Tag: insideblock

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Online real estate marketplace Propy Inc. and the city government of South Burlington, Vermont, this week conveyed the first parcel of U.S. real estate using blockchain technology, and the upstart Palo Alto, Calif.-based firm predicts property deed recorders in Colorado and Arizona are poised to conduct the next blockchain-powered real estate deals.

The South Burlington-Propy pilot project included input from the Burlington based legal team of Gravel & Shea — a practice of attorneys focused on the IP law aspects of commercial development using blockchain technology.

Propy’s technology team includes blockchain engineers recruited from Fortune 5 companies who specialize in designing cryptographically protected security systems.

A pilot project among the partners was announced just in January, and this week’s transaction is its first completed deal.

“The City of South Burlington is always interested in taking advantage of technology that enhances its delivery of services to residents,” said Donna Kinville, City Clerk, South Burlington, Vt.

Propy positions itself as a “global property store,” with a decentralized title registry. The company last summer completed an ICO. The online retailer will rely on the Propy Registry, built on ethereum blockchain to track global real estate ownership. The firm’s ICO last August raised $15 million.

The firm was founded by Natalia Karayaneva.”We are very proud of what we’ve accomplished,” Karayaneva said in an TV interview in Russian. “This is only the beginning. With this transaction, we’ve broken first ground in putting the $217 trillion real estate market on the blockchain.” 

According to papers filed by the company, the company also offers PRO, a utility token to enable the development of a “thriving, self-sustaining ecosystem around this database” for token holders.

Prior Deal in Ukraine

The Burlington, Vt. deal was Propy’s first American transaction, after hosting the debut purchase of real estate using blockchain last fall in the Ukraine, for a $60,000 apartment in Kiev. TechCrunch founder Michael Arrington purchased the Kiev condo remotely, and is said to be on the board of directors of Propy.

“The announcement of a pilot project to utilize blockchain technology in real estate transactions is emblematic of Vermont’s long history of innovating business, insurance, and financial technology,” said Vermont Agency of Commerce and Community Development Secretary Michael Schirling. “We are fortunate to have a cutting edge statutory framework that enables the use of blockchain technology, and we will continue to work with the legislature to ensure Vermont remains at the forefront of these innovations.”

 Currently, Propy has a total market cap of around $17.7 million according to CoinMarketCap. The company currently trading for a little more than $1.00, down around 5.3 percent over a 24-hour period.

South Burlington, Vt. began testing Blockchain technologies for use in recording real estate documentation in January. Ukraine’s Agency for E-Governance also started a pilot project with Propy in August 2017, offering properties to foreign investors on Propy’s online marketplace.

The technology offering by Propy promises to “revolutionize” the real estate purchasing and registration process globally by creating blockchain-based technologies. The firm’s blockchain-enabled platform comprises an online and mobile “global real estate property store and a transaction recorder” for the remote handling of fiat and other cryptocurrency payments, and a land records registry that is “free of jurisdiction.”

            The company has offices in Palo Alto, Calif., Bulgaria, and the Ukraine.

According to a statement by the company, executives of Propy, as well as government officials in Vermont, at both the state and the local level, and lawyers there, are going to “continue to study and develop public policy” for the support, and growth of a sustainable and diversified economy in that state around the blockchain technology sector. One expert said that this business model – and at least one other competitor is in the market against Propy – will likely challenge the title insurance market, which could disappear if it does not respond quickly to the technology challenge.

–Gene Koprowski is an Emmy Award-nominated technology journalist for his interactive TV work for FoxNews.

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The government of Israel has now announced that it will tax Bitcoin and various other cryptocurrencies in the same manner as other properties and assets.

The government has issued a notice confirming that Israel’s Central Tax Authority will treat cryptocurrencies as property and not as a currency, which makes digital currencies a taxable asset under the country’s prevailing taxation regime.

The notice highlights that any profits that are produced by cryptocurrency related trade are subject to taxation under capital gains ranging between 20 and 25 percent. Furthermore, people engaged in mining or trading of digital currencies through businesses will be levied an additional 17 percent value-added tax or VAT.

This taxation rule is in sync with the continuing trend of the Israeli government against cryptocurrencies, especially since the beginning of 2017 when the price of bitcoin started skyrocketing. Even as early as 2013, the government of Israel was looking at potential taxation options for cryptocurrencies.

