blockchain news

BY BEN PAYNTER

The future of world food aid arrived, in early May, unnoticed by its first recipients: the grocery shoppers inside a supermarket at the Azraq camp in Jordan, home to 36,000 Syrian refugees. To be fair, their buying process already looked pretty high-tech, especially for a store with a dirt parking lot in the middle of the desert.

Before paying, each shopper peered into a black, rectangular iris scanner mounted at eye-level, which confirms users’ identities with the camp’s organizing group, the United Nations High Commissioner for Refugees, and allows them to access a food stipend from the United Nations’ World Food Programme (WFP).

That’s a spiffy authentication process, but it had been there for months. What the shoppers didn’t see was the new back-end procedure. Instead of receiving WFP funds via a third party, such as a bank, the grocery store was reconciling each purchase directly with the aid group through a secure platform called Building Blocks, based on blockchain technology.

Inside the store, Houman Haddad, a finance officer for the WFP and the founder of Building Blocks, watched as each eye scan led to a cashier’s tablet flashing a green check mark, signaling a completed transaction. “It was the moment when I knew this was technically possible,” he says.

The technology behind cryptocurrencies such as bitcoin and ethereum, blockchain is essentially a shared digital ledger system: a decentralized database that allows information to be exchanged among several parties but not altered. Transactions become blocks of data that are chained together, making everything transparent and easy to review.

The concept arose in 2008 as a way to securely track and transfer bitcoins. Today, blockchain is being applied to everything from energy trading to legal contracts, and is poised to transform how we store and share personal information. But one of its most profound uses, say advocates, may be in international aid, where documentation is scarce and operating budgets are low.

By eliminating intermediaries, blockchain technology creates faster, safer, and, ultimately, cheaper ways of doing business. Organizations working in international relief can lose up to 3.5% of each aid transaction to various fees and costs. What’s more, across the industry, an estimated 30% of all development funds don’t reach their intended recipients because of third-party theft or mismanagement.

In Jordan, the WFP can use Building Blocks to audit each beneficiary’s spending in near-real time. And by paying vendors directly, Building Blocks has reduced money-management costs by 98%, according to Haddad. For an aid organization spending $6 billion annually across 80 countries, that adds up to tens of millions of dollars in savings.

Bernhard Kowatsch, who heads the WFP’s Innovation Accelerator, which incubated Building Blocks, sees more value: “[Building Blocks] provides even higher assurance to individual donors that if you give to the World Food Programme, that money actually reaches the people it’s intended for.”

Haddad, who has worked for the WFP for seven years, approached his employer in mid-2016 about developing a blockchain-based business through its accelerator. The WFP incubator offers intensive coaching and up to $100,000 to social entrepreneurs who share its goal of eradicating global hunger.

Once in the program, Haddad joined forces with Alexandra Alden, a Silicon Valley–based mentor, refined the concept during a boot camp run through California’s Singularity University, and, in January of this year, began testing a prototype in the Sindh province of Pakistan, whose rural inhabitants are dependent on food entitlements and direct cash distributions. (This trial didn’t involve fancy iris scanners, relying instead on text-based mobile voucher codes.)

The WFP initially scheduled just a one-month trial of Haddad’s technology in Azraq, but the program was surprisingly successful. The organization has asked Building Blocks to stay—and expand to other camps later this year, reaching a total of 100,000 people.

An even wider rollout to the country’s half million refugees scattered throughout different host communities will follow. Haddad expects the system to be available in other countries sometime in 2018, along with the ability for recipients to review their balances and itemized lists of purchases.

Because the design for Building Blocks is largely open sourced—its ethereum-based operating system allows for customizable applications—Haddad envisions the technology being used well beyond grocery stores. For instance, the WFP’s recipient rolls could be tethered to health data from the World Health Organization, or educational information from UNICEF.

That would give aid groups a better understanding of their recipients, and refugees a better way to manage their affairs. And the technology would be easily transferable across borders. “That’s when [it] starts getting pretty interesting and powerful,” says Haddad’s mentor, Alden.

Ben Siegel, an impact policy manager at ConsenSys, an ethereum development company that has helped form the Blockchain for Social Impact Coalition, considers Building Blocks a “superb” first step, and several UN organizations are exploring how to take it further. The ultimate goal, Haddad says, is to give uprooted people “as much control as possible” over their own lives.




[Illustration: Francesco Ciccolella]

BLOCKCHAIN FOR GOOD
These other organizations are using secure technology to bring stability to vulnerable communities.  

Alice: This London-based platform brings transparency to philanthropy by collecting and holding charitable donations—and releasing them only after an organization shares metrics demonstrating its success. Its first project is with a local homeless charity.

