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Ethereum Price Analysis – Fundamentals battle technicals » Brave New Coin

Ethereum Price Analysis – Fundamentals battle technicals » Brave New Coin

Ether now has a US$27 billion market capitalization, while exchange traded volume trailing Bitcoin on most days. Price action over the last week has also closely followed that of Bitcoin, with a heavy correction and fast retracement.

While bitcoin is a decentralized digital currency, Ethereum is a distributed computing platform featuring smart contract functionality. The platform has been extensively used for ICOs, which leverage the Ethereum ERC20 standard. ERC20 allows for the implementation of a standard API for tokens within smart contracts, allowing anyone to spin up a new cryptocurrency within minutes. The increased load has on a few occasions reached the network’s full capacity for hours at a time.

The platform’s native token, Ether, has experienced dramatic gains since launching just over two years ago. The token started this year around ~US$10, peaked around US$400, and currently sits at ~US$280.

Ethereum Price Analysis Sept 19 2017 2The Ethereum Foundation has been rapidly putting additional resources toward increasing the efficiency of the network, alongside planning longer-term changes that will greatly increase the network’s scalability.

Ethereum appears to be tackling scaling effectively, while the market leader bitcoin has been battling the issue for longer than Ethereum has been inexistence. The inventor and figurehead of Ethereum, Vitalik Buterin, also carries a very public role. While Ether is not a stock, by any means, it is traded publicly in a free market, and investors are fickle and always want more users, higher sales, and better products.

To some extent, cryptocurrencies are no different. Although there is an Ethereum foundation and other Ethereum developers, Vitalik handles this CEO role with increasingly ever-present media appearances, and frequently updates the market through articles and blog posts.

On September 14th, Geth 1.7 was announced on the Ethereum blog. Geth is the command line interface used when running a full node. The update includes various protocol changes (EIPs) needed for an upcoming hardfork, Metropolis.

Vitalik spoke today at TechCrunch where he mentioned Ethereum will likely have Visa scale transaction capacity with Plasma and implementations in a couple of years. Ethereum handled ~5.74 transactions per second on average on September 6th, the most transactions it’s ever handled in one day.

Ethereum Price Analysis Sept 19 2017 4Visa handles 2,000-4,000 transactions a second on average with the ability for the network to hold up to 56,000 transactions per second. PayPal handled 193 transactions per second on average in 2016.

Vitalik also mentioned that the Metropolis update, previously said to be released in late September, will be released in October.

Open mining interest, measured by hash rate and difficulty adjustments, continues to make all time highs. This suggests that Ether is both currently profitable to mine and that miners believe it will remain profitable for the immediate future.

Ethereum Price Analysis Sept 19 2017 5

Ether exchange traded volume has been led by Korean Won (KRW) markets over the past few days, with an almost equal share goin to US Dollar markets. Yuan (CNY) trading has dropped off considerably in light of the recent increase in Chinese regulations towards cryptocurrencies.

There is no trading against the Yen (JPY) on any major exchange. Japanese traders appear to be using bitcoin to gain exposure to Ether.

Ethereum Price Analysis Sept 19 5Interestingly, Ethereum tweet mentions continue to rise, with a current peak on September 14th. Undoubtedly, this increase is due to the onslaught of ICOs and their subsequent ongoing social media campaigns.

Technical Analysis

It’s important to continually evaluate the current trend, if there is one, especially after a major pullback. One of the many ways to do this is understanding the Wyckoff Method.

Ethereum Price Analysis Sept 19 2017 6Wyckoff accumulation and distribution are essentially the exact opposite of each other, occurring at the bottom or top of the trend respectively. There is no better example of Wyckoffian accumulation than that of Bitcoin from January 2015-2016.

Ethereum Price Analysis Sept 19 2017 7If we invert the current daily Ether chart, which helps eliminate bullish bias, and compare this to the textbook example of the Bitcoin chart, we began to see a similar picture. A triple bottom, with a lower low on the inverted chart containing an extended wick, would support evidence of the spring needed to begin a markdown phase. Certainly something to watch for in the coming months. A sustained higher high would refute a distribution phase and support a continued markup phase.

Ethereum Price Analysis Sept 19 2017 8On the weekly, price structure suggests a perfect ‘M for Murder’ pattern that just about smacks you in the face when not using log scale. A weekly close below US$140 would all but seal Ether’s fate downward.

Ethereum Price Analysis Sept 19 2017 9Again comparing to Bitcoin, the M on the weekly in December 2013 was the beginning of the bear trend, albeit under much different circumstances.

Ethereum Price Analysis Sept 19 2017 10We can further analyze the health of the trend with Ichimoku Cloud, a constant, auto-drawn indicator that quickly offers an immense amount of valuable information on any time frame. The Cloud is best used at higher time frames as more data generally provides more accurate signals and less false positives.

The indicator uses a moving average and dynamic support and resistance to make key zone projections. It’s goal is to capture 80% of any given trend. While it may seem complicated when viewed on the price chart, it is really a straightforward indicator that is very usable.

As long as the price remains above the Cloud, sentiment remains bullish. Price in the Cloud indicates a neutral trend, and below the Cloud indicates a bearish trend.

The best entry signals for the Cloud occur when the trend is obvious, but 1 or 2 signals have yet to become confluent with a higher time frame trend:

When the Tenkan (T) is over the Kijun (K) sentiment is bullish. K over T would indicate bearish sentiment. When the Lagging Span (LS) is above the Cloud and above the price sentiment is bullish, below the Cloud and below price would indicate bearish sentiment.

Additionally, in any given trend, price will continually attempt mean reversion to determine support levels. These pullbacks or corrections can be seen through touches of the Kijun, also known as the Kijun bounce.

On the weekly time frame, using the singled Cloud, there is very clearly a lack of cloud support below the Kijun ~US$220. If this level breaks cleanly, expect the ~US$50 zone to be strong support. This breakdown would not likely occur in one weekly candle but occur over many months, just as Bitcoin unwound slowly after it’s M double top.

Ethereum Price Analysis Sept 19 2017 11Alt coin prices generally move quicker than Bitcoin. Faster moving charts often require faster signals to keep up with price on higher timeframes. Trading signals should always be as fast as they can be without too much noise or false positives.

Using faster Ichimoku Cloud settings on the daily chart, 10/30/60/30, there is a bearish TK cross above the cloud, which is a long exit signal. Singled Cloud settings on the daily time frame have been back tested on more than 50 alt coins. The data shows superior and improved entries for Kumo Breakouts and TK Crosses when compared to the double 20/60/120/30 settings (data not shown).

On the daily timeframe, the singled Cloud is essentially neutral on mixed parameters. Price is above cloud, barely. TK cross and future Cloud are bearish, and LS is below price and above cloud. A long entry signal would trigger should Cloud and TK cross turn bullish with price staying above cloud.

Ethereum Price Analysis Sept 19 2017 12The faster cloud settings on the daily remains decidedly bullish. Sustained day over day selling below the cloud would suggest further support tests.

Ethereum Price Analysis Sept 19 2017 13On the four hour time frame, using the double cloud, signals are beginning to turn bullish again after the heavy pullback. A long entry signal will not trigger until the forward looking portion of the Cloud is bullish, with price above cloud. TK is currently bullish.

Ethereum Price Analysis Sept 19 2017 14There is also a completed Adam and Eve double bottom, which has broken resistance and is attempting a throwback support test. According to Bulkowski, king of chart patterns, “The double bottom setup says that throwbacks which do not plunge below the confirmation price suggest better performance after the breakout.”

Another indicator we can use is the Pitchfork (PF). They provide diagonals that can be thought of as a potential reversal zones or support/resistance lines. The upper yellow diagonal zone being ‘most overbought,’ or the top bounds of the trend, and the lower yellow diagonal zone being ‘most oversold,’ or the bottom bounds of the trend.

The PF that makes the most sense has been strongly invalidated, unless a 1.75 extension is used. This would need to remain valid and hold support to be considered a valid uptrend indicator.

Ethereum Price Analysis Sept 19 2017 15

Conclusion

Fundamentals for Ethereum, barring Chinese ICO regulation, have never been brighter. Several protocol updates are due in October through a hard fork and a roadmap to address scalability issues is on the horizon. Ethereum continues to gain awareness through the worldwide scope of the ICO market.

Technicals tell a slightly different story. The most concerning pattern for long term Ether holders would be the large double top on the high timeframe charts, which do not scream bullish continuation, no matter how hard you try. An extended months long downtrend would likely bring Ether to the psychological support of ~US$50 minimum. All eyes on the Adam and Eve resistance turned support throwback in the near term.

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Bitcoin Price Analysis – A perfect storm » Brave New Coin

Bitcoin Price Analysis – A perfect storm » Brave New Coin

Bitcoin has dropped ~USD$400 in the past 24 hours, contributing to a ~USD$1450 drop in the past seven days. The leading cryptocurrency is down ~US$1150 Since the recent high of ~US$4950 on Sept 2nd, or nearly 30%. The lackluster performance can be attributed to both technical and fundamental factors.

