produced via legitimate mining and sales activities are conducted “conflict free”.

Each shipment of diamonds is required to carry a certificate that documents where the diamonds come from, how they were mined, the place where they were cut and polished, all parties involved and their intended final destination.

According to Global Witness the problem is not limited to diamonds.

They claim that it is not just the diamond trade that is fuelling conflict and that rebel fighters and army units from eastern Democratic Republic of Congo (DRC) have been actively trading in mineral ores used in the production of various computer components and mobile phones. They suggest that local populations have been massacred, raped, extorted and subject to slavery.

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These conflicts of blood minerals are laundered into the global money supply by export houses. They are then transformed into refined metals by large international smelting firms. Chances are, some of the metals in the everyday products you use were at some point a conflict mineral.

Tracr was developed by De Beers in association with five leading diamond manufacturers: Diacore, Diarough, KGK Group, Rosy Blue NV and Venus Jewel.

The CEO of De Beers Group Bruce Cleaver has stated: “The Tracr project team has demonstrated that it can successfully track a diamond through the value chain, providing asset-traceability assurance in a way that was not possible before. This is a significant breakthrough made achievable by the close engagement of the pilot participants who share our commitment to industry progress and innovation...”

ID”. This ID documents a diamonds characteristic such as carat, clarity and colour. The data is then aggregated on an immutable blockchain. Tracr then re-verifies this data at each milestone along the diamonds journey from mine to retailer. This process utilizes blockchain to build upon the fundamentals of the KPCS essentially moving it to the blockchain. As each stage is recorded on an immutable ledger it should make the verification process of all previous stages somewhat easier.

op the Trust Chain initiative. This is a blockchain platform which will provide more transparency to the industry. Just like Tracr, the initiative will track diamonds, precious metals and other gems from mine to retailer.

The Tracr project team has demonstrated that it can successfully track a diamond through the value chain, providing asset-traceability assurance in a way that was Founded in 1888, De Beers has opernot possible before. ations in 35 countries worldwide. It This is a significant has mines in Canada, Botswana, Nabreakthrough made mibia and South Africa. De Beers had achievable by the a virtual monopoly on the world’s diaclose engagement mond trade until pressure from counof the pilot particitries with large stockpiles pressured pants who share our them to change their business modcommitment to inel. The diamond trade is worth over dustry progress and $80.4 Billion US dollars annually. innovation...”

In April the leaders of the diamond Under the Tracr system each diamond and precious metal industries in Afis assigned a unique “Global Diamond rica teamed up with IBM to devel-

Canadian diamond company Lucara Diamond appointed a new CEO in February. Her appointment was seen as a move to modernize the company.

Eira Thomas will lead the company which has purchased Clara Diamond Solutions, another company seeking to ensure the provenance of diamonds through blockchain.

Although the Kimberley Process website purports that it blocked 99.8 percent of conflict diamonds from entering the world market, some groups have claimed that this is not enough.

If the Kimberley Process can be improved upon through blockchain we may have come up with a solution that reduces the possibility of armed BRUCE CLEAVER, conflict on the continent of Africa.

CEO of Maybe Blockchain can help prevent De Beers Group another Sierra Leone.

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OCTOBER 2018

Blockchain and the Automotive Industry

The automotive industry is cutthroat and manufacturers are always seeking ways to embrace new technologies to improve their value proposition and make efficiency savings. From the production line to car phones the car industry always seems to be at the forefront of innovation.

So, it is not surprising to hear that potentially disruptive blockchain technology has found its way into one of the world's leading industries. We are going to look at how blockchain and distributed ledger technologies can improve everything from car manufacturby ICO CROWD ers supply chains, securing car ownership, your service history and the realm of autonomous driving.

Most if not all major car manufacturers are exploring use cases for blockchain and some have already announced integration or planned integration of the technology in their development roadmaps.

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German car manufacturer Volkswagen has announced the most ambitious blockchain based plans so far. Volkswagen and the IOTA foundation have announced they have partnered to bring their distributed ledger technology to Volkswagens future vehicles.

Another start-up founded by the former technology innovation lead at Germany's largest utility company, Innogy is called Spherity. They are looking at ways of applying the blockchain to electric vehicle charging. It is their intention to use blockchain to create an audit trail for “greenhouse The IOTA Foundation was established gas accounting”. This will allow users in Germany as a formal, non-profit orto ensure that their vehicles are usganisation (‘gemeinnützige Stiftung’) ing green energy as opposed to fosin 2017 by Dominik Schiener and David sil fuels. Spherity founder Dr. Carsten Sønstebø. They have grown quickly and Stocker said, "Someone who spends have formed partnerships with Bosch, $150,000 to buy a Tesla would probaFujitsu and the city of Taipei. bly like to have proof they are charging with green energy."

Their first steps together will be working on the “Connected Car System” Volkswagen have also entered into which is scheduled for implementapartnership with CarVertical, a start-up tion in 2019. The IOTA network will that claims to be a global car VIN Debe utilized to securely push software coder and the world’s first decentralupdates at first, although, many more ized vehicle check based on blockchain. features will be added later. It has Via an Ethereum token, a vehicles hisbeen suggested this will include the tory including vehicle information and ability for Volkswagens electric cars to millage can be checked via the blockautomatically charge and pay via cryp- chain. By using this system, informatocurrency. tion cannot be lost or altered.

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They are not the only people attempting to apply blockchain to metrics.

A UK team at Dovu (a start-up part owned by Jaguar Land Rover) who raised $13 million US dollars via a token sale plans to get involved in car metric tokens. They want to incentivize users to behave in a virtuous manner and capture their mileage on a regular basis.

Dovu have begun a pilot scheme alongside BMW to capture mileage. BMW staff who were enlisted, had to carry out the tests using a simple Dovu-developed crypto wallet. Dovu CEO and founder, Irfon Watkins has told CoinDesk, "If, like BMW, you own a lot of cars under a fleet management arrangement, it's really useful to know how many miles those cars are travelling every week or every month – rather than every three years."

He went on to say: "By which time you might find you have an asset on your books worth a lot less than you thought."

At Volkswagens Future Mobility Incubator research program there are sever-

al additional research programs which are exploring blockchain technology.

Another German car manufacturer pursuing a strategy of blockchain innovation is Porsche. They are working with XAIN, a research group based in London’s University of Oxford and the Imperial College to investigate various use cases for distributed ledger technology in its vehicles. Potential use cases involve enabling the unlocking of vehicles at a distance, opening car boots when delivering packages autonomously and recording real time traffic data in a secure manner.

Perhaps the most exciting use case for distributed ledger technology in cars is to help improve autonomous driving, a sector that has made huge strides in the last ten years. Soon we expect not only to see blockchain used in self driving applications, but also configuring ride sharing services and even shared ownership of cars. The Toyota Research Institute is working on developing standards in partnership with a team from the Massachusetts Institute of Technology (MIT). Many other carmakers are

working on their own projects including General Motors, Ford and the Renault Group.

If, like BMW, you own a lot of cars under a fleet management arrangement, it’s really useful to know how many miles those cars are travelling every week or every month – rather than every three years.”

Universal standards help create systems that work across a range of different cars and several tech companies in partnership with car manufacturers have created the Mobility Open Blockchain Initiative (MOBI).Together they represent over eighty percent of global cars manufactured. They are developing a range of uses for blockchain within the transportation industry and have forged relationships with universities, governments and other related parties that have a vested interest in bringing blockchain to transportation.

CONCLUSION The fact that blockchain technology has been so quick to be adopted is a testament to the revolutionary power this technology has. Whilst cryptocurrencies will probably remain at the fringe IRFON WATKINS of society for the moment, blockchain technology is going to enter the mainstream unbeknownst to most people.

Its implementation is still in its infancy but it's soon going to infiltrate every aspect of our daily lives.

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LinkedIn is a social network designed specifically for the business community.

Its aim is to allow registered members establish networks of people they know and trust professionally.

Member profile pages focus on skills, employment history and education. It has managed to establish itself as the go-to site for business networking. It is a great place for those in the tech industry to form partnerships with experts and key influencers. There are by ICO CROWD a number of highly influential blockchain professionals active on the site and it has become a valuable source of information and news on the blockchain arena.

strong's influence in the world of crypto is unquestionable. He has worked for some of the biggest names in tech including IBM, AirBnB and Deloitte.

Mr. Armstrong holds three degrees from Rice University: Bachelors of Computer Science, Bachelors of Economics, and a Master’s of Computer Science.

Brad Garlinghouse is the CEO of Ripple. He was formerly the CEO and Chairman of Hightail (formerly YouSendIt), the file sharing site. Before Hightail, he was President of Consumer Applications at AOL, after his role as Senior Vice President at Yahoo! running its Communications business which included the Homepage, Flickr, Yahoo! Mail, and Yahoo! Messenger. He is a very active angel investor and holds So, who are the most well-known block- investments in over 40 start-ups including hardware company Pure Storchain personalities on LinkedIn? The age, AI start-up Diffbot, and Indigo Agones who have gained respect and inriculture. He is a board member at Anfluence for their continued efforts and innovations in the world of blockchain imoto and OutMatch. He previously held board positions at Ancestry.com and crypto: and Tonic Health.

Brian Armstrong is the CEO and cofounder of Coinbase, one of the largest Garlinghouse has a BA in economics from the University of Kansas and an crypto exchanges around. Brian Arm-

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MBA from Harvard Business School.

With XRP being the 3rd largest cryptocurrency by market cap he is an important figure to keep an eye on.

Hunter Walk is an angel investor and adviser. He is a founder and partner at Homebrew. He also has extensive experience in product development and played a key role in making YouTube one of the internet's largest websites.

He is a regular writer of tech articles and posts frequent updates on his feed. He has nearly a million followers on LinkedIn. Gavin Wood is the co-founder of the blockchain based platform Ethereum and the founder and former CTO of Ethereum client Parity Technologies.

He proposed the Solidity programming language back in 2014 and has been involved in the implementation of Ethereum's Whisper Protocol. He is the founder and President of the Web3 Foundation. The Web3 Foundation nurtures and stewards’ technologies and applications in the fields of decentralized web software protocols, particularly those that utilize modern cryptographic methods to safe-

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guard decentralization, to the benefit and for the stability of the Web3 ecosystem.

Joanna Hubbard is the COO of Electron, a London based start-up company harnessing blockchain technologies to design more efficient, resilient and flexible systems for the energy sector.

She is a regular speaker at blockchain events. She has around 24,000 followers on LinkedIn. Salih Sarikaya is a blockchain journalist. He is the co-founder of Smartereum,a platform that connects investors and analysts with the world. Salih is a great source of news and other information about crypto for traders and investors alike. He was tech editor at Digital Review, an online digital trends and technology reviews magazine from 2013 to 2015. He has been listed as one of the top tech and blockchain influencers in the US. Joseph Lubin is one of the co-founders of Ethereum and is also the founder of ConsenSys, a software-production studio which builds decentralised applications on the Ethereum platform. He has been personally involved in cross-industry groups attempting to advance solutions to governance issues in the blockchain industry. In the past he has worked with Goldman

Sachs and Blacksmith Technologies.

He is a regular author of articles about blockchain applications and is followed by over 8000 LinkedIn users.

Meltem Demirors has a background in management consulting, corporate treasury, commodities trading, and supply chain management.

She calls herself a ‘Blockchain believer’. As an experienced business leader, Demiros brings a wide range of international, multi-sector experience into building Digital Currency Group's global network. Her strategy is to focus on building and supporting Bitcoin and Blockchain companies by leveraging its insights, network, and access to capital. She is the CSO at Coinshares and a member of the Global Future Council on Blockchain in the World Economic Forum. Her profile has over 4000 followers.

Reid Hoffman is an American internet entrepreneur, venture capitalist and author. Hoffman was the co-founder and executive chairman of LinkedIn itself, a business-oriented social network used primarily for professional networking. He is currently a partner at the venture capital firm Greylock Partners. On the Forbes 2017 list of billionaires, Hoffman was ranked 630th with a net worth of US$3.3 billion. He is also on the board

of directors at Microsoft. He has nearly 2 million followers on LinkedIn.

Who are the most well-known blockchain personalities on LinkedIn? The ones who have gained respect and influence for their continued efforts and innovations in the world of blockchain and crypto...

Naval Ravikant is the CEO and co-founder of AngelList. He has previously co-founded Epinions (which went public as part of Shopping.com) and Vast.com. He is an active Angel investor, and has invested in dozens of companies, including Twitter, Uber, Yammer, Stack Overflow and Wanelo. His recommendations are taken very seriously by his followers and the industry at large.

He has a reputation of supporting innovative projects.

As the blockchain sector is relatively new, people have not had significant time to develop reputations as influencers. In the blockchain economy, perception matters.

What people think influences what they buy and sell. These LinkedIn users have successfully used their reputations and knowledge of social media to gain significant influence. The difference between an ICO being a success or a failure can come down to how these influencers view you and if you can get any of them on board to support your project. Blockchain projects that can successfully leverage the support of key industry players such as these LinkedIn blockchain behemoths will always enjoy much more interest and support than those that do not. Anyone serious about blockchain should follow these profiles.

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Blockchain and Big Data

Two emerging technologies that look like they have a very bright future together are blockchain and big data.

Big data refers to the study of data sets that are too large and complex to be analysed by traditional data processing application software. The challenges relating to big data include capturing the data, storing the data, analysing the data, searching, transferring, visualby ICO CROWD ising, querying, updating and information privacy.

things from spotting business trends, prevent disease to combating crime.

It is an ever-increasing industry and is having dramatic effects for scientists, business executives, medical practitioners, advertisers and governments alike.

It is used extensively by search engines, fintech, urban and business informatics. It has redefined the studies of meteorology, genomics, connectomics, complex physics simulations, biology and environmental research.

Deep learning systems are used to interpret the data and extrapolate valuaBig data tends to refer these days to the ble insights to make predictions about future events. The amount of data in use of predictive and user behaviour the whole Technosphere is expected to analytics. It is more focused on methgrow from 4.4 Zettabytes in 2013 to ods of extracting value from the data 44 zettabytes in 2020. A relatively new rather than the size of a dataset itself. data feed for big data is the immense amount of information stored publicProper analysis of datasets can highly on blockchains and its potential vallight previously unknown correlations between datasets allowing people to do ue is immense.

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Without big data there is no easy way to view this complex web of data in any meaningful way. It is hard to track trends or otherwise put it to good use.

If we do not take advantage of this, it is an incredibly valuable opportunity lost.

There is so much that can be done with it, for example, if we seed this data into an advanced AI we can track trends that could help us track everything from inefficiencies in supply chains to identifying where human or drug trafficking is occurring.

The current size of the big data industry based on revenue is approximated at $42 billion this year. It is expected to grow to an excess of $100 billion by 2027.

Consider what value there is in knowing that money is being moved, knowing where it is going to, who is doing what and what addresses can be iden-

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tified as hackers, scammers, criminals and terrorists. The associated addresses could be tagged, and a model generated to prevent money going to a licensed exchange that is known to be associated with a bad actor. This has huge implications for national security agencies.

The data is also useful for companies and individuals, creating economic insight and helping to predict prices over time. Currently this is mainly done by tracking patterns in speculation and movement.

If big data could lead to a 1% efficiency saving across the global economy, it would be worth trillions of dollars to the planet annually. The actual savings are likely to be much greater. The United States is for example both an importer and exporter of many products simultaneously. This hardly seems like the most efficient way to trade.

separate and disparate from the rest.

Along came web 2.0 and sites started to interoperate and become part of the social net. The nets usefulness, functionality and value has increased exponentially since.

