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BIS Economist Proposes "Embedded Supervision" to Enhance Transparency of Tokenized Markets

Economist Raphael Auer of the Bank for International Settlements (BIS) has championed distributed ledger technology (DLT) as a way of supervising financial market risks.

Essentially, Auer purports that, “The spread of distributed ledger technology in finance could help to improve the efficiency and quality of supervision.” In his recently released working paper, Auer made the case for ‘embedded supervision’ which leverages machine learning or artificial intelligence and effectively creates a framework that allows compliance with regulatory goals to be automatically monitored by reading the market’s ledger, thus reducing the need for firms to actively collect, verify and deliver data.

The paper explains that DLT and smart contracts can be leveraged to create new forms of transparency and data credibility for the development of financial markets and can eventually eliminate the need for any third-party data verification. Auer writes that there is a necessity for regulators to establish auxiliary frameworks to govern distributed markets, however, DLT would ensure a more cost-effective and higher quality of compliance. He concludes, “Embedded supervision could further help maintain the confidentiality of firms and their customers, since cryptographic tools can be used to report an institution’s aggregated financial exposures to the supervisor without disclosing the underlying individual transactions.”

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Turkish Government Announces Plans for National Blockchain Infrastructure

The Ministry of Industry and Technology of the Turkish Government announced its plan for a national blockchain infrastructure used in public administration on Sept. 18 in Ankara.

Strategy 2023, a presentation set out by the Turkish Ministry of Industry and Technology, pointed out blockchain and distributed ledger technology as priorities for the coming year. The definition of blockchain technology outlined in Strategy 2023 states:

“Blockchain, which became popular with virtual currencies like Bitcoin, delivers a distributed communication infrastructure to provide trust between parties on transactions without the need for a central authority. This feature enables many different use cases that address transparency and reliability issues, from smart contracts to supply chains. Because it removes any intermediaries, blockchain technology builds new business models that will shape the future.”

In a survey outlined by Startup Genome, blockchain was marked as one of the fastest-growing technology trends, reaching a 101.5% increase in early-stage startup funding globally.

The Ministry of Industry and Technology also aims to work with Turkish regulators to create a regulatory sandbox for relevant blockchain applications.

An economic roadmap released by the government of Turkey in July 2019, outlined the plan for a central bank-issued digital currency.

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Bank of America Joins Marco Polo Blockchain Network Powered by R3 Corda

Bank of America has joined the Marco Polo Network, powered by R3 Corda’s distributed ledger technology to solve the challenges of the global trade participants.

The Marco Polo Network made the announcement on Sept. 19, stating that the multinational investment bank and financial services company is looking to provide transformative solutions for their global customers.

Launched in 2017, the Marco Polo Network aims to provide an “open enterprise platform for trade and working capital finance to banks” and corporates and a blockchain-powered solution for a better security system of the exchange of data and assets between participants.

Geoff Brady, the Head of Global Trade and Supply Chain Finance in Global Transactions at Bank of America stated:

“Joining the Marco Polo Network supports our strategic objective of turning technology advances into trade solutions that address client needs. We look forward to exploring how the new technology can generate greater transparency for our clients throughout the transaction lifecycle, making traditionally paper-based, opaque processes easier and more efficient.”

David E. Rutter, the CEO at R3, mentioned that the Marco Polo network’s existing pool of banks had been further strengthened by the addition of Bank of America to the network.

Daniel Cotti, the Managing Director at the Marco Polo Network, mentioned that the network was looking to expand its presence in North America and added that they are looking forward to working with Bank of America.

Cambridge Report: 77% of Enterprise Blockchains Are Not 'Truly Transformational'

The Cambridge Centre for Alternative Finance (CCAF) has released its Second Global Enterprise Blockchain Benchmarking Study. The Study was supported by Invesco and surveyed over 160 entities and analyzed 67 enterprise blockchain networks across all sectors.

Following on from its initial 2017 Global Blockchain Benchmarking Study, the new study underlines the significant changes in the industry landscape since the initial version. According to the findings, the new report states, “Two years ago, the industry landscape was mostly dominated by half-hearted experiments and short-lived proofs-of-concept – often announced with great fanfare and publicity – the hype has gradually given way to genuine development of sustainable blockchain networks that are increasingly being deployed in production environments.”

