Blockchain KYC Startup Raises $1.6 Million in Seed Funding

A blockchain startup focused on know-your-customer (KYC) solutions

has raised $1.6 million in a new seed funding round. Norbloc's round was led by Marathon Venture Capital, a VC firm based in Greece that launched in March. Other participants in the round include Digital Currency Group, Inbox Capital, Back in Black, as well as the founding team of classifieds website Avito, the startup announced today.

The startup is one of a growing number of companies focusing on KYC, or the process by which financial institutions verify the identity of their clients. It's a use case that has attracted the interest of a number of banks (and investors), and has been the subject of a number of enterprise-level pilots to date.

Astyanax Kanakakis, Norbloc's co-founder and CEO, previously worked for parent company of now-defunct bitcoin mining firm KnCMiner and later served as chairman of XBT Provider, which launched a bitcoin-tied investment product on Nasdaq Nordic in 2015. In statements, he said the startup plans to use the new seed funding to expand its existing team.

"We will be drawing on the expertise and experience of our investors and our advisors as we move forward. We will use the funding to continue to build the business and acquire talent across the four markets that we are now active in," he said.

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Why former NFL player Sidney Rice is participating in a cryptocurrency token sale today

Why former NFL player Sidney Rice
is participating in a cryptocurrency
token sale today

Sidney Rice has been a busy investor
and entrepreneur since retiring from the NFL three years ago. He created a coffee shop chain in Seattle; opened chicken wing eateries; started a t-shirt company; and made investments in several tech startups.Now Rice is getting into cryptocurrency.

The former NFL wide receiver is participating in a token sale today for UpToken, a new version of virtual currency created by Coinme, a local Seattle startup that he advises.

Founded in 2014, Coinme first launched as a fully-licensed Bitcoin ATM operator. The company now operates 39 ATMs around the U.S. and has since expanded its offerings to include a digital wallet, a digital exchange, and a cryptocurrency IRA investment service.

On Monday, Coinme opened a sale for UpToken, a new “rewards-based” virtual currency it created in part to help encourage more use of Coinme ATMs. Rice, who played for seven seasons in the NFL and three with the Seahawks, first began researching cryptocurrency last year. He got connected to Coinme CEO Neil Bergquist and installed a Bitcoin ATM in one of his Drip City coffee shops in Seattle.

Now he’s advising the startup and participating in today’s token sale. Even though many questions remain about the legitimacy and future of cryptocurrency, Rice said he’s confident in Coinme after spending time with the company and learning more about the new financial technology. “I’m still doing tons of research and learning as much as possible, but I think I found a great group to learn and grow with,” he told GeekWire.

Rice said he has lots of friends who reach out and ask him about purchasing Bitcoin and other cryptocurrency. His favorite app right now is Coinbase, a digital currency wallet — “I check it every 10 minutes,” he noted. “I definitely think people are picking up on it and in the next couple of years it’s going to be out there,” Rice said of cryptocurrency.Coinme, meanwhile, employs 25 people at its Seattle headquarters and has raised $1.5 million to date. The company makes money off transaction fees from its Bitcoin ATMs; each ATM is now processing around $100,000 per month, Bergquist said.

Coinme’s mission is to enable people to buy and sell cryptocurrency, Bergquist noted. “Access is still a big barrier to global adoption,” he said. “We found that for a lot of non-technical people, ATMs are a great entry point. Most of our users are first-time crypto purchasers.” The creation of UpToken is meant to further this adoption. Bergquist compared it to a cash-back program and described it as a “new genre of loyalty token.” Users will be able to buy and sell UpToken at the Coinme ATMs, just like they can buy and sell other cryptocurrency.

Here’s more info on UpToken from its FAQ page:

UpToken is a reward for our ATM customers. Coinme uses 1% of every ATM transaction to purchase UpToken, which is given to customers as a 1% “cash back” reward. The customer can use their UpToken to receive a 30% discount on ATM fees by paying with UpToken. However, the UpToken that is rewarded to ATM users through using the ATM is not available for withdrawal until that user has reached $10,000 in ATM volume.