Proper analysis of datasets can highlight previously unknown correlations Big data is currently dominated by web between giants and big government, but in time datasets we will move to a much more transpar- allowing people ent system. This is vital to ensure that to do things the internet remains a fair place. You from spotting should have ownership of your data and choose what you share on the web. business trends, prevent disease The data mined by tech giants gives them a huge competitive advantage to combating over the common man and it would be crime.

The democratizing feature of blockchain and big data is that all parties involved have access to the same data.

Groups can work cooperatively or compete to improve the systems we use to analyse the data.

naive to imagine that they operate in your best interest. After all, you are the product that they sell to advertisers.

Big data's relationship to blockchain in this nascent environment in many ways resembles the internet of the 1990s.

For example, it recently came to light There were plenty of websites you could in a Second Quarter SEC filing by visit, but each was its own monoculture Robinhood Financial (Robinhood)

that the firm is making millions of dollars from selling users’ data to high-frequency trading (HFT) firms.

This is the same company that espouses values of ethical trading practices that benefit the common man instead of fleecing customers to provide a quick buck for Wall Street traders. Valuable big data, in this example, is potentially being sold in real time to give Wall Street traders the competitive edge.

Big Data analysis of the blockchain along with huge economic benefits will bring with it, new issues relating to privacy. However, privacy on the internet really is nothing more than an illusion anyway. Banks and the military industrial complex will attempt to use it to maintain their hegemony over mankind and those who wish to evade it will develop ever increasingly inventful solutions to avoid it. Soon I think it is true to say, for the first time in a long time, we the people will have a say in what we share, how that data is used and have access to the same datasets to analyse. This democratisation of data is inevitable and an exciting development in the world of technology.

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OCTOBER 2018

How Can Blockchain Reshape the Art Industry?

Art might not be the first thing that comes to mind when you think of blockchain, but the art world is a surprising dark horse in the blockchain race.

From art valuations and art provenance to digital collectibles such as Cryptokitties, the art world has seen a handful of fascinating applications of blockchain technology to substantially improve the industry. Blockchain offers a handful of key benefits by for the art industry:

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2 Secure - data is less susceptible to fraudulent alterations 2 Lower cost for art trade 2 Empowering art collectors - changes must be confirmed across an entire network of “nodes”.

2 Proof of Authenticity Importance of ‘Proof of Authenticity’ Proof of Authenticity is the key benefit blockchain can offer to the art industry. A professional photographer had their work stolen over 200 times in 2016. To give you another example, 51,000 pieces of art are registered as stolen by Interpol. Just the 84

music industry alone loses $12.5 billion from stolen music.

Digital art is increasingly gaining traction in the contemporary art world, Blockchain-based solutions are more than welcome to help customers and creators to register their digital or physical art, however, it’s not always an easy task to prove the authenticity of a piece of art.

The art world has been closely monitoring scientific breakthroughs in fields as diverse as A.I., deep learning and protein analysis, the technologies born from this research have either been appropriated by authenticators or will be soon. With these extra layers of security added to the vetting process, the current generation of copycat artists will find it increasingly difficult to hoodwink museum directors and collectors.

Traditionally, authentication has relied on connoisseurs. After studying things like brushstroke, texture, composition, and color, they summon forth their vast wealth of knowledge and divine the truth. But as is the case with sports officiating, bad calls are part of the game.

The usage of deep learning and image recognition for art projects is a hot top-

ic. Much of the research into this technology is being conducted at the Rutgers Art and Artificial Intelligence Laboratory, an offshoot of the university’s computer science department. A paper published last year by two of the lab’s scientists, Babak Saleh, and Ahmed Elgammal, shows how an algorithm they developed is able to differentiate between Picasso and Matisse drawings with over 75-percent accuracy without analyzing composition or subject matter.

CODEX PROTOCOL Codex Protocol is a decentralized title registry protocol launched in July 2018 for the Art and Collectibles (A&C) market allowing trade through cryptocurrency. Codex Protocol’s mission is to make owning and transacting assets easier as this is hard for a number of reasons. The items themselves are by definition unique so it can be hard to verify their authenticity and their provenance; it can also be costly to prove your ownership, insure, transport and store.

ERC721 TOKEN STANDARD Codex Protocol has chosen the new ERC721 Ethereum token standard which is useful for collectibles, a recent example of this standard is CryptoKitties.

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According to Jess Houlgrave, COO of Codex, “ERC721 was emerging as a clear standard for non-fungible tokens which are perfectly suited for unique assets. Ethereum is a widely used platform with great developer tools. Tools like MetaMask, Ganache (local blockchain development) & Truffle and OpenZeppelin simply don't exist on other platforms. This means that the time to develop the protocol is significantly reduced since we can focus strictly on things that pertain to our team instead of building ecosystem infrastructure.”

Additionally, when they evaluated the technology back in January, Ethereum was really the only viable option.

A lot of platforms that were vying for their attention hadn't even launched a Mainnet yet (e.g., EOS). The main criticism of the Ethereum platform is scalability, which doesn't concern the type of customer they’re targeting since transactions are high value, low volume as opposed to low value, high volume.

BENEFITS FOR INSURERS Insuring art and collectibles involves careful evaluation of the object, it’s whereabouts and it’s ownership to understand the potential risks and price insurance effectively. Codex not only provides more data to make pricing more accurate but also reduces some of the risks associated with defective titles

and conditions. This could mean lower insurance premiums for owners and more effective pricing for insurers.

CODEX BIDDABLE ESCROW UTILITY Codex was released onto the main net in July. Artists and owners are already creating Codex Records for items they have created or acquired. Biddable, the crypto escrow functionality is also live and operational with some of Codex’s auction house partners.

When someone wins an auction, their cryptocurrency remains in escrow until the balance of the transaction is paid.

This gives the auction house comfort that the buyer will complete the payment.

VAULTITUDE Vaultitude (previously called IPChain) is designed as an innovative application based on Blockchain technology and meant to protect all forms of intellectual property (IP) such as inventions, scientific research, music, video, etc. The project addresses the needs of artists, inventors, and scientists as they can license anything they create, ranging from art to music, or even newly developed methods.

INTELLECTUAL PROPERTY MARKETPLACE Vaultitude’s software allows users to assign multiple owners to each IP.

“ERC721 was emerging as a clear standard for non-fungible tokens which are perfectly suited for unique assets. Ethereum is a widely used platform with great developer tools.

Tools like MetaMask, Ganache (local blockchain development) & Truffle and OpenZeppelin simply don’t exist on other platforms.

This means that the time to develop the protocol is significantly reduced since we can focus strictly on things that pertain to our team instead of building ecosystem infrastructure.”

Each IP can then be sold or licensed and the proceeds from that are automatically distributed among the owners according to their share of the rights. All transactions and the associated contracts are documented on the Blockchain.

FINANCE YOUR PATENT In countries where a grace period after publication of a new invention exists, the author can retain his right to file a patent. The platform can thus be an active tool in pre-seed financing by helping inventors to raise the funds for filing a patent and/or commercializing it – thanks to better protection and higher visibility of a published IP. BENEFITS OF VAULTITUDE Vaultitude supports the easy sharing of confidential information by sending out a simple link to a third party, that gets access to the data only after signing a non-disclosure agreement (NDA) which is also saved to the blockchain.

This proves that access happened only after the acceptance of the legal terms and conditions.

Besides that, Vaultitude acts as a secure proof of first authorship accepted in legal proceedings, trials or patent applications and reduces the risk of inJESS HOULGRAVE, fringement by deterrence. Using blockCOO of Codex chain technology, Vaultitude can assist in quickly resolving conflicts and so reduce the legal costs.

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OCTOBER 2018

Turning the Power of Influence Into Money It’s no secret that the mainstream financial system is plagued with sys-temic risk: when you deposit your money with the bank, the bank can take it and use it as they please, placing the global economy at risk of a 2008 repeat.

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Now blockchain technology has sparked dreams of a continuation of the human story of value exchange: for the first time in human history, peo-ple can trust each other and transact peer to peer without intermediar-ies needed to verify transactions.

While the first era of the internet brought unprecedented wealth, it failed to bring with it a system that could redistribute the wealth created.

And although the world continues to steam ahead technologically, it remains plagued by ever steeper inequalities and their ugly offshoots of zenophobia, protectionism, elitism, poverty extremes, and classism.

Perhaps this is because the internet brought about faster connections and transactions, but it did not fundamentally change the way humans transact.

The challenges with the traditional way of transacting, says Ravikant Agrawal, Principal Consultant at Infosys Management Consulting, are its “centralized nature, security issues, inefficiencies from a settlement and operational cost perspective, and being intermediary driven most of the time.”

blockchain enable the monetisation and democratisation of the power of influence and crowd-sourced value.

Thus, the technology becomes a game-changer for society at large, and this is the spark for much of the idealism and hope of blockchain enthu-siasts.

“Token economies are based on operant learning theory, which states that rewards and punishments shape behaviour,” says Agrawal.

But what if the creators of value could be compensated proportionately? And what if the value they create would increase as the numbers of those adding value to a network increase, and this would in turn drive up the value of their work further? Sound like a catch 22? That’s because it is.

“A token economy rewards good behavior with tokens that can be ex-changed for something desired. We should be able to connect to the to-ken economy from our day to day experience as well, where a token can be a chip, coin, star, sticker, or something that is given for an ex-pected behaviour or motivation and can be exchanged for what is required in the future.

Far from solely being a trust-building machine, applications built on the

“Now if we are narrowing token economies to blockchain and the cryp-tocur-

OCTOBER 2018

rency world, value provided by the token actually drives the level of influence within a given token network,” he says.

Ravikant Agrawal

In this scenario, it’s not the technology itself that creates prosperity, it’s the people.

Last year, Airbnb was valued as a $31 billion corporation and Uber at roughly $50 billion, raising the question of whether the sharing economy really is a sharing economy?

But suppose the Airbnb model was rewritten by a new economic grid in which a distributed application (Dapp) on blockchain handles payments, identifies parties, and even handles reputation? And this Dapp is owned by all the people offering their room to rent?

The sharing economy disruptors could be disrupted by a blockchain based model, where the word share would also entail the spread of wealth.

CREATING AN ECOSYSTEM OF USERS A token-based business model provides an ecosystem wherein con-sumers can realise the true value of the network they are part of.

This platform has potential to provide transparent market value for its tokens as the underlying popularity of the programs will drive more to-ken value. This in turn would drive stronger network effects, bringing li-quidity to the platform while ramping up the token’s value.

One such example is vSport, which has launched as the world’s first non-profit, open-source, and blockchain empowered platform dedicated to the sports industry.

Token economies are based vSport is building an ecosystem around on operant sport that is decentralised, ena-bling all learning parties including fans, clubs and agentheory, which cies to profit from being connected to states that the world of sports. rewards and punishments Based on the creative value evaluation system, vSport says the value frameshape work of blockchain technology is used behaviour. to create an ecological cir-cle that benefits all parties and creates a new sports business environ-ment. Tokens can be circulated quickly between fans and clubs and fans can be rewarded with relevant rights, services or privileges.

Sports clubs have long enjoyed significant influence through the mas-sive followings and loyal fans they attract, and now through partaking in the tokenised ecosystem, they will be able to fully capitalise on the pow-er of their influence.

“If the token is able to increase the list of features, build stronger gov-ernance, add more participants, grow its ecosystem and hence create the required network effort,” notes Agrawal “the power of influence for a token would be huge within and outside the network.

“This ultimately would drive demand for the token and translate into its price appreciation.”

Therefore, the strength of the incentive systems built into the token business model will be key in retaining users.

“There are many such success stories where the thoughtful token economy along with much needed value is provided by the token, lever-aged to powRAVIKANT er up influence, and hence this further AGRAWAL drives the token val-ue, as can be seen with EOS,” says Agrawal.

“If blockchain technology makes it through required regulatory support, coopetition (collaboration + competition) and technological maturity in the next 5 years, develops innovative blockchain enabled solutions and improves on the challenges of the current transaction processing, we could certainly see token economics becoming mainstream,” says Agrawal.

“We could see floodgates being opened for different industries’ use cas-es as they remodel to fit token economics or asset tokenization in their processes,” he says.

“For the end-user, it hardly matters what underlying technology a solu-tion / application is built upon, what matters more to them is whether it makes their life more convenient, trustworthy and affordable.

Token enabled solutions could certainly provide these benefits.

The entire business landscape is set to rapidly change in coming years, as more disruptive competitors come into the “I personally feel that the timeframe market with aggressive tokenised infor mainstream adoption may vary decentive schemes. pending on the factors mentioned, but the wave has already started and seems But could this occur within the next inevitable.”

5-10 years, or are we looking at a gradual shift over a series of decades?

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OCTOBER 2018

South Korean Digital Currencies Move into Mainstream South Korea claimed the limelight of the cryptocurrency craze last year, provoking much of the digital currencies’ boom and bust of 2017. Bitcoin trades in South Korea neared 20% of crypto trades globally, causing the prices of Bitcoin and Ethereum to balloon to up to 50% of the global av-erage. The country has often played an outsized role in the global cryp-tocurrency market.

But as the crypto frenzy spread and even entered the mainstream with some businesses accepting payment in digital currencies, the govern-ment saw red and warned of a widespread gambling addiction. by ICO CROWD

When fears of a harsh South Korean government crackdown or ban on cryptocurrency trading spread in January this year, the value of Bitcoin tumbled. And true to the rules of the inflated investment game, this sparked panic amongst investors and became the first domino to cause some of the biggest crypto currencies’ market capitalisations to sharply fall.

Amidst fears of digital currencies being used for money laundering and suspicions of North Korea being behind some of the major crypto ex-change hacking incidents, the South Korean govern-

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ment ruled, with ef-fect from 30th January 2018, that only real-name bank accounts can be used for cryptocurrency trading. South Korea’s financial regulator fur-ther prohibited domestic firms from participating in ICOs.

Big brands including Starbucks, Outback, seafood buffet restaurant Todai, candle store Yankee Candle, Kakao Talk, cafe Sulbing, and Cafe Droptop are among firms included in the partnership that will enable widespread payment with cryptos.

Hong Nam-ki, Government Policy Coordination minister, said in a statement that the government’s basic aim is to prevent any illegal acts or uncertainties regarding cryptocurrency trade, while nurturing block-chain technology.

The environment remains attractive to digital currency entrepreneurs, keen to bring their payment solutions to the wider market: “We hope that by providing a transactional platform that is fast and scalable we can compete as a real-time usable payment solution that someone could use to buy a cup of coffee with,” says Niall Moore, R&D Team Leader, as the team steps up efforts to bring cryptocurrency Hycon into real-world use throughout South Korea through partnerships with gov-ernment agencies and private businesses.

South Korea’s neighbour, China, further compounded the clamp down on digital currencies, issuing an all-out ban on ICOs and regulations which led to the closure of some exchanges’ domestic trading opera-tions.

Despite this turbulent backdrop, the country remains home to three of the world’s largest crypto exchanges. What sets the South Korean cryp-to market apart from other global crypto hubs is the many ways in which its seeped deep into the mainstream market.

Earlier this year, South Korea’s largest cryptocurrency exchange Bithumb announced 6,000 stores nationwide would be able to sell their goods through a joint venture with Korea Pay’s Service, a mobile pay-ment operator and gift card platform.

Hycon is a transactional medium, built on top of its own base protocol, which has been developed from the ground up to lay the groundwork for a highly-scalable on-chain solution.

The crypto currency is listed on OKEx, Bit-Z, and OKCoin Korea, and like other entrepreneurs of the digital age, the firm is fast seizing oppor-tunities to further expand into the mainstream market.