Dr Robert Wardrop, Director, Cambridge Centre for Alternative Finance said in a Forward to the report, “In multiple industries, enterprise blockchains are perceived as a solution to establish common data standards across organizations, eliminate organizational silos, and facilitate record reconciliation to help improve overall efficiency and enable the creation of new services.”

The Study cautions, however, that most of the existing live enterprise blockchain networks (77 per cent) have little to do with deploying truly transformational DLT networks. Coined as ‘blockchain memes’—the vast majority of these projects are merely a way of satisfying blockchain hype but are also effective as influential drivers of organizational change—promoting the development of common data standards.The Study reports that financial services account for the largest share, 43 percent, of live blockchain networks as banks and other institutions seek to leverage the technology for greater efficiency. Despite the reports citing ‘revenue generation’ as the biggest strategic driver for blockchain investment, only six percent of current enterprise blockchain networks’ value proposition focuses on incremental revenue generation.

Dave Dowsett, Global Head of Technology Strategy, Digital Transformation, AI and Emerging Technology at Invesco, highlighted a few salient points in another Foreword to the report. He said, “The success of blockchain cannot and will not happen in isolation as the power is in the network, that true transformation of ecosystems takes time, and that new technologies must prove themselves to build trust in the new paradigm.”

Three Key Findings:

Despite 72 percent of live networks being primarily used to lower costs through reductions in reconciliation, 69 percent of participants on the network have cited their key motivation in joining the projects as a way of increasing incremental revenue generation by providing new products and services.
Approximately 71 percent of live networks were initiated by a single founder leading the initiative; with the majority of 88 percent of these networks being designed for shared use by independent entities. Despite their designed purpose, the majority of live networks restrict membership to partners and 19 percent of them are jointly operated by direct competitors acting in a consortium.
Hyperledger Fabric serves as the core protocol framework for around 48 percent of covered projects used in production in all industries—followed by R3’s Corda platform at 15 percent and Coin Sciences’ MultiChain framework at 10 percent.

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European Commission Blockchain Report: The 3 Key Takeaways

European Commission: Blockchain Beyond the Hype

Since the inception of Bitcoin, much hype and public attention have followed the development of cryptocurrencies their value being dismissed by many while others have become hoarders of crypto. Away from the uncertainty of cryptocurrency future value, one aspect of the technology is now squarely in the limelight—the blockchain platform or distributed ledger technology (DLT) that make the cryptocurrencies possible.

The European Commission released a report yesterday entitled Blockchain Now and Tomorrow which brings together the research of different disciplines of the Joint Research Centre—the science and knowledge arm of the European Commission—to explore the diverse potential of Blockchain and DLT.

The European Commission released this post on Linkedin, which displays their intentions to insert this incorruptible ledger into many facets of law, policy and industry:

Blockchain Basics

Blockchain is a tamper-resistant and time-stamped database (ledger) operating through a distributed network of multiple nodes or users. It is, however, a particular type of database. Transactions between users do not require intermediaries or trusted third parties. Instead, trust is based on the rules that everyone follows to verify, validate and add transactions to the blockchain – a ‘consensus mechanism’

Source: European Commission: Blockchain Now and Beyond

Blockchain Real-World Potential

According to the report, Blockchain can enable parties with no particular trust in each other to exchange digital data on a peer-to-peer basis with fewer or no third parties or intermediaries. For example, the data held on the ledger could correspond to money, insurance policies, contracts, land titles, medical and educational records, birth and marriage certificates, buying and selling goods and services, or any transaction or asset that can be translated into a digital form. The potential of blockchain to engender wide-ranging changes in the economy, industry, and society – both now and tomorrow – is currently being explored across sectors and by a variety of organizations.

The report provides multidimensional insights into the state of blockchain technology by identifying ongoing and upcoming transformations in a range of sectors. The Commission’s report also aims at moving beyond the hype and debunking some of its controversies that surround blockchains by offering both an in-depth and practical understanding of blockchain and its possible applications.