On September 4th, China announced an outright ban of all ICOs, suggested refunding any collected funds in any ongoing crowd sales, and hinted at the shuttering of exchanges trading ICOs.

Earlier today, the oldest Bitcoin exchange in China, BTCC, announced it would end trading on September 30th. Competitors OKcoin and Huobi have yet to make announcements but they may also close their doors.

Needless to say, the market has reacted. Today marked the highest volume for a daily candle since Chinese exchange regulation in January, according to the BLX.

Not making a single clear statement, and therefore adding to fear, uncertainty, and doubt (FUD) is a classic move from the Chinese government and has occurred multiple times in the past. 

The crackdown in China occurs in the context of an already overbought market. These conditions are almost identical to those in January, when the Chinese government reigned in Bitcoin exchange trading.

One high volume Bitcoin trader, who likes to protect their identity, had this to say about the situation. “I see regulations as a means of protecting the investor. During the 1920’s the United States stock markets were cesspools of corrupt insider trading, front running and taking advantage of the general population. The Securities Act of 1933 put an end to most of that, although many now a days would say otherwise, ending the so called ‘wild west of the stock markets’. Cryptocurrency, still in its infancy in my opinion, is just this; markets untamed a wild west ruled by non professional pundits and early adopters. I expect regulation will potentially be a good thing at first. However, coming into larger global adoption – I fear that cryptocurrencies as a whole will become just as easily manipulated, if not more, by the J.P. Morgans and Goldman Sachs’ of the world, as has been demonstrated during the tumultuous events of the past seven days.”

When fundamentals and technicals are united, the price move and reaction becomes amplified. So no, CEO of J.P Morgan Jamie Dimon’s comments this week didn’t crash Bitcoin. The market was due for a large correction after spending only eight days in the 3000 range.

Exchange traded volume has been led by USD. Tether (USDT) is pegged to the dollar, and has also seen a significant bump in volume. This suggests that traders are using USDT as a safe haven from the pullback.

CNY volume accounts for <18% of exchange traded volume globally, but it’s clear that Chinese regulators have rattled the markets. Bitcoin has been selling for a significant discount in Yuan (CNY) markets, compared to other pairs, suggesting an influx of CNY traders selling bitcoin. CNY traders buying bitcoin had been paying a premium as recently as June.

Bitcoin Price Analysis Sept 15 2017 2

In light of the China exchange bans, pending or otherwise, we can expect OTC volume to increase significantly, just as it did following the increased regulatory focus from the Chinese government in January.

Bitcoin Price Analysis Sept 15 2017 3

On a geopolitically related note, North Korea appears to be itching for attention on the world stage, having fired another missile over Japan. Should an offensive campaign, police action, or outright war arise in the region, we can expect a reaction from Bitcoin in some fashion.

There has also been a great deal of press around the potential large scale bitcoin acquisition by North Korea, including: bitcoin mining based on an uptick of internet activity in the region, hackers targeting cryptocurrency exchanges, and their involvement with the WannaCry virus. Despite all the press, it is difficult to prove the extent at which this is occurring without significant and in depth investigations on several fronts.

However, Japanese Yen (JPY) and South Korean Won (KRW) constitute 28% of global bitcoin trading. Should Bitcoin be seen as a safe haven asset in those regions, we can expect a bullish spike in price, lead by bitcoin trading for a premium in those markets.

Technical Analysis

On weeks like this one, with intense selling, it’s important to understand why the selling is occurring from a technical perspective.

On the weekly timeframe, there was building volume and RSI bearish divergence, which was confirmed last week. This meant that as price is rising, it is doing so on less volume and less momentum that it had previously. It was losing steam.  

Bitcoin Price Analysis Sept 15 2017 4Divergences are considered lagging indicators and are difficult to trade off in isolation. Much like this divergence however, traders will watch the momentum fade and take action when they are certain of the direction.

Bearish Divergences on the weekly chart have historically had significant pullbacks. Note that RSI divergences should be seen from the body of the candle, not the wick, because RSI is calculated at the close of the candle.

Bitcoin Price Analysis Sept 15 2017 5There have also been several hidden bullish divergences on the weekly chart, signaling weakening bearish sentiment. A hidden bullish divergence occurs when price makes a higher low on increased momentum. This means that in spite of increased momentum, price was unable to make a lower low.

This pattern has occurred several times on the weekly chart, and was a signal for strong bullish trend continuation. Should selling continue over the next week, there is the potential for another hidden bullish divergence.

Bitcoin Price Analysis Sept 15 2017 6When looking for strong high probability support, look no further than the Ichimoku Cloud. The Kijun (red) represents complete mean reversion of the historic prices over the past 30 periods. This zone is currently holding as support at the time of this article. Additionally, there is an incredibly small, but existing hidden bullish divergence should this zone hold.

Bitcoin Price Analysis Sept 15 2017 7Another indicator to use when looking for support is the Pitchfork (PF). They provide diagonals that can be thought of as a potential reversal zones or support/resistance lines. The upper diagonal zones being ‘most overbought,’ or the top bounds of the trend, and the lower diagonal zones being ‘most oversold,’ or the bottom bounds of the trend.

Based on the longstanding PF, beginning in 2015, there is potential for increased selling down to the median line, ~USD$2800. This zone also represents support from the previous ATH made earlier this year.

Bitcoin Price Analysis Sept 15 2017 8There is another noteworthy pattern developing on a shorter timeframe, the fifteen minute chart, a bullish three drives pattern with a growing volume and RSI bullish divergence.

Bitcoin Price Analysis Sept 15 2017 9Lastly, we are approaching a rollover date on the OKcoin quarterly futures. Although the alternating top/bottom price pattern between quarterly futures contracts began to get much looser on the most recent rally to ~USD$5000, volatility surrounding the contract dates is not unusual. With a potential touch of the 200EMA on the daily chart, this may very well represent an interim bottom until December, when another bull run may occur.

Bitcoin Price Analysis Sept 15 2017 10Conclusion

A perfect storm of technical weakness and Chinese regulatory belt tightening, neither of which was fully priced in until at least today. Once regulations are finalized and FUD is abated, we can  expect a strong rally, similar to that in January of this year. Technicals are already showing signs of bearish momentum weakening, with support targets holding on the daily close. Interestingly, this drop has been timed almost perfectly with the open of a new quarterly futures contract on OKcoin. Although the volume on the daily candle is the highest it’s been all year, we’ve yet to see a strong capitulation wick, signaling the end of the pullback.



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Bitcoin attack, ‘Corebleed,’ demonstrates the need for node decentralisation » Brave New Coin

Bitcoin attack, ‘Corebleed,’ demonstrates the need for node decentralisation » Brave New Coin

At the Breaking Bitcoin Conference in Paris last weekend, speakers from around the world gave talks about breaking down the technicals of different implementations such as Segwit2x, Bitcoin Unlimited, and IOTA.

The most controversial talk was given by alternative Bitcoin implementation developer, Christopher Jeffrey, who revealed to a live audience of about 200 developers, academics, and professionals in the Bitcoin space how he broke the default Bitcoin implementation, bitcoind, better known as Bitcoin Core.

He drove the point home that the software ecosystem in the Bitcoin protocol is glaringly centralized. While Reddit and Twitter conversations focus on the threat to decentralization that miners pose to Bitcoin, Jeffrey highlighted a less popular, though equally harrowing threat: development centralization.

More than 99% of the Bitcoin network today runs Bitcoin Core, which is the default software implementation served by the package managers in most major operating systems. Jeffrey drove this point home by giving a poignant live demonstration.

Opening his talk, Pitfalls of Consensus Implementation, Jeffrey demonstrated a denial-of-service (DoS) attack by running a script which caused bitcoind nodes to allocate excessive amounts of memory, causing them to grind to a halt. This was a successful out-of-memory (OOM) attack executed in the Bitcoin testnet.

This OOM attack on Bitcoin Core, dubbed Corebleed, focuses on machine details, abusing memory, CPU, and disk I/O bottlenecks. This, combined with targeting the consensus layer, “which cannot be ignored by nodes,” Jeffrey notes, would break Bitcoin by bricking the nodes that were running Core software.

Theoretically, if this denial-of-service (DoS) vector were exploited in mainnet, it would shut down a significant portion of the nodes running Bitcoin. Only those nodes backed by beefy servers could survive this attack. However, Jeffrey claims that this would take months to set up.

There are two versions of this attack: a miner version and a non-miner version. The miner version remains strictly theoretica, simply because it is cost prohibitive to execute.