Banqu: Minneapolis’s BanQu uses blockchain to establish “economic identities” for people who lack access to banks. In Kenya, it’s helping refugees secure government aid and services. In Latin America, it has created shareable property registries to help female farmers prove ownership and secure loans.

Aid: Tech: Like Building Blocks, Aid:Tech eliminates transaction fees and fraud by allowing NGOs to disperse digital cash vouchers directly to recipients.

The Irish Red Cross has used it to help Syrian refugees in Lebanon.Project

Amply: The Cape Town organization, which is running a pilot with South African preschoolers, creates immutable digital identities to help children in Africa receive educational services and subsidies.

A version of this article appeared in the October 2017 issue of Fast Company magazine.

Bitcoin was the original cryptocurrency, the first money native to the internet. It facilitated anonymous online transactions better than anything ever had before, and criminals were the first to appreciate its potential, especially drug dealers.

Nick Bilton’s American Kingpin removes most of whatever doubt anyone might still have over whether or not Ross Ulbricht was really the Dread Pirate Roberts, founder of The Silk Road, the drugs and guns marketplace that users could only visit using the TOR browser. The first thing Ulbricht did to get the marketplace going was grow a bunch of psychedelic mushrooms to sell on the site, so that when customers went they would find something to buy.

Other products would show up on there eventually, but the business was really built around drugs.Two technologies were really essential for Silk Road: the TOR network and Bitcoin. Without a way to pay for the drugs over the internet, illicit sales would have to remain a primarily face-to-face business, so it’s no surprise that entrepreneurs inspired by Bitcoin would try to build businesses specifically for weed as the market for marijuana becomes more legal.

We took a look around and found several cryptocurrency and blockchain-powered products for the hazy purple future. Here’s what we found:

PotCoin

Pot Coin has aimed itself at the legal pot market. If a state permits a business to operate but the Feds still prohibit it, that makes banking challenging. If a business can’t get a bank, processing credit cards is impossible. Potheads are used to paying in cash, but more options are better. Until banks join the party, some dispensaries might like a cryptocurrency option for their customers.

Pot Coin claims that its supporters crowdfunded Dennis Rodman’s trip to North Korea, according to Buzzfeed, so add celebrity cred to its assets. The company did not immediately return a request for comment.Market capitalization: $15.5 million.

DopeCoin

Dope Coin was built as a fork of Blackcoin, a cryptocurrency some have credited with proving that a blockchain could be secured without Bitcoin’s energy-intensive proof-of-work where giant server farms “mine” the currency by cracking huge codes.

“The marijuana industry does not necessarily ‘need its own coin’ but there is certainly a place for it to be used by enthusiasts or retailers that might want to offer a unique kind of themed reward system or industry specific payment option for their customers,” Adam Howell, Dope Coin’s founder, wrote the Observer in an email.

The project has been underway for about three years now.Market capitalization: $3.3 million




Growing weed. Drew Angerer/Getty Images

The CHEX

We last wrote about the company in 2015, when it was building a blockchain based platform to track cannabis as it moved from the field to dispensary, called The CHEX. The site aims to be an exchange of weed-products, one that gives buyers confidence that the product they are purchasing really is the strain they wanted.

The company is in the middle of a token sale now that will run through October. It plans to use the new token to build other exchanges, using the digital coin as the standard of payment between buyers and sellers. For an exchange, an ICO offers an early benefit. If users buy in and start using the coin for business-to-business trades, the very act of using the coin could increase its value as they trade.

The more people on the platform use it, the more the coin is worth, making nearly every purchase one that comes with a discount.

Paragon

It seems like it was only last October that the Observer was talking to model and alum of CBS’s Amazing Race, Jessica VerSteeg, about her Birchbox-for-cannabis-products startup, AuBox, because it was. Now, VerSteeg’s pushing an initial-coin-offering. Paragon will launch its token sale soon (tomorrow, according to its countdown clock). It’s closing its pre-sale now, requiring potential buyers to register ahead of time (like Filecoin did).

Paragon seems to be an everything-under-the-sun strategy (PDF summary). Paragon will offer an unchangeable blockchain database to track the chain of custody, doctor’s prescriptions, lab tests for strains and whatever else cannabis businesses might need to record. It plans a network of coworking spaces. It’s an online community that will be empowered to back projects (presumably with the coin).

And it’s a digital coin.The company did not immediately return a request for comment.



A man smoking licensed medical pot in Berlin. Sean Gallup/Getty Images

Smoke Exchange

Smoke Exchange is a project of the Dope Coin team. In 15 days, according to its present countdown, an ICO will take place for the company. This will enable it to raise funds to build an ad network specifically for marijuana products on the web. The big display advertising networks won’t accept ads for companies in the weed industry. In many cases, this is true even if the company is 100 percent legal.