Moore explained that “Hycon is an open source, permissionless block-chain, and

OCTOBER 2018

our R&D team is focused on developing and improving that base platform.

He says that moving forward there is “huge scope” for growth in the pri-vate sector; “we have a separate enterprise focused team who are working on bringing Hycon into the real world through partnerships with government agencies and private businesses in South Korea.

“Not all blockchains have to be disruptive,” he adds; “Hycon is all about onchain scalability. We are going to be employing some novel data structures allowing us to build a DAG of blocks using a consensus algo-rithm called SPECTRE which will allow us to increase our transactional throughput 30 fold from our current levels and beyond.

“Having been primarily involved in the remittance industry it was decided to try to solve some of the existing problems found with well-known blockchain platforms.

Hycon is the result of that decision.

“Right now, our market cap puts us in the top 150 coins out there, so there is plenty of room for movement.”

opportunities in the country that has created fertile ground for investment in ICOs and use of digital currencies. Local investment op-tions have been somewhat limited to the highly pressured markets of real estate and the domestic stock market.

Earlier this year, South But real estate prices and interKorea’s largest est rates have been on the rise, and in-vesting into derivatives requires in- cryptocurrency dividual investor certification that is exchange not easy to obtain.

Bithumb announced In this environment, there’s a huge de6,000 stores mand for investment options that are easy, open, and widely available to the nationwide general public. would be able to sell their Similar to investing trends across the goods through globe, it’s the younger South Ko-rean a joint venture population that has jumped aboard the ICO and crypto bandwagon first and with Korea foremost.

Pay’s Service, a mobile payAccording to reports by the Korea Fiment operator nancial Investors Protection Foun-dation, 1 in 5 people in their twenties and gift card have purchased some form of digital platform. currency.

So why has South Korea been among those leading the charge in bring-ing digital currencies to the mainstream?

According to some industry insiders, its the lack of good alternative in-vestment

The decentralised future and the investment options it offers have at-tracted tech-savvy 20-30 year olds, keen not to cash in on new oppor-tunities to make their money work for them.

Unsurprisingly, although the younger generation attracts more investors, it’s the older generation of South Koreans that invest the most, accord-ing to a Korea Financial Investors Protection Foundation survey, the av-erage cryptocurrency investment among 20-somethings was around 2.9 million won versus 6.29 million won for South Korean investors in their 50s.

But it’s not just South Korea that has seen digital currency begin to spread into the mainstream. For some governments, including Vene-zuela, Russia, Turkey, and Iran, the idea of a statebacked digital cur-rency is appealing as a way to evade US economic sanctions.

The Marshall Islands also passed legislation to enable the launch of its own cryptocurrency to phase out reliance on the US dollar.

Reportedly, Dubai is developing a blockchain-based digital currency emCash, set to act as a legal tender for public and private debts.

There’s no doubt that while the South Korean government has chosen a path of cooperation with the digital currency industry, it’ll soon be among many other innovative leaders keen to see their nations enjoy a techno-logical head-start to widespread use of decentralised transactions.

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OCTOBER 2018

The Rise and Fall of the Decentralised Prediction Market From U.S. elections to World Cup soccer games, to whether or not 24-year-old Ethereum co-creator Vitalik Buterin has a girlfriend or when he might find one, prediction markets allow the ‘wisdom of the crowd’ to speculate on the outcomes of future events.

The Efficient Market Hypothesis states that assets’ prices fully reflect all available information, and this underscores the ability of the prediction market to aggregate information and make accurate predictions. Thus, the concept of a prediction market is that the marby ICO CROWD ket price of a share will be an indicator of the likelihood of the outcome occurring: people who forecast the correct outcome win money, while those who forecast incorrectly lose out. As well as being an effective tool for hedging against adverse outcomes, the market 90

can also act as a repository of crowdsourced knowledge for journalists, investors and policymakers.

A prediction market by its very nature is decentralised: collective wisdom over expertise decisions, making it a market that appears to be a ready-made match for a blockchain solution.

One of the very first Dapps, (apps powered by blockchains but operated by no single entity) built with Ethereum’s (ETH) blockchain, the Augur prediction market launched in July this year as a trustless, decentralised oracle and platform for prediction markets.

It’s a platform for users to create a prediction market and use ETH or REP to Nodari Kolmakhidze, Chief Investbuy ‘shares’ to bet on the outcome of ment Officer at Cindicator, says deevents. Event outcomes are determined centralised prediction markets are the via a decentralised vetting process: reclassic use-case for Blockchain techporters receive fees to create and modnology, because “this is one of the in- erate the market and they can lose REP dustries that require transparency in tokens if they incorrectly report outthe trading process and rewards/bets comes and are challenged by other REP management. holders.

“Decentralized prediction markets usually don’t require trust for the market organizer - and this is one of the advantages of Blockchain-based prediction markets.”

According to the Augur white paper, centralised prediction models come with significant risks and limitations: “they do not allow global participation, they limit what types of markets can

OCTOBER 2018

be created or traded, and they require traders to trust the market operator to not steal funds and to resolve the markets correctly.”

A decentralised model, however, hopes to eliminate these limitations, offering open and crowd-sourced speculation at low cost. Decentralised networks such as Bitcoin or Ethereum can remove the risk that self-interest will turn into corruption or theft.

The only significant expenses for participants are compensation to market creators and to users who report on outcome of markets once the event has occurred.

Kolmakhidze explains that “prediction markets are made up of exchange-traded contracts that allow participants to trade the outcome of events. In most cases, the price of such a bet is an indication of how traders are assessing the probability of the event, thus prediction market contracts are usually traded between 0 and 100%.

“The most important part is that any user has a motivation to try to guess

the right outcome, otherwise he will suffer from a financial loss.”

the ethereum blockchain by total users, according to DappRadar.

Augur says its incentive structure is designed to ensure that honest, accurate reporting of outcomes is always the most profitable option for Reputation token holders. This results in a prediction market where trust requirements, friction, and fees will be as low as competitive market forces can drive them.

Promise of low fee wagering and a fully open source, decentralised prediction market had fueled high hopes for quick growth. But Augur’s fall from grace has been equally swift, dropping from its prestigious ranking as one of the most used Ethereum DApps, to an insignificant handful of just 66 users in August.

The decentralised exchange protocol used by Augur, 0x, boasted a market capitalisation of $322 million at its July launch, according to Cryptoglobe.

As of September, Augur’s REP token has a market cap of $142 million, taking 47th place on Coinmarketcap’s list of top cryptocurrencies.

The decentralised prediction market was off to a smashing start when it launched on Ethereum’s live blockchain in July this year, briefly overtaking the most well-known decentralised application, CryptoKitties, in terms of number of users.

Just 12 hours after Augur’s launch it become the 5th most popular dapp on

...“time will tell if the platform can attract the kind of users it is aiming for and create a truly original means of prediction.”

Crowds were attracted by Augur’s supposed benefits of low trading fees, user-created markets, automated payouts, and an open to all permissionless protocol which allows anyone, anywhere in the world to participate.

So, what caused Augur’s sudden downfall? Like other innovative projects in the tech world, the user experience hit up against some yet-to-be-ironed out kinks: users quickly ran into problems such as the Augur app repeatedly disconnecting and slow syncing.

Platform founder Joey Krug, voiced his frustrations on Twitter: "Everyone knows the Augur UX is bad right now because of issues that only appeared on 91

OCTOBER 2018

mainnet in production, pointing it out on twitter isn't saying anything useful/ productive."

What’s clear is that there’s a current mismatch between hopes that the decentralised prediction platform model will soar, and their inability to attract and retain users.

prediction market, it focuses primarily on the Chinese market and is one of the first and largest dapps on the Qtum blockchain.

Gnosis is a prediction market which uses Ethereum smart contracts, but relies on a centralized Oracle for judging results, instead of token holders.

Gnosis is a prediction market which uses Ethereum Kolmakhidze explains that “we can see Next-generation hedge fund start-up right now there is a clear lack of usNumerai has released numeraire tokens smart contracts, ers for decentralized prediction market to its network of 19,000 data scientists but relies on platforms. Some platforms may have who improve its calculations for maka centralized less than 100 users while having a mar- ing real bets on the stock market.

Oracle for ket capitalization of hundreds of millions.

And Artificial Intelligence Exchange judging results, (AiX) relies on blockchain technoloinstead of token “Such high capitalizations may repgy and Artificial Intelligence to connect holders. resent the hopes and anticipation of growth of the whole decentralized prediction markets industry.

Despite the challenges facing blockchain based prediction markets, Augur is not without competitor rising stars which continue to emerge and innovate in the prediction market universe:

traders across markets, removing the need for inter-dealer-brokerage.

These alternative models provide a glimpse into the future of how the market could evolve and mature.

“The winner will be a project that will basically create this market for potential clients - there aren’t many at the Prediction market Bodhi says it is com- moment - show why decentralized premitted to providing the next generation diction markets are a solution that the 92

world needs, and why this solution could help to resolve clients' problems, says Kolmakhidze.

“But I’d refrain from pointing exactly to some existing projects, there are many competitors in the field, and we will see who will win their market over time,” he says.

According to Investopedia, we’re living the golden age of data and statistical utility with the benefits of data analytics and Artificial Intelligence coming together with the blending of economics, politics, and more recently cultural factors, which have made the demand for prediction even greater.

Despite the potential for the decentralised prediction model to takeover, Kolmakhidze adds that “time will tell if the platform can attract the kind of users it is aiming for and create a truly original means of prediction.”

Decentralised prediction models are still new comers on the block, and for many, it seems building a history of reliability will be key before serious money and numbers of users decide to move in.

OCTOBER 2018

Pre-empting a Hack Attack 10% of ICO Funds Lost to Hack Attacks

From manipulating national elections to the theft of sensitive personal data from major credit reporting agencies, the threat of a hack attack has grown alongside the proliferation of the Internet of Things and the convenience of increasingly interconnected digital assets. In an environment where hackers are scaling, the blockchain revolution has given birth to a seeming soft target for cyber criminals: digital currencies.

The massive inflow of funds into innovative technologies and blockchain networks that are far from tried and proven have lured hackers into cracking open the ICO and blockchain space to gain huge stakes in digital loot. by ICO CROWD

The race to attract investors to ICOs has led to companies launching blockchain services in, at times, high-risk scenarios where the very imminent

threat of a hack attack is neglected.

This is coupled with Fear Of Missing Out which has often driven token valuations without real connection to market fundamentals as investors transfer funds at record speeds. According to EY, ICO investors have at times contributed capital at an average rate of over $300,000 per second.

the most widely used hacking technique, according to a recent EY report.

A space where caution is thrown to the wind in the rush for a quick buck has long since attracted the greed of criminals, as dramatically depicted by Italian poet Dante Alighieri in the Late Middle Ages: “his gluttonous thirst of gold made traitor, robber, parricide: the woes of Midas, which his greedy wish ensued.”

“Unlike regulated banking systems which are ensured to a limit by the FDIC, ICOs have no such insurance at the moment in what is still a highly unregulated industry.”

In recent years, hackers have repeatedly broken into blockchain exchanges, exploiting weaknesses within the technology and computer systems to steal crypto currencies and disrupt ICOs.Over 10% of the $3.7 billion ICO funds are lost or stolen in hacker attacks, with phishing being

Brian Stack, Vice President of Dark Web Intelligence at Experian, says ICOs have been targets “in my opinion, primarily since there is little to no recourse for the investor in the event of a theft of their tokens.

It’s becoming harder to keep up defences: as the ICO space grows, so does the scale of the incentives for cyber criminals. The consequences of security oversight have been devastating as those who lose control, lose the battle.

In recent years, a series of powerful hack attacks have shaken the crypto and blockchain space with hackers si93

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phoning off millions by infiltrating the computers of employees or exchanges’ internal systems:

finex cryptocurrency exchange due to a flaw in the exchange’s multisignature wallet.

ty early stage investors in the increasingly competitive and at times risky environment of ICO fund-raising.

In June this year, South Korea’s largest crypto exchange, Bithumb, was hacked for the third time in two years.

The Mt. Gox exchange declared bankruptcy in 2014 after $473 million worth of Bitcoin was stolen.

So how can investors in ICOs and stakeholders in blockchain services companies protect their assets?

According to EY, ICO investors In 2107 CoinDash lost $7 million to Stormy global headlines of these major hackers and another $8 million was lost hack attacks have led to lack of security have at times from a Veritaseum wallet. becoming commonly publicly associat- contributed ed with Bitcoin and blockchain. capital at an In 2016, a breach in the Ethereum code average rate of led to $50 million worth of Ether beThe EY report discovered that the over $300,000 ing stolen in the Decentralised Auability for ICOs to meet fundraisper second. tonomous Organisation (DAO) hack ing goals has been declining: 90% of which resulted in the emergence of the Ethereum hard fork.

In the same year, $72 million worth of Bitcoins were stolen from the Bit94

projects with funds raised via ICOs reached fund-raising goals in June 2017, compared with 25% in November 2017. Thus, security has never been more vital to attracting quali-

“For the ICO investor I think the biggest mistake they can make is to not store their tokens in a cold wallet, like a Ledger,” says Stack.

“Storing your tokens at a reputable exchange is effective but in this scenario the exchange is still in position of your private key which is the issue if they are breached.”

The process for protecting ICOs, he says, is no different than it is for any other fi-

OCTOBER 2018

nancial institution or company trying to protect their assets from attacks:

10. Limit number of roles and users that have access to critical information

ously, its opened possibilities for largescale theft and criminal activity.

1. Train your employees on how to identity suspicious activity 2. Deploy patches as quickly as possible 3. Leverage firewalls, anti-malware, intrusion detection software 4. Bring in 3rd parties for periodic audits and pen testing 5. Monitor and manage cloud and desktop systems 6. Find, classify and protect the most sensitive data 7. Conform to best practices and regulations: PCI, HIPPA, etc.

8. Data encryption for sensitive information both at rest and transit 9. Use 2 factor authentication for your employees and customer login credentials

For those looking to invest in ICOs, Stack offers some keys to judging the security of the project:

Cutting out middle men and bureaucracy has in some cases led to cutting out firewalls of safety. The absence of a centralised authority combined with the rush of funds and information chaos have further made the space a prime target for sophisticated cyber criminals.

Are there any large firms investing in the ICO that have been publicly disclosed?

Are they being backed by someone in the tech or ICO industry that has a stellar reputation?

Are they listed on reputable exchange?

ICO’s have become the high-speed highway of the interconnected world: a fast-developing fund-raising tool that has democratised the investment market and opened up a new world of possibilities for innovation. Simultane-

Over 10% of the $3.7 billion ICO funds are lost or stolen in hacker attacks, with phishing being the most widely used hacking technique, according to a recent EY report.

In an interconnected world increasingly at risk of a hack attack, it’s now up to all stakeholders to prioritise transparency and security to create a new system for value exchange that’s protected from the dark web. Digital assets must be insured and secured if the vision of decentralised value exchange as a safe, fair, and democratising haven is to come to fruition.

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OCTOBER 2018

Public Interest in Crypto Currencies Set to Shift In 2017, ‘how to buy Bitcoin’ was the third most Googled question globally, and ‘what is Bitcoin’ was among the US and UK’s top ten Googled questions.

Bitcoin and cryptocurrencies began as the mainstay of crypto geeks and enthusiasts, but 2017 saw the beginning of the niche and often hidden market enter in full swing into mainstream awareness. But Bitcoin as a key search word has dwindled into 2018, along with the by ICO CROWD shrinking value of the crypto currency.

