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  • Writer's pictureMike V.


Facebook Buys Into Blockchain, Sparks Learning About Ledgers

Facebook recently hired the researchers from University College London behind blockchain startup Chainspace. The acqui-hire confirms the social media giant’s interest in smart contracts and crypto-payments. Facebook executive and former PayPal President David Marcus leads Facebook’s growing blockchain group which has over 10 job openings. “When they're ready to launch publicly, Facebook entering the blockchain space will certainly validate what many of us already know: blockchain technology is a fundamental game changer,” said Dave Balter, CEO of Flipside Crypto. “The fact that Facebook is leveraging experts in blockchain and smart contracts shows they’re one step closer to reaping the benefits of the technology when it comes to efficiency, collaboration, and the streamlining of processes,” said Casey Kuhlman, CEO of Monax, a leader in using distributed ledger to help companies manage legal agreements. Elias Haase, Community Manager of London-based blockchain trainer B9lab said, “Now the demand has shifted to truly qualified, multi-protocol professionals who need to be able to build, rather than write specs for whitepapers. B9lab is one of the growing number of training companies scrambling to meet the demand for blockchain talent.

Bloomberg: First U.S. Pension Funds Goes Long Crypto

Morgan Creek Digital has scored the first investment in the crypto asset universe from a U.S. pension fund. Two pension plans in Fairfax County, Virginia are anchor investors in a new venture-capital fund. Other investors include an insurance company, a university endowment and a private foundation, said Morgan Creek Digital founder Anthony Pompliano.

Many institutional investors, which crypto enthusiasts believe will be drawn to digital assets because of their volatility and potential out-sized gains. The Virginia pension funds join institutions that invest in the crypto world, including Yale University, the second-largest endowment in higher education that invested in a digital assets fund last year. Fairfax County Retirement Systems manages three separate defined benefit plans, two of which invested in the Morgan Creek Digital fund. Katherine Molnar, chief investment officer of one of the funds, said in a statement that blockchain technology, which was first developed to record the movement of Bitcoin, is an “emerging opportunity” that offers an “attractive asymmetric return profile.’’ Pompliano said his new fund is structured like a traditional venture capital fund that will invest in the equity of companies in the blockchain and digital assets industry. The fund will also hold a in liquid cryptocurrencies, such as Bitcoin. “There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable,’’ Pompliano said. “The smart money is not distracted by price but looks at the long-term trends, and believes they’re investing on innovation as a great way to deliver risk-mitigated returns.’’ Cryptocurrencies are not correlated to traditional assets, giving investors unique exposures.

1 Year After Dimon Slammed Bitcoin As A "Fraud", JPM Launches Own Cryptocurrency

It seems like just yesterday that JP Morgan CEO Jamie Dimon bashed bitcoin as "a fraud" and warned it "won't end well" for investors (though he failed to mention that the bank had been buying bitcoin-linked ETNs traded on a Scandinavian exchange). In a sign that banks are still seriously exploring applications for blockchain technology despite the blowup in the prices of crypto tokens, JPM announced that it would be rolling out the first cryptocurrency launched by a US bank. After banning the purchase of cryptocurrencies by its credit card customers last year, JPM said it will soon begin testing a stablecoin technology in its wholesale payments business now that its engineers have produced a finished product. The bank said "JPM Coin" will be used to offer instantaneous settlement for transactions in the bank's large corporate clients in its $6 trillion-a-day payments business for large corporations and institutions. Unlike bitcoin, JPM Coin's value won't be subject to the whims of a secondary market; instead, 'JPM Coin' will join the ranks of so-called "stable coins" where its value will be pegged to the dollar.

Forbes: GM Collaboration With Blockchain Startup Spring Labs

The auto will join the Spring Founding Industry Partners Program to work with Spring Labs as it develops its blockchain products, the first of which are expected to launch in the first half of 2019. “We came together with the view that we could develop a series of use cases that would match some of GM core business priorities as a lender” Spring Labs CEO Adam Jiwan. This isn’t GM’s first foray into blockchain: it joined Hyperledger, a group working to develop open-source blockchain technologies for businesses that also counts IBM, J.P. Morgan, and FedEx among its members, in late 2017. For GM Officer Mike Kanarios, the partnership with Spring Labs was a natural fit as GM continues to dive into blockchain. “We believe that they have the most momentum in this space,” Kanarios says. The startup is developing a protocol that will allow companies to securely exchange and verify sensitive information, like a customer’s credit history. Jiwan says this could help both lending and non-lending institutions share information about customer identities without compromising customer privacy, making it easier for everyone to identify fraudulent actors. Kanarios thinks that Spring Labs’ protocol will help GM combat synthetic identity fraud, which occurs when a fraudster uses both real and fake identification information to create a new identity and make purchases. Fraud like this costs GM millions of dollars per year in both losses of inventory and prevention costs, and Kanarios says a blockchain-based identity verification program could be a “better, faster, and cheaper system” than the lender’s current processes. The implications of the protocol in the auto sector, however, may go beyond just lending. Jiwan imagines future use cases like blockchain-based registries and payments systems for shared vehicle contracts, for example. David Treat, a managing director and global blockchain lead at Accenture, says the use of blockchain in general in the auto industry could extend to everything from insurance to traffic control and city planning to self-driving cars and AI, making driving safer, more secure, and more efficient. "All three of those outcomes are hugely benefited by the right kinds of shared data,” Treat says. Like Accenture, GM is a member of the Mobility Open Blockchain Initiative (MOBI), a group dedicated to exploring applications of blockchain like these. BMW, Ford, and Groupe Renault are also members.