Slide from Pitfalls of Consensus Implementation, by Christopher Jeffrey

This theoretical miner version of the attack would result in 24 gigabytes of data read into memory, and that is the number we would take at face value. In reality though, Jeffrey emphasized, due to the C++ heap, “the memory usage is amplified 3 or 4 times, so it’s probably more like 100 gb.” To pull off this attack, you would essentially have to be a miner. Moreover, the setup phase would be very obvious and people would notice it right away.

The non-miner version of this attack is relatively simpler, more obscure, and less costly to pull off. Done in practice, it would take months to setup and millions of dollars in USD to take down the Bitcoin network as we know it.

It’s not a lot of money or time if we consider large organizations wanting to shut down Bitcoin for the sake it, a point Jeffrey drove home in demonstrating this on the majority implementation with the lion’s share of the market. Wipe out Bitcoin Core and you wipe out more than 90% of Bitcoin.

Corebleed 2

This OOM attack is done by going after “the heart and soul” of Bitcoin: Unspent Transaction Outputs (UTXOs). Mechanically, Jeffrey explains, indexing new UTXOs requires all of the outputs to be stored under the same database record each transaction.

Corebleed 4When a spend occurs via an “input,” a single output in the UTXO index is referenced (in green). However, spending a “vector-based UTXO,” as it’s called, requires that a spend input reads the *entire* database record and stored into memory until the process has been completed.

Jeffrey walked the audience through a key distinction that even seasoned developers have difficulty grasping the subtleties of: protocol versus implementation details which cause network defects.

Corebleed 4As this attack is possible due to an implementation detail, it is easily remedied by diversifying the Bitcoin software environment, where multiple implementations with a spread out market share were running in parallel.

The list of alternative implementations is short but varied. Bcoin.io is an alternative to the Bitcoin reference client written in node.js by Jeffrey himself. Btcd is used by lnd, the Lightning Network, written in Go by Dave Collins, Core developer of Decred. Libbitcoin is another, written in C++ by Amir Taaki, who was also present at Breaking Bitcoin. These, along with several other alternative implementations, can be paths toward decentralizing the development space in Bitcoin, leading to a resilient network that couldn’t be taken down by a single virus or attack.

All implementations that are forked from Bitcoin Core are vulnerable to this attack. Implementations like Bitcoin Cash, Zcash, and other alternative currencies fall in this category.  

However, Bitcoin Core developer, Pieter Wuille, also proposed a performance boost to Bitcoin Core called pertxout in Apri, Core 0.15. While the upgrade is as yet untested, this upgrade from the old vector-based UTXO model to a pertxout model inadvertently amends the OOM attack.

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OpenBazaar launches version 2.0 beta » Brave New Coin

OpenBazaar launches version 2.0 beta » Brave New Coin

The OpenBazaar project, led by the well-funded startup OB1, has been working towards delivering a mainstream-friendly version of their peer-to-peer marketplace application.

The open source software directly connects people, circumventing the need for middlemen, and uses Bitcoin as the main payment method. This makes OpenBazzar a free online marketplace, with no fees or restrictions on what can be sold.

Developers launched an open Beta 2.0 version of the marketplace platform on Sunday, after a month in alpha testing. The beta uses real Bitcoin and real listings.

– Dr. Washington Sanchez, OB1 Co-founder

Users of the first version of OpenBazaar will likely notice an overall speed improvement, and greatly increased responsiveness across the platform. The new software uses a completely rebuilt back-end with the IPFS integration, but uses a more open framework to ensure the software can be expanded for future additions.

“It is more extensible than it was for version 1,” Dr. Washington Sanchez, OpenBazaar’s co-founder and Chief Research Officer told BraveNewCoin. “This means we can add new contract types in the future and expand what OpenBazaar can be used for.”

A new offline store functionality uses the IPFS framework to seed stores between network peers. “You can be offline and receive orders for your items,” Sanchez detailed, “which you’ll receive the next time you open the app.

The OB1 team has also improved the search feature, making results faster and more accurate. A number of optional search criteria can be used to refine each search, making the process feel much more like looking for a project on Amazon or eBay. OpenBazzar users can either use the OB1 solution or chose a third party solution, such as Duosearch.

OpenBazaar 2.0 also has a bitcoin wallet built in, allowing new users to simply download OpenBazaar and get started shopping right away. It has a user-friendly interface that includes a Shifty Button, which allows OpenBazaar shoppers to spend any cryptocurrency that ShapeShift trades on their platform. Behind the scenes, the wallet uses SegWit-formatted addresses to help save on transaction fees, and also lets users choose between three fee level settings.

New types of sales can also be added to the platform now, including “Auctions, crowdfunding, and forward/futures contracts” Sanchez revealed. “Things we’ve been writing about since the beginning of the project.” Users also have the added benefit of using Tor, which aims to conceal user identities and their online activity from surveillance and traffic analysis.

A suite of vendor tools is also included, starting with an inventory management page that lets store owners track inventory and the status of each sale. Dispute resolution tracking, purchase tracking, and sales tracking all have their own areas in the app, with useful new features, and the shipping options available for each item are likewise robust and customizable.

In the event that a moderator is needed to settle a dispute between buyers and sellers on the decentralized platform, version 2.0 has a new way of ensuring that they are properly assigned and contacted, going so far as to list the languages that each moderator speaks.

“So far the feedback we’ve received has been very positive in terms of stability, design, and user experience,” Sanchez recalled. “It certainly feels like a significant improvement over our previous releases.”

A couple of rough edges do stick out, however. Besides the small number of store listings that haven’t been upgraded from the old version yet, the app lacks security features such as a password prompt for the wallet, and there are no automatic delivery options for digital products at the moment.

Brian Hoffman, the CEO of OB1 and head of OpenBazaar’s development told BraveNewCoin that both missing features are high priorities for upcoming upgrades. “I really want to get to that asap but we don’t have a date,” he said. “We are actually going to have a roadmap planning session with the community soon and that will be a big goal.”   

OpenBazaar 2Sanchez adds that the beta testing will last as long as it needs to, “until we’re satisfied that we’ve shaken out the major bugs and identified any edge cases that require fixing […] Beta is really focused on making sure that the full release just works, transactions have the right fee, and every feature functions as advertised.”

One major area that the team is working on is fine-tuning Bitcoin’s fee estimation, which he says is critical, “It’s very tricky, but we’ll do the best we can, and I don’t doubt that the community will improve fee estimation tools over time.”

After that, the team plans to work on a new way of letting vendors add more robust content options for describing products. “Our goal is to let users curate pages of content with different styles and products, etc.,” Chris Pacia, OB1’s Lead Backend Developer shared with BraveNewCoin. The feature probably won’t make it into the full release, but he hopes it will be included by the end of the year.

“The important thing about what comes next for OpenBazaar is that we now have a solid foundation to build the decentralised marketplace on,” Sanchez pointed out. “It took us some time to get here, but now we have a great foundation, we can start pushing adoption and rolling out specific new features.”

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The imperative for self-sovereign identification » Brave New Coin

The imperative for self-sovereign identification » Brave New Coin

I’m making a presentation on cybersecurity this week at our Nordic Finance Innovation meetings. This meant preparing a few new slides from scratch as I don’t have a set deck for cybercrime, and sat and started ideas just as the news dropped about the Equifax breach. You’ll all know about this by now, but over 143 million Equifax accounts were hacked during June-July 2017, including customers’ social security numbers, name, address, date of birth, driving licence and other sensitive info. In other words, all the information you need to open new accounts and access existing accounts.

As we have known for a long time now, it is no longer good enough to use customer’s personal information for account access. After Ashley Madison and so many other incidents (Tesco Bank, Lloyds Bank, JPMorgan Chase, SWIFT, the Federal Reserve, the IRS, the Department of Homeland Security eBay, Yahoo, Google, Adobe, Target, Neiman Marcus, Home Depot …), surely we should be moving away from this antiquated system. Bear in mind it’s been used for almost two decades, it’s no wonder the system is no longer working.

So the banks add second-factor authentication (2FA) with secure entry pads and PINs, but they still rely on personal information for account access when you ring their call centres, and this is just annoying.

Yes, I may need to know my mother’s maiden name, first pet’s name, favourite rock band and inside leg measurement when I ring my bank, but then they add we just need to ask a few more questions before we access your account and my heart sinks.

In particular, questions like name a regular monthly payment set up on your account and the amount paid or name the last three transactions where your was card last used and for how much leaves me irritated, as I’m sure it does everyone else. In fact, when calling just to ask why my card is blocked, the five or six account access questions are plain annoying.

Is there a solution?

Of course. In fact, there’s two. First is biometrics and TouchID, voice, eyes and more can easily be used for authentication via a smartphone. Why banks aren’t incorporating these into their onboarding and access mechanisms beggars belief …. or maybe not, as banks would need modern systems to use such radical authentication techniques, and that’s a big ask. Far easier to rely on name, address, date of birth and all the information the hackers stole from Equifax.

Even then, I’m not a huge fan of biometrics if I’m honest, as it’s also hackable as it’s data. If it’s data it can be compromised and replicated and mimicked. I am far more a fan of the second solution: a self-sovereign identity scheme.