Donald Trump and Olympia are among terms that have overtaken the emerging world of digital currencies in the Google search bar so far this year.

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Roughly one third of Europeans think that digital currencies are the future of online spending, and although just 9% of Europeans say they own crypto currencies, an additional 16% say they plan to own it in the future.

“Cryptocurrency isn’t restricted to investors in the eyes of consumers, with similar proportions agreeing that digital currencies are the future of spending online and the future of investment,” says Jessica Exton, behavioural scientist at ING, “some would use digital money for everyday activities if it were more widely accepted.

So, has the general public shifted away from interest in an alternative payment method, even as the business world sees rapid adoption of the token economy and the ICO?

“The volatility of cryptocurrency carries with it both positives and negatives, on the plus side it can increase awareness but may also mean people view digital money as a relatively risky asset. If cryptocurrency stabilises there may be increased interest.”

According to an international survey

by ING, the falling cryptocurrency prices of 2018 are not indicative of longerterm trends of public interest towards digital currencies. The Cracking the Code on Cryptocurrency survey, which comes as part of the sixth annual ING International Survey Mobile Banking, suggests that cryptocurrency uptake could more than double in the future.

Mark Pascall, co-founder of Blockchainlabs New Zealand, notes that although traditionally public perception of cryptocurrencies has been centered around bitcoin and its use as an alternative currency and/or digital store of value (i.e. digital gold), what many people have yet to realise is that bitcoin proved that a decentralised system, with no company or government behind it, made up

of transparent, community driven incentive structures, can thrive.

“Unfortunately for the general public it has neither become a particularly effective currency, in that it is too volatile and very few sellers of products or services accept it, or store of value, as the price has been falling since the beginning of the year when many people bought in.

“The perception for many is that it’s main use is for people with something to hide,” he adds.

Despite growing numbers of people showing interest in owning digital currencies in the future, the prospect of owning or transacting in digital currencies is a high-stakes, high-risk game.

Nearly half of Europeans think that investing in the share market is less risky than investing in digital currencies.

Perhaps unsurprisingly, cryptocurrencies appear to have a more promising future in countries where it can be difficult or expensive to rely on the traditional financial system.

Although the underlying blockchain technology has yet to take off in a meaningful way throughout the Af-

OCTOBER 2018

rican continent, late last year the crisis in Zimbabwe exemplified how digital currencies can become a safe haven as a trading mechanism that’s uncorrelated to local political and financial upheaval.

“So, their impact on the global economy is still pretty limited and, at least from a monetary policy and financial stability perspective, central banks appear more curious than concerned about the growth of cryptocurrencies,” Jonas Goltermann, developed markets economist at ING, says. Although he adds, “the results from our survey suggest this could change, as many savers appear willing to consider crypto investments.

The volatility of cryptocurrency carries with it both positives and negatives, on the plus side “If that were to happen, we’d expect Nevertheless, in countries where the fi- policy-makers to take a more active in- it can increase awareness but nancial system is seen as efficient and terest in these instruments and how stable, people remain wary of burgeon- they affect the rest of the economy.” may also mean ing alternatives. people view Many blockchain industry insiders bedigital money Teunis Brosens, economist for global lieve a blockchain future would offer markets at ING, notes that “the Dutch, greater transparency and security than as a relatively with a very efficient and cheap domescurrent systems, and as the technology risky asset. If tic payment system, are most sceptical is further developed it will offer protec- cryptocurrency about the future of digital currencies.” tion for transactions and records from stabilises cyberattacks and human error. there may However, “over half of respondents see be increased stock market investing as at least as Already digital currencies have created risky as cryptocurrency. That is strikvast opportunities for value sharing and interest.”

While global attention focused on the volatility of Bitcoin, the greater underlying miracle of a nation turning to a transaction and trading form unrelated to its geopolitics and economics was the real story behind the headlines.

ing, given the extreme volatility observed in crypto-space.”

integrating increased stability into value exchange and transactions globally.

According to the Bank of England, cryptocurrency investments make up a small fraction of the global financial assets, much less than 1%.

“Over the last two years there has been a huge amount of investment and innovation flowing into the blockchain ecosystem,” Pascall says.

“This has gone into both building solutions on top of the existing crypto currencies like Bitcoin in order to address some of their core problems like volatility and scalability, but also to create new blockchain “protocols” that will allow a new generation of decentralised based software to be created.

“Over the next few years the Tokenisation of everything, the ability to associate a digital token with anything from an idea to a building, will have a profound effect on how our economies work and how the public perceive “money” and value transfer,” he adds.

“It will become easy for anybody to own and trade digital assets across the globe.”

The blockchain future has already had profound impacts across multiple industries, with 2018 being an iconic year for technological disruption and innovation. The current disruptive trends are just the tip of the iceberg that will gradually emerge over coming years, rewriting industries, and undoubtedly, rewriting the headlines to shift public awareness from Bitcoin towards the underlying blockchain technology and value transfer through digital tokens.

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OCTOBER 2018

Crypto in Africa

The continent of Africa is a continent of great size and diversity. There are great differences from country to country with regards to governance and income. All have, however, benefitted hugely from the rapid growth in mobile telecoms. This in turn has brought mobile banking to many on the African continent who would otherwise not have access to traditional banking services.

M-pesa, a mobile money platform, started in Africa but has subsequently spread to nations across the globe.

The pilot scheme was trialled initially in Kenya and Tanzania. It was a joint venture between Safaricom and Vodacom, the largest network operators in Kenya by ICO CROWD and Tanzania. The platform rose from relative obscurity to a point where now nearly 50% of Kenya’s GDP is carried on the platform.

Africa has built an entire banking infrastructure based solely on mobile phones, tailored for needs of Africans.

There is no need for expensive fixed line infrastructure and in many ways, Africa has been able to leapfrog the western world in the adoption of internet-based 98

innovation and apps. They even cater for the illiterate. Sadly, and also quite perplexingly the crypto revolution and blockchain has till now had little effect in Africa.

There are several reasons for this slow uptake of crypto on the African continent.

One of the main reasons for the slow uptake of crypto in Africa is due to the high arbitrage levels on the African continent. Local Bitcoin prices on the continent can trade at a 35% premium compared to the average on the major exchanges. Combine this with a lack of access to card payment facilities and it starts to become clear why crypto uptake has been slow. M-pesa has actually inhibited the take-up of credit cards.

This lags behind the rest of the world in terms of percentage of population who know about or use crypto. Also, large gaps in internet coverage and high connection costs exasperate issues.

There has been much talk of Africa becoming the next global economic front, with China investing heavily in infrastructure there. However, this has yet failed to deliver adequate internet access to the poorest in Africa.

Only an estimated 35% have access to the internet, with some countries it is as low as 1.4% (Eritrea) and other countries as high as 85% (Kenya).

Literacy rates also vary wildly across the continent although great progress has been made in the last 25 years.

The continent is slowly catching up with the rest of the world.

A documentary called “Starting from Scratch” is currently doing the rounds on YouTube and Twitter. It discusses the issue of what would happen if every penny you owned became worthless.

The short film charts life after the introduction of Kuvacash, a crypto pay-

OCTOBER 2018

ment platform in Zimbabwe a country still suffering from the effects of hyperinflation and a recent revolution.

As the country attempts to revitalize its economy crypto offers a liquid and trust less method of settlement whilst reducing the chances of government interference.

The documentary was funded partially with a grant from the Dash community and as such the currency receives a lot of attention in it. The thirteenth largest cryptocurrency is stepping up efforts in African markets aiming to become the leading cryptocurrency in countries like Ghana and Nigeria. It has also recently expanded into Togo and Benin.

Other blockchain based technologies have significant use cases that will hugely benefit society. If the continent of Africa is able to create a distributed ledger to record land titles, it will greatly increase the ability for the everyday African to utilize the value in

their real estate, providing a huge economic boost. This is a huge problem for the world's poorest countries and is in many ways symptomatic of the poor governance in these nations. There is also a long history of other nations appropriating wealth and resources from the continent. If Africa can arrange its affairs correctly using crypto they can keep a larger share of the African pie.

I visited sub Saharan Africa in 2013 (namely Senegal and the Gambia) I was shocked to find that in certain areas 4G networks were already available. The penetration was much stronger than that of traditional landlines.

This was also the case when I visited Cambodia. I noted that these poor nations had managed to leapfrog many richer nations by completely skipping the landline and ADSL step and moving straight to high speed mobile internet. If the continent of Africa can continue this trend, we may well find that the continent of Africa can leapfrog societies commercial banking stage and

move straight to the crypto paradigm.

In many African nations crypto would not even have to compete with a flawed fiat-based system.

Binance Labs Director Benjamin Rameau has gone on the record stating the Africa is at the front and centre of the company’s expansion strategy.

Binance Labs Director Benjamin Rameau has gone on the record stating the Africa is at the front and centre of the company’s expansion strategy, as it bets on a vision of the 21st century driven by the world's youngest population as they gain increased access to technology and the opportunities that come with. He has compared the continent to Asia in the 1960s.

Africa is a continent with as many opportunities as it has issues and if it can overcome them as its population doubles over the next 30+ years, we may well be looking to Africa as a model of decentralized banking. Right now, is a pivotal moment for the continent. With mass adoption of crypto in one swoop Africa may be able to solve its banking and poor governance issues in one sweeping action. Only time will tell.

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Evolving FinTech Opens All Business to Global Liquidity FinTech trends in big data, data science and machine learning have turned the industry on its head in the last two years, and now ICOs and security tokens emerging as the first blockchain killerapp - have further revolutionised the space, coaxing it out of its niche corner into the light of multiple-sector markets and the awareness of the general public.

This powerful combination could provoke a huge economic boom as illiquid shares become liquid assets that anyone, from anywhere in the world, could have access to. by ICO CROWD

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The FinTech industry has long since been at the spearhead of innovation, with the industry benefitting from significant investment capabilities and

fast speed of processing, evaluation, and adoption of disruptive technologies. But only in recent years has this once largely behind the scenes domain exploded with a boom so bright it has attracted the intrigue and interest of the world.

But the same period also gave birth to the concepts of P2P lending and crowdfunding, which laid the foundation for the emergence of the ICO and security token.

Like many other societal shifts, the eruption of FinTech innovation into the mainstream mind has come after a blend of underlying currents that have gathered momentum over the last 5-10 years, laying the foundation for unprecedented explosion of opportunities and innovation.

From 2016 onwards, these trends, combined with big data and machine learning, have accelerated time in the FinTech world into fast-forward motion.

Meanwhile, data science and Artificial Intelligence (AI) captured the imagination of the world as technological breakthrough promised to bring disruption not only to big business, but to society at large.

Automatisation, including investing in automation software to help with endless spreadsheets and emails and using different trading robots for trading and investing, were among the most prominent trends of the previous 5-10 years.

“We had a rise in payment systems, including social payments, and saw the beginning of more widespread coverage of cryptocurrencies,� notes Nodari Kolmakhidze, Chief Investment Officer at Cindicator.

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Now, three quarters of the way through 2018, its a year that has already made its mark in history as the scale and speed of FinTech innovation continues to escalate. The focus has been on developing next generation protocols to scale up blockchain capabilities, on security tokens/STOs, and on a clean-out of the ICO concept.

These trends in turn have helped to reduce market volatility.

Kolmakhidze expects to see a further rise of high-throughput blockchains and DApps that will be able to handle large volumes of transactions and clients: “We will also see huge improvements to UX in applications because most of them now are just not ready for wider adoption. Applications have become clean and simple with most of the unclear blockchain stuff working in the background.”

their mainnets - because there could be a huge demand for such platforms from industries where the time of transactions really matters - retail stores, banking, fintech, IOT etc.”

The first half of 2018, he says, “was overwhelmed with ICO projects that were focusing on building high-speed blockchains.”

This started with Credits which launched its ICO in February 2018, as a project aiming to hit 1,000,000 transactions per second (tps). Then other competing projects emerged including Matrix and Quarkchain, with ambitious aims of 100,000 tps or higher.

“I think this surge was mostly because of ETH network congestions (Cryptokitties as an example) and Bitcoin's slow transaction time that kills any possibility of Bitcoin's pure retail usage, i.e. in stores,” Kolmakhidze explains.

Next year, he believes, “we will see the rise of high-throughput blockchains when current or new projects will run

We had a rise in payment systems, including social payments, and saw the beginning of more widespread coverage of cryptocurrencies.”

An example of this, he says, is Binance, which started developing their own high-throughput blockchain to build decentralized exchanges due to existing solutions not being able to support such products.

The ICO fledgling space has already begun to see a clean-out this year, “basically we will see how non-efficient ICOs will go bankrupt because of high costs.

NODARI “We will have a cleaner market for new KOLMAKHIDZE, ICOs without obvious bad projects.

Chief Investment

Officer at Cindicator

“ICOs will have to have clearer grounds to launch and have any chance of competing in this field,” says Kolmakhidze.

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“We are expecting dozens of projects to go bankrupt or just stop all work, the cause would most likely be bad management of company's funds.

“We notice several projects with already running businesses that are ready to sell a part of their equity in the form of tokens,” says Kolmakhidze.

ticipants, clearer regulations, as well as more widespread usage of common valuation metrics can have a stabilising effect on the market.

“In order to survive, other projects will cut their spending, reduce their staff, salaries, and cut budgets for advertisement spending,” he says.

Increasing use of STOs is also expected to be spurred by that fact that it will become harder to sell utility tokens, since utility token holders receive no specific rights to dividends. Companies will likely aim to attract funding using tokens with direct financial returns in the form of dividends or buyback.

Kolmakhidze forecasts that further research and acceptance of valuation models could help to spread a more fundamentals-based view of certain crypto assets which would lead to more efficient pricing. This will help to identify over- as well as undervalued assets and drive investors accordingly.

Basically we will see how non-efficient This could have a knock-on effect of ICOs will go helping to cut the costs of launching bankrupt an ICO as exchange listing and adverbecause of high tisement prices drop along with decosts. We will creasing demand from companies.

However, Kolmakhidze warns that all these developments will depend on reg- have a cleaner The good news, says Kolmakhidze, ulations: “Some experts claim it's almarket for new is that “in the end this will lead to ready here in many countries, not speICOs without a more healthy ecosystem - overcifically in the form of tokens, but obvious bad all costs/prices will get down to norjust for usual securities like shares or projects.” mal and this may be a cause for fubonds. But it is still unclear if compature new projects to come in this field again.”

As the ICO market space undergoes a clean out, the security token and its surrounding infrastructure continues to gain momentum: new blockchain projects aim to build a platform for security DApps, with smart contracts supporting security token features like paying dividends, buybacks, and voting.

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nies may use this existing regulatory framework for securities in the form of tokens.

“We will also further develop valuation models which might help make prices more efficient.

“In contrast to traditional equity markets, the crypto markets are quite volatile and to a large degree, news driven.

The entrance of new large market par-

As innovative methods of exchange and fund-raising in the FinTech space progress they will become continually more efficient, the market less volatile, and this will further open the doors to professional market-makers and fund managers.

The knock-on effects will be felt throughout wider society as illiquid shares become liquid assets that are open to a democratic and open investment process.

“Anyone from anywhere in the world will be able to own a share in a small local company on the other side of the globe,” says Kolmakhidze, “it's pretty much a process of opening up all businesses to global liquidity.”

OCTOBER 2018

The Competitive Paradox of De/Centralised Exchanges In April this year, Adena Friedman, the Chief Executive Officer (CEO) of Nasdaq, the world’s second-largest stock exchange with a $9 trillion mar-ket cap, announced that if “people are ready for a more regulated market, for something that provides a fair experience for investors, certainly Nasdaq would consider becoming a crypto exchange, over time.”

of people that have the best interest of the platforms’ users and listed digital assets.

