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February 23, 2019
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blockchain

Blockchain is solid, in that there is no liquidity

in amtrak/blockchain/Delhi/India/Infrastructure/Jerusalem Venture Partners/Politics/Softbank Vision Fund/The Extra Crunch Daily/Venture Capital by

The quality of a financial market is driven by liquidity. Companies want to list on the NYSE, because that’s where the most financial investors in the world are located, and the thicker the market for investors, the better the valuations for companies. The NYSE has “problems” though — its closed most hours of the week, for instance, because humans are lazy, and it has a bunch of rules on what can be listed and how.

So blockchain! Blockchain solves this liquidity problem by allowing traders to operate 24/7, sell assets immediately, yada yada yada. All the stuff that’s been talked about ad nauseam the past few years.

I wanted us to get a better feel for the real liquidity of blockchain technology, and so we had Extra Crunch contributor Galen Moore crunch the numbers. And, my god, these markets are about as liquid as my dining room table.

In his analysis of security token offerings, Moore finds that liquidity can be measured in dollars a day. As in, sometimes there is someone, somewhere that wants to trade a token, but it isn’t all that often! For BCAP and SPICE, there are days that had no liquidity at all despite millions in purported market value.

It’s straight out of my market microstructures textbook that I used to read before going to bed. When you have lightly-traded assets, you want to build a market that concentrates trades in that asset into tight windows, in order to increase the thickness of the market. These securitized tokens would do better with an hour of trading per week when more buys and sells could be matched together, rather than the current model of no one trading ever.

We talk a lot about the user story from a utility token perspective, but we also need to talk about the user story from an investor perspective. Markets are sort of the classic case of network effects. Blockchain technologies are great and I am a “believer” for whatever that means, but if you are going to run a market, there has to be a crowd that shows up — or there is no market.

Why can’t we operate anything?

Leadinglights via Getty Images

The Wall Street Journal had a great piece yesterday on the travails of Amtrak, which in addition to being an actual business, needs to get approval from Congress to make operational changes (and you think your board is tough). If you thought we couldn’t build anything, wait until you see how little we can operate anything as well.

This story has everything:

  • Train nostalgics want Amtrak to continue running unprofitable, long-distance routes daily
  • Congressmen with rural stops want unprofitable routes to continue serving stations that essentially have no passengers
  • Unions are opposed to removing dining cars on trains that operate over short distances
  • Private rail owners don’t want more frequent service because it makes scheduling freight trains more complicated
  • Amtrak’s entire long-distance fleet has aged and needs to be replaced, but no one can agree on what configuration new train sets should have
  • Even so, Congress wants Amtrak to become more financially solvent (!)

And so you get to this fact:

Amtrak’s long-distance routes carried about 4.5 million riders in fiscal 2018, down slightly from the previous year. Amtrak reported an adjusted operating loss of $543 million on those routes in 2018, more than offsetting the $524 million in earnings coming from its operations on the Northeast Corridor.

Long distance passengers are just 15% of Amtrak’s total, but hold the company hostage.

We have an infrastructure obsession over here these days, but it’s not just planning and construction that matters — how we operate infrastructure is even more crucial for preserving the quality of the user experience. As Amtrak makes clear, the kinds of sprawling debates that plague the planning process come up just as often in operations.

Quality news from around the web

Matt McClain/The Washington Post via Getty Images

Google Policy “Reorg”

Dave McCabe at Axios got the scoop yesterday that Google is re-organizing its policy wing. The details are vague and don’t portend huge changes to its model. One interesting note is that the shop will be called “Government Affairs and Public Policy” instead of just “Public Policy,” indicating that Google clearly sees a need to lobby more forcefully on its behalf than it has in the past. The company will also bolster regional teams, which seems critical in emerging markets like India and Indonesia, where massive elections this year threaten to rapidly change the policy environment for large foreign tech companies.

Two internets is increasingly the reality at the protocol level too

We’ve talked a lot about the splitting of the internet into internets due to content firewalls and barriers to competition in the tech sectors in countries like China, India, and elsewhere. Another dynamic is that the very protocols that run the internet are now diverging between these countries. The FT noted that emerging markets have made almost no efforts to migrate to IPv6, the modern Internet Protocol system, from IPv4. With more and more devices coming online and the IP address space exhausted, that split on the core protocol of the internet complicates keeping the world on one platform.

