Welcome to Last week in blockchain. My name is Wim Pelgrim, a blockchain realist and with this weekly podcast you’ll stay up to speed about all the major developments on the blockchain. And please leave a review on iTunes so my podcast will get higher in the search results, share it with your friends and if you listen to this podcast for the first time: subscribe using your podcast app.
This week Gartners predictions for Blockchain, the J.P. Morgan Coin, the bonds for employees at Topicus bought, Veridium and the carbon market, the palm oil industry and a juicy crypto story in the referrals.
Background articles and research
Gartner is a well known research and advisory firm. The company identified the top 10 data and analytics technologies for 2019. Besides terms like Graph, Explainable AI and Augmented Analytics, Blockchain is in the top 10. The core, in their words: “providing decentralized trust across a network of untrusted participants.” But Gartner has some ifs and buts. The most important: although it is in the top 10, it will be several years unit a few major technologies in this field will become dominant. And because the costs of integrating blockchain with your existing data and analytics infrastructure are high, potential benefits aren’t big yet. And that’s what we see in a lot of examples: a blockchain application built as a separate project isn’t adopted wildly, because it is totally new. And blockchain isn’t adopted in existing fields, because it is experienced as an add on. Hopefully we will see a shift in this year.
Companies en applications
Two types of applications I’ll dive into this week: cryptocurrencies created by existing companies and blockchain as part of sustainable growth. Both JP Morgan from the United States and Topicus from The Netherlands are using blockchain in financing their own business processes. JP Morgan is one of the major banks in the United States and it presented their JPM Coin. But unlike Bitcoin, only big institutional clients of the bank can use the tokens. They will use the tokens for international payments, in stead of using wire transfers on decades-old networks like Swift. Two other applications for the token are securities transactions and J.P. Morgan’s treasury services business. All of this, according tot CNBC, is part of the banks preparation for a future in which parts of the essential underpinning of global capitalism is going to the blockchain.
Dutch IT company Topicus is starting a new company and to collect the funding, the company built a stable blockchain token in the form of a corporate bond. Employees could buy the security tokens worth 1 euro each to fund the companies new endeavor. Why the company wanted to receive investments in this way? Managin Director Finance, Michiel Schipper, explains on the website: “Crypto coins fluctuate enormously in value, mainly due to speculation and sentiment about vague underlying values. […] Our token is located on the Ethereum blockchain but is not the end of the investment. It represents a real loan at a physical company. By immediately starting with real money and real value, this project does not suffer from the non-commitment of other initiatives.”. I don’t know if more of this type of investment opportunities exist, but I think it is an interesting development, that opens up investing in companies for the masses.
The other two new applications I want to talk about this week are aimed at a sustainable future. The first is an extensive article about blockchain in the world carbon market on website BBN Times. It writes a background story based on startup Veridium, that is working on a blockchain solution to improve the carbon emission trade. After describing the problems with the current system (lack of transparency, no standardization, limited involvement of the government and increased overhead cost) the article describes why blockchain would be a good supportive technology in this case: blockchain is more decentralized then the current system, all stakeholders can track the status of the product and associated emissions, smart contracts could be used to help payment and administrative tasks and the government can get involved to do the appropriate auditing. On the website of Veridium you can find more information about what they do and check the links in the show notes for the full article on blockchain technology to reduce carbon footprint.
An other product that is in the picture when it comes to sustainability is palm oil. Blamed for deforestation and even prohibited to expand in Indonesia, the palm oil sector is a big one. Europe imported 3 billion liters of oil last year. Besides all kinds of technologies that can improve production and working conditions, blockchain is one of the technologies the palm oil industry is looking into. But Anita Neville, vice president of corporate communications and sustainability relations at Golden Agri-Resources, a large palm oil firm, notes a few problems for blockchain in bulk commodities. “Once it is mixed in large holding tanks with other sources and goes into the supply chain, the blockchain and its inherent traceability is lost.” And secondly: “It’s [Blockchain] not free, and that could prove a barrier to smallholders. Any new system has to be right-sized for smallholders.” So we see a problem that I’ve talked about before: blockchain isn’t a problem solver in every instance: there is always a point at which the real world meets the digital world and that is the point of failure for trust based systems such as blockchain. But Neville is optimistic: “Blockchain is coming, we just need to figure out how to apply it to the appropriate part of the supply chain.” Which is a lesson for all blockchain projects (and technology projects in general): what is the appropriate part of your problem to use blockchain as a solution?
Governments and law
Oh my god!
And if you want to read more, check out these very interesting articles I haven’t had time to discuss with you: Ethereum doesn’t seem to be the favorite blockchain of distributed app builders. And this ranking could be a good predictor for the future of blockchain technology. Two articles following podcast of the last few weeks: in the field of precious minerals: a consortium is working on the security to online diamond trade (cobalt in podcast #44) and ElaadNL, a Dutch firm, is working on an intuitive power grid for electric vehicles using Iota (last week I talked about TenneT, podcast #47). And the juiciest story from the crypto world is the death of the CEO of QuadrigaCX, taking passwords to a lot of crypto wallets with him in the grave. The story is surrounded with gossip, conspiracy and doubt, so if you like a good story, read the timeline by Amy Castor.
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 mentioned in this episode in the description Gartners predictions for Blockchain, the J.P. Morgan Coin, the bonds for employees at Topicus, Veridium and the carbon market, the palm oil industry and all the referrals including the juicy crypto story. And if you like what you’ve heard, share this podcast with your friends and on social media and subscribe to this podcast in your podcast app. See you next week!
Check my website: www.wimpelgrim.nl
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