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Low Capitalization, Institutional Exposure Make Crypto Low Risk, Says Dutch Gov’t Report

A branch the Dutch government has recently released an economic risk report, claiming that cryptocurrencies present a low risk to financial stability in the country, according a report published on May 29. The report was prepared and published by the CPB Netherlands Bureau for Economic Policy Analysis (CPB).

The CPB states in the report that at the current time, cryptocurrencies pose a low risk to the financial system due to the low level of capitalization, as well as the limited involvement of traditional financial institutions and systems. The CPB separately noted the problems associated with crypto’s use in crime financing, fraud, high crypto market volatility, and the energy consumption of crypto mining.

The report predicts that crypto-related risks will increase with more interaction with government financial institutions. The agency also states that cryptocurrencies are not “money substitutes,” claiming that users generally prefer to hold their crypto instead of using it as an everyday payment method.

The report stressed the need for balanced financial regulation. The CPB compared the risks of a lack of financial regulation equally with strict regulations, claiming that overly harsh measures can increase the activity of “shadow banks.”

The CPB has been tasked with providing a financial risk report at the request of the Parliamentary Committee of Inquiry on Financial Assistance every year since 2012. Affirming the low negative impact of crypto on financial stability, the CPB claimed that the most important financial risks are currently low interest rates and the involved risks of reducing the sustainability of debts on a macroeconomic level.

Earlier this year, a Dutch court recognized Bitcoin (BTC) as a “transferable value,” declaring that the major cryptocurrency “shows characteristics of a property right.” In the case, the court ordered the defendant party to pay a debt in Bitcoin. By the court’s reasoning, since the obligation of the defendant was originally made in BTC, the amount should likewise be paid back.

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Startup To Solve Major Problems of Gig Economy By Building A Decentralized Network

In early 2018, a team of entrepreneurs in Singapore launched a startup called the Blue Whale Foundation, aiming to overcome the crucial problems of sharing economy, such as high commissions and no employment benefits for the self-employed. In the future, the Blue Whale platform could let any freelancer or small to medium enterprise (SME) scale their businesses and release their own token without giving up equity.

When an Uber-driver’s dream come true

In the early 2010s, the gig economy – also known as the sharing economy – boosted the rental markets, the short and long-distance rides markets, and the freelance markets. Behind this boom were platforms like Airbnb, Uber, Blah-blah-car, Freelancer.com, and numerous local copies of those platforms.

Since then, the euphoria has died down, and the army of self-employed workers and freelancers have had to come to terms with several crucial problems. These obstacles include high commissions at marketplaces, high marketing costs of using platforms such as Facebook and Google, and the total absence of employment benefits for those who are self-employed, such as paid leave or pension.

Blue Whale is based in Singapore with offices in San Francisco, Seoul and Zurich. It recently revealed its plans for building a decentralized ecosystem for the self-employed that will be able to solve their problems.

The project team is focused on creating a Decentralized Associated Network (DAN), a free marketing software enabling anyone to advertise for other services.

According to its white paper, Blue Whale is also working on developing a Reward Bank (ReBA) to allow freelancers and self-employed to get paid time off, health insurance and pensions. The ReBA will include a Blockchain based decentralized ledger that will ensure transparent distribution of BWX coins, reduce volatility and maintain growth.

Another feature that the startup team intends to unveil is the Contribution Activity Manager (CAM), which is a verification tool that allows users to get rewarded in BWX coins by passing a verification process. The transparent reward system will be maintained by smart contracts. CAM is intended to be used as an additional revenue source, where freelancers will be also rewarded for referrals and other actions.

For the love of the gig economy

Blue Whale Foundation representatives told Cointelegraph that the project is receiving strong support from the ICON team. The Blue Whale token sale is to become the first initial coin offering (ICO) on the ICON Blockchain.

“Blue Whale will be an ICON decentralized application but will also have its own protocol for the decentralized M&A part”, said company representatives. The Blue Whale team plans for the DAN protocol to be ready by the end of 2018, while the decentralized applications will be revealed in the beginning of 2019.

Freelancers at Blue Whale’s platform will be able to use the BWX tokens for not only payment, but also to expand their business, says the project’s blog at Medium. “Furthermore, through decentralized M&A, a new business will have the chance to start a decentralized ICO themselves so that they can proactively seize, and even create, opportunities within the economy.”

Big partnerships with traditional businesses are to be announced in the coming weeks, said the company to Cointelegraph. Other projects with existing decentralized applications can also join Blue Whale Network to allow their freelancers and users to receive the benefits of the new platform.

As the Blue Whale team reported on Twitter, the project recently recruited a new advisor – Mai Gang (Mark Mai), Co-Founder of OKCoin and founder of VenturesLab. According to the project’s Facebook page, there are also other advisors attached to the project: Injong-Rhee from Google EIR; Marco Torregrossa, President of Euro Freelancers; and Simon Yu, CEO of Stormx.

