Supply Chain Initiatives Announced by Major Private and Public Sector Actors
By: Robert A. Musiala Jr.
This week one of the world’s largest technology firms announced an initiative with one of the world’s largest retail coffee stores to develop a mobile app feature, powered by blockchain, that “shows customers information about where their packaged coffee comes from, from where it was grown … to where and when it was roasted, tasting notes and more.” In another press release published this week, a major Latin American producer of premium shrimp announced that it has joined the Food Trust, the largest industry consortium using blockchain for food supply chain solutions. Late last week, a report provided details on a project underway by the Mexican state of Tamaulipas and a blockchain and IoT startup, GrainChain, that will use blockchain to track the supply chain of grain produced in the region from “farm to marketplace” and streamline the process of processing grain deliveries so that farmers can get paid faster.
Also late last week, a press release announced the World Economic Forum’s Redesigning Trust with Blockchain in the Supply Chain project. According to the press release, the project brings together “[l]eaders from the global supply chain and logistics industry, the world’s largest ports, blockchain start-ups, importers/exporters … and over 20 governments to accelerate blockchain deployment across supply chains.” The project’s goals include “to help supply chain decision-makers cut through the blockchain hype and ensure that the technology is deployed in an interoperable, responsible and inclusive way.”
For more information, please refer to the following links:
New Blockchain Enterprise Applications Announced Across Industries
By: Simone O. Otenaike
The Federal Communications Commission (FCC) is reportedly exploring the use of blockchain technology to record and monitor the use of Wi-Fi spectrums in connection with internet of things (IoT) sensors and devices. According to reports, the total number of IoT sensors and devices will increase from 21 billion this year to 50 billion by 2022. The FCC aims to use blockchain technology to offer a secure and standardized method to accelerate data exchange between IoT devices and to track radio wave spectrums in order to help resolve airwave distribution scarcity and improve wireless technology development.
Last week, four multinational life sciences and healthcare companies joined the MediLedger Project’s Contracting and Chargebacks working group. The working group aims to eliminate friction in the chargeback process, wherein wholesale distributors sell medications at a price previously negotiated with the manufacturer, and parties are made whole on the price difference through a chargeback. MediLedger’s protocol aims to resolve information-sharing challenges during the chargeback process by connecting the key parties on a common network and automating contract reconciliation. MediLedger plans to begin testing this protocol in Q2/Q3 2019. According to recent reports, MediLedger has also established a protocol for saleable return drug verification that meets DSCSA regulations.
On Wednesday, Malta’s Registry of Companies announced plans to establish a blockchain-based registration system. The Registry of Companies, formerly part of the Malta Financial Services Authority (MFSA), holds official information and documentation pertaining to new and existing companies. Also this week, a major global technology firm released a preview of its blockchain development kit for Ethereum. The kit offers developers the ability to build blockchain applications using the firm’s blockchain service or the public Ethereum network. The same firm also recently announced a partnership with the largest bank in the U.S. to promote blockchain application development and accelerate the adoption of enterprise blockchain. According to a press release, through this partnership the firms’ customers will be able to build and scale blockchain-based enterprise solutions, with lower costs, simplified distribution and built-in governance enabled through a cloud-based blockchain service platform.
To read more about the topics covered in this week’s post, see the following:
Cryptocurrency Products and Blockchain Systems Announced by Institutions and Startups
By: Jonathan D. Blattmachr
There are some exciting developments in the digital capital markets and payments space we can report on this week. First, one of the world’s largest asset managers has announced it will offer cryptocurrency trading to its institutional clients. The asset manager polled its institutional client base, the majority of which wanted to trade directly in digital assets. Many of those investors see the value in cryptocurrencies’ having low correlation with other asset classes.
One step forward, one step back: Bcause LLC, a crypto exchange and mining startup, announced it is preparing to launch its spot market near the end of May, and has also applied to the CFTC to be a registered designated contracts market and clearing organization. While this is good news for the company, it has now filed for bankruptcy protection under Chapter 11 and is seeking to restructure. Bcause hopes to exit its restructuring and take advantage of what it hopes will be a significant rise in bitcoin’s price.
To counter the ongoing fraud threat in crypto, some traders are considering using blacklists to keep out bad actors who renege on trades or engage in fraud. Alternatively, it has been suggested that the industry use “whitelists,” which would consist of those players that have been preapproved: verified customer identities and sources of funds.
