Goldman Sachs: Blockchain is ready for the big stage

HOME TECH BLOCKCHAIN GOLDMAN SACHS: BLOCKCHAIN READY FOR THE BIG STAGE
The blockchain technology is ready for the “big stage”, says a new report by banking giant Goldman Sachs.

The bank, which participated in the Circles $50 million financing round at the beginning of the year, writes in its “Emerging Theme Radar” to its customers that the Bitcoin may only be the “prelude” to blockchain technology.

The equity analysis team’s report says about the Bitcoin revolution:

“When you look at the underlying structures of Bitcoin revolution, this technology is … a new tool to reduce costs and attack the broker’s profit, with the promise of making centralized institutions superfluous. This review of the Bitcoin revolution is aimed not only at end-users, but also at much more lucrative companies.”

The author of the report, Robert D. Boroujerdi, quickly noted, however, that the “hype continues” and that the “blockades” of the blockchain technology are still standing in the way and therefore the full potential cannot yet be exploited.

Excluding the middleman
Boroujerdi emphasized the decentralized nature of the Bitcoin blockchain compared to traditional account book systems.

If you exclude the middleman, it means that the blockchain technology can work more efficiently, more securely and at lower cost than current systems, Boroujerdi writes. In addition, you could reduce the risk of the counterparty and offer the possibility of obtaining direct information about transaction risks and costs.

The report highlights a few examples of how Blockchain technology can be used, ranging from office work to government paperwork at banks to authenticate alternative goods such as art or credentials.

It is written in the Bitcoin loophole report:

“This decentralized, cryptography-based Bitcoin loophole solution excludes the middleman. It has the potential to redesign Bitcoin loophole transactions and internal services across a wide range of industries.”

Blockchains without Bitcoin

The report also addresses some possible problems with the blockchain technology. Among these is the limited scalability that stands for the Bitcoin blockchain at an unfavorable seven transactions per second and for VisaNet at 47,000 per second. It also takes into account that the question of public or private blockchains can lead to friction, slower deployment and increased fragmentation.

Boroujerdi points to a healthy start-up ecosystem that benefits from the “exponential” growth of the equity capital invested, but he also stresses that there are players behind this ecosystem who could bring this technology to the big American corporations.

Far from startups, Goldman is working closely with the R3CEV banking consortium (of which Goldman is a member); IBM’s ADEPT project, which seeks to combine the Internet of Things and Blockchain technology; and Nasdaq, which has built its Linq Private Market platform on a Blockchain.

Can blockchains exist without Bitcoin? According to the report, the answer is a clear yes:

“Those who have written off Bitcoin seem to have missed the golden egg – an underlying technology driver that, possibly, is designed to streamline a variety of businesses. Simply put, the blockchain can live outside a world of Bitcoin.”

Goldman’s client report comes after Goldman filed a patent last month for a securities settlement system based on a new crypto currency called SETLcoin.

This spring, Goldman’s analysts reported extensively in a multi-part report on “The Future of Finance”.

Scare for Miner: Discrimination against electricity prices allowed in New York

For miners of crypto currencies it will be expensive in the American state of New York. Electricity suppliers may demand significantly more money from them. The responsible regulatory authority (Public Utilities Commission) now allows the 36 local electricity suppliers separate tariffs for small companies with extreme electricity consumption. The regulation will come into force in March.

Outside the metropolis of New York City, the state of the same name is very extensive and sparsely populated. The landscape is characterized by forests and water. The well-known Niagara Falls are located in the far north of the state. The inhabitants of this area obtain electricity at very low prices from hydroelectric power plants. This locational advantage has increasingly attracted miners in recent years.

The New York authorities speak more generally of Bitcoin secret

According to the official publication, the costs for private households rose noticeably. Residents of the small town of Plattsburgh (20,000 inhabitants), for example, have had to pay an average of 10 US dollars more per month for their Bitcoin secret electricity bill since this year. So far, one kilowatt hour has cost companies just under 2 cents. Residents had to pay about 4.5 cents per kWh. The national average is 10 cents per kWh.

Miners drive up cryptosoft electricity costs according to authorities

The rising cryptosoft electricity prices are an exhausting topic in the economically little prospering rural areas. Read about it: Is Cryptosoft a Scam? Read This Review Before You Sign Up! The culprits have been identified: server farms that are primarily used in connection with crypto currencies. The consumption is enormous: In some municipalities these enterprises consume up to a third of the entire current offer. Plattsburgh has now been the first to impose an 18-month memorandum against new crypto companies.