On April 2, the project started a pre-sale, along with the private sale – both finished on April 15. According to the project landing page, the team has already raised SGD $25 mln. The public crowdfunding campaign opens in May 2018.The project also actively develops its Telegram community.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Petro: Stable Coin for Crypto Economy or Illegal Oil Futures?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Starting in late 2017 Venezuela’s President Nikolas Maduro began expanding heavily into media space in an attempt to promote a new payment instrument– the government-issued cryptocurrency Petro.

On Feb. 20 the pre-sale of Petro was launched and has already raised $735 mln, according to Maduro’s Twitter. Total amount of PTR issued for sale is 100 mln and is worth $6 mln. The pre-sale will end on March 19.  

The following questions are raised by this controversial project: what is Petro in an economic context and what would be its possible real use in the global economy? Is it a cryptocurrency, a stable coin, oil futures, new government debt instrument or something else? What is its possible economic impact? Which legal issues could follow?

Having carefully studied the Petro white paper and other data available, we present below the results of the analysis.

Venezuela now

According to Maduro, Petro being backed by the Venezuelan crude oil is one of the best ways to use new technologies to restore the financial condition of Venezuela. For many years, the country has been suffering from hyperinflation by thousands of percent per year, while US sanctions cut off Venezuela from international capital markets.

A huge deficit of US dollar monetary supply has led to the absence of basic goods and a tenfold price discrepancy between official and black market currency exchanges for the Venezuelan bolivar and US dollar. That said, this financial catastrophe coincides with Venezuela’s status as possessing the largest volume of readily retrievable proved oil reserves as assessed by OPEC, being well ahead of well-known oil producers such as Saudi Arabia, Kuwait, and others.

But it seems even more alarming news are boiling up. The US administration was urged to impose a full embargo on Venezuelan oil in the near future. According to export statistics, US is the main market for Venezuelan oil and a primary source of ‘hard currency’- US dollars. The excluding of the market from the oil export structure could lead to an even more dramatic economic situation in the country.

The idea of issuing cryptocurrency by the government has been suggested before (Japan, UAE, Russia, and some others), but has so far fallen short of authorization by top officials and practical implementation.

Petro has received official recognition from the Venezuelan government. President Maduro has signed a white paper clearly specifying the conditions and dates of the tokensale. Its activity is aimed at both internal and external markets and carried out at ALBA (Bolivarian Alliance for the Peoples of Our America) and OPEC (Organization of the Petroleum Exporting Countries) levels as well.

El Petro white paper

The original white paper, published on the official website of Venezuela’s government describes the process of issuing Petro. The initial disbursement will be made on the Ethereum platform as a standard ERC20 token. It also states that the Petro price will be correlated with one barrel of Venezuelan crude oil.

The basic items of Petro are mentioned in the white paper as follows: (all the information in this table is the white paper summary and the details are stated as they are in the original document):


Petro: general information

Petro is not solely a token equal to the raw oil barrel price. They are looking at more broad functioning:

  • A transitory asset for exchange to goods and services, and also fiat money
  • A digital platform for emittance and trade of stable crypto assets backed up by raw minerals
  • A store of savings and an investment tool

Unfortunately, the Whitepaper is drafted in common language without any detail on an assumed technological base to launch a full-stack digital platform. Plans to develop such a platform are also absent.


Petro: initial emission and distribution information

100 mln coins will be emitted at launch. Their initial distribution is planned as follows:

  • 38.4% presale
  • 44% public sale
  • 17.6% will be stored in possession of Venezuela’s Superintendence of Cryptocurrencies and Related Activities (SUPCACVEN)

El Petro’s minimum unit is called the ‘mene’ and equals 10-8 Petro. ‘The total emission of El Petro is to be carried out at the initial coin offering,’ further down in the document we find that ‘an additional emission can be made as per the result of El Petro holders vote: 1 coin equals one vote.’


Petro: economic use cases

The project’s architecture is aimed at El Petro’s maximum involvement into settlements between economic agents. The main use cases are as follows:

  • As means of payment for Venezuelan oil via direct exchange of cryptocurrency to real oil dispatch
  • As a legal means of payment on the territory of Venezuela, which allows for tax payments, exactions, duties and official acceptance as the settlement by individuals and businesses. To intensify the use there is a special discount index (Dv)**:

Acceptance price of petro = PriceOil/Bolivar*(1-Dv)

**Dv will be at least 10%

Apparently, this means that paying taxes and any other settlements with state bodies would be at least 10 percent cheaper in El Petro at the current exchange rate than in traditional currency (i.e. in Bolivars).

In the future, the use of Petro is planned to be expanded into other payment markets promoting its use in the world as a stable currency backed up by a real resource.


