Although organizations have considered decentralized identification for several years, it’s only recently become a viable solution for managing digital identities in a robust way. 

There’s a spectrum of potential decentralized identification methodologies, ranging from self-sovereign identification – individuals control the information they use to prove who they are – to federated identity – linking an identity to multiple identity management systems. 

At its core, decentralized identification is a potential mitigation strategy against the threat posed by a single central authority having access to personal data. Therefore, as organizations increasingly contend with privacy and security concerns, they’re increasingly exploring a decentralized alternative. 

What are the flaws with centralized identification?

By definition, identification data contain a vast amount of personal information, which could be foundational or functional. Foundational identities are those that have been assigned by a state, such as a birth certificate, passport, or identity card. Functional identity relates to the addition of other attributes, such as relationship status, employment status, and entitlement to various services.

Uncontrolled access to functional identities can be particularly problematic, as it could potentially lead to inclusion or exclusion, or similar abuses. “When the allies left Afghanistan, a large database of Afghani citizens who had helped was unfortunately made available to the incoming government, which is very dangerous for those people,” explains professor Jon Crowcroft, researcher-at-large for the Turing Institute. “It explicitly attributes those people that had helped foreign governments.”

It’s worth noting a distributed system isn’t necessarily decentralized. In a distributed system, data is spread over various servers, but may be within a single, centralized, authority. A decentralized system is where multiple authorities and agencies manage the system collaboratively. Therefore, just because a system is distributed does not make it also decentralized. A classic example of a distributed but centralized system would be the NHS in the UK, where there’s a single body overseeing the different health trusts across the country.

Decentralized identification is a methodology dependent on the organizations involved having a shared approach to identity management and control. “It came out of Tim Berners Lee’s Web3 stuff.” adds Crowcroft. “I'm not a big fan of blockchain and NFTs, but agreeing on standard formats and protocols is really good. It's engineering detail, but it matters, as when people agree to those, then you can have a rapid deployment.”

With a decentralized model for identification, there’s no single agency with oversight – and access to – all of the personal data. There have already been instances where companies have been coerced by governments into handing over user data. “We've seen this in the Snowden paper revelations when the US government would use secret courts to coerce companies that ran cloud services to reveal personal information,” says Crowcroft. 

Having a decentralized model for an identification system means it’s much harder for third parties to access the information. Instead of there being a single agency to be coerced, bribed, or overcome, there are now several. Whilst it won’t prevent third parties from gaining access to the information entirely, it does make it that much harder.

How can you deploy decentralized identities successfully?

With the growing number of privatized government services, decentralized identification is becoming an increasingly viable methodology for preventing a single private organization from having oversight over a large identification system. Decentralized identification allows governments to deploy the identification model across multiple vendors. With the appropriate agreements in place, decentralized identification also allows cross-border information sharing between countries to be conducted in a transparent and controlled manner. 

Although the decentralized identification model is inherently robust, it has a fundamental weakness in that there’s no single authority. For example, there’s no single point of contact for users who have lost or forgotten their passwords. It’s therefore incumbent upon users to have appropriate backups of their security keys, such as a one-time access code. 

In order to be viable, too, there needs to be a stable internet infrastructure so the decentralized identification system can operate between multiple agencies. As such, it has typically been deployed in dense, technologically-educated regions.

In 2021, the Estonian government issued its digital identity card as a decentralized identification system. In this case, it was less concerned about coercive governments abusing data than malicious actors from hostile nation-states accessing it. Although the digital identification system has proven to be highly successful, Estonia is a small country with a population of almost 1.5 million people, approximately the same as the number of people who work for the NHS.

There also need to be redundancy measures in place for when internet connectivity is unreliable, such as in remote regions or when there is poor telecommunication infrastructure. This is akin to carrying a paper copy of an e-ticket for a train or concert in case a smartphone runs out of battery.

“If you were retiring to the Western Highlands, where internet access is patchy, you would still need to be able to prove ID,” says Crowcroft. “If the internet is down that day, you could show up with a credential that you had previously printed in case of an emergency – it’s like I always print my boarding pass because I’m paranoid about my phone breaking. That consideration should be there for things you depend on.”

Given the foundational nature of decentralized identification, it’s best used in projects that are just starting out. Also, given that a decentralized identification would be spread across multiple organizations, these systems are intended for managing large numbers of identities.

When identification management is decentralized, the risk of the data being misused is mitigated due to there no longer being a single point of authority to be attacked, bribed, or coerced. With the agreed formats and protocols established through Web3, decentralized identification could become an increasingly viable method for robustly managing identification systems.

Former IBM chief scientist and global DNS system designer David Holtzman has been snapped up by decentralised cyber security provider Naoris Protocol as its new chief strategy officer.

The appointment follows a six-month period in which Holtzman has been working with the company in an advisory capacity distributed systems, cyber security, and blockchain.

A renowned dotcom strategist in Web2 and Web3, Holtzman will be responsible for developing and executing the Portuguese firm’s strategic roadmap, advising on product suite expansions, as well as providing guidance to assist with cyber security growth across Web 2 and 3.

In an announcement, Naoris Protocol CEO and co-founder David Carvalho said Holtzman’s depth of knowledge in both Web2 and 3 technologies will be a key asset to the business as it gears up to launch new products this year.

“We are excited to further utilise David’s incredible depth of knowledge and experience in the cyber security space,” he said. “He has been a key advisor to Naoris Protocol and now with the launch getting closer, he’ll add significant strategic value as a member of the C-suite.”

An early internet pioneer, Holtzman has designed and built numerous information management systems, and has authored several major patents.

In the late 90s, he oversaw the global domain name system (DNS), and, as CTO of Network Solutions, he managed the internet’s master root server – overseeing the commercial web’s growth from 500,000 to the first 20 million domain names.

Prior to that, he was a chief scientist at IBM and ran a major research group at Booz-Allen. For the last six years, he has worked as a consultant to blockchain companies, advising on software architecture and protocols for blockchain-based information systems built on crypto tokens. He is also a former military codebreaker.

“Working with Naoris Protocol has been an incredible journey, and I am thrilled at the prospect of being able to expand my role as their chief strategy officer,” Holtzman said. “My experience, combined with their leading edge tech and innovation will see decentralised cyber security become the norm in the not too distant future.”

According to the latest research from MarketsandMarkets, the cyber security mesh space is expected to grow from $0.9 billion to $2.6 billion by 2027.

Naoris is well-positioned to take advantage of this growth, being named by the research firm as a 'major player' in the market.

“In a world where the volume of cyber attacks is increasing exponentially, we need to have eyes on the future of cyber security,” Carvalho said. “We can no longer use the rear-view mirror approach to anticipate what’s to come.

“Web 3 has materially changed the requirements of cyber security, and the need for decentralised solutions will continue to grow and evolve as Web3 matures.”

I don’t like cryptocurrencies, so it’s safe to say watching not just Bitcoin but a large bucket of other cryptocurrencies sustain a $9 billion crash in the late summer of 2022 ignited a frisson of schadenfreude. The implosion, part of the ongoing crypto winter, might have even forced formerly optimistic traders into wondering if this was the beginning of the end.

After a few minutes of prodding and poking at the less hysterical regions of the net, I had some actual answers. Perhaps the most useful is that the entire market – all cryptocurrencies added together – is broadly agreed to be around $1 trillion. That means the overall loss in that particular crash, which sounds impressive at $9 billion, is still less than 1% of its valuation. Most currencies go through shifts in valuation like this without all the accompanying brouhaha that seems to attend the world of crypto.

All the while, many people forget that all cryptocurrencies depend on a great deal of computing power, both to be mined and to be maintained from day to day. This is a colossal amount, in fact. We’ve all heard the anecdotes as Bitcoin has surpassed the electricity consumption of Holland or Argentina.

Now, the rules are changing as quickly as energy prices are rising. This is bound to have a continued impact on the rarefied world of the blockchain and crypto, which may be strange new entities to the world of finance, but which suck up the kilowatts just like any businesses old or new.

This brings me to a rule learnt as an old banker into the technological world, which is the value placed upon rarity. If you could just buy all the bitcoins you wanted, then the price would go up until sellers are motivated to release their holdings. So why does it seem that cryptocurrencies have to keep on being “minted”, at a time when their competition for our megawatts is, to say the least, unwelcome, verging on foolish? Wouldn’t a moratorium on cryptocurrency farming while we have an energy sector problem, make existing Bitcoin and other crypto holdings more valuable, not less?

In a final irony, the strongest proof of the laws of economics as applied to rarity comes from the gold trade. Worldwide prices of gold are set every day in London, for everybody. This includes the Russians, who have enough gold in the ground to make it cheaper than brass, should they choose to get digging. If they understand the nature of rarity, then how come our crypto pioneers don’t, or want to see that rule overthrown, deposed, ignored?

This was exactly my thinking when I then read that Ethereum has essentially done exactly that. And not only has it placed a hold on minting new currency, but also hugely reduced the ongoing energy demands by switching to a new proof-of-stake concept that avoids the energy bill previously associated with any proof-of-work transaction.

So, good for Ethereum. But I cannot see any rationale, as we venture yet further into this energy crisis, for allowing Bitcoin and other cryptocurrency farms to keep running.

It was only a few months ago that non-fungible tokens (NFTs) were the hottest trend in tech. Celebrities from Paris Hilton to Snoop Dogg were cashing in, and tech visionaries were imagining how the metaverse could be built on the back of them. Now it appears – like tulips and Beanie Babies before them – the hype train may have hit the buffers.

According to the Block, a site that compiles NFT data, weekly NFT trading volume fell dramatically from a high of $1.12 billion last May to a much more sluggish $53.28 million in mid-August. Similarly, weekly NFT sales have fallen from almost a million per week at the end of last year, to around 280,000. This trend has only continued since.

The downturn can also be seen in the behaviour of cryptocurrency firms. OpenSea, the largest NFT marketplace, has announced that it is laying off 20% of its staff in response to what CEO Devin Finzer calls the “crypto winter”. In June, Coinbase, the best-known crypto platform, laid off 1,100 staff. We only need a glimpse at the chaos happening in the crypto markets right now to know there’s probably no coming back from this.

The NFT downturn, too, might explain why the UK government has gone awfully quiet on the NFTs that then chancellor Rishi Sunak ordered the Royal Mint to produce this summer. Nothing more has been officially announced about that project since April, at the time of writing, and the government doesn’t seem too keen to talk about it. The Treasury recently declined to answer a Freedom of Information (FOI) request from the Huffington Post about how much it was spending on NFTs, telling the site the plans were still “under development” and that ministers “need space” to refine the offering.

Nobody’s interested in buying NFTs anymore

“I started last July [2021], and you could have sold a picture of anything,” says Mark Shaw, an NFT investor and enthusiast. “The market was crazy. The money was rolling in, everyone was buying, flipping, and selling.”

He describes how, at the market’s peak, he was buying between three and five NFTs every day, and selling them the next day, doubling his money – or even more. “We all dived in believing it was a never-ending money-making machine,” says Shaw. “It was always going to go up. You buy [into] a quality project, if you could find one, [and] it was just going to make you money forever, it was always going to go up.”

The downturn has revealed a different side to the NFT community. “People would say, ‘Oh, I love the artwork; I love the community; I love all that stuff’. No, they didn't. They just like making money. And when you can't make any money, no one's interested in buying another donkey with a pair of sunglasses on.”

Shaw first noticed signs of trouble in October last year when, at the height of the market, the transaction fees to ‘mint’ new NFTs – known as ‘gas’ fees – went from around $5-10 to as much as $150. This is when he believes things started to turn.

“The fees went up dramatically – ridiculously high – and that started to put a bit of a kibosh on [transactions], because who's going to buy an NFT for $20, when the cost of [transactions] is $200?”

With the more recent downturn, ‘gas’ prices have fallen again, but Shaw still sees an ominous sign. “Now the gas fees are $5-15 and, still, no one's hardly buying them,” he says.

A brighter future for NFTs

It isn’t only the fees, though. Shaw attributes the downturn to two other major factors: the broader bleak economic picture, which he believes is leading NFT owners to cash out to pay their bills, and the reality of the NFT space being riddled with hackers and scammers.

“Every day, I read about people getting hacked, they’re clicking on links, losing all their NFTs, losing all their money,” says Shaw. “People don't really understand this is not putting your money into the Nationwide. This is completely unregulated. One click of a wrong thing, you lose it all. There is no comeback. There's no one to get it back. There's no help desk, there's no ombudsman, there's nothing.”

He argues there should be more training and education in the space to teach NFT owners how to manage their assets safely. “I think the other thing that needs to happen is [better] security,” he adds. “I don't understand why everything NFT has to be anonymous. We're not selling sex, drugs, and rock and roll – you're selling a JPEG of a monkey.”

He does, nevertheless, remain optimistic about the future of NFTs as a technology, and argues there could still be a future for serious artists selling NFTs of high-quality works. He points to a recent NFT release by Damien Hurst as a positive sign. “We need to get back to people loving the art, not loving the fact they can 3x in five hours,” says Shaw.

“For the last year, you basically had pictures of animals wearing scarves, sunglasses and hats,” he says. “I think that's run out of steam. No one wants a gorilla with a hat on.”

Major national banks have successfully completed trials of a co-developed blockchain platform that could see a faster uptake of central bank digital currencies (CBDCs) across global commercial banks.

National banks that took part were the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People's Bank of China, and the Central Bank of the United Arab Emirates, Bank of International Settlements (BIS) revealed this week.

The banks custom-built the mBridge platform which was based on a new blockchain called the mBridge Ledger which aims to support real-time, cross-border payments and foreign exchange transactions using CBDCs.

As part of ongoing efforts, it's thought the success of the platform will help deliver faster, cheaper, and safer cross-border payments and settlements.

Many jurisdictions, in particular emerging and developing economies, are losing access to the international network of correspondent banking services, leaving many households and firms without sufficient or affordable access to the global financial system for payments, the BIS said.

The experiment was designed to operate across different jurisdictions and currencies, to explore the capabilities of distributed ledger technology, and the application of CBDC in cross-border payments between commercial banks.

Real corporate transactions were tested during the pilot. These centred around international trade and involved the central banks, selected commercial banks, and their customers. 20 banks in the four jurisdictions were able to conduct 164 payment and foreign exchange transactions totalling over $22 million over six weeks.

By enabling peer-to-peer technology and instant exchange of multiple CBDCs on a single network, Project mBridge aims to solve long-standing inefficiencies in cross-border payments and foster greater financial inclusion and innovation in international payments.

"Financial exclusion is not just a problem for individuals; it is also affecting economies," said Cecilia Skingsley, head of the BIS Innovation Hub. "This project makes important strides towards developing a platform that has the potential to foster more inclusive and efficient payments systems that will benefit those making and receiving payments in different currencies and jurisdictions as well as the overall functioning of the global financial system."

The BIS said it would continue to work on this and similar projects to explore the user requirements, technical specifications, and governance framework needed for interoperable CBDCs.

The mBridge project team will continue building the technology and testing it with a view to producing a product with enough features to be used by early adopters in the year ahead and a production-ready system thereafter

This isn’t the first time central banks have come together to trial CBDC technology. In September 2021, the reserve banks of Australia, Singapore, Malaysia, and South Africa partnered to test CBDC use for international settlements, hoping it would reduce the time and costs for these types of transactions. It aimed to develop a prototype shared platform for cross-border transactions using multiple CBDCs.

The UK has considered experimenting with CBDCs but a House of Lords committee said this year there was "no convincing case" for adopting a digital centralise currency that could risk financial instability.

Blockchain is guaranteed to change the way we operate. Since blockchain is a decentralised ledger with strong focus on cryptography, security, and privacy, it’s ideal for banking applications and fintech.

Most banks are now using blockchain technology to create more efficient ways to record data. In 2020, the market share of blockchain in banking was 29.7 percent. Since blockchain allows you to update data in real-time, it’s a more cost-effective method to record transactions without intervention.

Here are a few use cases of blockchain in fintech/banking.

