Article by Joeri Cant.

The United States House of Representatives Committee on Financial Services has scheduled a hearing with Securities and Exchange Commision (SEC) Chairman Jay Clayton and four other SEC commissioners to discuss, among other topics, crypto.

In a memorandum from Sept. 19, the Committee on Financial Services stated that it will hold a hearing on Sept. 24 entitled, “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat.”

This one-panel hearing will include the Securities and Exchange Commission (SEC) chairman Jay Clayton, commissioner Hester Pierce (AKA Crypto Mom) and another three commissioners.

Libra coin could amount to a security

The Committee on Financial Services has included cryptocurrencies on its list of topics for discussion and points out that the federal securities laws apply to securities — including stocks, bonds, and investment contracts — regardless of whether they are digital.

The hearing will touch upon Exchange-Traded Funds (ETFs), whether or not digital assets are a security or exempt from securities law, and of course Facebook’s planned launch of its stablecoin Libra in 2020. The document adds:

“The Libra Investment Token could amount to a security since it is intended to be sold to investors to fund startup costs and would provide them with dividends. The Libra token itself may also be a security, but Facebook does not intend to pay dividends and it is unclear if investors would have a “reasonable expectation of profits.”

Zuckerberg continues tour of Washington DC

Cointelegraph reported on Sept. 19 that Facebook CEO Mark Zuckerberg is making the rounds with policymakers in Washington, D.C. to discuss “future internet regulations,” most recently with Senator Josh Hawley.

Earlier on Sept. 19, Cointelegraph reported that Zuckerberg had dinner with a handful of U.S. lawmakers, where he faced intense scrutiny over the Libra project.

Despite a nationwide crackdown on cryptocurrencies already in place, the Chinese government went one step further and passed a decree forbidding all crypto-related events in Beijing’s financial district.

No More Crypto Events

According to local news outlet South China Morning Post, authorities banned all hotels, malls, office buildings and other commercial properties from hosting “cryptocurrency talks and promotions.” Although the news was circulated by mainstream media on Aug. 22, the official announcement was issued five days earlier on Aug. 17 by a local financial service department.

An unnamed official confirmed the document’s authenticity, adding that the increasing number of crypto-events in Beijing’s financial district led them to the decision, especially promotional activities for a myriad of obscure cryptocurrencies.

However, the document stated that the action was solely to protect public interests and the region’s financial safety, in addition to strengthening the Chinese yuan and improving the country’s economic stability.

The document, loosely translated from Chinese, stated:

“We now order every shopping mall, restaurant, hotel and office building not to provide venues for any events that promote or talks about cryptocurrency, and must report to the authority if such activities were found.”

The development is the latest in a series of regulatory actions against cryptocurrency businesses and event spaces.

In April 2018, a major blockchain conference was halted in Shanghai after local police stormed into the venue. While the blockchain-focused event was eventually canceled, the presence of an ICO business reportedly spurred police action.

Related Article: Chinese Messenger App WeChat Bans Crypto Media Outlets

The news follows in quick succession to WeChat’s decision to ban cryptocurrency media accounts. The service is the country’s largest instant messaging platform and a notable mode of communication for several cryptocurrency projects, both regionally and internationally.

124 Crypto Exchanges to Lose Internet Access

In broader news, Chinese regulators are intensifying their crackdown on crypto-exchanges and related trading services. Authorities have blocked more than 120 exchanges from providing cryptocurrency access to domestic traders, according toShanghai Securities News.

Financial authorities, along with China’s National Fintech Risk Rectification Office, are said to have identified 124 trading platforms registered in overseas locations, which also possess international IP addresses, that are operating in mainland China.

The two bodies are tasked with blocking internet access to all named trading platforms and ramping up scrutiny of the cryptocurrency space.

Formed in 2016 by China’s State Council, the National Fintech Risk Rectification Office is a government-owned body that fights against financial risks and seeks to protect investor interests.

Most businesses moved to crypto-friendly locations like Singapore and Switzerland after China’s ban. And while popular cryptocurrency exchanges like OKEx, Binance and Bitfinex had their internet access cut off after China’s blanket ban on cryptocurrencies in 2017, local exchanges with significantly less trading volume appear to be operational.

The agency is also reportedly scrutinizing third-party payment providers that supply services to cryptocurrency businesses or handle crypto-transactions themselves.

Meanwhile, additional reports yesterday confirmed that WeChat may permanently shut down cryptocurrency business accounts, instead of merely disallowing access temporarily.