Petro: legal aspects

As the document states, Petro will fully comply with Venezuela’s legislation. However, the opposition in the National Assembly publicly claimed that issuing Petro was illegal. Some operations with Petro, such as initial sales, subsequent exchange to oil and other assets at ‘authorized exchange sites’ will be carried out in strict compliance with KYC/AML, yet the standards for these are not stated in the document.


Overall the document goes well beyond the scope in which Petro was covered by the media in late December and early January. Earlier it was considered to be simply a cryptocurrency backed up by oil. However, over the course of deeper investigation into the white paper, one could see that it also announces future creation of a platform for e-commodities (digital representation of goods/raw materials), greatly expanding the concept.

At the same time, some parts of the Whitepaper lack fine details, and some statements are not backed by any sufficient explanation. Some items feature information that could seem contradictory. A more thorough white paper with extra technical details would probably spark much more interest and trust in global crypto community.

Economic aspects

Petro could be described as ‘a legal payment instrument’ or ‘a legal tender’ applicable by the government. The concept raises the question of determining the use of a single currency as a legal payment instrument for goods and services to businesses, individuals and the government. This leads to several basic assumptions:

  • Any individual or business must accept this medium of settlement as payment in a private or public transaction
  • All taxes, levies, duties and excise duties as well as other payments to state bodies can be made solely in this currency (currencies)

In the case of Petro, the government, businesses, and individuals can (but are not obliged) to accept it as the currency for all the payments and levies. Despite the fact that the whitepaper declares the maximum intensification of Petro use – up to the discount index, which actually makes it more beneficial for use on the market compared to the Bolivar – we still cannot confirm that Petro fully corresponds to the concept of a legal means of payment. It is a payment instrument that has the attributes of a legal means of payment but is not necessarily such.

In reality, the value of emitted currency is to be ‘secured’ by the liability of Venezuelan government on providing the goods, i.e. the oil, and by its acceptance as the payment to state bodies. In theory, Petro looks more like the currency of the gold-standard period that is technically implemented by virtue of Blockchain technology.

Petro concept

The concept of Petro seems to be both simple and complicated. Up until now, there has been no precedent of issuing cryptocurrencies with such broad functionality to the mass market by the government. Petro is the ‘intersection’ of several familiar concepts from the world of conventional finance.

In Venezuela, Petro stands close to the concept of a legal settlement medium, and in global trade, it is basically a conditionally-stable crypto asset (oil also has specific volatility) that is in fact an oil future without a specific delivery date. Petro could also be assessed as an instrument for tax and levies payment with discounts in a concrete jurisdiction (in the ICO world: a token discount on the unique goods or service of the project). From the investors perspective, at the time of running the crowd sale, the purchase of future oil delivery (the futures) is made with the nominal discount.

New monetary aggregate

That being said, Petro can be conventionally viewed as a new monetary aggregate in the structure of Venezuelan monetary mass. Unlike the Bolivar, it is expected to be easily converted into the US dollar as well as other currencies, which will help Venezuela in export trade.

Therefore, it all comes down to ‘a special monetary aggregate for international payments’. Since it is planned to issue 100 mln coins with each coin equal to one oil barrel (~$60), its total capitalization will amount to $6 bln.

This cost will be actually created during the initial offering with the Venezuelan government receiving several billion of real US dollars from investors. Taking into account the correlation with the oil price and based on the price range starting from 2008 ($30-$150 BBL), we could claim that this monetary aggregate will amount to somewhere between $3 bln and $15 bln. The white paper doesn’t have any grounding on why this specific amount of coins is issued. However, this amount should probably be calculated according to the country’s demand in US dollars and foreign trade transactions.

Payment in Petro

From now on by order of Nicolás Maduro the oil state corporation PDVSA is obliged to carry out transactions in Petro. Moreover, all public and private services like hotels or services of the Venezuelan consulates can now legally accept Petro as means of payment. At the same time, the circulation of digital currency has not even started yet, but Maduro is already preparing a full-fledged legislative and actual infrastructure for future acceptance of Petro.

Questions arise

Many questions arise upon scrutinizing the project, and finding answers to them might clear up the future of Petro. Here we’d like to list some major concerns:

  1. Is it a currency or an oil future? And to what extent is it legal? Taking into account Venezuela’s condition under economic sanctions, it’s highly unlikely that this monetary tool will be easily accepted by the global community. And if it is not, Petro investors and users could get into trouble with the law in jurisdictions outside Venezuela.
  2. Whats are the risks of money laundering through Petro? There’s a clear possibility that it could be purchased with the funds that were received illegally at crypto exchanges or privately, and then exchanged to oil that can be ‘laundered’ and documented to eventually be sold under above-board business practices in various jurisdictions.
  3. Taking into consideration the political and economic situation in Venezuela and the level of corruption, it’s very likely that KYC/AML could become a rather byzantine procedure. Another question is whether major crypto exchanges would agree to list a token that is contradictory in terms of legal compliance.
  4. The project is initially issued at a digital platform. However, there is zero information on the technical parameters of the future blockchain system.
  5. What is the discount index going to be like? The white paper states that ‘no less than 10 percent’ will be available. This could be a point of leverage for Petro’s popularity in the country.
  6. It should be noted that introduction of Petro could put Venezuelan national currency Bolivar into even more miserable condition.
  7. The issue of additional issuance is not fully transparent. If it is done with consideration to holders’ votes, then apparently the government will profit from accumulating >50 percent of the coins and sooner or later start disseminating whichever amounts it chooses. On the one hand, it is useful for Venezuela’s economy: it could actually put into full swing the printing of ‘hard currency,’ on the other hand, a trust issue could arise.