1. Digital identity

One of the most important aspects of banking online is security. Banks have to ensure that the transactions they are carrying out are secure and validated. Most banks have their own security algorithms to confirm user identity. But for customers, they often are a huge hassle as they have to go through multiple security checks for simple tasks like checking their balance, transaction history, etc.

Banks sometimes also perform KYC (Know Your Customers) tools that further annoy customers. If you have accounts in different banks, going through different security protocols can be confusing, time-consuming, and frustrating.

To counter this, you can use the power of blockchain. With it, you can create your digital persona instead of relying on the one made by banks. You can also reuse your persona for identification at different institutes and locations, which will allow you to save time and effort. You can also customise your avatar, allowing you to create a personalised and accurate digital identity.

This technique can accelerate identification and validation at the institutional level. Through their digital avatars, clients can transfer funds, share data, and perform other bank-related activities such as loans, claims, and drafting. Also, since the data stored on blockchain networks is much safer than traditional volumes, fintech organisations prefer it for the software requirements.

2. Trading

Even these days, most trading companies require a lot of paperwork. Not only that, if you’re trading over the weekend, payments and transfers are delayed. Since vendors worldwide use trading systems, there is a need to establish a system where all participants can easily check and verify the trade. The trading system should ensure that all participants have correct entries and that the users can perform changes securely at any time they want.

Blockchain is designed to handle exactly this. It can improve the whole process by using a generalised ledger. And since information is refreshed in real-time, the flow of information is fast, and it is easy to make business decisions and policies based on that. Such a system also improves the whole lifecycle of the trade by reducing shorting risks and improving accountability.

• What is Blockchain? Everything you need to know

3. Payments across the world

Blockchain supports decentralised currency, which means that you don't have to go through banks for your payments or transfers. It can also help in faster and easier payments since it costs less to transfer money from one account to another. Since transfer through blockchain doesn’t require third party authorisation, and banks don’t require resources to transfer funds, the payment processing fees are also less.

Blockchain will help to improve the flow of currency all around the world. Normally banks charge 10-15 percent of the amount transferred as a remittance fee. With blockchain, this comes down to three percent.

Blockchain payments are also very secure since all participants in the blockchain transaction have to provide their approval for the transaction to take place, and anyone can check the updated ledger after the transaction.

Also, since you don't require a third party to transfer funds, you can use P2P transfer to do so. Through this, banks can compete with fintech startups and provide their own fintech related services.

4. Investing and lending

Most investment bankers require credit histories and finance details before investing. They need to make sure that their money is in the right hands. Through cryptocurrency, it’s very easy to validate accounts and maintain an investment ledger.

Even without investment firms, there are many ways through which startups can leverage blockchain to generate investments. These days, instead of just huge firms, the general public can also invest in cryptocurrency and blockchain startups. There are many other options like IEO (Initial exchange offerings) and STO (Secure token offerings). They do require their due diligence but are easy investment options.

Of course, banks still need to validate these through securities protocols, and these options need to comply with the government's standards. But through these, startups can generate investments from many investors and get advice from global strategists instead of relying on one hedge fund manager.

5. Auditing

Auditing is a process that verifies the accounts and narrows down any inconsistencies. For most banking sites, this is a slow process and requires many man-hours since it checks requirements and compliances set up by the organisation and the government. For most organisations, data integrity is the biggest factor for auditing.

Auditing is made simple through blockchain. Through it, you can add records directly into the ledger, which allows for a more efficient way to store and update data. Also, companies have incomparable proof of fund transfer in real-time given that the ledger is absolute and true. This also allows them to have cleaner records. They can also use the general ledger for auditing instead of taking data from different sources.

You can also use blockchain to verify transactions that aren’t recorded by users. Smart contracts and automatic invoicing systems will allow your business to charge clients without manual intervention. Also, since blockchain is immutable, there is no doubt about the transparency and accuracy of records.

Conclusion

There are many interesting applications of blockchain in fintech. There also are so many blockchain companies that are working on cryptocurrencies and blockchain applications that seek to provide quick and transparent fintech services. Even though blockchain has some risks, it can change the way banks do business by allowing faster payments, easier audits, and thorough identification.

Of course, to integrate blockchain into the systems, banks and fintech have to make changes to their existing infrastructure. But rest assured, these changes will have significant returns. There are ample opportunities to grow existing solutions into new use cases, leading to an even better customer experience.

• Can you build a business on blockchain?

We are living in very strange times indeed. More than two years of COVID-19, which many wrongly deem to be over, has given way to a cost of living crisis, accelerated by Russia invading Ukraine. This means that all the accepted norms of how household and business budgeting work have been thrown up in the air.

I didn’t expect a year ago to be paying over £100 to put diesel in my little Audi. Some wise sages claim that these price squeezes will help propel us to a greener future with houses warmed by heat pumps, and electric cars filled by roof-top solar panels. This is a fine prediction, but wholly inappropriate for those living in cities or the vast majority who simply can’t afford to take on that sort of capital investment. It almost feels like an “end of times” moment; it's a last roar of a grand crescendo of society abusing itself, where the haves distance themselves even further from the have-nots.

There are tell-tale signs we are entering the last years. The current implosion around the various cryptocurrency platforms certainly point in that direction. The value of Bitcoin, for example, plunged from approximately $24,000 to $17,000 over June. While I’m not bothered by the huge venture capital firms losing the shirts of their yacht-owning investors, it’s the heartfelt pain expressed by those who have very little, and who have been persuaded – some might say tricked – into pouring their savings into this new wonder product. They had no idea of what they were buying into, or how it worked, or the risks involved. In the past, they would probably have needed to go see their bank, or talk to a financial investor, and then to set this up with a reputable financial institution. Today, you can wire money around the world, into any jurisdiction, from the convenience of your smartphone.

The whole “I am in control” vibe can be very liberating, if you believe that the evil institutions of the past were only there to repress you. When things go badly wrong, though, which they have done over the last few months, the same people are wondering why they were left stranded and penniless. It is quite heart-breaking to watch.

Now, don’t start me on NFTs. A more pointless example of “end of times” would be hard to find. The right to prove ownership of a link to a JPG of an image. That’s it. Now, even reputable companies are jumping on board, with the so-called benefit of joining an “exclusive club” with special benefits. In one example, an invitation to an “exclusive event” at the HQ; this might stroke your ego and tickle your fancy, but at the end of the day those companies want to sell you a car.

To Lotus and McLaren, it may seem an easy marketing ploy. They offer a gallery of high-resolution images that fans can download for free, and others can buy NFT versions. I can understand why companies want to push their media story into the wider world, and images are a good way of doing that. These companies like to partner with other firms that provide NFT platforms, though, perhaps thinking they’re distancing themselves from any risk. They are wrong. The reputational damage is potentially huge, and that will come back to haunt many who have been persuaded to play in this space. It is this fear-of-missing-out, coupled with easy access to the global infrastructure of the internet that’s fuelled this nonsense.

We can’t expect the politicians to do anything significant about this. Getting involved in the machinations of the internet, and the global real-time data-scraping and user-modelling process, goes far beyond their capability to understand. It would actually be fairly easy to fix the underlying problems, but the simple reality is that much of the internet would then break. Our reliance on websites and services to data mine every aspect of our lives has become the drug that fuels Web3. Protecting the user by breaking this would lead to a significantly reduced experience for the voters. “Courageous, Minister,” as Sir Humphrey was so fond of saying.

So it comes down to us. To you and me. We need to be pushing the view, long and hard, that this nonsense is exactly that – nonsense. Financial instruments built upon Ponzi schemes and no underlying value whatsoever, are an unacceptable risk. No ifs, no buts. Those who still want to lose their shirts will continue to do so. For myself, my block button on Twitter has never been more active, removing those from my world space who want to pile in and tell me I am wrong; that NFTs and cryptocurrencies are both magical money trees; that they offer a way out from this period of extraordinary worry and stress for everyone. All of this internet-based nonsense is not the answer to the problem. Maybe there is no answer.

Alphabet has been revealed as the largest blockchain investor, having sunk over $1.5 billion into the technology, according to new research.

In four rounds of investment between September 2021 and June 2022, Alphabet invested $1.506 billion, several hundreds of millions of dollars ahead of its nearest investment competitor Blackrock ($1.171 billion).

Taken together, the top forty companies invested around $6 billion into blockchain over the period, with other notable companies such as Samsung, PayPal and Microsoft all putting confidence in the emerging space.

Despite the scale of spending over the period, Alphabet’s entire investment was in just four blockchain companies, Fireblocks, Digital Currency Group, Voltage and Dapper Labs. The deal with Fireblocks alone was worth $550 million.

The limited portfolio could indicate a shift in Alphabet’s interest, from broad investment in the sector to a specific focus on companies that best fit its use cases. In its report on the numbers, blockchain information vendor Blockdata notes that “Alphabet and Blackrock are showcasing a completely different strategy by making concentrated bets on a smaller set of companies.”

Supporting this interpretation of the data, Blockdata’s report from the previous year notes that Alphabet invested in 23 blockchain companies up to September 2021. The more focused strategy on display follows public indication that Alphabet, and its subsidiary Google, have warmed to blockchain and Web3 in the past few years.

Google CEO Sundar Pichai spoke optimistically about the blockchain in Google’s Q4 earnings call at the start of February.

“On web3, we are definitely looking at blockchain, and such an interesting and powerful technology with broad applications, so much broader, again, than any one application,” he stated.

“So much broader, again, than any one application. So as a company, we are looking at how we might contribute to the ecosystem and add value.”

In May, Google Cloud confirmed that it is in the process of building a dedicated Web3 team, to support customers seeking to deploy products around the blockchain, including cryptocurrency and NFTs. It is hoped that Web3 investment can lead to novel use cases, and Google Cloud's investment in the technology to date implies a wide net to provide as comprehensive an experience for blockchain customers as possible.

In recent months, blockchain and cryptocurrency companies have lost over $2 billion to hacks and exploits, with individual companies such as token bridge Nomad losing up to $190 million in one exploit.

IT Pro has approached Google for comment.

Earlier in the year, we were exposed to a case study that wasn't all about the money, but rather the systems and rules that govern the movement, storage, reporting and even taxation of money. We’ve all seen the headlines about disputes between Visa, Mastercard and Amazon, while the move to exclude Russia from SWIFT was a fascinating glimpse into the architecture of finance.

After some of the conversations I’ve had lately, we ought to pay more attention to the Amazon dispute. This isn’t just an argument about how the credit card processors manage payments for vendors so big they define their own markets and acceptable procedures, it’s an argument about how payments can be handled at all scales, from the new strain imposed by contactless payments for peppercorn values, through to the weird world of cryptocurrencies, non-fungible tokens (NFTs) and the blockchain. It’s why we’re engaged in what might be a fight for our lives, over eccentric design features of theoretical currencies suddenly made real.

Creatives vs NFTs

What exactly an NFT is has kept not only us, but my more creative friends busy. This is particularly true for the quieter times at the end of lockdown, as they tried to figure out if their particular speciality had fared well or badly in the role and employment shuffle that followed the end of remote working regulations.

I don’t think the architects of the whole NFT idea had this in mind as a vital bit of timing for their project, but it's a happy coincidence. Had NFTs escaped from captivity back when we were all rushing about like crazy, before COVID-19, I don’t think there would have been a single artist who would've bothered to plough through the whole NFT story. It takes a lot of reading and moping about the web to figure out what’s going on.

The key to it all is the F word. This F stands for “fungible”, an idea that is the absolute beating heart and power of using currencies, as distinct from object-to-object bartering, to run an economy.

You might think that this concept of indivisibility (in an asset) versus perfect recycling and reuse (in a currency) might be a 20th century invention, but it’s nothing of the sort. The medieval European traders needed some way to explain why they used “pieces of eight” as currency, so that people didn’t need to re-establish comparative values between hogsheads of beer, and hogs' heads, in a marketplace. Fungibility of money means you can combine or divide your earnings, no matter where they came from or what other people might think they were worth.

To give a thoroughly modern and yet retro example, I present my HP 16C programmer’s calculator. As a complete, unbroken unit, with its “Made in the USA” stamp burned into the soft plastic of the case, and with no special dependence on any cryptocurrency trading platforms, it has already reached an offer price of $850. What makes it that valuable is it hasn’t been taken apart; “complete and original”, as the collectors like to say. This is an example of an NFT. Non fungible, as you can’t break it down into ingredients or smaller parts and retain the value. And just a token, as its value isn’t driven by materials used, design or capabilities. Although it does still work perfectly.

Fungibility becomes much less clear once you look around at the other things being sold under this label. I’ve seen a proposed photo gallery site that prices each image at about 0.51 Ethereum. For those not obsessively hovering over their Bloomberg trader screens, 0.51 Ethereum is, on the day I write this column, worth £968. That, according to my photographer mates, is a respectable sum for a well-known and publicly applauded black-and-white portrait of someone quite famous – but not for an abstract, artsy eight-by-ten which isn’t even on paper for you to hang up as motivation.

NFTs are demonstrating their own misgivings

Everyone I talked to, from a drag artist in Camden to the tour photographer for the Rolling Stones and Grace Jones, expressed huge misgivings about the whole idea of NFTs. I expected the chorus of discontent to grow when I saw a press release trumpeting away about some “stolen” NFTs.

After all, I thought to myself, an NFT is a software construct based on blockchain technology, so it ought to be trivially simple to trace who owns any entity it presents now, or identify any transaction in its history as being illegal or unauthorised. The advantage blockchain provides is that it presents a globally readable, entirely distributed, easily interrogated history of every single purchase or transfer of any cryptocurrency asset.

Of course, that’s not what happened. Reading further, I realised what was being presented as “theft of NFTs”, with all the hardcore hacking and cracking this implies, was just the usual password-stealing fakery and social engineering. This is complete with a heavy dose of old-school infected emails, gussied up to look like system maintenance window warnings.

With the greatest of respect to the company behind this press release, I think the stretch from the headline claim to the actual blow-by-blow of the incident itself is a bit too far to get yourself a free mention in these pages! Sorry about that.

Then there was the curious matter of Fiverr, the platform for freelance work. Now it wants to advertise not just training resources in programming “wallets” for use in NFT exchanges and repositories, but is actively promoting the idea of training people to create an NFT marketplace. In other words, Fiverr wants to be a supplier to an ecosystem of NFT owners and traders. It has no intention of being the owner-of-record for any assets; that’s for its students and customers to do.

My initial reaction was shock, because surely something so tightly bound with education and commercial operations is going to attract lawsuits like mosquitos round a barbecue, as the less successful students can’t just throw up any old test wallet-type system that takes their fancy.

The rapid growth of NFTs takes us back to the old adage of the wild west, and with that stampede comes a lack of communication. In their rush to grow, the various NFT market players shout loudly with promises of riches, producing a mix of false hope and naively misguided marketing puff.

It reminds me of the birth of photo libraries, a marketplace with its own share of false dawns. There have been several tries in the course of the past few decades at totally rebuilding the photo library pricing model, from some rather divergent first principles. The last try held that photos would be so commonplace they’d be essentially worthless, and that gave us Shutterstock and its many replicas. Perhaps NFTs, and its ageing sibling known as DRM, are moving us to a point where the viewer software can figure out whether you’re the owner of this or that image, and hence whether it ought to show it to you. All of which suggests a sharp jump in value, totally at odds with Shutterstock.

Or perhaps it will work the other way round, and that NFTs provide a form of micro billing (that long sought-after oasis) where pay-per-access becomes a natural and acceptable part of personal photography. I’m not at all sure how I feel about that.

Google Cloud has confirmed that it has plans to form a team dedicated to building tools developers can use to create Web3 projects.

Amit Zavery, VP/GM and head of platform at Google Cloud, told employees on Friday that Google Cloud wants to be the first choice for developers when building new products that use Web3 technologies, according to CNBC.

Zavery also told the outlet that onlookers shouldn’t confuse the move as Google Cloud attempting to be part of cryptocurrency’s surge in popularity, but more to help businesses take advantage of burgeoning opportunities in Web3.