This post is credited to cryptoslate

China’s government will take steps to further block access to more than 120 offshore cryptocurrency exchanges whose websites are still accessible on the mainland.

Citing local financial news outlets, the Hong Kong-based South China Morning Post reports that authorities associated with the Leading Group of Internet Financial Risks Remediation — which was founded in 2016 and run by top central bank officials — will begin blocking IP addresses belonging to 124 cryptocurrency trading platforms that still serve mainland residents, despite local prohibitions on these activities.

CCN first reported in February that the People’s Bank of China (PBoC), the country’s central bank, was preparing new measures to stamp out the local cryptocurrency trading industry, which continues to thrive in defiance of bans first put in place during Sept. 2017.

The actions are the latest in what increasingly appears like a coordinated crackdown on the part of Chinese authorities. Last Friday, authorities in Beijing’s downtown Chaoyang district circulated an order barring public venues such as shopping malls and hotels from hosting cryptocurrency-related events.

Concurrently, China-based social media giant WeChat shut down accounts run by at least eight blockchain and cryptocurrency media outlets for allegedly violating regulations from official internet censors.

Some industry observers had said that, though these actions do not appear overly-serious when viewed in isolation, they likely foreshadow a broader clampdown timed for the one-year anniversary of China’s initial coin offering (ICO) and cryptocurrency trading ban.

Last month, the PBoC reaffirmed its commitment to act with “vigilance” to prevent foreign ICOs, which are illegal in China, from marketing their tokens on the mainland.

Even so, ICO scams have managed to grift hundreds of millions of dollars from Chinese investors. Just this month, a company called Shenzhen Puyin Blockchain Group raised $60 million through three separate ICOs, only to pull what may be the largest-ever ICO exit scam.

The cryptocurrency markets traded down on Thursday, though it’s not clear to what extent the decline stemmed from the news of China’s reinvigorated trading ban. The bitcoin price declined approximately three percent for the day, while other large-cap coins saw pullbacks as large as six percent.

This post is credited to ccn

Canada’s National Research Council has launched a new Ethereum blockchain explorer for public use, according to a press release.

Canada’s Move Toward Transparency

The development is one of the world’s first instances of a country building an explorer platform, and the new blockchain explorer will be used to provide the public transparency to government frameworks, specific to grants and contributions. The platform was developed by the NRC’s Industrial Research Assistance Program (IRAP), coded by blockchain firm Bitaccess and is hosted on cloud-based Interplanetary File System (IPFS).

 Bank of Canada: Double Spending is “Unrealistic” in Blockchain Technology
Related: Bank of Canada: Double Spending is “Unrealistic” in Blockchain Technology

Industry observers have termed the IPFS as an “immutable, distributed supplement” to the HyperText Transfer Protocol (HTTP)–the globally used internet network. The former is said to enable a more secure, transparent and less centralized internet than the latter.

NRC further explains that IPFS fundamentally operates as a peer-to-peer method of data transfer and storage, with the capacity to host web applications protected by robust immutability.

Related to the development, Bitaccess published a statement explaining how to utilize the blockchain explorer efficiently to swiftly locate datasets–grants and contributions–embedded by the government on the Ethereum blockchain.

Blockchain Experiments Proving Technology’s Prowess

Moe Adham, co-founder of Bitaccess, highlighted that the framework enables institutions to become wholly-transparent while empowering participants to verify and validate all public information.

Adham added:

“We built the [IPFS] as a simple, low risk, application for institutions to get introduced to blockchain technology.”

In January 2018, the Canadian government had its first brush with blockchain technology when it launched a public blockchain prototype to administer government contracts.

At the time, the development was more experimental, with the NRC working on several use cases, alongside the newly-released framework, to provide quantifiable, sharable information with the public using a blockchain network.

Meanwhile, the NRC concluded its ambitious announcement by noting that its experiments are “expected to provide constructive insights” with regard to the future of blockchain while creating a more transparent ecosystem for citizens.

This post is credited to cryptoslate

The World Bank and the Commonwealth Bank of Australia (CBA), the country’s largest bank, have issued a public bond exclusively through blockchain technology, Reuters reports August 23. The World’s Bank official mandate for the project was first unveiled August 10.

The A$100 million ($73.16 million) deal entails two-year bonds that will settle August 28 and have been been priced to yield a 2.251 percent return, according a CBA statement.

