Bank of China and the news spy: Blockchain against poverty in Tibet

The Bank of China wants to use blockchain solutions to combat poverty in the Himalayan province of Tibet, according to Chinese business news. In the future, Blockchain software will help to secure infrastructure programs in the mountain region, which is characterized by poverty. The autonomous province of Tibet is one of the statistically poorest regions in the People’s Republic. It is to serve as a pilot project for similar funding initiatives in the provinces of the Middle Kingdom.

With the blockchain pressing ahead worldwide, one of the greatest strengths of the technology still lies in the financial sector. If the Chinese government has its way, it should help the provinces groaning under poverty.

According to the China Money Network financial news this week, the Bank of China (BOC) is to upgrade its infrastructure program with blockchain software. With the help of distributed ledger technologies, the State Bank wants to support development aid. In concrete terms, the distribution of funds from the infrastructure funds for projects is to be made more transparent and efficient in the future.

The news spy should above all help the people in Tibet

The news spy is where the first pilot technology adaptation is located. Stricken by poverty, the Chinese mountain region in the Himalayas has been one of the problem children of the People’s Republic of China since its integration in 1950, which was disputed under international law, both politically and economically.

For the autonomous province groans below a poverty rate of 12.4 percent of the population – three times the official statistics of the rest of China. The majority of Tibetans live from agriculture and as shepherds in the mountains. Apart from sluggish tourism, the province has little economic power, transport routes are poor and industry is limping. Beijing has been responding to this since 2012 with a decisive investment offensive, which is now to support the blockchain.

Tibet as a pilot
In order for the pilot project in Tibet to bear fruit, the seventh largest bank in the world also wants to enter into partnerships, for example with the Agricultural Bank of China. In this way, the bank wants to better network potential candidates for fund funding in the future and drive the region forward.

If this is successful, the BOC, which is one of the four major state-owned banks in China, intends to expand the project further. The blockchain-supported distribution of funds will also help in the Gansu, Yunan and Qinghai parts of the country, according to the bank.

Poverty reduction thanks to Blockchain

However, far from the Middle Kingdom, Chinese banks are by no means the first to adopt the blockchain in poverty reduction and development aid. The United Nations, for example, has long been committed to the implementation of distributed ledger technologies as part of its Sustainable Development Goals. It was not until March that the organisation entered into a strategic partnership with the start-up Blockchain. The aim of the cooperation is to combat global poverty.

And corresponding initiatives are already underway in Germany. The Kreditanstalt für Wiederaufbau (KfW) is currently testing the use of Blockchain technology in project funding on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). With the help of the software, the development bank intends to make the work and approval steps in procurement, contract drafting, tendering and disbursement processes for development projects more reliable in the future.

Blockchain on the advance
While concrete information on blockchain adaptation in Tibet is still lacking, technology is experiencing a real boom among Chinese state banks. The BOC had already filed a patent for blockchain scaling in February. A research institute of the Ministry of Industry and Information Technology on the other hand had launched a blockchain index in March under the leadership of the central bank. This index was probably intended to evaluate various software formats on the basis of the criteria of technology, applicability and innovation, also with a view to domestic industry.

Digital Bitcoin loophole Priority List: Germany lags behind

While the German-speaking Bitcoin and Blockchain community is growing steadily, the authorities are struggling with adaptation. The digital priority list states that there are numerous requirements in the field of digitisation.

But the Bitcoin loophole mills are grinding slowly

On 29 August, the Liechtenstein government published a 179-page consultation report to create a legal basis for Bitcoin loophole regulation. The aim is to give investors, entrepreneurs and businesses more legal certainty when dealing with block chains. An important step towards adaptation and a major leap forward for Liechtenstein in terms of technical innovation. And Germany? Orders its priorities.

For example, a study conducted in cooperation between the F.A.Z. Institute and Sopra Steria Consulting shows that seven percent of the federal, state and local administrations surveyed provide a budget for blockchain projects. Here it is above all an increase in efficiency that could oil the slow mills of the administrative apparatus:

“The technology is particularly suitable for the federal, state and local governments to complete complex processes with many simultaneously involved parties more quickly. State benefits, such as unemployment benefits and BAföG, could be paid out without each transaction having to physically pass through many hands until it is legitimized.