Coinme’s ATMs only facilitate Bitcoin and UpToken exchanges for now, but will soon add capability for other cryptocurrencies like ethereum. Bergquist, formerly the managing director of Seattle-based SURF Incubator, admitted that his company is working in a wild west industry, but noted that “we have four years of learning under our belt.” “All of our numbers and learning thus far gives us good validation that virtual currency is absolutely here to stay and ATMs will play a really big part in that ecosystem,” he said. Bergquist added that “virtual currency has the potential to do more for rising economies than even micro-finance.”

“By just giving people an alternative currency from the one of their potentially-unstable government’s currency, it gives them options to thrive, and protection during periods of hyperinflation,” he said. Bitcoin reached record high prices last week amid rumors of Amazon accepting the currency, as Bitcoin’s market capitalization exceeded that of Goldman Sachs. But there is still a feeling of uncertainty around this nascent industry, particularly as government regulators crack down on cryptocurrency. The price of Bitcoin and other currencies continue to fluctuate wildly.

At the GeekWire Summit last week, three venture capitalists talked about the future of cryptocurrency. A key theme from their discussion was about how regulation might affect the value of Bitcoin and other currencies, as well as companies working in this industry. “Lots of things that make crypto so interesting are all the things that have to go away, in a way,” said Rebecca Lynn, a partner at Canvas Ventures. “It has to be regulated; people have to be known and not anonymous. In the end, it has to be switched back, so you sort of lose the free rails aspect of it in a way. There are definite applications of crypto but I think it was really overhyped for a while.”

Sarah Tavel, general partner at Benchmark Capital, said she’s “very long” on Bitcoin and the concept of blockchain technology, but more wary of other smaller token projects. Tavel noted that any investor in this new industry must take a “leap of faith.” “This is one of those markets that regardless of how you invest in this space, you are ultimately taking a leap of faith that it is something real and that it’s a small fraction of what it will be 10 years from now,” Tavel explained. “So if you feel comfortable making that bet, then you can make a bet on what feels like a smaller market now, knowing that in the future it will become bigger.”

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IBM’s Stellar Move: Tech Giant Uses Cryptocurrency in Cross-Border Payments

Big Blue is making what could be considered its first public foray

into cryptocurrency. In the kind of unveiling that can only come before one of the biggest events in global finance, IBM is revealing today at Sibos 2017 the results of a partnership with blockchain startup Stellar in which it successfully settled real transactions using the company's custom cryptocurrency, lumens.

While currently limited to cross-border payments involving British pounds and Fijian dollars, the early-stage platform is nonetheless designed to scale to handle seven fiat currencies in the South Pacific – including the Australian dollar, the New Zealand dollar and the Tonga pa'anga.

Perhaps the platform's most distinguishing characteristic, however, is that the project showcases how private and public blockchain technologies are increasingly being used in tandem. While IBM's blockchain solutions are designed to complete much of the workflow around transaction clearing, the actual settlement will be conducted using Stellar's blockchain. In this case, Stellar's lumen serves to digitally connect fiat currencies, allowing for nearly instant exchange without the consumer or buyer ever touching the cryptocurrency itself.

Stellar founder Jed McCaleb told CoinDesk:

"When trading between multiple currencies, it helps to have a bridge currency to reduce the ledgers needed to maintain. Lumen provides that single ledger that can bridge currencies."

New orbit

Taken together, however, this partnership goes beyond just technical implications. Not only is the partnership an outside-the-box move for IBM, which has largely focused on its own blockchain platforms, it's a big win for Stellar, which having emerged from the Ripple founding team hasn't had quite the same growth, perhaps attributing in part to its focus on developing markets. The partnership is also evidence of the extent of collaboration between blockchain firms and the wider financial world. To make the project work, IBM had help from partners including National Australia Bank, TD Bank and Wizdraw (HK) of WorldCom Finance.

