Slippery slopes

Our weekly opinion piece and overview View this email in your browser February 26th, 2017 Heating up The race to implement blockchain technology got a boost this week with the entrance of a new sector that could end up overtaking the financial industry. (Find out which in THE TAKEAWAY below.)     *NEW COINDESK RESEARCH* In BLOCKCHAINS FOR INSURANCE, CoinDesk takes a look at how blockchain technology is affecting a $5tn industry. We talk to the startups and incumbents making this happen, give an overview of the applications and share insights from industry insiders on how distributed ledgers can change a sector that touches almost every aspect of the global economy.   PURCHASE THE REPORT  TOP TRENDS ON COINDESK Funding on the rise? Investment activity seems to be picking up, with three blockchain startups announcing successful financing rounds over the past few days. Bitcoin IoT startup Filament has so far raised $9.5m in a round that is still ongoing. P2P bitcoin lender Bitbond received new funding of $1.2m. And decentralized, blockchain-powered cloud storage service Storj completed its first VC round, raising $3m. Is this a blip, or could we be looking at the beginning of an uptick in investor interest? Bitcoin party Bitcoin had a really good week, and not just because its price set a new all-time high. As we saw above, two bitcoin startups got funded. Washington DC-based advocacy group Coin Center raised $1m in new donations. And the Danish police claim that they can now track bitcoin transactions, which should make regulators happy but privacy buffs less so. Zcash 2.0 Privacy advocates are probably in two minds over zcash. On the one hand, its price fell to below $30 for the first time. But on the other, the team released a roadmap for an upcoming update, with promising features such as selective payment disclosure, inter-blockchain transactions and the issuance of zcash application tokens. Going live 2017 does seem to be the year that PoCs enter production. This past week, two live projects were announced: one spearheaded by Northern Trust (which revealed a live IBM-powered blockchain for private equity funds), and another by ING and Société Générale that saw a live oil trade take place on a blockchain platform (more on this in THE TAKEAWAY below).   Regulation crawl On the regulation front, US states continued to fumble their way toward a patchwork of rules. West Virginia wants to make bitcoin money laundering a felony. California wants to ban bitcoin in charity raffles. And Hawaii is thinking about looking at it more closely. Meanwhile, on the other side of the ocean, Poland seems to be inching its way toward regulating bitcoin exchanges. And the EU is proposing to ban online geo-blocking, including for virtual currency users, in a bid to achieve a cohesive digital common market.   See all CoinDesk stories JOB LISTINGS GENESIS TRADING - Sales Marketing Associate The Sales and Marketing Associate is a sales-support position, responsible for identifying and contacting prospects, with the expectation of bringing revenue-producing clients into Genesis' digital currency business lines. More info. GENESIS TRADING - Research Associate The Research Associate will support the continued growth and expansion of the business, and will proactively assess new market opportunities and products within the digital currency space. More info. Are you looking for talent? Let jacob@coindesk.com know if you're interested in posting job opportunities here.   QUOTE OF THE WEEK "Now we have to turn our attention to data being weaponized against us. What we used to think about protecting – we now have to be protected against. It's the strangest irony. The target is now the weapon." – Chris Young, CEO of Intel Security, quoted by Dean Takahashi in VentureBeat, "Ransomware has exploded thanks to Bitcoin's anonymity"   THE TAKEAWAY  This past week, European banks ING and Société Générale unveiled a blockchain platform designed to facilitate oil trading. Far from making a splash on the front page of CoinDesk (or other mainstream publications for that matter), the news debuted via a quiet press release, eked out into cyberspace without much fanfare. It's unfortunate, because this news was worth a second look. To see why, let's break the development down into three factors that make it stand out: 1) This project is not just a proof-of-concept. The announcement revealed a live transaction with the commodities trading house Mercuria. A cargo shipment containing African crude oil was sold three times on its way to China. Traders, banks, an agent and an inspector were all involved. According to the participants, the result proved that a blockchain-powered system can significantly reduce the time needed to complete a transaction, as well as enhance document reliability, auditability and user experience. 