“While the world is still early in its embrace of Web3, it is a market that is already demonstrating tremendous potential with many customers asking us to increase our support for Web3 and Crypto-related technologies,” said Zavery in an email to staff on Friday.

Google Cloud has previously indicated its intentions to pursue and support Web3 opportunities with the announcement of its Digital Assets Team in January this year.

The team is dedicated to supporting Google Cloud customers who want to deploy new products in the blockchain and digital assets ecosystem, citing decentralised technology and companies such as Hadera, Theta Labs, and NFT firm Dapper labs as examples of those who chose Google Cloud for their infrastructure.

Google said that it was still building out the team, at the time of the January announcement, but would look to enable customers to make and receive cryptocurrency payments in the future.

The popularity of and interest in Web3 among developers appears to be inconsistent across reported data, though. Google Cloud believes developers are eager to build for Web3 but recent reports from developer learning and discussion platform Stack Overflow revealed the opposite.

Most developers expressed little interest in Web3, according to its April 2022 survey. A total of 61% either thought Web3 was a scam, ‘overhyped’, or did not know what it was, and 85% had not ever developed using blockchain.

Only a third of those who had developed using blockchain had used it for professional means with the majority saying they used it only in a personal side project.

Web3 is the term used to describe what is thought as the third generation of the internet and is characterised by a collection of decentralised technologies, such as but not limited to blockchain, cryptocurrency, NFTs, and the metaverse.

Web2 - the current experience of the internet - is built upon a select few big tech companies whereas Web3, in theory, would be built on blockchain. Proponents say it will increase user privacy and overall control by becoming less reliant on major tech companies, while those who are less enthusiastic say the movement simply attempts to add value to things that inherently do not have any, like NFTs.

Others adopt more positive views on the technology and think Web3 will be a boon to cloud service providers like Google Cloud. Matt Shearer, CPO at Data Language told IT Pro “if you take a step back, what is happening right now is the early part of the Web3 explosion - there are enormous success stories, but the real impact is just beginning.

“Ignoring the press hype areas like NFT and glitzy [initial coin offering] promises where the value can often seem nebulous, Web3 gives us fundamentally new value models built on blockchain that add a whole new dimension to the innovation and market disruption.

“As these new capabilities and characteristics: trust, transparency, distributed integrity - and the resulting resilience - become more obvious to a broader audience, Web3 approaches are going to be adopted with increasing pace, and this will drive the upstream uptake of cloud services.”

In the beginning, Tim Berners-Lee created the world wide web. It was basic by modern standards, composed of static pages and limited interaction. It was on this foundation that the modern tech giants – Google, Facebook, Amazon and Apple – created something new. Web2 is characterised by dynamic, mobile-first, digital services and social media, underpinned by large platforms, and is what we’re all familiar with.

Now, a new generation may be imminent, and it has captured the imaginations of the Silicon Valley chattering class – a new technological paradigm that has been termed ‘Web3’ by Gavin Wood, a co-founder of the Ethereum cryptocurrency. What exactly Web3 is supposed to be, though, is surprisingly hard to define.

“You always have the feeling you don't really know what it is because even the people who claim to do it can't often explain what it is that they're doing and why they do it,” says Jurgen Geuter, a sociotechnologist who studies the intersection of technology and politics.

Awkwardly then, it isn’t easy to explain what Web3 means, as it has become a catch-all term for a bucket of futuristic technologies, and some of the ideas associated with it intermingle with similarly vague high-concept ideas such as the metaverse.

However, there is one common theme: Web3 advocates tend to envisage the entire web, reimagined and rebuilt using the blockchain. Here’s our best attempt to explain how Web3 might work – and answer the question of whether it really could revolutionise the internet?

Can Web3 let us take back control?

“Web3 is more about being self-sovereign, about being decentralised, and not having a sole reliance on massive corporations and the services they provide to us,” says Justin Bingham, the chief technical officer at Janeiro Digital, a software company that builds decentralised software tools.

“Self-sovereign” refers to a system of digital identity where the user maintains full control over when and where their identity data is used, instead of letting, for example, Google or Facebook decide. In fact, if Web3 is realised, it will conceivably remove the need for large companies to manage our digital lives.

“The ideal dream with Web3 is much more of a trust-based internet,” says Craig Beddis, the CEO of Hadean, a distributed computing firm that provides decentralised computational power to companies such as Microsoft, Oracle and Epic Games. “There's a lot more freedom of choice [and] the privacy element of it will be massively improved because you're not locked into services.”

“In a Web3 world, we're not as bound to a device or a service or a hosting provider. That for me is where it could take us,” he adds.

In essence, then, Web3 is the idea that all of your personal data belongs to you, and that it should be stored on a blockchain, rather than on other companies’ servers. This control isn’t just good for your privacy, but it also makes your data more interoperable.

“You might have some data that's coming from a nutrition application that you're using, that your doctor could find really useful if you could share it with them,” says Bingham, “but they're not designed to connect and talk to each other.”

Enter Web3, where we have full “self-sovereign” control over our data. In this new era “you'll be able to make the data that you have available to whoever you think it makes sense to make it available to, in a way that's first completely based on your consent,” says Bingham.

In Bingham’s view, this could make the apps and services built on Web3 principles even better. “If there are no walled gardens, every interaction that you have around your broader data set is enriching that data set,” he says.

“You'll find that the applications that you use are much smarter because you can give them access to a broader spectrum of information. If you find that you don't like how they're using that access, you can cut them off. Because the data is all designed to be interoperable, you'll get more choice, and so it'll be a more equitable playing field.”

The obvious next question is how we get there from where the web is now. This is something Bingham is working on, as his company is working with the NHS on making blockchain distributed electronic health records interoperable with other, more traditional NHS systems. “If we can make this work with health data, we can make it work with anything,” he says.

Meet the Web3 detractors

Even though Web3 is currently little more than ideas scribbled on a whiteboard, the principles behind it and proposals about how it might work technically have already proved hugely controversial, and not everyone is a fan.

“Web3 is a grift,” says Molly White, a software developer and creator of Web3 is going just great, a website that catalogues negative stories about crypto, NFTs and other blockchain tools that fall under the Web3 umbrella. “The entire point of it is to convince people that countless cryptocurrencies or ape JPEGs, or whatever else, actually have value, at least long enough for the creators or early adopters to make money and get out before the whole thing collapses.”

In White’s view, the very premise of Web3 as a new, decentralising force is flawed. “Many proponents of Web3 present decentralisation as this big new idea when in reality decentralisation has been built into the web since day one,” she says. “Concepts like peer-to-peer sharing and even web hosting, federated social networks, and self-governing communities have been around for a very long time, and blockchains aren't necessary for any of them.”

Even if true decentralisation can be achieved, this might not actually be desirable. Moxie Marlinspike, the founder of messaging app Signal, recently published a blog post laying out his criticisms. They centred on the fact that Web3 requires standards to be agreed upon across the tech industry – which is a tortuous process compared to how platforms operated by one company can make changes and innovate much more quickly.

“If something is truly decentralised, it becomes very difficult to change, and often remains stuck in time,” Marlinspike wrote. “That is a problem for technology, because the rest of the ecosystem is moving very quickly, and if you don’t keep up you will fail.”

He goes on to cite NFT marketplace OpenSea as an example. Although the underlying tokens are stored on the blockchain, OpenSea’s developers have, in true Web2 fashion, built their own proprietary tools on top to make the platform more useful.

So is there any value in what the Web3 advocates are proposing? “I don't think there are good or useful applications,” syas White. “The projects that do attempt to use these technologies for benevolent purposes would be better served by proper, efficient databases.”

Making Web3 happen in practice

Geuter, meanwhile, sees Web3 as not just a technological project, but a political one too. “It's a very libertarian crowd,” he said. “They build this technology and through this structure of ownership, they gain resistance to censorship, they gain freedom, which mostly means freedom from restrictions of what you can say – also restrictions from tax laws, for example, and other regulations.”

He cites the example of how in his native Germany, displaying the Nazi Swastika is banned in most cases, but in a Web3 world, moderators wouldn’t have the choice to remove content at all. “Sometimes they claim Web3 is apolitical, like ‘we just write code, and we're not into politics’,” Geuter explains. “But I think it's anti-political. I think what they try to build is technology that makes political discourse impossible, because you can no longer argue and say we don't think this is okay.”

That, in a nutshell, is some of the theory behind Web3, but will it ever actually happen? Will we wake up one day to find we are logging on as our sovereign selves? “[Web3] leads, I think, to a very exciting era where the web goes back to what the original incarnation of the internet was supposed to be,” says Beddis. “It was about the people and the power and freedom to communicate and exchange points of view and perspectives and data and transact.”

White isn’t so sure, though, that Web3 will ever be taken seriously. “It may for a while, while the grift can be maintained and people believe there is money to be made, but I don't expect it will endure, no.”

Non-fungible tokens (NFTs) have surged in popularity in recent years, despite a chorus of voices condemning the trend as little more than a Ponzi scheme. Investors are ploughing millions of dollars, pounds, or whatever they can find, into these cryptoassets, while bystanders continue to gawp with widening mouths at the unfurling horrors (Nyan Cat cost how much?!).

What better way, then, for the embattled Rishi Sunak to cap off a rocky few days than by throwing himself, and the government, head-first into this utter minefield.

Branded an “emblem of the forward-looking approach the UK is determined to take”, Sunak has commissioned the otherwise serious Royal Mint to launch its own blockchain-based asset this summer. Sunak has gleefully positioned this NFT front-and-centre of a wider package of measures to boost UK fintech, although many of these steps will have been lost amid the noise. Indeed, his Royal Mint NFT is a needless distraction that might set back any efforts to reign in this flaming wilderness.

The reality is that NFTs have become synonymous with corporate exploitation and hypercapitalist greed. The market is as fast-growing as it gets, with $44bn (£32bn) worth of cryptocurrency sent to NFT-related smart contracts last year, up from $106m (£78m) in 2020, according to Chainalysis.

There’s a good reason, though, we haven’t yet reached a consensus on whether or not the whole thing’s just a massive scam unfolding in broad daylight. Not only are artists continuously getting fleeced (some things never change) but the advent itself has muddied the waters of what ownership actually means.

Minted onto Ethereum-based smart contracts, anybody can create an NFT – digitally immortalising an asset – without seeking permission, and trade it freely through a litany of marketplaces. It can be especially egregious for those who hold the copyright to valuable works, like photos or artwork, as there’s essentially no recourse for somebody if their work is ‘stolen’ and minted as an NFT, before being sold on for sizeable profits.

Big brands, too, are finding increasingly exploitative ways to extract money from their customers for little meaningful value in return. A string of household names, like Pizza Hut and Pringles, are urging their customers to buy their NFTs to reap the flimsy benefits of digital gifts, exclusive access, and other gimmicky perks. What business, then, does the UK government have in launching one of its own?

Sunak’s big day in the sun

We barely know anything about Sunak’s NFT, although we can speculate it’ll likely be sold as a digital asset through a version of the Royal Mint’s online shop, much like its other coins and collectables. How the NFT will actually look, or work in practice, though, remains shrouded in mystery. We also know nothing about what rights those who buy into the scheme should expect to have. While it could be nothing short of another gimmick from a chancellor whose entire life, at this point, comes across as an elaborate photo-op, what’s absolutely certain is that cryptoassets of this kind are highly lucrative.

Put this together with the fact the announcement came out of nowhere. Indeed, there were no mentions of NFTs in the government’s 40-page consultation document on regulating cryptoassets launched in July 2021, nor in the government’s 46-page response released this week. Cynics among us may, therefore, suggest Sunak might be reaching for ways to plug the widening hole in the UK public finances, or even fund the £4.3bn in fraudulent COVID-19 loans the Treasury wrote off in February. The likelier explanation is that, when it comes to publicity stunts, the chancellor just can’t help himself.

While there might be a lot of intriguing notes in the wider package, including a commitment to launch a stablecoin in the UK, this NFT line has overshadowed the lot. Sure, many of the measures are vague and might not lead to anything, but setting up forums and advisory groups, at least, will give the government a chance to get a grip on what’s fast becoming a runaway train. The CryptoSprint and Cryptoasset Engagement Group, in particular, are key to this process, given the UK currently has no regulatory regime in place and likely won’t for a number of years. This makes Sunak’s decision to drop a fully-fledged, government-backed NFT in just a matter of weeks all the more bizarre.

Far from this ‘cherry on the icing’ serving as an emblem of the UK’s “forward-looking approach”, it’s more akin to lobbing a grenade into a fireworks factory. For all the important work the Treasury might accomplish on setting the direction of travel on cryptoasset regulation, Sunak has shredded it all with what his imminent NFT might come to represent.

Move fast and break things

There are arguments to make that NFTs aren’t entirely ridiculous. As mindblowing as some of the most famous NFT sales have been – such as Jack Dorsey selling the first-ever tweet for almost $3 million – proponents argue these are no crazier than transactions normally seen in the art world. The worth of high valued physical assets, too, like expensive watches, are often largely derived from certificates of authenticity.

NFTs, in effect, grant us a means by which to cement such documents in the digital realm in a way they can’t be tampered with. The underlying Ethereum-powered blockchain technology, too, has potentially valuable business use cases. But at least with art, or other high-value items, you can feel; touch; smell; do whatever you want with them. Your ownership, too, is guaranteed by way of these items being in your possession, reinforced with the law.

As far as NFTs go, the regulatory landscape is non-existent, and we’re far from devising common standards for trade, particularly across borders. Terms and conditions, too, as well as rights, can vary wildly between marketplaces. Users, for example, might purchase the Royal Mint NFT from the designated marketplace, be awarded some rights, and resell it on a second marketplace with deeply limited terms of ownership. That buyer might then resell the NFT through a third, entirely separate marketplace with its own terms and conditions. They may end up not even having the rights over the NFT the marketplace claims they do.

Fundamentally, though, we absolutely cannot wash our hands of the rampant exploitation, industrial-scale money laundering, and unfathomable quantities of energy being wasted to sustain the whole operation. Nor can Sunak. While the Royal Mint NFT might be entirely legitimate – and nothing more than just a bit of fun – its launch is a tacit endorsement of the entire ecosystem in its current shape – including the refuge it provides for schemers, scammers and snake oil salespeople.

The government must be as far removed from NFTs as possible, especially if it’s serious about answering the big questions on ethics, greedy business practices, and regulations. The chancellor, after all, should be instrumental in foiling Ponzi schemes, not be seen to be throwing his weight behind them.

India is set to launch a central bank digital currency (CBDC) called the digital rupee in a bid to boost the digital economy.

Nirmala Sitharaman, minister for finance and corporate affairs, announced that the Reserve Bank of India would introduce the digital rupee starting from 2022 or 2023.

While presenting the 2022-2023 budget in parliament, the finance minister said the CBDC will give a big boost to the digital economy. She added that digital currency will lead to a more efficient and cheaper currency management system, and that it will use blockchain and other technologies.

India’s central bank has previously raised concerns around private cryptocurrencies around the fact they may cause financial instability.

Sitharaman also announced that the government is imposing a 30% tax, the highest tax band available, on income coming out of digital assets. Losses from sales cannot be offset against other income either, she added.

It has been claimed that CBDCs would help further the adoption of crypto, but it’s just not as simple as that, said Kristjan Kangro founder and CEO of Change, a cryptocurrency investment platform. He added that CBDCs could help speed up transactions and add credibility to crypto, but it comes at a huge cost which is centralisation.

“It’s worth noting though that CBDCs come in a lot of flavours,” said Kangro. “Central banks across the world are experimenting in different types of digital currency with different levels of anonymity, scope and underlying technology. These experiments have had mixed results.

“However, what’s certain, is that without a global approach backed up by consistent, international regulations, it’s difficult to see how CBDCs could replace cryptocurrencies in the short-term.”

India isn’t the only country in the region introducing this new technology, as last September the reserve banks of Australia, Singapore, Malaysia, and South Africa agreed to test the use of CBDCs for international settlements. The banks hoped it would reduce the time and costs for these types of transactions. The project is also set to explore different governance and operating designs to allow central banks to share CBDC infrastructures.

