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Ethereum (ETH), EOS, and Tron (TRX) Users Will Be Able to Interact With Each Other Thanks to Loom Network

Deciding which blockchain will be most suitable for a Dapp
is the most critical choices of any developer; however, the Loom Network team
seems to have achieved the dream of interoperability that kept many developers
and enthusiasts fantasizing on social networks (and working hard to make it

In an announcement published on its official blog, the Loom Network team explains that thanks to the development of PlasmaChain, dAPPS running on Tron and EOS will be able to communicate smoothly with each other, and interact with Ethereum (the blockchain on which PlasmaChain runs).

Over the coming weeks, Loom Network will be releasing integrations for Tron and EOS into PlasmaChain – effectively allowing DApp developers to offer their DApps to users on all three chains simultaneously.

Loom’s team says they took a blockchain-agnostic approach, to develop a product that would be useful for as many users as possible, but they are aware that such a decision “is bound to ruffle a few feathers.”

Loom Network developed PlasmaChain as a “universal layer 2” that will make it possible to share data among TRX, EOS and ETH users. Image Courtesy: Loom

Although Ethereum is the second most important blockchain in the ecosystem, the growth of other DApp-oriented blockchains is undeniable. Coming up with a solution that allows developers to expose their product to users of “rival” blockchains without having to do any kind of reprogramming is a wise decision, both economically and technologically .

Bottom line is, DApp developers want the maximum number of users possible using their DApps and spending money on their services- and they’re going to gravitate toward whichever platform offers that.

The Loom Network team explains that PlasmaChain
generates a kind of common ground in which, from a user’s perspective, it is
irrelevant to decide which blockchain to use, since anybody can access the DApp
and pay with any token (ETH, EOS, TRX, or any ERC20 token). According to the
developers, PlasmaChain is a kind of “universal layer 2”.

In other words, Ethereum, EOS, and Tron users will be able
to interact as seamlessly with PlasmaChain DApps as if they were native
DApps on each of those platforms.

Loom network allows users to “make a purchase transaction on Layer 1 Ethereum, and receive the purchased game item (or other digital asset) on Layer 2. This operation takes less than 3 seconds and does not have additional costs associated.

The Loom team has not announced an official release date,
however, according to their statements, PlasmaChain should already be in a phase
of final development.

The post Ethereum (ETH), EOS, and Tron (TRX) Users Will Be Able to Interact With Each Other Thanks to Loom Network appeared first on Ethereum World News.

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Wanchain's Bridge to the Ethereum Blockchain Is Now Open

Amber Baldet, former JPMorgan blockchain program lead (and current CEO of Clovyr), has expressed her doubts about the proliferation of blockchain protocols: “Each of these blockchains speaks a different language,” she said in April.

Getting different blockchains to talk to one another has become a pressing issue, as more and more protocols pop up – eos, tezos, neo, cardano, not to mention the two incumbent giants, bitcoin and ethereum.

The growing interoperability problem may be meeting its match, however.

On Monday, the Beijing- and Austin-based startup Wanchain announced the live release of its protocol’s version 2.0, which allows for decentralized transactions between its blockchain and ethereum using a form of atomic swap.

With this announcement, wanchain has become one of the first protocols to demonstrate the viability of cross-chain transactions. The project has made linking blockchains its core focus, with the aim of enabling use cases like multi-asset ICOs and better decentralized exchanges – the latter of which has been the goal of a growing number of startups.

Wanchain raised 121,500 ether – worth around $37 million at the time – during its ERC-20 token sale in 2017. In January, it executed a token migration from ethereum to its own blockchain.

For now, Wanchain’s solution only allows ether (the native currency of the ethereum network) to be transferred to wanchain and back, but in time, the statement continued, wanchain will “allow for seamless integration with almost any blockchain in existence.”

“This is a very exciting time for Wanchain in our vision to reshape the world of digital assets and finance,” the company’s founder and CEO Jack Lu said in a statement.

How it works

Teaching blockchain protocols to speak each others’ languages is a daunting technical challenge, Lu contends, because “different blockchains have different consensus algorithms.”