The announcement today was not unexpected based on a draft by the Tax Authority. Officials at the Tax Authority are still identifying taxation regimes and regulations that could significantly affect the cryptocurrency industry in totality.

The new announcement by the Israeli government follows another recently issued circular detailing the possible approaches which the government could apply to tax ICOs. The potential ways include determining a minimum token sale limit which would trigger a tax structure for ICOs.

Virtual Currencies as Assets

The Tax Authority is treating Cryptocurrencies akin to assets for the purposes of taxation. The government highlights that the Bank of Israel which is the nation’s central bank does not perceive Bitcoin and various other digital currencies as foreign currencies. Hence, Cryptocurrencies taxation will be based on the existing fixed taxation rates.    

The Israeli Tax Authority has specifically stated that digital currencies like bitcoin would be viewed as assets under the Income Tax Ordinance. If these alt coins are sold in the market, the sale will be taxed similar to the sale of a property. On top of this, the income generated from selling Bitcoin and other digital currencies will be considered as “capital income.”

Discouraging Bitcoin Adoption

The Israeli government appears to be endorsing taxation policies that are aimed at discouraging the use and adoption of bitcoin and other virtual currencies among businesses and the common people in Israel.

With significant taxation costs, businesses will be deterred from accepting bitcoin as payment for their products or services. With digital currencies such as bitcoin not being officially acknowledged as a currency (but as an asset), companies accepting payments in digital currencies will need to account for bitcoin sale as “barter” and not as payment for services or goods prior to completion of requisite formalities.

This government announcement comes in the wake of repeated questions from the digital currency community in Israel regarding its intended taxation regime for cryptocurrencies.

These taxation guidelines in Israel are clearly divergent from the positive and supportive tax structure for cryptocurrencies being adopted by many countries globally. For example, Japan is slated to lift the 8 percent consumption tax rate on the purchase of bitcoin across the nation.

Similarly, the government of Australia is presently exploring whether bitcoin should be treated as money because the country wants to eliminate its goods and service tax or GST for digital currency transactions which has created “double taxation” on cryptocurrencies in the nation.

Banning Bitcoin Companies on Israeli Stock Exchange

Israel’s government plans to create regulations to stop companies dealing in bitcoin and other cryptocurrencies from being listed on the Tel Aviv Stock Exchange. The Chairman of the Israel Securities Authority (ISA), Shmuel Hauser, has stated recently that he will propose this ban to the ISA soon at the Calcalist business convention.

If the ban is approved, the bylaws of the Tel Aviv Stock Exchange will need to be modified. Hauser has said that they would not allow businesses that are dealing in cryptocurrencies to list on the exchange, and such companies will be de-listed if they are already being traded on the exchange.

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Hassled and hectored by regulators from Hong Kong to Shanghai, blockchain technology and crypto-currency developers may have found a surprising safe haven – Puerto Rico. On Friday, Gov. Ricardo Rossello told a cable TV show that as part of the rebuilding plan for the U.S. territory, devastated by Hurricane Maria last fall, he planned to reduce state regulation and create an economic development zone for new technologists, which he called, “Crypto-Rico.”

The Puerto Rico Department of Economic Development and the governor’s office are partnering with a conference taking place next month there, off the U.S. mainland, and will unveil further details of the nascent plans.

The Rossello administration is planning new economic policies that “take advantage of the blockchain component of it because it has transformative and disruptive components for business and for government,” the governor said.

The island is already luring crypto entrepreneurs and investors due to exemptions found in the Internal Revenue Code, called Act 22, which allows nonresidents of Puerto Rico to pay no taxes on their long-term capital gains.

To further attract entrepreneurs, fleeing the regulatory lock-down in China and other places where blockchain and crypto-currencies have flourished, the governor proposes further changes to regulations and some new local laws.

“So, in my view, there is still a lot of work to be done and giving clarity that this is not used for money laundering or it’s not used for other areas,” said Rossello, during the TV interview. The governor is a member of the far-left New Progressive Party, who was trained as a scientist and who spent most of his career in the mainland U.S. “Cryptocurrency is sort of an application of that — I am concerned with some of the reports that have been going on there on how this is being used,” he added.