China has selected 15 pilot zones and 164 entities in various industries to carry out blockchain pilot projects across the country.

The pilot zones include areas in major cities like Shanghai and Beijing, as well as Guangzhou and Chengdu, according to a notice posted on the Central Cyberspace Administration of China (CAC)’s website.

164 entities, including hospitals, universities, and companies like the Commercial Bank of China and Beijing Gas Group, have been selected to carry out the blockchain pilot projects. These entities will conduct projects in fields including manufacturing, energy, tax, law, government and finance.

The CAC stated that the regions should attach great importance to the national blockchain innovation application pilot work and ensure it’s promoted. It said that the pilot should explore the full role of the blockchain in promoting data sharing, optimising business processes, reducing operating costs, improving collaboration efficiency, and building a credible system.

Provincial-level cyberspace administrators and industry supervisory departments will be in charge of guiding, coordinating, and promoting the layout of blockchain technology infrastructure in the region.

The notice added that all pilot regions should give priority to adopting blockchain software and hardware technologies that are interoperable and capable of sustainable development. They should also guide blockchain applications to develop their value, scale, and industrialisation. Pilot regions will be encouraged to carry out in-depth cooperation with research institutions, companies, and experts too.

The CAC, national and provincial industry supervisory authorities will help pilots to connect to experts to provide guidance on the planning and construction of the pilot, training exchanges, and creating blockchain standards.

The statement was jointly published by 16 governmental bodies, including the ministry of industry and information technology, the central bank, the state administration of taxation, and the National Energy Administration.

China is promoting blockchain technology despite having banned bitcoin and cracked down on cryptocurrencies. In May, the country targeted cryptocurrency mining as well as exchange platforms. Miners and platforms were forced to suspend operations and came after other measures were proposed like banning banks and financial institutions from providing cryptocurrency-related services.

The Institute of Electrical and Electronics Engineers (IEEE) has formed a new task force to develop global standards for blockchain-based decentralized identities (DIDs) for Internet of Things (IoT) devices.

Dr Xinxin Fan, founding member and head of cryptography at IoTeX, led the development of the DID framework for IoT devices with the World Wide Web Consortium (W3C) in 2019.

Scientists and researchers from Lockheed Martin, Ericsson, Lenovo, Huawei, Bosch, IoTeX, and the China Academy of Information and Communications Technology have now been tasked with formulating a universal DID specification.

“Blockchain identity standardization is critical to ensure interoperability and communications between Internet of Things (IoT) devices, people, and businesses," explained IoTeX. "Eliminating technical barriers and enabling heterogeneous entities to communicate with global standards make possible global trade, economic growth, and local communities worldwide to prosper,”

The working group will be focused on defining an interoperational global DID standard for humans and machines to unlock the $12.6 trillion potential value of IoT that McKinsey estimates will be realized by 2030.

In addition, the Identity of Things standard will help provide a decentralized identity and access management (IAM) framework for IoT device management and help with the creation of IoT security services, such as device authentication, data authorization, and access management.

It's also believed that with global DIDs, people will be able to contribute valuable real-time weather, geography, traffic, and other data to society.

"Despite technological innovations, today, even humans face communication barriers due to language barriers. This issue is compounded when we look at machines manufactured by different companies and deployed in different geographical regions," said Dr. Fan.

"That is what the working group I preside over has been working on since April, and today I am pleased to say we have formed a fantastic initial class of forward-thinking enterprises to drive this standard forward and progressed significantly although many challenges still lie ahead."

This article originally appeared in issue 22 of IT Pro 20/20, available here. To sign up to receive each new issue in your inbox, click here

Blockchain technology has long been touted as a solution for many problems that businesses, and entire industries, face, with many organisations pursuing a variety of use cases. The way blockchain works, however, has genuine downsides in terms of energy consumption, and its rise in popularity comes at a time businesses are actively considering the environmental impact of their operations.

Bitcoin, the most widely-known application of blockchain, has gained infamy for its less than impeccable green credentials. There are several mining rigs throughout the world validating transactions and, according to the University of Cambridge’s Bitcoin Electricity Consumption Index, its annual consumption is 102.3 TWh. This is a figure greater than the total consumption of the Philippines (93.4 TWh), which has a population of 110 million.

Bitcoin, though, is just a single application of broader distributed ledger technologies (DLTs). With countless other potential forms and use cases, especially in the enterprise, can tapping into the blockchain ruin an organisation’s green credentials?

More hype than reality?

To understand why blockchain is such an energy hog, we must first consider how it works. Blockchain is essentially a database shared among several participants, or, in other words, a distributed ledger. This database is akin to a growing chain of blocks, with each block distinguished by its tamper-evident cryptographic signature, or hash, that prevents any block from being tampered with once it’s added to the continuously growing chain. Because a distributed ledger is scattered over many independent nodes across a network, it’s said to be invulnerable to hacking in a way classic networks aren’t due to their single point of failure.

Until recently, blockchain, and other DLTs, have been unsuited to meet the needs of businesses. This has been, in large part, due to a lack of scalability, security, regulatory compliance, and energy efficiency. The evolution of enterprise-grade blockchain technology, however, has made such systems accessible for both private and public sector organisations, according to iov42’s CTO, Ryan Worsley.

“We’re now beginning to see blockchain and other DLTs being embraced by several governments and organisations who want to leverage the benefits of blockchain — security, immutability, transparency, traceability, and streamlined efficiencies,” he says. An example of how the blockchain is being more widely adopted is in the development of the European Blockchain Services Infrastructure (EBSI) platform. This is a programme that aims to use blockchain to improve the scalability, energy efficiency, and security standards of cross-border services for public administrations, citizens, and businesses across the EU.

Not all blockchains are created equal

Bitcoin’s “not so secret” dirty secret is the enormous computing power it requires to confirm a financial transaction is legitimate, according to Neil Robson, a partner at Katten Muchin Rosenman LLP. Allowing any transfer to take place involves solving complicated encryption challenges on banks of computer servers that consume vast amounts of electricity. This confirmation process, known as proof-of-work, requires more and more power to solve the increasingly challenging encryption codes as Bitcoin matures, and there are fewer coins available to be mined. There are, after all, only a finite number of Bitcoins that will ever be discovered. The University of Cambridge’s latest benchmarking study showed only 39% of the electricity powering the Bitcoin mining process comes from renewable sources, with a hefty 61% coming from power stations fuelled by natural gas, oil, and coal.

Roughly 61% of electricity powering the Bitcoin mining process comes from gas, oil and coal

“For Bitcoin, or other cryptocurrencies, to become sustainable and be a suitable investment for an environmental, social, governance (ESG) fund,” Robson continues, “it will be necessary for them to evolve or be re-engineered away from the proof-of-work model so that they use significantly less electricity.”

Although cryptocurrencies consume huge amounts of energy, these digital tokens only represent one use of DLT. Should companies be keen to bolster their green credentials, they can still engage in other uses of blockchain without denting their ambitions, the founder of akaChain, Hoang-Giang Tran, tells IT Pro. “For instance,” he says, “companies can consider smart contracts. Smart contracts can be applied in many industries, including supply chain, finance and real estate. With smart contracts, industries like insurance can operate with less effort and less paper. The blockchain structure allows each stakeholder of insurers to communicate seamlessly, therefore reducing the laborious effort and resources involved in an insurance claim process.”

Another example is blockchain-backed traceability, which is based on the way DLT prevents any party from tampering with on-chain information. Blockchain-backed traceability can ensure the integrity of the information that’s transmitted through a network and, subsequently, eliminate any unethical practices in agriculture or goods manufacturing.

Worsley adds that companies shouldn’t avoid using blockchain technology so long as the particular use case isn’t reliant on the proof-of-work approach. “Unfortunately, Bitcoin’s reputation of being bad for the environment is casting a huge, unwarranted shadow on the rest of the DLT space that follows different consensus approaches,” he says. “This perception that blockchain is energy-intensive needs to be rectified, immediately.”

Building a greener blockchain

For companies hoping to both tap into blockchain and chase their net-zero targets, there’s a promising alternative to the proof-of-work model known as proof-of-stake. In the context of cryptocurrencies, proof-of-stake involves asking miners to stake their shares of any given cryptocurrency to validate each transaction, ditching the need for energy-intensive banks of computer servers to solve encryption challenges.

The Ethereum blockchain, on which the cryptocurrency Ether is based, is in the process of adopting a proof-of-stake system, with the community having been testing a proof-of-stake workflow on a chain called Beacon since December 2020. The switchover is expected to be completed towards the end of 2021, but no exact date has been given yet.

“If cryptocurrencies were to evolve to a proof-of-stake, or other models, without the need for vast amounts of electricity, which Bitcoin probably never will” Robson explains, “then maybe they could eventually become a sustainable investment for ESG investors.”

The Ethereum blockchain will soon abandon proof-of-work in favour of a proof-of-stake system

By integrating a sustainable form of blockchain technology into every aspect of economic life, we could also reduce the carbon footprint for many businesses. For example, automating the bulk of organisations’ infrastructure and IT systems might enable companies to reduce the number of employees who need to commute into an office to process orders. This will lead to fewer transportation-related carbon emissions, according to Dr Najwa Aaraj, chief researcher at the Cryptography Research Centre at the Technology Innovation Institute (TII) in the United Arab Emirates (UAE). “Although the full potential of the green applications of blockchain technology may not become apparent for years to come,” she says, “it can help companies log their carbon emissions. In the future, we may even be using blockchain-powered carbon credits to move to a carbon-neutral future.”

Welcome to issue 22 of IT Pro 20/20, distilling the most important themes of the previous month into a simple, easy-to-read package.

For this month’s issue, we take a look at some of the technologies causing a stir across both the technology industry and the wider public. Whether it’s tried and tested technology like the internet, or emerging disruptors like blockchain, conversions are still being had about how best to utilise these building blocks.

Our lead feature looks at UK net neutrality, and whether an upcoming Ofcom review may lead to a fundamental change in how internet traffic is managed.

Elsewhere, we ask whether a company can truly embrace blockchain without sacrificing its green credentials, and whether a recent surge in productivity has put businesses on the road to digital transformation burnout.

The next IT Pro 20/20 will be available on 29 October – previous issues can be found here. If you would like to receive each issue in your inbox as they release, you can subscribe to our mailing list here.

“Buy them only if you’re prepared to lose all your money,” said Bank of England governor Andrew Bailey in May 2021. He was talking about cryptocurrencies such as Bitcoin, and one reason for his scepticism is that these next-generation virtual tokens “don’t have intrinsic value”.

But does that make them a bad investment? Indeed, are traditional currencies any better? Sterling was previously underpinned by gold, but Britain sold off half of its reserves between 1999 and 2002, when gold was at its lowest value in 20 years. When governments can make unilateral actions like that, decentralised cryptocurrencies which aren’t controlled by any single entity start to look appealing.

That’s particularly true if they’re set up to mimic a traditional gold-backed means of exchange, and Bitcoin’s pseudonymous creator Satoshi Nakamoto mimicked gold by making the currency rare and difficult to mine. To “create” a new bitcoin, a computer’s resources have to be used to crunch through equations. Most of those equations will come to nothing; just occasionally you will hit the jackpot and find a coin.

“It is its very cost of production that gives Bitcoin value (among other factors),” wrote Dominic Frisby in MoneyWeek last October. “You can’t just conjure up Bitcoins. You have to do some hard computer work first and thereby make your contribution to the network. And even if you do this, there is no guarantee you’ll get bitcoins at the end of it. There is risk.”

So, there’s a chance you could burn a considerable amount of electricity for no financial gain. That’s just one of the risks involved in mining cryptocurrency, and a big factor in the question of whether it’s worthwhile.

The biggest cost of mining: energy­

Mining bitcoins consumes a lot of electricity. In evidence presented to the United States Senate Committee on Energy and Natural Resources in 2018, Princeton University’s Arvind Narayanan outlined how Bitcoin miners were at the time computing “about 50 billion billion hashes… every second.” Combined, Narayanan estimated, those operations were consuming just under 1% of the global electricity supply, “or slightly more than the electricity consumption of the state of Ohio or that of the state of New York”.

And as time goes on it takes more and more power to generate a return. By 2020, digital assets exchange Zipmex was warning that “it takes a large setup nearly 30 days to mine 1 bitcoin. After deducting the electricity cost and the overall hardware and software cost, you will be left with 0.1 BTC of profit every month at best. With the majority of setups and the electricity cost and some manpower, it would cost you a total of $73,000 to process one Bitcoin every month.”

At the time of writing, a single Bitcoin is worth $34,471, so you’d have to bank on the value going up considerably to make any profit at all. Or, you could try mining somewhere where electricity is cheaper. In 2018, Elite Fixtures calculated the energy cost of mining a single Bitcoin across 115 different countries, and found prices ranging from from $1,190 in Trinidad and Tobago to $26,170 in South Korea. In the UK, the cost was $8,402. Unfortunately, it’s not feasible for most of us to up sticks and start mining in a different country: the costs of moving will eat significantly into any putative profits.

​Generating money through mining

It’s not just the energy of cryptomining that costs money: you need to pay for the hardware too. In theory you could use your personal PC, but this is likely to yield a trickle of currency at best, and most serious operations have switched to Application-Specific Integrated Circuit (ASIC) designs that are custom-designed for mining.

One mining platform that uses this technology is the Antminer S19 Pro, which costs £6,500 and which can rip through 110 terahashes per second. On average this should generate approximately 0.0007 BTC per day – but with an energy consumption of around 3.25kW it’ll cost you around $18.72 per day to mine around the clock. At current rates, you can expect an operating profit of $4.25 (£3.05) per day, or $1,551 (£1,116) annually.

Clearly this setup isn’t going to make you a millionaire. It would take nearly six years just to pay off the cost of the hardware – and there’s a further complication too. The complexity of the Bitcoin mining algorithm is continually updated to compensate for technological advances in the mining hardware, to ensure that future computers can’t flood the market with cheaply generated coins.

This means that today’s state-of-the-art hardware can quickly become uneconomical. In 2018 the International Business Times reported that miners in China were selling off older mining hardware because it was no longer possible to mine enough currencies with these machines to cover their electricity costs: “a mining machine bought at a price of about 20,000 yuan ($2,885) a year ago is being sold for a price between 100 yuan to 1,600 yuan.” So if you want to keep on mining coins at a consistent rate, you need to keep investing in the latest hardware.

If you’d rather not be constantly upgrading your mining rig, an alternative is to mine in the cloud using sites like shamining.com, hashing24.com or genesis-mining.com. This lets you benefit from the expertise of dedicated teams for whom operating and refining a mining operation is a full-time job, and in many cases, you can also make responsible choices regarding energy consumption. Shamining has a focus on solar and wind energy, for example, while Genesis Mining is based in Iceland, a country where 80% of power comes from renewable sources.

Cloud mining is still an expense, though, with most services requiring an up-front payment. When choosing one, check the minimum required investment, minimum contract length, expected profit, and the terms on which you can withdraw your share of the operation’s earnings.

Can you still create Bitcoins?

If you really want to use your own computer for mining, there are sites that can help. nicehash.com is one that makes it easy, with a mining model which has (a little bizarrely) also been adopted in the latest release of ­­­the Norton 360 antivirus suite.

The idea in both cases is simple. The software runs quietly in the background, using your computer’s spare capacity to mine for cryptocurrency – in Norton’s case, Ethereum. Whatever you earn is automatically transferred into your wallet.

It sounds like a no-brainer: you might only see a small profit, but since there’s no impact on your computer usage it’s free money – right? Well, perhaps not. If you use your computer’s CPU, it’s all but certain that you’ll burn up a far greater cost in electricity than you will ever make back.

Graphics cards with their abundant cores and parallel processing are far better tuned to mining. If you have a powerful graphics card that spends most of its day sitting idle then it may be worth your while putting it to work. However, for precisely this reason, these cards are hard to come by, with mining enthusiasts snapping up stocks of high-end GPUs, leading to worldwide shortages of graphics hardware. To manage demand, Nvidia has even started shipping cards that deliberately reduce their own performance when used for mining cryptocurrencies.