The prototype — dubbed “Bondi” (Blockchain Operated New Debt Instrument, and a pun on Australia’s most well-known beach) — is being hailed by the participants as a milestone in automating decades-old bond issuance and sales practices. Reuters cites CBA executive general manager, James Wall, as saying that:

“You’re collapsing a traditional bond issuance from a manual bookbuild process and allocation process, an extended settlement then a registrar and a custodian, into something that could happen online instantaneously.”

As Reuters notes, Word Bank bonds are classified with an AAA rating — the highest possible rating that indicates a high level of creditworthiness. The bank reportedly issues between $50 and $60 billion in bonds annually to foster economic progress in the developing world.

As Cointelegraph has reported, this May, Sberbank CIB — the corporate and investment banking arm of Russia’s largest bank Sberbank — conducted the first blockchain-based commercial bond transaction in Russia.

The transaction was completed in partnership with leading local telecoms firm MTS and the National Settlement Depository (NSD), and entailed the smart-contract enabled issuance of MTS corporate bonds for the value of RUB 750 billion ($12 million) with 6-month maturity.

In Australia, major initiatives are underway to integrate blockchain across both the government and the financial sector. This July, IBM signed a five-year AU$1 billion ($740 million) deal with the Australian government to use blockchain and other new technologies to improve data security and automation across federal departments, including defense and home affairs.

As of December last year, the Australian Securities Exchange (ASX) has been working to implement blockchain technology to replace its current system for processing equity transactions, a project that Reuters today notes is slated to be completed by 2020.

This post is credited to cointelegraph

If there is one country where blockchain will succeed, it is China. Nowhere has a larger, more underdeveloped or fragmented amount of data to manage in logistics, supply chains and other areas. There are also the ever-present counterfeit scandals from fine wine to condoms filling social feeds and state media. Even on booming cross-border e-commerce platforms–promoted as the bastion for legitimate products bought directly from the source–fakes are all too common. In fact, 40% of cross-border cosmetics sold during last year’s Singles’ Day turned out to be counterfeits. There is no shortage of reasons why Chinese are the least trusting consumers on the planet.

As a result, hundreds of solutions have surfaced to provide traceability for genuine fare. Unfortunately, few of these have the scale and widespread acceptance to tempt consumers to download the app or engage other tools to legitimize a product. Many of the systems themselves can be faked, with phoney QR codes pointing to bogus websites falsely claiming a product’s authenticity.

Blockchain is the first tracking standard that is receiving widespread acceptance from consumers, businesses and government in China. Alibaba and JD are investing large sums into blockchain and President Xi Jinping calls it a “breakthrough” technology. About 41% of Chinese startups who received funding in the first quarter of 2017 were blockchain related. Shanghai, Guangzhou, Shanxi, Henan, Guiyang and Hangzhou all have policies actively encouraging blockchain development, with Hangzhou pledging investments of $1.5 billion (10 billion yuan) in the technology. It was one of the most talked about topics at the World Economic Forum’s 2017 Davos, where it was estimated 10% of global GDP will be stored on blockchain by 2027.

China’s President Xi Jinping delivers a speech during the first day of the World Economic Forum, on Jan. 17, 2017 in Davos. (Fabrice Coffrini/AFP/Getty Images)

It’s still important to remember that blockchain is a nascent technology, and widespread adoption, profitability and expertise is yet to come. Blockchain will not replace the internet; it is a data infrastructure that sits upon it. Nevertheless, like any new technology, there are countless prospectors hoping to cash in, several unanswered questions and many misnomers related to blockchain. Here are four myths about blockchain.
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1. You can store anything you want on blockchain, cheaply

As blockchain data is held across thousands of servers, storage isn’t cheap. Ziga Drev, founder of blockchain solution provider OriginTrail notes that blockchain wasn’t designed for large amounts of data, but the ultimate aim of the technology requires it to “optimize the way business is done across multiple companies,” such as with supply chains. This does take some data. Fortunately, OriginTrail has overcome the challenge of expensive scalability, storing only “fingerprints” of data on the blockchain itself, which costs cents, or even a fraction of a cent for low cost FMCG (fast moving consumer goods) products, where fingerprinting can be done on a batch level.