To be continued…

Petro has set a precedent of bringing a cryptocurrency to the market which was created by and government and secured by a physically tangible resource. This instrument features broad functionality that is close to regular money and conventional financial instruments.

However, at the moment the project raises a lot of concerning questions and provides few answers. It still looks more like a beautifully crafted concept than a real and viable financial instrument which could operate worldwide.

It should be noted that initially, the cryptocurrency world is in the state of postindustrial economy, i.e. an economy of communities which independently emit the values determining cost on their own. Therefore, any attempt to secure the cost by virtue of some kind of liabilities is pretty risky.  As history shows, the emitters of money like to renege on financial liabilities. Taken Venezuela’s negative reputation on world financial markets, one might think twice about the promise of Petro.

So the big question is still there: is Petro a stable coin for the world’s crypto economy or merely an illegally emitted oil future? It remains to be seen.

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Is Darknet Done With Bitcoin?

A new study by Recorded Future has found that Bitcoin is losing its position as the number one currency on the Darknet markets. The Internet tech company analyzed 150 of the most active message boards, marketplaces, and illicit service providers and noticed that the Darknet communities sentiments toward Bitcoin have taken a turn.

The Darknet economy

The Darknet is an Internet that uses non-standard communication protocols and ports to make it a bit more difficult for the digital identities of users to be revealed. The Darknet requires users to run a special software,  the most popular being TOR. to connect to the Internet. One of the main purposes of using the Darknet is to make the information provider and the person accessing the information difficult to trace. Because of this privacy feature, the Darknet has become famous for its Darknet markets like Silk Road that allowed users to effectively exchange anything,  legal or illegal over an Amazon-like marketplace. The anonymous Internet is said to attract criminals and those interested in black market activities as well.

A backlogged network

In mid-2016, Recorded Future noticed that the 150 entities they were analyzing were all expressing concerns regarding the functionality, usability and security of Bitcoin in the Darknet economy. Although it was a relatively mild increase compared to the increase in interest in Bitcoin in the latter half of 2017, the Bitcoin network was beginning to become overloaded with traffic which resulted in higher transaction fees for those using the Darknet markets. On Dec. 23, 2017 transaction fees were $52.18.

Recorded Future found that the average transaction size on the Darknet is $50-$300. If an individual tried to transact on Dec. 23, 2017 – it could have been the case that the transaction fee was more costly than the amount being transacted. One member of a Darknet message board posted this on the forum he uses:

“What’s happening at the moment is incomprehensible. Despite that I’ve used the recommended commission fees, my transactions have remained pending for the past three days, and my work has been paralyzed. Dear vendors, please implement alternative payment options; otherwise, I will miss out on this Christmas season.”

A Christmas miracle

The backlogged queue on the Bitcoin network was making it difficult for some individuals in the underworld to conduct their business. This users transaction was logged so far back in the queue that it took several days for it to become verified. To combat double-spending attacks, most vendors on the Darknet adopted a rule requiring three confirmations before treating transactions as complete. Because a transaction cannot be complete until the payment has been confirmed, this user was effectively frozen out of conducting his “business.”

Although he was worried he would “miss out on this Christmas season,” his Christmas miracle was about to occur. To combat, the exuberant transaction fees that were increasing daily, vendors began accepting alternative payment options. The study found that Litecoin was the second most popular currency with 30 percent of all vendors accepting LTC, and Dash the third most popular currency, with 20 percent of all vendors accepting DASH.

Other Darknet studies

Back in 2016, economist Tuur Demeester was in the process of researching the Darknet markets. Demeester turned to r/DarkNetMarkets to see if the community could provide him with the statistics he was looking for: what percentage of trades on the Darknet was conducted with BTC?  Was DarkCoin used and how often? How many Bitcoins were spent on the Darknet on a daily/monthly/yearly basis? But Demeester was not met with any useful answers from the community.

Darknet Markets research?

Prior to Demeester’s endeavor, The Digital Citizens Alliance released a table with statistics about the number of drug listings on the Darknet markets in August 2014, but this table provided no information regarded prices, trade volumes and preferred payment methods.