That’s only the first challenge, however. Bitcoin represented such a milestone because it was the first decentralized solution to solve the “double-spend” problem: in a nutshell, since data is infinitely replicable, what’s to stop someone from spending the bitcoin in their account, then spending it again?

Lu told CoinDesk:

“On a single chain, it’s already very challenging to solve the problem of double-spending. And if you’re trying to solve the problem of double-spending cross-chain, it’s even harder.”

In Wanchain’s solution, a group of specialized nodes called “storemen” use a technique called secure multiparty computation to lock a certain amount of ether on the ethereum blockchain – preventing it from being spent, but without destroying it (by sending it to an address without a known private key, for example).

That ether then becomes available on wanchain as the “mapping token,” WETH. If the user wants to transfer the value back to ethereum, the WETH is burned, and the original ether is unlocked using a threshold scheme, in which a certain number of the storemen nodes must provide fragments of a secret key.

That way, no single node can double-spend the ether while the corresponding WETH still exists.

Wanchain is not alone in this market, though. Nuco’s aion project started its work with ethereum as well, releasing a “testnet” version of its ether token bridge in June, plus a handful of other projects and startups have been working on creating links between disparate blockchains – for instance, dogecoin and ethereum.

Yet there seems to be interest around collaborative efforts as they relate to this particular use case. Wanchain and Aion, for instance, joined Icon, another project aimed at cross-chain communication, to form the Blockchain Interoperability Alliance in November, in an effort to prevent a confusing array of competing standards.

Public, private and fiat

Yet, wanchain’s mission doesn’t stop just at interoperability.

The project also aspires to be a blockchain for initial coin offerings (ICOs) as well.

With the release of wanchain 2.0, it is now possible to conduct an ICO on Wanchain that accepts both its WAN tokens and ether.

Soon the list of compatible assets will expand to encompass some ERC-20 tokens. Bitcoin compatibility is slated for the end of this year. Each token it can accept in a crowdsale natively improves the use case for a potential buyer, who doesn’t have to bother with exchanging what they have.

In fact, Wanchain is incubating six ICO projects now.

Besides fundraising, the company has described potential use cases including decentralized exchanges, the seamless transfer of medical records, and credit and lending services.

Eventually, Lu told CoinDesk in a recent interview, “we want to connect with not only the public chains, but also private chains, as well as fiat currency.”

Since Wanchain’s cross-chain communication is a “generic solution,” he said, it would be able to link to central bank-issued crypto assets the same as any other blockchain. He is “confident” that blockchain-based fiat currencies will appear in the near future, adding:

“And then the fiat currency can flow into the crypto economy.”

Image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ripple’s David Schwartz Talks About the Future of Cryptocurrencies

Adoption is more important than the price of a token. This is the way of thinking of David Schwartz, Ripple’s Head of Cryptography, who discussed his vision of the world and the future of cryptocurrencies.

In an interview with CNN’s Ivana Kottasova at MoneyConf 2018, David Schwartz was emphatic in pointing out that the future of cryptocurrencies depends more on interoperability than on other more popular factors such as the market cap.

Viacoin Developers Successfully Completed Atomic Swap With LitecoinRelated Story: Viacoin Developers Successfully Completed Atomic Swap With Litecoin

Interoperability is the ability to interact with two or more systems using different languages. A typical example is Atomic Swaps.

He talked about this as the Internet of Value, where people handle money just as easy as information is right now. Another factor that Schwartz sees as crucial for global adoption is the ease of its use in real life scenarios. For the cryptographer, the price and volatility of the markets are nothing but a distraction:

“The whole cryptocurrency market, as you know, has dropped significantly. Think that kind of shows that the marketplace doesn’t yet distinguish between the use cases that cryptocurrencies are aimed at.

I think for people who are building technology it’s kind of a distraction; like, we care about is adoption, newer technologies, are we solving real problems for real people?

I do understand how the prices can be a distraction … but I really think people should focus on the fundamentals and look at what is the new technology … and I think the market will eventually reflect the underlying utility”.