Blockchain is Everywhere

The initial spike in interest in Blockchain and DLT came from the financial sectors in 2014 as the potential benefits were more obvious. Other industries have since begun pilot and experimental programs and Blockchain is tagged as one of the technologies which are anticipated to have a profound impact over the next 10-15 years, backed in the short term by upward forecasts for investment. Additionally, there has been sharp growth in blockchain start-ups and the volume of their funding. Massive funding started in 2014 with EUR 450 million and rapidly increased to EUR 3.9 billion in 2017 and over EUR 7.4 billion in 2018.

Source: European Commission: Blockchain Now and Beyond

Three Key Messages from the Report:

There is space beyond cryptocurrencies and financial applications—It is the technology behind cryptocurrencies – blockchain – that holds the most potential. Beyond its financial applications, its potential has come to the foreground in many other sectors, such as trade and supply chains, manufacturing, energy, creative industries, healthcare, and government, public and third sectors.

A global ecosystem is on the rise from start-ups to capital investment—The rise of blockchain technology is witnessed by both the sharp growth in blockchain start-ups and by the volume of their funding. International players in the United States are taking the lead, followed by China and the European Union. Funding reached over EUR 7.4 billion in 2018 due to the explosion of ICOs and venture capital investments. Blockchain does not follow a ’one-size-fits-all’ model—The potential opportunities and challenges of deploying blockchain technology are strongly related to context, application or sectorial issues. That is why organizations should not develop solutions looking for problems, but instead should find existing or foreseeable problems in their operations or business, and then look for possible blockchain solutions.

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Avo Receives First Virtual General Insurer License in Hong Kong

Hong Kong’s Insurance Authority (IA) announced on Tuesday that it has granted the first authorization for virtual general insurance under Fast Track. The license was granted to Avo, a local insurtech company providing products like health and travel insurance. The IA introduced the Fast Track Scheme in September of 2017 to provide a dedicated application stream for newcomers who are seeking to operate primarily through digital distribution channels. Avo Insurance fit the criteria as it is a purely digital company which will sell its products online without the use of agents or brokers.On the approval, Clement Cheung, CEO, IA said, “The first non-life virtual insurer authorized under Fast Track is a local company, whose strategic focus is providing innovative and customer-centric products, like health and travel insurance, for under-served segments through bespoke digital distribution channels without the involvement of intermediaries.”

In further comments, Cheung shared that the approval of new actors under the Fast Track Programme will facilitate wider application of Insurtech in Hong Kong and provide the opportunity for both consumers and the industry to improve the customer experience while enhancing inclusiveness.

The first life virtual insurer under Fast Track was authorized in December 2018 and awarded to Bowtie.

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Dynasty Farms to Use Blockchain for Fresh Produce Traceability Project

Dynasty Farms/ Pacific International Marketing is set to use iTrade Blockchain to propel transparency and traceability of fresh produce. iTrade Network is a noteworthy worldwide provider of supply chain management solutions in the food and beverage sector.

By using iTrade Blockchain, Dynasty Farms will attain and present key product data with various trading partners. This approach will be instrumental in offering optimal visibility of the supply chain operations being undertaken. Moreover, consumers will be advantaged as their knowledge base about food safety will be enhanced.

Dave Johnson, the president of Dynasty Farms, stipulated that transparency and safety were their top objectives.

Johnson noted:

“We want to make sure we are providing our consumers with the safest, highest quality product. Having rich traceability information associated with our purchase orders on the iTrade Blockchain will not only give us meaningful insights into our operations and facilitate a safer supply chain, but it will also set us apart from our competitors and make us more appealing to our current and prospective trading partners.”

The deployment of iTrade Blockchain is set to be transformative as PIM/Dynasty Farms will be able to capture vital first-mile data. As a result, food safety will be enhanced based on the traceability solutions presented. This project is set to render a secure and smarter food supply chain.

Previously reported on Blockchain.News, the traceability of coffee origin was recently propelled by a blockchain app.

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Tertiary institution Signs MOU with Cryptography Development Initiative in Nigeria

As the rest of Africa makes an effort to secure a position of relevance in the blockchain space, Nigerian based Nile university has gone into partnership with Cryptography Development Initiative in Nigeria (CDIN), the announcement was made in the official Twitter handle of CDIN on October 16.

