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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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Feeling Left Out? EU Establishes Approximately €400m Blockchain & AI Fund

The European Commission and European Investment Fund (EIF) have launched a €2B fund to be invested in fundamental technologies. Nearly €300-€400M will be invested in blockchain and artificial intelligence (AI) amid fears that China and the US are setting a precedent in these areas.

Sifted reports that €100m of this money will be generated by the EU and EIF, whereas the rest will be obtained from independent venture capital funds. Nevertheless, it has been acknowledged that the fund could rise to €2B ($2.2 billion) under the InvestEU program.

This undertaking is seen as an attempt to assist Europe with catching up with China and the US in fields, such as blockchain and AI.

It has been stipulated that US companies take 33% of blockchain investment, and European and Chinese companies follow them at 22% and 21%, respectively.

Nevertheless, Europe still feels it is lagging because most of the blockchain investment is channeled towards proofs-of-concept and research.

“Investing in a portfolio of innovative AI and blockchain companies will help develop a dynamic EU-wide investors community on AI and blockchain. By involving national promotional banks, we can scale up the volume of investments at a national level,” the EIF noted.

The new fund is expected to tackle the concerns that not much is spent in Europe in developing large scale blockchain and AI projects.

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Bitmain-Backed Digital Assets Company Matrixport Extends Its Crypto Services into Europe

Matrixport, a Singapore headquartered and Bitmain-backed crypto company that offers trading, lending, and custody services, extends its services into Europe through the establishment of its new Zurich office. However, for now, Matrixport will not offer its payment services in Europe. Instead, it aims to apply for a Swiss banking license.

Matrixport is backed by Bitmain, the Chinese crypto mining company, and it has plans to set up a European operations center in Switzerland. By joining other crypto firms based in Switzerland, it aims to reach out to cryptocurrency enthusiasts and institutional investors such as private banks, family offices, and asset managers who always welcome being exposed to cryptocurrency.

As stated by the report, Matrixport’s Chief Operations Officer in Switzerland, Hui Wang said that the company plans to enlist close to 10 staff in the space of two years.

“We will start on a modest scale initially as we establish our name in Europe and establish a pool of clients. We don’t intend to act as a channel for our Singapore HQ, simply referring clients to Asia. We will service our European clients from Switzerland.”

Matrixport is registered under the name of Chaintech in Switzerland and is presently a member of the self-regulatory body QVF, which is looked after by the Swiss Financial Market Supervisory Authority.

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First in the World? Lithuania Central Bank Approved Blockchain-based Digital Collectible

As revealed in a recent press release, the Bank of Lithuania has approved a sample size of the physical version of LBCOIN, a silver digital collector coin equivalent in value to €19.18. The coins were produced to commemorate the year of the Act of Independence of Lithuania and its 20 signatories.The sizing and form of this coin will be like that of a credit card, equally, it will depict the Act of 16 February 1918. The coin features a digitized picture of the Council of Lithuania as well as a Lithuanian Flag on one side coin. To add to its value, the national anthem has been inscribed in binary code. The other side of the coin showcases the Vytis – the coat of arms which represents the Republic of Lithuania.

The digital token was designed by Giedrius Paulaskis, and the Bank of Lituania is preparing to release 24,000 blockchain-based digital collector tokens. Every one of these tokens will feature one of the 20 signatories of the Act of Independence.Upon purchasing the digital coin, the collector will get one of the six randomly selected digital tokens. Once they have a collected token from each of the six available categories, they will be eligible to exchange the set for a physical silver coin.

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European Crypto Miners Share Insights About Their Local Mining Industry

dGen, a non-profit research organization, in its report, revealed that the cryptocurrency miners in the European region believe that Europe’s higher electricity prices as compared to that of Russia and China is due to the strict regulation, strong protections, and political stability.

On April 28, 2020, Maggie Clarendon, the editor of dGen, published a study on his Medium channel with the title “Europe’s Mining Opportunity: Bitcoin Halvening 2020”. According to the study, many crypto miners in Europe feel prepared for the upcoming Bitcoin (BTC) halving. They also stressed that the higher electricity prices in Europe are making the mining community invest and focus more on highly efficient technologies.

“Higher electricity prices are offset by smoother business, better regulation and more protection, even things like getting insurance”, said Global Business Director of F2Pool, Thomas Heller.