The Future of Cryptocurrencies Relies on Interoperation Rather than Competition

Mr. Schwartz believes that the secret to making the future of cryptocurrencies as promising as many people think it will be, is for each blockchain to find its market and its own type of customers. For Mr. Schwartz, there is no need for competition between the different blockchains:

“I think what we are starting to see now is stratification around use case… as Bitcoin has aimed to be store of value, XRP is positioning as a sort of intermediary settlement asset; so I think if all of these can go after their use cases and they can interoperate seamlessly when you need to pay accross them; I Think that’s the best way to accomplish what we want to accomplish”

David Schwartz at the TNW Conference on the 24th of May

Schwartz commented that the use of blockchain could greatly facilitate international transactions. In fact, due to its speed, Ripple is more stable in the minutes it takes to settle a trade than some FIAT currencies in the days it takes to settle an international transaction.

Similarly, David Schwartz sees the problem of avoiding the massive use of cryptos as a kind of ‘chicken-and-egg situation.’ Nobody wants to use cryptocurrencies because there are no compatible systems built right now and nobody wants to build compatible systems because nobody wants to use cryptocurrencies.

Ripple is playing a significant role in the adoption of blockchain at the corporate level, exponentially increasing the efficiency in settlement of banking operations, specially when compared to traditional systems such as SWIFT.

Full Video is available here:

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Why Ripple (XRP) Should Still Be In Your Crypto Portfolio

Times have been hard for any Ripple (XRP) HODLer who has seen the coin zoom past the competition and peak at $3.82 on January 4th, only to drop to $0.62 less than a month later on February 6th. This is a big drop in value (84%) for XRP in such a short time period. Some traders cashed out and headed for the hills; but there are the few who are still HODLing in anticipation of the $10 value predicted by SBI Holdings CEO and President,  Yashitaka Kitao.

So why should you still have XRP in your portfolio?

To begin with, the xRapid tests proved that it can save money remittance service providers anywhere from 40% to 70% in terms of transaction costs away from the traditional foreign exchange middle men. Also, the transactions that took 2 days was reduced to 2 – 3 minutes via xRapid.

Ethereum World News would then explore how xRapid works and found out that the service will be using the XRP in circulation. This means as the remittance service providers of Moneygram and Western Union start using the service, then it is a Moon Shot for the coin. The XRP for the transactions, will be sourced directly from the markets.

A second reason why you should still have XRP in your portfolio is the continual listing of the coin in exchanges and Mobile Wallet apps. XRP has just been listed on the Revolut App that is based in the UK. Also to add, is the listing on the LMAX Exchange also from the U.K, that has a target customer base of institutional investors. Another exchange worthy of mentioning, is the highly anticipated SBI Virtual Currencies exchange that has been scheduled for release this Summer.

Yashitaka Kitao, the CEO of SBI Holdings, has promised that this exchange shall be number one.

The third, and not the last reason why you should still HODL XRP, is the vision of interoperability held by not only David Schwartz who is a key cryptographer at Ripple, but by the entire project. Ripple was envisioned itself as being the one stop solution for cross-cryptocurrency payments.

Mr. Schwartz had this to say about interoperability at the recently concluded TNW Conference in Amsterdam:

From the earliest days our vision was to create a cross currency system built on interoperability. There should be a system where paying in any currency is possible.

So there you have it ladies and gentlemen. These are a few – but not all – the reasons why you should still have XRP in your portfolio. What is a high possibility, is that XRP will be the choice in the future for all remittance services around the globe.

To The Moon!

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Axoni, Clearmatics Claim Milestone for Blockchain Interoperability

Two of the most prominent startups in enterprise blockchain are teaming up to tackle the hard, but now seemingly inescapable problem of interoperability.

At Consensus 2018 this week, Clearmatics and Axoni demonstrated how a financial derivative can be issued via a smart contract, trigger a payment and then instigate a cross-chain atomic transfer of value between two distinct networks. This marked the first time a derivatives contract has been originated on one enterprise blockchain and settled on another.

The milestone is important because interoperability is now emerging as a key design goal of distributed ledger technology (DLT).

While the financial world may be moving from a state of many ledgers to fewer ones, blockchain architects have come to realize that trades, deals and transactions will probably never be originated, processed and settled by a single, monolithic system.

Robert Sams, the CEO of Clearmatics, told CoinDesk:

“Facilitating end-to-end processing from point of trade to settlement, we need to make the assumption that that process is going travel through multiple systems, rather than a single monolithic settlement system, distributed or otherwise.”