Is cryptocurrency ethical?

It’s clear that, however you generate your cryptocurrency, it’s going to involve guzzling large amounts of energy, which can't be good for the environment. Cambridge university’s Bitcoin Electricity Consumption index recently put Bitcoin’s global electricity consumption roughly on par with that of a medium-sized European country such as Sweden or Ukraine.

Many have concluded that this alone is a good reason to ban all cryptocurrencies. “Bitcoin could be the first inefficient version of a disruptive technology,” Dr Larisa Yarovaya, a lecturer at Southampton university told the FT recently. “It should die for the common good of the planet and be replaced by a new model. It consumes more electricity than a country. All the rest is detail.”

And the societal cost of cryptocurrency mining isn’t felt only in electricity consumption. The GPUs and memory used in mining rigs are a hefty cocktail of silicon, copper, boron, cobalt, tungsten and all manner of chemicals. Some of those raw materials are in short supply, which is in part to blame for the current global CPU shortage. Rare-earth materials are – in part – being used up to mine highly volatile virtual currencies.

There is, at least, some awareness of these issues within the cryptocurrency industry. The Crypto Climate Accord, founded earlier this year, describes itself as “a private sector-led initiative for the entire crypto community focused on decarbonising the cryptocurrency industry in record time”.

The Accord – which is backed by some big names from the crypto industry – is largely focused on making mining use 100% renewable energy, with a target date of 2030. That’s more aggressive than many climate targets, but given that much of the mining is undertaken by unofficial farms around the globe, it’s highly unlikely to clean up the entire practice.

And even if it does manage to move generation to solar, wind and other renewable electricity sources within nine years, the question remains: wouldn’t that energy still be better used to power something more beneficial?

Alternative ways to profit from cryptocurrencies

You don’t need to create coins yourself to take part in the crypto boom. The price of all cryptocurrencies is in constant flux, and as with any other currency you can invest by buying low and selling high. According to CryptoCoin News, a 2021 study by investment firm AJ Bell found that “more Brits have bought into cryptocurrency than into equity … 7% of young adults have invested into crypto over the course of the last year. The FCA estimates that 2.3 million Brits now own cryptocurrency, which amounts to 3.4% of the UK’s population.”

If you’re not among them, you might be wondering whether you’ve left it too late. We can’t advise on whether you should buy into cryptocurrency: nobody can say what will happen to the market day-to-day, let alone over the longer term, so those of us who didn’t invest in 2010 can only look back and rue what we missed. However, since fewer than one in 25 Brits has yet invested in a digital currency, the market could still see gains as interest increases.

If you do decide to invest, there are a few important factors to consider, not least of which is the environmental impact. Make sure you trust whichever institution you use to buy your currency, and consider buying when the market is down, to maximise your chances of selling at a profit later. Finally, remember where we came in, with advice from the Bank of England: there are no guarantees in the world of cryptocurrencies, so “buy them only if you’re prepared to lose all your money”.

Around $90 million has been mistakenly sent to users of popular DeFi staking protocol Compound following a bug in a recent upgrade.

The company's founder took to Twitter to plead with users to return the platform's crypto tokens, while also threatening those refusing to do so.

"If you received a large, incorrect amount of COMP from the Compound protocol error: Please return it," Robert Leshner, founder of Compound Labs, tweeted on Thursday. "Keep 10% as a white-hat. Otherwise, it's being reported as income to the IRS, and most of you are doxxed."

Compound is a decentralised finance (DeFi) platform with a liquidity mining program that rewards depositors and borrowers, but usually at a rate of a single-digit for annual percentage yield (APY).

A user known as 'napgener' first noticed an issue with Compound payouts, flagging three Ethereum transactions where users received around $15 million in COMP tokens in exchange for borrowing and supplying small token quantities for the likes of USDC, ETH and DAI.

DeFi protocols like Compound are designed to recreate traditional financial systems, such as banks and exchanges, but with blockchain powered by automated smart contracts. On Wednesday Compound attempted to roll out an upgrade, but it appears to have included an error.

"The new Comptroller contract contains a bug, causing some users to receive far too much COMP," Leshner said. "There are no admin controls or community tools to disable the COMP distribution; any changes to the protocol require a 7-day governance process to make their way into production."

More and more users began reporting over payments after Leshner tweeted about the bug: $29 million worth of COMP has been claimed in one transaction, while another has said they received 70 million COMP tokens (thought to be worth about $28m).

Leshner didn't specify the issue with the update, however a developer from another DeFi crypto exchange, SushiSwap, tweeted that the fault could be blamed on a "one-letter bug" in the code.

Bitcoin has gone from a niche internet curiosity to a household name that’s made the fortunes of many an investor. Over the last several years, cryptocurrencies and NFTs have stolen headlines, but for the savvy technologist, it’s the blockchain technology underpinning them that’s most interesting.

We’re not going to go into too much detail on the technical specifics of what blockchain is and how it works, but, in brief, a blockchain is a distributed ledger in which every transaction is collectively validated by every node on the network. Entries are permanent and immutable, and the infrastructure itself is completely decentralised.

Blockchain was originally developed to support Bitcoin, and became famous through the rise of cryptocurrencies. However, experts have highlighted many potential uses for blockchain beyond cryptocurrency, including a number of applications in business verticals from property to logistics.

How realistic, though, is the idea of deploying blockchain within a business? Is there a genuine need for this technology, or is it merely a passing gimmick? And how difficult would it be to put the theory into practice? In this month’s IT Pro Panel discussion, we asked our panellists for their insights into just how much of an influence they expect blockchain to have on the future of business.

Block you like a hurricane

If you’re relatively new to the world of blockchain, it may surprise you to learn it’s been around for more than a decade, having been invented by Bitcoin creator(s) Satoshi Nakamoto in 2008. As with most people, our panellists initially became aware of blockchain through its relationship to Bitcoin – which didn’t necessarily lead to the best first impression.

SmartDebit CTO Gavin Scruby, for example, first came across it as a vehicle for criminal transactions and ransom payments. He says although he initially dismissed it, its growth in popularity over the years led him to do more research into the technology behind it.

“I've had a similar experience to Gavin,” says Studio Graphene founder and CEO, Ritam Gandhi. “It’s come in waves for me as well, and I first started reading up about Blockchain around 10 years ago when I heard about Bitcoin.”

This experience is also shared by RoosterMoney CTO Jon Smart, who even tried his hand at mining bitcoin prior to its explosion in popularity and resource requirements.

“I’ve got no idea what I did with the outcome though, as at the time I remember thinking this was a gimmick and would not last,” he says; “I was definitely wrong!”

While the ideas and concepts behind blockchain may seem dense and confusing to the uninitiated, our panellists report quickly getting their heads around it. What was harder to figure out, they said, was how to effectively apply the technology.

“I didn’t find it too difficult to understand and have always liked the concept,” Smart says. “I have, however, questioned how well it would scale and if it was cost-effective as an approach.”

“The bit I found really challenging was understanding the various use cases and understanding how they leveraged blockchain at a more granular level,” says Gandhi, “as well as understanding how to actually implement blockchain technology in practice.”

Block around the clock

These questions around the implementation of blockchain technology are still being asked to this day, although there’s been significant progress since it was first introduced. For example, Smart says his research into decentralised finance has revealed some intriguing potential applications within the insurance industry.

“It was interesting how they suggested that insurance companies may convert fiat currencies into a centralised digital currency as a way of holding the funds globally for more regional insurances, allowing easier flow of funds for assets that moved around”, he notes. “I didn't dig too deep, but the idea that it was easier to hold the funds in a form of global currency rather than using traditional banking to hold funds on account in different countries felt like it may have legs.”

Scruby, meanwhile, remains sceptical. He argues that blockchain is still “a solution looking for a problem”, involving disproportionate engineering overheads and nebulous security implications. He also posits that it has “some of the advantages of a fully distributed system but all of the disadvantages”. Despite this, however, there were some elements that caught his attention.

“An interesting application area I saw was one where Know Your Customer checks were shared between banks on a single blockchain. This meant that the blockchain provider didn't control or even hold the data, and each bank can validate that the others made their changes, so they reduce individual KYC effort. Of course, this could all be done with conventional engineering and agreements, but having that crypto proof made international compliance checks much easier - so the solution was more solving a regulatory proof issue than anything.”

Another use case raised by Smart is Nestlé’s use of managed blockchain to track the origin of its coffee to increase transparency throughout its supply chain.

“I think pretty much every industry can decide to leverage blockchain in some way,” adds Gandhi. “Supply chain is a great example.”

Scruby concurs that if the parties can agree on a common system, supply chain is an excellent use case, but raises a particular point in regards to Nestlé’s deployment. The concept of blockchain is based around a decentralised system with no singular party trusted more than another, and, according to Scruby, this doesn’t precisely meet that definition.

“The thing I find interesting is that all of this happens within AWS,” he explains. “Each user in that chain has to connect to AWS and use their services. So in reality, it's not decentralised and there is a trusted party - Amazon - so there is no actual need for blockchain; Amazon could just share a database that it controls. I appreciate it's Hyperledger Fabric underneath, but we only have Amazon's word for that, so we have a trust in place. It's really interesting that the first commoditised uses of these systems will be blockchain in name, rather than spirit.”

Scruby’s opinion is that the most compelling use case for blockchain technology comes in the form of smart contracts within the legal industry. The main advantage in this area, he says, is that because blockchain is inherently tamper-proof, blockchain-based smart contracts eliminate the need for lawyers to cross-check and verify the terms of the agreement at different stages. This could massively speed up the process of things like mergers and acquisitions.

What’s up, block?

On the other hand, there are still a number of barriers standing in the way of large-scale blockchain deployments. One of the greatest is the fact that any blockchain needs to reach a critical mass of adoption before it becomes viable. Smart notes RoosterMoney was looking at potentially implementing a blockchain-backed cryptocurrency, but says “the volatility of that currency and the need for volume to help stabilise provides additional challenges”.

“With blockchain tech more specifically, we looked at a number of approaches and one that we nearly implemented was a more centralised solution with the benefits of immutability and verifiable transactions. However, at the time we needed it, it wasn't as proven as we would like and we had concerns over what it looked like at scale.”

This problem of critical mass, according to Gandhi, is compounded by the current lack of understanding around the technology.

“In my mind, we need more people to understand blockchain,” he says; “how and where it can be applied, the limitations and risks, why it's useful and, lastly, how to apply it and build applications using blockchain. If our level of understanding grows, adoption will grow and this helps us address the volume challenge we've talked about.”

“Security is a big one for enterprises,” adds Scruby. “These are new solutions, so no one really knows where the malicious attacks (as well as careless configuration mistakes) will come from. Current scanning tools have no knowledge about any of these new solutions and they are in such flux now that they will be playing catch up for a while. When issues are found, due to the inherent tamper-proof and consensus operation of the system, rapid and frequent fix deployments will be an issue. As Ritam noted, more knowledge around will make all of these things easier, but blockchain is just so new in application (if not the concepts behind it) that security by obfuscation will be what is relied on for quite a while.”

Other concerns our panel raised around implementing blockchain solutions include the potential need for regulatory approval in financial deployments, as well as the comparatively slow speed with which blockchain transactions are generally authenticated. The environmental impact of enterprise blockchain deployments, however, isn’t seen as an issue.

This is because while most blockchains use proof-of-work to validate transactions, where vast amounts of energy are expended to perform complex calculations, an alternative method is to use a ‘proof-of-stake’. In this model, members of a blockchain must demonstrate some level of investment in order to contribute changes, such as (in the case of a cryptocurrency) the number of coins held.

“That stops a malicious actor from adding blocks,” Scruby explains, “as they would have to already have more than legitimate members.”

“It's much easier in more controlled blockchains where joiners are vetted for access (like most enterprise ones will be), so you can be even more creative in the block validation mechanism. Ethereum is in the process of converting to proof-of-stake for obvious environmental reasons, but this is slow due to roll-out speed issues inherent in blockchain that we've already discussed.”

Block to the future

While it’s one thing to discuss the theoretical idea of integrating blockchain technology into applications, building that functionality is another thing entirely. However, while it may seem like a dauntingly complex system, Gandhi is sanguine about how difficult it would be to build blockchain-backed software.

“I think in this instance, ‘difficult’ is a relative term,” he explains. “There are a number of popular frameworks, like Hyperledger and Etherium. I think it comes down to the skillset for engineers, as is the case with any other technology. It's difficult the first time or whilst an engineer is learning how to work with one of these frameworks, but the next time it will be easier.”

On the other hand, as Scruby points out, most spheres of software development are significantly more established than blockchain, with good levels of separation between the code needed to run the application and the rest of the stack. In blockchain, the boundaries are currently much less defined, and the levels of certainty are much lower.

“Here, the systems are immature, so a programmer is not completely sure how the infrastructure supporting everything will react,” Scruby says. “They won’t know what security issues will be encountered or know if race conditions and timing issues will be a factor. The breadth of knowledge needed is just much wider right now, documentation is poorer and there is no standardisation between different chains.”

“I absolutely agree,” says Gandhi. “With a certain level of maturity and standardisation, it will get substantially easier in terms of adoption.”

These adoption challenges are illustrated by the fact that even among our panellists, the use of blockchain is still almost non-existent. Although he’s kept a close eye on the development of both cryptocurrency and blockchain, Smart says he has no plans to implement either technology within RoosterMoney’s environment.

“I can't see us deploying a decentralised blockchain solution –which I think is what most people think of when talking about blockchain. It will be interesting to see where things go. We came very close to using a centralised version of the blockchain and that may well come up again. We are more likely to integrate with some form of decentralised finance; however, that does depend on how things progress with the changes that are happening. There are a lot of financial services ideas in that area, and there seems to be good momentum.”

Gandhi’s company already has a number of projects leveraging blockchain, but says they’re still at the proof-of-concept stage and not yet ready for public deployment. However, he hopes to have a blockchain-based application in public beta within the next year to further expand the team’s capabilities.

Scruby’s main objections to deploying blockchain at SmartDebit have historically been based on the highly regulated nature of the payments industry and the company’s size. However, earlier this year, SmartDebit was acquired by business software company The Access Group, which he says may change matters.

“Now that we're part of a larger organisation, who knows? I know they have at least a proof of concept running in the labs,” he says.

“I'll be taking a ‘last man standing’ approach to choosing a solution environment. For me, in areas that handle real money and real risk, I'll leave the early adopter approach to braver people!”

To apply to join the IT Pro Panel, please click here to enter your details. Please note that we are not accepting applications from technology vendors at this time.

Australia and Singapore have complete a blockchain trial to prove trade documents can be issued and verified digitally across two independent systems, removing the need for paper documents and reducing cross-border transaction costs.

The trial was carried out as part of the Australia-Singapore Digital Economy Agreement to make cross-border trade simpler between the two countries, and involved the Australian Border Force (ABF), the Infocomm Media Development Authority of Singapore (IMDA) and Singapore Customs. It successfully tested the interoperability of two digital verification systems, the ABF’s Intergovernmental Ledger (IGL) and IMDA’s TradeTrust reference implementation.

The authorities involved said that by using this blockchain-based, decentralised approach, transactions can become “more cost effective and offers scalability without the need for expensive data exchange infrastructure, lowering barriers to the adoption of paperless cross-border trade”.

They added that it showed Australia’s capability in issuing high integrity digital trade documents that can be instantly authenticated, provenance traced and digitally processed. QR-codes embedded with unique proofs are inserted into digital Certificates of Origin (COO), allowing for “immediate verification for authenticity and integrity of the document when scanned or machine-read”.

COO’s are usually issued on paper and businesses regularly wait days to receive a hard-copy document via courier before dispatching to multiple parties, and paper trade documents are generally required by authorities to prove authenticity and integrity.

“ABF is proud to pioneer cutting-edge digital verification projects in Australia. We understand this collaboration is among the first to involve multiple government agencies from two countries to achieve cross-border document interoperability,” said ABF commissioner Michael Outram. “Digital verification and verifiable documents show promise as a ‘circuit-breaker’ to disrupt persistent paper-based evidence required by authorities.”