The project gets kicked out because software finds the words “cannabis” or “marijuana” and rejects it. By creating an ad network just for weed, people with products to sell can buy ads without a middleman, save money and know where their ads will go.Howell told the Observer in an email that it would bring on legal consultation after the crowdsale to help potential customers navigate where they can and can’t advertise, based on their location.

Tokken

Tokken aims to be a secure and completely legal mobile payment system for above-board marijuana purchases. Founded by Lamine Zarrad, who formerly worked for the Comptroller of the Currency, the mobile app verifies that a user has the legal right to buy weed or weed-based products. It checks all kinds of data points, including watch lists, then turns credit card payments into a digital token that a dispensary can accept.

The dispensary can then convert the token back into dollars and, in theory, banks will be fine with this because they know Tokken goes out of its way to verify the transaction was legal.

Zarrad told CNBC that it doesn’t hold onto records about actual purchases, which protects privacy, but all transactions are logged for good on Tokken’s blockchain.




A pothead eager to buy at Denver’s Discrete Dispensary. Theo Stroomer/Getty Images

There’s some other coins out there, but they are so miniscule on exchanges at this point that they aren’t worth mentioning. In fact, none of these coins are significant cryptocurrencies. CoinCap shows 49 cryptocurrencies with market capitalizations over $100 million, as of this writing.  

PotCoin currently ranks 140th.Buzzfeed cited a director at the National Cannabis Industry Association that didn’t know any growers or sellers using PotCoin, the most prominent cannabis cryptocurrency.

In fact, scanning the coverage of these projects over the last year or so, lots of reports talk about how the blockchain could be used by participants in this industry, but we have not found any that cite dispensaries or growers that actually are.

Those interested in speculating on any of the ICOs above should take note.In 2014, Verdict wrote a piece analyzing the legality of DopeCoin and PotCoin, and it’s probably largely still relevant to all these projects.

From a Federal perspective, not much has changed. The feds could probably make life difficult for anyone it wanted to in this industry, but that’s not a course D.C. has taken yet, as far as anyone knows.

Discover more stories like this on Observer.com: 
http://observer.com/2017/09/marijuana-cryptocurrency-blockchain/

Did Jamie Dimon obliterate bitcoin’s buzz?

Bitcoin and other digital currencies have been getting absolutely toasted in recent trading, with some wondering if withering criticism from Wall Street heavyweights, like J.P. Morgan Chase’s JPM, -0.20%  CEO, and growing regulatory scrutiny in China have finally combined to exact a punishing, and lasting, toll on one of the most bubblicious segments of finance.

On Thursday, the value of a single bitcoin BTCUSD, -2.40% was down about 14% at $3,349, compared with around $5,000 in early September and representing a roughly $27 billion loss of market value in the world’s No. 1 cryptocurrency, according to digital-currency site Coinmarketcap.com. 

Ether tokens, the second-most popular digital currency, were down 17% on the day at $230 in recent action. That equates to a loss of more than $16 billion in total value for the currency running on the Ethereum blockchain.

Time

Bitcoin USD Nov 16 Jan 17Mar 17May 17Jul 17 Sep 17US: BTCUSD01,0002,0003,0004,0005,0006,000  

Still, bitcoin’s rise has been dazzling, rallying some 250% so far in 2017. By comparison, the Dow Jones Industrial Average DJIA, +0.20% and the S&P 500 index SPX, -0.11%  are each up by nearly 12% this year, sparking a litany of pronouncements that U.S. equities are too rich.

At least part of the drop in bitcoin is due to excoriating comments made by Dimon on Tuesday, who referred to it as “a fraud”, among other indictments, at a banking conference. He reiterated those remarks at a separate conference later that day.

On Wednesday, prominent investor and market pundit Mohamed El-Erian, chief economic adviser at Allianz Global Investors, added further fuel to bitcoin’s bearish fire, making the case that bitcoin might lose a third or half its value.


“The current pricing assume massive adoption, and I don’t think governments will allow the amount of adoption that’s currently priced in,” he said on CNBC Wednesday morning in New YorkJamie Dimon Calls Bitcoin 'a Fraud

Bitcoin bulls have been up in arms about the onslaught of negative comments. But talk of a bubble and the increased attention on digital currencies, and the underlying blockchain technology, are drawing may signify that the cyberunits are at an important crossroads.

That could determine whether bitcoin, or some other cryptocurrency becomes a mainstream instrument, challenging fiat currencies like the U.S. dollar DXY, -0.04% or just a case study in irrational exuberance.“Dimon says that bitcoin is a fraud because all of the value is being driven by speculation and not utility. There is a grain of truth to that.