The payments themselves are conducted for the Advancement of Pacific Financial Infrastructure for Inclusion (APFII), an organization of member financial institutions founded by the United Nations and Swift, and operated by KlickEx, a privately-held direct clearing provider that specializes in cross-border digital remittances. According to IBM's vice president of global blockchain development, Jesse Lund, getting all these players to work together is just an extension of IBM's mission to collaborate with financial institutions to develop a blockchain ecosystem.

To that end, the platform is already integrated with IBM's Financial Transaction Manager, which itself is integrated with ACH, SEPA and other electronic transaction networks. Going forward, APFII's confirmation receipts are expected to be published as MT103 Swift messages directly to the blockchain. "This in many ways is just an extension of that, wherein we're providing, in collaboration with banks, and in the process developing this blockchain ecosystem," said Lund.

More support

For now, the new project is also a balancing act – at once both a small advancement of early-stage technology and an aspirational advance toward more lofty goals. While the trial with APFII has been ongoing since last week, the CEO of ClickEx, Robert Bell, said it's too early to provide any numbers about transaction volume. But still, he expects as much as 60 percent of the cross-border retail market in the region to be transacting on the platform once all seven currencies are added (the Australian dollar will be the next currency integrated).

"For the first time, blockchain is being used in production to facilitate cross-border payments in multiple integrated currency corridors," Bell said. IBM also sees the demo as one with implications for the digitization of central bank money – a concept that's gotten a significant amount of attention recently as central banks around the world grow more interested in figuring out how the technology could create efficiencies. "Our long game is to support multiple different types of digital assets,"

said Lund, adding:

"And I'm very confident that you will be seeing central banks coming forward with their own digital asset issuances that will be a much more formidable construct of this model."

Today, that future will be discussed in greater detail on stage at Sibos in Toronto, where a panel with representatives from IBM, TD Bank and CLS will discuss the project with the CEOs of both Stellar and KlickEx. "It's going to be a wild ride,"

Lund said, concluding:

"We've got the bankers and the renegades altogether."

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CNBC Audience Predicts $10k Bitcoin Price as Dotcom Says ‘Hodl’/IBM Blockchain Payments

CNBC Audience Predicts $10k Bitcoin Price as Dotcom Says ‘Hodl’

Bitcache and MegaUpload creator Kim Dotcom

have urged Bitcoin holders not to sell, as even mainstream news consumers stay bullish on its future. In a tweet over the weekend, Dotcom, who is now fully signed up to Bitcoin to power his latest creation, reiterated the lucrative nature of ‘hodling’ funds.

“Congratulations,” he told followers. “Don’t sell yet.”

His comments came a day before WikiLeaks founder Julian Assange revealed he had turned 50,000 percent profits from Bitcoin funding of his resource, as a direct result of the US government blocking credit card payments. Assange, also using Twitter, wryly expressed his “deepest thanks to the US government,” which made the decision back in 2010 when a single Bitcoin was worth less than $0.10.

While vocal proponents of Bitcoin’s long-term investment prospects are becoming increasingly well-known, a survey by CNBC meanwhile suggests more and more mainstream consumers are beginning to share their positivity. Reporting on Assange, the publication asked users to choose a likely future Bitcoin price, without specifying a timeframe. Out of three options – over $10,000, $6-8,000 and “Jamie Dimon is correct” – the majority of the roughly 5000 respondents chose the first, reflecting optimism as Bitcoin continues to circle all-time highs around $5,700 Monday.

IBM Blockchain Payments To Use Stellar In Major Partnership Deal

IBM and payments network

KlickEx have announced Stellar as the backbone of its new “cross-border payments solution.” In what it describes as the first use of public Blockchain technology “being used in production to facilitate cross-border payments in multiple integrated currency corridors,” IBM is already convening a group of big banking partners to further the initiative. “Currently, cross-border payments take up to several days to clear,” Stellar co-founder Jed McCaleb said in

an accompanying blog post.