Does Saudi Arabia’s Asia investments paint a blurry picture for the SoftBank Vision Fund?

During his tour across Southeast Asia this week, Saudi Arabia’s crown prince Mohammed bin Salman has been publicizing his intentions to invest billions in the region. And we’re not talking about chump change here — just yesterday during his visit to India, MBS stated Saudi Arabia was looking to invest at least $100 billion in the country over the next two years, which came just days after Saudi Arabia reportedly signed agreements to pour around $20 billion into Pakistan.

Besides the fact that Saudi Arabia is diving further into the infrastructure race in Southeast Asia and that the country is actively engaged with national rivals, Salman’s statements interestingly came right after reports that Saudi Arabia’s Public Investment Fund was growing frustrated with the SoftBank Vision Fund where it has invested $45 billion. Based on the crown prince’s ambitious claims in Southeast Asia, it seems like Saudi Arabia has more than enough alternatives to SoftBank to put its money to work, which might create some more around hopes for a second Vision Fund if the reports of LP discontent are true. ~ Written by Arman Tabatabai

Countries are torn on how to transition to a cashless future

Pieces from Quartz and the New York Times highlighted a developing story of how countries are approaching the swift decline in cash. As regions move closer to cashless societies, policymakers are voicing concerns over equity, data treatment, and the underbanked. Such negative externalities have been well-documented in countries like Sweden, where cash is rarely used, infrequently printed and is no longer accepted in most places.

To avoid the same unintended consequences, the UK will publish a roadmap for handling falling cash usage next month, while policies banning cashless stores have already been passed or discussed in major US cities and states. While other countries like South Korea, India and China have advocated for cashless payments, the UK and the US are hoping to create a more gradual, manageable and predictable transition. ~ Written by Arman Tabatabai

JVP’s new $220 million fund leverages its frontier tech and cyber pedigree

Yesterday, Israel-based Jerusalem Venture Partners (JVP) announced it had closed on $220 million in committed capital for its eighth fund, which will focus on investing in early and mid-stage companies in frontier tech sectors like AI, cybersecurity, and computer vision. JVP has a long track record of investing in these categories and working with governments. The firm has worked with the Israeli government to help run several leading cybersecurity accelerators, and recently partnered with New York City to help launch the city’s $100 million Cyber NYC program focused on establishing a dominant cybersecurity ecosystem. Israel has long been a source of new innovative cyber solutions while New York’s central financial institutions have been some of the largest customers and stakeholders in cybersecurity. Given its established and expanding presence in these markets, JVP seems well-positioned to source deals and grow companies that fit under the focus of its new fund. ~ Written by Arman Tabatabai

Obsessions

  • More discussion of megaprojects, infrastructure, and “why can’t we build things”
  • We are going to be talking India here, focused around the book “Billonnaire Raj” by James Crabtree, who we just interviewed and will share more soon
  • We have a lot to catch up on in the China world when the EC launch craziness dies down. Plus, we are covering The Next Factory of the World by Irene Yuan Sun.
  • Societal resilience and geoengineering are still top-of-mind
  • Some more on metrics design and quantification

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to danny@techcrunch.com.

This newsletter is written with the assistance of Arman Tabatabai from New York

News Source = techcrunch.com

Binance releases a first version of its decentralized crypto exchange

in Asia/blockchain/cryptocurrency/Delhi/India/Politics by

Binance, the world’s largest crypto exchange, has launched an initial version of its highly-anticipated decentralized trading service (dex) today which is available now at testnet.binance.org.

The launch — which is initially a testnet as the URL suggests — has been a long time coming and it is designed to complement the main Binance exchange, which does around $1 billion in daily trading volumes according to data from CoinMarketCap.com.

That core service is centralized, like most others, meaning that the exchange manages its customers’ fiat or cryptocurrency balance for them. Centralized exchanges also set the price, pick the selection of assets on offer and make money from transaction fees. Some see that as necessary but others disagree. Ethereum creator Vitalik Buterin went so far as to say that centralized exchanges should “burn in hell” for their controlling position.