Alejandro De La Torre, the Vice President of Poolin, in the report, also laid stress on the role of a stable government, their clear or non-threatening regulation, and the higher ease of business they offer as compared to countries like China and Russia with low electricity prices.

According to De la Torre’s statement in the study published by dGen, the miners in the European region are relatively better than any other miner in the world as miners in Europe often tend to upgrade themselves quickly, use firmware that is more efficient, and have access to engineered data centers that can take advantage of local weather.

Philip Salter, the Head of Operation at Genesis Mining, shared his concern in the report and shed some light on the centralization of Bitcoin mining which is rumored to be based in China.

“No one knows exactly how much of the global hashrate originates from China, but it would be great to have other continents gear up. Bitcoin shouldn’t have a central location for mining. It’s like having all eggs in one basket, simply put. China is known for rash and authoritarian decisions, which means a lot of uncertainty for anyone who wants to run a stable business, and also for the entire Bitcoin ecosystem” said Philip Salter.

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ECB Plans to Lead CBDC Exploration to Unleash Global Power of the Euro

Fabio Panetta, a member of the Executive Board of the European Central Bank (ECB), stated in his address to the European Parliament that the ECB intends to remain at the forefront of discussions concerning the nature of money in the digital world, including the exploration of the desirability and feasibility of establishing a central bank digital currency (CBDC).

Italian economist and Member of the Executive Board of the ECB, Fabio Panetta addressed the European Parliament via a Frankfurt Am Main video conference on July 7—where he spoke on the Euro’s untapped global potential, citing the necessity to stay ahead of the pack in terms of CBDC development.

Euro’s role in the Global Markets

Referencing the findings of the 19th annual review of the international role of the euro, Panetta highlighted to the ECB members that although the euro has been one of the most profound changes to the international monetary system since the collapse of the Bretton Woods System, the euro’s share in international currency sits at around 19% which is lower than the approximate 50% share of the US dollar, but well ahead of any other currency.

Panetta reflected, “Developments since the outbreak of the coronavirus (COVID-19) pandemic have not changed the picture: investors rushed to the safety and liquidity of the US dollar in March 2020, confirming its pre-eminent role in the global monetary and financial system.”

Panetta stated that the euro’s global potential is yet to be fully realized, “But the right policies could unleash it.”

Covid-19 and the Rise of Digital Money

The Covid-19 pandemic crisis has accelerated the digitalization of money which Panetta believes, “May have implications for the euro’s global role.”

The Italian economist highlighted that Europe has stepped up its efforts in meeting the challenge to create a true European and modern payment solution through the European Payments Initiative. The initiative is a collaboration of 16 European banks and aims to create a unified payment solution for consumers and merchants across Europe, encompassing a payment card and a digital wallet and covering in-store, online, and person-to-person payments as well as cash withdrawals. Panetta said, “This is essential to ensure the autonomy of the European payments market, in the face of increasing dominance by foreign players.”

CBDC Could Raise the International Status of the Euro

The ECB will continue to monitor how new technologies change payment behaviors and intends to remain at the forefront of the discussion—including the exploration of the desirability and feasibility of establishing a central bank digital currency (CBDC).

Panetta said, “A CBDC would have domestic implications for the euro area in areas such as monetary policy, financial stability, and payment systems, which would need to be thoroughly assessed.” But according to the ECB member, “If the CBDC is allowed to be used outside the euro area, it is likely to have implications for the global monetary and financial system too.”

Panetta believes that the euro’s international status could be greatly strengthened if the CBDC represented and an attractive payment vehicle or store of value for non-euro residents. He said, “It could have implications for capital flows and the exchange rate of the euro, with potential knock-on effects on the euro area and global economic developments. It could amplify the real and financial cross-border spillovers of domestic monetary policy shocks by creating a new channel for their propagation. The magnitude of such effects would depend on the design of the CBDC.”

Towards the end of his speech, Panetta asserted, “Regardless of the choice of technology, the stability of money and payment systems should continue to rest on the firm foundations central banks provide. Maintaining the unit of account, guaranteeing the finality of payments, providing liquidity, and conducting oversight remain essential public goods that are provided by central banks. They are paramount to maintaining trust in a currency and safeguarding monetary sovereignty.”

