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: European Parliament Passes a Resolution to Support Distributed Ledger Technologies And Blockchains
Decrypted: On May 16th, The European Parliament Committee on Research, Industry and Energy, passed a resolution for DLTs and Blockchain. Greek S&D member Eva Kaili wrote the resolution, which had overwhelming support, with 56 votes in favor and only three against.
Eva said “We aspire to make EU the leading player in the field of blockchain.”
The EU has an important role to play in cultivating blockchain technology. Eva Kaili: “We aspire to make EU the leading player in the field of blockchain," @EvaKaili https://t.co/JwfrpLa8vV pic.twitter.com/JVRqBkbRtd
— EU Blockchain (@EUBlockchain) May 22, 2018
The EU has sent out a huge endorsement on the potential of blockchain and the benefits it can provide to the lives of its citizens.
In addition to outlining how Distributed Ledger Technology (DLT) can deliver improvements to the economy, the document spelled out a policy to increase DLT adoption across Europe, and called on the European Commission to propose a framework for Initial Coin Offerings (ICO), saying “ they have a strong potential in funding innovation and accelerate technology transfer”.
Our take: For centuries, Europe was the epicenter of innovation in science and technology. In the last century we saw a shift, with technological innovation coming primarily from the United States.
Silicon Valley has been the center of high-tech innovation over the last 40 years. While other regions have tried to copy its success, they have not been successful. In recent years, with the growth of entrepreneurship, the emergence of global competition and technologies like blockchain and Initial Coin Offerings (ICOs), the landscape is changing rapidly.
Among the many technologies that are driving digital innovation, blockchain has the potential to be truly transformative for financial services, markets and economies.
European innovators and entrepreneurs are already offering blockchain-based solutions. Major players from traditional sectors, like banks, insurances, stock exchanges, logistics or companies are engaged in pilot projects. Many member states have announced initiatives to reinforce the use of blockchain technology.
While each member country is sovereign, the European Union is responsible for maintaining the economic stability of the region which is largely dependent on the value and stability of the Euro. To this end, the EU seems to be paying a lot of attention to the cryptocurrency and blockchain technologies.
The EU’s recent resolution, to support distributed ledger technology, signals Europe’s decisiveness to take a leadership role in most revolutionary financial and technological innovations of the last decade. Blockchain is a game changer and Europe wants to be at the forefront of its development.
For the first time in many years, the EU is ahead of its competitors both in the US and in Asia. The EU is in desperate need of fast, small victories, and this resolution will help bring about an important one for Europe.
Competitive economies depend on the availability and free movement of people, products and services. Data is the fuel that drives the movement of these assets. With this resolution, the EU wants to establish the right environment. It wants to enable a single digital market on blockchain and ensure that the European economy remains globally competitive, bringing benefits to both businesses and consumers.
News Item 2: IBM Will Marry Its New Verifier To The Blockchain, Transforming Diamonds, Olive Oil And Insurance
Decrypted: IBM Research introduced Crypto Anchor Verifier, a new technology that uses artificial intelligence and optical imaging to verify the identity and authenticity of objects. Crypto Anchor Verifier can identify the authenticity of forged goods such as fine wine, diamonds and medicine, as well as analyze water quality and detect bacteria, such as E.coli.
IBM’s Crypto Anchor Verifier uses your phone’s camera and blockchain technology, to verify an item’s authenticity.
Our take: Fraud costs the global economy more than $600 billion a year. In some countries, nearly 70% of certain life-saving drugs are counterfeit. Complex supply chains, with of dozens of suppliers in multiple countries, make it difficult to prevent tampering with everything from paper currency to consumer electronics.
Blockchain brings trust, efficiency and transparency into supply chains. Unfortunately it’s not possible to put physical goods on blockchain. The next best thing is to use computer vision to capture an object’s appearance, create a unique digital signature and store that on blockchain.
The new technology is based on the idea that things we use and eat have their own unique optical patterns, which differentiate them from each other.
Within the next five years, cryptographic anchors, such as ink dots or tiny computers smaller than a grain of salt, will be embedded in everyday objects and devices. They will be used in combination with blockchain, to ensure an object’s authenticity.
