Wednesday, December 20, 2017

What blockchain technology could mean for universities

Advocates say that the technology will cut out degree fraud – but could it actually help to fracture universities?

Blockchain is the technology that some think will shake up banking, currency and the very nature of commercial contracts.

It can be used to create a kind of digital ledger that tracks buying and selling, who owns what, or even the provenance of objects – diamonds, for example, to make sure that they are not funding conflict.

Unlike the centralised database of, say, a bank, there are multiple versions of this ledger stored on computers around the world, meaning that it is much harder to hack and alter. The idea is that this creates security and trust, and cuts out the need for a middleman to validate transactions.

The relevance of this to universities might not be immediately obvious. But a handful of academics and institutions are experimenting with ways that blockchain can be used in higher education. At their most modest, they see blockchain as a useful way of cutting administrative costs and making degree records more secure.

More ambitiously though, blockchain could hasten the dissolution of universities as institutions and help to usher in a system whereby academics validate students’ knowledge directly, they claim.

John Domingue is director of the Knowledge Media Institute at the UK’s Open University, which specialises in distance learning, and something of an evangelist for blockchain’s potential to change higher education.

One idea is to use the technology to create a secure, publicly accessible ledger of academic qualifications whereby universities ratify a graduate’s degree on the blockchain, in theory making it unnecessary for every company to double-check that their new employees have not lied on their CVs, he said.

“Every university will have a small team dealing with employer queries,” said Professor Domingue. But by validating degrees on the blockchain, they would no longer be necessary, he explained.

The UK already has a centralised system for checking whether people hold the degrees they claim to – the Higher Education Degree Datacheck service. The problem of fraud is significant, the service says: the most recent data indicate that about one in four CVs will contain lies about degrees.

Although this is supposed to be more efficient than individual checks by universities, it still costs employers £12 per enquiry, and it can take up to seven days to process. The idea with blockchain is that it is instant and free.

The costs of checking qualifications will only grow if people increasingly flit between institutions to build up a portfolio of education, say blockchain advocates. Instead of just checking someone’s undergraduate university, an employer might have to check with five to 10 different institutions, Professor Domingue pointed out.

The technology can also be useful if a university is incapacitated, for example, by war – one of the problems for Syrian refugees hoping to resume their education in Europe has been getting verification from their conflict-stricken alma maters – goes bust, or is closed down.

“Depending on the way in which the blockchain is set up, there is very likely the possibility that records stored there will persist in the face of local catastrophes,” said Phillip Long, associate vice-provost for learning sciences at the University of Texas at Austin, another enthusiast, albeit not an uncritical one, for the technology. “The validation takes place in a blockchain environment by going back to the record in the chain, not necessarily to the issuer of the record themselves.”

The blockchain could also thwart politicians or other public figures who lie about their credentials, Professor Domingue pointed out. India’s prime minister Narendra Modi, for example, has faced repeated questions over his qualifications, with allies brandishing certificates in support, but opponents claiming they are false. In theory, putting all qualifications on the blockchain would make it possible to settle these disputes immediately and definitively.

But one concern over such an open system is privacy – do you really want your diploma in applied BDSM studies to be available for all to see on the blockchain? There are solutions, Professor Domingue argued. Your qualifications could be encrypted and employers given a time-limited key to view them.

Professor Domingue’s ambitions for blockchain go much further than simply making it easier for employers to verify a new recruit’s degree. He sees it potentially transforming the entire hiring process, at least in areas where necessary qualifications are clearly defined – data science, for example.

If enough people put their qualifications on to the blockchain, employers could simply filter candidates who have studied the desired subjects, or taken certain massive open online courses, and flagged themselves as wanting a new role (although the system would somehow have to keep your desire for a new job secret from your current employer). Advertising the position, and filtering out candidates by reading endless CVs – which can take days of managers’ time – would no longer be necessary.

In a way, this system would be a bit like LinkedIn, where companies can find potential candidates by filtering their qualifications and skills. Making CVs public reduces fraud, Professor Domingue said, but blockchain hopes to eliminate the problem entirely.

Dr Long is a little more circumspect about the prospect of blockchain upending recruitment. “It will take some time, if ever, for CVs to completely go away,” he said. “But the prospect of the record of achievement that represents the history of formal education being provided by blockchain-sourced data is likely to increase.”

Even more ambitiously, the “real difference” that blockchain can make to higher education is to allow us to “move beyond the current structure of universities”, argued Professor Domingue.

Individual academics could verify on the blockchain that students have passed online modules, with no university needed, he said, something he calls “the university of one”. Blockchain cuts out the middleman – the university. “If you've done a course by Tim Berners-Lee on the internet, that's going to mean something,” he said. Or one academic could do the teaching, and another academic (or private company perhaps) could mark an exam, Professor Domingue suggested.

This is, of course, technically possible already without blockchain, and there have been a few signs of this model catching on. But the big advantage of the new technology is that it “implements trust”, Professor Domingue argued. Everyone in the system can check what a student has learned – which certificates they have accumulated – rather than having to rely on a particular institution to store these data, he said.

So who is actually using blockchain in higher education? Last year, Sony announced that it had developed a system that uses the technology to keep track of and share educational progress records. However, the Japanese company currently offers only a handful of robotics and maths courses online, largely aimed at children.

In October last year, the Massachusetts Institute of Technology Media Lab released Blockcerts, software that it hopes will underpin the issuing of academic certificates on the blockchain. It is grappling with some of the technological problems this throws up, such as how to disclose only a selection of qualifications that are relevant to the job people are applying for.

Meanwhile, Professor Domingue’s mission is to get all UK universities to put their qualifications on the blockchain. So far he has talked to University College London and Imperial College London, and both have expressed an interest, he said.

Or it might be the private sector that makes blockchain-based qualification verification mainstream. Gradbase is a London-based start-up that gives graduates a QR code to put on their CV, which employers can scan to verify their qualifications. The company stores degree records on a blockchain, meaning there is “no downtime, nor any single point of failure in the network”.

“It’s very early days, but the possibility that you’ll have your lifetime learning record on a portable device you carry with you is real,” said Dr Long. “That's very exciting.”