2. Using blockchain in the supply chain is just about authenticity assurances

Whilst blockchain provides traceability for products that are sensitive to counterfeits and tampering, it also increases efficiencies leading to cost reduction. Currently, 10% of all freight invoices contain inaccurate data, including duplication, wrong freight mode charges and incorrect fees. This leads to disputes, as well as many other process inefficiencies in the logistics industry. By powering leaner, more automated and error-free processes, blockchain can achieve cost savings across the supply chain and provide benefits spanning as wide as healthcare to legal contracts.

The transparency, robustness and decentralized nature of blockchain will see it expand far beyond the practices seen today. One example is blockchain startup Wings, a Shanghai-based P2P flight booking service allowing travelers to buy and sell tickets to anyone, anywhere. Wings founder Stephen Yuan praises the blockchain backbone “allowing the platform to verify every ticket transaction at every point of sale, millions of times a day.”

3. I’ve heard all about blockchain but I’m not aware of any real-world success stories

China’s most innovative companies have been quick to jump on the blockchain wagon. There is no shortage of examples of implementation–such as the more than 400 brands and 11,000 SKUs on alone who have blockchain tracing–but success stories are harder to find. Fear not, they are coming, such as Cheong-Kwan-Jang red ginseng which implemented blockchain tracing on JD this year and saw sales increase more than 500% year-on-year between March to May, according to an email from a JD representative. Another JD initiative, AI-supported Running Chicken, allows consumers to scan a QR code on the bird’s foot to check raising days, feed, as well as time period for regular checks and disinfection activities, information about the production and testing companies all stored on blockchain. Every batch of the premium chickens has sold out. “We are building long-term trust, beginning with products customers really care about. They’ve never had real visibility into the supply chain before, so this is a big deal,” says Josh Gartner, VP, International Corporate Affairs at JD. “Blockchain traceability will completely change the standard for trust throughout global retail.” is one of the biggest e-commerce and logistics company in China. (Photo by Zhang Peng/LightRocket via Getty Images)

Yimishiji, a Shanghai-based online farmers’ market selling organic and local produce incorporated blockchain to enable customers to trace purchases from farm harvest to distribution center to the last mile delivery. “As an added benefit, by connecting the data points, blockchain also showed its potential to efficiently uncover any data discrepancy,” says Matilda Ho, founder and CEO. Yimishiji and blockchain partner OriginTrail went on to win an innovation award from the Walmart Food Safety Collaboration Center in China for the initiative.

4. My businesses and my suppliers need to replace our IT systems to integrate blockchain

We’ve heard from businesses concerned about the upheaval and expense involved replacing existing infrastructure to implement blockchain. Fortunately, as long as key touchpoints are already digitalized, blockchain is ERP-agnostic and can plug and play into existing systems. There are a host of businesses offering solutions such as OriginTrail (mentioned above) and Decent.

Blockchain has many benefits selling in China, but beyond the hype, companies considering blockchain should evaluate if there will be legitimate benefits from cost reductions and efficiencies, and/or if their brand or product will fulfil a consumer need by assuring them of the authenticity of their products. Regardless of whether it is currently the right fit for your business, blockchain is something you’ll be hearing a lot more about.

News Credit : Forbes

The internet has provided an unparalleled means of communicating with people all over the world. There are more than 60 billion messages sent per day on WhatsApp and Facebook messenger combined as well as 269 billion emails sent on a daily basis. However, these platforms have slowly become centralized over time allowing them to become prime targets for hackers and other actors seeking to harvest our data. Both of them have continuously threatened users’ rights to privacy.

Blockchain technology’s disruptive force innovates the way our data are stored, allowing users to fully control personal details they would like to share in public. Leveraging the potential of blockchain technology and decentralization may well be the key to protecting our privacy.

Centralized Threat

Facebook’s recent Cambridge Analytica data privacy scandal exhibited just how companies have harvested users’ private data for monetization purposes. An estimated 87 million users around the world have had their personal information used by analytical firms, making it one of the worst data breaches in social media history. While this isn’t new, it highlights the inadequate data protection that exists in our current platforms.

Technological advancement has revealed another way to manage our data through blockchain technology. But this method isn’t something novel, in fact, it harkens back to some of the earliest ideas of the internet. Decentralization set the stage for the unparalleled World Wide Web we know today. It is also a central feature of blockchain technology.

Distributed Privacy

Blockchain provides an infrastructure that allows a secure platform that provides multiple innovative use cases. The immutability and transparency that blockchain provides can gain back users’ right to privacy. However, this technology is still in its infancy.

Credit: Forbes

“From here on out, people can’t say bitcoin is not private anymore.”