In order to ensure high consumption, electricity suppliers will have to expand reserve capacities. This requires high investments. These are usually passed on to all consumers and thus beaten against the electricity price for many years. The fear of local utilities and politicians is that companies will put their equipment on trucks and move on before the investment has paid off. There is no local connection or investment. In contrast, the local companies and residents remain sitting on the investments. Investments that no one needs anymore.

Cyber attacks: With the blockchain against bank robbers

The classic bank robbery, in which cash is stolen under threat of violence, is increasingly becoming a thing of the past. Instead, hackers are trying to invade the network of banks and even central banks in the form of cyber attacks and withdraw amounts in the millions.

The biggest cyber bank robbery in history, $951 million, failed because of a tiny typo (recipient’s name was misspelled). Nevertheless, the hackers managed to capture 81 million US dollars from the Bank of Bangladesh.

According to the Russian IT security company Kaspersky, around 100 financial institutions worldwide have been robbed by cyber attacks in the last two years, with damage amounting to around 1 billion US dollars.

Banks and hackers are in a race that financial institutions all too often lose. As a consequence, the ECB has set up a reporting office for cyber attacks.

The process of Bitcoin loophole

Digital bank robberies, such as that at the Bangladesh Central Bank, usually follow a similar pattern: Hackers search for a vulnerability in the bank’s IT system and gain access to it Malware is being installed Access data is read out at the interface to the SWIFT system and a circumvention of the security measures is installed. On the day of the bank robbery, the malicious program becomes active and properly instructs the Bitcoin loophole via the SWIFT payment system. Details about the Bitcoin loophole can be found in this review.

To avoid being exposed, the malware disguises or manipulates all reports and logs so that only the hackers get information about the transactions and have enough time to set the money aside.
The fact that hackers are increasingly able to locate weak points in banks’ IT systems is partly due to the fact that their systems are often outdated and have in some cases already exceeded their lifecycles. In addition, a large proportion of the applications used are provided by external providers, making it difficult to keep track of and control one’s own IT security.

Avoiding cyber attacks with the news spy

The current incidents regarding the news spy of banks raise the question of whether new, decentralized IT solutions based on the blockchain would not make sense. After all, banks’ current IT standards no longer seem to be sufficient to ensure the news spy of bank deposits and prevent attacks on the central banking network.

If one were to make use of the logic of the blockchain, one could avoid the danger that a single computer could paralyze the entire transaction infrastructure of a bank or bank network by being infected with malware. If the money were transferred via a blockchain, there would be no danger that the banks’ IT systems would give different information about the transactions due to a hacker attack. The IT systems responsible for the transactions would be decentrally connected and cryptographically secured, so that no single central unit in the system would be able to fool the other IT systems or participants into believing anything.

What the concrete implementation of such a new IT security system, based on the blockchain, could look like is rather uncertain so far. Nevertheless, many banks, especially in the banking consortium called R3, are working together to look for possible applications for the blockchain technology. The cooperative banking network SWIFT, which regulates transaction traffic, is already working on decentralized solutions to increase IT security (click here for the article).

However, at this point we can also refer to a quote from Bill Gates, who said: “Banking is necessary, banks are not”. In this sense, bank customers can ask themselves the question of whether they want to use a bank to transfer money at all or not directly access a digital peer-to-peer currency such as Bitcoin.

From Gold to Cash, from Cash to Bitcoin: The Money Revolution Progresses

Over the years, technology has developed into an all-embracing fixed point in our lives and the characteristics of gene transfer have also changed radically.

Money has always enjoyed continuous development. Money” in the form of shells became bracelets, shiny coins became paper-based banknotes. Then came the credit cards – a piece of plastic that allows valuable and personal data to be collected with just one pull through the card reader.

Goods as cryptosoft

In the time when there were no cryptosoft scam yet, people exchanged simple items or different goods to get their desired good. Since it was often not possible to carry out a fair cryptosoft exchange, let’s say the exchange of a cow for a chicken, a possibility was looked for to divide the value of a barter object into many individual parts.

An example of money secured by the value of an object are the old Russian glass beads. The cobalt blue glass bead necklaces were used in the 17th century for trade between Russia and the locals in present-day Canada.

Smithsonian’s ‘Stories on Money’ exhibition. Source: TBN
The Handelsperlene, which originated in today’s Czech Republic, were later even used worldwide as barter goods. Of course, glass finds its value more in beauty than in a practicable exchange good, which breaks very quickly. However, it is a very nice example of the fact that everything that has a recognised value from the general public can be considered as money in addition to the legal means of payment.