The what, why and how of blockchain in travel

Blockchain technology is in its infancy, but it’s clear that it will change many industries in radical ways. The most brilliant minds of our time are trying to understand all the implications, but it will take some time.

NB: This is a viewpoint by Maksim Izmaylov, founder and CEO of Roomstorm. He has also helped to start Travel Tech Con and Winding Tree (mentioned below).

As with many other technologies, startups will play the key role in this process by testing these ideas in the wild and trying different approaches. We’ll surely see some big wins and we’ve already seen disasters, such as The DAO.

I’ve already seen multiple “X + blockchain” ideas, where the “blockchain” part is not relevant to the idea, so let’s discuss some of the aspects of the blockchain that you can use in your business today.

Hopefully after reading this article you will be able to better understand what blockchain is, how it works and why it’s important.

What is blockchain?

Blockchain is simply a type of database which has several interesting features. First of all, it’s immutable, meaning that records can only be added to that database and never removed or changed.

Secondly, blockchain databases are distributed among multiple computers that store full or partial copies of that database.

For example the Bitcoin blockchain (yes, there are multiple blockchains out there!) is hosted by millions of machines. It’s important to distinguish private blockchains, where all the computers in the network are controlled by one organization and which you can’t freely access, and public blockchains, such as Bitcoin, Ethereum and Hyperledger.

Last, but not least, one can deploy a piece of computer code onto a blockchain and, because that database is immutable, that code will be stored and executed there forever.

Basically, a blockchain is a virtual machine that can execute computer code. You can write programs for the Bitcoin blockchain by using a computer language called Script.

But Script is too low level, it’s hard to use, that’s why other blockchains, such as Ethereum, were born. Ethereum developers created a new computer language called Solidity which is much more flexible than Script.

Just like in Conway’s Game of Life three simple features allow for immense complexity. Let’s discuss a few obvious implications of these “rules” and some high-level concept enabled by them.

Blockchain uptime: 100%

Because blockchain databases are distributed among millions of computers, the reliability of those networks, depending on their size, is, theoretically, 100%.

Again, it’s very important to understand that private blockchains can be shut down any time by the organization that controls its nodes, but public blockchains can’t be controlled (or shut down) even by their creators.

Blockchain can’t be hacked

The immutability aspect of blockchains and the fact that they are distributed among multiple computers means that it’s extremely hard for a hacker to tamper with. Each computer in the network is constantly checking other nodes for validity.

Nodes that don’t match certain validity requirements imposed by other nodes are automatically excluded from the network.

With public blockchains there is a risk of a “51% attack” where a party that could seize control of 51% of computers in the network can theoretically control the system. Such risk is, of course, extremely small, for a number of reasons, but that’s a topic for a separate article.
Blockchain enables trust

Over the course of the history we have invented multiple institutions that essentially are there to enable trust.

For example, I will only trust that your name is John Smith if you show me your driver’s license or passport. Those documents are very hard for authorities to produce and hard for individuals to tamper with.

They usually have multiple layers of security – such as watermarks, holographic images and, recently, biometric information about their owner.

Banks are another example of a type of institution that we are accustomed to trust. Your expectation is that if you put $1,000 into your bank account, you’ll be able to retrieve it later on.

Whenever you transfer $500 from your bank account to your business partner’s account, you can rely on your bank to confirm that the transaction has been sent, that the other party’s bank received it and that the amount of money left in your account is now $500.

But even banks get hacked and officials sometimes use their power to their personal advantage, undermining these institutions.

These days we already have an alternative to the banking system – Bitcoin (BTC). All the computers on the Bitcoin blockchain contain information about all the accounts in the network, so everyone knows that you have exactly 1BTC in your possession (where “you” is represented by a hash – a long string of numbers and characters called “address”).

When you spend 0.7BTC, everyone knows that you’ve done it and that your balance is now 0.3BTC.

The same applies to the aforementioned problem of identification. If you put a record onto a blockchain that would contain your name and, let’s say, your fingerprints, you will be able to easily prove that you are who you are in an automated way, without an organization in the middle.

Such information, if stored on a public blockchain, should be thoroughly encrypted, of course.

This brings us to another important implication.


As with the example above, we no longer need middlemen to trust each other.

Whole organizations, for example escrow funds, can now be replaced with just a few lines of computer code. All interested parties in this case will be able to see that party A transacted a certain amount of money to an address on a blockchain that will send that money to party B, when certain conditions are met.

This is a very powerful concept that now allows us to create organisations that could govern whole industries, but that would lack all the downsides of monopolies.

Winding Tree is a decentralized autonomous marketplace for travel. It’s one single organisation, but no one can control it and raise transaction fees or cut someone off the network.

Decentralized business model

Blockchain also gave rise to a whole new type of business organisation, where a cryptocurrency issued by that organisation acts as its shares and at the same time as its internal currency, in which its contributors can be rewarded.

This new business model allows startups to raise money and at the same time pump value into their cryptocurrency by giving discounts to early buyers.

If it still sounds like science fiction to you, don’t worry, you are not alone.

This concept is worth a separate discussion, which, luckily, has been started here by Fred Ehrsam, CEO and founder of Coinbase.

There are already investors, such as Olaf Carlson-Wee, that only invest in cryptocurrencies, and there is a number of new challenges associated with this model.
Blockchain companies and projects

Here’s a list of notable blockchain companies:

Augur – decentralized prediction market

Steemit – blockchain-based social media platform

Storj – distributed cloud storage

OpenBazaar – decentralized marketplace

Uport – decentralized identity for all

Applications in travel

An obvious implementation of these ideas is identification and personalization solutions based on blockchain.

In the future, a blockchain company could potentially replace Airbnb and Uber as intermediaries.

In the recent news, an Australian company WebJet announced that it is building a hotel distribution solution on the Microsoft blockchain. This project, because it’s built on top of a private blockchain, has obvious disadvantages to Winding Tree, an open-source decentralized distribution platform for travel.


To me, payment solutions enabled by Bitcoin are the most obvious (read “predictable”) use cases for the travel industry.

But there are many other ideas and concepts that are now possible thanks to blockchain technology and our job is to try and test those ideas.


