Day: April 1, 2018

Calculating tax exposure is always a data-heavy business process. With regular assets, this process is simple. In cryptocurrency, it’s anything but.

A partnership with blockchain company Coinfirm was announced by Polish bank PKO Polski on 29 March.

PKO has embraced Coinfirm’s Trudatum tool in order to provide its customers with a secure means to access documents containing information regarding regulations, transactions, fees and commissions. This would eliminate the need for paper documentation and represent a major boost to the bank’s financial budget, reducing costs to servicing its nine million customers.

Banks in Poland are becoming increasingly interested in adopting the new technology in order to deliver a more efficient, secure and cost-efficient system for customers as current methods are proving to be susceptible to problems such as removal of data and modification.

President of Polish fintech company MC2 Solutions, Anna Strezynska, indicates that the Polish Bank Association is currently looking at different ways of alleviating these issues within Polish banking systems and consequently investigating alternative solutions including blockchain technology.

PKO vice president Adam Marcinak indicated that the Trudatum system had been tested by the bank since last year to great success. Following the tests, the bank has decided to opt for further cooperation with the platform. He sees the future as very positive and believes that PKO will “be able to carry out a pioneering operation of implementing blockchain technology into the Polish banking sector”.

New technology and the banking system 

Worldwide, barely a day goes by without the announcement of another major bank either testing or trialling the new technology. Combining shared databases and cryptography, blockchain technology allows multiple parties to have simultaneous access to a constantly updated digital ledger that cannot be altered. Some financial institutions see the potential of these attributes as irresistible.

A fast, low-cost, cross-border wiring service using blockchain is being considered this year between Japanese BTMU and Merrill Lynch, Royal Bank of Scotland, Australia’s Westpac and other international banks in order to improve existing systems.

The Bank of England indicated last week that is also testing blockchain possibilities to enhance its Real Time Gross Settlement Service (RTGS) through using distributed ledger technology.

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Multinational technology conglomerate Cisco has filed for a patent incorporating blockchain technology with a group chat format.

Cisco notes in the publicly available patent filing that its innovation would make confidential group messaging easier and more secure than formats currently available. The application from Cisco describes the benefits of blockchain technology in this area, recounting it as enabling users to form groups of multiple individuals both quickly and easily, allowing them to share files with each other while keeping track of both membership and those involved in the conversation.

Details of the patent filing suggest that the proposal can provide solutions to several problems commonly associated with group chat messaging. The application outlines a new process for “how group membership is established, communicated, updated” while creating a network secure from tampering.

Group chat via the blockchain

Cisco offers that the unique selling point of a blockchain-based group chat technology is the decentralized system. The patent proposes using cryptographic keys to be shared among group participants, establishing a peer-to-peer network only accessible to those authorized to join. The initiators of the chat would create the genesis block automatically via their device, with participants generating their own blocks as they join.

Here, the blockchain would be explicitly enrolled to record group chat members, although Cisco did propose a secondary way it could be utilized.

The blockchain could otherwise be used to enable secure file sharing or instant messaging, ordering the list of data blocks to represent a tamper-resistant chronological account of group membership updates. The patent filing states the benefits of this as ”enabling end-to-end encryption of instant messaging, content sharing, and streamed media”.

In a patent filing released October 2017, Cisco looked to copyright the use of blockchain in tracking Internet of Things devices. The technology, in this case, was described to be used to identify different connected devices, monitor their activity and evaluate how trustworthy the device is when connected to a network.

Cisco’s blockchain group chat patent application was filed with the US Patent and Trademark Office in December 2017. The application was made public on 29 March 2018.

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When Bitcoin appeared, not many people were ready to recognize the true value a decentralized solution to cash could bring. It took years until the technology was met with recognizable levels of adoption and its creator(s) vanished shortly after Bitcoin began receiving significant mentions from major media, but that’s another story.

Bitcoin’s roots

The vision Bitcoin created and the road it paved for cryptocurrency is something that’s still surrounded by a lot of nuances to many.  It’s true that the initial supporters of Bitcoin, even prior to its widespread success in global markets, were libertarian in nature. This was, in part, due to Bitcoin posing as an alternative to government-issued money.

Of course, Bitcoin has come a very long way since its early days and the overall cryptocurrency economy has grown tremendously. What’s important to highlight, though, is the fact that cryptocurrency’s success in markets is firmly based on a handful of principles. And it is these principles introduced by Bitcoin that make cryptocurrency a viable alternative to government-issued cash.

The principles that make Bitcoin “trustless”

The term “trustless” is often thrown around when it comes to cryptocurrency. Understandably, it might not easy to grasp why or how this is even a feature. It is, however, crucial to understand why trustlessness is important for cryptocurrency. This might be the most important aspect of what crypto has to offer, and it is the result of a plethora of features based on Bitcoin’s principles.

Unlike government-backed money, Bitcoin not dependent on trust for central authorities. Its users do not have to trust any government or central bank for its integrity.

Decentralization

Bitcoin is decentralized, meaning that there is no central issuing authority. There also are no clearing houses that transactions must go through. New units of Bitcoin are minted into circulation through a deflationary process called mining. Other than an incentive structure that rewards miners with transaction fees and newly-generated coins, miners also contribute to verifying transactions by including them in blocks.

Moreover, participants in the network running full node software are broadcasting transactions compliant to the network rules, this way contributing to the ecosystem. Bitcoin’s system works in a peer-to-peer manner, with users also being contributors if they so choose.

Open source: “in code we trust”

The code of Bitcoin is always published. Its creator, Satoshi Nakamoto, released the Bitcoin very first client with the entirety of the codebase being made public. This allows for anyone to review the code, compile it and verify its functions without having to trust the issuer. Insofar, no one has been able to crack Bitcoin’s code to exploit its system and the code is continuously reviewed by the community before releases are made official. Crypto enthusiasts have been known to play on the phrase “in God we trust”, inscribed on US dollars, jokingly stating that they put their trust in [computer] code.

Cryptography or “backed by math”

Cryptocurrency might not be backed by a tangible store of value such as gold. However, Bitcoin and most cryptocurrencies are backed by cryptography: a codebase that has been through countless tests and found to be unbreakable, a large network of contributors and the largest computing network in the world making up its mining network. All those values are set in stone by mathematical properties other than physical attributes. It is thanks to math that cryptocurrencies have many of the characteristics of cash and that is why many people attribute value to it.

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