Bitcoin goes Retail; Binance invests in MobileCoin; Vitalik vs. CoinDesk


The Blockchain Bitcoin & Crypto Weekly CXO Briefing is all you need to know, each week, jargon free for CXO level business leaders and investors who will use this technology to change the world. Each week we select the 3 news items that matter and explain why and link to one expert opinion.

For the intro to this weekly series, please go here.

News Item 1: Lightning + NFC? The New Plan to Bring Bitcoin to Retail

Decrypted: A little over two years ago, Joseph Poon and Thaddeus Dryja shared their idea for Lightning Network when they released the white paper in January 2016. Now Lightning Network is coming to life and Bitcoin is gearing up to take on legacy payment systems.

A month ago, Lightning Labs took a major step to making the Lightning Network dream a reality, by releasing the beta version of their highly anticipated Lightning Network Daemon (LND).

The launch of the the Lightning Network is the first ever Layer 2 solution that is built on top of the current Bitcoin blockchain. Lightning Network is meant to help lower fees at a fraction of a cent and make transactions instantaneous. However, to use Lightning as it stands is very hard.

But another development that could radically change how users transact with Bitcoin is Near-Field Communication (NFC). NFC could allow for Bitcoin transactions to happen at the tap of a phone.

Our take: While Bitcoin and other cryptocurrencies are mainly seen as assets for speculative investments these days rather than currencies for making payments, NFC could enable holders of Bitcoin to easily make purchases at brick-and-mortar stores.

Currently, most BTC transactions use QR codes, however that can be a problem as transactions become more complicated. NFC (Near Field Communication) technology aims to replace QR codes by making things easier, and at the same time allowing additional information to be added to the transactions, such as receipts or invoices.

Developer Igor Costa recently submitted a proposal to standardize a way of connecting the Lightning Network with the NFC technology. The developer claims that it could make Bitcoin transactions available for everyday retail.

NFC is a method of transmission, not an actual network. NFC is a means of communication between the consumer mobile wallet and the merchant’s POS solution. NFC technology that allows users to make payments by placing a compatible device like a smartphone or payment card within a few centimeters of another compatible device like a POS terminal, tablet or another smartphone. Near-field communication transmits data through electromagnetic radio fields and is the technology behind payment services like Google Wallet and Apple Pay.

In the United States 86 million people use ApplePay for contactless payments and the global contactless payment market was valued at $7.3 billion in 2017 and is projected to expand at a CAGR of 26.57% over the forecast period to reach $30 billion by 2023.

Merging of Bitcoin with contactless payments has the potential to turn the cryptocurrency into a universally accepted currency, as many merchants now use NFC technology. This would allow individuals with Bitcoins, to easily spend their funds at the  shop around the corner.

While 2017 was the year that crypto and blockchain entered the mainstream consciousness, most people still don’t understand how it works or how it can be used in everyday situations. As we enter the fourth industrial revolution, the importance of an interconnected economy, where payments can be made instantly between consumers and merchants, has never been greater. The integration of NFC and Lightning Network has the potential to move Bitcoin from a store of value to a medium of exchange.

News Item 2: MobileCoin, a cryptocurrency advised by the creator of Signal, just raised $30M for mobile payments

Decrypted: Binance seems to be following a similar course to Coinbase, that recently launched its first venture fund. Binance, through through its blockchain incubator Binance Labs, led a $30 million funding round for MobileCoin.

The MobileCoin team includes Signal creator, Moxie Marlinspike. Other members if team includes Joshua Goldbard, general partner at a cryptocurrency hedge fund and Shane Glynn, a lawyer. The involvement of Signal’s founder gives the project an air of legitimacy, but its worth noting that MobileCoin doesn’t have a prototype or MVP out yet. The capital from Binance will be used to develop the team and the product.

MobileCoin is a cryptocurrency that aims to enhance the user experience on mobile devices. The idea is to solve the usability, scalability, and privacy concerns associated with existing cryptocurrencies.