The World’s Largest Tourism Company Goes Big on Blockchain

The TUI Group, the world’s largest tourism company, is a firm believer in blockchain technology and is already moving some of its hotel technology to its own, in-house blockchain.

Based in Germany, the TUI Group is a multinational travel and tourism giant, the largest of its kind in the world. The group, which has some 67,000 employes, owns over 1,600 travel agencies, over 30 hotels, cruise ships and multiple airlines with a fleet of 150 planes. With a reported revenue of nearly $20 billion in 2016, the travel giant is led by chief executive Friz Joussen who is a keen, enthusiastic proponent of blockchain technology.

Joussen revealed details of BedSwap, an in-house private blockchain-powered project that sees TUI place its owned hotel inventory on a blockchain to assess demand and shift inventories between different points of sale in real-time. As reported by tech publication Tnooz, the next phase of the BedSwap could potentially see the firm’s entire property management system, down to individual hotel rooms, integrated onto the blockchain.

In conversation with Skift, Joussen revealed that TUI had invested less than €1 million ($1.29 million) on blockchain development. That’s a small spend, particularly when the group sees potential cost savings around €100 million ($129 million) per year.

Speaking to the publication in a recent interview, Joussen said of the group’s blockchain endeavor:

It’s a smart contract blockchain. So, we have all our contracts on the block chain, and we use it for hotel swapping. We have embedded it, we have coupled it to our yield systems, so the yield system determines where we want to sell the beds.

Joussen is also convinced that blockchain technology will fundamentally reshape the business-to-business (B2B) space over the next decade. Aside from significant cost savings, the executive sees blockchain technology breaking the wheel of the monopolistic hold of travel intermediaries like Expedia, on the travel and tourism industry.

As a decentralized database that is continually updated real-time, blockchain’s distribution technology could fundamentally render the likes these travel accommodation companies and agencies redundant.

Joussen also discussed the possibility of turning its currently-private blockchain, into a public chain that could be openly accessible by anyone, anywhere in the world.

“[Y]ou can start in territories like China where we don’t have a distribution. You start publishing stuff. Making it available where it doesn’t hurt your sales,” Joussen added.


Blockchain can help Governments to achieve an efficient and transparent Governance

The public sector is a complex machine – centralised in respect of its responsibility for governance and public service delivery, yet fragmented and often disconnected in terms of its organisational structure and ability to share data.

The effects of long-running austerity cut deep – reductions in departmental budgets offer a stark choice to central and local government bodies alike: sweeping cuts, shrinking headcount and reduced services on the one hand or wholesale transformation of service delivery on the other.

At the core Blockchain is a distributed ledger that enables efficient and reliable transactions that are typically private (or pseudonymous), secure, and transparent. Blockchain records are visible to all members of a network, so they can be easily monitored and audited. They are protected by encryption and a groundbreaking peer-to-peer cryptographic validation mechanism that makes them highly secure. Also, once a record is added to the blockchain, it is permanent and is next to impossible to tamper with.

Potential Blockchain Use Cases for Government:

Government to Citizens:

Blockchain tends to displace existing intermediary institutions, meaning that government – which is often one of those intermediary institutions – could find its unique position as a service provider diminishing across a range of functions. That being said, the secure platform provided by blockchain could also provide the government with a transaction layer upon which the service functions it does retain are executed and recorded.

Government to Government:

Since blockchain enables a shared ledger with minimal transaction latency, it could allow agencies to reconcile transactions and budgets faster than ever before – without having to change their traditional service model. In cases where government agencies maintain silos of information, blockchain could make information sharing easier by serving as the common transaction layer upon which agencies communicate.

Government to Vendors

In some cases, the government is able to use its leverage with vendors to encourage compliance. That means the government could not only solicit work and distribute funds via blockchain-based applications, it could also drive vendor compliance by offering access to the platform as an incentive for certain corporate practices.


Electronic Health Record system built over Blockchain is one another application which would widely solve all healthcare records related issues. Every node in Blockchain EHR system would sent updates about medications, problems, and allergy lists to an open-source, community-wide trusted ledger, so additions and subtractions to the medical record were well understood and audit-able across organisations. Instead of just displaying data from a single database, the EHR could display data from every database referenced in the ledger. The end result would be perfectly reconciled community-wide information about all their citizens, with guaranteed integrity from the point of data generation to the point of use, without manual human intervention.

A Blockchain powered benefit distribution system is being proposed against the regular system of distributing funds for these benefits. In the system, crypto-tokens would be generated and passed from issuer to scheme organising departments to beneficiaries which beneficiaries be able to redeem to different vendors in the same ecosystem.

A blockchain could also serve as the official registry for government-licensed assets or intellectual property owned by citizens and businesses, such as houses, vehicles and patents. A blockchain could facilitate voting in elections, ensuring that each eligible person uses only one vote. A blockchain could also help in back-office functions, to coordinate and streamline tendering and purchasing across departments, agencies, and other armslength bodies. In all cases, a blockchain could reduce fraud and error while delivering big benefits in terms of efficiency and productivity.


3 Ways Blockchain Technology Can Improve the Logistics Industry

For all the talk about blockchain, it’s still a concept that is hard for most people to understand. Even harder to understand are the ways the technology is applicable to real life and what’s most important to us — the logistics industry.

What Is Blockchain Technology?

Although it’s been around since 2009, blockchain has only recently begun to be used by the supply chain industry. For a good primer on the technology, read this article by the Wall Street Journal.

At a high level, a blockchain is a distributed database that keeps a list of records called blocks. The information in the blocks cannot be changed, as each one has a timestamp and is linked to a previous block. So, while many users can access or add to the data, they cannot change or delete it. This creates a permanent trail of events, making it safer and easier for companies to conduct business via the internet.

Supply chains involve multiple stages and dozens of geographical locations, which makes it difficult to track events and incidents. Blockchain technology is one way for logistics providers to ensure that their data remains accurate and secure by recording and tracking vital information. The interface is easily adaptable to existing systems, making it accessible for all type of companies.


The shipping industry is not immune to cyberattacks, some of which have left large shipping lines unable to serve their clients (as happened to Maersk earlier in 2017). There are also persistent supply chain issues such as counterfeiting, poor work conditions, or even revenues being used to fund criminal groups. Investigation and accountability in supply chain is very difficult because of the many links along the process.