Oracle’s First Dozen Cloud Blockchain Applications Are Now Live

The software giant now has up to a dozen enterprise customers using live applications that have sped into production since its cloud-based blockchain platform went live last July.

This includes a cargo tracking consortium called the Global Shipping Business Network (GSBN); China Distance Education Holdings, which shares educational and professional certificates; Circulor, which tracks conflict minerals; and SERES, a solution for dealing with invoices between franchisors. Oracle said other customers at the production stage are: Arab Jordan Investment Bank, Certified Origins, NeuroSoft, TradeFin, HealthSync, OriginTrail, ICS FS, SDK.Finance, and Nigeria Customs. Previously, the only major enterprise blockchains in production were built using IBM Blockchain; namely trade finance solution and Food Trust (it’s notable that both Oracle and IBM have used Hyperledger Fabric to create their blockchain platforms.)

Frank Xiong, group vice president of blockchain product development at Oracle: “Other vendors may still be experimenting but we do have real customers in live production. I would say around 10 to a dozen are in a live situation.” By “in production,” Xiong said he means these applications have their own end users and are handling live transactions. He said transaction numbers vary from customer to customer, with them all gradually rising. “To start with we were seeing transactions probably among hundreds an hour. But are expecting many of them to grow to thousands of transactions per second,” said Xiong.

Taking on IBM

The GSBN consortium, which formed last year, includes five ocean carriers (COSCO, CMA CGM, Evergreen Marine, OOCL, and Yang Ming) as well as terminal operators: DP World, Hutchinson Ports, PSA International Pte Ltd, and Shanghai International Port. As such, it’s a clear competitor to IBM and Maersk’s TradeLens, which also seeks participation from shipping carriers, freight forwarders and port authorities. Xiong said the GSBN consortium grew out of Oracle’s close partnership with CargoSmart, an independent software vendor that put the consortium together. CargoSmart is a subsidiary of OOCL and therefore some way comparable with IBM and Maersk. But he said GSBN works out cheaper. “As a pricing model, we charge by transactions,” he said. “So it becomes a very attractive model for new entrants. Once you are established, the transaction charges are very low at this point.”

Fabric of the future

It’s fine to see Oracle going great guns with Hyperledger Fabric, but one criticism which has been leveled at the vendor is the lack of code it has supplied to the open-source project.

In addition, Oracle worked out certain enhancements around the database, said Xiong, specifically switching out Fabric’s Level DB and using Oracle’s Berkeley DB which, he said, has better performance and richer querying capabilities. “For these enhanced areas we will make a decision about when we will contribute the interface to the community. I would say definitely yes, we are going in the direction of making more contributions to this OS community.” And measure for measure, Oracle is open to collaborating with IBM and others when it comes to blockchain, Xiong said. “We offer a very rich Rest API connection for a Fabric-based blockchain,” he said. “So whether you are IBM Bluemix [cloud] developer or other cloud or on-premises – you can be integrated with our platform.”

Credit Suisse Arm Sees Blockchain Benefits

A subsidiary of Swiss multinational investment bank Credit Suisse has completed a blockchain trial for fund transactions. Fundsquare, the arm of the Luxembourg Stock Exchange and the project’s technical partner, saying Credit Suisse has “successfully processed live end-to-end fund transactions” using blockchain technology. For the trial, the firms used the FundsDLT platform, developed in a partnership with professional services firm KPMG and software provider InTech, for cross-border distribution of an investment fund. The test enabled the participants to achieve “more efficient, scalable, and timely” cross-border transactions, “from delivery of the order to the processing of the trade,” Fundsquare said.

“With the successful completion of real, live transactions, we were able to prove that considerable benefits can be achieved with distributed ledger technology for both clients and asset managers,” said Credit Suisse. In December 2017, Vanguard said it began using smart contracts over a private blockchain for some of its business operations. Nasdaq and Sweden’s SEB bank also tested blockchain for mutual fund trading last September.

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