Sunday, 25th December, 2016
| A surprise Christmas report
TL;DR CoinDesk travels to the North Pole to bring you an exclusive inside look into an innovative trial, and the back story that accompanies it. (Read more in THE TAKEAWAY below.)
TOP 5 STORIES ON COINDESK Smart lessons. Jeffrey Billingham, blockchain lead for Markit, believes that 2017 will be the year we start to see the real power of smart contracts, now that the hype seems to be dying down. Our understanding of the potential is deepening, as is our awareness of their limitations. Among the main lessons learned: smart contracts are not the same as digital assets; they cannot be implemented by the blockchain alone; and they require a total rethinking of processes. Read more.
Asset tokenization. Julio Faura, Head of R&D and Innovation for Banco Santander, talks about what he believes to be the main blockchain application for financial services in the short term: the creation of cryptographic tokens. For him, blockchain is less about cryptocurrency, and more about making value transfer secure and auditable. The ‘tokenization’ of value is a relatively simple way to increase transaction efficiency – what moves are the cryptographic tokens that represent assets, which remain in trusted custody. Read more.
How much sharing? Gideon Greenspan, the founder and CEO of Coin Sciences, points out that blockchains are not good settlement ledgers for banks, due to the need for confidentiality. However, he highlights a surprising ideal use case: internal ledgers for financial institutions. Can’t they just use a central database? Not, he explains, if the subsidiaries are legally separate entities in different regulatory jurisdictions. The confidentiality issue is not a problem, and settlement can take place almost instantly. Read more.
Stable, and yet dramatic. It’s been a pretty good year for BTC so far, what with breezing past $800 and clocking up gains of +90% (at press time). And it certainly hasn’t been boring. We had the halving, and then the Bitfinex hack. We also had the political upsets of Brexit and the US election. These events jolted BTC’s volatility index, but on the whole, the trend has been relatively stable. Read more.
Year in Review. We are full swing into our 2016 Year in Review series. While you have already heard from some sector leaders, builders and creators, we have many more to come. Bookmark the series so you can keep up with the thought pieces as they are published.
We begin the countdown to CONSTRUCT, our invite-only summit for developers and senior engineers.
With exclusive in-depth talks from founders and/or high-level execs from Zcash, Hyperledger, MIT, the Ethereum Foundation, Blockstack, IBM and more, CONSTRUCT gives you the opportunity to hear first-hand how the sector is evolving. Join us in San Francisco, USA from January 30-31, and network with industry leaders to discuss network security, access management, and financial services.
😎 APPLY TO ATTEND 😎
QUOTE OF THE WEEK "I do see a connection between the internet bubble and blockchain proliferation. When I go to conferences, I hear these wild presentations about how the blockchain will solve all of our problems. It won’t. The blockchain solves very specific problems, and so far the best application of blockchain technology is as a digital currency." – Perry Woodin, quoted by Peter J Reilly, in ‘ On Bitcoins, Tulips and IRS Tax Compliance’ for Forbes |
THE TAKEAWAY
Today we bring you a CoinDesk exclusive.
Santa Claus has successfully completed his first blockchain trial.
Speaking with CoinDesk at the North Pole operations center, he revealed that his team has been working on the supply chain prototype since January. The other participants in the project are not being disclosed at this stage, and all have signed confidentiality agreements.
As the founder of what is often referred to as ‘The Best Supply Chain in the World’, Santa has ample experience in managing a global distribution network.
“The blockchain has been a steep learning curve for me,” he said. “Although I do have a lot of experience working in the cloud.”
The huge amount of paperwork behind simultaneous and reliable delivery of goods has been one of the team's principal pain points for centuries. With an increase in volume came errors. Database inconsistencies began to create bottlenecks that occasionally delayed delivery, which Santa insists is unacceptable in his line of work.
Over the past few years, the group has tried a wide range of technology solutions, from mobile apps to beacons, but they all collapsed when hit with the high volume of data during peak periods. Furthermore, the centralized server architecture created a single point of failure that on occasion sent the entire team into panic mode.
“Don’t talk to me about Iceland,” Santa told CoinDesk. He added that he now has a specialist on the team who does nothing but watch for seismic activity in the region.