With blockchain, a copy of the essential shipping data can be stored on a decentralized network on individual nodes, so even if the network is hacked, the data remains safe. Blockchain can also allow a company’s supply chain to identify security breaches more easily.

Increased Transparency

One of the challenges in a global supply chain is the difficultly of keeping track of all the moving parts — literally and figuratively. Blockchain is a way to connect different parties involved in a supply chain because of the transparency of the technology. Every time a product is handled, the transaction can be documented. The technology can enable everyone in the process of shipping to experience better visibility and connectivity.

Blockchain also enables customers to see where their products came from before arriving at their door.   For many customers, they don’t know (or can’t trust) the details behind the distribution, storage, and raw materials they’ve sourced. This means the price paid may not always reflect the true costs of production for the purchaser.

Increased Efficiency/Reduced Costs

The efficiencies created by this technology will get orders filled and delivered faster. It can record the transfer of raw materials and goods as they move through the supply chain as well as track purchase orders, shipment notifications, and receipts. Blockchain also has the ability to assign a serial number or bar code to goods so that they can be easily traced.

Losing orders and information costs money, whether the product needs to be replaced or the customer needs to be refunded. Blockchain technology creates a trail that can reduce delays and human error.

The blockchain has the potential to transform the supply chain and disrupt the way we produce, market, purchase, and consume our goods. Although adoption by the logistics industry is still in its infancy, blockchain is shaping up to be a transformative technology. The transparency it offers will make every company’s data more secure and reliable.


Using blockchain to improve data management in the public sector

It’s not just for financial institutions; government agencies can use this digital ledger technology to protect trusted records and simplify interactions with citizens.

An important function of government is to maintain trusted information about individuals, organizations, assets, and activities. Local, regional, and national agencies are charged with maintaining records that include, for instance, birth and death dates or information about marital status, business licensing, property transfers, or criminal activity. Managing and using these data can be complicated, even for advanced governments. Some records exist only in paper form, and if changes need to be made in official registries, citizens often must appear in person to do so. Individual agencies tend to build their own silos of data and information-management protocols, which preclude other parts of the government from using them. And, of course, these data must be protected against unauthorized access or manipulation, with no room for error.

Blockchain technology could simplify the management of trusted information, making it easier for government agencies to access and use critical public-sector data while maintaining the security of this information. A blockchain is an encoded digital ledger that is stored on multiple computers in a public or private network. It comprises data records, or “blocks.” Once these blocks are collected in a chain, they cannot be changed or deleted by a single actor; instead, they are verified and managed using automation and shared governance protocols. (See sidebar “Capturing value from blockchain technology.”)

So far, banks, payment-service providers, and insurance companies have shown the highest level of interest and investment in blockchain.1 But we believe government agencies have just as much to gain from experimenting with this technology and deploying it strategically through pilot projects. Over time, blockchain can help agencies digitize existing records and manage them within a secure infrastructure, allowing agencies to make some of these records “smart.” IT departments in government agencies may be able to create rules and algorithms, for instance, that allow data in a blockchain to be automatically shared with third parties once predefined conditions are met. In the longer term, the technology may even allow individuals and organizations to gain direct control over all the information the government keeps about them. This level of transparency could, in turn, make it easier for agencies to achieve buy-in for the creation of networked public services.2

Finding advantages in blockchain

There are a number of blockchain tools and technologies that government agencies can implement today to protect critical data and improve the management of records associated with property ownership and incorporation. In the long term, as blockchain matures, governments may also use it to enable networked public services.

Managing data and digital assets

Protection of critical data. Anyone who uses public services is rightly worried that, despite agencies’ best efforts to protect their systems, criminals might gain access to government databases and steal or manipulate records.

In 2015, for instance, hackers obtained personal details, Social Security numbers, fingerprints, employment history, and financial information for about 20 million individuals who had been subject to a background check by the US government. Encryption methods can never be 100 percent safe, but blockchain technology can make similar breaches a great deal more difficult to achieve.

The nation of Estonia, for example, is rolling out a technology called Keyless Signature Infrastructure (KSI) to safeguard all public-sector data. KSI creates hash values, which uniquely represent large amounts of data as much smaller numeric values. The hash values can be used to identify records but cannot be used to reconstruct the information in the file itself. The hash values are stored in a blockchain and distributed across a private network of government computers. Whenever an underlying file changes, a new hash value is appended to the chain, and this information can no longer be changed. The history of each record is fully transparent, and unauthorized tampering from within or without the system can be detected and prevented. KSI allows government officials to monitor changes within various databases—who changes a record, what changes are implemented, and when they are made. The electronic health records of all Estonian citizens are managed using KSI technology, and the country is planning to make KSI available to all government agencies and private-sector companies in the country.

Digital property ownership.The process of owning and transferring assets—whether physical property or financial instruments—typically involves multiple interactions and a long paper trail. Government agencies could meaningfully cut down on both by digitizing information about asset ownership and storing it on blockchain registers. Consider the emerging use of blockchain technology by the Swedish government. When it comes to real-estate transactions in Sweden, the stakes are high. The cumulative value of all properties in the country is currently more than 11 trillion Swedish Krona, or roughly three times the value of Sweden’s GDP. Yet the registration and transfer of properties remain onerous tasks. The country’s land-registry authority, Lantmäteriet, is exploring ways to digitize the process. It is prototyping a mobile app that would provide transaction space for sellers and buyers as well as their real-estate agents and banks. A blockchain would record detailed information on the properties being sold as well as each step in the sales transaction. Communications among all the parties in the sale would become more transparent. Paper documentation—typically hundreds of pages long—would become superfluous. When implemented, the app is expected to reduce the time needed to complete a sale from three-to-six months to just a few days, in some cases even hours. (See sidebar “Toward faster real-estate transactions in Sweden.”)

The republic of Georgia has indicated that it will test a similar technology, allowing citizens and companies to use a smartphone application to acquire and transfer property titles within a short period of time and at limited cost. The current property-transfer process is manual; applicants can spend up to a day waiting in line at a public registry and pay between $50 and $200 to complete a transaction. According to our analysis of real-estate transactions across all countries in the Organisation for Economic Co-operation and Development, buyers pay at least $3.5 billion a year in administrative fees to register their purchases. Digital processing could significantly decrease the cost of this service to governments; in turn, agencies could pass the savings on to citizens.