“This new implementation is poised to affect a profound change in the South Pacific region, and once fully scaled by IBM and its banking partners, could potentially change the way money is moved around the world.”Multi-asset, real-time and cross-border: Payments solution from IBM #blockchain at #Sibos. Panel, demos and booth

KlickEx already has an extant payments network operating in Southeast Asia from its base in New Zealand. Now, a group of “diverse banking leaders” will assist in the”development and deployment process” of the Blockchain-backed solution, which is already in active use, IBM states. The move sees a significant implementation for Stellar within the global financial framework of legacy institutions, putting it alongside Ripple as one of the principal entities in Blockchain-based institutional settlements.This caps a year of outreach initiatives, with marketing ploys such as a grants program and the release of the Lightyear spin-off hoping to attract wider attention and participation from investors.

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Bitcoin SegWit2x Hard Fork Benefits Not Visible: Bruce Fenton

Bitcoin SegWit2x Hard Fork Benefits Not Visible: Bruce Fenton

Bitcoin Foundation executive director Bruce Fenton

has become the latest high-profile Bitcoin personality to criticize SegWit2x. In comments on Twitter Sunday, Fenton triggered responses from other well-known Bitcoin industry and community figures after he wrote that he “didn’t see the benefit” of the hard fork. “What's the end goal? Switching dev teams alone?” he asked.

“What makes it worth it? ROI?”

I don't see the benefit of NYA / 2x at this stage.
What's the end goal? Switching dev teams alone?
What makes it worth it? ROI?
Explain.

SegWit2x’s imminent activation has led to increasingly hostile rhetoric from supporters of Bitcoin Core, who frequently suggest the fork is an attempt to unseat its developers as a “hostile takeover.” Fenton stopped short of stating outright SegWit2x would be hostile to Bitcoin, instead appearing to reinforce the futility of the operation. “If the goal is to simply to honor agreements then people shouldn't have made those agreements to begin with,” he added in a further tweet.

Reacting, others could not agree on whether the goal of November’s fork was to switch development teams.

“I don't think goal is to switch, but to coerce Core to adopt block size increase,” BitGo engineer Jameson Lopp wrote, while entrepreneur Tuur Demeester conversely stated his opinion to the contrary. Despite the supposed threat posed to Bitcoin network stability, prices have increased in the run-up to the fork’s November 18 deadline. Meanwhile, the fifth hard fork of Ethereum occurred problem-free over the weekend, with prices rising towards $350.

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Swift Blockchain Success Sets Stage for Sibos

Once considered perhaps the largest middleman at risk

of being disrupted by blockchain, Swift took a notable step today toward becoming a disruptor. Revealed on the eve of its largest annual event, Sibos, the inter-bank platform, along with six banks including BNP Paribas, BNY Mellon and Wells Fargo, has deemed its flagship blockchain trial a success from both a technical and business perspective. First announced in January, the proof-of-concept tested whether moving funds stored in nostro-vostro accounts for international transactions to a blockchain could free up those funds to further investment.

But in spite of the PoC achieving multiple objectives, Swift says there's still a long way to go before implementation, primarily since its 11,000 members will not benefit equally from the project In conversation, Swift's head of R&D Damien Vanderveken explained that some banks that have invested heavily in traditional, centralized solutions for nostro-vostro accounts are already experiencing efficiency gains, and as such might not be as keen to invest in a blockchain-based solution.

Vanderveken said:

"The PoC demonstrated that it can fulfill the requirements. The business value depends on the level of automation of the participants. We will need to make sure for the final solution that we take care of the different levels of investment."

As a result, instead of a one-size-fits-all solution, Vanderveken said each Swift member will eventually have to analyze the value offered by blockchain and weigh it against the costs of implementation.

Benefits of blockchain 

Built as part of Swift's Global Payments Innovation initiative (GPI) within its newly revealed DLT sandbox, the PoC uses the open-source Hyperledger Fabric platform to test two main applications. The first used real, anonymized production data from each of the banks to provide "the account owner and the account servicer a complete view of all the nostro-vostro accounts that they own or serve," Vanderveken said.

The second simulated back-office procedures, which gave the participants a node hosted in the cloud to test the benefits of moving funds from multiple accounts to a single distributed ledger. These two applications provided users not only increased visibility of and access to available funds, but also simplified the reconciliation process, which uses Swift's ISO 20022 standard. "The feedback from everybody is unanimous," said Vanderveken. "What we have built in terms of applications actually does meet the requirements."