The collaboration is significant also because of the clout of the players involved.

Axoni, based in New York, is working with a wide range of leading financial institutions and infrastructure providers to move trillions of notional value in U.S. dollars onto blockchain tech across a variety of asset classes.

Meanwhile, its partner in the demo, Clearmatics of London, is working with a consortium of banks and financial institutions to create digital fiat that is fully collateralized by cash at the corresponding central bank and transferable on a distributed ledger.

Axoni has also been doing a lot of work in the derivatives space and other areas of post-trade processes, while Clearmatics is focused on the settlement side of things, so the pairing was an obvious fit (both are building technology based on ethereum-derived architecture).

“If we can collaborate appropriately and facilitate linkage between those networks, what you end up with is a highly automated, highly transparent process all the way from trade agreement through to settlement finality,” said Greg Schvey, the CEO of Axoni.

Lessons from crypto

Stepping back, it’s fair to say blockchain interoperability is at the R&D stage.

To make sense of the problem involves a lot of requirements based on use cases and the domain applications, which all have to be considered together. Sams emphasized that the interoperability demo was just a proof of concept – but an important one, because it drives the spirit of open source collaboration.

“Interoperability needs to be tackled in a open and collaborative fashion and built around open standards and open source implementations,” he said, adding:

“There will probably be multiple types of interoperability solutions – not many, but more than one.”

The same spirit extends to the public blockchain community, where a lot of cutting-edge work is being done on the very technical aspects of the topic.

“There’s a lot of overlap between cross-chain atomic swaps in the cryptocurrency space and the stuff that we are doing,” said Sams. “Even though the domain application is entirely different, the underlying technological primitives are very similar.”

The contract in question was modeled using Axoni’s domain-specific language, AxLang, and then settlement finality of the resulting cash payments was achieved across different permissioned, ethereum-compatible ledgers.

Clearmatics’ contribution to the demo was Ion, an open source interoperability protocol, designed to perform atomic cross-chain transactions.

Lingua franca

The AxLang smart programing language used here was developed by Axoni to make working with smart contracts in an enterprise setting a sure thing, so to speak.

Axlang is based on Scala and enables formal verification of smart contracts, a rigorous mathematical method used to prove the correctness of computer programs. It can also compile to both the Java and the ethereum virtual machines.

However, developers are often asked, why another programing language?

Schvey said that doing lots of work with large-scale application design on blockchains revealed certain requirements not being met by Solidity, the first step into programming smart contracts among the ethereum community.

In particular, Solidity lacks formal verification, which is the ability to have mathematical proofs that the code written has compiled properly, Schvey said.

“Being able to check for certain error vectors is a very powerful concept, especially if you are deploying a large scale multi-party infrastructure with a lot of value going through it,” he said.

Indeed, the proof of concept marries two hard technical challenges: interoperability and formal verification. And there’s an important connection between the two, Sams pointed out.

“Imagine an end state of distributed market infrastructure where you have an end-to-end process flow, occurring through multiple systems,” he said.

“It’s obviously going to be very important that at the semantic layer, a system taking over a process from another system, and vice versa, understands and can demonstrate exactly what the business logic is that they are consuming or producing for another system to consume.”

Two roads image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Aion Is Launching a 'Token Bridge' to Connect Blockchains

Aion’s token may have grown up on the ethereum blockchain, but it’s moving out.

The Aion network has been built to foster interoperability across blockchains. One of the key tools to this functionality is the network’s “token bridge,” which is designed to allow tokens to move between chains.

The first token bridge will work between the Aion network and ethereum, on which its token currently operates.

Rather than using a smart contract to hold copies of tokens, as pairs of networks like Kik’s new chain and ethereum will do, Nuco has proposed actually destroying tokens as they move – put simply, so there really is only one token at a time.

According to Matt Spoke, CEO of Nuco – the company founded by Deloitte alums that’s behind Aion – the bridge then “issues an AION [token] on the other side.”

It’s a micro-network, it’s a collection of nodes that’s decentralized, there’s multiple participants, and those other nodes on the network are acting honestly, but that bridge is responsible for agreeing they witnessed the event,” Spoke went on to say. “That’s the function that we built in.”