An additional benefit of using blockchain to keep track of property ownership is that insiders, too, could be held in check; it would be that much harder for unauthorized government employees to manipulate information. This could lead to more secure property rights in parts of the world where the rule of law is weak and abuse of power is high.

Smart incorporation. The US state of Delaware is in the early stages of creating incorporation services based on blockchain records and smart contracts, rather than paper-based exchanges. The process of incorporation, of course, involves filing the appropriate documents, establishing a separate legal entity, holding organizational meetings, issuing shares, adopting bylaws, and so on. A digital approach to incorporation would benefit, in particular, the growing number of private companies with complicated equity structures, where different shareholders have different rights and obligations. The rules associated with particular investments in a business could be formulated as smart contracts embedded in a blockchain. This blockchain might then be used to automate voting procedures or ensure compliance with rules regarding when and how investors can sell their shares.

Building networked public services

Governments normally know a lot about individuals and organizations because of all the data they collect. Because this information exists in agency and department silos, however, it is often not used to the fullest possible extent.

Agencies that provide social services typically have little or no direct access to information about interactions that a client may have had with other public authorities. And collecting such information can be a painstaking effort, requiring lots of time and legwork. In one Scandinavian country, for instance, civil servants who are responsible for planning rehabilitation programs for convicted criminals spend more than half of their workdays trying to get information about these individuals from different government agencies.

From a technical perspective, there is no good reason for keeping data in silos. With some effort, many governments could create central repositories or enterprise systems for sharing information across agencies. A critical sticking point, however, is security—like their counterparts in the private sector, public agencies cannot, under any circumstances, make sensitive data accessible indiscriminately. What’s required is an environment in which data can easily be shared across systems but in which individuals and organizations can take back ownership of their data and control the flow of personal information—who sees it, what they see, and when.

Emerging blockchain technology may support such a scenario (exhibit). Each person or organization would have all relevant data about them (basic personal information, for instance, or records of previous interactions with government agencies) stored in a dedicated ledger within an encrypted blockchain database. Individuals or companies could access these ledgers through the Internet. End users could then give government agencies the authority to read or change specific elements of their individual ledger using public- and private-key cryptography.3 They could use public keys to selectively share information relating to a particular service transaction with agencies. Or they could issue private keys to agencies for one-time “write” access to their data.

In certain situations, smart contracts could expose certain information to designated agencies if predefined conditions are met. If recipients of unemployment benefits are imprisoned, for instance, that information could be transmitted to the labor agency so payments can be stopped for the duration of the sentence. Agencies would be able to use a specific piece of information for the purpose at hand but would not have unlimited access to all of an end user’s data.

The use of blockchain ledgers would reduce the risk of unauthorized access (through strong encryption) and data manipulation (through tamperproof audit trails). Indeed, public services could become truly networked, without infringing unduly on privacy rights. Individuals and companies would no longer need to spend a lot of time filling in forms with information they had already provided to the government. And agencies could tailor their services to meet individuals’ needs, rather than deploying a one-size-fits-all approach.

Understanding and addressing risks and challenges

Government IT departments that want to adopt blockchain solutions must deal with an industry that is evolving quickly. Venture-capital funds have invested more than $1.2 billion into blockchain start-ups over the past two years alone; about 50 of those start-ups have received more than $1 million each.4

Such fast growth presents challenges for IT decision-makers in government. First, there are no widely accepted standards for blockchain technologies or the networks that operate them. Government IT organizations—like everyone else—may therefore have a hard time assessing the quality of available solutions and determining how best to integrate them within their existing IT landscapes. Second, because many blockchain providers are small start-ups, it may be difficult for IT and procurement departments to identify partners with staying power—that is, companies that can offer cutting-edge products but are stable enough to see projects through to implementation.

At the same time, privacy risks will require constant attention. Even if governments could deploy blockchains that share data across public networks (as in the “networked services” scenario described earlier), they would still need to ensure that current and future encryption methods are strong enough to ensure user privacy. Leaders in government agencies will need to understand the legal and regulatory implications of blockchain, among them: To what degree will smart contracts be binding? Can blockchain audit trails be used as evidence in court? Should the use of blockchain be mandatory in certain fields?

How can governments take advantage of the rapid pace of innovation in the blockchain ecosystem, while dealing with these risks and challenges? One way is by adopting an incubator approach to change. That is, they can establish a small team that scans and prioritizes opportunities for blockchain pilots and then selects the right partners for implementation. This group could be within a government’s central digitization office or within the individual authorities that stand to benefit most from blockchain deployment.

An incubator team at the monetary authority of Singapore, for instance, invited scores of blockchain start-ups to present their offerings and capabilities; a handful of these applications were then selected for pilot testing—among them, a payment infrastructure based on blockchain technology that would allow immigrants to send remittances home more quickly and at a lower cost. Lessons from pilot projects can help government agencies address standardization, security, and regulatory issues.


The incubator team could begin by reviewing ideas for the use of blockchain technology in public administration. The team’s scan could focus on processes that, with improvement, could result in a better citizen experience—for instance, streamlining interactions that involve too many manual tasks, cost too much, or take too much time.


The incubator team should investigate the incremental benefits that the use of blockchain technology might provide in each potential area of application. Using blockchain to record votes in an election, for instance, might be more tamperproof than existing digital and traditional voting methods. However, the incremental benefit of switching may not always be big.

The team’s focus should be on applications that can yield immediate, meaningful results that may prompt more buy-in for blockchain.


Once priorities have been set, the incubator team can explore partnerships with blockchain providers to create pilot programs. Through these relationships, technology companies have an opportunity to showcase and road-test products while public agencies accelerate their learning about blockchain without having to significantly add internal resources.

Once pilot programs are in place, governments should think about how to build on them. A national road map, for instance, could provide clear guidance to public agencies and blockchain-technology providers alike, about technical standards and interoperability norms. It could include best practices for building capabilities across government agencies and funding the rollout of those blockchain applications that have shown potential in pilot phases. Governments could extend these conversations to include international partners—for instance, setting up a forum like the financial industry’s R3 consortium to share lessons from pilot studies, exchange technical templates, or promote global technical standards.