Lack of skilled workers calls for automation

To this end, it is of interest to automate more activities, especially in view of the shortage of skilled workers. Two percent of the administrations surveyed had therefore “already” invested in AI solutions. Nevertheless, the respondents are optimistic about the future. As the study continues to show, this share is expected to rise to 16 percent by 2020: Specific fields of application are the analysis, categorization and distribution of citizen enquiries and applications.

According to the report, considerable progress is also expected to be made on mobile devices in order to optimize processes:

“Mobile devices are also changing the work of administrative staff. One example of this is the ‘Mobile Workplace’ pilot operation launched by the Rhineland-Palatinate police in October 2017. Here, the connection of mobile terminals offers many advantages, for example by allowing data on traffic accidents or criminal charges to be entered directly on site or data from the residents’ registration system to be retrieved and checked.”

Germany and the missed revolution

Furthermore, the administrations wanted to finally manage to implement the e-file. For “paperless file management”, 38 percent of the respondents want to use “a considerable share of the budget” by 2020. In fact, 57 percent of administrative decision-makers are already in the implementation phase with the electronic file.

However, Germany needs a solid legal basis before the blockchain technology can be adapted. And it will probably be some time before that comes. The topic of “blockchain” is included in the coalition agreement. But BaFin and the government are still struggling at the moment. The “world” hit the nail on the head already in February: “Germany misses already again an Internet revolution”.

SEC: Bitcoin-ETF from Winklevoss rejected again

The US Securites and Exchange Commission (SEC) has once again rejected an application by the Winklevoss brothers for approval of a Bitcoin ETF. This confirms the authority’s decision of last year.

But not all SEC members support the Bitcoin news

Already in October 2016, the Bats BZX Exchange applied to the SEC for listing of Bitcoin news: The SEC rejected the request of the investor twins in March of last year. In its justification, the SEC cited above all concerns regarding control and monitoring mechanisms at relevant marketplaces. According to the authorities, another problem was the lack of regulation of the markets.

The Winklevoss brothers then pushed for a revision of the decision and tried to achieve this by petition. The SEC continues to justify the renewed rejection with security and regulatory concerns regarding the BZX Exchange:

“[…] while the BZX states that […] transactions via the Bitcoin blockchain are publicly viewable, the blockchain only identifies parties to a transaction by a pseudonymous public key address. Furthermore, no distinction is made between Bitcoin trading activities and other Bitcoin transfer activities (e.g. for remittances, purchases of goods, or services).”

Therefore, the Crypto Exchange does not meet the SEC’s requirements regarding the containment of fraudulent activity:

“On the contrary, the Commission disapproves of this proposed rule change because BZX has not fulfilled its obligations under the Stock Exchange Act and the Commission’s Rules of Procedure to demonstrate that its application complies with the requirements of the Stock Exchange Act, in particular that its rules must be designed to prevent fraudulent and manipulative acts and practices”.

Resistance within the SEC

The SEC’s decision was not unanimous. Commissioner Hester M. Peirce is of the opinion that the Winklevoss application does indeed fulfil the conditions of the Stock Exchange Act. She criticises that the SEC’s reasoning is less about the proposed Exchange Traded Product (ETP) than about the Bitcoin market in general:

“As the Disapproval Order focuses on the Bitcoin spot market, it does not give adequate weight to the important role of the exchange as a self-regulatory organisation (SRO) within our regulatory framework. BZX should and would play a central role in monitoring the trading of trust shares. In exercising this function, BZX would perform the functions entrusted to it as an SRO and would be subject to the supervision of the Commission. In exercising this responsibility, BZX would have strong regulatory and business incentives to ensure the integrity of the products it lists for trading. There is nothing in the minutes to suggest that BZX is unwilling or unable to perform its duties under the Stock Exchange Act”.

No reason for FUD
From the SEC’s point of view, the rejection is understandable. With regard to the upcoming dates in September for the approval of further ETF applications, it is understandable that the authority is keen to keep expectations regarding Bitcoin ETF low. The fact that the Bitcoin share price is yielding somewhat, currently 3.9 percent, is not the end of the world. After the Bitcoin price increase of the last few days, this small correction is absolutely within the bounds and should therefore not be overestimated.

Better water management thanks to blockchain technology?

Although water scarcity is not a problem in our regions, there are many countries that are struggling with inadequate water management. The Blockchain should help to use water efficiently. Australia and the USA have already developed initial concepts.