Money covered by crypto trader

So how could a person get a fair price for a scam, or let’s say a more valuable jewel? While some goods could be dismantled into smaller individual parts, other goods unfortunately did not have this practical crypto trader property. Also, the constant transport of heavy gold was anything but efficient. It was simply too difficult to handle global economic trade solely through trade goods or commodities.

Money representing the value of a good, on the other hand, was a much more practical instrument for this purpose. It only took its time for this revolution to be recognized around the world.

A 1934 US Gold Certificate. Source: Collectors Weekly
Thus, money covered by goods in the form of notes or coins became known worldwide.

In this way an easily divisible instrument could be used which still has the value of a commodity. Often the gold was also used for it.

Gold was for a long time a stable and above all divisible form of money. In some countries, gold was also used for cultural purposes, which further increased its global value. The scarcity of gold was the reason why gold was used as money.

The US dollar was known to be covered by gold, the so-called gold standard. At that time in the 20th century, the USA had the world’s largest stock of the precious metal. But things changed and in 1971 the USA made a decision that drastically changed the concept of money.

Money Covered by the Government
Germany was the first country to abandon the gold standard. At that time it was a wise economic decision.

When the USA also decided to take this step in 1971, it also served to protect itself. The USA had accumulated too many dollar reserves and gold reserves continued to decline. So in order to avoid a depreciation of the dollar, the government decided to break the gold standard (also known as the Nixon Shock).

At the time, breaking away from the gold standard was a very risky business, but in retrospect it was imperative. The idea also arose that the fiat currency or government-based currency should be geared to the economy and not to the equivalent value of a commodity.

Regulierungs-ECHO KW42 – A crypto currency for Hamburg?

In the past week, a lot has happened around the globe in terms of regulation. In our regulation ECHO we look back to the end of the week and summarize what was said, thought or decided when, where and by whom.

Germany: CDU Hamburg demands its own Bitcoin revolution

The Hamburg Christian Democrats are playing with the idea of their own Bitcoin revolution for the Hanseatic city. This was reported last week in the Hamburger Abendblatt with reference to the CDU member of parliament and spokesman for the digital economy, Carsten Ovens. According to him, the “Hamburg Coin” has above all a Bitcoin revolution marketing character. So far, however, the ruling SPD has not heard anything about this proposal.

Iran: US authority wants to slow down use of crypto in Iran
The use of crypto currencies has recently become more and more popular for companies in Iran. The reason for this lies in the trade sanctions of the USA against the country. These should be avoided with the use of crypto currencies. But this should now be an end. As the US authority against financial crime, the Financial Crimes Enforcement Network (FinCEN), announced, the use of crypto currencies in Iran is classified as “illegitimate and malicious” and therefore wants to prevent it.

Hong Kong: New regulatory approach planned Bitcoin loophole

The Hong Kong Securities and Futures Commission (SFC) would like to regulate Bitcoin loophole more strongly in the jurisdiction. As chairman Carlson Tong Ka-shing revealed to the local media, the new regulation is intended to protect potential investors. However, this is not a policy of Bitcoin loophole bans, as is the case in mainland China. Rather, one would like to design a well-regulated counter-model to the rest of the People’s Republic.

USA: Former CFTC chairman for ICO regulation as securities
Gary Gensler, former chairman of the US Commodity Futures Trading Commission (CFTC), has taken a stand on Initial Coin Offerings. Crypto currencies, which emerge from ICOs, were therefore generally considered securities in the USA. Basically, he is positive about crypto currencies and blockchain technology. However, he stresses the need for a regulatory framework for sustainable growth. In the past, Gensler had already classified Ether and XRP as securities.

Russia: Hackers in court over minings on government servers
A young Russian hacker was put on trial this week. He is accused of illegally mining crypto currencies. He is alleged to have used the computing power of servers operated by the Russian government for this purpose without permission. Local media report that the Russian domestic intelligence service FSB has become aware of the inconsistencies on Russian government servers. The 21-year-old hacker is now threatened with up to five years imprisonment.

USA: SEC sets up new department for dialogue with ICOs
The US Securities and Exchange Commission (SEC) has ordered the creation of a new department. The aim of this group is to improve coordination with crypto start-ups. In particular, it should make it easier for those who want to start an initial coin offering to comply with the legal framework. From now on, the Strategic Hub for Innovation and Financial Technology (FinHub) will act as a contact point for FinTech companies.

Japan: Tax committee to facilitate crypto taxation
The Japan Taxation Committee has discussed how to simplify the taxation of crypto currencies in the island state. Local media report that the current tax system is unnecessarily complex and discourages many Japanese citizens. The committee, which advises the government on tax issues, therefore wants to make it easier to include crypto currencies in tax returns. This would also create an even more crypto-friendly environment in Japan.