Blockchain technology shows promise for those government bodies that are looking for better ways to manage and protect trusted information. It offers an enticing path toward more efficient operations, more responsive service, and enhanced data security. As early adopters in financial-service industries can attest, however, it will take time for the technology to fully mature. Now is the time for experimentation. By including blockchain in their innovation agendas—establishing it as a critical component of enterprise architecture—governments will learn what works in practice and how to unlock the full potential of data-driven service.


How Blockchain Is Changing the Banking Industry

The cryptocurrency craze has been in full flow during 2017. Bitcoin seems to be setting record highs with every passing week. Initial coin offerings (ICOs) are turning traditional capital-raising on its head. And perhaps most significantly of all, blockchain technology is beginning to have a transformational impact on the world. Arguably, it’s the global banking system that could benefit the most from the implementation of this revolutionary distributed-ledger technology. Whether it’s payments, settlements or compliance, blockchain’s key properties of decentralisation, immutability, efficiency, cost-effectiveness and security are leading to a growing chorus of support for the technology’s adoption across the entire spectrum of financial services; as such, the industry is now expected to undergo substantial disruption over the coming years.

In terms of the impact of specific blockchain companies, few have done more for the global banking industry to date than Ripple. The San Francisco-based tech firm is now providing global financial-settlement solutions powered by blockchain to enable banks to transact directly with each other and lower the total costs of settlement. Its digital asset XRP has grown to become the fourth biggest cryptocurrency by market capitalisation (after bitcoin, ethereum and bitcoin cash), and banks are now joining in droves to improve their cross-border payment capabilities. Indeed, Ripple’s CEO Brad Garlinghouse recently acknowledged the rapid growth in adoption of the company’s blockchain by banks: “People know Ripple is the only blockchain solution for payments that is proven in the real world, and it’s driving demand from financial institutions of all kinds and sizes because they want to stay ahead of the curve.”

For instance, the end of June saw the rollout of the first blockchain-powered instant-remittance service, which has been jointly adopted by Japan and Thailand as a way to establish a new payment rail between the two countries. The collaboration between Thailand’s Siam Commercial Bank and Japan’s SBI Remit, which uses Ripple’s blockchain, will help to boost the speed, efficiency and cost of the countries’ remittance corridor, which sees around $250 million transferred every year, largely as a result of the 40,000 Thai nationals living in Japan. According to Siam Commercial Bank, a transaction that results in funds being deposited in the recipient’s savings account in Thailand can be completed in two to five seconds, which drastically reduces the current norm of “two business days” for payments between the nations.

Elsewhere, Ripple’s blockchain is being utilised in a coordinated manner by some of the largest banks in the world, which in turn is helping to usher in a new era of virtually instantaneous international bank transfers. Last September, the company launched the “Global Payments Steering Group”, which is the first interbank blockchain group for global payments, and which will enable member banks to facilitate the creation and maintenance of payment-transaction rules with formalised standards for money transfers over the Ripple blockchain. Its six founding members included some of the world’s biggest financial institutions, such as Bank of America Merrill Lynch, Royal Bank of Canada, Banco Santander, UniCredit, Standard Chartered and Westpac; since then, many more banks have joined.

Banks are also joining up to design a brand new blockchain-based digital currency that they are intending to launch in 2018. Six of the world’s premier lenders—Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG (Mitsubishi UFJ Financial Group) and State Street—have recently joined a project led by Swiss banking giant UBS—in addition to existing members Deutsche Bank, Banco Santander, Bank of New York Mellon and NEX—with the goal of creating the utility settlement coin, a digital currency that will primarily be used to quickly clear and settle financial transactions using blockchain. The aim of the project, therefore, is to reduce the time, cost and capital required for the post-trade clearing and settlement process, as well as to improve financial-market efficiency. As such, it provides yet another way for the back offices of banks to use blockchain to enhance the speed and efficiency of settlement systems, with the utility settlement coin allowing banks to transfer value and assets without having to wait for long periods of time, as is currently the case with traditional methods. The coins can be converted into fiat currency at central banks and will be stored on the blockchain, which enables them to be quickly swapped for securities that are being traded.

The payments sector is receiving an additional boost through the partnership between Nasdaq and Citi that was announced in May. The collaboration will involve the use of blockchain to record and transmit payment instructions in order to facilitate straight-through payment processing, as well as provide an automated reconciliation mechanism. A number of transactions have already been reportedly executed through the CitiConnect® for Blockchain connectivity platform and the Linq Platform powered by the Nasdaq Financial Framework. As such, liquidity of private securities could ostensibly be improved by streamlining payment transactions between multiple parties, while administrative functions in capital markets are also likely to undergo much modernisation. According to Nasdaq, key benefits of the venture include a seamless, end-to-end transactional process for private-company securities; direct access to global payments from Nasdaq’s Linq platform using CitiConnect® for Blockchain and Citi’s cross-border, multicurrency payments service; and increased operational efficiency and ease of reconciliation with real-time visibility of payment-transaction activity on the blockchain ledger. Moreover, the blockchain will enable real-time visibility of payment-transaction activity.

Trade finance is one major area within banking that could experience considerable transformation as a result of blockchain adoption. The currently outdated processes that litter this area of banking, coupled with the sector’s overall size, means that it is ripe to be upgraded by distributed-ledger technology, in terms of cost and efficiency. Furthermore, it appears to be among the top priorities for global banking blockchain consortium R3, one of the leaders in blockchain development for the banking sector during this early stage. The New York-based company, which currently boasts more than 80 members comprised of banks and financial organisations, managed to raise a record $107 billion in a fundraising round in May, the biggest single investment for any blockchain to date. And now the collective is close to launching its first pilot commercial product. Eleven of the banks—Bangkok Bank, BBVA (Banco Bilbao Vizcaya Argentaria), BNP Paribas, HSBC, ING, Intesa Sanpaolo, Mizuho, RBS (Royal Bank of Scotland), Scotiabank, SEB and US Bank—are preparing to use R3’s blockchain software Corda to test an application aimed at cutting costs and increasing efficiency in the processing of sight letters of credit, which, as it is intended, will be payable immediately upon receipt of the letter and supporting documents by the relevant financial institution.

