Last week in blockchain for week 7 of 2018, a podcast with the latest developments in the world of the blockchain.
Welcome to Last week in blockchain. My name is Wim Pelgrim, a blockchain enthousiast and with this weekly podcast you’ll stay up to speed about all the major developments on the blockchain. And that in under 10 minutes!
Last week a lot of news came from the financial world. Fintech is the first field in which the blockchain is broadly tested and implemented. Because the bitcoin was the first successful blockchain application, a lot of people only think about money and finances when it comes to the blockchain. That’s unfortunate, because the blockchain can do so much more.
But looking at the financial sector: after a few years with all kinds of proof-of-concepts, the first real applications begin to emerge. In the next few minute I’ll be talking about ABN Amro’s third party account, paying your taxes in Arizona using the bitcoin, Finterra’s waqf ledger and South Africa’s central bank pilot.
Dutch bank ABN Amro introduced an alternative for escrow last week, using a blockchain ledger. I can’t find the technical details online. A lot of sites copy-paste the press release. What I can make of it is the following: clients can get a special account on the blockchain to keep track of transfers. First partner is Nxchange, a white label broker, that will use the accounts to keep the non-banking transactions under supervision of the official Dutch financial authorities. Why a blockchain solutions is best in this case, I can’t assess. A centralized database could work here to, but I’m not a financial expert: please comment if you know more.
The next real step in normalizing blockchain applications comes from the state of Arizona. The senate has passed a bill that allows citizens to pay their state income taxes using the bitcoin or other cryptocurrencies. The bill has to be passed by the House of Representatives of Arizona, but they’re a big step closer. Representative Jeff Weniger told media the big aim is to make Arizona the place to be when it comes to blockchain and distributed ledger technology, hoping to change the landscape of tech. With the bitcoins volatile value, the bill also has a clause included that the payed taxes have to be transferred to dollars within 24 hours after payment. A smart clause.
But these are just a few examples of blockchain solutions making it to a official state. Most of the examples are still pilots or proof-of-concepts. Finterra’s idea for the Islamic waqf for example. A waqf is a charitable endowment under Islamic law. Finterra wants to help modernize and simplify the finances of a waqf. Nowadays its hard to break even on a waqf and additional funding is necessary. As the Singapore based company states in its press release: “The firm hopes this can provide a more efficient way to raise money, manage and transfer ownership of waqf, which receive donations from Muslims to operate social projects, such as mosques, schools and welfare schemes.”
The South African central bank also works on a proof-of-concept. The bank stated last year a blockchain-enabled central bank cryptocurrency would be “too risky” (Francois Groepe, August 2017). And some journalists are surprised the same bank announced last week they want to replicate interbank settlements on an Ethereum-based blockchain. But a cryptocurrency isn’t the same as a distributed ledger solution, dear CNN. Working on a common truth and trust between competing parties using a shared ledger isn’t the same as creating new digital money. The blockchain isn’t the bitcoin, the bitcoin is a form of blockchain. I see a lot of journalists and others making the same mistake. The initiative of the South African central bank resembles the initiative of 15 insurance companies in The Netherlands, who use a blockchain solution to keep track of the reinsurances between the competitors. I think we’ll see this kind of examples a lot more in the next 12 to 24 months, but press coverage will decline, beca\use these examples will become the new normal. Compare the start of online shops: the first few were big news, today webshops start and close all the time.
Some semi-financial news: Telegram is starting a blockchain platform with a native cryptocurrency. They raised nearly 850 milion dollars before their Initial Coin Offering (ICO). Rumors of this plan started last December, but this week a lot of news about this ICO came out. Potentially, it’s the biggest ICO to date. The white paper that leaked at the end of last year talks about a scalable and flexible Blockchain architecture that consists of a master chain and up to 292 accompanying Blockchains. An interesting idea, but with the warnings about ICO’s I talked about in Last in blockchain #1, I’m hesitant to invest my money here. Additional hesitation comes from the article I linked in the description of this podcast: the Dutch source from website Das Kapital about this news item has a lot of interesting links in it, also to news about recent cryptomining malware in Telegram. Something to think about before investing.
And about investing in ICO’s is this next news item. Vitalik Buterin, founder of Ethereum, has warned about investing in ICO’s again. He did so last year, and posted the following tweet last week.
“Reminder: cryptocurrencies are still a new and hyper-volatile asset class, and could drop to near-zero at any time. Don’t put in more money than you can afford to lose. If you’re trying to figure out where to store your life savings, traditional assets are still your safest bet.”
Just so you know!
Then some non-financial news: land fraud, a problem African start ups want to tackle using the blockchain. Blockchain-based land-titling systems can prevent fraud and bring colonial records of land ownings to the 21st century. Honduras, Rwanda and Georgia already have signed deals to build these systems. Other African countries are thinking about it. I’m curious if Africa, after skipping the personal computer and becoming a mobile continent, it’s going to skip centralized databases and skipping to the blockchain. In about 50 years we’ll know.
And that wraps up this Last week in blockchain. Check my website: www.wimpelgrim.nl for more info on me and my podcast and a full transcript of this episode. Check the links to all the news items I talked about in the description: ABN Amro, South Africa’s central bank, Finterra, Arizona, Telegram, Ethereum and African start ups. And definitely check back next week for my new podcast on Soundcloud!
South Africa’s central bank
African land fraud start ups