This is explained really well by Rhodri Davies on the Charities Aid Foundation website:

Emerging technologies (particularly blockchain, although not exclusively) are making the development of “self-sovereign identity” a real possibility. Trustworthy identification has been one of the main challenges facing the internet ever since it was invented, because none of the traditional, offline means of verifying that someone is who they say they are apply (as famously encapsulated in a New Yorker cartoon by Peter Steiner in 1993, in which two dogs are seen using a computer and one is saying to the other “on the internet, nobody knows you’re a dog.”) The way this challenge has been overcome up to now is to rely heavily on the role of trusted third parties (banks, government agencies, the Post Office, law firms etc) as guarantors of identity. When it really matters for us to know who someone actually is on the internet, it almost inevitable involves recourse to one of these third parties to confirm it. This gives these organisations a huge amount of power. (You can read more about the challenges of identity on the internet in this fascinating article by Kim Cameron of Microsoft)

We might be on the brink of a fundamental shift in the way that personal identity works – one that will make many existing systems and rules entirely redundant.

The basic idea behind self-sovereign identity is that rather than have our information held by third parties (often without us even knowing what that information is) and used to guarantee our identity and make decisions that affect us; we could turn the entire model on its head and give each individual control over their own digital identity.

Obviously, this identity has many different aspects that are only relevant or appropriate to certain contexts. For example, you might want a prospective employer to be able to access information about your educational qualifications, but you probably don’t want them to be able to see that you are also the life President of a Mighty Morphin’ Power Rangers LARPing society.

Currently these different aspects are kept separate by virtue of the fact that the information is held by different third parties, but that means that you have little control over when this information gets shared. So the LARPers might grass you out to your employer for some reason, or- more seriously- a healthcare provider or a wearable fitness tech device might pass on data to insurance companies that would affect your premiums. With self-sovereign identity, you would hold all of the different elements of your online identity in a “box” or “wallet”, and would then be able to choose which of those elements to reveal in any given context.

With self-sovereign identity, you would hold all of the different elements of your online identity in a “box” or “wallet”, and would then be able to choose which of those elements to reveal in any given context.

As Don and Alex Tapscott put it in their book Blockchain Revolution:

“What if ‘the virtual you’ was in fact owned by you – your personal avatar ─ and ‘lived’ in the black box of your identity so that you could… reveal only what you needed to, when asserting a particular right. Why does your driver’s license contain more information than the fact that you have passed your driving test and demonstrated your ability to drive?”

Self-sovereign ID would give us far more control over which information we release, and raises the intriguing possibility that we could start charging organisations for our data.

We need not get in the detail of how blockchain could make this work here (You can find out more from a blog by Antony Lewis from R3 or by checking out the work of organisations like Evernym or uPort who are working to make self-sovereign ID a reality), but the basic facts to be aware of are:

  1. The technology offers a way of creating and maintain an immutable record of transactions
  2. This record is public
  3. All kinds of things can be recorded on a blockchain, including ID information (or, more likely a hash of the information, as putting your entire ID on a public ledger is probably a recipe for disaster.)
  4. Different parties could access the relevant information recorded on the blockchain, thus removing the need for the information to be stored in multiple locations
  5. There are cryptographic techniques (e.g. “zero-knowledge proofs”) which would make it possible to confirm that you have a particular piece of identity documentation without having to disclose any of its content.
  6. There would probably have to be a role for trusted authorities of some kind to confirm that the information recorded on the blockchain matched that in the real world (in much the same way as organisations like the Post Office currently play a role in the UK government’s Verify scheme by checking that someone has the relevant passport/driving licence before they are issued a verify ID that they can use in interaction with other agencies like HMRC etc.).

I really like this idea as it flips the ownership, verification and authentication process from third parties (trusted and untrusted) to me. I own my identity and I allow access to a persona of my identity on demand. I’ve blogged about such things before and wrote a long blog entry over a year ago about digital identity ledger-based systems. Nevertheless, I am not advocating that blockchain solves everything, as illustrated by this proof of concept summary paper from Rabobank. It just gets us along the way.

All in all, it is pretty frustrating that time is passing by so fast and yet the industry is not moving to keep up with the needs for improved online authentication. Hopefully they will eventually.  Meanwhile, I hear some banks are thinking of using our DNA to authenticate. Go to a cash machine and spit on it for cash. Pop into a branch and give blood to get a loan. Sounds about right.

 

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Blockchain opportunities in atypical markets » Brave New Coin

Blockchain opportunities in atypical markets » Brave New Coin

As virtual currencies skyrocket in value and credibility, more and more people are beginning to take a serious look at blockchain technology to disrupt various industries. Banks are already adopting the technology at a breakneck pace: a 2016 report by IBM predicts that by 2020, 66% of banks worldwide expect to be using blockchain at scale in their commercial operations.
But what is blockchain technology, exactly? The concept of a financial ledger goes back to the dawn of civilization, with transactions recorded in base 60 on cuneiform tablets. Clearly, the technology has come a little way since then, and blockchain is just the next step in that evolution. According to Don and Alex Tapscott, authors of Blockchain Revolution, “the blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Have you ever shared documents for editing? A traditional electronic document (think MS Word) must be transferred to an editor, where changes are made locally, after which the document is sent back. Google Docs revolutionized this process, making it possible for teams to edit documents in the cloud in real-time, keeping a record of all changes. This is how the blockchain works, whereas centralized banks are stuck with the “MS Word” paradigm.

This is why it takes so long to transfer money: the ledgers on both sides must be updated individually while the transfer is performed. Blockchain makes the whole process much faster, easier, and more secure, because it’s conceivable that financial records can be hacked and altered at an individual bank, but when records are hosted in the cloud, the other 99%+ of nodes will still have the authentic blockchain record.

So what does all this mean for the future of blockchain adoption? The technology sector was the first logical step, and the gaming industry is already seeing the benefits of blockchain technology, making it easier for gamers to purchase in-game items, and giving them more incentives to trade using virtual currency. This also eliminates middlemen such as Steam, Apple, and Google from siphoning substantial revenue (up to 30 percent) from game developers, and making them wait up to 60 days to receive payment for their work.

Another industry that’s being disrupted by the blockchain concept is real estate, where the same advantages will serve to ameliorate the often risky and cumbersome process of buying property. In this case, the middleman is the escrow or title company, which usually takes 1-2% of the total value of the property — not an insignificant figure — to ensure both parties’ honesty and legitimacy.

Again, the distributed nature of a blockchain automatically ensures this credibility, which also prevents fraudsters from posing as sellers and bilking potential buyers out of their money. Another great advantage is transparency: in a blockchain, buyers’ credit history and income will be readily available, and homeowners can prove ownership of the property and provide a complete record of repairs and upgrades.

The possibilities don’t end there: even sports can see a new era of revitalization, as up-and-coming talent finds new ways to get funds for their training, and coaches, talent scouts, and fans get an opportunity to be a part of the process. A new ICO called TokenStars has bold plans to disrupt the 40-billion-dollar talent management industry, and will apply the blockchain concept to tennis, offering ACE tokens as part of the funds collection to tokenize tennis stars’ careers.

Elena Masolova, TokenStars investor backer and Forbes top-30 internet entrepreneur, explains, “Aspiring tennis players need approximately $100K a year to build a career. Some have to put everything at stake, just like Olympic medalist and 5x Grand Slam winner Maria Sharapova, who came uninvited from Russia to Nick Bollettieri Academy in Florida at the age of 9. Her father had to work as a dishwasher just to cover her bills. Later she earned $36.5M in prize money and $285M in sponsorship deals. With ACE, young players like Maria Sharapova can get funding help covering their academy costs, coaches, sparring partners, and tournament participation, as well as support in signing sponsorship agreements.”

The list goes on, but we believe that as blockchain technology continues to penetrate all spheres of life, everyone stands to benefit: banks, realtors, gamers, athletes, sports fans, and just about anyone else you can imagine. This is a trend that’s definitely worth watching.

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Thomson Reuters adds Bitcoin Liquid Index (BLX) to Eikon » Brave New Coin

Thomson Reuters adds Bitcoin Liquid Index (BLX) to Eikon » Brave New Coin

We are excited to announce that Thomson Reuters has added the Bitcoin Liquid Index to their award winning Eikon terminal. By adding a single, reliable USD price discovery tool and reference rate for Bitcoin, the Eikon terminal now extends its market data offerings beyond its traditional financial coverage and firmly enters the cryptocurrency space. The BLX gives Eikon’s growing network of professional and business subscribers a trusted live feed for gaining a competitive advantage.

Thomson Reuters has lead the way as one of the most relied upon sources for financial and business intelligence. Their Eikon software package connects its users with critical and timely feeds from over 400 exchanges and OTC-traded markets. Over 210,000 Eikon Messenger users have access to trusted news content, data, analytics and insights, filtered to their exact needs. Available on both desktop and mobile devices, the Eikon trading software provides access to deep pools of liquidity, professional networks, expert analysis and insights on emerging and complex markets.