The product is reported to have a few key standout features. Firstly, it will offer a standardised interface to its users, such as carriers and shipping companies, for inputting shipping details, even in the absence of Corda. This means users won’t need to buy a new platform or train people to use it, and will be able to acquire users more easily. Secondly, the application could result in reducing the costs and complexity of existing processes, which in turn means that SMEs (small and medium-sized enterprises) will ultimately be able to access funds more quickly using sight letters of credit than other methods of trade financing. It will also mean that trade finance could be accessed by a wider range of potential users. The banks have been working on the product for more than a year, and are on schedule to launch in 2018.

R3 is not the only entity currently seeking to improve trade-finance processes through blockchain. On the contrary, seven of Europe’s biggest banks—Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit—have hired tech giant IBM to build a blockchain platform to facilitate cross-border trade finance for small businesses. At present, companies often have to wait several weeks for cross-border orders before they are paid. The blockchain platform, however, will also allow companies to track orders and use smart contracts to automatically trigger payments on specific events, such as an invoice notification or delivery being recorded. It will also add more banks, shipping companies and freight forwarders, all of which will be assessed before being added. Much of the existing payment methodology will remain in place for the time being, but in the words of Rabobank’s chairman, Wiebe Draijer, “The whole infrastructure, the administration is done on the blockchain; and ultimately we will also move the payment into that blockchain solution, when the payment in blockchain is ready to be robust for large-scale applications”. The technology solution will be built on Hyperledger Fabric, an open-source blockchain framework, and is expected to go live before the end of the year. Thus, there is much optimism surrounding blockchain’s role in the transformation of trade finance. “We are convinced that blockchain will have a huge impact on banks in the future and that trade finance is one of the biggest areas of potential for the technology,” according to Rudi Peeters, chief information officer at KBC.

The IBM blockchain itself is proving to be increasingly valuable for banks across a range of use cases. The tech giant recently joined Thai lender Kasikorn Bank (KBank) to launch a new enterprise Letter of Guarantee network based on its blockchain. According to IBM, the project will help to simplify and expedite procedures for KBank’s Letter of Guarantee process, including strengthening security and reducing costs for both the customer and the bank. Most notable is that the enterprise solution will be completely paperless, which will facilitate a more convenient flow of information between banks and customers. Being on the blockchain, moreover, means that transparency is improved over incumbent guarantee processes, which in turn minimises the potential for forgery; while the entire length of time taken to complete the process will now also be considerably reduced. KBank has the biggest market share in Thailand as far as Letter of Guarantees issued by the country’s banking system is concerned, and accounts for 25 percent of the approximately $40 billion issued in total per year. The lender hopes to increase its share to 35 percent by the end of next year, with 5 percent of this amount being processed using blockchain.

There are many more applications of blockchain currently being adopted by banks—Bank of America has filed numerous patents relating to using the technology for conducting and settling transactions; Deutsche Bank is trialling a corporate-bond platform that uses smart contracts to issue and redeem bonds; and DBS and Standard Chartered Banks are working on a trade-finance collaboration with Ripple to better track invoices and avoid invoice duplication. What’s more, it’s not just ordinary lenders that are seeking to utilise blockchain; central banks around the world are also undertaking trials to see how the technology can enhance their monetary-policy capabilities, with the Bank of Papua New Guinea the latest to report such research. As such, it is clear that blockchain is having a profound impact on existing banking processes; and now that the early exploratory phase of the technology is gradually coming to a close, one should expect its adoption in real-use cases to begin to accelerate.


Tuesday, December 19, 2017

Digital Advertising Is Ripe For Blockchain Disruption


The word "disrupter" has a negative connotation: troublemaker, nuisance, agitator. As students, we learned to be obedient or faced the consequences. But outside academia or corporate environment, being disruptive is a trait that can unleash positive change, especially in the areas of innovation and technology.

The blockchain stands tall as a game-changer perhaps not seen since the rise of the internet, and it's beginning to impact digital advertising, a $223 billion global industry. In this case, the status quo is not something to be embraced because it's rife with ad-bot scams and hacks that create fake traffic and clicks.

Say you're a marketer, and you spend $1 million on video ads. You may think that your video got 500,000 views when only half those views involved real people.

A Lot Of Money Being Wasted

Artificial impressions aren't trivial, either: They do more financial damage each year than the cost of an aircraft carrier, and diverts money to hackers. Exactly how much ad spend is wasted? Try $51 million per day or $19 billion by 2018, according to Juniper Research. And fraudulent advertising schemes are spreading like a virus to mobile, social and apps.

Blockchain applications can take many forms. But generally, the technology involves decentralized processing, verification and immutable storage of data. Once information is recorded, it cannot be undone. The blockchain can capture transactions or database entries in their original state, thereby preserving the authenticity of data for future observers such as platform users, auditors, regulators, clients and other stakeholders.

Fraudsters hate it.

"Innovation in ad tech has been centered mostly around automation of the buying process via programmatic and real-time bidding technologies," says Marcia Hales, co-founder of, a blockchain-supported platform for advertisers and marketers. "Most data providers in the ad tech space are using different algorithms on a relatively similar set of data, often with conflicting data points across providers."

Decentralized Validation

The blockchain is like taking a photo of an object but the image can never be altered or photo-shopped. The decentralized validation is key to preventing any single party or hackers from manipulating records. These characteristics are useful in preventing ad fraud because armies of bots like to distort identities, obfuscate data and inflate views or clicks.

A few startups are leveraging the blockchain to prevent fraud in advertising. However, ad bots these days are sophisticated, making them difficult to detect. Bots are often deployed thousands at a time, and they're designed to mimic human behavior so that impressions, clicks and interactions don't raise suspicions. The bots' movements result in fees paid to hackers.

What's one way to protect all that ad dollars? Platforms such as lets advertisers identify and reward advertising and IT experts with tokens so they can identify ad bots and safeguard systems. According to the founders, it's all about leveraging and rewarding experts who can stop fraud in its tracks. In exchange, experts can earn, trade or spend tokens in a marketplace.