Furthermore, Nicolas Cristin, an associate research professor in the School of Computer Science and in Engineering and Public Policy at Carnegie Mellon University (CMU) together with Kyle Soska, a Ph.D. candidate in CMU’s school of electrical and computer engineering back in 2013, conducted a study from 2013-2015 to get a handle on the Darknet market economy.

When the Silk Road was shut down in October 2013, Cristin and Soska noticed that the take-down spawned the development of anonymous online marketplaces, which continue to evolve to this day. Cristin and Soska used long-term measurement analysis on 16 different marketplaces for over two years (2013– 2015) to calculate the growth of the online anonymous marketplace ecosystem. Their research documented the types of goods being sold, the effect – or lack – of adversarial events, such as law enforcement operations and large-scale frauds, on the overall size of the economy. The two also gained insights into how vendors are diversifying and replicating across marketplaces, and how vendor security practices (e.g., PGP adoption) are evolving.

Payment methods are evolving

Recorded Futures study concluded by stating that the efforts that vendors are taking to diversify acceptable payment methods on the Darknet markets will continue. Although payment methods like Litecoin and Dash are becoming more popular, Recorded Future still expects Bitcoin to have a place in the Darknet economy- just a much smaller market share than it currently has. Recorded future also warns that with increased popularity in digital currencies will come an increase in malicious tools like ransomware that will try to take advantage of the mainstream trends in cryptocurrency.

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EU Opens ‘World’s Most Comprehensive’ Blockchain Observatory And Forum

The European Commission announced in a press release today, Feb. 1, the launch of the EU Blockchain Observatory and Forum in a major step aimed at “uniting” the economy around Blockchain.

In the most hands-on step to leverage the promise of the technology to date for the EU, the project will bring together various sectors — including regulators and politicians — to develop new use cases.

European Commissioner for Digital Economy and Society Mariya Ivanova Gabriel was quoted in the official press release saying that the project would become “one of the world’s most comprehensive repositories of blockchain experience and expertise.”

“It will build an open forum for Blockchain technologists, innovators, citizens, industry stakeholders, public authorities, regulators and supervisors, to discuss and develop new ideas and directions,” she continued.

The 28-member bloc has actively sought to understand how it can involve itself in Blockchain and promote it to citizens for several years. Research published by the European Parliament in 2017 claimed that Blockchain would “change the lives” of EU residents, with efforts nonetheless focusing on areas such as data and identity over economic overhauls.

At the same time, the official treatment of cryptocurrency itself in the EU remains much more cautious — plans to end anonymous transactions on digital wallets and exchanges were approved in December last year.

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Around 4,000 Participants Attended North American Bitcoin Conference

North American Bitcoin Conference that took place in Miami last week gathered around 4,000 people including entrepreneurs, investors, lawyers and leaders who came together to speak to the crypto community.

Dr. Moe Levin    Dr. Moe Levin receiving the Greatest Showman on the Blockchain Award.

The conference has come a long way from the 100 attendee event in 2012. Its founder Dr. Moe Levin hosted this year’s event that informed crypto community of current developments, investment opportunities, and trends and provided a great atmosphere to network.

The conference hallThe conference hall

Inside of the James L. Knight Convention Center industry speakers such as Overstock CEO Patrick Bryne, the American Institute for Economic Research’s Jeffrey Tucker and BitInstant CEO Charlie Shrem addressed a packed audience. They spoke about Blockchain technology, digital assets and the economic history and future of Blockchain technologies such as Bitcoin.

Overstock CEO Patrick BryneOverstock CEO Patrick Bryne

Two weeks previous to the opening the conference has stopped accepting cryptocurrency payments for ticket purchases due to “network congestion.” However, the event made it clear that there are benefits to decentralizing some centralized systems.

But…we are in a bubble

Sean Walsh reminded in his “Breaking Down Bitcoin” presentation that the cryptocurrency market has unprecedented characteristics and that it does not get its fundamental value in a conventional way like the stock markets most investors are used to.

Many speakers acknowledged that we are in a bubble. Charlie Shrem said in his Fireside Chat that although it is possible to invest in several different Blockchain related companies, a number of these companies will fail. However, even if just two of the 100 companies you invest in succeed, it could be worth it. Shrem then reminded of the dot-com bubble, where tons of websites like Pets.com flopped. However, we also got websites like Amazon and Google that came out of the dot-com bubble and prospered.

Bruce Fenton, founder and CEO of Chainstone Labs gave participants a tool to analyze digital assets, evaluate and estimate its potential success. Fenton talked about a 100 point investment evaluation tool called Spacesuit X.

Bitcoin

Looking for fame and money

The exhibit hall was mostly comprised of companies looking to launch their projects in the upcoming months and companies displaying developing technologies in the Blockchain space such as AI, Bitcoin Automated Teller Machines (ATM) and virtual reality. A number of the companies exhibiting also spoke to the audience in the conference hall regarding the goals of their project in hopes to acquire funding from investors.