“The difference between those business models is not a criteria or standard to evaluate an exchange, it’s just a technical infrastructure,” he be-lieves this doesn’t mean “that one is better or worse from the other.”

“The decentralised structure is The worlds of both centralised and dethe technical charcentralised crypto exchanges are set to acteristic of blockcontinue to compete and merge in com- chain,” he adds, ing years, as the exchange busi-ness “but the perforcontinues to prove its place as the most mance of servicmature and competitive segment of the es on exchangcrypto economy. es is not dependby ant on its strucICO CROWD So, what competitive advantages does ture, but on its opthe decentralised exchange offer, and eration index: volwhat are the obstacles in the way of the ume, liquidity, decentralised model becom-ing mainsafety, user expestream as it vies for a greater share of rience and transthe market? action fees.”

“A decentralised exchange is an open platform for people to share their trading intentions, it has no controlling parties to regulate and oversee transactions,” explains Feng Bo, CoinBene Brazil CEO and Global Vice President.

“Traditional exchanges are formally organised and secured by a group

way towards creating frictionless global value transfer.

Beyond driving efficiencies, they offer potential for financial freedom for the unbanked as well as a transparent and secure system of exchange.

The hidden rules and fees of banking cartels have long since plagued us-ers of value exchanges - it’s an age-old problem that has blighted the globe for hunPeople are ready for dreds of years.

a more regulated market, for something that provides a fair experience for investors, certainly Nasdaq would consider becoming a crypto exchange, over time.

Other industry players, however, believe decentralised exchanges hold the promise of rewriting some of the existing inefficiencies created by having intermediaries control the flow of value.

Decentralised exchanges are designed to be trustless, transparent, global, and active 24/7, and could thus go a long

The 4th President of the US, James Madison, said: “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by con-trolling money and its issuance.”

Since decentralised exchanges have potential to be both transparent and secure, they could present a viable alternative and solution to the problem.

Major decentralised exchanges that have emerged on the playing field in103

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clude Idex, Bitshares, Openledgerdex and Oasisdex.

The 0x protocol aims to provide the infrastructure that will enable the exchange of Ethereum-based tokens under the ERC20 standard (and more recently ERC721), enabling users to exchange tokens directly between one another, rather than going through a centralised exchange service.

cryptocurrencies are not utility tokens, but are security tokens, and need an exchange to be listed on.”

Decentralised exchanges bring fresh ideas, possibilities, and competition to the market but they have yet to attract significant volumes of sophisti-cated investors.

History records that the money changers have Meanwhile, the Over the Counter used every (OTC) market has remained very acform of abuse, But centralised exchanges are fast catch- tive as an alternative way for instituintrigue, ing on to the technological disrup-tion, tions and HNW sophisticated invesdeceit, and and some have already begun to deliver tors to trade cryptocurrencies’ tokens. a blend of old and new models.

Some organisations are reportedly see- violent means ing trading volumes of $100 million of possible to Overstock.Com, one of the first of trades a day. maintain their many publicly listed companies globalcontrol over ly to do an Initial Coin Offering (ICO), The Goldman Sachs Group owned Cirhas announced a tie-up with the BoscleInternet Financial is one of the best- governments ton Exchange via its subsidiary tZeknown firms in this market and “anoth- by controlling ro — a crypto exchange trading securi- er sign of how institutions are embrac- money and its ty tokens. ing the new asset class that ICOs have issuance.”

CHALLENGES FACING DECENTRALISED TRADING & EXCHANGES Burgeoning decentralised exchanges are faced with having to address a number of challenges as they seek to scale up globally.

Crypto exchanges have often shied away from listing security tokens, as this could have meant the exchange itself would need to be regulated and firms issuing the tokens would also have had to comply with regulation.

But Fry says “It has been a little like the emperor who has no clothes, or the analogy that “if it looks like a duck, swims like a duck quacks like a duck…it is probably a duck”. If you are raising capital using an ICO for a company that is going to build/ create a business and turn it from an idea to some-thing tangible, then it is likely the token you create will be a security.

created,” says Fry.

“This will help tokens to comply with some of the SEC regulations and is a very positive move for tokens, as well as a healthy sign that the ICO market is maturing, says Jonny Fry, co-founder and CEO of TeamBlockchain.

“After all, many people have believed that in reality a significant majority of 104

“A regulated exchange, which can trade security tokens, could act as a possible gate keeper and offer global regulators some comfort, but only if the exchanges allow clients to use the exchange, provided they have completed appropriate KYC and AML checks,” he says.

JAMES MADISON, The 4th President of the US

“Although it is ironic that once the ICO has raised capital to build software or some type of organisation, many will need a way to access/power the organisation i.e. a utility token.

“So, there is a body of evidence to argue that many tokens initially need to be treated, listed and traded as a security

OCTOBER 2018

token, and then potentially will become a utility token.”

posure to different cryptocurrencies, and although there are hedge funds and other specialist vehicles being created, these are So, decentralised exchanges will need to typically not available to the public. comply with security regulations such as the U.S.’ SEC or the UK’s FCA, “as It’s currently not possible to offer a regyou could find yourself carry-ing out an ulated mutual fund/OEIC/Unit Trust Initial Public Offering (IPO) and being to the public, as these vehicles need like Apple, Google, BP or Facebook, a to have the majority of their assets publicly listed security,” says Fry. in-vested in recognised securities.

A further challenge is how to make the whole user experience of buying tokens more user friendly, without the need to have private keys and hot and cold wallets?

The industry also needs to address issues of custody: who and how can a third party hold digital assets? Fry says this is vital for crypto funds to be able to evolve.

These recognised securities need to be traded on recognised, or regulat-ed, exchanges which ideally are able to provide fair prices, liquidity and the ability to buy and sell these securities, so the asset managers can value the funds they are managing.

ADVANTAGES OF A DECENTRALISED MODEL While regulations have been created to “While the technology of blockchain protect investors, in reality there are that powers many tokens was de-signed many securities/equities, particularly to decentralise the economy, the abiliquoted smaller companies, that have a ty to have an organisation to look after listing with very little daily liquidity. your tokens that can be trusted is still appealing for many. A fund offers in“Arguably they offer little comfort that vestors the ability to have a true spread the price which is quoted, is the price of managed or index track-ing crypto that can be traded at,” explains Fry. exposure,” he explains.

Many cryptocurrencies, however, boast a much higher daily turnover of people Circle Internet Financial has made atbuying and selling than many publicly tempts to offer investors a spread of exlisted companies.

After all, many people have believed that in reality a significant majority of cryptocurrencies are not utility tokens, but are security tokens, and need an exchange to be listed on.”

In addition, while securities are usually listed on one stock exchange, cryp-tocurrencies are often traded on multiple exchanges globally. Even for the most valuable companies by market capitalisation, such as Amazon, Apple, ExxonMobile, and Microsoft, which may be listed across NewYork, Tokyo and London, trading is limited by the stock exchanges closing every Friday evening in New York, before the stock market opens again Monday morning in Tokyo.

“Contrast this with crypto exchanges, where you have the ability to trade 24/7, and often by using several different exchanges that are located across the world,” says Fry, “so tZero’s announcement with the Boston Stock Exchange is a significant step forward.

“It potentially will allow cryptocurrencies to be traded on a regulated ex-change, which in time may be recognised,” he says, and so “allow institu-tions who are currently managing over $80 trillion according to Goldman Sachs and heading to $100 trillion, to start moving some of this capital into cryptocurrencies.

“What impact will this have on the crypto market and ICOs as more institutions embrace this new asset class?”

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The $495 billion Global Accounting Industry’s Disruptive Holy Grail What’s the first thing that comes to mind when you think about accounting? Papers, taxes, records, files - a range of important but boring and often tedious processes and procedures. For many business owners, keeping careful track of expenditures and income is a painstaking part of business management.

“To place their estimate in context, if the 5% loss estimate were applied to the 2017 estimated Gross World Product of USD 79.6 trillion, it would result in a projected total global fraud loss of nearly USD 4 trillion.”

But this is all set to change. What if you could automate the audit and financial reporting procedures? How would this change the ways, the speed, and the accuracy of your assurance and disclosure?

And how would that change the world?

cial statements in real time, contemporaneous audit opinions, and reports and related analyses for stakeholders to be produced continuously for the first time. This holds the potential to eventually make traditional reporting methods obsolete.

It also aims to reduce the risks and re-establish the audit trail in today's electronic environment.

In a survey conducted by the Auditing Standards Board, the second greatest The path to 360-degree disruption of source of emerging audit or attestation organisations’ accounting procedures risk identified by respondents was relathas already been paved. The trail now ed to auditing in an electronic environbeing blazed by pioneers is preparing to ment, where all the entity’s transactions fly the flag of discovery until these new are electronic and there is no paper trail. realms of expertise gradually convert streams of innovation into a pounding However, the groundbreaking Auhighway of the mainstream world. ditchain technology not only proposes new standards of transparency, As a world-first, Auditchain is develdata standardisation and accountabilioping a Decentralized Continuous Auty for financial reporting, but also imIn its 2018 Global Study on Occupadit & Reporting Protocol Ecosystem: proved security, substantially increased tional Fraud and Abuse, The Associonce launched, it proposes to automate risk controls and greater assurance for ation of Certified Fraud Examiners, (ACFE) asked “survey participants what the external audit process, cut down on stakeholders. fraud, and present real-time accounts percentage of revenues they believe a So how did all of this come about? And typical organization loses to fraud each reporting. what was it that drove the Auditchain year. The median response provided by The blockchain-based technology platpioneers off of the supposed ease of the these CFEs is that organizations lose form will enable streaming of finanbeaten path?

5% of their annual revenues to fraud.

Worse yet, it’s a domain that easily falls privy to fraud: According to Accountingweb, a 2015 Cornerstone Research report shows that “accounting fraud cases, either alleged in securities class-action lawsuits or in enforcement cases brought by the US Securities and by ICO CROWD Exchange Commission (SEC), increased sharply over the past year, due in part to the agency's heightened focus on accounting-related fraud.”

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“Bewildered, frustrated and in despair, I resorted to curating a parody of the regulatory establishment in the form of a giant 50-piece art exhibit of the board game Operation and called it Corporation.

Jason Meyers, Auditchain Founder For Auditchain founder, Jason Meyers, the phrase ‘necessity is the mother of invention’ has never rung truer.

The answer to how he discovered blockchain and its use case within the accounting industry?

“Through beating my head on the desk for 30 years wondering how the hell such systemic problems can persist in such an innovative world,” he says.

“It wasn’t fun nor was it funny. I was an investment banker for almost 30 years.

I had a war over an accounting with a rapacious regulator who drained every penny I had until I could not afford to fight anymore I was then forced to sign the worst agreement I ever signed.

During the exhibit, I had my Ah-ha moment when I realized what blockchain could do to reduce regulatory conflict and disrupt accounting, audit and reporting.

“It featured a contrast between the centralized banking and regulatory system and the decentralized monetary system that is Bitcoin. I showed it in New York City. It got rave reviews.

“I held panel talks on blockchain during the second show and attracted some of the biggest celebrities in the space.

“The panel talks and the art exhibit put me in the middle of the blockchain establishment. During the exhibJASON MEYERS, it, I had my Ah-ha moment when I realAuditchain ized what blockchain could do to reduce Founder regulatory conflict and disrupt accounting, audit and reporting. It was actually the best use case for a blockchain while everyone else was indulging the craziest time for ICOs. “I began writing a paper titled Decentralized Continuous Audit & Reporting Protocol. I paced around the kitchen for almost 6 months. I wrote a paragraph; paced around the kitchen; lather, rinse, repeat.

“I finally approached Rutgers University’s Continuous Audit Lab and sent an email off to the head of the Lab for a sanity check to see if I was crazy.

“They were very impressed and invited us to present at the 40th World Continuous Audit and Reporting Symposium at Rutgers in Newark, NJ. I told them I wasn’t a CPA or an auditor, that I was a 10th grade dropout. They laughed and were not surprised.

“We presented at 40WCARS; a two day event. I didn’t plan to go the 2nd day but somehow, I ended up there. That’s where I met Eric Cohen who presented that day on audit and audit data standardization. Eric co-created xBRL which is a standard business mark-up language used in most regulatory jurisdictions around the world, including HMRC and the SEC,” says Meyers.

“I asked him on the spot to join us and he did! I then met Dr. Stuart Haber who, with Scott Stornetta, invented the data structure now known as blockchain in 1991. They are cited in references 3, 4 and 5 of the original Satoshi Whitepaper.”

Dr. Stuart Haber says: “Assuring the integrity of business records was the intention of my early work with Scott Stornetta back in 1990.” To him, bringing blockchain to the accounting industry; “Represents the completion of the original vision we had during that early work.”

So, with an all-star team and a blockchain-driven plan to create permanent and global disruption within the au107

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dit profession, Meyers has laid a solid foundation to exacting his vision of change.

Auditchain is deploying a decentralized continuous audit and reporting protocol ecosystem using a public blockchain and a block explorer that renders streaming financial statements under continuous audit.

tracts as well as through subscriptions from enterprise data consumers.

Meyers says expansion plans involve its affiliate, the DCARPETM Alliance, which is a coalition of members of the entire accounting, audit and financial reporting supply chain.

Consumers will use AUDT Tokens for subscriptions for access to more granular detail that comprises Streaming Financial Statements, audit analytics as well as sector-based analytics and macro-economic reporting.

Bewildered, frustrated and in despair, I reEnterprises can contribute compusorted to curatIt will enable the automation of the ex- tational power back to the network, ing a parody of ternal audit function by enabling enwhich can substantially reduce net asthe regulatory terprises to raise the level of audit evisurance and reporting compliance establishment dence using a blockchain. costs. in the form of a This offers solutions to some of the Auditchain is holding a private sale for giant 50-piece worst nightmares in the global capital early adopters to buy AUDT tokens for art exhibit of markets, reducing problems including future staking and usage. The company the board game accounting conditionality, manipulative will also be conducting a Token Generpractices, earnings subjectivity and the ation Event which comes with a unique Operation and possibility of fraud.

Airdrop designed to additionally reward called it Corpoearly, long-term adopters who hold ration.”

“We are also enabling auditors to be more independent and less subjective,” says Meyers.

The Auditchain economy will be powered by the AUDT Token. Auditors will be paid AUDT rewards for providing standardized levels of assurance. Premium levels of assurance will be requested and paid by enterprise users through a library of engagement con108

AUDT Tokens.

250,000,000 AUDT will initially be launched on the Ethereum network and Auditchain plans to Airdrop up to a total of 42,685,996 additional AUDT after the Token Generation Event. The Airdrop will reward those that hold AUDT and do not move or sell them - it’s being referred to as a Proof of HODL Airdrop.

JASON MEYERS, Auditchain Founder

The potential for Auditchain’s market growth spans a $495 billion per year business - the entire accounting and audit supply chain: “Our goal is to convince every public auditor to join the network and earn AUDT by providing external validation of enterprise data sets in the same way that external validators validate a Bitcoin or ETH transaction,” explains Meyers.

So, what began as one of life’s worst trials has turned into a stepping stone and the bedrock of Meyers quest for the Holy Grail of innovation and global transformation of the assurance industry.

“It has since been an incredible journey in an ever-widening circle of goodwill that wakes me up every morning, if I sleep,” he says.