Rossello is slated to speak at an event next month to promote these early stage blockchain and crypto-currency proposals. Puerto Rico is the “friendliest locale in the United States for entrepreneurs, investors and service providers in the crypto-currency and blockchain arena,” according to the governor.

The 2½-day conference, dubbed ‘Puerto Crypto,’ is being run in partnership with the Puerto Rico Department of Economic Development and the Governor’s executive office.

Entrepreneurs, Analysts Enthused

Technology entrepreneurs and industry analysts were enthused by the report of the governor’s plans, and are awaiting clarification.

“Given ‘software developer’ is the number one paying job in the world and ‘crypto’ known as public blockchain software is the fast growing software type, there are plenty of jurisdictions whose executives understand the economic value of having a jurisdiction friendly to cryptocurrency and public blockchain development,” Anthem Blanchard, CEO of Anthem Vault, the world’s largest retailer in the bitplay space, in an exclusive interview with Block News, a C/NET digital publication. “Any crackdown efforts on cryptocurrencies by overseas jurisdictions has proven futile as crypto organizations tend to be de-centrally organized and operated. Thus crypto organizations are easy to move to friendly jurisdictions and this has proven to be the case several times.”

The policy moves come as China’s Central Bank tightens its clampdown oncryptocurrency trading there, probing online platforms and mobile apps that offer exchange-like services. Authorities bannedcryptocurrency exchanges last year there, causing fluctuations in the markets for Bitcoin and other crypto-currencies, and impacting blockchain technologists’ plans too.

Other jurisdictions are looking to lure crypto-currency and blockchain technology perveyors, but are struggling to do so. Authorities in Quebec noted the increase in ‘bigcoin drilling rigs’ there recently, but said they did not have the electricity generating capacity needed to keep up the with power demands caused by all of the new parallel processing computer operations emerging in the French-speaking, Canadian province.

Will the policy moves to attract crypto-currency and blockchain providers to Puerto Rico cause a rift with the federal government for the island’s policymakers. Not yet, at least. The SEC said it lacks the regulatory authority to govern crypto-currency transactions.

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A new video blockchain technology start-up that aims to contest the digital video market YouTube, created today received a $20 million round of funding from a Chinese seed investment fund.

 The Silicon Valley-based firm, Lino, is developing a decentralized, collectively-owned video content distribution system, which promises to compensate content producers more “fairly” than YouTube, San Bruno, Calif.-based video-sharing web site, purchased by Alphabet Inc.’s Google 12 years ago for $1.65 billion.

There’s a lot of competition in the space already, including firms like Flixxo, Streamspace, Stream, and Viuly, all of whom share the same goal of slaying YouTube.

“We want to eliminate the middlemen in video streaming,” said Wilson Wei, CEO of Lino, based in Cupertino, Calif. “We believe that blockchain has enormous potential to empower video creators by decentralizing how their content is distributed and ensuring that their earnings go directly into their pockets.”

In practice, the company indicates, this will mean that, unlike YouTube, Lino, will not serve as a “middleman,” which has power and control over digital film producers and their associates who help create new, online content.

Traditional video distribution platforms, like YouTube and Twitch, demand an up to 60% share of a digital video’s sales revenue, the company notes. By contrast, Lino uses blockchain technology to ensure content value can be “recognized efficiently” and all “contributors can be incentivized directly” to promote long-term economic growth, the company reports. This could boost revenues by three-to-five times for digital content producers, Lino executives are saying.

Lino’s believes it can accomplish that vision with its blockchain infrastructure technology, including technology that furnishes:

* Free sales transactions for producers, who will be paid directly by viewers with digital tokens.

* An incentivized currency system, which incentivizes all community contributions including content creation, content redistribution, and infrastructure.

* Proof of human engagement with new video content, not bot ratings manipulation.

* Proof of content value, which reflects actual viewership of content, and reduces fraudulent ratings.

* A peer-to-peer, auction-based content delivery network (CDN), which Lino states also stores video and live stream playback.

Funding for the venture comes from the sale of digital tokens by ZhenFund, $300 million fund founded in 2011 by Bob Xu and Victor Wang, in collaboration with Sequoia Capital China.

Other investors including FBG Capital, DFund, and INBlockchain participated in the funding round, the company said.