Our take: In the MobileCoin whitepaper published in December 2017, the project’s creators described their intention to develop a “fast, private, and easy-to-use cryptocurrency that can be deployed in resource constrained environments to users who aren’t equipped to reliably maintain secret keys over a long period of time, all without giving up control of funds to a payment processing service.

MobileCoin is designed so that a mobile messaging application like WhatsApp, Facebook Messenger, or Signal could integrate with a MobileCoin wallet.

MobileCoin will use Stellar Consensus Protocol to synchronize the transactions to the network and also ensure that the financial transactions are recorded accurately. The rationale behind this is to achieve high transaction speeds and scalability.

Their aim is to link the MobileCoin wallet with a messaging app. The final version will be integrated into WhatsApp and Signal, the two messaging apps that use Marlinspike’s end-to-end encrypted Signal Protocol.

The price of Stellar jumped nearly 20% on news that MobileCoin will use its Consensus Protocol. The cryptocurrency is trading just a fraction of a cent below its most recent two-month high at $0.43. In essence, the moment MobileCoin gets integrated into some of the world’s largest chatting platforms such as WhatsApp, it will be a jackpot for Stellar. Stellar will be the bridge for people converting MobileCoin to fiat currency and vice versa, once MobileCoin gets adopted.

This is a huge boost and represents a move for Stellar to become a useful platform for ICOs. Ethereum has long been the main and most well-known platform for ICOs, but there are alternatives out there.

Stellar has put forward solutions for overcoming the gas problem. This means Stellar could become the bridge for users looking to use Blockchain solutions to send and receive money through instant messaging services, if MobileCoin proves to be a success on this Blockchain.

News Item 3: Ethereum Founder Is Boycotting One of the Biggest Crypto Summits

Decrypted: On Thursday 26th of April 2018, Vitalik Buterin, the founder of Ethereum, announced that he will be boycotting Coindesk’s 2018 Consensus conference in a series of tweets (1, 2, 3, 4):

Our take: Thousands of individuals are going to be attending at CoinDesk’s 2018 accord conference in could. However, Ethereum founder Vitalik Buterin won’t be among them.

Coindesk’s Consensus conference is one of the most widely attended events in the crypto space. This year, the conference is expected to host around 5,000 attendees. Some of the speakers include Amber Baldet, who is the former Blockchain head at JPMorgan, andJack Dorsey, the founder of Twitter and Square.

In his tweetstorm, Vitalik posted:

“I am boycotting @coindesk’s Consensus 2018 conference this year, and strongly encourage others to do the same. Here is my reasoning why. Coindesk is recklessly complicit in enabling giveaway scams. See their latest article on OMG, which *directly links* to a giveaway scam.” 

Omkar Godbole, a reporter with CoinDesk, wrote the piece in question and that included false information from a fake post claiming to be OmiseGo’s official blog. Buterin ripped into them for a technical analysis piece about OmiseGo’s OMG token. Specifically, the CoinDesk piece included links to a scam that claims to be giving away OMG tokens.

“Their coverage of EIP 999 was terrible. They published a highly sensationalist article claiming the chain would split, when it was very clear that EIP 999 was *very far* from acceptance. This is why pundits need to be replaced by prediction markets, ASAP.”

Ethereum Improvement Protocol 999 (EIP-999) was a proposal that would free up 513,000 ETH that were previously frozen in 580 Parity Library Contract wallets, after a bug that was written by a developer last year in November. The community voted against the proposal. CoinDesk covered it with an article “Ethereum may be on the brink of a blockchain split.

Moreover, Buterin claims that Coindesk’s reporting policies are sensationalistic and that the conference costs between $2K and $3K to attend.

I am not going to take a position on this one, you can make up your own mind. All I will say is that Vitalik Buterin is one of the leading minds of the crypto world. I don’t know Coindesk’s internal editorial processes and I think that events like Consensus have a positive impact bringing people together to exchange ideas, meet, and build new things.

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Ilias Louis Hatzis is a Blockchain entrepreneur who writes the Blockchain Bitcoin & Crypto (BBC) Weekly CXO Briefing each Monday.

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