Binance Unveils Crypto-Powered Debit Card in Europe For Seamless Transactions Across 60 Million Merchants

Leading crypto exchange Binance has rolled out its Binance Card, a crypto debit card, in Europe that will enable users to convert their stored cryptocurrencies like Bitcoin (BTC), Binance Coin (BNB), Swipe (SXP), and Binance USD (BUSD) to fiat and spend them at more than 60 million merchants worldwide.

Eliminating the conversion hustle and bustle

The Malta-based exchange intends to elevate customers’ satisfaction rates as the Binance Card powered by Swipe will eradicate the hustle of converting cryptocurrencies to fiat manually before carrying out a transaction as is the case with prepaid cards.

The crypto debit card will hold the digital assets in their native state until a point-of-sale transaction is instigated at more than 60 million locations across 200 territories and regions globally.

Changpeng Zhao (CZ), Binance CEO, said:

“By providing a tangible way to transact, convert and spend crypto for everyday use, we are furthering our mission of making crypto more accessible to the masses. Giving users the ability to convert and spend their crypto directly with merchants around the world, will make the crypto experience more seamless and applicable.”

This development aims to create a frictionless user experience by simply swiping the Binance Card when making purchases.

More rollouts to follow

Binance plans to launch the card in other regions. CZ added, “We are looking forward to making the Binance Card available to users in other regions, as well as introducing new features to enhance the Binance Card experience through our partnership with Swipe.”

On the part of Binance Director of European Growth Josh Goodbody, he stated:

“We are delighted to finally get the Binance Card into our users’ hands, so they can start utilizing their crypto in their day-to-day lives,” said Binance’s Director of European Growth Josh Goodbody. “We see this product as a critical component within our ecosystem of services.”

This move is a step forward towards crypto adoption as a recent report showed that Bitcoin trading had hit a six-month low of 51% because of a sluggish trend.

EU’s Latest Coronavirus Recovery Deal: What’s Wrong with Fiat and What’s Right with Crypto

EU leaders have come into an agreement on an unprecedented plan to jointly borrow €750 billion to be used for the recovery of the coronavirus pandemic, which has taken over 135,000 lives in the EU.

The recovery fund spearheaded by the EU is made up of €390 billion in grants and €360 billion in loans, which will be added to a new Multiannual Financial Framework (MFF), with the sum of €1.074 trillion as a seven-year budget. The heads of state and government have reached a unanimous agreement, resulting in a total financial package of €1.82 trillion.

Germany and France, led by Chancellor Angela Merkel and President Emmanuel Macron have been delighted for the plan’s approval. Macron described the approval as “a historic change of our Europe and eurozone.” Some supporters of the plan said that it was a strong demonstration of solidarity in response to the coronavirus pandemic, and the economic consequences thereafter.

However, Austria, Denmark, the Netherlands, and Sweden opposed the idea of taking on debt to issue the recovery fund. They were reportedly fighting fiercely to reduce the portion of grants in favor of loans. Mark Rutte, the Prime Minister of the Netherlands, stated that he would not label the deal as “historic,” adding “that’s a term I wouldn’t use.”

As the number of coronavirus cases continues to increase globally, especially with the resurgence of cases in a number of EU countries, some leaders had feared that a potential failure to reach an agreement would cause stock markets to crash. With the stock market plummeting, and the sense of distrust brewing in the traditional markets, the crypto market could see a surge in adoption.

With the current debt-driven economy in the EU, we could potentially witness the collapse of the current monetary and financial systems. With blockchain technology, perhaps there could be the end of the monopoly of government-issued currencies, as suggested by Friedrich Hayek — the author of Denationalisation of Money. Bitcoin could be the next answer to financial crises, as suggested by Bouri et al. in 2017, “Bitcoin is often seen as a panacea, replacing financial institutions and providing shelter from sovereign risk and weakness in the global financial system.”

Countries that are in the midst of economic crises could often tighten controls on the financial market, imposing capital controls on their populations. This could mean prevent their citizens from taking cash out of the bank during financial turmoil, some people have turned to Bitcoin and other cryptocurrencies.

Think Tank Releases Report on the Blockchain-Based Genetic Data Network

Think Tank, dGen, releases a new report entitled, “AI, Privacy, and Genomics: The Next Era of Drug Design”. It tackles the issue of privacy and access to genetic data for companies using AI to speed up and improve drug design.