That, as seasoned crypto traders will tell you, leaves customers open to loses from hacks, shutdowns or other kinds of unexpected issues. Common advice is for users to take control of their own cryptocurrency and manage it via a wallet. That’s where a dex comes into play because it allows users to trade directly from their wallet, as opposed to the cumbersome exercise of transferring tokens into an exchange to trade and then withdrawing them afterward. So the Binance dex is a direct complement to its centralized exchange and it gives customers more options.

Binace also claims that it offers speed.

“Binance Chain has near-instant transaction finality, with one-second block times. This is faster than other blockchains today,” said Binance CEO Changpeng “CZ” Zhao in a statement. “With the core Binance Chain technology, Binance DEX can handle the same trading volume as Binance.com is handling today. This solves the issues many other decentralized exchanges face with speed and power.”

The Binance decentralize exchange

Zhao has also touted the dex as a new revenue driver for the company since it sits on Binance’s own blockchain with the company operating a number of nodes itself. Zhao previously told TechCrunch that when its nodes are used in transactions, the company will gain some of the network fee. Not that Binance needs help making money; a recent report from The Block suggested it made a profit of $446 million in 2018, a year that was most definitely a downer for the crypto industry across the board.

We do have one concern about the Binance Dex, however, and that is that it includes an option to unlock a wallet using a private key.

Pasting a private key into a browser is a major no-no in crypto circles. Users are encouraged to avoid this option for unlocking a wallet since there are a plethora of alternative options that include Metamask — a popular browser extension with over a million users — hardware devices such as Ledger, Trezor or Yubikey and — more recently — authentication apps from the likes of MyEtherWallet or Parity Signer.

Of those secure options, the Binance Dex currently supports Ledger (the hardware and app), but the other options are KeyStore file upload or the less-secure private key or mnemonic phrase.

While you can argue that the onus is on the user when it comes to private keys, service providers do have a responsibility.

Many, including Zhao, commonly claim that crypto adoption is in its early days while terms like ‘education’ and ‘democratization’ are repeated often by many in the space. Removing the private key, and thus limiting potential phishing attacks, would seem to be a part of educating new users and helping make crypto safe for others who join.

It may seem far fetched, but the phishing threat is very real. Leading wallet MyCrypto.com said it had been hit by attacks regularly, including a hijack on its Amazon DNS servers, while MyEtherWallet was hit at least twice last year as attackers went after its DNS and phished other users by compromising a free VPN service.

As a result, MyCrypto dropped the private key option from its primary web-based service.

“We’re removing support for private keys on the web version of MyCrypto because it’s not safe — and we encourage others to follow suit,” the company wrote in a Medium post.

But others haven’t followed, perhaps aware that removing the private key entry mechanism would mean many that users opt for alternatives were unlocking their wallet is easier.

MyEtherWallet, which competes directly with MyCrypto, has a strong warning around its private key entry option while Binance, to its credit, is warning dex users that using a private key or mnemonic phrase to unlock their wallet means there’s “a much higher chance [of losing them] due to phishing websites or applications.”

There is a positive. Binance said it plans to add the option to unlock a wallet on the dex using Trust Wallet, the mobile app it acquired last year.

“We’re working toward decentralized accessibility to cryptocurrency. We want users to have full control over their private keys, and easy access to decentralized applications, to maximize the potential and mainstream adoption of cryptocurrency. Binance DEX is one step further to realizing our vision for greater freedom of money,” Viktor Radchenko, the founder of Trust Wallet, said in a statement.

That would certainly be a major step forward for tightening security. Still, it is somewhat disappointing that Binance hasn’t taken a stand here. It certainly has the clout to send a major message out to the industry and cut down on potential phishing attacks.

News Source = techcrunch.com

The plot to revive Mt. Gox and repay victims’ Bitcoin

in Apps/Banking/Bitcoin/blockchain/Brock Pierce/coinlab/cryptocurrency/cryptocurrency exchange/Delhi/Developer/Gox Rising/India/lawsuit/mt.gox/Payments/peter vessenes/Politics/Security/Startups/Sunlot/TC by

It was the Lehman Brothers of blockchain. 850,000 Bitcoin disappeared when cryptocurrency exchange Mt. Gox imploded in 2014 after a series of hacks. The incident cemented the industry’s reputation as frighteningly insecure. Now a controversial crypto celebrity named Brock Pierce is trying to get the Mt. Gox flameout’s 24,000 victims their money back and build a new company from the ashes.