Ethereum will come first, according to Spoke, but the plan is to extend it across all blockchains.

“The design of the bridge is going to get more and more generic over time. We want that to communicate with any other blockchain,” he told CoinDesk.

The token bridge is Aion’s next step on its roadmap, following the launch of its mainnet at the end of April.

“Even in the enterprise context, interoperability, every one of their RFPs [request for proposals] has an interoperability requirement … Hyperledger networks can all talk to each other and they’re all private,” Spoke pointed out. “But there’s not a common solution for a cross between protocols.”

Additional reporting by Pete Rizzo.

Pinion and chains image is public domain

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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The Opportunity for Interoperable Chains of Chains

Kyle Samani is co-founder and Managing Partner at Multicoin Capital, a thesis-driven crypto fund that invests exclusively in crypto assets.

Today, blockchain interoperability is virtually non-existent.

If you want to move value across chains, you must do so by moving tokens into a centralized exchange, trade on the exchange’s in-house ledger and then withdraw the new asset on a new chain. This process is slow, expensive and involves substantial counterparty risk.

Fundamentally, there are two types of chain interoperability:

  • Relaying messages about the state of one chain to another. This includes synthetic tokens (AKA one-to-one pegs, two-way pegs, or sidechains).
  • Cross-chain atomic swaps. The exchange of tokens between users across chains, without trusting a third-party.

A number of high-profile projects such as Polkadot and Cosmos are vying to be the meta “blockchain of blockchains.” Each of these systems has a native staking token that validators must stake in order to perform work for their respective networks.

Another chain of chains, Block Collider, proposes a radically different technical mechanism to achieve many of the same functions.

Building on insights drawn from Vitalik Buterin’s excellent paper on chain interoperability, I’ll walk through both of the functions above and highlight that the largest opportunity for these systems is message relaying. Cross-chain atomic swaps can be accomplished trustlessly without dedicated chain of chain systems.

Cross-chain messaging

Cross-chain messaging is fundamentally a question of trust: How does one design a system to trustlessly relay messages between chains?

This is especially difficult given what I’ll refer to as orphan chain risk: if a service relays the state of Chain A to Chain B, but it turns out that the relayer was on a fork of Chain A that is ultimately orphaned (either benignly or maliciously), then the relayed message to Chain B is invalid.

If one is relaying messages to issue synthetic tokens across chains, this would result in cross-chain double spends, which is unacceptable. Accommodating the perpetual “what if the relayer is on an orphaned fork” risk is by far the greatest challenge in message-relaying systems.

Cosmos and Polkadot address the orphaned-chain problem through two mechanisms. First, using the inter-blockchain communication (IBC) protocol, they store Merkle-ized block headers for each cross-chain transaction. Building on a history of Merkle-ized block headers, Cosmos/Polkadot maintain global invariant balances of the total supply of each token. Together these mechanisms prevent cross-chain double spends.

It would be nice if systems such as Oraclize could relay messages between chains. But these kinds of systems don’t account for the orphaned chain problem.

If we look out into the future, it’s possible to envision a time in which the orphaned chain problem is solved by the sending chain itself. How? By leveraging finality in proof-of-stake (PoS) based systems. This is the explicit purpose of Casper FFG, which is in alpha now. However, it’s unclear how fast finality can be given tradeoffs in parametrizing such a PoS system.

Even with a finality guarantee, there are still other challenges.

We’re currently witnessing a Cambrian explosion of blockchain innovation. This is likely to continue for the next few years at a minimum. Given the number of new chains that are emerging, each chain will be required to store and validate Merkle-ized block headers of every other chain with which it communicates.

Each blockchain could become bloated with blockheaders of every other chain. Using a bridge chain reduces the bloat per chain from a function of n! to to a function of n.

While I’d like to see a future in which blockchains communicate directly with one another without an intermediary chain, this seems highly unlikely. This problem is compounded by the fact that systems such as bitcoin may never move off of proof-of-work (PoW) consensus and towards PoS consensus with guaranteed finality.

If you project out far enough, it seems possible that intermediary chains will become superfluous, but that future is still unclear. For the foreseeable future – at least a few years – Cosmos/Polkadot have a real opportunity to become the backbone powering cross-chain messaging.