Crypto anchors are tamper-proof digital fingerprints that are embedded into products, or parts of products, and linked to the blockchain. Crypto anchors can authenticate a product’s origin and contents, ensuring it matches the record stored in the blockchain. The solution captures the optical signature from an original, uncompromised item and records it on the blockchain. This signature can be used to verify the item, throughout the supply chain, and ensure that it hasn’t been tampered with.
This technology can pave the way for solutions to manage food safety, authenticity of manufactured components, genetically modified products, identification of counterfeit objects and provenance of luxury goods.
IBM is already working with GIA, the inventor of the famous 4Cs of diamond quality (Cut, Color, Clarity, and Carat Weight). GIA is testing the Verifier software for diamond grading, by capturing and creating 3D model images of diamonds, analyzing their characteristics and predicting their clarity grade. GIA hopes to integrate this solution with blockchain, to ensure transparency and verifiability of the gems, throughout their journey from manufacturer to consumer.
Imagine using the Verifier technology on your cell phone, to confirm the grade of a diamond you bought or to make sure the your diamond is returned to you, after you sent it to be cleaned.
The opportunities for the Crypto Anchor Verifier are limitless and offer a viable way to protect and validate all kinds of physical products. Combined with the blockchain, it brings new levels of trust to the products we use and consume.
News Item 3: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
Decrypted: Last week, Bitcoin Gold was attacked by malicious hackers, using a double spend attack. They managed to get away with over $18 million worth of BTG (Bitcoin Gold) coins.
The hackers were able to get temporary control over the Bitcoin Gold network, by scooping up 51% of the total hash power. Once they had control of the network, they started depositing Bitcoin Gold (BTG) into crypto exchanges and from there sending these deposits to a wallet they owned.
Because the hackers held the majority of the Bitcoin Gold network, they were able to reverse the transactions, actions that normally would have been blocked by the blockchain, and get the coins into their own wallet from the exchanges.
In a recent post, Bitcoin Gold says the first attack occurred on May 16, but it has stopped now. The Bitcoin Gold team advised:
“An unknown party with access to very large amounts of hashpower is trying to use “51% attacks” to perform “double spend” attacks to steal money from Exchanges. We have been advising all exchanges to increase confirmations and carefully review large deposits.”
Our take: One of the largest and most controversial Bitcoin forks was the Bitcoin Gold fork, that took place on October 2017 at block 491,407. Cryptocurrency forks are nothing new. In fact cryptocurrency forks take place on a regular basis and lately it seems like we have a new one every week.
Hard forks take place for a number of reasons, which include improvements to the code, developer conflict or different goals. Bitcoin Gold’s goal was to “make Bitcoin decentralized again.”
In the world of cryptocurrency, several key issues can affect any blockchain network. The 51% attack is perhaps one of the worst scenario for developers to deal with. It effectively means someone controls the majority of the blockchain’s processing power. Transactions, payments, and day-to-day operations can be severely affected.
The BTG hack is not the first time smaller cryptocurrencies have been affected by attacks like this. Recently, several altcoins suffered 51% attacks, including Verge and Monacoin.
These incidents have lead many to say smaller networks are vulnerable, because of Proof-of-Work (PoW) algorithm. While this recent hack is of great concern, its not the only one issue with BTG. Ever since its release, there have been numerous concerns and technical issues. Despite hard forking original Bitcoin, BTG has not inherited the robustness of Bitcoin.
After the hack, the BTG team revealed that it plans on making the Bitcoin Gold blockchain “dramatically safer from a 51% attack”. The team says that a major upgrade that was planned for the end of June, is now being pushed to take place as soon as possible, in order to eradicate the use of ASIC hardware to mine BTG.
To be clear, the hacker hasn’t been stealing money from users, but from the exchanges. While users have not lost money, the attacks are dangerous because they might destabilize an exchange’s backup funds, or may lead to its insolvency and prevent users from withdrawing funds Right now, users are not losing money, but if the attacks were to continue, some exchanges could go bankrupt and in turn users would lose their money.
Today, Bitcoin Gold is the 27th largest cryptocurrency with a market cap of $750 million and trading around $44.
Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Bitcoin & Crypto (BBC) Weekly CXO Briefing each Monday.
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