“I am no longer angry at regulators nor am I resentful at the status quo. I gleefully wake every morning to bring my Ah-ha experience to reality.”

OCTOBER 2018

Smart States and Cities Governments across the globe are experimenting with the concept of smart cities. Smart cities make use of big data and the internet of things to manage everything from waste collection, electricity production, public transport to the policing of our cities. Currently these systems are being tested in Dubai and some cities in the US and China.

goes well beyond mere cryptocurren- ways it is a sci-fi fans dream. Dubai is cy and payment services. It is likely not resting on its laurels and there are fleets of unmanned cars will commu- active moves being made by the authornicate with trains ities of the UAE to and airspace conturn the city into trollers. Let's a blockchain meglook at where the apolis by 2020.

“The Internet, cloud most progressive computing, large data, cities technologDubai's position artificial intelligence, ically, have got as holding the on their journey smart city crown machine learning, into the realms of is part in thanks blockchain… will drive blockchain based to the governthe evolution of smart cities. ment supported One estimate by McKinsey analysts (a Smart City proglobal management consulting firm) everything — digital, UNITED ARAB gram. The prosuggests that by 2020 the number of network and intelligent EMIRATES gram launched smart cities will exceed 600 globally. services will be Dubai is one of in 2014 involves That by 2025 60% of the world's GDP the implementawill be generated by them. Digital tech- the most technoeverywhere.” logically advanced tion of more than nologies will drive the engines of ecoby cities in the world.

545 projects deICO CROWD nomic progress and blockchain is likely to be at the heart of interconnecting Having risen from relative obscurity in signed to change the way both resithe 1960s (when oil was discovered). To dents and tourists alike live and inthese currently disparate systems. an urban metropolis with the world's teract with the city. The local authortallest building, it has conducted trials ities are attempting to streamline the The smart cities of tomorrow are alwith unmanned flying taxis, automatmanagement of the city using techready starting to be built and blocked trains and driverless cars. In many nology. They aim to be completely pachain technologies role in the future 109

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perless, making all documents in circulation electronic.

They are developing a system to track, ship and deliver imported and exported goods via blockchain. They intend to create a single, secure and transparent platform. It is hoped that the implementation of this system will save over $1.5 billion US dollars.

fline after a particularly powerful DDoS attack. They decided to implement a series of distributed ledgers even before Satoshi Nakamoto had produced his world changing white paper.

China's downer on cryptocurrency does not extend to blockchain. They are actively embracing the technology. Their five-year plan for National Informatization in December 2016 stated:

Estonia now uses them in their national health, judicial, commercial, legislative and security systems.

“The Internet, cloud computing, large data, artificial intelligence, machine learning, blockchain… will drive the evolution of everything — digital, network and intelligent services will be everywhere.”

Blockchain solutions are also going to be apCHINA plied in logisBlockchain solutions are also going to China is planning to create or convert tics and storbe applied in logistics and storage. They 1000 smart cities. In January 2013 the age. They plan plan to have an entire network of unMinistry of Housing and Urban Rural to have an entire manned trucks for the transport or Development formally announced the production of materials. list of cities to be involved in smart city network of unpilot schemes. manned trucks ESTONIA for the transport Estonia was one of the first countries Yinchuan is the first city on this list. or production of to implement blockchain based govern- They have already abandoned traditionmaterials. ment solutions. This was as a direct re- al payment systems. Rather than havsult of a 2007 cyber-attack where at one point almost all of the states government services and websites went of110

ing tickets, passes etc it is enough to merely show your face to get access to a range of public services.

The Chinese Ministry of Industry and Information Technology has revealed that a Chinese national stand plan for blockchain has been decided and is known to include standards on data security, business and application standards with consideration of credibility and interoperability standards.

It is expected that each government office will be a node in the national

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blockchain. Each verifying and validating each other’s data. It is not yet known when the project will move forward to the implementations stage.

West Virginia is also launching a blockchain based voting system in their regional elections.

THE USA Delaware announced the Delaware Blockchain Initiative in 2016. It is intended to implement blockchain and smart contract technologies in both the private and public sector. They have recognised information stored in blockchain as verifiable data. However, since a change in administration the new governor has shown more caution than the previous.

In Australia authorities have provided $8 milOTHER COUNTRIES RWE a German energy company is lion US dollars working on an Ethereum based sysfor a blockchain tem of charging stations for electric veproject designed hicles. They intend to let drivers conto make smart trol the charging process using a speThe benefits to mankind will be huge utilities. cial application. A blockchain regisand it is quite possible that we will see

Illinois has announced their own blockchain initiative which is intended to transform the delivery of public and private services and redefine the relationship between government and citizen.

New York is developing its own microgrid project to allow households to buy and sell electricity produced by solar panels.

ter will be used to calculate the energy spent, make payments and identify users. There is talk of taking advantage of charging on the fly - where a car can be charged whilst travelling.

chain project designed to make smart utilities.

LOOKING TO THE FUTURE Big cities never stop, they are almost like living beings, they need food, they produce waste and they grow or shrink over time. As the internet of things combines with artificial intelligence and blockchain make their mark on our urban infrastructure cities as we know them are likely to change beyond recognition.

cities grow to never before seen sizes of 100 million residents plus. All working together in harmony. With an end to pollution, traffic jams and seamless interaction between all public services and private businesses.

In Australia authorities have provided $8 million US dollars for a block111

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Reinventing Ethereum Ethereum is more than a currency.

At the centre of it lies a super virtual computer. Its power is distributed across tens of thousands of nodes which work cooperatively to create the platform. The Ethereum Virtual Machine is responsible for the execution of the functions of multiple tokens, DApps and DAOs its blockchain is comprised of.

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This part of the Ethereum infrastructure is preparing for a complete rewrite. There are plans to replace the EVM with a new virtual machine known as eWASM. eWASM is Ethereum’s implementation of WASM or WebAssemby code. It was created by the Word Wide Web consortium, who are a team of developers responsible for maintaining web standards.

The ethereum switch will occur in parallel with a few other updates currently known as “Shasper”. These changes will include a scaling, sharding and mining rewrite known as “Casper”. Exact timelines are yet to be decided but rapid progress is being made and a testnet implementation of the rewrite at Devcon 4 in Prague in October.

eWASM will allow developers to produce code using a multitude of programming languages, not just Solidity, Its engine on which Ethereum operates the Ethereum specific language. There speaks a language called EVM bytecode. are a range of proposed performance EVM bytecode is a series of raw 256 bit enhancements as well. strings of information that can contain Ethereum will join several of its comany conceivable algorithm or function petitors such as EOS, Tron and Cardano providing it remains within the platin deploying project specific virtual maforms self-imposed limitations, this is by chines to handle WASM code.

ICO CROWD regulated through “gas”.

These changes are intended to transition Ethereum from a clunky homebrew custom build job to a truly powerful, scalable, enterprise level solution.

Whilst the EVM is an amazingly innovative technology its solution to attack resistance decentralized computation is not as clean as it could be.

Currently DApps programmed using Solidarity are automatically com-

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piled into an EVM bytecode compatible form. EVM relies on large and wide instructions. Even the smallest computational instructions need to be converted into 256-bit strings, often making even the smallest computational tasks bulkier than they need to be. This can create issues when attempting to make products that are broadly usable, although they are technically correct. The EVM is optimized for technical purity and not for practical use. It is at its core internally consistent but the EVM has not been built with real world implementations in mind.

fork. With eWASM operations can be written as smart contracts removing the need for a hard fork.

Not everyone is happy with the concept of the eWASM upgrade. Greg Colvin is an Ethereum core developer.

He has been actively involved in the maintenance of the EVM and is reluctant to see it deprecated.

Maybe you have quadratic sharding over here, and Plasma over Colvin had been working on a new here, and mayand improved version of EVM named be they overEVM 1.5. The Ethereum Foundation lap in places, cut his funding without warning beand maybe we fore he was able to complete his improvements. have a DfiniWASM code is designed with proty chain talking duction in mind. The code it runs Colvin’s opposition is not just a matter to an ethereum is more in tune with the hardware of personal pride. He has claimed that used, mimicking actual hardware in- there are technical issues with the eW- chain talking to structions. As a result, less computa- ASM as well. It isn’t the panacea that bitcoin through tional power is used translating difit is being marketed as. He believes Cosmos and Polferent coding logic and potentially eWASMs multiple language support kadot� providing exciting performance enhancements.

eWASM will allow Ethereum developers to use the programming language they are most comfortable with, or the one that is most appropriate for a specific application. eWASM will also remove the need for a precompile. As the code is precompiled certain operations need to be built into the fabric of the system otherwise the gas cost of executing such operations would make many projects non-viable. Implementing new functionality on a network wide level is a risky and complex thing to do, it would probably result in a hard

means an increasing reliance on compilers. This could create a single point of failure attack vector for a potential attacker.

He also remains sceptical of eWASMs smart contracts replacing the need for precompiles. Whose solution will win out in the long term remains to be seen. There is a recurring theme in software developments where the more inefficient tech often wins the adoption race.

This uncertainty creates a quandary for developers. Should they be building applications for eWASM or for EVM? Should you support both - or

LANE RETTIG Independent Ethereum core developer and member of the eWASM team

should you look somewhere else completely to support your product? This unfortunately is a natural part of contributing to an open-source project with no central leadership. The hive mind of Ethereum developers is both a strength and a weakness of the project.

There is no one single vision of what Ethereum is, there can be no one roadmap. Developments occur organically and in an evolutionary fashion.

Ethereum will probably hard fork several times as people's ideas differ. It may well be better for all if there is no one chain to rule them all. eWASM has been built in a language that has been standardized for the web. Adding in browser support for an Ethereum light client would be an easy addition. These blockchains could continue to interoperate, possibly in unique and unconsidered ways.

Lane Rettig is an independent Ethereum core developer and a member of the eWASM team. He has been quoted as saying: "Maybe you have quadratic sharding over here, and Plasma over here, and maybe they overlap in places, and maybe we have a Dfinity chain talking to an ethereum chain talking to bitcoin through Cosmos and Polkadot," Rettig said, suggesting: "We just don't know, so don't get so caught up in the official canonical roadmap, whatever that may be."

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OCTOBER 2018

Crypto Friendly Browsers Opera is launching a special edition of its web browser with a crypto wallet built in.

The integrated wallet was first announced back in August this year but is now open for beta testers using the Opera for Android browser. There is also a special “Labs” version of their desktop browser with the same functionality. Users wishing to participate in the beta phase will be required to have a Gmail account.

Their recent blog post states: “In order to create a good, future-proof Web 3.0 browser, one must start with a great browser, and this is exactly what we’ve done. We took Opera, a full-featured, standards-compliant and Chromium-based browser and inby ICO CROWD tegrated crypto wallet functionality into it. This is only possible thanks to Opera’s long experience in making browsers for all kinds of devices and platforms.

Existing Dapp browsers have to, instead, rely on a default WebView system component for their browsing 114

functionality, which has many technical limitations and drawbacks and makes them less user-friendly.

Users can now use Opera to access these emerging Dapps. We’ve decided to support Ethereum, as it has the largest community of developers building Dapps and has gathered a lot of momentum behind it. Opera with Crypto Wallet supports the Ethereum Web3 API, making interacting with these Dapps seamless to the user.

We plan on extending our wallet to support more cryptocurrencies and networks in the future.”

The browser will allow users to authenticate Web 3.0 and DApp transactions made on their computer using their Android Phone. It interoperates with the mobile crypto wallet they released as

part of the Opera for Android beta app in July this year.

Opera is emphasising that its users are not going to be required to set up a new wallet and can still store their wallets private keys on the hardware of their phone.

Their combined mobile and desktop wallet offering works with the phones lock system and can secure transactions using fingerprint confirmations for token transfers and App interactions.

Operas browsers have included anti-crpytojacking software since January this year and Firefox announced it will be following suit in August.

Brave is a new web browser created by Mozilla co-founder Brendan Eich. He co-founded the Mozilla project, the Mozilla Foundation and the Mozilla

OCTOBER 2018

Corporation, and served as the Mozilla Corporation's chief technical officer and briefly its chief executive officer. He is now the CEO of Brave Software and has funded the new browser through an ICO. According to reports it is rapidly carving itself out significant market share as shortly after its launch it achieved 4 million active users and over 10 million downloads.

Brave software has stated that it is their intention that the Brave browser “resets the web”. It will automatically block advertisements and give the users the option to opt in to unobtrusive ads that are native to the users browser and do not track them as they scour the web. The company claims they will provide publishers and content creators with a greater share of advertising revenue than they currently receive from Google.

may have blocked their advertisements with Brave. All this works while keeping your browsing history private. Your funds are transferred to the site owner through an anonymous ledger system, which makes it impossible for you ever to be identified based on the sites you visit and support.

Having installed Brave it appears that participating sites are already lined up to receive these monthly payments……

The facility to earn BAT tokens from viewing adverts is still in trial.

BAT’s are ERC-20 tokens issued as a result of the Brave ICO.

Brave has already announced a partnership with Civic a blockchain identity start-up that allows verified publishes to accept their monthly share of BAT payments to an external Payments are scheduled to be made to Ethereum wallet rather than the one both users for viewing adverts and sites provided by the browser. This will althat participate in the Brave Payments low publishers to use Civic’s secure scheme. Brave Payments allow publish- and private KYC service to authorise ers to stay in business even though you payments to their new wallet. Coin-

base has also suggested it will allow trading in BAT tokens soon.

Users can now use Opera to access these emerging Dapps. We’ve decided to support Ethereum, as it has the largest community of developers building Dapps and has gathered a lot of momentum behind it. Opera with Crypto Wallet supports the Ethereum Web3 API, making interacting with these Dapps seamless to the user.

Since Braves $36 million US dollar ICO last year, not only has Brave seen significant subscriber growth but it has received rave reviews from professional reviewers and publishers alike.

Brave is built using Chromium, an open source project that serves as the bases of the Chrome browser providing a fundamentally similar experience to browsing with Chrome. In addition to strong security. It has all the standard features you would expect from a browser such as password management, incognito browsing, bookmarks etc.

Brave, whilst a new entrant to the browser arena, has come out fighting.

It is reported that Brave has recently filed two complaints against Google alleging that they are in violation of Europe’s General Data Protection Regulation. They have also chosen not to use Google as their default search engine in France and Germany, replacing it with Quant a privacy focused search tool.

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OCTOBER 2018

Crypto Asset Stripping

In the world of stocks and shares when the price of a share is less than the value of all its assets it is often considered ripe for a process known as asset stripping. Asset stripping is the process of dismantling part of or all of a company's assets and selling them off to realise their value.

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It is a morally and financially questionable process that has throughout the history of corporations been at the heart of many scandals.

A company does not need to be failing for someone to profit by its failby ICO CROWD ure. Some people and institutions make a business out of the failure of others.

Sometimes referred to as vulture capitalism this process often leaves many out of work. This process if done correctly is not illegal. Society has asked time and time again, when does the process of making a profit become plunder?

Let's look at what happens (and what should happen) in the world of crypto when the value of your assets is greater than the value of your proposed project.

Imagine you come up with an idea, wrote your white paper and have started your ICO funding round. Further to that, imagine after several rounds of funding, financial and tech experts assessed your company’s books and determined that your final product is not even worth the cost of making it.

The current crypto bear market has meant several blockchain based com-

OCTOBER 2018

asset in all the above listed examples are themselves highly volatile. Ethereum, at the time of writing is currently languishing in the doldrums. Any potential asset stripper could soon find that their ICO tokens exceeded the value of the ICOs ETH holdings, making the process not just a gamble on the ICO token but on the ether prices as well.