Thomson Reuters is one of a growing number of vendors and distributors that carry BNC data, which includes financial industry stalwarts like Tullett Prebon, buy-side specialists like RIMES and connectivity provider Colt.

Thomson Reuters’ decision to incorporate the BLX as a trusted source of digital currency data builds on BNC’s relationship with Tullett Prebon (TPICAP), an Interdealer Broker (IDB) and specialist financial intermediary headquartered in London. With offices in 24 countries and over 2,600 brokers and staff that provide brokerage services to clients, including commercial and investment banks, Tullett Prebon selected BNC to provide much-needed transparency and data coherence for this fast-emerging asset class.

Quick also recently started displaying the BLX on their Active Manager desktop service, on 5-minute delay, through their connection with TPICAP. Quick is owned by a consortia of banks, financial Institutions, asset managers, the Japan Exchange Group, and Nikkei. Active Terminal is Quick’s main data and analytics platform for professional and institutional clients. Given the significant crypto currency market and regulatory activity in Japan, there is an increasing need for market and reference services such as the BLX.

The Brave New Coin (BNC) Bitcoin Liquid Index (BLX) provides a USD denominated Bitcoin price point at 30-second intervals. The BLX was designed by mirroring data dimensions that are paramount to traditional financial indexes, such as the liquidity and the quality of the constituent exchanges. BNC periodically reviews the mix of exchanges it uses for the index calculation, taking into consideration shifts in market preferences and allowing for new participants that provide sufficient liquidity and trade signals.

Taking the volume weighted average from each of the exchanges’ transactions, the BLX uses a proprietary algorithm to aggregate the base exchange prices, taking into account metrics such as order book depth and trading history. The BLX API delivers a live feed, and supports fine granularity, via historical tick data for bitcoin market trading, dating back to the beginning of trading on MT Gox in early 2010. End-of-Day (EOD), Open High Low Close & Volume (OHLCV), Time & Volume-Weighted-Averages (T-WAP & V-WAP) are also included.

BTCINX 2

 The Reuters Instrument Code (RIC) assigned for the Bitcoin Liquid Index is , and the BNC company page is referenced as TR: BLXINDEX.

The BNC BLX API is also available through the following partners:

  • RapidAPI/Mashape – open source software developers that house and support a growing list of API’s for DevOps and IT Teams
  • Quandl – a data provider with a platform used by over 200,000 people including analysts from the world’s top hedge funds, asset managers, and investment banks
  • DatastreamX – a marketplace for buyers and sellers of financial data including historical data along with real live streams and event based data
  • Cloudquote – an API data warehouse that connects top tier financial data providers with vendors
  • RIMES – who deliver cloud based specialist managed data services and regtech solutions to asset managers, owners and servicers worldwide
  • Benzinga – a financial media outlet that serves dynamic, actionable and innovative content used for analysing and picking trades. In addition, BNC’s market data is used by a growing number of trading and portfolio tools, including investFeed and TradeStops.

The BNC BLX is the latest offering in its API data emporium which also includes:

  • Digital Currency Exchange Rates API – accurate exchange rates for over 280 cryptocurrencies across more than 1000 markets, dynamically generated every 5 minutes, including historical price and volume data.
  • Digital Currency Daily Index API – historical daily index prices with open-low-high-close & volume, supporting over 1000 trading pairs.
  • Digital Currency Tickers API – a free digital currency spot price index API updated every 5 minutes to provide price-discovery & support for more than 200 digital currencies, and a converter utility for conversion between Digital & Fiat rates.
  • Bitcoin B-WAP API – a unique block weighting algorithm that delivers the USD value for any historic transaction based on its block inclusion.

BNC is also preparing to release APIs for its Ethereum Liquid Index (ELX). A direct companion to the BLX, the ELX applies the same rigorous methodology to the Ethereum marketplace. Further details will be provided on availability in coming days.

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Bitcoin, Cherch of Blerk, and Brave Volunteers Connect During the Destruction of Hurricane Harvey

Bitcoin, Cherch of Blerk, and Brave Volunteers Connect During the Destruction of Hurricane Harvey

The International Cherch of Blerk (IOCB) is a fully registered crypto-based 501c3 and recognized religion. It is a revolution in peer-to-peer charitable giving and volunteer work using cryptocurrency to give aid where needed during times of crisis.

CoinIdol interviewed Cherch of Blerk Founder and Executive Director, who is also an Attorney, Jason Seibert along with Dr. Rhiana Ireland, an Emergency doctor with an emphasis on EMS and Pediatric Emergency Medicine. Jason Seibert describes how the organization emerged and why Bitcoin is an integral part of its operation. 

“This organization was formed at the beginning of August, but it has been in the planning phase for over a year. There are many people that want to do good, but they don’t want to be affiliated with traditional systems – they wanted something that fit them. People want to know that their charitable giving is going to those that need it – what we call Boots on the Ground giving. We don’t do anything without having eyes on the scene to determine the most impact we can make for the situation. For those that like that kind of thinking, BLERK fits them as a charity. If you wish to believe in our religion, Blockchain, great, if not – it doesn’t matter, those that receive the help don’t care if you believe or not. 

Blerk’s model, as an actual religion and registered 501c3 means that the activities of the organization, donations to it, and the eventual mining and currency activities, will all benefit the users of the network as a vehicle for doing good, but will also provide those incentives to give that traditional organizations like the Red Cross enjoy. 

We had a man two days ago that made a large cash donation, but he wanted to make certain that we were truly a real organization (funny name, serious works). I delivered our Texas formation documents and the IRS letter with our Tax ID number on it, and he handed over cash for us to deploy to Port Aransas and Rockport. This is real. 

Bitcoin/Cryptocurrency adds a unique layer of flexibility, speed, and accountability that traditional FIAT systems just can’t provide. With Crypto, we can put boots on the ground without having to ship anything but a human being and a cell phone. Once that point person is on the ground, they survey the scene, make a wish list, and crypto pours into their phone. Working with local exchangers, that crypto can be quickly converted to local FIAT for supplies, services, and goods to get things moving as quickly as possible without the need for lengthy customs checks at the docks, or paperwork that prevents action from happening in the disaster phase.” 

Jason Seibert

International Cherch of Blerk Delivers 

CoinIdol asked Dr. Rhiana Ireland how long she’s been an Emergency physician, what her role is within the ICOB, and how this organization was vital during the Hurricane Harvey crisis and its aftermath. 

“I have been in Emergency Medicine for 11 years. I trained in South Central Los Angeles with a heavy emphasis on EMS and Pediatric Emergency Medicine. From there I was the Pediatric ER attending in East Los Angeles, prior to moving to Texas. I have worked for various agencies here in Texas responsible for disaster response and Ebola readiness for East Texas. I currently work at St Michaels ER in Sugarland, Texas. 

I work with ICOB as the Medical Director and Disaster Coordinator. Each disaster is different, sometimes my work involved being the medical director at the shelter clinics directly treating patients, other times I have been meeting with city and county leadership at the Emergency Operations Center. 

ICOB was vital during Hurricane Harvey. League City Texas had only one shelter for over 100,000 residents and it quickly became overwhelmed with evacuees. The Red Cross had only 3 volunteers in the shelter none of which had any management experience in mass casualty situations. The shelter took all evacuees, many of which had major medical conditions that required immediate medical assistance. There were two pregnant patients both of which due to deliver in less than two weeks, postoperative patients with surgical wounds contaminated by flood waters, and asthmatics who needed immediate breathing treatment. Ambulances were unable to respond due to high call volume and unable to transport patients due to flood water causing hospital evacuations. Without ICOB and the medical supplies we brought, these patients could have died. 

One of the reasons I became involved with Cherch of Blerk is because they believe in having ‘boots on the ground’ during disasters. This means that our members are at the disaster site determining actual needs rather than depending on second or third-hand information. One of the difficulties in Hurricane Harvey was the multiple rumors that spread throughout the shelters, inciting panic. Evacuees heard that levees had been breached and that the water had been tainted. By being there with city leaders we were able to get accurate information and then dispel those rumors.” 

Dr. Rhiana Ireland

Coordinating Disaster Relief 

CoinIdol inquired about his role as the Cherch of Blerk Executive Director and Bitcoin Attorney during the Hurricane Harvey crisis and its aftermath. Surprisingly candid, Seibert explains that he wore many hats during this emergency crisis. 