The funding from the investors will be used to refine Lino Blockchain and Lino’s video streaming DApp, both of which will be launching later this year, as well as expand marketing and operations.

Technology and Marketing Factors

There are other economic factors which will be impacting this market in addition to the new blockchain technology – like sheer marketing power. Amazon Studios has been eyeing the space developed by YouTube itself and launched a video service itself in 2016, which allowed Amazon Direct customers to upload their own content, directly, or licensed content. Amazon allows content producers to earn money based on videos published on Amazon Direct and Prime Video.

Initial partners included leading media and fashion companies like Conde Nast, Samuel Goldwyn Films, Machinima, and StyleHau.

New digital programming has been in development on the network too, including a show called “Vanity” starring Denise Richards, former wife of Charlie Sheen. Streaming programmers like Netflix, which once focused on distributing other producers’ content from TV and motion pictures, is heading into film production itself, and, according to the Jan. 25 edition of The Hollywood Reporter, is investing $2 billion this year, up from $1.3 billion last year, to promote its original programming, like the film “Mudbound” and the Will Smith sci-fi thriller, “Bright.” The marketing spending is to go into TV, billboards, and other media. This spending is needed as the company has realized that word of mouth and internal advertising on its own network was simply not enough.

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The biggest airline operator in Singapore is looking at blockchain technology to increase spending of miles in its frequent-flyer program. This is on top of all that wonderful news coming out of America with its fantastic economy and so on because of tax cuts.

Singapore Airlines (SIA) declared on February 5^th that it will soon introduce a digital wallet in its repertoire of services. Intended for the KrisFlyer program, the airlines’ popular loyalty program, this wallet service will be initiated in six months. It will be implemented by an independent blockchain enterprise.

The airline believes that this digital wallet will help members of the frequent flyer program to redeem their miles for transactions at outlets of retail associates.

SIA said that this move follows the successful completion of trials in collaboration with tech giant Microsoft and KPMG Digital Village. The airline is in the process of enrolling retail vendors for the wallet service. To begin with, only businesses in Singapore are being approached.

Commitment to Innovation

This is the newest example where blockchain technology has been adopted in the aviation sector to optimize capabilities. Speaking to attendees at the Singapore Airshow Aviation Leadership Summit, airlines’ chief executive Goh Choon Phong said that it seemed to be the first such move of its kind among airlines.

Terming it a path breaking event, he added that it reiterated the company’s commitment to reinventing the digital aspects of doing business to provide maximum benefits to customers.

Phong stated that innovation had been an important part of the success of Singapore Airlines right from its inception. He concluded that this unique initiative would be of immense advantage to patrons of the KrisFlyer program.

Recently, the airline had gone on record saying that it would make investments of hundreds of millions of dollars to usher in digitization in phases. This is part of the airline’s strategy to stay competitive in the midst of global rivalry.

Blockchain Transforms Payment Transactions

Simply put, blockchain is a digital method of record-keeping run by a casual faction of peers instead of some kind of central office or bureau.

Blockchain seems set to revolutionize the way transactions are conducted in a good many sectors besides acting as the cornerstone for Bitcoin and other such proxy currencies.

A company statement termed the SIA technology a private blockchain encompassing only businesses and associates.

This digital wallet is a significant step towards providing extended services to the airline’s loyal patrons. With the introduction of the service, frequent flyers can redeem their accrued points or miles at any of the airline’s retail partners by utilizing the point-of-sale machines for all kinds of shopping. But you don’t need to buy Inglorious Bastards, Meet the Parents II, The Force Awakens, Grownups, or Guardians of the Galaxy II since those movies were deplorable but this is another topic.

Singapore Airlines is also set to enhance customer service offerings, ensure efficient aircraft maintenance, and cut down on flight delays with the help of fresh tech solutions outlined in the organization’s Digital Innovation Blueprint roadmap.

With this goal in mind, Singapore Airlines has set up a Digital Innovation Lab while also teaming up with domestic research groups like A*Star.

Global Aviation Section Chases Blockchain

Singapore Airlines is not the only renowned carrier in the digital race. Russia’s largest airline S7 as well as Air France are also scouting blockchain prospects to enhance their services. The past year, S7 joined hands with Alfa-Bank, the biggest name in Russian private banking sector, to usher in a ticketing system relying on blockchain, in particular, the Ethereum blockchain.