Other participants included in the trial included the Australian Chamber of Commerce and Industry, Australian Industry Group, ANZ Bank, DBS Bank, Standard Chartered and Rio Tinto.

In July, the Australian government invested over $5.6 million (£3 million) in two companies through its Blockchain Pilot Grants programme to investigate the capacity of blockchain to enhance the productivity and competitiveness of the country’s minerals and food and beverage sectors. One company was going to investigate how this technology can be used to create a digital certification for critical minerals while the other was going to research how to implement the blockchain to automate key reporting processes.

The Australian government is investing over $5.6 million (£3 million) in two companies through its Blockchain Pilot Grants programme to investigate the capacity of blockchain to enhance the productivity and competitiveness of the country’s minerals and food and beverage sectors.

The first grant is worth £3 million and goes to Everledger to investigate how blockchain technology can be used to create a “digital certification” for critical minerals through the extraction and movement phases.

This aims to help companies in the sector ensure adherence to compliance regulations and increase the demand for Australian products in global markets, while simplifying the process and lowering costs.

The second grant goes to Convergence.tech, worth $2.6 million, to implement blockchain technology to automate key reporting processes under the Excise system, a commodity-based tax on goods including beer and spirits.

This funding hopes to help companies to reduce compliance costs associated with the creation, storage, and transportation of their products.

“The Blockchain Pilot Grants will demonstrate the potential for blockchain to help businesses to save money and cut red tape by improving processes such as tracking products throughout the supply chain and transferring customer information,” said Christian Porter, minister for Industry, Science and Technology.

“These two successful projects will also highlight opportunities to improve the technical and regulatory environment for blockchain in Australia, bolster blockchain literacy and support collaboration between Australian governments, the private sector and blockchain companies.

The grants are funded under the Australian government’s Digital Business package, which was announced in the Federal Budget 2020-21, and aligns with its National Blockchain Roadmap.

In May, Australia announced it was investing almost $1.2 billion in its digital future as part of a strategy to become a modern and leading digital economy by 2030. The investment included over $100 million to support digital skills, including a pilot programme for work-based digital cadetships, investments in the cyber workforce, and scholarships for emerging technology graduates.

Visa is partnering with 50 cryptocurrency firms to make it possible for customers to convert and spend digital currencies like Bitcoin at roughly 70 million merchants worldwide, even if they don’t accept cryptocurrency.

The global payments giant claimed customers spent more than $1 billion on crypto-linked Visa cards during the first half of 2021, with Visa being convinced the “crypto community” sees value in further integrating digital currencies with its global payments network.

The move will see Visa develop a series of payment card programmes with organisations like FTX and Coinbase, with their expertise combining with Visa’s treasury infrastructure to support blockchain-based payments.

"The merchants don't have to change anything," Visa’s head of cryptocurrency, Cuy Sheffield, told Business Insider. “It will be the same as any other Visa transaction to them. But on the back-end, the crypto assets are instantly converted into fiat."

“You have this growing number of consumers with assets on crypto platforms, trading crypto, holding crypto - and then you millions of merchants who don't really understand crypto. They don't want to have to update their point of sales and terminals and figure out what a blockchain is.”

The exact conversion mechanism, and whether there are any additional features, will vary depending on the exchange platform that supports the particular Visa card programme. Generally, however, Visa’s payments infrastructure will handle the instant exchange between fiat currencies and cryptocurrencies.

Users will also be able to benefit from rewards schemes that will see cryptocurrencies administered like hotel points or airline miles. Programmes will be modelled in a similar way to the BlockFi Rewards Visa Credit Card, which lets users spend conventional currency, and earn cryptocurrency rewards. Visa sees this as a means of engaging seasoned cryptocurrency users while opening the door to new adopters.

The announcement follows a series of moves the global payments giant has made in recent years to expand its support for cryptocurrencies. It follows companies such as Mastercard and PayPal also making inroads in the cryptocurrency ecosystem, with Visa keen to be at the centre of any trend that sees digital currency used on a much wider scale.

In March, the firm said it would allow the use of the stablecoin USD Coin to settle transactions on its payment network. The firm launched a pilot with Crypto.com and plans to expand this option to more partners later in 2021.

Previously, if a customer uses a Crypto.com Visa card to pay for anything, their digital currency held in a cryptocurrency wallet had to be converted to a fiat currency. The cryptocurrency wallet deposited traditional fiat currency into a bank account set to be wired to Visa at the end of the day to settle transactions.

Visa's move meant that it now uses the Ethereum blockchain to strip out the need to convert digital currency into traditional money for the transaction to be settled. The firm partnered with digital asset bank Anchorage to oversee the first payment, with Crypto.com sending USD Coin directly to Visa’s Ethereum address at Anchorage.

Sir Tim Berners-Lee, the creator of the world wide web, is selling the original code used to create the modern internet as an NFT.

The single non-fungible token will actually consist of four items - time-stamped files of the original source code, an animated visualisation, a letter from Berners-Lee and a poster of the code. It will be auctioned at Sotheby's for an unnamed charitable cause, according to the BBC.

There has been some surprise at the decision, given that Berners-Lee famously refused to patent his invention, but it is further indication of a growing trend for selling 'things' as NFTs. These are digital tokens, a type of cryptocurrency, that's somewhat similar to Bitcoin besides the fact that each token is unique.

These 'one-of-a-kind' assets have taken the art world by storm, with use cases for albums, paintings, poetry and even just 'ideas'. In regards to the web, the files represent nearly 10,000 lines of written code with its value based on its historical significance and creators authentication. As such, Sotheby's is advertising the collection as "the only signed copy of the code for the first web browser in existence".

"Why an NFT? Well, it's a natural thing to do as when you're a computer scientist and when you write code and have been for many years," Berners-Lee said, according to the BBC. "It feels right to digitally sign my autograph on a completely digital artefact."

Berners-Lee has been thoroughly praised for never having sought profit for his invention, keeping it open source and free for all and his decision to auction it as a charitable NFT is likely to raise a hefty sum of money.

However, NFTs are somewhat controversial due to their environmental impact with the carbon footprint of a single Ethereum transaction said to be more than 14 times that of putting a physical work of art through the post.

Bitcoin has fallen to a three-month low following a promising surge in value that created a number of opportunities for its investors.

Dropping more than 9% on Monday to just under £30,000, the cryptocurrency is at its lowest point since 9 February, Reuters reported. However, it then regained some of its traction, rising to £32,000 on Monday morning.

Similar fluctuations were also seen in other popular digital currencies such as Ethereum and Dogecoin, with the latter falling by 7%.

The drop of all three cryptocurrencies has caused even the most confident traders to become anxious, Reuters found, with one of its most high-profile champions, Elon Musk, taking to Twitter to state that the company had “not sold any Bitcoin”.

The clarification came after a Twitter exchange between the Tesla and SpaceX CEO and Twitter account @CryptoWhale. The latter suggested that Tesla had “dumped the rest of their #Bitcoin holdings”, with Musk replying "Indeed". However, at the time, Musk didn’t clarify whether he was agreeing with @CryptoWhale’s or the account’s comment about Musk facing online criticism.

Musk’s business decisions have been seen as catalysts for the ongoing fluctuation of Bitcoin's value. The move recent slump comes days after Musk announced that his electric car company would no longer allow customers to purchase vehicles using the digital cryptocurrency due to concerns about the increasing use of fossil fuels for Bitcoin mining.

According to research conducted by the University of Cambridge, Bitcoin was found to consume an estimated 148 Terawatt hours (TWh), increasing almost four-fold since 2017. Commenting on the decision, Musk said that “cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment”. The statement caused Bitcoin to fall £5,000 overnight.

Although Bitcoin is still far from its lowest point of this year, the news comes days after it was revealed that the world’s largest cryptocurrency exchange, Binance, was under investigation by the US Department of Justice (DoJ) and IRS due to allegations of money laundering and tax violations.

Microsoft’s Azure Blockchain Service is set to be retired on 10 September 2021, with users being asked to migrate their ledger data to an alternative offering.

Although the platform still supports existing deployments, it’s no longer accepting new members or projects.

The decision to sunset Azure Blockchain Service after only two years was confirmed earlier this week, with Microsoft announcing its deprecation on 10 May.

With a deadline for the retirement set for 10 September, users are being requested to opt for an alternative platform.

The tech giant also provided a thorough migration guide which aims to guide customers, including GE, J.P. Morgan, Singapore Airlines, Starbucks, and Xbox, through the process, and recommended that they migrate their data to the ConsenSys Quorum Ethereum service.

“Based on your current development state, you can either opt to use existing ledger data on Azure Blockchain Service or start a new network and use the solution of your choice,” stated Microsoft. “We recommend creating a new consortium based on a solution of your choice in all scenarios where you do not need or intend to use existing ledger data on Azure Blockchain Service.”

Blockchain is a form of distributed ledger technology, made famous because it is the system on which Bitcoin and other cryptocurrencies are built upon. However, there is more to blockchain than just digital money, with the technology also being used by banks to digitise the transaction records of private placements, or by jewellery companies to help track the origin and ownership of precious gems.

Microsoft first started reselling blockchain as a service (BaaS) in 2015, but only launched the fully-managed consortium network, Azure Blockchain Service, in 2019, allowing users to build, govern, as well as expand blockchain networks at scale.

Microsoft has not provided a succinct reason as to what motivated this decision, although it’s suspected that the platform wasn’t performing as well as its rivals.

The process of the shutdown can also be followed on Twitter through @AzureEndofLife, which was created by Codit Azure architect Tom Kerkhove as a way of monitoring the process.

The news of the sunsetting of Azure Blockchain Service comes months after IBM and R3 announced that they were working together to provide clients with new options to scale blockchain technology while ensuring performance, compliance, and data privacy.

Elon Musk caused the price of Bitcoin to fall last night after announcing that Tesla has suspended vehicle purchases using Bitcoin due to the huge amount of energy required to power the cryptocurrency.

The electric car firm will no longer sell Bitcoin or allow customers to purchase vehicles using the digital token due to concerns about the increasing use of fossil fuels for Bitcoin mining and transactions, especially the use of coal.

Musk, who has repeatedly advocated for cryptocurrencies as a spending vehicle, said his firm will look at supporting alternative cryptocurrencies that consume less than 1% of the energy that Bitcoin does, instead.

As Bitcoin’s popularity has continued to grow, the amount of energy consumption required to power the cryptocurrency has grown in parallel. According to the University of Cambridge, Bitcoin consumes roughly 148 Terawatt hours (TWh).

By way of comparison, the nations of Argentina, the Netherlands and the United Arab Emirates consume 121 TWh, 109 Twh, and 113 Twh respectively. Bitcoin’s power consumption was only 39 TWh in 2017, according to Digiconomist.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment,” Musk said.

“Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”

Musk has long been seen as one of the tech industry’s greatest proponents of cryptocurrencies, and Bitcoin in particular. Only in February his company invested roughly $1.5 billion (approximately £1 billion) in Bitcoin, which the Bank of America estimated is the equivalent to the carbon footprint of the annual emissions of nearly two million cars.

Critics at the time derided the move given Tesla's previous commitment to be an environmentally friendly company. Information regarding the accelerating energy consumption of Bitcoin has been widely documented and was, at the time of Tesla’s investment, freely available online.

Musk had wanted to use Bitcoin as a means for paying for Tesla vehicles, with the $1.5 billion worth of Bitcoin granting the firm the liquidity once it started to accept payments.

This decision follows several other companies in announcing support for Bitcoin, or cryptocurrencies more widely. PayPal, for example, now allows users to trade using Bitcoin as well as other cryptocurrencies, while Mastercard last year announced it would begin supporting some cryptocurrencies, but not those used predominantly as an investment vehicle, likely ruling out support for Bitcoin and other mainstream cryptocurrencies.

The news that Tesla was dropping support for Bitcoin over environmental concerns sparked a price drop, and adds to a growing mood of anxiety about the ecological consequences of cryptocurrency mining - Bitcoin, in particular.

As for the cryptocurrencies Musk may look to as an alternative, Ether consumes roughly 10 times less power than Bitcoin per transaction, according to TRG Data Centres, at 63 KWh versus 707 KWh. Litecoin, meanwhile, consumes 19 KWh per transaction, Dogecoin consumes 0.12 KWh, and XRP consumes 0.0079 KWh.

A NatWest board member has suggested that the bank would refuse business customers who accept virtual currencies as payment, although the bank has since rejected this position.

Morten Friis, a NatWest non-executive director, board member, and chair of the bank’s risk committee, called cryptocurrencies “high risk” during an online shareholder event on Wednesday, as reported by the Guardian.

“We have no appetite for dealing with customers, whether taking them on as new clients or having an ongoing relationship with people, whose main business is backed by an exchange for cryptocurrencies, or otherwise transacting in cryptocurrencies as their main activity,” Friis said.

“We think of cryptocurrencies as high risk and we’re taking, for that reason, a cautious approach to this. It’s an area where regulation is very much in evolution and we’ll obviously respond to that as things change,” he added.

For personal customers who want to use cryptocurrencies, Friis added that the bank would have to conduct extra financial crime checks, as these new digital currencies have been linked to money laundering and black market dealings.

“We expect to continue to take a cautious approach, but we’ll watch how the market evolves,” he underlined.

When asked for clarification, a NatWest spokesperson told IT Pro that as cryptocurrencies like Bitcoin and their regulation are rapidly evolving in the UK, it’s important that the bank takes “appropriate measures” to ensure their customers are protected.

“We can clarify that as long as some specific conditions are met, our business customers can accept cryptocurrencies as forms of payment,” said the spokesperson.

They added that personal banking customers can transact with crypto asset firms from their bank account or debit card, subject to usual fraud and financial crime checks.

The spokesperson also underlined that due to the evolving nature of virtual currencies, the bank is constantly reviewing its stance, taking into account the latest guidance from the regulator and wider industry.

The UK’s Financial Conduct Authority (FCA) announced the ban of the sale of financial products tied with cryptocurrencies or other crypto assets last year, calling them ill-suited for retail commerce. As of 6 January 2021, the sale of cryptocurrencies, like Bitcoin, Ether or Ripple, was prohibited; this affected the sale of derivatives and exchange trade notes, which track the virtual currencies, to investors.

Mastercard said in February that it would support specific cryptocurrencies if they prove to be secure, compliant with industry standards and regulations, and prove to be stable. The company also hinted that not all virtual currencies would be supported, casting doubt over whether Bitcoin would make the list.

Earlier this week, the government announced the formation of a special task force to explore the launch of a UK central bank digital currency (CBDC). This state-backed digital currency would operate alongside traditional currencies and allow for payments to be made using digital money issued by the Bank of England.

If you’ve been on social media recently, you’ve no doubt heard of NFTs – and you’ve no doubt been flummoxed as to what on earth an NFT actually is.

The mind-boggling buzzword first made headlines after a digital-only artwork sold at Christie's auction house for an eye-watering $69 million (£50 million), which saw the winning bidder receive a unique digital token known as an NFT, rather than a painting or print.

Shortly after, the band Kings of Leon jumped on the NFT hype bandwagon and announced plans to release its next album as an NFT, and fashion house Gucci started selling virtual trainers at $12 a pop. And it appears even tweets hold value as NFTs, with Twitter co-founder Jack Dorsey selling off the first-ever tweet for a ridiculous $2,915,835.47 (£2,085,060.05).

Still confused? We were too, so we’ve done the hard work of figuring out what NFTs are – and whether you should care – so you don’t have to.

What are NFTs and where did they come from?

An NFT, which stands for “non-fungible token”, is a digital token that's a type of cryptocurrency like Bitcoin or Ethereum. However, unlike a standard coin in the Bitcoin blockchain, an NFT is unique and can't be exchanged like-for-like, hence the term “non-fungible”.

That means an NFT is a one-of-a-kind asset in the digital world and though it holds no tangible form, it can be bought and sold like any other piece of property; artwork, music, and videos, for example. While Bitcoin was hailed as the digital answer to currency, NFTs are now being touted as the digital answer to collectables.