“Nobody wants an attorney when their house is flooded, they are cold and wet, and don’t know where they are going to sleep. I wore multiple hats. For the most part, I was in the kitchen! I worked with local leadership to let them know I was available, but they didn’t have anyone during the disaster that could coordinate the acquisition, logistics, and protocols to run a disaster kitchen. Dr. Ireland ran the medical and EMS services side; I ran the food and logistics side. I did have to be a lawyer from time to time to resolve conflicts between the Red Cross and local nurses, as well as the Red Cross and shelter leadership, which is unfortunate. The Red Cross has their way of doing things that may be good for a single-family house fire, but as for huge disasters – they really don’t have the training on the ground and in place to handle the situation. It’s been a real eye opener at just how unorganized and incapable the Red Cross is.” 

When CoinIdol asked about how challenging it was to coordinate and create several shelters in Galveston County, Texas along with producing nearly 12,000 meals for four shelters, Seibert shares how the community collaborated by volunteering in the midst of this tragedy. 

“The volunteer effort in the community was amazing. There is a time in any massive effort where you really have to step back and let others serve. For example, T-Bone Tom’s, a local BBQ place made famous by the Food Network, showed up and cooked outside in the storm for 13 hours to make chicken and sausage. A local seafood supplier provided a refrigerated truck so we could keep all the food cold until it was time to prep for meals, members of the community poured in dried goods and supplies. We never had a shortage of volunteers. 

As for victims of the flood – they absolutely wanted to help, but we had enough volunteers that were not impacted so there was no need, and frankly, that was ideal. Flood victims are exposed to all kinds of bacteria and contaminants. We ran a full infectious disease and contamination protocol out of the kitchen. It would be hard to keep those protocols if Uncle Harvey walked into the kitchen to help, covered in raw sewage.” 

Dr. Ireland adds, “The community was amazing. I began posting live feeds from the shelter and as soon as people became aware they showed up to help. People put their entire lives on hold to bring in supplies, dry off hypothermic patients and began pushing out hot meals for hungry evacuees. Money is important in a disaster, but so is someone being there for you, getting you out of wet clothes and bringing you a hot meal. Our community was lucky however, we took primarily flood damage and retained city services. ICOB went to the eye of the storm in Rockport, Texas and no part of the town remained unscathed. The city has no working sewage, power, or cell phone communications which create so many hardships for the citizens who are trying to bounce back.” 

Red Cross Falls Short 

Seibert shared with CoinIdol the effort of Blerk’s volunteers and Dr. Ireland as they assisted in advising local officials on how to proceed during the crisis. Seibert explains that the lack of experienced help from the Red Cross was glaring at this crucial time during which Houston was being inundated by flooding and disastrous winds from Hurricane Harvey. 

“Dr. Ireland is a fully trained Emergency Room Doctor who trains EMS on situations just like this. She was instrumental in getting facilities open, maintaining calm in leadership by having a structured plan to open and close shelters, getting families the help they needed, and, when necessary, being the bad guy by telling shelter residents it was time to leave for their next destination. As a lawyer, when I wasn’t cooking, I advised leadership on their liability in the numerous facilities, best practices under good Samaritan laws, and how to proceed in a humane way while still accomplishing the mission. 

The Red Cross claims they were cut off by the storm. As a fraud lawyer, I’m not sure I’m inclined to believe them; however, that’s really not for us to decide. The truth is the young man from the Red Cross that was running the Bay Harbor Shelter, the only ‘Red Cross’ shelter in the area, was untrained, overwhelmed and completely unprepared. There were two other volunteers from the Red Cross that tried to step up, but they had little experience as well. Bay Harbor is a church, and through Blerk’s advice and strategies, they quickly took back control of their facility and flourished while serving the community. They did a great job.” 

Dr. Ireland explained her first-hand experience with the initial Red Cross response. “The initial Red Cross response was inadequate to the scale of the disaster and I cannot say exactly why that was. We know that the Bay Harbor United Methodist Church initially was told they would have 16 volunteers and only take in 100 evacuees. On day one of the disaster only 3 volunteers came to the shelter and the church took in over 700 evacuees. The Red Cross has been plagued with scandals in recent years regarding their handling of disasters and the ProPublica and NPR series on them from a few years ago may give more detail as to the problems with the institution. 

We had well over 50 volunteers between the 4 shelters I helped manage. Some people provided direct care, some donated medical equipment from their own practices and medical supplies.

The HEB in League City, before being flooded out, was able to get us medications free of charge from their pharmacy. I am indebted to them for all of their help.” 

Bitcoin To The Rescue 

Seibert disclosed to CoinIdol how difficult it was to get supplies during the crisis and what challenges the team faced after Blerk’s truck died. 

“Scrounging for supplies was tough at first, but the community response was amazing. We quickly figured out that there was no magic truck of food and supplies coming from the government or the Red Cross. A local grocer was still open. With the limited funds Blerk had (we just opened!) and with community volunteers, we rounded up ‘high profile’ vehicles and made a grocery run after grocery run and filled the refrigerated truck with as many supplies as we could, knowing we were going to have to hang on for at least five days. Also, members of the community made direct donations by purchasing thousands of dollars of food as well. Tookies Seafood and T-Bone Toms were great examples of that. 

As for Blerk’s truck, it was a true champion. It crossed many flooded roads and access ways to get medical supplies, food, and personnel to multiple needed destinations. After it suffered damage from debris, and water in the systems while making one last crossing, our ability to keep medical supplies and food moving was severely limited.” 

Seibert reveals to CoinIdol how Bitcoin played a major role in the solution. 

“We needed another truck. The supply of trucks in the Houston area after the flooding was pretty limited. I put out a call on social media for anyone that knew of an available truck. After calling around, we found the perfect vehicle, a diesel 4×4 chevy truck with a crew cab. It was 70 miles away on the north side of Houston and we were on the south side. After working with the dealer to secure the truck, I realized we didn’t have enough funds in the Blerk coffers to make it happen, I had to make another donation from my own funds. 

I contacted Rob Gonzalez in Dallas (registered FinCEN MSB), and asked him if he could liquidate my assets and wire transfer those funds to the dealer. Rob said, ‘No problem. Oh – wait… it’s after 3 pm on Friday and the banks won’t be open until Tuesday because of the holiday.’ Okay – we switched to cash. Rob worked with another FinCEN broker, Jesse Wilkinson, to get cash on the road and in the dealer’s hands in under four hours. I drove the truck off the lot that night – of course, I had to ride my motorcycle through an awkward route through Houston (flooding), and then load the bike in the back of the truck for the return trip to League City, but it all worked out. If I had to rely on a bank, we would have been shut down for the entire weekend. As a result, we were able to get over to Port Aransas and Rockport (ground zero) and deliver direct aid to the front lines in the form of monetary support and supplies.

Dr. Ireland continues, “Bitcoin has helped the relief efforts by allowing us to rapidly scale up as the disaster presented itself. We lost equipment during the hurricane and were not nimble enough to allow us to buy things late at night and during the weekend. Banking hours are fixed but a hurricane doesn’t care about that. Bitcoin is a 24-hour currency for a 24-hour disaster.” 

How Boots on the Ground, Cherch of Blerk, and Responsive Bitcoin in Crisis Mode Saved People 

Discussing the challenges of this flooding disaster, Seibert explains how each crisis is different and how innovation and personal effort are key as the government and Red Cross did not save them. Lessons learned will be used for future experiences such as another disastrous hurricane. 

“Each disaster is different. Each situation is different. That’s why boots on the ground and targeted efforts are so important. We’ve already been asked to try to find medical supplies and sleeping cots (of all things) in advance of Hurricane Irma.” 

As the Cherch of Blerk founder, Seibert reflects on what he has learned from their first disaster. “I formed the Cherch of Blerk, so I guess it makes sense that I’m the Executive Director. I’ve learned that if you are going to wait around for the government to save you, that’s a long wait for something that’s not going to happen.” 

The coordination success of Blerk’s efforts differs from other crises Seibert has been involved in. “It took folks a bit to get used to the idea that someone, where a shirt said “Cherch of Blerk” on it, was an expert on anything. After that barrier was gone, everyone got down to work.” Though the Cherch of Blerk is a registered religion, the word “Cherch” is spelled this way out of respect for more traditional faiths that use “church.” Blerk is at the core of how this religion is defined: BeLiEve in Random Kindness. 

Dr. Ireland also reflects on the inspiration of volunteering during this crisis and people helping each other during a momentous time of need. “I will never forget the enormity of this disaster. It is awe inspiring to see a helicopter, the national guard Humvees and giant dump trucks filled with people just trying to escape from the storm. I remember standing in the rain as a city dump truck arrived with the back loaded with people and pets soaked to the bone in the rain. People were handing us all their worldly possessions, their entire lives in trash bags, passing us their children just needing someone to shelter them from the storm. 

Without Bay Harbor Church, people would have died. It was able to withstand the flood and was the staging ground for food, warmth, and medicine. The volunteers’ generosity prevented the church leaders from getting overwhelmed and allowed them to continue working problems in real time to allow us to scale up to meet the needs of the disaster. Government is good at handling many parts of national disasters but in the beginning, it is volunteers and the community who puts itself in harms’ way to take care of each other.
As a result of this experience, Seibert respects the power of Bitcoin even more and realizes how it can benefit future charitable organizations and causes during times of crisis. 