Technical limitations

While the nostro-vostro blockchain PoC was deemed a success, Swift also noted several limitations. In particular, Vanderveken said Swift is concerned about the possibility that cryptographic security could be hacked with quantum computers. A technology still in the proverbial petri dish, the thought has pushed Swift to create a "hybrid architecture," where some transaction components were distributed on a blockchain, while others were "operated by a neutral third-party."

At the top of the list for the latter was the identification of participants, or as Swift described it earlier this month in a paper jointly written by BCG Financial, "a universally trusted global KYC registry." For businesses like Swift, which operate in permissioned systems, this is considered a crucial security feature.

Vanderveken said:

"If you want to ensure data confidentiality, and you don't want to rely solely on encryption — which is prone to failure in the long run as encryption becomes hacked by technology progress — you need to have solutions where data is then segregated."

Swell for Sibos?

This successful test of Swift's blockchain PoC is particularly notable leading up to the Sibos conference in Toronto, since the financial incumbent has stiff competition with distributed ledger startup Ripple hosting a competing event called Swell. Twice during Sibos, Swift will demo the PoC in front of a live audience. But while participants (of both events) perform their own cost-benefit analysis of blockchain, the second phase of Swift's POC will already be underway.

Since Sept. 27 financial institutions — including ABN Amro, Deutsche Bank and JPMorgan Chase — have been validating the PoC results, with a final decision expected by the end of year. But one thing is certain, Vanderveken said Swift only intends to move forward in implementing the new technology if its members benefit.

He said:

"We need to take care of the differences of the various banks to make sure such a solution is successful."

Chuck Reynolds


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Collaboration FTW: How Blockchain Came So Far, So Fast

Looking ahead to next week's annual Sibos conference,

Palatnick takes stock of blockchain technology's progress in transforming the plumbing of global markets, and explains why cooperation is critical for further advancement. While 2016 was referred to as the year of the blockchain proof-of-concept, 2017 has become the year of the blockchain pilot. While the progress has been remarkable, it's important to be mindful of the critical role that industry collaboration has played in accelerating development and advancement.

Shortly after the blockchain conversation started across the financial services industry in 2014, a number of participants began to realize the value that distributed ledger technology could bring to the financial markets. For DTCC, distributed ledger technology represents a generational opportunity to reimagine the post-trade infrastructure through its potential to harmonize and streamline the costly, burdensome reconciliation process the market currently operates in. By providing a single version of the truth to all parties, DLT can fundamentally alter how financial transactions are entered, stored and shared.

Just three years later, the industry has made significant strides in turning blockchain from a concept to reality. We've seen initiatives move from PoC to pilot, and a number of efforts are underway to operationalize the tech. Although still in the early stages of implementation, the industry has learned that collaboration is critical. The key to reaching the full potential of blockchain technology lies in fostering industry-wide collaboration and aligning the technology with the industry's longstanding core principles of mitigating risk, enhancing operational efficiencies and driving cost efficiencies.

From realization to reality

After all, the underlying technology itself calls for collaboration. Interoperability and standardization in utilizing blockchain can only be achieved when the industry joins in support of a common goal and a single ledger. DTCC believes the core of any distributed ledger solution for the global financial industry must be based on open source, not owned by any single vendor and aligned around best practices and established standards. Until recently, there were no viable open-source models for distributed ledger technology. However, that is quickly changing due to the development we’ve seen this year from organizations like Hyperledger and the Enterprise Ethereum Alliance.

Hyperledger, the first enterprise-oriented open-source collaboration project created to advance cross-industry blockchain technologies, recently gained support from 10 new members, including the Gibraltar Stock Exchange and DLT Labs, bringing its total membership to 18,765 members. The recent release of Hyperledger Fabric 1.0 is an example of what the industry can achieve through community effort, where 159 developers from 28 organizations joined together to incubate the project. The release marked a significant milestone in the evolution of distributed ledger technology, proving the critical need for collaboration.