Pierce spoke to TechCrunch for the first interview about Gox Rising — his plan to reboot the Mt. Gox brand and challenge Coinbase and Binance for the title of top cryptocurrency exchange. He claims there’s around $630 million and 150,000 Bitcoin waiting in the Mt. Gox bankruptcy trust, and Pierce wants to solve the legal and technical barriers to getting those assets distributed back to their rightful owners.

The consensus from several blockchain startup CEOs I spoke with was that the plot is “crazy”, but that it also has the potential to right one of the biggest wrongs marring the history of Bitcoin.

The Fall Of Mt. Gox

But the story starts with Magic: The Gathering. Mt. Gox launched in 2006 as a place for players of the fantasy card game to trade monsters and spells before cryptocurrency came of age. The Magic: The Gathering Online eXchange wasn’t designed to safeguard huge quantities of Bitcoin from legions of hackers, but founder Jed McCaleb pivoted the site in 2010. Seeking to focus on other projects, he gave 88 percent of the company to French software engineer Mark Karpeles, and kept 12 percent. By 2013, the Tokyo-based Mt. Gox had become the world’s leading cryptocurrency exchange, handling 70 percent of all Bitcoin trades. But security breaches, technology problems, and regulations were already plaguing the service.

Then everything fell apart. In February 2014, Mt. Gox halted withdrawls due to what it called a bug in Bitcoin, trapping assets in user accounts. Mt. Gox discovered that it had lost over 700,000 Bitcoins due to theft over the past few years. By the end of the month, it had suspended all trading and filed for bankruptcy protection, which would contribute to a 36 percent decline in Bitcoin’s price. It admitted that 100,000 of its own Bitcoin atop 750,000 owned by customers had been stolen.

Mt. Gox is now undergoing bankruptcy rehabilitation in Japan overseen by court-appointed trustee and veteran bankruptcy lawyer Nobuaki Kobayashi to establish a process for compensating the 24,000 victims who filed claims. There’s now 137,892 Bitcoin, 162,106 Bitcoin Cash, and some other forked coins in Mt. Gox’s holdings, along with $630 million from the sale of 25 percent of the Bitcoin Kobayashi handled at a precient price point above where it is today. But five years later, creditors still haven’t been paid back. 

A Rescue Attempt

Brock Pierce, the eccentric crypto celebrity

Pierce had actually tried to acquire Mt. Gox in 2013. The child actor known from The Mighty Ducks had gone on to work with a talent management company called Digital Entertainment Network. But accusations of sex crime led Pierce and some team members to flee the US to Spain until they were extradited back. Pierce wasn’t charged and paid roughly $21,000 to settle civil suits, but his cohorts were convicted of child molestation and child pornography.

The situation still haunts Pierce’s reputation and makes some in the industry apprehensive to be associated with him. But he managed to break into the virtual currency business, setting up World Of Warcraft gold mining farms in China. He claims to have eventually run the world’s largest exchanges for WOW Gold and Second Life Linden Dollars.

Soon Pierce was becoming a central figure in the blockchain scene. He co-founded Blockchain Capital, and eventually the EOS Alliance as well as a “crypto utopia” in Puerto Rico called Sol. His eccentric, Burning Man-influenced fashion made him easy to spot at the industry’s many conferences.

As Bitcoin and Mt. Gox rose in late 2012, Pierce tried to buy it, but “my biggest investor was Goldman Sachs. Goldman was not a fan of me buying the biggest Bitcoin exchange” due to the regulatory issues, Pierce tells me. But he also suspected the exchange was built on a shaky technical foundation that led him to stop pursuing the deal. “I thought there was a big risk factor in the Mt. Gox back-end. That was may intuition and I’m glad I was because my intuition was dead right.”

After Mt. Gox imploded, Pierce claims his investment group Sunlot Holdings successfully bought founder McCaleb’s 12 percent stake for 1 Bitcoin, though McCaleb says he didn’t receive the Bitcoin and it’s not clear if the deal went through. Pierce also claims he had a binding deal with Karpeles to buy the other 88 percent of Mt. Gox, but that Karpeles tried to pull out of the deal that remains in legal limbo.