2) The commodities industry needs a logistical overhaul. Insiders point out that it has changed little over the past few decades and still relies on paper-intensive processes, rife with redundancies, errors and delays. Letters of credit, bills of lading, shipping contracts, insurance, transport and payment are just some of the complicated components of a commodity trade that could be automated by a digital platform. And the transparency and immutability afforded by blockchain technology could remove the risks associated with trust and ensure that each phase seamlessly connects with the next. While the experiment was for an oil transaction, the steps involved in trades of other commodities are not very different, which will allow the platform to easily scale. 3) In what is perhaps the most intriguing twist of all, the nature of the oil trading sector puts it in a unique position to overtake the financial sector in blockchain implementation. First and foremost, it is dominated by a handful of big players. Some are large conglomerates, but others are independent firms with a lower aversion to risk than most financial institutions. The implication is that with one or two demonstrating positive results from moving operations to a blockchain platform, the others will quickly follow suit in order to maintain competitive margins. Furthermore, the need to stay competitive is likely to become more acute as the market heads into an environment of lower profits due to a flattening forward curve. Finally, the potential impact on the global economy of more efficient oil trade could end up being even greater than that of a more efficient financial system. While it is pointless to debate the relative importance of money vs oil – both are essential in today's economy – it is hard to deny that financial products are already easier to send across borders. The benefits resulting from gains in speed and cost in the movement of oil are therefore likely to have an even greater short-term effect. A more efficient oil trading system would not only have a greater influence in smoothing the uneven distribution of such a necessary resource. It could also encourage blockchain experimentation and adoption all the way up and down the value chain. - Noelle MORE BACKGROUND: Mercuria Chief: Blockchain Could Cut Oil Market Costs By 30% Austrian Utility Giant Trials Blockchain Energy Trading Commonwealth Bank, Wells Fargo Test Blockchain for Cotton Trade Walmart Wants to Apply Blockchain to Other Products Beyond Pork   Share Tweet Beyond CoinDesk... OTHERS ARE TALKING ABOUT Bitcoin breaking through its all-time high triggered the usual flurry of action-packed headlines as the media tried to retroactively understand why. TechCrunch suspects it was because of the strong stock markets, and perhaps also the potential influence of bitcoiner Mulvaney after his appointment to the Office of Management and Budget. Investopedia thinks it was because of capital flight from China and enterprise interest in the blockchain. Bloomberg believes that it was due to Trump-related uncertainty. Quartz attributes it to the pending decision on the Winklevoss ETF.    Unrelated, Euromoney reviewed the UK Financial Conduct Authority's regulatory sandbox experiment. VentureBeat talked about the explosion of ransomware and the weaponization of data. And Bloomberg highlighted the difficulty of cracking down on something as slippery as bitcoin.  If you're into podcasts, Epicenter had a riveting interview with Vitalik Buterin and UnChained got a detailed perspective on DLT applications from Nasdaq's VP of blockchain innovation. UPCOMING EVENTS Feb 27 – Distributed: Markets – Atlanta, GA Feb 28 – Blockchain Technology – Moscow, Russia March 1 – DTCC Fintech Symposium 2017 – New York, NY March 1-3 – The Blockchain Africa Conference – Johannesburg, South Africa March 1-3 – Digital Finance World 2017 – Frankfurt, Germany March 3-5 – CoinAgenda Caribbean – San Juan, Puerto Rico   WHAT WE'VE BEEN UP TO Videos from our Construct 2017 developer event are up! So if you missed it, you can still hear Gregory Maxwell, Joseph Lubin, Brian Behlendorf, Zooko Wilcox and a host of other high-profile influencers give their take on industry trends and opportunities. (And, friendly nudge, make sure you don't make the same mistake with Consensus – ticket prices go up on Tuesday, just sayin'.) Speaking of Consensus, over the next few days we'll be leaking some of the confirmed speakers in our CoinDesk Daily Newsletter. Be sure to keep an eye out!        Copyright © 2017 CoinDesk, All rights reserved. You're receiving this email because you subscribed for updates on our website. Our mailing address is: CoinDesk 636 Avenue of the Americas New York City, NY 10011 Add us to your address book Want to change how you receive these emails? You can update your preferences or unsubscribe from this list Received this from a friend? Subscribe here.