Having been established just earlier this year, the Enterprise Ethereum Alliance has quickly gained 120 members to its consortium, which has the mission of evolving ethereum into an enterprise-grade technology. The rapid growth in membership and support from major players such as State Street, JPMorgan Chase and BNY Mellon, as well as DTCC, shows the evolving acceptance and deployment of open-source distributed ledger technology in the global marketplace.

DTCC believes this is one of the many ways in which the industry has and will continue to benefit from collective contributions, and is why we're leveraging the Hyperledger network to provide a DLT framework to drive further improvements in derivatives post-trade lifecycle events. Through our work with IBM, Axoni and R3, we're rebuilding our trade information warehouse, which provides processing services for about 98 percent of all credit derivative transactions globally. The initiative is underway and, in 2018, nearly the entire global $11 trillion market for credit default swaps will run on a distributed ledger.

Are you in?

As the adoption of distributed ledger technology grows, as in any open market, many different innovations will be proposed and pursued. The challenge for the financial industry, and for an emergent technology like distributed ledger, is about creating networks that share information and technology, and the need for continued collaboration.

Without collaboration, DLT solutions will leverage proprietary, separate models that will ultimately recreate the many silos and disjointed systems that already exist today. In the financial industry, this could lead to bifurcated markets, reduced liquidity, greater risks and a suboptimal experience for the investing public. It is essential that we work together across industry organizations, technology providers, market participants and market structure providers to develop best practices and interoperability standards for this technology in order for DLT to truly live up to its potential.

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Surreptitious cryptocurrency miners hide on Politifact and hundreds of other sites

Surreptitious cryptocurrency miners hide on Politifact and hundreds of other sites

Politifact is the latest and perhaps most high-profile website

to have hosted code that secretly hijacks visitors’ CPUs to mine cryptocurrency. Driven by a boom in cryptocoin value and a lack of protections against JavaScript routines like this one, this surprising form of audience monetization is now found on hundreds of sites.

(Update: Politifact has removed the code and is looking into how it got there.)

It’s not quite an ad, and it’s not quite malware, nor is it strictly speaking a virus or exploit. JavaScript is used for all kinds of things in the background of practically every major website, from tracking users to displaying custom fonts. Generally speaking, these apps are running code hosted on another server that the end user can’t inspect, and often doesn’t even realize their browser is executing.

In recent months, several JavaScript-based cryptocurrency miners have appeared. The idea, supposedly, is that instead of showing your visitors ads, you have their CPU run the calculations necessary to mine a currency like Bitcoin. As the administrator, you could control the CPU load and reap any resulting coins. CoinHive is a new business that offers this as a service. Predictably, this already questionable approach to monetization has already been repurposed by malicious actors. Injecting a bit of JavaScript into the front page of a website is often simpler to do than penetrate its databases or phish its admins; and once it’s in, it runs itself — all you have to do is give it a wallet to put the coins in.

That seems to be what happened at Politifact; my blocker registers a CoinHive instance on the main pages of the site, with new requests coming in multiple times a second. Inspecting the site’s JavaScript shows an enormous chunk of CoinHive miner code sitting amongst the ordinary scripts. It’s pretty hard to miss, and if not blocked it takes over the whole CPU until the tab is closed. With a few million users mining for a minute or two each while they check out the latest political shenanigans, those cycles add up quick.

I’ve contacted the site’s team to ask what the story is; someone there told The Register that they’re looking into it, but I’ll update if I hear back with more details. The site is far from alone: a study by ad blocker company AdGuard showed that hundreds of sites, most of them on the shady site (porn and torrent sites, for instance) are running CoinHive code, or some other JavaScript-based miner.

What can you do? Well, this is a great reason to install an ad blocker, if you haven’t already: in addition to getting rid of intrusive ads and trackers, some of them block unknown scripts or have a blacklist of known malicious ones. I use uBlock Origin, which also makes it easy to whitelist sites (like this one) that only feature organic, free-range advertisements. But you could also use NoScript, AdBlock or any one of the many out there, depending on your platform and browser.