The Supposed Villain

The Sunlot has since been trying to handle the bankruptcy proceedings, but that arrangement was derailed by a lawsuit from CoinLab. That company had partnered with Mt. Gox to run its North American operations but claimed it never received the necessary assets, and sued Mt. Gox for $75 million, though Mt. Gox countersued saying CoinLab wasn’t legally certified to run the exchange in the US and that it hadn’t returned $5.3 million in customer deposits. For a detailed account the tangle of lawsuits, check out Reuters’ deep-dive into the Mt. Gox fiasco.

CoinLab co-founder Peter Vessenes

This week, CoinLab co-founder Peter Vessenes increased the claim and is now seeking $16 billion. Pierce alleges “this is a frivolous lawsuit. He’s claiming if [the partnership with Mt. Gox] hadn’t been cancelled, CoinLab would have been Coinbase and is suing for all the value. He believes Coinbase is worth $16 billion so he should be paid $16 billion. He embezzled money from Mt. Gox, he committed a crime, and he’s trying to extort the creditors. He’s holding up the entire process hoping he’ll get a payday.” Later, Pierce reiterated that “Coinlab is the villain trying to take all the money and see creditors get nothing.” Industry sources I spoke to agreed with that characterization

Mt. Gox customers worried that they might only receive the cash equivalent of their Bitcoin according to the currency’s $486 value when Gox closed in 2014. That’s despite the rise in Bitcoin’s value rising to around 7X that today, and as high as 40X at the currency’s peak. Luckily, in June 2018 a Japanese District Court halted bankruptcy proceedings and sent Mt. Gox into civil rehabilitation which means the company’s assets would be distributed to its creditors (the users) instead of liquidated. It also declared that users would be paid back their lost Bitcoin rather than the old cash value.

The Plan For Gox Rising

Now Pierce and Sunlot are attempting another rescue of Mt. Gox’s  $1.2 billion assets. He wants to track down the remaining cryptocurrency that’s missing, have it all fairly valued, and then distribute the maximum amount to the robbed users with Mt. Gox equity shareholders including himself receiving nothing.

That’s a much better deal for creditors than if Mt. Gox paid out the undervalued sum, and then shareholders like Pierce got to keep the remaining Bitcoins or proceeds of their sale at today’s true value. “I‘ve been very blessed in my life. I did commit to giving my first billion away” Pierce notes, joking that this plan could account for the first $700 million he plans to ‘donate’.

“Like Game Of Thrones, the last season of Mt. Gox hasn’t been written” Pierce tells me, speaking in terms HBO’s Silicon Valley would be quick to parody. “What kind of ending do we want to make for it? I’m a Joseph Campbell fan so I’m obviously going to go with a hero’s journey, with a rise and a fall, and then a rise from the ashes like a phoenix.”

But to make this happen, Sunlot needs at least half of those Mt. Gox users seeking compensation, or roughly 12,000 that represent the majority of assets, to sign up to join a creditors committee. That’s where GoxRising.com comes in. The plan is to have users join the committee there so they can present a united voice to Kobayashi about how they want Mt. Gox’s assets distributed. “I think that would allow the process to move faster than it would otherise. Things are on track to be resolved in the next three to five years. If [a majority of creditors sign on] this could be resolved in maybe 1 year.

Beyond providing whatever the Mt. Gox estate pays out, Pierce wants to create a Gox Coin that gives original Mt Gox creditors a stake in the new company. He plans to have all of Mt. Gox’s equity wiped out, including his own. Then he’ll arrange to finance and tokenize an independent foundation governed by the creditors that will seek to recover additional lost Mt. Gox assets and then distribute them pro rata to the Gox Coin holders. There are plenty of unanswered questions about the regulatory status of a Gox Coin and what holders would be entitled to, Pierce admits.

Meanwhile, Pierce is bidding to buy the intangibles of Mt. Gox, aka the brand and domain. He wants to then relaunch it as a Gox or Mt. Gox exchange that doesn’t provide custody itself for higher security.