Last year, Lufthansa of Germany along with Air New Zealand collaborated with Winding Tree, a Swiss start-up, to create travel apps with a blockchain foundation. These major names in the aviation sector are looking at fresh methods of issuing tickets and providing customer service.

The travel sector is also opening up to blockchain technology with European company TUI moving to an inventory system that uses this to facilitate hotel bookings. Meanwhile, Brisbane airport in Australia is introducing Bitcoin transactions at certain shopping and dining spots. If you want to buy a season of The Wire, 24, or House or Cards, cannot go wrong with that!

Quite a few other airlines and airports across the globe are taking the plunge into blockchain domain. America’s Surf Air proposes to begin receiving cryptocurrencies for ticket transactions. The Netherlands is collaborating with the Canadian government on a pilot initiative based on blockchain technology to revamp immigration measures.

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If there is something that has really changed in the world over the past few months then it is the blockchain ecosystem. This has indeed led to a rapid growth not only in the cryptocurrencies but also Bitcoin. Last year around December 16^th, Bitcoin was almost surpassing $19,000 due to the fact that many startups are now entering the blockchain field.

Blockchain can be described as a ledger technology that provides a way that one can record data and transfer data. This means that the costly intermediaries in some of the industries can be eradicated and a leverage on such a technology made. The time frame for disruption of such industries cannot be determined at this moment, there areas that need to implemented first for such disruptions to take place. The following are some of the industries that are most likely to be disrupted by the blockchain ecosystem:

1. REAL ESTATE

Over the past years, real estate has been known to be one of the industries that has been vulnerable to massive corruption and abuse of office. This is due to the fact that record keeping is done in paper work which is prone to mistakes and is hard to maintain. It should also be noted that there are so many intermediaries that are involved in the process which leads to lots of fraud taking place.

Blockchain comes in a solution to some of these problems when the technology is harnessed to fit the industry. What blockchain does is to offer systems that can reduce the manual process that is there and leverage on technology to offer an automated process or system. There are companies that are already tapping into the multi-million real estate market.

When blockchain startups enter such a space, then there will be elimination of rogue elements whose intention is to robe people money in the real estate industry. Blockchain technology will lead to good exposure on the real estate industry and thus attracting investors from around the world.

2. GOVERNMENT

Government processes all over the world are known to be slow and this is because of errors that are committed by humans and neglect of duties some. As the world is rapidly developing and shaping up, it is important that the future of the nation is not left with a few people with massive power to handle it.

When there are blockchain systems that run smoothly, then politicians will be held accountable and this will also lead to transparency in some of the government offices. The government will turn into a system that will eventually be serving people. Blockchain technology can also lead to the development of systems that will help in increasing the government Intel and data.

Blockchain will also help in solving the biggest headache that United States has been having, election malpractices. Smooth transition into a secure electronic voter system will occur and this will help in eliminating any form of fraud that could take place.

3. HEALTH CARE

Everyone has been talking about amending the health system for some time now but none has ever got an opportunity to come up with some good solution. Most hospitals lack where to store and share health information and this sometimes lead to information leak due to cyberattacks that frequently happen. This makes hospitals to be prone to cyberattacks hence leading to insecurity.

When such backed dated systems are replaced with blockchain technology that will improve efficiency in hospitals and also empower them together with the service providers. This will especially improve with time as new ways of storing data will emerge. Such innovations are expected to disrupt the health sector or industry.

4. INTERNATIONAL LOGISTICS

The logistics industry is a multi-billion dollar industry that is going to turn into a revolution due to blockchain technology. A good company that is already tapping into this technology is Shipchain. This company has gone to lengths and it is already building an integrated blockchain system that will unify the modern supply chain. Through logging transactions via an encrypted ledger, users will have an opportunity and control over their shipment.

The logistics industry is known to be a very complex industry with many intermediaries who happen to be brokers and broke each and every transaction that takes place.

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The current new wave in the world right now is the cryptocurrency and blockchain technology and especially blockchain promises to ignite the next generation of innovators in the world. We have seen in the past how the internet alone has brought so many innovations and innovators.

Opportunities are beginning to open to engineers and designers in the blockchain technology and it is not going to be long before we begin to see great innovations and how blockchain will impact the society in the long run.