Two thirds of the earth is covered by water, but only 1 percent of it is usable for humans. While in our latitudes we have a guilty conscience about not letting the water run when we brush our teeth, others are actually struggling with water scarcity and rationing. Approximately 4.5 billion people do not have access to a safe water supply due to water scarcity – and the trend is rising. Blockchain technology could make water more efficient and ensure distribution. It could be used to store important data on water quality and quantity. This information would help both industrial consumers and private households to manage water consumption. Current data could be used to decide whether to store or use the water. This would not only reduce costs but also make distribution more efficient.

Bitcoin formula on the advance

The Australian city of Fremantle is currently planning a Bitcoin formula project to test the blockchain’s water and power distribution capabilities. Read more about it: The project will combine robust, low carbon and low cost systems with blockchain technology. A large photovoltaic system, a charging station for electric vehicles and systems for water treatment and absorption will also be connected to the Blockchain technology. This scope of the project already suggests it: Research is already underway here with a view to future smart cities.

Melbourne also wants to optimize water trading with the help of blockchain technology. To this end, the city has teamed up with start-up Civic Ledger. As part of the collaboration, they have completed a feasibility study for a blockchain-based application. This is intended to increase the transparency and efficiency of water market trading in Australia.

Clean water in the USA

The water used in oil drilling is mainly stored underground in barrels, which makes it impossible to use it for other purposes. Genesis Research Technology Group, based in the USA, has now developed a system that can purify the water without the use of chemicals. This process has proven to be very successful over the last three years. The company now uses the Ethereum blockchain to test and evaluate the water quality in a tamper-proof manner. To this end, it has entered into a cooperation agreement with MVP Asia Pacific Inc. Its CEO, Darren McVean, explained:

“The Blockchain represents an amazing potential for the environmental and land rehabilitation sector. In the past, governments and community groups had no access to land, water and air quality records. Few have confidence in the reports and this has nipped investment in environmentally friendly technologies in the bud. We believe that by incorporating Blockchain technology into Genesis RTG’s proven water treatment process, we can realize huge environmental benefits on a large scale and drive the Blockchain industry forward.”

Of course, the blockchain cannot conjure up water where there is none. However, it can obviously help people to distribute the available water efficiently and to document its quality reliably.

Cryptosoft: The hybrid ICO

Hybrid ICOs are what analysts call those who compromise in all three areas – reach, compliance and cost efficiency. One example is RightMesh. RightMesh has established a subsidiary in Switzerland and designed its RMESH token to be classified by Swiss regulators as a pay coin (and not as security). A dedicated law firm ensured that RightMesh met the relevant KYC and AML requirements. The token was also not offered in countries where ICO tokens are generally classified as securities, such as the United States. The RightMesh team researched how the RMESH token would be classified in over 27 jurisdictions. However, this care is associated with corresponding costs. In addition, there is no guarantee that a token will retain its status within a jurisdiction.

“This manual review of investors, regulatory research and selective issuance is a good example of how a company can work with regulators to achieve compliant token distribution, although it also illustrates the huge costs in terms of finance, time and human resources that are currently being incurred, the authors of the study state.

The fourth cryptosoft way: head in the sand

Not every cryptosoft company is willing to find a way to counter this trilemma. Although many (even “the silent majority” according to the analysts) have already considered an Initial Coin Offering as a cryptosoft financing scam instrument, they do not do so in view of the associated (and above mentioned) uncertainties.

“We have talked to several stakeholders who have seriously considered raising capital for new companies through token issues, but have so far held back and decided that the (known and unknown) costs of achieving a compliant ICO that reaches a sufficient pool of distributed investors are currently too high to proceed.

As a result, many companies are either taking a blanket decision not to implement an ICO, or are adopting a wait-and-see approach in the hope of a more transparent (and at best global) regulatory environment.

A – not entirely altruistic – proposed solution

Since such globally uniform regulation is not yet foreseeable and passivity is not a viable option for every company, the analysts propose a solution in which ICOs regulate themselves. This reveals the biased character of the study.

The iComply system, i.e. one of the authors of the study, is proposed as a possible approach. The platform iComplyICO is supposed to enable the implementation of ICOs with automated Compliance:

“Before the Token Sale of the ICO begins, the rules for who can hold them and may act are coded into the digital tokens. In order to purchase the tokens, individuals must demonstrate that they meet these requirements by verifying their identity in accordance with the appropriate multijurisdictional guidelines and then whitelisting their wallet.”