“We want to offer [creditors] more than the bankruptcy trustee can do on its own” Pierce tells me. He concedes that the venture isn’t purely altruistic. “If the exchange is very successful I stand to benefit sometime down the road.” Still, he stands by his plan, even if the revived Mt. Gox never rises to legitimately challenge Binance, Coinbase, and other leading exchanges. Pierce concludes, “Whether we’re successful or not, I want to see the creditors made whole.” Those creditors will have to decide for themselves who to trust.

News Source = techcrunch.com

The next integration evolution — blockchain

in blockchain/Column/Delhi/file-sharing/India/linux/microservices/Politics/SOA/system integration/TC/web services/xml by
Here is one way to look at distributed ledger technologies (DLT) and blockchain in the context of integration evolution. Over the years, businesses and their systems are getting more integrated, forming industry-specific trustless networks, and blockchain technology is in the foundation of this evolutionary step.

Enterprise integration

Large organizations have a large number of applications running in separate silos that need to share data and functionality in order to operate in a unified and consistent way. The process of linking such applications within a single organization, to enable sharing of data and business processes, is called enterprise application integration (EAI).

Similarly, organizations also need to share data and functionality in a controlled way among themselves. They need to integrate and automate the key business processes that extend outside the walls of the organizations. The latter is an extension of EAI and achieved by exchanging structured messages using agreed upon message standards referred to as business-to-business (B2B) integration.

Fundamentally, both terms refer to the process of integrating data and functionality that spans across multiple systems and sometimes parties. The systems and business processes in these organizations are evolving, and so is the technology enabling B2B unification.

Evolution of integration

There isn’t a year when certain integration technologies became mainstream; they gradually evolved and built on top of each other. Rather than focusing on the specific technology and year, let’s try to observe the progression that happened over the decades and see why blockchain is the next technology iteration.

Evolution of integration technologies

Next we will explore briefly the main technological advances in each evolutionary step listed in the table above.

Data integration

This is one of the oldest mechanisms for information access across different systems with the following two primary examples:

  • Common database approach is used for system integration within organizations.
  • File sharing method is used for within and cross-organization data exchange. With universal protocols such as FTP, file sharing allows exchange of application data running across machines and operating systems.

But both approaches are non-real-time, batch-based integrations with limitations around scalability and reliability.

Functionality integration

While data integration provided non-real-time data exchange, the methods described here allow real-time data and importantly functionality exchange:

  • Remote procedure call provides significant improvements over low-level socket-based integration by hiding networking and data marshaling complexity. But it is an early generation, language-dependent, point-to-point, client-server architecture.
  • Object request broker architecture (with CORBA, DCOM, RMI implementations) introduces the broker component, which allows multiple applications in different languages to reuse the same infrastructure and talk to each other in a peer-to-peer fashion. In addition, the CORBA model has the notion of naming, security, concurrency, transactionality, registry and language-independent interface definition.
  • Messaging introduces temporal decoupling between applications and ensures guaranteed asynchronous message delivery.

So far we have seen many technology improvements, but they are primarily focused on system integration rather than application integration aspects. From batch to real-time data exchange, from point-to-point to peer-to-peer, from synchronous to asynchronous, these methods do not care or control what is the type of data they exchange, nor force or validate it. Still, this early generation integration infrastructure enabled B2B integrations by exchanging EDI-formatted data for example, but without any understanding of the data, nor the business process, it is part of.

With CORBA, we have early attempts of interface definitions, and services that are useful for application integration.

Service-oriented architecture

The main aspects of SOA that are relevant for our purpose are Web Services standards. XML providing language-independent format for exchange of data, SOAP providing common message format and WSDL providing an independent format for describing service interfaces, form the foundation of web services. These standards, combined with ESB and BPM implementations, made integrations focus on the business integration semantics, whereas the prior technologies were enabling system integration primarily.

Web services allowed systems not to exchange data blindly, but to have machine readable contracts and interface definitions. Such contracts would allow a system to understand and validate the data (up to a degree) before interacting with the other system.

I also include microservices architectural style here, as in its core, it builds and improves over SOA and ESBs. The primary evolution during this phase is around distributed system decomposition and transition from WS to REST-based interaction.

In summary, this is the phase where, on top of common protocols, distributed systems also got common standards and contracts definitions.