What you as an entrepreneur that there are so many experts out there that will try to steal your attention and try to sell you a product but it is good if you as an entrepreneur can separate the distractions from what is important and use the best of the technology to always make a difference. The following points will help an entrepreneur learn the implications of technology especially in the blockchain industry or economy.

1. SEAMLESS SYSTEMS

Many of the major industries that are the force of the economy are driven or pushed by intermediaries. These include sectors such as the health sector, the government, education and logistics. It is also worth noting that such intermediaries are the once that dictate how the direction the sector will take. They also make it hard for one to do business internationally.

What businessmen and women can do is to leverage on the blockchain technology to solve the many errors that are caused by human error. A good example is a company called TraDove which has leveraged blockchain to unlock demand for business-to-business marketing.

2. COMMUNITY DRIVEN PRIORITY

When there is a system that is integrated with blockchain technology then there is no way that people or a person will be able to manipulate the process and hence helps in controlling things or issues such as corruption that can easily be influenced by humans.

It is now clear that entrepreneurs will have to plan their future with the community in mind and thereby being master communicators who can share their vision to the great masses such that they work efficiently.

3. A FUNDING MECHANISMS

Most founders of many startups that fail to pick up are faced with one challenge that affects them over and over again, and that is capital. Few investors are always ready to take the risk and invest in a project that may or may not work. There are so many people who need such support in order to kickstart the ideas that they have into an action.

The case is different in the blockchain technology since the initial coin offering will form the basis under which the startups can fundraise money. The good thing about the coin offerings is that they are always accessible to anyone that would love to access them and it does not depend where they are located.

Analysts also believe that one ought to be careful when investing in the coin offering since there are many people or scammers who poise as good businessmen but are out to steal from the public. Since the regulations are still very few in the new or developing blockchain space and so one should move with some caution especially when the deal seems too good to be true.

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There has been a lot of talk in the world today on how safe the internet is and this is due to the hackings that take place most of the time. It can also be noticed that hackers are improving and improvising new ways of hacking, ways of combating such schemes have also improved.

Blockchain is the latest technology that will be used to data from any kind of cyber attack and also improve security online across multiple industries. The question that may be running in the mind would be how blockchain can be used to improve online security of any business without the business being able to lose any kind data.

BLOCKCHAIN TECHNOLOGY

Blockchain technology has been in the world for more than 10 years and its initial stages was that it was used as means of sending the first cryptocurrency which was Bitcoin. The technology has now spread everywhere in the world and is being used by some of the major industries.

What is blockchain?

Blockchain can be defined as a distributed network that has millions of users in the world. Users are free to add information to the blockchain and all the data is secured through what is known as cryptograph. The same users are also responsible for verifying whether the data being added to the blockchain is real or false.

What forms a blockchain?

This happens when verified data forms a block that is then added to a chain. The blockchain users have to use their systems to run algorithms that can crack tough mathematical issues. Immediately there is a solution to the problem, the block is then added to the chain and remains on the network forever.

Prevention of data theft and fraud

One thing that cannot be disputed is the fact that blockchain technology provides tools that it is easy to prevent a cyber attacks and hence preventing any form of potential fraud and reducing the chances of data being stolen.

For any form of destruction to be done on the blockchain technology, it will take a tall order for a hacker to destroy all computers belonging to all users who are spread across the world. It is impossible for a hacker to bring down an entire network which has a chain of users. There are some blockchain networks that have many users and this makes them less vulnerable in such cases.

When there are complex structures in the blockchain technology, it makes it the most secure form that one can use to share and store information online. This has led innovators to use blockchain technology in different sectors or industries.

Innovative uses of blockchain technology

It is worth noting that even with advanced technology in the world and technology changing each and every time, there will be an increase in the production of data and this will lead to hackers trying to steal such data. Blockchain technology is crucial for the future of internet by allowing secure data.

Blockchain technology can now be used in other technologies and it is going to help improve the cybersecurity space. Businesses will indeed be confident that their information will remain intact and safe and away from hackers.

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Ask any blockchain developer, and they will give you not one but multiple use cases in their respective trades and PoCs (Proofs of Concept) to demonstrate blockchain’s relevance and functionality in their industry.