Those wishing to follow the process in more detail will find more detailed descriptions of what such self-regulating ICOs can look like, both in the study and on the corporate side.

Bitcoin Classic Proposal: A doubling of transactions per block?

A new version of Bitcoin Classic, an offshoot of Bitcoin Core, could double the number of transactions per block.

Bitcoin users currently rely on different versions of Bitcoin Core, the successor to the protocol originally written by Satoshi Nakamoto. The current blocksize debate, however, opened the door to other implementations, as the rise and fall of Bitcoin XT made clear some time ago.

Discussions about this proposal and generally about the yes or no question behind increasing the block size ultimately triggered a schism in the Reddit community around Bitcoin. Further sharp debates took place on Twitter and the slack channels of Bitcoin Core and Bitcoin Classic.

What will happen to the crypto trader?

Now Bitcoin Classic is released. Will the crypto trader be accepted now? A preliminary data collection allows the conclusion that the number of nodes working with Bitcoin Classic will increase in the future like this: . According to the page Coin.Dance there are currently a bit more than 500 nodes with Bitcoin Classic – in comparison there are 4100 Bitcoin core nodes.

The new version of Bitcoin Classic, ultimately a restructuring of the current Bitcoin core that would accept larger blocks, could be a new phase in the debate about scaling the transaction capacity of the blockchain.

For over a year now, members of the Bitcoin community have been arguing extensively and often bitterly about the block size. The latest proposal, which includes Bitcoin Classic, plans to increase the block size from 1MB to 2MB. If the new protocol were activated, it would lead to a split in the blockchain, with both branches containing their own different transaction histories from the time of the split.

Since its release last month, Bitcoin Classic has attracted the attention of both supporters and critics alike. The former see it as the next phase of software development behind Bitcoin, the latter a threat to the blockchain.

The proposal to split the existing history of Bitcoin transactions into two branches as described above (one with 2MB block size, one with 1MB block size) is supported by startups working in the Bitcoin scene and some Bitcoin miners.

However, you have to keep in mind that an activation of the Bitcoin Classic software requires 751 of 1,000 miners supporting 2MB blocks. Only then will a 28-day transition period begin during which node operators and miners will have to replace their software with one compatible with Bitcoin Classic.

At a conference hosted by Coinbase – Coinbase itself is a strong supporter of Bitcoin Classic – Bitcoin Core Maintainer Gavin Andersen said he suspected that miners who did not immediately support Bitcoin Classic would follow suit if there was sufficient support:

“As soon as 75% of the miners are convinced, the rest will follow very quickly. This is exactly what happened with similar protocol updates”.

An adoption of Bitcoin Classic depends on the majority of node operators and miners, they must take the step of splitting off from the existing network. This has never been the case before; so far, new versions of Softfork (protocol versions that are fully downward compatible) have been tested by volunteers.

The Bitcoin Classic team – which includes people like Andersen and Bloq CEO Jeff Garzik – said they expect a new version to be released within the next few weeks. This new version would be based on Bitcoin Core 0.12. The development team will get some new faces (Pedro Pinheiro, Tom Zander and Jon Rumion), while others will only be external (Jonathan Toomim, Marshall Long and Olivier Janssens).

The debates continue

Advocates of increasing the block size limit say that this will be necessary in the near future; it needs this new space to allow more transactions and as a means against too high transaction fees. Friends of Bitcoin Classic stress that it is competition between different implementations of the Bitcoin protocol that drives development and allows Bitcoin users to participate in this process through freedom of choice.

Critics say that these changes should be pushed through too quickly and therefore too risky; the question is asked how a broad adoption of a hard fork should be successfully coordinated at all. It would then be necessary for all nodes to download new software, otherwise they would be separated from the network by incompatibility. Also, the governance system of Bitcoin Classic,

Health sector still needs time for blockchain

Despite the fact that blockchain hypes do exist in the health sector, some say that pitches and ideas are not much more than fantasies.

Such comments come at a time when Blockchain technology and the Bitcoin secret has been increasingly praised

The Blockchain technology is supposed to be a scam solution for everything from the management of electronic medical records to health insurance and reduce the complexity of these Bitcoin secret systems in such a way that the frustration of all users is minimized.

However, new research shows that the entrepreneurs behind these plans mean well, but ultimately offer no better solutions to the industry’s existing problems.