Blockchain-based integration

While exchanging data over common protocols and standards helps, the service contracts do not provide insight about the business processes hidden behind the contracts and running on remote systems. A request might be valid according to the contract, but invalid depending on the business processes’ current state. That is even more problematic when integration is not between two parties, as in the client-server model, but among multiple equally involved parties in a peer-to-peer model.

Sometimes multiple parties are part of the same business process, which is owned by no one party but all parties. A prerequisite for a proper functioning of such a multi-party interaction is transparency of the common business process and its current state. All that makes the blockchain technology very attractive for implementing distributed business processes among multiple parties.

This model extends the use of shared protocols and service contracts with shared business processes and contained state. With blockchain, all participating entities share the same business process in the form of smart contracts. But in order to validate the requests, process and come to the same conclusion, the business processes need also the same state, and that is achieved through the distributed ledger. Sharing all the past states of a smart contract is not a goal by itself, but a prerequisite of the shared business process runtime.

Looked at from this angle, blockchain can be viewed as the next step in the integration evolution. As we will see below, blockchain networks act as a kind of distributed ESB and BPM machinery that are not contained within a single business entity, but spanning multiple organizations.

Integration technology moving into the space between systems

First the protocols (such as FTP), then the API contracts (WSDL, SOAP) and now the business processes themselves (smart contracts) and their data are moving outside of the organizations, into the common shared space, and become part of the integration infrastructure. In some respect, this trend is analogous to how cross-cutting responsibilities of microservices are moving from within services into the supporting platforms.

With blockchain, common data models and now business processes are moving out of the organizations into the shared business networks. Something to note is that this move is not universally applicable and it is not likely to become a mainstream integration mechanism. Such a move is only possible when all participants in the network have the same understanding of data models and business processes; hence, it is applicable only in certain industries where the processes can be standardized, such as finance, supply chain, health care, etc.

Generations of integrations

Having done some chronological technology progression follow-up, let’s have a more broad look at the B2B integration evolution and its main stages.

First generation: system integration protocols

This is the generation of integration technology before CORBA and SOA, enabling mainly data exchange over common protocols but without an understanding of the data, contracts and business processes:

  • Integration model: client-server, where the server component is controlled by one party only; examples are databases, file servers, message brokers, etc.
  • Explicit, shared infrastructure: low-level system protocols and APIs such as FTP.
  • Implicit, not shared infrastructure: application contracts, data formats, business processes not part of the common integration infrastructure.

Second generation: application integration contracts

This generation of integration technology uses the system protocols from previous years and allows applications to share their APIs in the form of universal contracts. This is the next level of integration, where both applications understand the data, its structure, possible error conditions, but not the business process and current state behind it in the other systems:

  • Integration model: client-server model with APIs described by contracts.
  • Explicit, shared infrastructure: protocols, application contracts, and API definitions.
  • Implicit, not shared infrastructure: business processes and remote state are still private.

Third generation: distributed business processes

The blockchain-based generation, which still has to prove itself as a viable enterprise architecture, goes a step further. It uses peer-to-peer protocols, and shares business processes with state across multiple systems that are controlled by parties not trusting each other. While previous integration generations required shared understanding of protocol or APIs, this relies on common understanding of the full business process and its current state. Only then it makes sense and pays off to form a cross-organization distributed business process network:

  • Integration model: multi-party, peer-to-peer integration, by forming business networks with distributed business processes.
  • Explicit, shared infrastructure: business process and its required state.
  • Implicit, not shared infrastructure: other non-process related state.

There are many blockchain-based projects that are taking different approaches for solving the business integration challenges. In no particular, order here are some of the most popular and interesting permissioned open-source blockchain projects targeting the B2B integration space:

  • Hyperledger Fabric is one of the most popular and advanced blockchain frameworks, initially developed by IBM, and now part of Linux Foundation.
  • Hyperledger Sawtooth is another Linux Foundation distributed project developed initially by Intel. It is popular for its modularity and full component replaceability.
  • Quorum is an enterprise-focused distribution of Ethereum.
  • Corda is another project that builds on top of existing JVM-based middleware technologies and enables organizations to transact with contracts and exchange value.