Bitcoin has not yet seen wide adoption for day-to-day transactions, but the number of transactions occurring across the globe has been rising, particularly in 2017,” said Perry Woodin, CEO of Node 40, a blockchain governance company.Indeed, bitcoin is making headway across the globe, from the U.S. to Japan and China.

But of late, recent regulatory rumblings out of China have appeared to set the stage for the current pullback in bitcoin and the broader crypto market.

According to The Wall Street Journal, Chinese regulators are planning to shutdown bitcoin exchanges. Although some in the industry have challenged the veracity of those reports, China is a major hub for bitcoin activity, representing about 20% of bitcoin mining and trade, said Charles Hayter, co-founder of Crypto Compare in an interview.

On Thursday, one exchange, BTCC, said it would stop all trading as of Sept. 30.China is cracking down on illicit uses of digital currencies and has also is monitoring so-called initial currency offerings, or fundraising tied to digital-currency ventures that has recently supplanted traditional, early-stage venture investing in 2017.

Read: What is an ICO?

“There has been a free fall of late and it is making everybody quite scared,” Hayter said. He said he welcomes increased regulation from places like the U.S. and China, which may help to legitimize a currency that is in its infancy. But questions abound as to the role China, if any, will play in bitcoin’s outlook.

“China is always an enigma wrapped in an enigma so you don’t always see what’s happening,” he said.About Dimon’s comments Hayter said, “Bitcoin likes to view that as a ‘poor me excuse.’” Meaning, banks may view digital currencies as a rival to their business models of moving money for a fee.

Here’s what Elizabeth Stark, CEO and co-founder of Lightning Labs, a blockchain-related company, had to say about Dimon:

“I think it’s quite shortsighted to be so disparaging about this emerging industry, especially without a core understanding,” Hayter also said.

Bharath Rao, founder and chief executive of digital currency trading platform Leverj, said what many critics fail to understand about cryptocurrencies is their potential to be revolutionary, which some have equated to the internet in its early stages, around the early 1980s or 1990s, or even the industrial revolution.

“Bitcoin is a technology breakthrough like the steam engine was a couple of hundred years ago. Those that call it a fraud will simply be run over by it,” Rao said.

“There are a number of people who hold most of their assets in cryptocurrency, particularly bitcoin because they are convinced it is the future. This number is growing by the day as people who taste financial freedom are unlikely to want to go back to servitude,” he said.It is also important to point out that bitcoin has been facing its own growing pains that led to some summer hiccups.

So-called Bitcoin Cash, which erupted out of the original bitcoin early last month is the result of a faction of bitcoin developers’ demands for a version of that allows virtual miners, which support the currency, to more rapidly process transactions in larger units known as blocks. The original bitcoin also went through an upgrade that increased its processing power without resulting in another currency split.

Whether bitcoin or its successor is the future remains to be seen. However, advocates for bitcoin point to a number of factors that make it a promising enterprise. The fact that it is decentralized from central banks or governments is one such factor. That means individuals can conduct transactions without an intermediary.

Another bulls point to is the blockchain, or the software that underpins every digital currency.

Check out: Bitcoin is now the most crowded trade around: Bank of America Merrill Lynch

Put simply, blockchain is a digital ledger, or record, that has seen its utility grow within Wall Street and at institutions like Jamie Dimon’s J.P. Morgan.

The bank has been testing blockchain uses to combat the rise of cryptos.

That recognition from the more staid financial community has heartened many bitcoin investors.“Jamie has far more experience in the financial industry than someone such as myself, but if you have a look at look at the developers in bitcoin…this smells exactly like the early internet,” said Iqbal Gandham, U.K. managing director at eToro, a trading platform.

“This is not a Facebook, this is not a Snapchat. This is something bigger,” Gandham said, referring to social-media giant Facebook Inc. FB, -1.21% which boasts a market value of more than $500 billion, and Snapchat, whose parent company, Snap Inc.SNAP, -0.80% recently became a publicly traded company.

Sometimes it’s hard to tell true innovation from fake. In 1903, the president of Michigan Savings Bank is said to have told Horace Rackham, an early stockholder in Ford, that the “horse is here to stay but the automobile is only a novelty.

”All that said, what happens to bitcoin is anyone’s guess. And it will be marked by bouts of intense volatility, and maybe pain given the tendency of digital currencies to swing wildly.

The question may be: Can investors stomach the roller-coaster ride?

“I think with any market where the liquidity is low, there is always going to be volatility,” Gandham said.

Discover more stories like this on Marcketwatch here: http://www.marketwatch.com/story/bitcoin-at-crossroads-after-shedding-nearly-20-billion-in-value-201...