Andrew Archer’s Aitheon ProjectAndrew Archer’s Aitheon Project

Louis Kang from NoLedge Productions using a virtual reality set from VResLouis Kang from NoLedge Productions using a virtual reality set from VRes

Governance and regulation

With an increasing market capitalization in the cryptocurrency market, the number of crypto investors increases. A regulatory panel concluded that cryptocurrency regulation is on its way on both the criminal prosecution and on the consumer protection policy side of things.

Marco Santory, Emma Channing, Brian Klein ,Matthew Kohen, and Veronica McGregor.

Left to right: Marco Santory, Emma Channing, Brian Klein ,Matthew Kohen, and Veronica McGregor.

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How to Use Smart Contracts For Revenue Sharing, Explained

1. What is revenue sharing and how its business model work?

It’s pretty much like sharing your salary with your family at the end of the month.

Revenue sharing is a distribution of profit (and losses) amidst the stakeholders, business alliances or even the employees of an organization.

Although it was popularized in recent years on the internet as part of affiliate marketing and advertising programs, revenue sharing has been around for long. It is employed in just about every industry including government, technology, media, sports, energy, investments, entertainment, hospitality, etc.

With the concept of sharing economy tipped to be our future, revenue sharing is getting more exposure.

2. How one can actually apply it?

Options are immense.

In government, for instance, one of the applications of revenue sharing is seen in tax income sharing among different units of government. For example,  states or provinces sharing tax revenue with local governments or federal governments.

In entertainment, one of the applications of revenue sharing is seen in how music services, such as Spotify for instance, share the revenue they generate from their music streaming services with artists.

In sports, leagues governing bodies and the teams in the league share revenue generated from local and national television rights.

In investing, revenue sharing is employed to reward investors in the form of dividends or profit sharing.

3. Are there any challenges in this business model?

Transparency, security and speed.

It is difficult to list the current challenges of the revenue sharing business model, as each industry has its own, mainly because the underlying businesses are different in setup. For instance, music-streaming services that bundle songs into one offering encounter the issue of how to allocate the revenue to each song in the bundle. In sports, creative accounting can be used create an imbalance in revenue sharing due to too many parties involved in the validation process.  

However, looking through all the complaints regarding revenue sharing across industries, it’s easy to generalize the challenges they face under these themes: transparency, speed and security (i.e., assurance of payment).

Blockchain technology has an antidote to the challenges inherent in the revenue sharing business model: smart contracts.

4. How can smart contracts help?

Smart contracts assure accurate revenue sharing in real-time.

As a quick reminder, a smart contract is an agreement, powered by Blockchain technology, put out in the form of a computer program and executed once all pre-determined and programmed terms and conditions are satisfied. At its core, the smart contract protocol aims to make contracts more secure, disintermediated, executed in real time and more transparent, which are the exact challenges with the revenue sharing business model.

5. And what about transparency in revenue sharing?

Yep, this too.

Think about an investment opportunity where you invest, say, 10 BTC valued at about $140,000 for a 10 percent ownership in the venture. This opportunity also gives you the right to 10 percent of the revenue or $0.10 on the dollar. Before now, you invest your money and hope/trust that the business will honor the terms of the contract.

However, with a smart contract, you can be sure that you will get your correct share of the revenue. All that is needed is to insert these terms into a smart contract. As soon as the revenue flows in, the smart contract will be executed, immediately transferring 10 percent of the revenue to your wallet. Xwin, a Blockchain-powered sports betting startup, is one of the companies aiming to use smart contract to improve revenue sharing transparency.

6. Can smart contracts make revenue sharing secure?

Let’s see.

Since smart contracts are based on Blockchain technology, which is a public ledger that is maintained by multiple parties simultaneously, smart contracts cannot be altered. Therefore, as long as a smart contract is initiated, no single party can decide to alter it. A smart contract can only be discontinued or altered if all parties agree. Interestingly, this level of security is achieved without the need for an intermediary, which has its own cost.

7. And speed of execution, any improvements there?

Well, we’ve mentioned the real-time process.

But that’s not all. One other speed advantage is that with smart contract, you could have quicker access to yield’s from your investment, possibly on weekly or even monthly basis, as long as the smart contract contains such clause. It is costly for this level flexibility to exist with traditional revenue sharing model because it would require non-core administrative activities too often.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Crypto Mining Overloads Infrastructure In Small WA County

Cryptocurrency mining is putting an undue amount of pressure on the electrical infrastructure of Douglas County, a small territory in Washington state, CNBC reports.

Crypto miners are flocking to Washington to take advantage of the state’s cheaper electrical costs, creating a need for more data infrastructure to keep up with the higher energy demand. The price per kilowatt of electricity is around four cents in Washington state, as opposed to the average of seven cents in the rest of the US.