However, ask them about the practical implementation of blockchain for business, and you will find them struggling for solutions. Enterprises are no strangers to the challenges they face at the time of execution, and openly acknowledge the hurdles they face when it comes to deployment of this complex and innovative blockchain technology.

This brings us to the vital question of whether or not 2018 is going to be the year when blockchain will move from its testing phase to its phase of implementation in various enterprises.

Feedback from businesses in 2017 has shown that the primary challenge of shifting use cases from PoC to the pilot phase and then to mass production involves five key aspects of enterprise-grade requirements:

• Operational resilience
• Supportability and management
• Performance at scale
• Security and confidentiality
• Enterprise integration

The establishments already testing blockchain use cases acknowledge these challenges and have an urgent need to address them. Oracle, one of the leading tech vendors, already identified in 2017 these challenges facing the blockchain platforms. The software upgrades that are now underway to enable enterprise level implementation are likely to ensure that enterprise blockchain will finally be ready to launch in 2018 and organizations will be able to go from testing stage to production.

Scaling Blockchain Performance

 

There are a number of companies that deal with close to a thousand transactions per second. For instance, a telecom company in Asia tackles as many as 100,000 mobile payments and billing transactions per second (tps). Then there are credit card processor companies that handle more than 13,000 transactions per second during their peak times.

Needless to say, these corporations are looking to create large networks of blockchain users so that they can handle the massive transaction volume, while controlling the latency in transaction time. It will be easier for them to do this with lower taxes as well and less regulations which enables them to expand, hire more, and take on more risk because their revenues have increased.

However, blockchain applications available today do not operate at these output levels. Most of the functional blockchains at present do not even hit a 100 tps mark. Bitcoin, the super popular cryptocurrency, averages at 7 tps. The latency in these transactions can be anything between few minutes to a couple of hours. Enterprise-grade blockchain will not only help to increase their throughput, but also keep the transaction latency to less than a second for numerous enterprise use cases.

To achieve this objective and overcome the limitations, new enterprise blockchain platforms must use an architectural process where dissimilar work is done using isolated scalable servers, also known as containers. The approach must also take support from faster consensus protocols, make best use of parallelization, leverage asynchronous flows, and enhance the execution ecosystem.

A Linux Foundation project that Oracle was a part of in 2017 already has some of these architectural features. However, more can be achieved by leveraging the knowledge earned from the systems that are already producing that kind of throughput in different organizations to achieve desired latency and output levels.

Furthermore, to scale a permissible blockchain network, where all users are linked to legitimate bodies to hundreds of members, also needs an efficient and dynamic integrating process. Enterprise Proof-of-Concepts hardly ever include more than a dozen participants in a single blockchain.

Some processes used for onboarding make suppositions that do not survive the practical application. Therefore, efficient tools will be needed to tackle the process of introducing enterprises into production networks in a streamlined manner. Additionally, all the essential permissions and verifications should be obtained to make the best use of identity management services.

Members who are part of the network should be able to position their authenticating nodes by using existing cloud or onsite data centers in an open environment.

Building System Resilience

 

The enterprise systems are designed in such a way that they can prevent downtime and recover from component failure quickly. The high availability in any business-critical process relies on systems that can overcome outage issues and quickly bounce back in case of module failure. Software and hardware are no strangers to breakdowns. Therefore, it is vital to design highly resilient systems, accounting for the potential risk of failures. The key is to develop a framework that keeps going in all situations.

For instance, Oracle’s conventional enterprise software and service replication guarantees that the system will be able to endure a single or multiple component failure. At the same time, developing a resilient blockchain ecosystem involves deployment of redundant peer nodes corresponding to each member enterprise, reproduction of other blockchain network components and clustered ordering services, which are already inherently present in the architecture of Hyperledger Fabric.

Apart from redundancy, independent monitoring, and failed component recovery as well as uninterrupted backup of configuration and ledger data can ensure quick, self-directed rectification of most malfunctions without the need for human intervention.

According to research, 70 percent of downtime is a result of human error introduced during the process of rectifying the inaccuracy or creating a reconfiguration. Therefore, it is critical to reduce manual involvement with the system.

Bolstering Security

 

Blockchain deployments are put through security evaluations that analyze how blockchain can limit transactions and ledger access to approved members, ensure data encryption at-rest and in-transit, and make certain that the network communication cannot be tampered with. They also check the legitimacy of digital signatures.