That’s how veteran developer Adam Ficsor, now CTO and co-founder of the privacy tech startup zkSNACKs, described the importance of the Wasabi Wallet, set to debut on August 1.

This desktop-friendly bitcoin wallet, which can only be used with the anonymizing Tor browser, will be the first (relatively) mainstream light wallet to offer CoinJoin transactions, dispatching lots of transactions at once to obscure their sources.

First proposed by Bitcoin Core legend Gregory Maxwell in 2013, CoinJoin is one of the most prominent attempts to solve one of bitcoin’s greatest challenges: while addresses are pseudonymous, all transactions are publicly recorded on the blockchain, undermining user privacy.

While developers have been experimenting for years with improved anonymity models, Wasabi Wallet will finally make using CoinJoin as easy as flipping a switch.

Because these privacy tech projects generally avoid collecting data about their users for obvious reasons, it’s hard to determine how many people use privacy-oriented wallets. However, Samourai Wallet’s Android app, arguably the bitcoin industry’s leading privacy wallet since the project was founded in 2015, has garnered at least 27,000 downloads.

The team behind Samourai also plans to implement a type of CoinJoin feature by the end of the year, called a Whirlpool cycle. So Ficsor added another unique feature to further distinguish Wasabi Wallet.

Most bitcoin wallets actually have thousands of addresses inside, he said. But blockchain explorers like can often detect that those unique addresses share a common source since the same wallet will send an explorer balance queries on all its addresses simultaneously, tipping the user’s hand that they belong to the same person.

“That’s what we want to avoid,” Ficsor said. To do so, he applied a so-called filtering solution first proposed by the bitcoin developer known as Roasbeef, which Ficsor said enables the wallet “to query how much money is in your wallet in a way that you don’t connect your addresses together.”

With the filter, instead of pinging an explorer, “you can figure out which blocks in the blockchain you are interested in and you connect to a lot of bitcoin nodes and get one block from one node,” Ficsor said. “So basically they cannot figure out which transaction you are interested in and they cannot make statistical guesses what this random guy who asks for a block from me wants to do with that block.”

Although funds are otherwise viewable on the blockchain itself, Wasabi will be the only wallet that obscures from nodes how much bitcoin the total wallet holds. “No [other] light wallet queries the balance in a private way,” he said.

Shared values

Beyond the Japanese motifs, the Samourai and Wasabi projects have a lot in common, both in terms of values and business models.

The most obvious commonality is the privacy focus. Speaking to why he’s so passionate about privacy, Ficsor said it’s critical to the success of a currency that any individual unit is as valuable any other, no matter where it’s been, telling CoinDesk:

“Fungibility is very closely related to privacy and anonymity. And we know this is a property of money, that this is a feature it needs.”

Likewise, the pseudonymous co-founder of Samourai Wallet, who goes by the initials SW, told CoinDesk his team views know-your-customer identity checks that connect bitcoin wallets to users’ government-issued IDs or bank accounts, such as those implemented by platforms like Coinbase, as a “fundamental attack on bitcoin and its users.”

These ideals have in turn shaped the two teams’ business models. They’ve both eschewed taking venture capital or raising money through an initial coin offering (ICO), two of the most popular fundraising methods for blockchain projects.

“My co-founder and I come from very well-funded, by VCs, companies in the crypto space. And that’s not something we wanted to replicate,” SW said, adding that ICOs are “a good way to distract yourself from building a good product.”

Rather, both Ficsor’s recently founded zkSNACKs startup, incorporated in Gibraltar, and the un-incorporated Samourai Wallet project were self-funded until launch then accepted bitcoin donations to expand the team to roughly five people each.

SW pays contractors only in bitcoin, while Ficsor utilized two donated bitcoin to compensate independent developers.

Ficsor said self-funding allowed him to stay independent. In fact, Ficsor is so confident users want Wasabi’s CoinJoin feature that charging 0.3 percent per mixer transaction is the startup’s sole source of revenue. He told CoinDesk:

“We’re actually expecting to have a lot of income, so we’re not selling out.”

Meanwhile, economist Bálint Harmat, co-CEO of zkSNACKs, agreed with SW about prioritizing the product instead of trying to make a quick profit or generate buzz.

“At first we want to make sure that the wallet is rock-solid,” Harmat told CoinDesk. “We are planning to release the 1.0 version on October 31, without outside investors. We are only going to accept investors’ money for further development of Wasabi if it is stable and we enjoy the acknowledgment of the bitcoin community.”