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PBoC Digital Currency Director Calls for Centralized State Cryptocurrency

China may not recognize bitcoin as a legal currency,

but it seems to have a clear vision for a state-issued alternative. At a meeting hosted by the International Telecommunication Union this week, Yao Qian, the Director of the Digital Currency Research Institute under the People's Bank of China, reportedly boasted about the potential of a state-owned digital currency, while suggesting that there is an inherent lack of value anchoring public cryptocurrencies like bitcoin.

According to a report by Yicai, Yao also framed a state-issued digital currency as a way to stabilize domestic fiat currency, while better securing country's financial status. Although the publication made clear Yao's comments reflected his own opinions, the remarks nonetheless reveal how the country may choose to direct the future development of digital currency.

Yao told attendees:

"The value of cryptocurrencies such as bitcoin primarily comes from the market speculation. It will be a disaster to recoganize it as a real currency. And the lack of a value anchroing inherently determines that bitcoin can never be a real one."

Launched by China's central bank in June this year, the Digital Currency Research Institute focuses on R&D related to blockchain-based digital currency. Currently head of the institute, Yao also served as the deputy director of PBoC's technology department.

Pointed barbs

Elsewhere, Qian had more criticism for public cryptocurrencies. In yet another statement, he was quoted as saying that the deflationary nature of economic systems utilizing the technology could be a hinderance to their success. "A total cap of 21 million like bitcoin whose current supply also halves every four years is actually driving backward along the currency evolution," he said. Yao went on to argue that a state-owned digital currency, however, creates tangible economic values and helps stabilize the market position of fiat currencies.

"The nature of a state-owned digital currency is a government liability issued to the public," he said. "And it's backed by the sovereign credibility." Yet, Yao takes a different approach from current trials of other central banks' cryptocurrency projects that focus on the distributed ledger technology. Citing the RSCoin design concept by the Bank of England as a promising example, Yao argued that such state-owned digital currency should not be confined by the ideology of the blockchain and DLT. "RSCoin pictures a system that is controlled by the central bank," he said. "The role of central banks may not just be deciding how much to supply but also designing the rule of the supplying algorithm."

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World stocks hits fresh highs, as bitcoin keeps climbing – business live

World stocks hits fresh highs, as bitcoin keeps climbing – business live

All the day’s economic and financial news,

as new Chinese trade figures beat expectations

  • Bitcoin hit $5,800
  • Chinese imports surge by 18.7%, suggesting strong demand
  • US surplus hits record high, but trade with North Korea tumbles
  • MSCI World Index hits new peak
  • FTSE 100 hit new closing high last night
  • Coming up: US inflation; IMF meeting

A worker processes panda soft toys for export to American and European markets at a factory in Lianyungang, Jiangsu province,

China, this week.

…The cryptocurrency community is aware of the sheer energy consumption issue. Therefore, it is looking for alternative solutions to the Mad Max problem.

One alternative may be Proof of Stake. Miners are not asked to show they put in work (computing power) in validating but to commit valuable resources beforehand, indicating they have a stake in the proper outcome. For example, miners may have to put an amount of cryptocurrency in escrow which is only released if no fraud is detected, otherwise forfeited.

That sounds like a smart idea. However, it implies that only those wealthy enough to be able to put resources in escrow can join the mining process. This creates a plutocracy, which sits uncomfortably with cryptocurrency’s anarchistic and libertarian roots.

My conclusion is that finding a sustainable and fair solution to the Mad Max Problem is one of the biggest challenges for the cryptocurrency community today.

The US inflation figure was the main focus in the day’s data, says Connor Campbell, financial analyst at Spreadex,

and it came in below expectations:

US consumer confidence hits highest level since 2004

The survey’s chief economist Richard Curtin said:

The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints. The data indicate a robust outlook for consumer spending that extends the current expansion to at least mid 2018, which would mark the 2nd longest expansion since the mid 1800’s.