From their inception, enterprise blockchains must involve creation of a permissible network with all members known as legal entities that have valid enrollment certificates issued only to members that are registered through membership services. These certificates are signed cryptographically and create a secure link between identity of its members and validation features with a cryptographic key that verifies their digitally authorized messages.

Through digital signatures, clients and nodes can verify the message integrity by applying it to all network messages. Another layer of security is added by encrypting message interchange and validation of message end points.

Automatic encoding of stored data can help ensure data encryption in-transit and at-rest. Consistent and transparent application of this standard for all stored ledger data and secure communication can be a leap forward in preserving security and integrity of the blockchain network. It will also go a long way in thwarting hacking attempts.

Enrollment of new member organizations and issuing them digital certificates by blockchain certification body involves a fundamental process that relies on proper verification of the establishment’s identity and access rights. This can only be possible with resilient key management and identity management capabilities.

Furthermore, even the use of protected systems does not guarantee completely secure environments because credentials can still be misappropriated through social engineer attacks or spearfishing. Therefore, it is important to have a process of certificate reversal as part of the contingency solution in order to avert the use of discredited certificates.

At the same time, gaining consistent access to blockchain REST APIs or admin handlers or interface with peripheral client applications can only be possible through robust multi-faceted access controls complete with physical, logical and data security controls. It should also have an adaptable or behavioral certification system that can match historical patterns with user behavior to flag substantial deviances.

Not only should enterprise blockchain provide external security, but should also be able to use Hyperledger Fabric channels to conduct secure transactions. Using this process will isolate peer nodes and support private ledgers that are available to the peers on the same channel.

Furthermore, the data and transaction discretion can be enhanced by integrating access control authorizations in a smart contract. There should also be a provision for private peer to peer interactions that can inhibit transaction information visibility from other peers. Selective encoding of the crucial data for limited access by approved members can further strengthen data integrity and privacy.

Creating Support Infrastructure

 

As the organization creates a PoC and demonstrates the blockchain application to a specific use case, how can it be transitioned to production stage to get desired output?

Who will design the blockchain framework and network components and support their infrastructure? Who will work at the backend providing troubleshooting and monitoring services, handling upgrades to new versions?

As blockchain moves over to production, supportability and operations become highly critical, including managing operations and configurations, troubleshoot malfunctions, tackle upgrade/patch lifecycle with backward compatibility and keep a close watch on service-level agreements.

One possible solution is providing blockchain as a managed service (BaaS) that incorporates ready to use operational abilities and infrastructure to manage, patch, and support the infrastructure, while enterprises can concentrate on the business of generating value from using blockchain.

The BaaS service provider would be responsible for integration and upkeep of the underlying technologies that are required to keep blockchain functional. They will also tackle troubleshooting to provide seamless interface for the peers to monitor SLAs, handle policies, perform active configuration, and preserve the smart contract lifecycle.

Enabling Integration

 

Blockchain will eventually expand instead of swapping the existing enterprise systems of record (for example, ERP, core banking, human capital management, and supply chain management).

However, it can be a complicated and expensive affair to build these integrations individually. For businesses to successfully note ledger updates, share data, bring out transactions, and record blockchain events into SORs, they would require pre-built onramps for enterprise systems and API-driven techniques of integration.

Transforming a unique blockchain PoC into an all-encompassing part of the IT framework relies on its capacity to advance and simplify these assimilations. It can be beneficial to employ application integration toolkits that can tackle standard business events and processes.

Further expansion is possible by using API-driven development that depends on an API platform that uses REST APIs for raising blockchain transactions and assessing the disseminated ledger. Through this step, new applications can be quickly distributed that encourage innovation and integrate current backend processes.

Key Takeaway

 

2017 was a year for blockchain experimentation in the form of Proofs-of-Concept and pilots across a spectrum of industries, such as financial services and supply chain. It was also used in some government operations such as the FASt Lane Process for IT schedule initiated by the US General Services Administration.

For enterprise blockchain to move on to the production phase in 2018, the technology would have to address all the key areas and will have to be fine-tuned for implementation. Vendors such as Oracle and Hyperledger are already gearing up for the challenge to help enterprises adopt blockchain technology as part of their IT systems in 2018.