In a first, two central banks sent each other digital currencies using blockchain technology. The Canadian and Singaporean entities have been collaborating to get this project off the ground, with a focus on facilitating simpler and more efficient cross-border payments. The Australian Stock Exchange is also looking for efficiency through distributed ledger technology, as it announced a new equities clearing system that uses blockchain as its backbone. The system will be fully in place by mid-2020.
Currency.com will now allow users to trade in tokenized government bonds. Tokens will be U.S. dollar-denominated, and investors will receive interest payments in fiat currency, bitcoin or ethereum. While currently limited to Belarusian bonds, trading of more bonds (both corporate and govvies) is planned. Finally, a legal services company is predicting many parties to smart contracts will soon be making payments in a stablecoin cryptocurrency, with the transfer automatically being affected once a contract is satisfied. The product is in beta testing, with full rollout expected later in May 2019.
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Major Exchange Hacked, Security Flaws Reported, Arrests by Department of Justice and Europol
By: Joanna F. Wasick
On Tuesday, Binance disclosed a severe security breach, in which one or more hackers obtained a “large number” of user API keys and two-factor authentication codes, and used them to withdraw 7,000 bitcoin from a Binance hot wallet. Binance said that the affected wallet held only 2% of the exchange’s holdings and that its other wallets are secure. The exchange will conduct a thorough security review that it expects to last one week; it will suspend all deposits and withdrawals during that time. Movement of the stolen funds on the Bitcoin blockchain is being tracked; but while the hacker’s movements are apparent, as of yet no one has been able to identify who is behind them. The Binance theft will add to the $1.2 billion in cryptocurrency that, according the cybersecurity firm CipherTrace, has already been stolen from exchanges and through other fraud-related activities this year. That number is about 70% of the total amount stolen in all of 2018.
According to reports published earlier this month, a vulnerability in older versions of Confluence workspace productivity software was recently exploited by hackers, enabling them to secretly install and utilize crypto mining malware on affected systems. In another report, the Tron Foundation disclosed a substantial security vulnerability in its wallet that could have crashed the entire Tron blockchain. The vulnerability was found by a researcher who was then paid a $1,500 bounty by Tron. And Cointelegraph recently reported that 60% of bitcoin full nodes are running software that are vulnerable to the “inflation bug,” which allows the potential for illegitimate minting of bitcoin.
Two U.S. prosecutors recently arrested and brought charges against two Israeli citizens (one living in Israel, the other in Brazil) for operating the darknet website “DeepDotWeb” (DDW). Prosecutors allege that the two individuals received kickbacks whenever their users accessed the site to visit various darknet marketplaces, in which vendors sold drugs, firearms, hacking tools and other contraband. The individuals allegedly used bitcoin to conceal more than $15 million in illegal proceeds, which they would transfer from their DDW wallet to other bitcoin and bank accounts that they controlled through shell companies. In Europe, Europol worked together with Spanish authorities to dismantle a money laundering ring that reportedly operated by exchanging fiat currency for crypto assets by using cryptocurrency ATMs and then splitting funds into smaller sums to introduce them into the regular financial system. Eight people have been arrested so far, and wallets containing about 9 million Euros have been frozen.
To read more about the topics covered in this week’s post, see the following:
Global Blockchain Survey Released
By: Robert A. Musiala Jr.
This week a Big Four accounting and consulting firm released its 2019 Global Blockchain Survey. The survey polled 1,386 senior executives across Brazil, Canada, China, Germany, Hong Kong, Israel, Luxembourg, Singapore, Switzerland, the United Arab Emirates, the United Kingdom and the United States. Companies selected to participate from the U.S. had $500 million or more in annual revenue. Participants outside the U.S. had $100 million in annual revenue.
Some notable highlights from the survey include the following:
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Critical Priority for More Than Half. Fifty-three percent of respondents said blockchain has become a critical priority for their organizations in 2019 (a 10-point increase from 2018).
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Modest Increases. There were modest increases over 2018 in the percentages of respondents that indicated they believed blockchain would achieve mainstream adoption, drive a compelling business case, replace current record-keeping systems and be needed to maintain competitive advantage.
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Barriers Decrease, Competition Concerns Increase. The perception that organizational barriers would prevent blockchain adoption appeared to decrease, although “concerns over sensitivity of competitive information” increased.
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No Consensus on Consortia. There appears to be little consensus on the criteria used to evaluate and determine whether to join blockchain industry consortia. Popular criteria included aligned objectives, member quality/stature, evidence of and opportunities for influence, cost of participation, regulatory environment, and membership rules/policies.
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Consortia Benefits. Cost savings and learning opportunities were the top benefits companies expected to gain from joining blockchain industry consortia.
