How We Build a Blockchain-Based World?
Blockchain is still in its infancy. Before we see widespread adoption on the scale the technology is capable of, a lot needs to happen. We must have buy-in from government (which in the U.S. means working state-by-state on policies and legislation). The industry has to clear a labyrinth of legal and regulatory hurdles before blockchain can power better banking, identity, records, or anything else requiring official documentation that now runs on legacy government systems or even (still) on paper.
We also need open standards to tie the blockchain industry together. The most prominent coalition working to make that happen is the Hyperledger project. Hyperledger is an open-source initiative to create an open, standardized, and enterprise-grade distributed ledger framework and code base to be used across industries. Overseen by The Linux Foundation, its members include tech companies (Cisco, IBM, Intel, Red Hat, Samsung, VMware, and more), big banks (JPMorgan, Wells Fargo, and so on), blockchain startups such as Bloq, and a host of others. The project recently released the first production-ready version of Hyperledger Fabric as a foundation for building blockchain apps. Big blockhain players like Microsoft are beginning to get into the standardization game as well, with Redmond releasing its own Coco Framework to work with existing protocols and build more powerful governance and data confidentiality into private blockchains.
"The Linux Foundation is the key layer of governance for shepherding and maturing open-source products," said Garzik. "There are many blockchain peddlers out in the market right now, and one of the biggest pain points we see is incompatibility; a large bank that has merged 10 businesses over the past decade and has a lot of halfway-compatible internal legacy systems. That's where the foundation and Hyperledger really come to the fore. As young as the blockchain industry is, the kind of technical standards-making we need for interoperability has so far been absent."
Another important Hyperledger member is R3, the wealthy elephant in the room when it comes to blockchain standardization. R3 is a consortium dedicated to research and development of advanced distributed ledger technologies for global financial markets. It also represents most of the biggest banks and financial institutions on the planet: Barclays, Credit Suisse, J.P. Morgan, the Royal Bank of Scotland, UBS, Bank of America, Citi, Deutsche Bank, HSBC, Morgan Stanley, Wells Fargo, and a number of others.
We're already beginning to see the kind of blockchain-based international trading R3 is after. Last fall, the first cross-border transaction between banks using multiple blockchain applications took place between the Commonwealth Bank of Australia and Wells Fargo, resulting in a shipment of cotton to China from the United States. R3 is also becoming an example of how difficult standardizing blockchain can be. Goldman Sachs and Santander both left R3 in late 2016 in the midst of big-bank jockeying over control of a new funding round for the consortium. R3 is doing just fine, though. The consortium announced a new $107 round of funding in May.
As Ethereum and the value of the Ether currency have exploded in popularity in the past year, standardization efforts have emerged around its blockchain platform as well. The membership of the Enterprise Ethereum Alliance has amassed more than 150 enterprise organizations since its launch in February, spanning tech corporations, banks and financial institutions, blockchain and cryptocurrency startups, industries such as healthcare and energy, and even a few governments.
Few know the challenge of pushing for blockchain adoption better than Perianne Boring, president of the Chamber of Digital Commerce. The Chamber is currently engaged in lobbying and advocacy efforts in 14 states and counting. In North Carolina, the chamber's efforts helped pass the North Carolina Money Transmitter Act in July 2016, which updates the state's existing laws to include a defined "virtual currency."
Boring said the law is a big win for blockchain and digital currency but still only a drop in the bucket of patchwork state-by-state regulations and the even more muddled web of federal agencies. In the past year, Chamber representatives have testified at cryptocurrency regulation hearings in New Hampshire, lobbied regulatory proposals in New York and Washington states, and made official comments on virtual currency acts and regulatory frameworks from the Uniform Law Commission and the Conference of State Bank Supervisors (CSBS).
"How is digital currency supposed to be regulated? This is a huge national debate around how states can effectively regulate digital currency and money transmission, and every state has its own opinion and a completely different way of doing things," explained Boring. "New York says businesses need a separate digital currency license to operate in the state. North Carolina said that's way too complicated and regulatory overkill, and decided instead to amend their existing money transmission laws to incorporate digital currency. We prefer the latter approach."
Boring also stressed the importance of keeping blockchain technology and policy on the same page. The Chamber is also a Hyperledger member, and Boring said the Chamber will work to actively bring Hyperledger into policy discussions, to ensure lawmakers understand the pros and cons of regulations.
Yet as difficult as overcoming entrenched legacy systems and regulations can be, we already have a blueprint of how it can be done. Over the past two years, the state of Delaware has shown how governments can legislate, sanction, adopt, and implement blockchain technology to power core services.