Historically, the operation has been a hybrid of centralized and outsourced management, with parents contributing some of the logistics. Rapid organic growth, however, led to incompatibilities.
Older readers will remember Santa’s original offline messaging platform, which is still operational in some remote jurisdictions. This is increasingly a concern, as it exacerbates the problems of latency.
In late 2015, the team decided to investigate the potential impact of the blockchain on Christmas. For some time, Santa confided, he had been thinking about increasing the outsourcing of both logistics and manufacturing. Pushback from the elves delayed the decision, but the metrics indicated that a shift was inevitable.
The developers eventually opted for a decentralized ledger where all versions coincide, latency is minimal, and where outage of a node does not materially affect the network. Another important characteristic, surprisingly, turned out to be immutability. (The IT department has twice had to reinforce the firewalls due to inexplicable additions to the lists of certain children in Russia.)
Finding a flexible and secure solution took longer than expected, since the relative advantages of public and private blockchains had to be weighed.
In the end, the tech team opted for a hybrid solution based on both the bitcoin and ethereum blockchains. The resilience, flexibility and relative ease of implementation were among the deciding factors.
Santa confirms that he has no plans to open-source the code at this time.
The system just trialled allows for the incorporation of any type of retailer, from online giants to small independent stores and Christmas markets.
A proprietary AI algorithm adapts wish lists to uploaded SKUs, sorted by geographical location. When matches are made, the information is distributed, and the logistics operation swings into action.
At this early stage, the deliveries will be coordinated from the North Pole. Next year, the tech team will focus on developing a blockchain-based system for managing outsourced stock picking and distribution. When asked what effect this would have on the workforce, Santa told CoinDesk that re-training programs were being developed, and designers were working on a new line of branded products to be produced in-house.
Although the team pronounced the test a success, Santa confided that it did not go as smoothly as hoped. Conflicts in certain areas meant that some databases were unreliable, and the whereabouts of affected children proved impossible to track.
Another project slated for next year is a separate blockchain for portable identity management, to facilitate messaging and to help find children without a fixed address.
Despite persistent questioning, Santa would not reveal where the financing for this development came from. Rumors have been circulating of an anonymous backer with ties to a large retailer. Santa did disclose that he had been approached by a couple of tech giants interested in the data-gathering potential, but apparently discussions broke down when they raised the subject of inserting ads in the gifts.
He also revealed that he had received an “inexplicably large” offer for the technology behind his sleigh from a well-known entrepreneur fascinated with high-speed travel. Santa explained that he turned it down because he had enough problems with drones, and was constantly having to upgrade the jammers that the reindeers wore on their antlers.
A more likely explanation for the funding behind the development lies in the sheds our correspondent glimpsed, not far from the main warehouse. There were about six of them, with several electricity lines connected to a large generator. In the crisp North Pole air, a distinct hum could be heard…
– Noelle
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OTHERS ARE TALKING ABOUT...
Understandably, the mainstream press has been a-buzz with BTC's price movements this week. Several of them used the word "surging", and I saw a couple of "smashes". It has not been a boring week.
On bigger-picture stuff: Bloomberg published an overview of the murky world of blockchain patents. Wired showed how bitcoin could improve internet security. Artsy wrote about using the blockchain to protect artists.
In an interesting opinion piece, Nasdaq takes a look at the concept of money, and argues that an ideal economic system will be based on a hybrid of fiat and cryptocurrency.
Forbes compared cryptocurrencies to tulips, and then invoked the IRS. And International Business Times imagines a future in which cars are self-driving and run on the blockchain. It sounds almost utopian. Blockchain as a driving force? (he he)
UPCOMING EVENTS
WHAT WE’VE BEEN UP TO On behalf of all of us at CoinDesk, I hope that you had an amazing holiday weekend.
With the team scattered for the holiday, we won’t be publishing a daily email tomorrow. But you’ll be relieved to hear that we’re back on schedule on Tuesday. 😉
And to reference my favorite Christmas song: while I’m sure that most of us who have to get on a plane or on the highway are not dreaming of a white Christmas (at least not until we get home), I do hope that your days are merry and bright.
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