It is not a great look for the ICO or the crypto market in general when a startup fails straight off the cuff. However, this is not a debt that necessarily needs to be paid back and many investors in crypto are well aware of how volatile the market is. Depending on how deep the ICOs pockets are and how far their proposition is from launch play a big part in whether these metrics indicate a token is heading to the cryptocurrency graveyard.

Those companies that organised their funding before the last quarter of 2017 are generally sitting on massive reserves.

The development teams are sitting on enough crypto to keep them running for years to come, allowing them to develop and refine their product without too much fear of imploding.

panies find themselves in this position.

Start-ups have found the value of all of their tokens (or market cap) to be in some circumstances worth significantly lower than the value of the ETH that they are sitting on.

The twelve ICOs mentioned above have a lower market valuation than their wallets, although it should be noted that Musiconomi’s wallet was frozen by the Parity bug. The Parity bug was discovered by a user of the Ethereum wallet that allowed him to convert a contract governing multi-signature wallets into a standard wallet address. After converting the contract, he was able to make himself the owner. He then killed the contract immediately all related wallets were rendered unusable. Musiconomi appears to be limping along despite their significant loss of ETH.

The other 11 ICOs tell a slightly different story.

If these ICOs were regular stocks or clearly equity tokens, crypto vulture capitalists would be swooping overhead. Ready to make a killing. They would seek to purchase enough voting rights to force the ICO into liquidation.

If these ICOs were regular stocks or clearly This type of practice breaks down in the equity tokens, world of crypto for two main reasons. crypto vulture Unlike stocks and shares, most crypto capitalists tokens do not give voting rights or conwould be fer a share of the company nor its profits. This is only the case if the tokens are swooping explicitly security tokens, even in this overhead. case the laws regarding what defines a Ready to make security are still in their infancy and difa killing. fer wildly between different national jurisdictions. Secondly there are inherent risks in attempting to buy a controlling investment over time. The underlying

Profitability in the tech sector has more and more seen itself as a secondary consideration to gaining market share and developing that killer product. Notable examples of profit taking a long time are AirBnb which although starting in 2009 did not make a profit until 2016. Tesla is another example, having its first profitable quarter in 2013, a full 10 years after its founding. Uber has yet to make a profit. Amazon, with its $1 trillion market cap spent many years unprofitable and CEO Jeff Bezos has long maintained that investing in future growth is more important than hitting quarterly earnings targets, much to Wall Street’s annoyance.

It is quite a stretch to compare Gnosis and Mysterium with Amazon. Quite simply, nine out of ten start-ups fail.

This seems to ring true in the world of ICOs too. These start-ups that have sizeable budgets are in a strong position to whether any short term corrections in the world of crypto. Although their activities may be severely curtailed by a prolonged ETH bear market.

It is not the ICOs which are undervalued relative to your ETH holdings that should concern you too much. It is those whose cupboards are already bare. If the underlying idea is good and the ICO has the resources to achieve their stated goals. Rather than finding that metric concerning, you might find that the ICO sitting on their ETH represents a good buy.

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OCTOBER 2018

Crypto and Honest Lending

Crypto has already demonstrated its ability to solve multiple liquidity issues when it comes to financial processes. How much more will this disruptive technology change the financial services industry?

And could crypto save the world from another financial crisis?

In 2008 we witnessed the catastrophic failure of the global banking system. To this day society, governments and banks alike are still feeling the effects of this crisis but apart from some slightly increased affordability checks and increased money laundering reguby ICO CROWD lations on a fundamental level, very little has actually changed with regards to the way we do business. Are we on the verge of sleepwalking into another crisis? Would another debt crisis spark the end for fiat money? Let's investigate what is wrong with the world of lending.

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UNDERSTANDING FRACTIONAL RESERVE BANKING Banks are required by law to keep a varying percentage of cash given to them by depositors available for instant withdrawal. Most banks are required to keep around 10% on deposit. Meaning a bank with deposits of $100 million could lend out $90 million in reserve. This essentially creates new money in the economy.

When attempting to estimate the impact of the reserve requirement on the economy analysts tend to use an equation referred to as the “multiplier equation�.

Whilst this equation is handy for economics teachers, it does not truly reflect how money is actually created. Policymakers generally consider this equation an oversimplification of fractional reserve lending effects.

RESTORING NON-FRACTION RESERVE LENDING & HONEST LENDING Crypto currencies do not lend themselves well to the idea of fractional reserve lending. Whilst such a scenario is theoretically possible with a cryptocurrency, the crypto would not have Total economic impact = deposit * (1 / as great a value proposition as its confraction reserve requirement percentage) temporaries who had provable digital scarcity, thus making it a poor choice to To look at it another way, a deposit of lend with. Every time a new loan was $100 million creates $90 million of new created it would inflate the money supmoney which can be deposited to creply and potentially devalue means of ate a further $81 million and so on and exchange. Such a currency would also so forth. At 10% reserve requirements require a degree of centralization or $100 million of new deposits creates $1 some very complex method of approvbillion of new economic activity. ing inflation through smart contracts.

OCTOBER 2018

No major economist or government has suggested undoing the fractional reserve banking system as it would significantly reduce the amount of power banking institutions hold over us and banks that do not participate in the fractional reserve banking find it hard to compete with those that do. By taking advantage of the ability to lend 10 times what you hold in reserve you essentially create a two-tier economy where major institutions have undiluted money which they then water down to issue to the borrower. This system ensures the hegemony of our banks.

There are now the rumblings of full reserve banking starting to break through into the mainstream and it is rumoured that Tethers primary reserve bank is Noble Bank International ( at the time of writing Noble Bank International seems to be in hot water: https://www.bloomberg.com/news/articles/2018-10-02/puerto-rico-s-cryptocurrency-bank-noble-is-said-to-seeksale ) although this is not known for sure as Tethers creators are notoriously secretive in the nature of their cryptos inner workings.

Whilst Bitcoin remains a relatively niche part of the financial industry, there is talk of Bitcoin and Wall Street becoming increasingly intertwined. The need for crypto-collateralized lending for both individuals and corporations is already being demonstrated.

Whilst Bitcoin remains a relatively Bitcoin is the most well-established cryptocurrency and it has shown itself niche part of to have increased stability at the $6000 the financial level and if it can maintain this minindustry, there imum price ongoing there could be a is talk of Bitcoin strong use case for collateralized lending backed by crypto. Even though Bit- and Wall Street coin is volatile and capable of protract- becoming ed downturns, collateralized loans increasingly would offer security against bear marintertwined. kets. If a client’s crypto collateral needs to be liquidated by falling prices, the fiat cash is still leverageable. Bitcoins inherent deflationary tendencies should offer banks some protection against falling prices over the medium to long term.

Consumers can take advantage of small-scale collateralized lending thanks to the cryptocurrency markets.

A start up called InLock is making collateralized fiat loans backed by cryptocurrency. The two parties agree terms including interest to be paid, the loan term and the collateral crypto is locked up in a smart contract. In the event the borrower does not meet his commitments or the spot price of the crypto falls below a pre-agreed limit the crypto currency can be sold to settle the outstanding debt.

Systems such as this provide interesting opportunities for both investors and crypto miners. Access to such liquidity without having to sell at the bottom of a bear market could create opportunities for miners. There are several advantages.

Firstly, there is no need for credit checks which can be time consuming and you may find you do not meet the requirements of a loan. Secondly, the selling of crypto creates a taxable event for mining operations, accruing debt does not.

Thirdly the miner gets his crypto back on repayment of the loan, hopefully with accrued gains. In the event the collateral has gone down even further it should be noted that the crypto would probably have been sold anyway.

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OCTOBER 2018

Energy Traders and Banks New Blockchain Platforms Energy giant’s, energy traders and banks are uniting to revolutionise a centuries old trade-finance industry with the launch of two blockchain based trade platforms. The aim is to provide a faster, cheaper and more secure way of completing trades. This new platform will shake up the way we trade everything from oil to wheat.

ers BP Plc and Total SA. It is not known if they will use the platform or will develop a competing platform.

Through the digitization of a large number of contracts, letters of credit, invoices and the other related paperwork (currently relayed around the world by email, fax and post) and placing them on a platform operating on the Ethereum blockchain network, they envision a seamless, faster, cheaper Energy giants such as ABN AMRO, BNP and more secure method of completing trades and settling transactions.

Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, The platform will be run by a venture called komgo SA, based in GeneNatixis, Rabobank, Royal Dutch Shell, va, Switzerland, and it plans to go live SGS and Societe Generale are among later this year. The platform will be dethe corporations backing the two new by veloped in partnership with blockchain blockchain based platforms.

ICO CROWD technology company ConsenSys. Conspicuous by their absence are the top three independent oil traders -- Vi- “Blockchain technology will answer the needs of key participants in commoditol Group, Glencore Plc and Trafigura ty trading by improving efficiency and Group -- as well as oil majors and trad-

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security,” said Souleima Baddi, chief executive of Komgo. “The launch of komgo SA highlights a shared vision for industry innovation and underlines the ongoing commitment among members to build a truly open and more efficient network within commodity trading” Komgo will provide the financing via blockchain for all commodities and can scale itself up to new and emerging commodities. It will do this by digitising the lenders’ customer identification documents as well as electronic letters of credit.

Komgo will launch in November alongside VAKT. VAKT is the second platform designed to focus on the raw material transaction. It will assist in putting the information and paperwork together to make it possible for a deal to be processed on the platform.

The two companies “will explore syner-

OCTOBER 2018

gies between both platforms,” Komgo said in the statement.

Komgo expects to launch two products before the end of the year: a “know your client” database and a digital letter of credit facility.

The platforms have seven common shareholders and will cooperate so that their users can complete a transaction on both the physical material side and manage the deals financing.

Due to the immutable nature of blockchain technology all encrypted digital information can be stored in a secure, linear, chronological order. It can be shared with permission allowing all parties involved in a trade to collaborate. Once records are created they cannot be revised as blockchain is an append only database and any attempted changes are visible to all parties involved.

Given the size of the parent organisations the new system is well placed to replace the work practices of a centuries old sector. One that has been slow to adapt to the modern digital world.

Until now the entire process has been reliant on the exchange of physical documents. This is an inefficient and costly process with the inherent risk of fraud.

Banks, commodity traders and associated lenders have been trialling completing deals with blockchain for some time now. The technology has been used to digitize and process paperwork.

One such trial discovered that document processing times could be cut to 20% of the average, whilst another oil based trade trial led to cost savings of up to 30% according to the participating banks.

There has also been some progress in using blockchain to track the provenance of produce. Cargill, a commodities group is operating its pilot scheme to track the movement of turkeys. Danish shipping group AP Moller-Maersk is using blockchain to facilitate some of its marine insurance contracts.

Some of Europe’s largest banks such as HSBC and Deutsche Bank are experimenting with blockchain technology in cross-border trade finance.

“Blockchain technology will answer the needs of key participants in commodity trading by improving efficiency and security” SOULEIMA BADDI, Chief Executive of Komgo

Komgo and VAKT have been implemented as a result of earlier successful trials. Mercuria, the Geneva-based energy trader, and banks ING and SocGen used a blockchain based platform in early 2015 for an oil cargo deal. Agricultural trader Louis Dreyfus completed a soya bean trade using blockchain, with a Chinese buyer. This was done with the assistance of banking giants ING, SocGen and ABN Amro.

VAKTs primary focus when launching later this year will be the North Sea oil market. Although both komgo and VAKT are in talks with other parties to increase the number of participants in the scheme.

From early next year, komgo will widen to agriculture and metals.

Ms Baddi, a former deputy head of commodity finance at SocGen has stated “The projects are unique in that you see both traders and lenders backing the ventures, and the solution is answering to the needs defined by the industry itself, and co-constructed together.”

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OCTOBER 2018

The Oracle Problem At the beating heart of most blockchains are smart contracts. By utilizing smart contracts on blockchain networks we can increase efficiencies and we can reduce costs across an array of businesses and government services. Smart contracts are designed to minimise counterparty risk and provide transparency throughout the process. They do however have some limitations especially when dealing with third party systems.

As the need grows for external data to flow into blockchains and provide information for smart contracts there have been questions raised about Oracles. Oracles are agents that examine external data feeds. It then provides vital information to a blockchain that by ICO CROWD affects the execution of a smart contract. For example, a gambling DApp might only pay out if the BBC sports website states that the conditions for pay-out are met. Verifiable exter122

nal data is an essential component of smart contracts and expanding the crypto ecosystem.

The primary function of an oracle is to provide a smart contract with data that is trusted and secure. Blockchains alone cannot access external data and need Oracles to trigger smart contract executions. Oracles are a vital part of multi-signature contracts where the trustees of a contract agree to the future release of funds only if certain conditions are met. It is an Oracle that must sign off this contract as well.

THE DIFFERING TYPES OF ORACLES Hardware Oracles are sensors that interact with tangible objects. Examples would include RFID tags feeding data Software Oracles pull data from third party sources such as web APIs. They are the most common type of oracle. Typical sources would include stock prices or weather data.

Consensus Oracles rely on aggregated data from several oracles with proprietary methods of determining their accuracy and authenticity. An example might by checking several websites to determine a football result.

Inbound Oracles execute a conditional statement. An example of this would be “if price X is met by Coin Y then sell Coin Y”.

Outbound Oracles send data to third party sources that sit outside of the blockchain network they exist on.

There is an Oracle at the heart of the Augur platform. The Augur platform is a decentralized prediction market. It is representative of a very complex Oracle that functions as its own data feed relying on the “Wisdom of the Crowd”.

The participants in the system act as the data source. If enough people agree, the contract executes. Whilst Augur uses this system it also utilizes other oracles to report correct results.

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There is an incentive structure to encourage honest reporting.

posted the wrong football result, before correcting it 2 minutes later? The smart contract could immediately execute THE ORACLE PROBLEM if not programmed to wait for a cerThe Oracle problem is not a new one. tain amount of time. What if someone Oracles have been around a lot longer was to place a large enough bet that it than blockchain, as have smart conmade economic sense to attempt to intracts (the term was first coined in the terfere with the BBC sport website. This mid-1990s). There has been an ongoing could be attempted via a DNS attack or debate as to what extent we can trust via holding a gun to the webmaster’s and implement them. head. Both scenarios could result in the smart contract payThe Oracle problem reing out despite the relates to the security, al-world conditions for What would happen if the bet to pay out not authenticity and trust conflicts between Orthe BBC momentarily being met. acles dependent on posted the wrong third parties and the POTENTIAL football result, trust less execution of SOLUTIONS smart contracts. How before correcting it You can never comexactly does the digiremove risk 2 minutes later? The pletely tal world know what is from any system. You smart contract could can only seek to mitihappening in the physical world? immediately execute gate the risks as much possible. Oracles - if not programmed as Given how integral orwhen properly deto wait for a certain signed and implementacles are to smart contracts and the potened can represent a sigamount of time. tial power they can nificant decrease in yield over outcomes. risk. As with any new The data oracles provide have substan- technology it creates different risks. tial influence of the execution of conConsensus Oracles go a long way totracts. Can you trust the third-party wards minimizing many of the risks indata? And as such, are smart contracts volved in transactions and where postruly trust less? sible should be implemented. By implementing a system that uses varyFor example, let's take the gambling ing methods to confirm oracle data analogy I mentioned earlier. What from a pool of oracles chosen randomwould happen if the BBC momentarily ly it can also make it easier to identify

The primary function of an oracle is to provide a smart contract with data that is trusted and secure.

Blockchains alone cannot access external data and need Oracles to trigger smart contract executions.

if someone is attempting to manipulate a smart contract and put a freeze on it.