Prof. Aras, the institution’s Vice-Chancellor(VC) of the university who spoke at the event, used the opportunity to express his pleasure in the new partnership as he believed that it would play a significant role in fortifying the students with the necessary skills needed to survive the digital space. Professor Can also bolstered the points made by the vice-chancellor by saying that this partnership was going to provide a reliable platform for students to sandwich their theory-based knowledge with helpful practicals.

CDIN happens to be a non-profit organization that aims at tackling the wide learning gap and practice of cryptography within Nigeria.

Mr. Fadele, who stood on the position of the spokesperson for CDIN, commended the warm welcome shown by the institution in a time when not many institutions recognize the need to value and integrate blockchain-related skills to the school system. The event was wrapped up with the formal signing of the MoU.

The efforts to integrate blockchain and crypto-related skills into the educational system, as seen in a report from Coinbase, have shown that rising interest of students in crypto and an increasing number of courses focused on blockchain, cryptocurrencies, or Bitcoin that are being taught across a range of disciplines. This increased interest in studying crypto at colleges and universities could pass for an indication that the future of money has a lot yet to be seen.

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Bank of America Plays Ripple Project Close to Chest

Bank of America (B of A) has been keeping its blockchain contingency plans under wraps for the better half of a decade. According to a tweet from CoinDesk’s Nick Carmillo, B of A has been quietly testing Ripple’s distributed ledger technology (DLT) and a recent job posting from the bank now indicates they may be planning to take it to the next level.

In a presentation to the International Monetary Fund (IMF) last year, Ripple did label the B & A as an active customer. A spokesperson for Ripple told CoinDesk that B of A has been a member of its steering group for the network of institutions that leverage Ripple products—Ripplenet. She also divulged that Ripple and B of A had conducted a pilot project together but both Ripple and the bank have chosen not to comment on the specifics of the project. From the presentation made to the IMF however, it could be deduced that B of A has allegedly conducted tests with Ripple’s xCurrent payment system.

B of A Continues to Future Proof In an interview with Bloomberg on April 20th, 2016, Cathie Bessant, Tech and Operations Chief revealed that B of A had been quietly stockpiling blockchain patents despite admitting that while she kept an open-mind, she was “bearish” on the technology in her personal opinion. At the time of the interview, Bessant revealed that B of A were miles ahead of any other financial firm after revealing the bank’s 86 patent application had been made under her watch—JP Morgan had only six applications for comparison. The revelation that B of A has allegedly been conducting tests on Ripple’s xCurrent, indicated that despite Bessant’s public skepticism on blockchain, the bank has continued to reserve their place in the IP (intellectual property) chain and indeed may be taking DLT initiatives further than previously anticipated.

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Want a Masters in Blockchain? Look no further than the "Blockchain Island"

Malta has been deemed the “Blockchain Island” based on the incredible steps made by the administration. Notably, it has a governmental authority whose mandate is certifying distributed ledger platforms and offering frameworks necessitated when establishing ICOs.

As a result, Malta has become a force to reckon with in the blockchain space based on its friendliness. The nation has also been making steps in ensuring that blockchain education is integrated into the populace because of its exceptional capabilities.

The University of Malta is offering a Masters of Blockchain and Distributed Ledger Technology with the first enrollment taking place this October. Presently, this program has attracted nearly 35 students.

The Master’s program is noble and unique because it is the only DLT-specific in this nation. Realistically, there are a few similar programs across the globe.

As reported by Coindesk on 20 Oct, Malta’s Prime Minister, Joseph Muscat, has been making consistent efforts in ensuring that the nation becomes the global trailblazer in blockchain technology.

The Masters Program Director, Joshua Ellul, has asserted that those enrolled in the Master’s program will be part of the future blockchain specialists that steer the world forward.

As reported by Blockchain.News in August, the present-day blockchain industry is being hindered by the structural scarcity of talents. The Masters of Blockchain and Distributed Ledger Technology being offered in Malta is a positive move in eradicating this challenge.

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