“We didn’t fully use the power of Bitcoin in this disaster response. We only scratched the surface. We hope to get the token launched (which we delayed so we could focus on Harvey efforts) so we can get our software and services ramped up and out the door. We have so many great ideas based on the lessons learned from this and other disasters. 

But our uses are not limited to just the software side, we are using innovations in hardware as well. We are using lessons in high-density rack design, based on mining equipment, to recalculate power consumption to configure lithium batteries more efficiently to power field refrigerators for medical supplies. Yep – read that last sentence again. Just awesome. Bitcoin mining tech revolutionizes medical delivery. It’s awesome.” 

Hurricane Harvey

Value of the Human Spirit and Lessons Learned from Collective Collaborative Creativity 

CoinIdol asks Jason Seibert and Dr. Rhiana Ireland what lessons they learned from collaborating and operating during a real-time disaster such as Hurricane Harvey. 

“The biggest lesson I learned was that ‘ignorance is the demon.’ There was a time when I was really tired. I think I had been up for 3 days, we were slammed, nobody knew if or when the flooding would stop. I got word that a man on dialysis had been discharged from a hospital and was at the front of the shelter. The shelter had to turn him away and they had no idea where to send him. It was only a matter of time before he would die. 

We always had hot chicken and rice soup on the stove for anyone that walked in the door. I grabbed a bowl and a slice of bread, a few bottles of water and walked it up front myself. The man was frail and hunched over in his wheelchair. I placed the bowl in front of him and he looked up at me and smiled. I shook his hand. I walked back into the kitchen and went to the sink to wash my hands, but just shut down. I couldn’t move. ‘Did I just give that man his last meal?’ I was overwhelmed with the disaster and the tragedy. I started to sob. Bay Harbor is a Methodist Church, and its leader, Pastor Paul, saw me and asked me how I was doing. ‘I just need to reset,’ I said. He invited me to visit the Church’s sanctuary. I did. 

In that moment, I realized that I could not know or own what happens to every person that walks through the door. We can only serve those that are right in front of us the best we can, and then allow them to be served by the next. If we focus on the thought of ‘what will happen to that person next?’ we will never be able to help the person that is right in front of us. It took me a few minutes to resolve, reset, and get back in the game. 

As for human spirit, creativity, and inspiration, it thrived for four days as the community fixed its own issues. League City is in the phase called, ‘return to normal.’ That means that the disaster is over, recovery is nearly complete, and folks are getting back to their lives. But just a few miles away, there are houses still under water. We have a lot of work to do.” 

Dr. Ireland shares the lesson she learned by being a witness, volunteer, and Emergency doctor when people were in desperate need of help during a grand scale crisis. 

“The most important thing I realized from this was that people are the most important resource in a disaster. Some people truly rise to the occasion in stressful situations and those people become indispensable in an emergency.”

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Canadian regulators striking balance with Initial Coin Offerings » Brave New Coin

Canadian regulators striking balance with Initial Coin Offerings » Brave New Coin

Initial Coin Offerings (ICOs) have raised US$1.5 billion this year alone, compared to US$100 million in all of 2016This FOMO-inspiring figure is thanks to the until recently near-complete absence of any securities regulations. In most cases, companies have raised funds entirely in Bitcoin and Ether, and did not put investors through any Know Your Customer/Anti-Money Laundering (KYC/AML) process.

But regulation is coming, and depending on the jurisdiction, companies who have held ICOs in the past could be held to existing securities laws, and this could put a chill on the red-hot ICO market. At the heart of if and how to regulate an ICO is one question; Is a token a security?

Securities are well-defined, and definitions are similar from one country to the next. The most oft-used definition for a security, the “Howey Test,” comes from a US Supreme court case. The test determines whether a transaction is considered a security, and there are four condition that need to be met:

1.    It is an investment of money.

2.    There is an expectation of profits from the investment.

3.    The investment of money is in a common enterprise.

4.    Any profit comes from the efforts of a promoter or third party.

However, each jurisdiction has its own particular set of laws governing what exactly a security is and how they are regulated, and this determines how ICOs are seen.

This quickly evolving world of regulation can be divided into several categories; Jurisdictions where tokens are explicitly deemed not to be securities, think Singapore and Switzerland; Jurisdictions where securities regulations are non-existent, not enforced or can be influenced with money, think much of the developing world; Jurisdictions where authorities are watching and waiting to decide how to regulate, and possibly punish, companies holding ICOs, think USA, Russia, Australia, and Canada; And China, where regulators recently banned ICOs completely.

China has taken the position that all ICOs are illegal, and any funds raised this way must be returned to investors immediately. While this caused an immediate drop in markets, both in China and abroad, there is speculation from within China that signs this initial ban will set up subsequent regulation of the ICO market.

Hu Bing, from the Chinese Institute of Finance and Banking, attempted to clarify the government’s position, stating that the move to ban ICOs was meant to protect investors, and China will look to resume ICOs in the future once a regulatory framework has been established.

In the US, the Securities and Exchange Commission (SEC) was eerily silent for a long time, but recently made decisions signaling that they are carefully scrutinizing the cryptocurrency world.

In March, they put the brakes on a Bitcoin ETF backed by the Winklevoss twins. One concern highlighted in the Winklevoss decision was the lack of transparency and oversight in cryptocurrency exchanges, which could lead to price manipulation.

In July, the SEC issued a report concluding that tokens sold by The DAO were indeed securities, and warned the blockchain industry that they must obey securities laws when holding ICOs. While it’s still too early to see the effects of this report, the USA just became a much less attractive home to hold an ICO. Whether this will stifle innovation, or merely cut down on scams, remains to be seen.

Australia, on the other hand, has been proactive in welcoming blockchain innovation. The Australian Securities and Investment Commission (ASIC) has become a world leader in creating conditions conducive to the development and advancement of blockchain and fintech, going so far as to publish an information sheet designed to foster dialogue between regulators and the private sector.

 ASIC chairman Greg Medcraft has an open-minded view to ICOs, stating “They’re a very interesting concept.”

– Greg Medcraft, Australian Securities and Investment Commission Chariman

 In Canada, regulators are attempting to strike a balance, taking action to foster innovation while at the same time emphasizing the importance of protecting investors.

Last fall, the Ontario Securities Commission, which regulates Canada’s largest province and Toronto, the 11th largest financial market in the world, hosted a hackathon at which startups attempted to innovate regulatory solutions using blockchain.

A whitepaper was then published which detailed the many regulatory options made possible by blockchain. Still, the OSC preaches caution, having issued a warning that an ICO could trigger securities law requirements even if the tokens themselves don’t signify an ownership stake in a particular business.

Last month, the Canadian Securities Administrators (CSA) issued a notice entitled “Cryptocurrency Offerings,” which outlines how to apply securities laws to cryptocurrency crowdsales.

The notice confirms that, in the case of a token fitting the definition of a security, a crowdsale must comply with all prospectus and registration requirements, as well as KYC/AML regulations pertaining to securities. Also, cryptocurrency exchanges will be considered to be marketplaces subject to the general regulations governing stock exchanges or alternative trading systems.

Time will tell how the increased friction in the purchase process will affect ICO earnings, but signs from the first post-regulation ICO are encouraging.

The first company to receive an exemption to hold an ICO in Canada is impak Finance, which was accepted into the sandbox of their home province of Québec’s regulator, L’Autorité des Marchés Financiers (AMF).

This exemption gives regulators the opportunity to observe the new crowdsale regulations in action, and to understand if the regulations put in place adequately protect investors.

impak Coin, which is designed to grow the impact economy by incentivizing spending and investment in socially impactful companies, was deemed to fit the definition of a security according to the AMF, as there is a reasonable expectation of profit.

Receiving this exemption was a huge vote of confidence for impak Finance from the AMF, and its case was certainly helped by the fact that the company is in the process of launching a debt fund that will lend to businesses creating a positive social impact, and a digital bank that invests 100% of its deposits in the impact economy.

But with this vote of confidence brought a significant added workload. From a technical perspective, working with the regulators to add the necessary KYC/AML protections, as well as stringent security standards, made the crowdsale’s website more complex.

The increase in friction to buy impak Coin raised questions of how many investors would be turned off by the process, and whether the increased complexity of the site would be able to withstand the crush of traffic on the first day of the ICO. Making these improvements to the original plan took added time, receiving the regulatory approvals at each step took even more time, and thus led to significant delays in the launch date.

The key to success was to be completely transparent every step of the way, sharing the experience with investors to help them understand the benefits of this added protection. Specifically, the KYC/AML requirements limit investment by a participant to $2,500 unless the participant can prove that they are an accredited investor or an eligible investor.