Monero (XMR): Fees drop to minimum after update

The transaction fees at Privacy Coin Monero are currently at their lowest level. After the last update on October 18, the Hard Fork Beryllium Bullet was able to improve the network’s performance. Transactions are now cheaper overall and require less storage space.

Monero received another protocol update last Thursday, October 18th. The most important innovation of the Hard Fork Beryllium Bullet was the optimization of the range proofs used in Monero for Ring Confidential transactions. In short: Bulletproofs.

Monero is currently turning into the news spy review

Roughly speaking, the aim is to ensure that the units sent are actually issued in the news spy review. True to the motto “Privacy first”, however, at the same time it must be ensured that the true amount of the transaction is concealed. Without this mechanism, attackers with special transactions could create new coins and the news spy review thus trigger uncontrolled inflation. (You can read more about this here).

The hard fork (which takes place twice a year in the Monero network, by the way) should also bring one thing above all: Transactions that require less storage space and are cheaper. This has now proven to be the case.

The average transaction fees at Bitcoin secret scam

The average transaction costs of the Privacy Coin are currently 0.02 US dollars – as low as they were last in 2016 – and that is currently 3,586,000 transactions. This means that Bitcoin secret scam transaction fees have fallen by over 90 percent since the bulletproof update.

In the XMR price, however, the update has not made itself felt at Monero so far. Although the XMR price rose from 107 US dollars to 109 US dollars for a short time after the update, the weekly XMR price has remained stable. In the course of the week, however, it fell by almost five percent. Over the course of a month, the XMR has to absorb 13.36 percent of losses. At present, this is just under 105 US dollars.

Phillip HorchPhillip Horch is head of the BTC-ECHO service and responsible for the structuring and planning of editorial content. He gained several years of editorial experience during his studies and then worked as a freelance journalist before joining BTC-ECHO as an editor in January 2018. Phillip holds a Master’s degree in Literature, Art and Media Studies from the University of Constance and the Universidad de Valpara√≠so.

CryptoCompare publishes study on Bitcoin landscape

CryptoCompare comes up with a new study on the crypto landscape. The paper, published on 16 October, looks at various ways of grouping over 200 different crypto assets.

CryptoCompare describes itself as the “gateway to the world of crypto currencies”. In its recently published Cryptoasset Taxonomy Report, the London-based company attempts to classify the different types of crypto assets. The authors of the study examine the tokens on the basis of four possible groupings:

What is the use case of the asset?
Is the design suitable to guarantee value retention?
Is the token controlled centrally?
Why should someone hold the asset in question?
Through these categories, CryptoCompare aims to achieve a sufficiently precise taxonomy of the examined assets. The most important results at a glance.

Decentralization

The study focuses heavily on the status quo of decentralization. The surprising result: Only 16 percent of the crypto assets examined can be described as completely decentralized. The authors assess 30 percent as “semi-decentralized” and with a good 55 percent more than half of the investigated assets are classified as centralized.

Different basic ideas

Furthermore, the authors examine the basic calculations of investors that can flow into purchase decisions. Or in the authors’ words: “What is the most prominent reason to hold a crypto asset? Since the list of calculations cannot be estimated conclusively, the authors limit themselves to six possibilities of classification, with the following results:

Access to services – 39.5 percent (including ETH)
Reward potential – 35.5 percent (including GNO)
Profits from hard fork – 4.5 percent (including LTC)
Off-chain cash flow – 3 percent (including PAY)
Value memory – 1.5 percent (all stable coins)
Cash and cash equivalents – 16 per cent (including BTC)
Distribution of the various DLTs
The study also shows the distribution of the various distributed ledger technologies (DLT). The vast majority are classic blockchain technologies à la Bitcoin (48 percent of the assets examined). Together with the ERC-20 tokens, this results in a share of 92 percent. The next largest share (three percent) is accounted for by Directed Acyclic Graph (DAG) technology, which is also used at IOTA.

The result: the established crypto currencies such as BTC, BCH and ETH have a lower concentration within the top 100 wallets than the less common tokens such as EOS or NEM.

Conclusion
CryptoCompare confirms its reputation as a reliable source of data on all aspects of the cryptoecosystem. The data sets appear to have been seriously researched and, with more than 40 illustrations, are mostly clearly presented.

Here and there, however, a few inaccuracies creep in. Thus certain definitions are not kept over the entire length of the paper or only insufficiently explained. Moreover, the division into the different basic ideas for the purchase of the tokens seems arbitrary and could just as well have been done differently. As always, it is worth taking a close look.

The complete Cryptoasset Taxonomy Report can be found here.