“It’s simply impossible for the healthcare sector to act in real time – even though people like to say the opposite,” says Dr. Alyssa Hoverson Schott, a physician who works in Sanford Health. She started a discussion on this topic at the Distributed Health Conference earlier this month.

Hoverson Schott has an average of 39 patients per day and has to record their medical data in a database between visits.

“I notice that I often don’t have the time for the entries,” says Hoverson Schott.

The database entries are sent to insurance companies, which then prepare an offer for the treatment costs on this basis. The negotiation between the hospital and the insurance company can take ninety days.

But what is the real problem with blockchain approaches? The providers of new technical solutions know nothing about the daily business of health insurance companies.

“The founders of these start-ups often talk about things that are not feasible. I doubt that they know our daily routine and understand the system behind it.”

That doesn’t mean that she doesn’t see any place for the blockchain in the health business. She is very interested in the blockchain, also on a personal level: Her husband is a business analyst at Experian and as such is also interested in the blockchain.

She suggests, however, that start-ups should team up with the established industry instead of working “disruptively” against it.

Even if the minds within the healthcare industry have their concerns, this use case shows that the blockchain is now more than just a technical solution – it has become a social phenomenon.

Concerns from the health sector

There was also interest in the blockchain from other sides in the healthcare industry: Dr Jonathan Holt was a practicing physician, but is now focusing on his two startups. SeqTech Diagnostics performs genetic testing on food and TranSendX is a blockchain application designed to give patients more control over their patient records.

Holt sees another opportunity to expand his expertise in a new project: Like financial companies, health insurance companies often have financial incentives to keep patients’ or customers’ information locked up in their files. This could be the starting point, but many of the current ideas are too radical to be accepted.

Holt is not the only one to believe that companies in the healthcare sector are reluctant to accept new data storage systems. A leak of such data can result in such high fines that healthcare providers can go bankrupt.

During the conference mentioned above, start-up entrepreneurs were therefore met with criticism.

There is another reason why healthcare providers are reluctant to face the blockchain industry: They have pumped a lot of time and money into the existing solution.

Similar to financial companies, which will not simply abandon their previous system, this industry also requires updates rather than complete new beginnings.

In addition, many hospitals are currently switching to the electronic health record (EHR), an American counterpart to the e-file. Within the framework of the American Recovery and Reinvestment Act, the US government suggested that health service providers should “make sensible use” of the EHR from 2014 onwards.

Ivy League in China: Education for all or censorship for all?

A network of Chinese universities has created the Ivy League. With a decentralised autonomous organisation (DAO) based on the blockchain, they want to improve the exchange of knowledge between different universities and thus create education for all. A message that has a flavor.

In total, the Tsinghua University platform currently comprises 14 universities from China

The distribution of education and its price is an issue that sometimes makes many people’s heads smoke, and rightly so. In one way they must be financed, in another they must be distributed. At the moment, these are problems that need to be solved – as we know, education is the only effective weapon against stupidity.

In order to tackle this problem, at least to some extent, a coalition of Chinese universities created the Ivy League. The Tsinghua X-Lab of the Tsinghua University is in charge, which according to an official announcement is reacting to the 19th National Congress. In it, the Chinese government encouraged the use of blockchain technology to promote higher education. The Ivy League has now committed itself to this:

“We will promote the innovation of the underlying technology of the blockchain and promote the integration of the blockchain technology and industry, while helping China become a country of strong education, science and technology”.

The catch on the matter

The ultimate aim is to combine two essential power factors in contrast to the USA: “Unlike the elite education concept of the United States Ivy League, the Ivy League advocates the concept of universal education and technological power”. This should make education accessible to all instead of making it an elitist good, as in the USA.

To this end, the Ivy League is relying on a decentralized autonomous organization. It provides for the establishment of distributed nodes for alliance members and member units in cooperative institutions, scientific research institutes and related institutions. These then have the appropriate voting rights to vote by consensus on who can learn what, when and how.

This is exactly where the catch lies. In theory, the decentralized organization of education and the associated shortening of paths is desirable for a better distribution of knowledge. However, if one follows José Herranz from the University of Bochum, DAOs lead to the formation of new central points. In the case of the Ivy League, the problem is that – despite a decentralised “autonomous” organisation – there are new power centres that ultimately vote on the learned content. Here one can assume that the contents are strongly controlled and selected in the sense of the government.