Given the similarities between Wasabi and Samourai, it’s not surprising that the two have collaborated.

Both privacy wallets will implement ZeroLink, an open source tool Ficsor made to help developers find a wallet’s security vulnerabilities. By working with the Samourai Wallet team on such tools, Ficsor prioritized the open source ethos over any rivalries with a formidable competitor. Taking the idea even further, both teams plan to make almost all of their software open source.

Nevertheless, they are still competitors. Evincing the rivalry, SW critiqued Wasabi’s CoinJoin feature for requiring users to wait until 100 users pooled their bitcoin together to send out at once.

“How long is that going to take?” SW asked.

These privacy wallets share at least one more thing in common: they are out of step with the trend among VC-funded blockchain startups to become more like regulated financial institutions.

Aside from recently seeking broker-dealer or even banking licenses, the industry’s unicorns are known for tracking their users’ transactions on the blockchain in order to comply with anti-money-laundering (AML) laws and international sanctions. Indeed, platforms like Coinbase often freeze accounts that accept cryptocurrency previously used on a gambling site or dark market.

That’s why around 15 percent of Samourai users utilize the Ricochet option, which adds five additional hops to a transaction until it lands at the intended destination. Wasabi’s CoinJoin feature will offer similar, although not identical, obfuscation.

On the other hand, Samourai already has many other unique privacy features, including a stealth mode that hides the application so that anyone stealing the phone won’t know it holds a bitcoin wallet. Plus, Samourai Wallet offers remote commands to wipe a stolen phone clean and transfer the wallet to another device.

Such privacy features have proven especially useful for bitcoin users in Venezuela, where corrupt officials are known to confiscate crypto-related devices.

Venezuelan Samourai Wallet user Eduardo Gomez, head of support at the crypto startup Purse who earns his salary in bitcoin, told CoinDesk he uses features like Ricochet and CoinJoin because he fears platforms like Coinbase could freeze his account if he receives a bitcoin with a questionable transaction history.

“I have no control over which bitcoin my employers send me,” he told CoinDesk, concluding:

“I really want to emphasize how important fungibility is for bitcoin. The community needs to solve that problem ASAP.”

Credit: Coindesk

There is no doubt that Blockchain is evolving, right now hundreds of ICOs are currently vying for your investment ready to launch that great new project.

But to find the best thing since Bitcoin, you need to look at why Blockchain was created in the first place—for transparency and accountability. Two ideals which go hand in hand with the auditing world but up until now have rarely been used.

For businesses, an annual audit can be costly but necessary. It assures communication with stakeholders and presents a snapshot of how that company is doing. But in today’s continually evaluating and fast-paced world, is a snapshot really good enough?

That’s where real-time reporting, and Blockchain, comes into play.

An army of auditors

Enter Auditchain, a project that could be summed up as the culmination of dreams for those who remember the original Satoshi Nakamoto whitepaper on Bitcoin.

This brave new world is staffed by industry legends such as Chief Scientist Dr. Stuart Haber – who’s work in cryptographic time-stamping Nakamoto referenced, Eric Cohen, a pioneer in audit technology, co-inventor of global reporting taxonomy standard xBRL and fellow at the Continuous Auditing and Reporting lab at Rutgers University and Jason Meyers, a 30-year veteran investment banker who pioneered the first multi-jurisdictional stock plan administration platform that landed Facebook as a client.

Credit: Forbes

The interest around blockchain has been well-chronicled for everybody to take notice of the technology in the past few years. Deeper enthusiasts have delved further into the different types of blockchain networks along with their possibilities.

Differences between public non-permissioned blockchain networks and private permissioned blockchain networks are fairly straightforward. In all its simplicity, a public permissionless blockchain has no access restrictions to view its data or participate. Usually, such networks offer economic incentives for those who secure them and utilize some type of lottery based consensus algorithm. Some of the largest, most known public blockchains are Bitcoin and Ethereum.

On the other hand,  private permissioned blockchain networks requires permission to read the information on the blockchain and limits the parties who can transact or participate. Some examples include R3’s Corda, as well as various Hyperledger frameworks including Hyperledger Fabric and Hyperledger Sawtooth among others. There are few cases where a private permission-less network would make sense but there are some examples of public permissioned networks appearing in order to facilitate better scaling of public networks.