Cross-chain atomic swaps

The first cross-chain atomic swap recently occurred between Litecoin and Decred.

These are both chains that don’t support Turing-complete programming languages. Cross-chain atomic swaps will be technically easier to implement between general-purpose smart contract platforms. It will take another one or two years for these libraries to mature and become widely adopted, but they will. There aren’t many technical questions remaining.

The other major challenge with cross-chain atomic swaps is price discovery and order matching. That’s where decentralized exchanges (DEX) such as 0x and OmiseGo come into play. OmiseGo is fully decentralized, meaning that the order book lives on chain.

In 0x, orders are hosted by relayers (centralized entities), who then submit matched orders to the chain for settlement.

If the market ultimately demands DEXs to be fully decentralized – including on-chain order books – then systems like OmiseGo will be necessary for cross-chain atomic swaps to function. However, given the intrinsic limitations of on-chain order books (settlement time, miner front-running, miner griefing, etc), I believe that the 0x model will prevail for the foreseeable future.

Although 0x only works within the ethereum ecosystem today, the 0x roadmap includes cross-chain* support (it will likely leverage much of the tech built in the Litecoin-Decred proof of concept for Scrypt based chains). 0x relayers will host order books for price discovery, and will relay messages between chains to trigger the release of funds from the escrow on each chain. This should offer many of the best elements of decentralization (no counterparty risk) and centralization (speed, order matching), with minimal trust guarantees (only that the relayer actually relays the messages to both chains).

On-chain DEXs are theoretically possible.

However, given the limitations they face, the intrinsic network effects of liquidity in order books, time-to-market and go-to-market advantages, and minimal trust guarantees of a 0x relayer, I contend that the 0x model will prevail, leaving little opportunity** for Cosmos/Polkadot/Block Collider-based DEXs.


With the Cosmos launch approaching in the next month or two, we’re about to witness a huge hype cycle about the opportunity for an internet of blockchains. Systems like Cosmos solve fundamental cross-chain communication problems, but aren’t necessarily the answer to all cross-chain communication challenges.

It’s paramount to recognize that not everything these systems can do actually needs to be done by a chain of chains. As the crypto ecosystem evolves, expect more diversity in trust models, relayers, and solutions broadly.

* Note: Cross-chain atomic swaps are only possible if both chains offer a native escrow function. This requires bitcoin-esque script functions at a minimum. Some chains, such as IOTA and sia, for example, don’t support on-chain trustless escrows at all, and as such cannot implement trustless cross-chain atomic swaps.

** One of the greatest limitations of cross-chain atomic swaps is settlement time. By definition, these transactions can only settle as fast as the block time of the slower of the two chains. Block Collider’s system allows for settlements that are theoretically even faster than the block times of either chain. Enabling cross-chain swaps to settle more quickly than the block times of either chain is a pretty wild idea. Given how slow bitcoin blocks are, Block Collider could carve out an interesting niche.

Special thanks to the Sunny Aggarwal, Matt Luongo, James Prestwich, and Sina Habibian for their input on this essay.

Chain connection image via Shutterstock

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Public Blockchain's Lure Will Become Irresistible for Enterprises in 2018

Paul Brody is a principal and global innovation leader for blockchain technology at EY.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.

Say what you will about Cryptokitties, but the app does something today that nearly all enterprise blockchains still cannot: exchange one item of value, a cryptokitty, for another item of value, ether.

That item of value may be silly (a digital kitten), but to those who care about them, it’s really enough.

More importantly, the entire contract and transaction, including the exchange of product, takes place on the ethereum blockchain. At EY, our hypothesis is that this kind of low-friction, closed-loop economic transaction is, in fact, the ultimate end game for most enterprise blockchain aspirations.

We’re still very far from that destination, however.

Right now, many enterprise blockchains are still operating like distributed databases and notary services, often with very specialized objectives, such as tracking product provenance. This is a useful start, but if we are not careful, it could be a dead end — a fancy, hacker-proof database, where the software company has replaced the central bank as the intermediary of choice.

To deliver on the full promise of blockchain technology, we believe that enterprises must embrace the full power of tokenization, and ultimately, the allure of the public network. And, 2018 is the year that this will come into view as the future of this technology.