Where the average drug today takes 10-12 years and cost $2 billion, Covid-19 forced this timeline to 12-18 months. Whether or not the cure will be delivered in the next six months remains unclear.

The bottom line is that more companies need access to more genetic data. We spoke with industry leaders from Aidence, Gero, Iktos, Alphanosos, e-Estonia, Qunatlib, Turbine, and more.

With a blockchain-based access network, our top predictions for 2030 are:

● Better collaboration networks will emerge.

● Genetic privacy laws will be overhauled.

● AI will become a fundamental part of drug discovery.

● Pharmaceutical giants won’t be toppled, but they won’t get out unscathed as biotech startups take the field.

Genetic information is central to many AI-enabled drug discovery startups. To expand this innovation, several issues with genetic data must first be resolved:

● ownership

● secure storage

● availability to multiple research parties.

Ultimately, many privacy-preserving technologies leave the issue of ownership and auditing this system undisturbed. We propose a blockchain-based, decentralised pan-European biobank network to make information available to researchers, but log all access requests. This would also empower individuals to grant or deny these requests and track the use of their information.

Quotes:

Maxim Kholin, Gero Co-Founder

‘We believe that AI can accelerate the drug discovery process by proper understanding of human diseases from large biomedical data. The data-driven approach should help establish the genetic determinants and molecular markers of the disease’.

Pascal Mayer, Alphanosos Founder

‘While currently working really well on bacteria, we are confident [AI-enabled plant-based drug discovery] shall be successful in fighting viruses as well’.

‘Using edible plant extracts, like we do, in the development process of drugs, the risks of side effects are quite low[…] possibilities 10^10 or 10^30 [are available]. This is such a huge number that we use AI to quickly drive us through these possibilities’.

Tamás Török, Turbine Head of Business Development

‘Turbine is able to identify novel molecular targets to overcome the disease, and precisely select patients for whom the therapies will work best. Turbine’s Simulated Cell platform therefore generates novel biological knowledge through simulations rather than mining available biological data’.

Florian Marcus, e-Estonia Speaker

‘The patient will then see in the logbook, that this particular doctor looked at this particular patient dataset at this time for this and that reason. This can be challenged in court […] when the system was introduced, some doctors lost their licence over it’.

‘This logic of a rights-based access system is fundamental to the operation of e-Estonia, as is the notion of truth-by-design so I can always see who checked my data and hold them to account’.

Image source: dGen. Org

European Union Parliament Considers Petition for Crypto Fraud Victims Fund

The European Union (EU) Parliament is considering a petition filed by a consortium of individuals, organizations and companies that seeks to establish a restitution fund for victims of crypto fraud.

The EU Parliament has announced that they are considering a petition submitted by a consortium of crypto fraud victims. The objective of the petition is to seek for the establishment of a restitution fund for victims of crypto fraud.

The victims represented by their lawyer, Dr. Jonathan Levy, have suffered losses exceeding €40 million and like tens of thousands of other crypto crime victims worldwide have been unable to recover their funds through law enforcement, national regulatory authorities or the courts.

In the petition, Dr. Levy urges the European Parliament to act directly to help the victims of crypto-active crimes as part of its EU strategy for the creation of a genuine single market for digital financial services.

The petition has been submitted to the EU Parliament—with the EU indicating that it will institute EU wider regulation of crypto assets to be phased in by 2022. Under the current EU rules, there are no provisions for victims of crypto crimes which usually range between fraud, extortion, money laundering, and cyber attacks.

The EU projects that the annual losses to individuals, organizations, and companies as a result of crypto-related crimes are in the billions of Euros and constitute a “massive transfer of wealth to organized crime firms.”

According to the EU announcement, the consortium of victims includes: disabled and elderly victims being preyed upon by crypto scammers posing as brokers. An American investor whose crypto wallet was hacked and nearly 1000 Bitcoins sent to a criminal operation; and, companies and individuals from Europe, America, Africa, Asia, and Australia who were deceived into investing in fraudulent crypto-asset funds, nonexistent crypto mining operations, and deceptive ICOs by seemingly legitimate companies registered in England and Germany.

The consortium also includes victims of some of the more notorious crypto Ponzi schemes like OneCoin, as well as numerous offshore online casinos and FOREX platforms that use crypto to evade AML and consumer protection laws.