These requirements undoubtedly left some money on the table by deterring some investors wishing for complete anonymity, but for a token designed to incentivize spending over holding, anonymous investors with no intention to participate in the ecosystem offer no real value anyway.

The evolving global regulatory frameworks provide an opportunity for investors to see a company’s true intentions. If projects choose to launch in jurisdictions where regulations are in place to protect investors, it’s a good sign that the project has a real long-term plan. If companies choose to launch in regulatory-free zones, it’s a fair question to ask whether the ICO is designed to support a real project, or to raise the maximum amount of capital for its founders.

While the KYC/AML process will inevitably deter some investors wishing for complete anonymity, this anonymous speculation on cryptocurrency leads to artificial demand, and distorts the price of a token.

So far, impak Coin’s experience has been encouraging. In the first two weeks, the ICO has raised C$1.32 million from over 1900 investors in 52 countries. For the time being, the wide range of options for regulatory jurisdictions leaves other blockchain projects with some choice of where to hold their ICO. It will be interesting to see how investors respond to companies’ choice to regulate, or not.

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machine learning on the blockchain » Brave New Coin

machine learning on the blockchain » Brave New Coin

I don’t usually tell people that I’m a qualified expert in insurance as it’s not relevant, but I’m mentioning it today as I just presented at a private insurance event. There are lots of interesting nuances in insurance. You and I probably think it’s just that once a year renewal of our auto policy, or maybe the regular premiums we pay for life and pensions. That’s an important part of it and is a challenge as people don’t buy insurance, it has to be sold. Think about it. You don’t wake up and think “oh, I might die today! Better get some life insurance”, but you learn through advisory sales that this is what you need to do.

Then there’s a whole other raft of insurance where the real money is made: commercial insurance. Insuring ships, aircraft, offices and employees is where the big-ticket policies arrive. These are more complicated, as the risks have to be calculated in more depth. Under assess the risk and the insurance company loses; over assess and a competitor might steal the business. Equally, the corporate relationship becomes important in this space, as that’s where the strength of understanding the client comes from.

It is not as simple a business as you may first think. For example, how would you calculate the risk of terrorist attack on an aircraft and what price would you put on that policy? Yep, it’s not easy, so insurers have a lot of humans called actuaries who work these things out using math. Now, you know where I’m going with this. Artificially intelligent actuaries.

If my CFO can be an algorithm then so can my actuary and, more and more, is becoming one. In fact, I spoke at an insurance event with Earnix last year and so, rather than me waffle on around AI insurance, I will refer you to their blog to learn more.  They also published some interesting research about how AI will change the insurance industry over the next decade.

Some of the key findings of the survey include:

  • Machine Learning adoption is becoming a significant trend, used by 54% of all respondents and 60% of those from companies with over 5,000 employees.

  • 90% of the survey respondents that use Machine Learning use it in pricing and product management, a result that is likely impacted by a large portion of the respondents coming from these functions.

  • When asked about the top benefits realised by their organizations, as many as 57% of the respondents cited greater analytical accuracy as one of the top three benefits.

  • The most significant promise and expected benefits of Machine Learning moving forward is in greater automation, productivity, and cost savings.

  • Despite the growing adoption, the vast majority of respondents admit significant knowledge gaps when it comes to Machine Learning.

Very good.

I must admit that AI and machine learning for risk management is probably one of the top, if not the top financial application. But that’s more to do with financial institutions’ fragmented data structures that block them from a single customer view than saying it is the best application.

The other big impact technology for insurance for me is blockchain. Yea, sure, blockchain is boring but it’s still going to change the world eventually. I truly believe it is the most underestimated but overhyped technology out there. In fact, it’s all the hype that has made it so boring, as it hasn’t delivered … yet. But when you see the first Ethereum Unicorn appearing and ICOs for new cryptobanks, then you know something is going on and, in insurance, blockchain just makes sense.

This is because one of the underlying principles of insurance is uberrimae fidei, utmost good faith, which is that the insurer asks you a range of questions when you take out the policy or make a claim, and has to trust you are telling the truth. In insurance, it is very different to most industries, in that other industries work on the principle of caveat emptor, buyer beware. If you get screwed by someone who sold you a pup, well, it’s your fault. In insurance, it’s the other way around. They have to trust you, so seller beware. It is why they require full disclosure at the outset and can refuse to pay if you lied. That is their only protection.

Another basic insurance principle is insurable interest: if you are insuring something, you have to show that you have a vested interest in that something. This arose in the 17th century when people took life insurance policies out on the Royalty and celebrities of Elizabethan Britain, on the basis that they thought there was a good chance they might die. It was an old form of betting and as the industry matured, the law changed to say that you could only insure a life that was related to you: a spouse, parent or child; you could not just take a punt on the chance that your grizzly old neighbour might pop it this year.

These two core principles of insurance are so overwhelmingly pervasive for a blockchain application that it almost makes me drool. This is because (a) I can immediately find out through your authenticated data whether you really are 31 years old with a clean driving license, living at the address you entered and with the car you state; (b) I can therefore feel comfortable that you are telling the truth and that it belongs to you.

In other words, blockchain deals at the heart of two of the six core principles of insurance. No wonder the largest insurance companies have formed a blockchain alliance.

The Blockchain Insurance Industry Initiative B3i was launched in October 2016 to explore the potential use of distributed ledger technology, and has 15 members: Achmea, Aegon, Ageas, Allianz, Generali, Hannover Re, Liberty Mutual, Munich Re, RGA, SCOR, Sompo Japan Nipponkoa Insurance, Swiss Re, Tokio Marine Holdings, XL Catlin and Zurich Insurance Group. (The original five members were Aegon, Allianz, Munich Re, Swiss Re and Zurich.)

Again, rather than me talking through the opportunities for blockchain in insurance, Zurich Insurance Group recently wrote an interesting summary as part of B3i:

The widely-held hope is that blockchain technology could deliver a shared and transparent record of industry-wide contract and claims-related information.

While smart contracts and claims automation are technically feasible using alternative technology, the addition of blockchain adds a level of transparency and trustworthiness.

Crucially, blockchain can remove the need for a central authority to control operations, and places the customer in control of the relationship with the service supplier.

For example, automated claims-handling processes based on blockchain technology, smart contracts and publicly available data can be developed. When a certain set of conditions is met, such as a flight being cancelled, the contract can be resolved automatically, without requiring additional assessment.

Not only does this approach increase customer trust, the technology has the potential to streamline communications and transactions by allowing for automatic data transfers in seconds.

“From a customer perspective, they should be getting a better service if we can operate and process claims more efficiently,” adds Alessandro.

Fraud detection and pricing

One of the most exciting possibilities for the insurance sector is the possibility that blockchain could assist in creating an incorruptible, international and cross-industry database that can be used to flag possible signs of insurance fraud.

Given that the ABI estimates that fraud adds an average of £50 to every UK policyholder’s insurance bill, the potential for blockchain to reduce the chances of fraud is intriguing.

The database could be used to detect identity fraud, and to check claims history and police reports, alongside a host of other information that may be required from insurers and brokers when dealing with contracts and claims.

In this manner, contracts and claims could be recorded onto the blockchain, ensuring that only valid claims are made and multiple claims for one accident are rejected. The addition of smart contracts can also ensure that payments are triggered when certain conditions are met and validated.

Reducing admin costs

On a practical level, there is the potential to reduce the cost of insurance by simplifying transactions and minimising the administration burden. By storing contracts and transactions on a shared ledger, not only is contract consistency and execution ensured, but the administrative burden is reduced for multiple stakeholders.

Automation of workflow, while reducing the administration burden, also helps reduce the chances of data entry duplication, and the disputes and delays this can lead to. In addition, blockchain can save time by opening up the potential for the automation of policyholder identity verification and contract validity checking.

“This should result in less administration and effort for brokers”, explains Alessandro, adding that, “the aspiration is that these savings will trickle down all the way through the value chain.”

Cyber security

Another of the main advantages of blockchain, which should help to allay fears of personal data loss, is that the technology is secure by design. The decentralised ledger, which serves to record transactions across multiple computers, removes the central hub that functions as an obvious target for attack.

Crucially, this means that data in a ‘block’ cannot be retroactively altered by any party, ensuring consistent and transparent contracts. According to Alessandro, this means that: “Blockchain can deliver faster cycle times and reduce disputes and errors.”

This presents a significant advantage, as the reconciliation following a major claim can be expensive and time consuming if disparities in the fine print are uncovered following a claim. In the aftermath of 9/11, disparities led to an insurance dispute of $3.5bn.

Ultimately, blockchain technology has the potential to transform how transactions, policies and claims are recorded and reconciled. If B3i ultimately proves the validity of the technology, blockchain could serve to reduce error rates in contracts and claims, boost security and deliver significant cost reductions across the insurance value chain.

All in all, times are very interesting I guess, especially for insurers.

Benediximus amicis meis epularer (so old school these insurance chaps).

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