Port of Douglas County Economic Development Manager Ron Cridlebaugh responded to the problem by stating plans to add 100 megawatts of data center infrastructure to the county.

Cridlebaugh said in his CNBC interview:

“Our infrastructure is actually being put to the test. We’re full…It’s going to take some time to catch up because growth has been so quick.”

A December 2017 study by the electrical supply company Crescent Electric (CESCO), named Louisiana as the cheapest US state for cryptocurrency mining — a low 9.87 cents per watt makes the cost of mining one Bitcoin about $3,224. According to the same study, Washington is the third cheapest state for mining, with the cost of mining one Bitcoin averaging $3,309.

The mining of Bitcoin (BTC) and other digital currencies has sparked debate over its environmental impact, with critics complaining about the costs and possible effects of such a high-energy endeavor. Opponents maintain that crypto mining is actually the lesser of two evils, arguing that fiat money production consumes more energy in comparison.

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News Business Is Broken But Blockchain Can Save It

Changing the woeful business trajectory for news publishing through Blockchain auditing and growth building markets is the ambitious goal of PressCoin’s NEWS cryptocurrency. But is the news industry ready for crypto-disruption? Why haven’t digital news publishers been able to innovate past their ever shrinking advertising yields? And most importantly, what is the economic opportunity for investors?

We talked to PressCoin designer Amit Rathore and asked him how PressCoin’s crypto-economy intends to change the news game and create wealth.

The “new one percent”

PressCoin’s plan to remake the news, and with it democracy, begins with the goal of building services to provide the information needs of what Rathore calls the “new one percent.” He says:

“These are people who are seeking more than the endless argument that often passes for news these days. Professionals looking for actionable information, who need to know what is going on, consumers who want facts and opportunities for respectful, useful discussion of news events, and civil society members who seeking action and solutions.”

But while PressCoin’s initial plan involves building media platforms, it doesn’t intend to become a media company itself. PressCoin wants to support a decentralised, pluralist, free media –  not become the media. Rathore says:

“Our starting point will be a suite of new publishing platforms and e-commerce tools which will demonstrate how a better experience for news consumers can drive new revenue streams for publishers. These initial platforms will target specific areas of the public sphere – elections, investigative reporting, local and hyperlocal news and citizen journalism.”

Two platforms were recently released in alpha, Next Election and Insurge Intelligence.

“The news industry needs to start treating its readers and viewers as an integral and valuable part of the ecosystem rather than as bystanders or mere consumers. Or as a product to be sold to advertisers, as Facebook and Google do. And most importantly the news business needs to get back into the business of selling news.”

PressCoin Designer Amit Rathore

PressCoin Designer Amit Rathore   

Overcoming the challenge of the giants

So why does Rathore think that it’s possible to challenge the supremacy of the platform giants in the digital advertising space? He says:

“An overlooked story of 2017 was end of Yahoo as a news business. In June it sold its publishing business to Verizon for $4.5 billion. Back in 2000 this business was valued at $125 billion and looked invincible. By 2006 the company was struggling to make the right decisions. In its final decade things got really ugly. The lesson from Yahoo is that internet giants, no matter how big, remain vulnerable to innovation.”

PressCoin is betting that after being burnt thrice by the platforms, news publishers now have a high level of motivation to find new solutions to the decade long problem of declining revenues and influence.

“News content built Yahoo, and it has played a massive part in Facebook’s rise and in Google’s ongoing success. But right now all these relationships are failing for publishers. We are going to fix that.”

An industry addicted to internal competition

Ok then, how?

Rathore begins with the old saw about how legacy industries never build their replacements: “AirBnB wasn’t built by a hotel company, nor Uber by a taxi company,” he says, then shifts to address why this applies to news:

“This is a divided industry, it doesn’t know how to cooperate or build internal markets or transform itself. It needs both technology solutions, and an open bazaar model to help show the way.”

PressCoin’s initial approach will be to build reference implementations to demonstrate how publishers can go beyond publishing passive content and take reader engagement to a deeper, more purposeful level. New marketplaces for trading in content and traffic will enable publishers to cooperate and thrive.

“Right now news companies talk lots about how they are being disrupted by the internet giants. Yet they focus the bulk of their competitive energies on each other and have no cohesive collaboration strategy.”

PressCoin’s plan is to build a win-win solution for publishers using multiple Blockchains – to show how alternative approaches to growing  revenues can change the news business trajectory. Rathore says:

“Using Blockchain builds trust between players, and creates economic value. We intend to show how this change can be engineered.”

The PressCoin StackThe PressCoin Stack

The PressCoin operating system

This answers the strategy side of the how question, but what about the actual how?

Rathore now shifts focus to software engineering, the field he cut his entrepreneurial teeth in. And in particular, he focuses on the cloud based, smart, API driven, big data driven technologies he built at Quintype to accelerate innovation in the digital news market. Quintype’s suite of publisher and media cloud solutions enable publisher migration to a new omni-channel post-Facebook publishing world. This suite will provide the foundation for what Rathore calls the PressCoin OS, or the PressCoin Stack.