One of the main benefits of owning a digital versus a physical collectible, like an oil painting or a rare minted coin, is that each NFT contains distinguishing information that makes it both distinct from any other NFT and easily verifiable. This makes the creation and circulation of fake collectables pointless because each item can be traced back to the original issuer.

While NFTs have made headlines over the past few months, they’ve actually been around for some time. The first attempts at NFTs were made in 2012, with some crediting “Colored Coins”, a method used to represent and manage real-world assets with the Bitcoin blockchain, as laying much of the groundwork for NFTs. However, NFTs were first popularised by CryptoKitties, a blockchain game on Ethereum that let players purchase, collect, breed and sell virtual cats.

How do NFTs work?

NFTs are part of the Ethereum blockchain. Ethereum’s non-fungible token standard, as used by platforms such as CryptoKitties, is ERC-721, although it’s worth noting that NFTs can also be created on other smart-contract-enabled blockchains with non-fungible token tools. NEO and TRON, for example, now have NFT standards, and Cryptokitties has since migrated to its own blockchain.

The blockchain acts as the decentralised ledger that tracks the ownership and transaction history of each unique NFT. The main difference between NFTs and other traditional cryptocurrencies like Bitcoin is interchangeability – or, rather, the lack thereof; while one Bitcoin in a digital wallet is interchangeable with another in a different walled, NFTs are coded to have unique identification codes and other metadata that no other token can replicate.

Andy Baloiu, Blockchain Technologist at Digital Catapult, explains: “NFTs are a bit like a digital version of those art pieces or card games. Imagine a designer like Ken Sugimori, the father of Pokémon, or Banksy, the anonymous graffiti artist, issuing an NFT on the blockchain that includes the digital image of said piece. And imagine that after issuing the NFT, anyone in the world could bid and eventually buy that NFT, which means getting the exclusive digital rights (or perceived rights) for that piece.”

Theoretically, anyone can create, buy and sell an NFT without asking for any prior permission. These assets are stored in an encrypted peer-to-peer network, which makes it very difficult for cybercriminals to hack or tamper with.

NFTs could have applications beyond being used to transact in content, including supply chain management of physical goods and secured finance transactions.

Should my business care about NFTs?

Many people – including the artist who sold his digital artwork for $69 million – believe the NFT craze is a bubble that’s eventually going to burst, suggesting it has simply managed to capture our imaginations because it fuses so many potent social and financial trends. It has a cryptocurrency angle, a virtual-reality angle, a meme angle, and it’s taken the world of social media by storm.

Others, however, believe that NFTs aren’t going away any time soon and that businesses should be paying attention to the mind-boggling, frenzy-creating trend.

Gary Bracey, Co-Founder of Terra Virtua, the world's first fully immersive digital collectables platform, tells IT Pro: "At minimum right now it’s an important technological development driving big changes in the entertainment, creative, music and gaming industries. If you’re connected to those worlds you’ll likely already have an awareness of NFTs, and a sense of where they're headed. If not – and that’s plenty of businesses and consumers of course – it’s really worth keeping informed.

“Granted, there’s definitely a bit of a valuation bubble going on at the moment, when it comes to the most high-profile items, but the future is affordable, sustainable and inclusive. NFTs offer forward-thinking businesses the chance to align unrivalled customer engagement with safe, secure and transparent revenue streams.

“There’s also enormous scope for retail, marketing, collaboration, sponsorship and investment opportunities. Connecting NFTs with AR and VR means consumers can get closer than ever to their most cherished brands, enjoying truly immersive experiences. All that’s needed is a basic understanding of the potential and the inspiration to apply it to your own operations."

Thomas Borrel, chief product officer at Polymath, agrees that businesses should be paying attention to NFTs, and believes they could have many use cases beyond digital art, including IoT deployment and decentralised finance.

“NFTs could be used to track the transfer of ownership and/or right to benefit from other assets like data. Additionally, NFTs can be used to track ‘things’ in an IoT deployment, identify replicas or provide an auditable trail of ownership for luxury goods.

“As the popularity of NFTs surge, we should expect them to become collateral in decentralised finance (DeFi) and have their associated revenue streams shared across the token holders. Whether NFTs are securities will be a matter of facts and circumstances for each individual asset.”

PayPal has launched Checkout with Crypto, a new feature that allows customers with cryptocurrency to check out using this option on the company’s platform.

The cryptocurrencies supported by PayPal are Bitcoin, Litecoin, Ethereum and Bitcoin Cash, and only one of these can be used for each purchase.

This feature will now automatically appear in the PayPal wallet at checkout for US customers with a sufficient cryptocurrency balance to cover an eligible purchase, and there will be no transaction fees.

Once the purchase is confirmed, the cryptocurrency is converted to fiat money, a government-issued currency that is not backed by a commodity but by the government that issued it, and then the transaction is completed.

"As the use of digital payments and digital currencies accelerates, the introduction of Checkout with Crypto continues our focus on driving mainstream adoption of cryptocurrencies, while continuing to offer PayPal customers choice and flexibility in the ways they can pay using the PayPal wallet," said Dan Schulman, president and CEO at PayPal.

"Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies."

Furthermore, this feature allows customers to checkout with cryptocurrency without any additional integrations or fees required by the business. Customers can sell cryptocurrency through PayPal to then pay a business for select online purchases. The transactions are settled in USD and converted to the applicable currency at PayPal conversion rates.

When asked when this feature would be rolled out to the UK, a spokesperson for PayPal said: “Currently this feature is only available to PayPal customers in the US We have nothing further to share regarding market expansion at this time.”

In October, PayPal launched a service that allowed customers to trade and exchange cryptocurrencies on their platform. The service is in partnership with the Paxos Trust Company, a regulated provider of cryptocurrency services. Furthermore, PayPal has been awarded a conditional “Bitlicense” by the New York State Department of Financial Services, which is needed for businesses looking to trade in Bitcoin.

Higher bitcoin prices lead to more carbon emissions, analysts from the Bank of America's research team have warned.

There has been a “relatively linear relationship between bitcoin prices and bitcoin energy use”, the bank claimed in a new report, largely because higher prices attract more miners around the world, seeking bigger rewards.

“The rising complexity of the system creates ultimately a vicious environmental cycle of rising prices, rising hashpower, rising energy consumption and, ultimately, rising CO2 emissions," the research team concluded, as as reported by Yahoo! Finance.

The bank calculated that a $1bn investment in bitcoin would produce the same carbon emissions as the annual output of 1.2m cars due to energy usage associated with bitcoin.

This means Tesla’s $1.5bn(£1bn) investment in bitcoin is equivalent to the carbon footprint of the annual emissions of 1.8m cars.

Last month, Tesla announced it was going to invest $1.5bn into bitcoin, with some critics pointing out this undermines the electric car manufacturer's green credentials.

Bank of America also argued that because bitcoin is not tied to inflation and remains “exceptionally volatile”, this makes it impractical as a mechanism for storing wealth, or as a system of payments.

“As such, the main portfolio argument for holding bitcoin is not diversification, stable returns, or inflation protection, but rather sheer price appreciation, a factor that depends on Bitcoin demand outpacing supply,” stated the bank.

Its research found that the bitcoin network’s energy usage is already comparable to countries like Greece and the Netherlands, and that the cryptocurrency’s estimated energy consumption has grown over 200% in the past two years.

Moreover, it found that 75% of the network’s computer power is based in China, where over half of all electricity comes from high polluting coal-fired plants. The bank also wrote that a single bitcoin purchase at a price of $50,000 has a carbon footprint of 270 tons, the equivalent of 60 ICE[petrol/diesel] cars.

In the past, financial institutions have taken a hardline stance against emerging cryptocurrencies. The Bank of America has remained sceptical of technologies like blockchain, even though it held the most patents for it. In March 2019, it held 82 blockchain-related patents, more than any other financial firm.

This attitude towards blockchain and cryptocurrencies has changed in recent years, with banks like JP Morgan even revealing its own cryptocurrency. Dubbed 'JPM coin', this currency was limited to internal transactions and settlements.

Mastercard hinted in February that it will soon support cryptocurrencies however, a host of restrictions, such as only supporting currencies that encourage spending, rather than investment, make it unlikely that bitcoin will make its way to the platform.

Mastercard has outlined a strict set of criteria that cryptocurrencies will have to fall under to be directly supported on its payments network as part of changes being made this year.

The financial services giant, during 2021, will begin to support select cryptocurrencies if they prove to be secure, compliant with industry standards and regulations, as well as proving stable enough to be used as a "vehicle for spending".

Not all cryptocurrencies will be supported on Mastercard’s network, however, and the company has strongly suggested many of the most mainstream assets, such as Bitcoin, won’t make the cut. The firm has hinted, instead, that it will rely on partnerships with central banks to create new digital assets that are likely to be so-called 'stable coins' - cryptocurrencies that are pegged to fiat currencies, such as the dollar.

“Mastercard isn’t here to recommend you start using cryptocurrencies,” said Mastercard’s ‎EVP for blockchain, digital asset products and partnership, Raj Dhamodharan. “But we are here to enable customers, merchants and businesses to move digital value - traditional or crypto - however they want. It should be your choice, it’s your money.

“Doing this work will create a lot more possibilities for shoppers and merchants, allowing them to transact in an entirely new form of payment."

Bitcoin is the most widespread cryptocurrency, making it an ideal candidate, on paper. Although it has enjoyed a surge in valuation and popularity in recent months, it's this wild fluctuation in price that makes it unlikely that Bitcoin will be supported.

Mastercard has outlined four criteria that cryptocurrencies must firmly fall under before they can be considered for support on its payments network:

• Consumer protections: The same level of privacy and security of consumer information that people have come to expect in their credit cards.
• Strict compliance with protocols: Cryptocurrencies must follow standards in the financial industry, including Know Your Customer, which is designed to “snuff out” illegal activity and deception in payment networks.
• Legally-sound: Candidates must be legal and compliant with local regulations in the regions in which they’re used.
• Stability: Most importantly, Mastercard will only support digital assets that offer the stability people need in a vehicle for spending, not investment.

Considering the likes of Ether and Bitcoin, two of the most widely-used cryptocurrencies, are deemed highly volatile and subject to surges and crashes, it’s unlikely they’ll be deemed stable enough to be considered. This isn't to mention the likes of Dogecoin, which has similarly surged wildly in recent weeks due to interest from figures like Elon Musk.

Cryptocurrencies have also been at the centre of organised crime in recent years - famously used to launder money by those behind Silk Road. Bitcoin is also among cyber criminals’ preferred payment methods following a ransomware attack, due to the high degree of anonymity it offers.

Regulation is also a major barrier, with governments across the world investigating the role of cryptocurrencies in the broader financial landscape. While the Financial Conduct Authority (FCA) in the UK has blocked crypto-linked financial products from being marketed, it’s widely believed that India might go one step further and ban Bitcoin altogether.

Stablecoins, meanwhile, such as Facebook’s Libra coin, are consciously designed to minimise volatility by being tied to a stable asset. TrueUSD is the second most popular stablecoin, for example, according to CB Insights, and is backed 1:1 with the US Dollar.

These are nowhere near as widely used as the likes of Bitcoin, however, and likely won’t receive much uptake should Mastercard decide to support these.

The most likely path the company will follow as it seeks to support cryptocurrencies on its network is to lean on its partnerships with several major central banks around the world. These institutions are planning to launch new cryptocurrencies, dubbed central bank digital currencies (CBDCs), in the near future. Mastercard says it even created a test platform for these banks to experiment with these cryptocurrencies and assess their viability.

Instead of waiting for the more mainstream cryptocurrencies to clear what many may consider an unrealistically high bar, Mastercard could instead adopt a selection of these CBDCs and thrust them into the spotlight.

PayPal launched a similar service last year that lets customers trade and exchange digital assets, although, unlike Mastercard, the company didn’t make support conditional on stability or other factors.

Mastercard has supported projects in the past, teaming up with Wirex and BitPay in 2020, for example, to create crypto cards that allow people to use cryptocurrencies to make payments. However, in this case, and all others, cryptocurrencies never moved through Mastercard’s own network.

Hospitals in England are using distributed ledger technology (DLT) to monitor the storage and distribution of COVID-19 vaccines, alongside chemotherapy drugs and other vaccines.

By partnering with digital asset tracking firm Everyware and distributed ledger provider Hedera, the NHS hopes to ensure that critical drugs and vaccines, including various coronavirus vaccines, are distributed as efficiently as possible.

The Stratford Upon Avon and Warwick hospitals have initially adopted the technology, with a wider rollout planned as the national COVID-19 vaccination programme progresses.

Everyware specialises in developing asset tracking and monitoring software that can be customised to follow several variables, including temperature, on a 24-hour basis. Temperature is a major challenge for storing and maintaining the Pfizer/BioNTech COVID-19 vaccine, in particular, given it must be stored at roughly -70°C.

Hedera, meanwhile, is a decentralised platform on which developers can build secure applications. The fact that distributed ledger databases cannot be tampered with, and update in real-time, means they're perfect for ensuring results are recorded and validated efficiently and at pace, according to the two companies.

"Everyware has already demonstrated their capability as a trusted partner, helping us monitor the integrity of a wide variety of clinical applications,” said electro biomedical engineering manager at South Warwickshire NHS, Steve Clarke.

“As we begin to prepare the roll out of these new COVID-19 vaccines, with the specific temperature requirements, we recognise the importance of utilising their same tracking and monitoring capabilities. This, in turn, will allow us to demonstrate our commitment to providing safe patient care."

DLT, of which blockchain is one form, has been highly sought-after by businesses for years. The term refers to a type of decentralised database that can be managed by multiple participants, across several terminals, in real-time. The key benefit over traditional digital databases is that there’s no need for a single central authority to validate the authenticity of records in the ledger.

For hospitals, distributed ledgers could mean more efficient record-keeping, with data more easily shared between organisations. This is opposed to the current data management regime, where information is often siloed, and not standardised.

Much of the attention towards DLT has come in the form of hype or theory, however. Applications of DLT have only been theorised, or adopted on a small scale, as opposed to concrete examples of large-scale implementations.

Blockchain is the most widely-known form of DLT due to the fact it forms the basis for cryptocurrencies. Various financial institutions and governments have looked to benefit from the practical applications of blockchain in recent years.

HSBC, for example, transferred £20 billion worth of paper records to a custody blockchain in November 2019. This DLT-based ‘Digital Vault’ represented just one of several similar projects HSBC has embarked on in recent years. Samsung and Salesforce also, last year, ploughed millions of dollars into a blockchain company known as Digital Asset. This company created the open source smart contract language DAML.

The value of Bitcoin has broken the $22,000-barrier for the first time in its history, representing a 175% rise during 2020, after receiving strong backing from investors and institutional giants.

The last time the cryptocurrency reached such heights was during the 2017 craze that also saw it enter the mainstream lexicon, skimming the $20,000 barrier but never comfortably breaking through, eventually crashing shortly after during a mass sell-off. Bitcoin reached $20,000 on Wednesday after a sudden and sharp rise, with its value now surpassing $22,000, and rising, at the time of writing.

Wider economic conditions, backing from investors, and encouraging signs the cryptocurrency is being adopted by mainstream platforms and services such as PayPal have all combined over the past few months, helping the digital currency break a new milestone that some doubted would happen in 2020.

“Bitcoin was trading at $700 just a few years ago and this is a cryptocurrency that was invented 11 years ago,” said Coindesk’s first move editor, Bradley Keoun, speaking on Coindesk Daily. “People are buying it for all kinds of reasons.

“It was invented to be a peer-to-peer payment system on a distributed ledger and this year, with the federal reserve and central banks printing trillions of dollars of stimulus money, Bitcoin took on this narrative as an “inflation hedge. And over the past few months, we’ve just seen more and more big Wall Street firms getting into Bitcoin and there’s a limited supply, so the price just keeps going up.”

The lack of mainstream support, or buy-in, for the cryptocurrency is one of the reasons Bitcoin has fluctuated so heavily in the past, and one of the reasons it surged but then immediately crashed during 2017.