Time for tokens

The foundation of this high-value future is the concept of tokenization: representing a company’s products and services as digital tokens on a blockchain, not merely as items of information, but as carriers of value.

Such digital tokens can stand for anything from pharmaceuticals to phones to music. Whatever they are, they should have assigned ownership and value. If you have a pallet of 1,000 mobile phones, each worth $1,000, that’s on a ship in transit, the blockchain should represent that with 1,000 small tokens with a collective value of $1 million.

When products are made, delivered or sold, value in the blockchain can change hands: 1,000 phone tokens for $1 million in U.S. dollar tokens. Not just bitcoin or ether, but U.S. dollar. Or euros or yen for that matter.

Set aside the debate about the value of traditional fiat vs. cryptocurrencies for the long run. The simple fact is that enterprise CFOs want to be paid the same currencies in which they have expenses and long-term liabilities.

That means tokenizing traditional fiat currency and doing so in the same blockchain as the products and services are tokenized.

Having both types of tokens in the same blockchain is critical — it is what enables the seamless, low-friction and low-risk exchange of items of value. Cross-chain connections are a nice idea, but they can’t beat the power and simplicity of direct exchange.

Central banks are already experimenting with the tokenization of their own currencies, but doing so in private, permissioned or proprietary blockchains that are managed by the central banks. It is a good start, but the next logical step is to create the legal and regulatory framework that enables the tokenization of fiat currency on any industrial or public blockchain.

Once a closed-loop tokenized industrial blockchain exists, many of the key foundations of specialized blockchains would become add-on features in the true economic blockchain. Trade finance is easy if you trust that the representation of 1,000 phones, each worth $1,000 is accurate — you can loan money against those tokens in the blockchain.

Similarly, customs declarations, tax calculations, and product history and provenance are all easily derived from looking at the history of the tokens in that blockchain. No separate blockchain is required for trade finance, payments or product traceability.

Next steps

This vision of the future will start arriving in 2018, and it will have two clear stages.

The first will be the development of what we are call full cycle economic blockchains, where products and services are tokenized and exchanged through digital smart contracts for digital currency tokens. This foundation will likely start with sales, procurement and logistics, and will then go on to see the addition of related services, such as trade finance.

The second phase of this will be the gradual emergence of public blockchains as the preferred ecosystems for these transactions.

We believe that decentralized public blockchains are the only way by which enterprises will truly and deeply commit to digitizing their products and services in a fully interoperable manner. No company will want a centralized intermediary to become the main point of exchange for trillions of dollars in products and services: that entity will have far too much power as a natural monopoly, protected by powerful network effects.

This second phase will depend on how quickly transaction privacy tools such as zero-knowledge proofs (and related zk-snarks and zk-starks) mature.

Right now, transaction scalability and data privacy are not yet ready for multiple competing enterprises to put their strategic transactions into a public blockchain and feel confident they are secure, but that those risks will start to fade in 2018.

Beyond privacy, there are still many challenges to making public blockchains usable for enterprises, including how to implement the rule of law and related know-your-customer and anti-money-laundering regulations.

We believe these are solvable problems and that they can be addressed without the need for centralization. We’re already testing our ideas of how to audit decentralized fiat currency tokens on public networks in ways that will company with AML and KYC rules, for example.

In the end, the lure of the public blockchain network is overwhelming. It’s the only place where companies can be sure they are being treated fairly on a transparent, inspectable and open playing field.

In 2018, the foundations for this future will emerge and the first pilots of these concepts will be visible on the world’s public blockchain networks.

Magnet image via Shutterstock

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What Crypto Didn't Give Us in 2017

Ian Simpson is head of marketing and communications at Lakeside Partners, an early-stage investment firm in Zug, Switzerland.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.

Without a shadow of a doubt, this past year has been huge for cryptocurrencies and the blockchain technology. Whatever the future may hold for Satoshi’s brainchild and all that it has given birth to, 2017 will forever hold a singular position on the timeline of events in the crypto world.

But as a new year approaches, the urge to get caught up in all that has happened over the past 12 months could prevent us from considering what 2017 did not bring – and why.