As blockchain technology matures and becomes more mainstream it is likely the insurance industry will enter the market to offer products that indemnify the participants in smart contracts.

There are several organisations working upon solutions to the oracle problem. Most of them are attempting to implement solutions that are similar in nature to the solutions that remove bad actor issues from interfering with blockchains. The solution appears to be decentralization. Platforms tackling the oracle problem include Delphi, Oraclize, and ChainLink. Their focus is on leveraging consensus-based oracles, decentralized marketplaces, and novel methods of authenticating Oracle data.

CONCLUSION For blockchains to prove themselves viable alternatives to our current systems across government and industry we are going to have to place increasing emphasis on the accuracy and reliability of real-world data. Significant strides have already been made in achieving this and great effort is being put in to improving it. There has been an ongoing battle between developers and hackers ever since the dawn of early networked computers. This game of cat and mouse will never truly be resolved as long as there are bad actors. The way we keep our networks reliable and secure is through constant innovation.

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OCTOBER 2018

The Crypto Friendly Global Political Movement Politicians and cryptocurrencies don’t have a history of getting along that well with each other.

The first Pirate Party was formed in Sweden (The home of The Pirate Bay) where it is known as Piratpartiet by Rick Falkvinge. His Party was formed in response to Sweden's ongoing poThe world of crypto in many ways poses litical debate regarding changes in an existential threat to those who hold copyright law in 2005. Rick Falkvinge government office and the banks whose went on to become the CEO of Bithegemony they help maintain.

Coin Cash.

He went on to say: “...Bitcoin is a peer-to-peer currency. A peer-to-peer technology means there’s no middleman. Governments have been trying to stop peer-to-peer technologies since Napster. And they have been as completely unsuccessful as anybody could possibly be in that.

So, I don’t see them being able to stop peer-to-peer currency either. Which However, across the globe there are po- Talking to Russia Today Rick Falkvinge leads me to the last observation. Since litical movements popping up that are has stated: there’s no middleman, there’s nobody by “I think you absolutely have a point giving permission. When I’m buyICO CROWD crypto and DAO friendly. From the Pirate Party of Sweden to The Cyber party that most people don’t really undering a bottle of water with a credit card of the USA. Several attempts have been stand what Bitcoin is. It is ‘peer-to-peer somewhere in the background there’s made to get representation in governelectronic money’. That means I have a bank giving me permission to buy ment for those of us who are technoa phone here. I can use that phone to a bottle of water with a credit card. logically and often libertarian minded. transfer money to a nearby phone, or to And that is a horrifying thought. Bea phone on the other side of the plancause that means that the bank can THE PIRATE PARTY MOVEMENT et. The transfer is instant, it is practialso deny me permission to buy a botThe Pirate Party is a label adopted by cally free. Nobody gets to decide wheth- tle of water. Nobody thinks of this, a wide range of political parties in difer I can make that transaction or not, but it’s there. With Bitcoin this is not ferent countries. Pirate Parties support including financial authorities. And true. There is nobody needing to give civil rights, direct e-democracy and par- that in itself will mean a financial revo- permission in the background. There’s ticipation in government. They want lution. This is an extinction level event nobody who gets to say no to a transto see reforms of copyright and patent for banks. Banks will no longer be a action. No money can be forced. No laws and the free sharing of knowledge necessary middleman. And that’s, more money can be seized. And here’s a big with open content. They also support than anything, why I believe that this is problem for governments in the funet neutrality. the future of finance.” ture. Taxes can no longer be forced.”

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The United States Pirate Party was founded by university student Brent Allison. The party was focused on the abolition of the Digital Millennium Copyright Act. They wanted to reduce the length of copyright from 95 years after publication or 70 years after the authors death to 14 years. They wished to cancel patents that did not result in significant progress after 4 years instead of 20 years. Allison stepped down three days after founding.

The Pirate Party of Austria was formed in the run up to the 2006 Austrian legislative election.

The Pirate Party of Finland was founded in 2008 and entered their official registry of parties in 2009.

In 2009 European Parliamentary elections took place and various Pirate Party candidates stood. They had the most success in Sweden where they won 7.1% of the vote and had Christian Engström elected as the first ever Pirate Party MEP. Following the adoption of the Treaty of Lisbon the Swedish Pirate party achieved a second MEP in 2011, Amelia Andersdotter.

In July 2009 the Pirate Party UK was registered with the Electoral commission and its first party leader was Andrew Robinson.

In 2010 Pirate Parties International was founded in Belgium to encourage

cooperation between the various pirate parties.

Belgium, Côte d'Ivoire, France, Canada, and Switzerland.

In 2011 Berlin state election to the Abgeordnetenhaus of Biren, the Pirate Party of Berlin (a division of the German Pirate Party) won 8.9% of the vote, corresponding to 15 seats. The high number of seats was due to a system of proportional representation used.

Other notable political movements supporting crypto include John McAfee's short lived 2016 Cyber Party who campaigned for privacy, freedom and technological solutions to big government. John later attempted to lead the Libertarian Party in the US presidential elections.

In 2013 the Icelandic Pirate Party won 5.1% of the vote resulting in three members of Parliament. They have subsequently, after Iceland was rocked by political scandal (The Panama Papers), polled as high as 37.8%. They currently have 10 seats in parliament out of 65 representing 14.5% of the total vote The Czech Pirate Party entered the Chamber of Deputies of the Czech Parliament for the first time after the election held on October 2017 with 10.79%.

A bizarre outburst occurred recently in the Czech parliament where Czech Pirate Party member Jakub Michalek questioned Prime Minister Andrej Babiš regarding government progress on an electronic database for official documents. The Prime Minister replied that the opposition is not entitled to ask questions about the matter since all they are able to do, related to the IT sector, is to talk about Bitcoin mining.

Other Notable Pirate movements include: In Parti Pirate Francophone, the French-speaking Pirate Parties include

I think you absolutely have a point that most people don’t really understand what Bitcoin is.

It is ‘peer-topeer electronic money’. That means I have a phone here.

I can use that phone to transfer money to a nearby phone, or to a phone on the other side of the planet.

The transfer is instant, it is practically free.

Steve Bannon, former chief strategist to U.S. President Donald Trump has hinted multiple times that he will be attempting to use his own cryptocurrency to promote his international populist movement although no details are clear at this time.

CONCLUSION Politics makes strange bedfellows and as cryptocurrency further enters mainstream we will see crowdfunded pro crypto candidates being put forward more and more. We will also see growing resistance against these new types of politicians who wish to break with the old ways from the establishment.

It is just a matter of time before states in the EU and across the world start to be shaped by the influence of political crypto donations and those parties that do not adapt to the new technological, political and financial paradigm RICK FALKVINGE stand to be left behind by those that do adopt crypto.

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The Crypto Glossary 51% ATTACK When more than half of the computing power of a cryptocurrency network is controlled by a single entity or group, this entity or group may issue conflicting transactions to harm the network, should they have the malicious intent to do so.

ADDRESS Cryptocurrency addresses are used to send or receive transactions on the network. An address usually presents itself as a string of alphanumeric characters.

ALTCOIN Generally any crypto-currency other than Bitcoin or Ethereum. (Though some Bitcoin folks would probably still say Ethereum is an altcoin) ARBITRAGE Taking advantage of a difference in price of the same commodity on two different exchanges.

Often mentioned when it comes to comparing ETH prices on Korean exchanges against US exchanges.

ASIC Short form for ‘Application Specific Integrated Circuit’. Often compared to GPUs, ASICs are specially made for mining and may offer significant power savings.

BAGHOLDER Someone still holding an altcoin after a pump and dump crash. Can also just refer to someone holding a coin that is sinking in value with few future prospects.

BEARISH An expectation that price is going to decrease.

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BITCOIN Bitcoin is the first decentralised, open source cryptocurrency that runs on a global peer to peer network, without the need for middlemen and a centralised issuer.

BULLISH An expectation that price is going to increase

BLOCK Blocks are packages of data that carry permanently recorded data on the blockchain network.

COLD STORAGE The process of moving crypto-currency ‘offline’, as a way of safekeeping your crypto-currency from hacking.

BLOCKCHAIN A blockchain is a shared ledger where transactions are permanently recorded by appending blocks. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.

CONFIRMATION The successful act of hashing a transaction and adding it to the blockchain.

BLOCK EXPLORER Block explorer is an online tool to view all transactions, past and current, on the blockchain. They provide useful information such as network hash rate and transaction growth.

BLOCK HEIGHT The number of blocks connected on the blockchain.

BLOCK REWARD A form of incentive for the miner who successfully calculated the hash in a block during mining. Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those.

BOLLINGER BAND A margin around the price of a crypto that helps indicate when a coin is overbought or oversold.

CENTRAL LEDGER A ledger maintained by a central agency.

CONSENSUS Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.

CRYPTOCURRENCY Often, at times referred to as tokens, cryptocurrencies are representations of digital assets.

CRYPTOGRAPHIC HASH FUNCTION Cryptographic hashes produce a fixed-size and unique hash value from variable-size transaction input. The SHA-256 computational algorithm is an example of a cryptographic hash.

DAPP A decentralised application (Dapp) is an application that is open source, operates autonomously, has its data stored on a blockchain, incentivised in the form of cryptographic tokens and operates on a protocol that shows proof of value.

DAO Decentralised Autonomous Organizations can be thought of as corporations that run with-

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out any human intervention and surrender all forms of control to an incorruptible set of business rules.

DISTRIBUTED LEDGER Distributed ledgers are ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may be permissioned and private.

GENESIS BLOCK The first or first few blocks of a blockchain.

GOING LONG A trade that profits if the price increases.

GOING SHORT A trade that profits if the price decreases.

HARD FORK A type of fork that renders previously invalid DISTRIBUTED NETWORK transactions valid, and vice versa. This type of A type of network where processing power and fork requires all nodes and users to upgrade to data are spread over the nodes rather than the latest version of the protocol software. having a centralised data centre.

HASH DIFFICULTY The act of performing a hash function on the This refers to how easily a data block of trans- output data. This is used for confirming coin action information can be mined successfully. transactions.

DIGITAL SIGNATURE A digital code generated by public key encryption that is attached to an electronically transmitted document to verify its contents and the sender’s identity.

DOUBLE SPENDING Double spending occurs when a sum of money is spent more than once.

ETHEREUM Ethereum is a blockchain-based decentralised platform for applications that run smart contracts, and is aimed at solving issues associated with censorship, fraud and third party interference.

EVM The Ethereum Virtual Machine (EVM) is a Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code.

Every Ethereum node runs on the EVM to maintain consensus across the blockchain.

FIAT Government-issued currency, such as the US dollar.

FOMO Fear of Missing Out. The overwhelming sensation that you need to get on the train when the price of something starts to skyrocket.

FORK Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network.

FUD Fear, Uncertainty, and Doubt. Baseless negativity spread intentionally by someone that wants the price of something to drop. A FUDster is someone that is spreading FUD. GAS A measurement of how much processing is required by the Ethereum network to process a transaction. Simple transactions, like sending ether to another address, typically do not require much gas. More complex transactions, like deploying a smart contract, require more gas.

HASH RATE Measurement of performance for the mining rig is expressed in hashes per second.

HODL Long ago, someone on a bitcoin forum got drunk and made a post with this typo in the place of ‘hold’.

HYBRID POS/POW A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network. In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).

LIMIT ORDER / LIMIT BUY / LIMIT SELL Orders placed by traders to buy or sell a crypto-currency when the price meets a certain amount. They can be thought of as ‘for-sale’ signs. These orders are what are bought and sold against when traders place market orders.

MINING Mining is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the miners, usually in the form of coins. In this cryptocurrency boom, mining can be a lucrative business when done properly. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.

MINING RIG A computer especially designed for processing proof-of-work blockchains, like Bitcoin. They often consist of multiple high-end graphic processors (GPUs) to maximize their processing power.

MOONING Referring to a price going up astronomical levels.

MULTI-SIGNATURE Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a transaction.

NODE A copy of the ledger operated by a participant of the blockchain network.

ORACLES Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.

PEER TO PEER Peer to Peer (P2P) refers to the decentralized interactions between two parties or more in a highly-interconnected network. Participants of a P2P network deal directly with each other through a single mediation point.

PUBLIC ADDRESS A public address is the cryptographic hash of a public key. They act as email addresses that can be published anywhere, unlike private keys.

MACD Moving Average Convergence Divergence. A PRIVATE KEY trend indicator that shows the relationship be- A private key is a string of data that allows you tween two moving averages of prices. to access the tokens in a specific wallet. They act as passwords that are kept hidden from anMARGIN TRADING yone but the owner of the address.

Margin trading refers to the practice of using borrowed funds to trade, it is the act of ‘magPROOF OF STAKE nifying’ the intensity of your trades by risking A consensus distribution algorithm that reyour existing coins. (NOTE: Very risky, only wards earnings based on the number of coins for experienced traders and available on speyou own or hold. The more you invest in the cific exchanges) coin, the more you gain by mining with this protocol.

MARKET CAP The total value held in a crypto-currency. It PROOF OF WORK is calculated by multiplying the total supply A consensus distribution algorithm that reof coins by the current price of an individuquires an active role in mining data blocks, ofal unit. ten consuming resources, such as electricity.

The more ‘work’ you do or the more computaMARKET ORDER / MARKET BUY / tional power you provide, the more coins you MARKET SELL are rewarded with.

A simple purchase or sale on an exchange at the current price. Market buys purchase the PUMP AND DUMP cheapest ETH available on the order book, and The recurring cycle of an altcoin getting a ton market sells fill the most expensive buy order of attention, leading to a fast price increase, on the books. and then of course followed by a huge crash.

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REKT Borrowed from online gaming slang, to mean utterly destroyed or ruined ROI Return on Investment. The percentage of how much money has been made compared to an initial investment. (i.e., 100% ROI means someone doubled their money).

SMART CONTRACTS Smart contracts encode business rules in a programmable language onto the blockchain and are enforced by the participants of the network.

SCRYPT Scrypt is a type of cryptographic algorithm and is used by Litecoin. Compared to SHA256, this is quicker as it does not use up as much processing time.

SOFT FORK A soft fork differs from a hard fork in that only previously valid transactions are made invalid.

Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners to upgrade in order to enforce, while a hard fork requires all nodes to agree on the new version.

SELL WALL / BUY WALL Using a depth chart, traders can see the current limit buy and sell points.

SOLIDITY Solidity is Ethereum’s programming language for developing smart contracts.

SHA-256 SHA-256 is a cryptographic algorithm used by cryptocurrencies such as Bitcoin. However, it uses a lot of computing power and processing time, forcing miners to form mining pools to capture gains.

STABLE COIN A crypto-currency with extremely low volatility that can be used to trade against the overall market.

SHARDING A scaling solution for blockchains. Typically, every node in a blockchain network houses a complete copy of the blockchain. Sharding is a method that allows nodes to have partial copies of the complete blockchain in order to increase overall network performance and consensus speeds.

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TA Trend Analysis or Technical Analysis. Refers to the process of examining current charts in order to predict which way the market will move next.

TESTNET A test blockchain used by developers to prevent expending assets on the main chain.

TRANSACTION BLOCK A collection of transactions gathered into a block that can then be hashed and added to the blockchain.

TRANSACTION FEE All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.

TOKENS Crypto tokens represent a particular fungible and tradable asset or a utility that is often found on a blockchain.

TURING COMPLETE Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of. An example of this is the Ethereum Virtual Machine (EVM).

WALLET A file that houses private keys. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.

WHALE Someone that owns absurd amounts of crypto-currency.