Preventing Fake Impressions

There are technical methods as well. The platform uses machine learning and device information such as IP addresses, algorithmic analysis of gameplay interactions and proprietary techniques that capture signals about users and interactions. Ultimately, it's all about identifying and interpreting these signals so administrators can prevent bots from registering fake impressions and conversions.

"The underlying blockchain … takes into account a set of increasingly complex algorithms that are used to combat fraud by bots and farms. These transactions are not rewarded for their fraudulent meta-mining activity," explains Hales. "The ads.txt standard from the Interactive Advertising Bureau (IAB) are used as a way of whitelisting accredited publishers, as part of this algorithm."

There are other signals that could raise suspicions. For example, ads with complex messages that are intended for expert audiences may be shown to beginners. Or a bot may artificially inflate impressions during an expected down-time when a small number of users use the platform. These activities can be flagged as potentially fraudulent.

Automation isn't good if the process is broken. In online advertising, there's clearly room for innovation that can distinguish between a bot and a real person. The blockchain may seem like a simple technology, but the immutable storage of data is a major headache for web outlaws.

Source: Forbes

How blockchain technology could transform the food industry



There has been a lot of noise on cryptocurrencies and Bitcoin of late. While some suggest cryptocurrencies are a fraud, others believe them to be the next biggest economic revolution the world has seen since the internet. Bitcoin has brought to light blockchain technology, which offers great potential for food safety and verification in the agrifood sector. Yet it is far from being the panacea for a range of issues affecting the industry — at least for now.

Simply put, blockchain technology is a way of storing and sharing information across a network of users in an open virtual space. Blockchain technology allows for users to look at all transactions simultaneously and in real-time. In food, for example, a retailer would know with whom his supplier has had dealings. Additionally, since transactions are not stored in any single location, it is almost impossible to hack the information.

For consumers, blockchain technology can make a difference. By reading a simple QR code with a smartphone, data such as an animal’s date of birth, use of antibiotics, vaccinations, and location where the livestock was harvested can easily be conveyed to the consumer.

Food safety

Blockchain makes a supply chain more transparent at an all-new level. It also empowers the entire chain to be more responsive to any food safety disasters. Massive organizations such as Nestlé and Unilever are considering blockchain technologies for that reason.

Walmart, which sells 20 per cent of all food in the U.S., has just completed two blockchain pilot projects. Prior to using blockchain, Walmart conducted a traceback test on mangoes in one of its stores. It took six days, 18 hours, and 26 minutes to trace mangoes back to its original farm.

By using blockchain, Walmart can provide all the information the consumer wants in 2.2 seconds. During an outbreak of disease or contamination, six days is an eternity. A company can save lives by using blockchain technologies.

Blockchain also allows specific products to be traced at any given time, which would help to reduce food waste. For instance, contaminated products can be traced easily and quickly, while safe foods would remain on the shelves and not be sent to landfills.
Preventing fraud

However, it will work only if the data at the source is accurate, as current practices in the industry are much more open to human error. Much of the compliance data is audited by trusted third parties and stored either on paper or in a centralized database. These databases are highly vulnerable to informational inaccuracies, hacking, high operating costs, and intentional errors motivated by corruption and fraudulent behaviour.

Blockchain operates anonymously, so mistakes would be traceable to individual culprits. Considering recent food-fraud scandals in Canada and elsewhere, this feature is not trivial. Blockchain technology provides a method with which records are kept permanently.

Most importantly though, it facilitates data-sharing between disparate actors in a food value chain. Many retailers have sold fraudulent food products unknowingly. With the use of blockchain, those days could come to and end.
Faster, fairer payment

Blockchain will allow everyone to be paid more quickly, from farm to plate. Farmers could sell more quickly, and be properly compensated as market data would be readily available and validated.

Blockchain technology could represent a legitimate option for farmers who feel compelled to rely on marketing boards to sell their commodities. The use of blockchain could prevent price coercion and retroactive payments, both of which we have seen across the food supply chain.

Blockchain technologies could “Uberize” the agrifood sector by eliminating middlemen and lowering transaction fees. This can lead to fairer pricing and even help smaller outfits desperate to get more market attention.

Limits of blockchain

Our current traceability systems need work, and blockchain technologies could be the evolution they need. Given its architecture, blockchain technology offers an affordable solution to both small-to-medium enterprises (SMEs) and large organizations. However, there are noteworthy limitations.

The amount of information which can be processed is limited. Since all of the information would be out there and accessible, several contracts between organizations would need to be secured for some level of confidentiality to be retained. How to balance confidentiality with transparency would need to be worked out.

The agrifood arena is filled with secrets. Blockchain technology as it is currently being deployed would be problematic for many food companies. For many, blockchain is just a solution looking for a problem. Simply put, some companies, like Walmart, have more power and influence over other companies within the same supply chain.
Marketplace confusion limits participation

In addition, blockchain is really in its infancy and most people are uncertain about its potential. The innovation in blockchain architectures, applications and business concepts is happening rapidly. It’s a decentralized, open-source organism which is challenging to grasp for many, including governments.

In food, innovation is always desirable until it becomes real. Once it manifests itself, guards go up. Some organizations are moving ahead while others wait to see what happens. The marketplace is currently fueled with confusion due to the Bitcoin phenomenon, which is labelled by many as being irrational and ridiculous. Cryptocurrencies allow for transactions to occur while using blockchain technology, but it remains just an option.

Nevertheless, the most important challenge for blockchain technology remains participation. All parties must adopt the technology in order for it to work. In food distribution, not all companies are equal and some can exercise their power more than others.

A successful integration of the blockchain requires the engagement of all participating organizations. Walmart’s blockchain will likely be successful because it’s Walmart. But thousands of companies do not have the same clout.

Blockchain technology in agrifood has potential but it needs work. Industry public leaders should embrace blockchain as an opportunity and should be added to a digitalization strategy currently affecting the entire food industry. Transparency, productivity, competitiveness and sustainability of the agrifood sector could be enhanced.

Nonetheless, research should look at how to generate evidence-based blockchain solutions to democratize data for the entire system before we get too excited

Source: The Conversation