“Most news publishers continue to live in a world of HTML. But millennial news consumers aren’t even using Facebook, let alone the NY Times. To flourish in this rapidly evolving ecosystem publishers need a sophisticated new technology stack – one that looks a lot more like Facebook’s or Google’s than the CMS’s they presently use, and one which is data native. Our mission is to make this transition both simple and revenue positive.”

And along the way there will be change.

“Digital news also needs to learn from social media. Consumers expect to be able to interact with their news, to be able to amplify things they care about, correct mistakes, call out lies. The internet is now populated by an army of news consumers who are able to add value to publishing products – and who would like to be rewarded for their efforts – just look at Reddit and Steemit. PressCoin will make all this work for readers and publishers and everyone in the value chain.

“Most important of all, news content itself needs a market. News is supposed to travel fast and influence what happens in the real world. To restore this aspect of the news – we need to speed up the flow of content through the system and address the challenge of ensuring fair rewards are paid for quality work.  PressCoin will use Blockchain based crypto content markets to build a super efficient market in verified news content.

“Our objective will be to restore the most important function of news, reaching a large and influential readership capable of holding the powerful to account, on focused interconnected platforms that together address news and the public sphere.”

The opportunity

The PressCoin ICO is raising $100 mln and the initial offering runs until January 22. Check out the PressCoin ICO here. For more about the estimated $100 bln market opportunity see this article at CoinTelegraph.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.
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How Blockchain is Banking the Unbanked

It may be hard to believe, but two billion people in the world still do not have a bank account.  Most of them live in low and middle income emerging markets, but even in high-income countries, large numbers of people are unable to use banks to meet their day to day financial needs. This means they don’t have access to the convenience, to security and to interest that banks provide.

Moreover, many people have access to a bank account but do not have adequate access to the financial services that banks can provide. These people are known as the underbanked. Even in the United States, for example, 33.5 mln households were recognized in 2015 as unbanked or underbanked, over 25 percent of the population!  Without access to savings and credit, these people cannot participate in the virtuous cycle of economic growth, instead of remaining in a vicious cycle of poverty.

Clearly, the unbanked and underbanked together constitute a large market that is not well served by existing institutions. In the third world countries, large banks do not want to extend credit to the underbanked. Even when they do, they charge very high interest rates to offset the risk.  For a time, microfinance institutions provided a way for the underbanked to access much-needed credit, but in recent years, large banks have begun to participate in microfinance.  In the process, the interest charged on microfinance loans has increased significantly and become a major pain point for the unbanked.  

Blockchain to the rescue

Blockchain technology has the potential to help the unbanked and underbanked by allowing them to create their own financial alternatives in an efficient, transparent and scalable manner.  One of the biggest challenges banks face when trying to serve the unbanked is that many of them do not have clear identifying information, making it difficult to implement “Know Your Customer” practices.  

With Blockchain, individuals can receive a digital identity for use in their banking.  Property rights, long a pain point for many low-income individuals, can also be moved onto the Blockchain, allowing them to enter formal information networks and even leverage their property as collateral. And by making remittances painless and efficient, Blockchain could allow low-income individuals in different countries to save and lend together.

The countdown has started

The countdown to a future without unbanked people has already started. As examples let’s take a few Ethereum based Blockchain projects that have made serving the unbanked and underbanked their main focus.

OmiseGo technology enables peer-to-peer value exchange and payments using a digital wallet platform.  They aim to encourage financial inclusion in emerging markets by creating a platform that other companies beyond Omise can use. Their network claims to decentralize market liquidity and high-scalability payments and to help resolve payments across emerging eWallet payment networks. This could become significant because if successful, it would enable the unbanked to have control over their financial lives and access financial services previously unavailable.

WeTrust: their Trusted Lending Circle product (now in beta version) would allow users to create Rotating Savings and Credit Associations on the Blockchain. Benefiting from the finality and transparency provided by Blockchain, this instrument could be seen as a stepping stone for individuals to build a Blockchain powered credit score.

Humaniq combines Blockchain and biometrics to create apps that would allow transactions and investment in the third world. Users of the platform could earn tokens at home, using bio-identification procedures, and exchange those tokens for local currencies in an app. Basically, those without any formal identification could have an opportunity to create a digital bio-identification straight from their smartphones.

Towards a more financially inclusive future

Even simple things like building savings or receiving a loan can be difficult for those who can’t access the security and convenience of a bank account. These unbanked individuals constitute a large market ready to adopt disruptive financial solutions outside of the traditional banking system. Blockchain provides a secure, scalable way to serve the needs of these individuals, and a number of technology companies are leveraging it to usher in a world in which everyone has access to the savings and credit that is an essential building block for economic growth.