As with much of the legislation, regulation, and business drivers behind blockchain, it starts with fintech (financial technology). More than a million companies and 66 percent of Fortune 500 companies are incorporated and legally headquartered in Delaware, in large part because of the state's largest export: uncertified shares (meaning the ability to own shares in a company without holding the actual stock certificate). In partnership with blockchain fintech company Symbiont, the Delaware Blockchain Initiative announced in 2016 will completely automate stock issuance and recordkeeping on a blockchain ledger.
'Before the Delaware Blockchain Initiative, there was no technological solution to support digital representation of share ownership," explained Symbiont CEO Mark Smith. "From what can only be described as a forward-thinking agenda from the state, they embraced that they could reimagine how to deliver their marquee service on a distributed ledger, using Symbiont's technology to create a new type of share and change the way a corporation works from now into the foreseeable future."
A little finance background: The genesis moment of a private equity is when you incorporate a company. As Smith explained, now companies will have the ability to carry that equity all the way from incorporation up to and including an initial public offering (85 percent of IPOs happen in Delaware), all via the blockchain, with complete financial transparency for state lawyers and regulatory agencies. The entire process will run automatically on smart contracts.
Overstock Bets Big on Blockchain
E-commerce retailer Overstock.com became the first publicly traded company to issue stock on the blockchain this past December, selling 126,565 shares through its subsidiary, t0: the first-ever blockchain-based trading platform for stocks and securities. Overstock has been developing t0 for more than two years to serve as a distributed immutable ledger for capital markets.
Overstock CEO Patrick Byrne has called t0 a blockchain version of Wall Street, and in a Q&A with PCMag, the outspoken executive talked about how the platform works, making history with t0, and how blockchain could turn capital markets into Game of Thrones.
"I think what's going to happen is similar to what English common law did over a century ago. Blockchain is going to disrupt all kinds of legal work, notary publics, contracts, lawyers, judges, you name it," said Byrne. "You're going to start seeing open-source, self-executing contracts gradually improve over time. What the Internet did to publishing, blockchain will do to about 160 different industries. It's crazy."
Read entire interview with Overstock CEO Patrick Byrne here.
Even greater implications lie in what the Delaware Blockchain Initiative is doing beyond digital shares. At the Consensus blockchain technology summit this past year, Delaware Governor Jack Markell gave a keynote speech announcing the initiative and laying out a blockchain roadmap for the next five years, including a new joint effort with Symbiont to digitize and store the entire Delaware Public Archives on a blockchain ledger in 2017.
Symbiont's Smith, who is also a co-chair of the Chamber of Digital Commerce's Smart Contracts Alliance, explained how Delaware is building cryptographic document control that will ultimately overhaul how city, county, and state municipalities share information that in many cases still exists on paper in filing cabinets. Smith's first conversation with Delaware officials was in October 2015, and between then and now, the state has gone from knowing nothing about blockchain to embracing it in its biggest export and mobilizing to push new legislation and initiatives around it.
"The state is completely reimagining how it stores and distributes public records to its citizens. Land and property titling, licensing, birth and death certificates, automobile VIN numbers, heavy machinery and luxury good registrations, all these things are being incorporated into Symbiont's technology stack behind the Delaware blockchain," said Smith. "Distributed ledger technology is not a silver bullet—it's not going to solve every problem—but it does solve some very big ones.
"When [Delaware] Governor Markell came out publicly announcing the initiative, he said he wanted to challenge us to use this powerful technology," Smith continued. "Delaware should serve as a blueprint for many other states, each of which could operate a node right next to Delaware and build critical mass and momentum from a government perspective that could lead to other nations joining in."
Potchain: Where Blockchain Meets Marijuana
Medical and recreational marijuana is being legalized in more and more states across the U.S. This new, fast-growing sector of the economy presents challenges we haven't dealt with before, partly because even in states where it's legal, there are still a lot of things cannabis-related businesses can't do. Blockchain is helping fill in gaps for entrepreneurs, particularly when it comes to banking and legal protection.
Current federal banking regulations still preclude banks from doing business with cannabis companies, leaving them without a dedicated banking system. Tokken, a digital bank startup, gives cannabusinesses a bank account and blockchain-based transaction history that's linked to brick-and-mortar banking institutions and seed-to-sale systems, with Tokken as the middleman.
More interesting is what Medical Genomics is doing on the science side of the potchain. The life sciences company is mapping and sequencing the DNA of different cannabis strains, then storing and registering that info on the Bitcoin blockchain. The company lists this information on its public-facing Kannapedia strain database, but of far greater importance is how the company uses blockchain-based strain DNA as intellectual property (IP) protection for growers. The government makes it very difficult to obtain trademarks and patents for weed strains. But a blockchain provides irrefutable legal proof a grower can use to prove ownership of a strain if challenged by other growers or the pharmaceutical corporations that will ultimately enter the legal industry.
Welcome to Our Blockchain Future - coming soon...
Source: pcmag.com | by ROB MARVIN
Read more here: Blockchain: The Invisible Technology That's Changing the World.