While the early October surge indicates greater optimism about the future course of the economy, it also reflects an unmistakable sense among consumers that economic prospects are now about as good as could be expected. This “as good as it gets” outlook is supported by a moderation in the expected pace of growth in both personal finances and the overall economy, accompanied by a growing sense that, even with this moderation, it would still mean the continuation of good economic times.

…Nothing in the latest survey indicates that consumers anticipate an economic downturn anytime soon – which contrarians may consider a clear warning sign of trouble ahead. Nonetheless, consumers anticipate low unemployment, low inflation, small increases in interest rates, and most importantly, modest income gains in the year ahead. It is this acceptance of lackluster growth rates in personal income and in the overall economy that signifies that consumers have accepted, however reluctantly, limits on the pace of improving prospects for living standards.

Wall Street opens higher

The dollar has weakened following the US data, in particular the inflation figures. But – barring political ructions – the Federal Reserve is still on track for a rate rise in February, says James Knightley,

chief international economist at ING Bank:

Inflation pressures are grinding higher and domestic activity is strong, suggesting that the main barrier to a higher Fed funds rate is political rather than economic.

The US CPI report shows inflation pressures are rising, but this is primarily an energy story reflecting higher oil prices and refinery shutdowns relating to Hurricane Harvey. At the headline level it rose 0.5% month on month/2.2% year on year (a tenth of a percentage point below what was expected). Energy prices rose 6.1% month on month, but excluding food and energy inflationary pressures were more muted, rising just 0.1% month on month/1.7% year on year (again a tenth of a percentage point below expectations).

In terms of core inflationary pressures, we are starting to see a bit more upward movement in the housing component, but medical care, apparel and education prices are very soft. Nonetheless, with the economy growing quite strongly, the jobs market looking tight with wage growth starting to show some signs of life we would expect inflation rates to creep higher….

September retail sales [data] has also been released and is strong, rising 1.6%MoM with small upward revisions to August’s data. Hurricane effects are clearly visible – higher gasoline prices boosted gasoline station sales 5.8%MoM while the fact unit car sales rose to a 12 year high helped boost the value of sales with a 3.6%MoM rise. Strength can also be seen in other components and it is likely that there was some uplift as households start to replace lost items following the recent hurricanes. This has come on top of what is already a strong story for the consumer with employment, wages and confidence all looking healthy.

We expect the positive story to continue into next week with industrial production rebounding following storm disruption. After all, the ISM manufacturing index is at a 13 year high, the dollar is making exports more competitive and we are seeing stronger global growth.

With overall economic growth looking good, inflation pressures gradually increasing and the Fed’s worries about asset valuations and financial stability becoming more prominent in speeches, a December rate hike is looking likely. The main risk remains the potential for an economically/market destabilising government shutdown.

Meanwhile US retail sales have bounced back in September, albeit just shy of expectations:

Newsflash: inflation across America rose last month, but by less than expected.

So, is bitcoin a sensible investment at today’s record levels, or should you keep well away?

The moment bitcoin hit a new all-time high over $5,800 today Photograph: Bloomberg But critics argue that the recent rally is a bubble, that could burst if there is a rush to the exits. Lee Wild, head of equity strategy at Interactive Investors, says anyone considering investing in

digital currencies needs to be cautious:

“The value of bitcoin has almost doubled in less than a month which is clearly attracting further interest from speculators. There’s evidence of growing institutional activity, too, and if China reopens cryptocurrency exchanges after the Communist Party Congress which starts next week, some believe the price could reach $10,000 by the end of the year.

“However, there could be near-term turbulence around changes to the code the bitcoin network runs on, due to be implemented in mid-November. “It is crucial that retail investors understand the many risks involved in cryptocurrency trading, not least the volatility – bitcoin has lost more than a third of its value on two occasions since June. It is clearly not for the faint-hearted.”

The pace of bitcoin’s rally in recent weeks is quite remarkable.As this chart from Bloomberg shows, it’s quadrupled in value this year, despite faltering last month when China announced a crackdown on bitcoin exchanges.Our economics editor, Larry Elliott, has been holding the World Bank to account at their

Annual Meeting with the IMF in Washington:

Chuck Reynolds


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