Admittedly, it is hard not to be mesmerized by the numbers: the more than 1,300 cryptocurrencies, the $700-plus billion market cap they have produced or the eye-popping ICO raises of Tezos, Filecoin, Bancor and others – oh yes, and the gut-wrenching ride of bitcoin’s price as it climbed over $20 000 – and fell back down.

And yet, it is worthwhile taking a step back and considering what is still missing and what exactly this might mean for the year that is almost upon us.

1. We did not see mass adoption of blockchain for enterprise

While there has been plenty of talk about blockchain patents (Mastercard is one example) from big-name companies along with a surge in sign-ups to the Enterprise Ethereum Alliance, 2017 did not bring a whole-hearted embracing of crypto by established players across various industry verticals.

Some will point to concrete financial and technology implementation factors to explain this – “How can you invest in something that’s still so immature?” and “If it can’t scale how can we depend on it?” – and certainly those may be valid points.

Education (its lack and its acquisition) also plays a role. On the one hand, many executives still do not grasp how it actually works and yet still want to dabble in the space, if only to use the hype for marketing purposes.

On the flip side, the more informed decision-makers in large corporations become, the more they realize how much the blockchain world challenges the very core of current systems and paradigms. For many, this knowledge makes them pull back and refuse to “take the leap.”

I also suspect that – perhaps subconsciously – the hype surrounding ICO funding also served as a reactionary force, ironically as the very buzz that put bitcoin and blockchain on the lips of thousands also made many fear its disruptive force.

If the wave of token sales slows in 2018 and regulatory uncertainty clears up, this may change, and arguably it must change if cryptocurrencies and token economics are going to stick around for the long haul.

It may also depend on the outcome of the next point…

2. We did not see a clear distinction between blockchain, tokens and cryptocurrencies

No one in particular is to blame for this, but the fact remains: 99.9 percent of people outside the technical crypto/blockchain community associate blockchain with bitcoin and cryptocurrencies. Period. Unfortunately, this is enough to block adoption by many.

If anything, the huge ICO numbers that 2017 produced only reinforced this association as headlines around the world flashed dollar amounts with each new token sale.

The problem with this is that, to the wider world, it inherently reduces crypto to “a new way to make money through fundraising and speculation.” This is, and will continue to be, a major handicap going forward.

I personally applaud voices such as that of William Mougayar and guests of his Token Summit series, who add more perspective to the discussion and differentiate the various levels of technology and token models.

For blockchain to reach its true potential, these distinctions will need to be made and explained.

3. We have not yet seen self-regulation take hold

With major attention focused on the SEC, FCA and Swiss FINMA, regulation has never been far from the crypto conversation over the last year.

And in the face of expected scrutiny, numerous self-regulation initiatives have been formed with the Crypto Valley Association announcing a Code of Conduct and Waves setting up a foundation for ICO standards, among others.

So far, however, these initiatives haven’t produced much, with the afore-mentioned Code of Conduct still unpublished.

In some ways, this can’t be surprising since it isn’t hard to imagine “self-regulation” as a clever tool to, on the one hand, keep governmental watchdogs at bay, while promoting a “higher standard” which can be used for financial gain.

The coming year may, indeed, bring more visible results on this front – and it should – before scam projects over-multiply and influential advisors over-abuse their positions to artificially pump projects of little-to-no value, compelling governmental regulators to take over in full force.

4. We do not have inter-chain operability.

Finally, in a more technical note, inter-chain operability remains (for now) an elusive holy grail.

The past year saw serious efforts to tackle it. Polkadot grabbed most of the attention (and its creator as well, for different reasons) and Cosmos not far behind. They’re not the only ones, though, with quieter projects like Block Collider working with unique angles on the same problem.

Maybe it seems unreasonable to expect inter-chain connections to come along so soon, even as blockchain and crypto continue to in their relative infancy. But if there is one thing that 2017 didn’t give us, one gaping hole that 2018 can fill, this is it.

But what about the big successes? CoinDesk is still accepting submissions for its 2017 in Review. Email to make your voice heard.

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The leader in blockchain news, CoinDesk strives to offer an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

For more details on how you can submit an opinion or analysis article, view our Editorial Collaboration Guide or email