Ethereum creator Vitalik Buterin captured the difference between public and private networks nicely when he said,

“Essentially, instead of having a fully public and uncontrolled network and state machine secured by crypto-economics (e.g. proof of work, proof of stake), it is also possible to create a system where access permissions are more tightly controlled, with rights to modify or even read the blockchain state restricted to a few users, while still maintaining many kinds of partial guarantees of authenticity and decentralization that blockchains provide.”

When a company is in the architectural planning stages of a blockchain network, the team has to first assess the objective and goals the network wants to achieve. Would a public or a private blockchain network be more appropriate? Should the network be tokenized? Which specific blockchain technology is the best choice?

For instance, let’s say your aim is to reduce fraud around invoice financing in India, then it’s important to understand how to connect clients in a secure but transparent manner by creating a blockchain network that has never existed before.

Why private permissioned blockchain network

If a company wants to create a safe ecosystem to mitigate fraud in financing, the network access restriction should reflect the sensitivity of the business processes it is targeted at. Financing is restricted to licensed or regulated entities, and so the blockchain network should also be restricted to the same licensed or regulated entities.

In enterprise, and specifically in financial services, when there is a network that will potentially be open to multiple  parties, there needs to be assurances that all parties follow the same rules, regulations, and disclosures. Additionally, enterprises need to know that specific information and data is not available to anyone not entitled to access it. If the risks of having the general public participate are greater than the value they would bring to the network, then why have them participate? And the risk the public poses to any network is serious, especially when the data being stored on it could be sensitive.

From a business standpoint, there is rarely a case to make transactional information public and networks tend to serve a specific purpose which is restricted to entities that meet specific requirements. For example, regarding participating on the Swift network for interbank payments, access is generally restricted to participants which are of a certain size, are licensed, are regulated, and fall under a certain classification because they have procedures in place and have a vested interest in operating a certain way on the network.

Transformation of private network into a public one

There are some instances where a network or service should be made public. For instance, identity services like certificate authorities (whose purpose is to validate the link between an identity and cryptographic keys) make more sense as a public service than specific to a single blockchain network. Tying keys to known and verified public identities is a common requirement for private networks.

That being said, the exchange of transactional information itself between parties for enterprise is unlikely to be done in a public setting unless it is public information, even if it is encrypted or pseudonymous. There are a few cases where transactional information is mandated to be made public, such as property deeds which are publicly searchable. Even then, a public permissioned network would be the appropriate choice over public permissionless. However, with most use cases being pursued, irrespective of the industry,  they almost always involve sensitive or regulated information for which privacy is a fundamental requirement.

Non-tokenized blockchain network

Once the private vs. public argument has been weighed, one must ask if it is appropriate to use a token model for the particular use case. Continuing with the earlier example of fraud mitigation, one can understand that the use of tokens in that particular case does not add value and facilitate communications over the blockchain network. In fact, without tokenization, the distributed ledger architecture itself adds value by providing a secure and immutable data service, not controlled by any single entity, where data is being stored and shared while guaranteed to maintain its integrity. Tokens fundamentally represent ownership or value. So unless you are transferring ownership  or value among participants, tokens are not required and should be avoided.

Now let’s decide on the framework

Picking the right tool for the job is critical. Once decided that you want to build your network on a private permissioned non-tokenized blockchain network (or otherwise), the question is which blockchain framework best fits the needs in that particular use case. Before finalising the framework, you need to keep in mind the following criteria:

  • Find a platform that specialises in the type of network you are planning to build (private permissioned/public)
  • The platform needs to be cost effective and flexible in its design principles so that you can have the freedom to work around your requirements.
  • Everything needs to be enterprise grade and industry tested. Look for platforms that have had successful use cases, or better yet, live production systems.
  • Longevity of a platform is critical for the success of an enterprise, hence your choice should have high probability of survival. This is where the backing of industry leaders comes into play.

The decision regarding which type of blockchain network to use for your network can be a complicated choice as many factors weigh into the decision. Public or private? Tokenized or not? Proprietary or open source? Does the use case even require the use of a distributed ledger in the first place? The ultimate choice needs to be primarily driven by the use case at hand. Consult with others who are further along in their use of blockchain technologies. Take the time at the outset to vet options thoroughly before getting too deep into the process and don’t forget to speak to industry experts before you make a decision. Making decisions in a vacuum will only lead to failure. If you are working on an industry-wide use case, input from the other future participants of the network is critical.

Credit :Entrepreneur Media.