There are already many business networks built with the above projects, enabling network member organizations to integrate and interact with each other using this new integration model.

In addition to these full-stack blockchain projects that provide network nodes, there also are hybrid approaches. For example, Unibright is a project that aims to connect internal business processes defined in familiar standards such as BPMN with existing blockchain networks by automatically generating smart contracts. The smart contracts can be generated for public or private blockchains, which can act as another integration pillar among organizations.

Recently, there are many blockchain experiments in many fields of life. While public blockchains generate all the hype by promising to change the world, private and permissioned blockchains are promising less, but are advancing steadily.

Conclusion

Enterprise integration has multiple nuances. Integration challenges within an organization, where all systems are controlled by one entity and participants have some degree of trust to each other, are mostly addressed by modern ESBs, BPMs and microservices architectures. But when it comes to multi-party B2B integration, there are additional challenges. These systems are controlled by multiple organizations, have no visibility of the business processes and do not trust each other. In these scenarios, we see organizations experimenting with a new breed of blockchain-based technology that relies not only on sharing of the protocols and contracts but sharing of the end-to-end business processes and state.

And this trend is aligned with the general direction integration has been evolving over the years: from sharing the very minimum protocols, to sharing and exposing more and more in the form of contracts, APIs and now business processes.

This shared integration infrastructure enables new transparent integration models where the previously private business processes are now jointly owned, agreed, built, maintained and standardized using the open-source collaboration model. This can motivate organizations to share business processes and form networks to benefit further from joint innovation, standardization and deeper integration in general.

News Source = techcrunch.com

Crypto mining giant Bitmain is reportedly getting a new CEO as its IPO plan stalls

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Bitmain, the Chinese crypto miner maker, looks like it has reached an interesting point in its pathway to going public. There’s been little heard since the company filed to go public in Hong Kong in September, but now it appears that a new CEO has been hired and its two founders are leaving.

That’s according to a report from SCMP which — citing two sources — said Wang Haichao, Bitmain’s director of product engineering, has assumed CEO duties following a transition that began in December. Founders Wu Jihan (pictured above) and Zhan Ketuan will be co-chairs with Wang described as the “potential successor.”

The publication said that it isn’t clear when a new CEO will be named, or indeed whether an outside appointment will be made.

Bitmain declined to comment on the report when asked by TechCrunch.

The company, which is said to have been valued as high as $15 billion, certainly appears to have stalled with its IPO following the filing of an application on September 26. That document opened up a treasure trove of financial information regarding the company, which is estimated to supply around three-quarters of the world’s crypto mining machines.

Indeed, Bitmain’s IPO filing showed heady growth in revenue. The company grossed more than $2.5 billion in revenue in 2017, a near-10X leap on the $278 million it claimed for 2016, while sales in the first six months of last year surpassed $2.8 billion.

However, there were no figures for Q3 2018 and, since September, the price of Bitcoin and other cryptocurrency has plummeted further still, therein reducing the appeal of buying a mining machine and likely impacting Bitmain’s sales.

Bitmain saw impressive revenue growth as the crypto market grew, but it isn’t clear how the business weathered the price slump that affected the market in 2017

We reported that the company likely made a loss of around $400 million in that Q3 quarter. Things are likely to have been trickier still in Q4, as crypto prices dropped so low that mining companies in China were reported to be selling off machines because the cost of power to mine was lower than the reward for doing so.

Bitmain has diversified into non-mining services, to its credit, but its efforts to grow Bitcoin Cash — a controversial fork of Bitcoin — have been controversial and likely loss-making, to boot.

The price of Bitcoin Cash is currently $162 at the timing of writing, that’s down significantly from around $2,500 one year ago. That doesn’t bode well for Bitmain’s investment into the cryptocurrency, and it likely explains why the company has made layoffs, like others in the crypto space.

What a difference four months can make. The challenge for the company’s (apparent) new CEO is certainly a daunting one.

But Bitmain’s struggle isn’t unprecedented. Just this week, its closest rival — Canaan — was linked with a U.S. IPO. The company had planned to go public in Hong Kong last year but it allowed its application to expire as crypto market prices went south.

There’s plenty to watch out for in the mining space in 2019!

Editorial note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

News Source = techcrunch.com

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