The landscape is measurably different three years on, with Bitcoin passing several major hurdles that may help it maintain its current strength and potentially rise further. One encouraging sign of its newfound resilience, according to Coindesk’s markets managing editor, Laurence Lewitinn, is the fact that it had to overcome thousands of sell orders.

This is in addition to huge names in the financial services industry hoping to jump onto the bandwagon of a proven investment. The UK-based Ruffer Investments, for example, purchased a staggering $744 million worth of Bitcoin in November.

Breaking the $20,000 barrier for the first time, too, will be considered a psychological boost following how close it came to reaching this valuation in 2017, as it gives investors confidence that Bitcoin is an asset that can retain its value.

There’s also encouragement that not just Bitcoin but the wider cryptocurrency landscape may enjoy more stability and user adoption during 2021, chiefly due to services developed by major platforms such as Facebook and PayPal.

Facebook, for example, is pressing ahead with the launch of its own Libra stablecoin in 2021, despite being heavily challenged by regulators and abandoned by its initial backers.

Paypal recently launched functionality on its platform to support the buying and selling of Bitcoin, Ether, and other cryptocurrencies. This precedes the tokens being used to make transactions with the company’s 26 million registered merchants.

The embattled Libra cryptocurrency, built by Facebook, will make its long-awaited launch as early as January after a tumultuous two years in development and rising scepticism among backers and regulators.

The social media giant announced its own stablecoin in June 2019, backed by a host of big names in the finance sector, as a means for customers to send and receive payments without the need for a banking intermediary.

Libra almost immediately attracted backlash, however, with US regulators quick to question Facebook over how it plans to handle data protection and privacy concerns. Big brand names began to waver in October, with Mastercard and Visa pulling their support for the project, with reports emerging shortly after that not one of the 21 partnering firms had provided their expected $10 million pledge.

After spending months in the wilderness, Facebook appears to be readying the launch of its cryptocurrency for early 2021, according to the Financial Times. Following intense regulatory pressure, this will now launch a single digital coin backed by the dollar.

There is no precise launch date as yet, and this would depend on when the Libra Association, an open source non-profit which governs the cryptocurrency, will receive regulatory approval by the Swiss Financial Market Supervisory Authority.

A major turning point for the Libra Association, and likely what made the digital currency viable, was the appointment of Stuart Levey, HSBC’s former chief legal officer, as the group's CEO in May. Such an appointment would have relaxed a number of external concerns, while also ensuring the project lay in the hands of somebody with sufficient expertise in regulatory compliance.

Stablecoins are designed to avoid the sort of volatility that digital coins, such as Bitcoin or Ether, often experience because it’s tied to a fiat currency, such as the dollar. This would, in theory, make Facebook’s Libra a far more stable means of making payments than many other cryptocurrencies.

Facebook has also developed its own blockchain, run by the Libra Association, which manages the funds tied to the Libra token.

Democracy faces a host of challenges, and that includes voting itself. Voter turnout is falling – in the UK, it fell to 67% of eligible people in the 2019 general election, down by 1.5% from 2017. And that was before the pandemic hit. During the US election, casting an in-person ballot caused some consternation about the potential risk of queuing at a polling station, while others more worried about the impact of the most vulnerable voters deciding to stay at home. Mail-in ballots are one answer, but the chaos surrounding the US Postal Service (USPS) had many concerned.

E-voting is often suggested as a solution, and has been trialled in Estonia with some success, but digital polls are haunted by security concerns. Could blockchain be the answer?

The digital ledger at the core of Bitcoin, blockchain has emerged as a hyped technology in its own right, offering a decentralised way of holding pieces of data that are hard to change. Once data has been written in a block, everyone on the blockchain has to agree to change it, which makes it potentially useful against fraud.

However, despite the many headlines proclaiming a new use for the idea – from tracing coffee beans for Starbucks to a game called CryptoKitties – blockchain largely remains a solution without a problem to solve. Could e-voting be blockchain’s killer app?

The short answer is “maybe”. We still need to tackle serious challenges around security, privacy and transparency – and most of the hurdles have nothing to do with blockchain, but the technology that will need to be built around it to prove and check identities, for example. The problems with voting aren’t normally the ballot paper itself, after all, and when it comes to elections, the blockchain is about little more than verifiably storing a piece of data.

Blockchain voting

That said, the USPS believes that blockchain might provide a solution to some of its woes, and in February filed a patent for a new voting system that pairs blockchain and postal ballots.

“A voting system can use the security of blockchain and the mail to provide a reliable voting system,” reads the patent, which was made public in August. “A registered voter receives a computer-readable code in the mail and confirms identity and confirms correct ballot information in an election. The system separates voter identification and votes to ensure vote anonymity, and stores votes on a distributed ledger in a blockchain.”

This isn’t the first attempt at blockchain voting. Alongside Democracy Earth and Votem, US startup Voatz has been developing the idea since 2014, when founder Nimit Sawhney came up with the idea at a hackathon. Since then, it’s run 70 election trials, of which 11 have been for governments or political parties, explained Hilary Braseth, chief of staff at Voatz. Generally, there are two different products: an entirely blockchain-based voting system and one that uses paper votes but adds blockchain for fraud protection.

The former sees the vote stored on the blockchain and is used for anything from board meetings to church gatherings; anywhere a verifiable ballot is required. It’s even been used for some political uses, such as internal party decisions. The latter, meanwhile, is required for government elections, as that piece of paper is required by law. In that case, the vote is cast via paper but also recorded on blockchain as an added form of verification.

To use the system to vote in a US government election, the voter would fill out a form to request a digital vote, in the same way that they’d request a mail-in ballot. They would then be sent an invitation to download the app, with one vote allowed per device. The voter would set up an account by verifying their identity using what Braseth called a “live selfie”: facial recognition could be fooled by holding up a photo of the person, so instead it uses a live video stream. When it’s time to vote, a notification will pop up with the ballot loaded by election officials into the app.

Once a vote is cast, a ballot is printed by election officials at their offices. Instead of the voter’s name, it’s printed with an anonymous ID. The voter is also sent an email with a receipt that contains that ID, meaning they can verify their vote. And their choice is saved to the blockchain for additional auditing. For non-governmental votes, such as at board meetings, ballots are held entirely on the blockchain.

One of the key trials run by Voatz has been running elections for overseas Americans, such as soldiers. More recently, the company has expanded to those with disabilities that keep them from being able to visit the polls in person but who also find a mail-in ballot difficult, such as blind people who can vote via app using assistive technologies. “They can vote independently for the first time ever, because they don’t need someone to help fill out a paper ballot and mail it,” said Braseth.

The Covid-19 pandemic has exacerbated that, and Braseth said the company has been inundated with phone calls from election officials this year. While she can’t specifically share which areas Voatz is working on for the US ballot in November, Braseth said it was largely limited to those at risk of disenfranchisement because of health issues.

Securing the vote

The main criticism for blockchain voting is security. “There’s a number of challenges that haven’t yet been fully solved,” said Steve Schneider, director of the Surrey Centre for Cyber Security. “I’m not against electronic voting under any circumstances, but I’m kind of nervous about some security aspects.”

And that criticism extends to Voatz in particular. Researchers from MIT found vulnerabilities that could allow hackers to change a vote or see how someone cast their ballot. That’s an alarming result, although Voatz said the research used an outdated version of the app. “Their methodology was flawed,” said Braseth, who claims more recent versions address the spotted flaws.

Alongside the security criticism have come complaints about transparency, with the researchers noting they had to use an older version because they weren’t able to access the current one for their work. “One of the main problems with using a private company is that no one can really look at how the system works,” said Nir Kshetri of the University of North Carolina at Greensboro.

Since the research, Voatz has introduced a bug bounty programme and Braseth said the company does allow auditors to look at its systems, saying that securing such a system is an ongoing effort. “Security is not an endpoint, it’s not like you’re secure one day and then automatically secure tomorrow,” Braseth said. “Threats continue to evolve.” However, the company has since filed a brief in a US Supreme Court case on hacking, saying that while some computer breaches are necessary, so-called white-hat hackers and researchers should check with a company before beginning such work – a move that would make such attacks harder.

There are challenges to securing any digital voting system, however. Generally speaking, the blockchain is fairly secure, noted Kshetri. It depends what sort of implementation is used – private versus public and so on – but the real security threat is likely to be the app or site that’s used to access the system or register for it. “There may be vulnerabilities,” Kshetri said. “The computer or phone may be infected with some malware or virus.”

Voatz does acknowledge this, and scans users’ devices for infections. Voatz ran an election for the Republican Party in Utah and spotted malware on users’ devices. “The voter had no idea they had malware on their phone,” Braseth said. If it can’t be removed, there’s a backup system to vote via a phone call.

While that’s a positive step, what if an infection or malware is missed? An election hack is likely to come from a state-sponsored actor and may have access to vulnerabilities above and beyond your basic criminal – that Voatz spotted some malware doesn’t mean it saw it all. “It seems it’s within the capability of nation states to launch attacks, and some of the difficulties with voting systems in particular is being confident that you’ve got the correct result and people should have trust in that,” said Schneider.

Transparency – and too much of it

Another security risk is raised by private blockchains. With a public blockchain, anyone can have their own copy and store it wherever they would like. With a private one, it’s only accessible with permission from the company that’s managing it and may only be held in a limited number of locations.

Kshetri noted that if one were held by a single cloud provider, it would be possible for a political party to collude with it to change voting blocks. “I think if you’re doing a public ballot, you certainly want that kind of verifiable information to be publicly available,” agreed Schneider.

That doesn’t mean that a public blockchain is best. Alongside being slower and more complicated, there is also the risk of unpicking how people voted. In 2019, for example, Moscow used a public blockchain to run a city election. Ahead of the ballot, the system was hacked in just 20 minutes by a security researcher at France’s National Centre for Scientific Research, potentially letting votes be linked to voters.

This is a core concern for blockchain voting. “One of the worries would be that if my vote could be linked back to me in any way, that’s not something I would want and certainly not something that you should have the possibility of,” explained Schneider. Votes could be cryptographically secured rather than stored in plain text, but to be verifiable there needs to be a way for a voter to see that their ballot has been recorded correctly. If that can be reverse-engineered, there’s a problem.

A privately managed but openly accessible blockchain could be the answer; what’s known as a “public-permissioned” network. As most people don’t know how to access and understand a blockchain – perhaps IT Pro readers do, but most of the general electorate doesn’t – it doesn’t necessarily need to be a fully public blockchain, but merely be openly accessible to independent experts.

Schneider suggests that we could hire cryptographers to check our votes in the same way we use lawyers to look over a contract. “The public needs to be able to access the evidence that the elections have run correctly,” Schneider added. “There’s a notion of verifiability in electronic voting. The blockchain could provide a platform for holding that information and then for people being able to verify the correctness of the tallying process.”

Disenfranchised by AI

One of the challenges around e-voting, be it blockchain-based or not, is verifying identity to ensure the right person is voting. With systems such as Voatz, that tends to be done by looking at an image of the person when they registered – perhaps pulled from government records, such as a passport or driving licence – and using a smartphone camera to compare it to the person using the app to vote.

Such systems use facial recognition, and that raises a problem as such artificial intelligence-based technologies have faced criticisms of bias. “They recognise white males with close to 99% accuracy,” said Kshetri. “But if you look at African American women, the error rate was as much as 30%.” That has the potential to further disenfranchise such groups of people by leaving them unable to vote via the app.

Moreover, such systems can be fiddly to use for people who aren’t tech savvy. “It needs to be accessible to everyone,” said Schneider. “It’s a real challenge.”

Is this the solution?

Blockchain voting won’t solve all of the problems faced by this year’s US election – none of the systems have been tested enough for such an important event. Nevertheless, we’re inching slowly toward techniques to secure and protect mobile or digital voting, and blockchain might be part of that.

“I think it has the features to be part of the solution,” explained Schneider. “I don’t think it solves all of the challenges there are around electronic voting, but in terms of being a secure platform for information and trusted… that is a useful component in an online election.”

Mobile voting isn’t here yet, but when it is, we may use blockchain as an anti-fraud tool during digital elections. Whether that counts as full blockchain voting or not, we might have finally found a real-world, genuinely helpful application for this much-discussed technology in search of a purpose.

Braseth says the intent isn’t for Voatz to run an entire election, but to be part of it. “It’s one extra tool alongside mail-in votes,” she said.

It’s an acknowledgement that our current election systems aren’t perfect. “It actively shuts out citizens from participating,” said Braseth. “In the US, our overseas population votes at a rate of 7% – and there are three million eligible voters. That can impact the outcome of an election, and it’s largely due to logistical barriers – and right now, the US post office isn’t delivering to 70 countries, if not more.”

Overall, blockchain technology might not be the solution that makes e-voting a possibility, but there’s no question this is a problem that needs solving. After all, as Braseth pointed out, “a vote not cast changes the outcome of an election just as much as a vote changed.”

IBM and R3 are working together to provide clients with new options to scale blockchain technology while ensuring performance, compliance, and data privacy.

R3 launched an open beta program to bring Corda Enterprise, its enterprise blockchain platform, to IBM LinuxONE across the hybrid cloud via IBM Cloud Hyper Protect Services. Starting on November 2 2020, the program will be available on IBM Cloud and on-premises, with general availability expected in the first quarter of 2021.

Enterprises in regulated industries seek to build blockchain solutions that provide performance, advanced security and data privacy. IBM LinuxONE and IBM Cloud Hyper Protect Services provide Confidential Computing capabilities, including “Keep Your Own Key” workload isolation encryption capabilities, tamper protection from privileged user access and data encryption.

"Bringing R3 to IBM LinuxONE is another exciting example of leveraging our highly secured Confidential Computing capabilities to help our clients of all sizes, across any industry, protect their most sensitive data across the hybrid cloud," said Ross Mauri, general manager at IBM Z.

"This announcement builds on the exciting work over the last several months to welcome new workloads to LinuxONE and IBM Cloud Hyper Protect Services in emerging areas like blockchain and digital asset custody – and we're looking forward to taking this next step with R3 to build on this momentum with clients of all sizes from early stage startups to the largest global enterprises."

IBM Services is expanding its Corda capabilities with an R3 center of excellence. It’ll provide services to clients planning to adopt R3 solutions. This includes Corda-certified solution architects, strategy and design consultants, subject matter experts and a delivery pool to help clients advance network and solution deployment.

"This center of excellence is being designed to innovate and incubate client-requested ideas and use cases leveraging IBM's deep expertise in developing and standing up commercially available production grade blockchain networks," said Jason Kelley, general manager, IBM Blockchain Services.

"We will use IBM methods, including design thinking, to focus efforts on developing interoperability solutions for disparate blockchain networks, digital assets and currencies and industry-focused use cases."

IBM will work with clients across industry and hybrid ecosystems, using IBM LinuxOne’s openness and security, to advance a network of networks to a hybrid of hybrids.

IBM Services will support its blockchain services and offerings to provide more options in the market. IBM Blockchain Services will enable companies to accelerate their growth through access to new channels, strategic partnerships and resources.

"Corda Enterprise and IBM LinuxONE bring together IBM's best security, efficiency and scalability features in blockchain and hybrid cloud," said David E. Rutter, CEO of R3

"Blockchain is fast emerging as the technology of choice to drive digital transformation and R3 and IBM will provide access to the privacy and security inherent in blockchain technology underpinned by IBM LinuxONE. This combined with the deeply knowledgeable team within IBM Services' new R3 center of excellence, can empower customers to level up their digital transformation drive."

PayPal has launched a service that will allow customers to trade and exchange cryptocurrencies directly from their account and through compatible merchants.

Bitcoin, Ethereum, Bitcoin Cash, and Litecoin can be bought and sold directly from PayPal's new digital wallet within the coming weeks, ahead of plans to make it available as a funding source for purchasing goods through the platform next year.

The platform will also provide account holders with training and guidance about cryptocurrencies to help them understand the ecosystem and the risks associated with investing in these blockchain-powered tokens.

This is arguably the most significant moment in continued efforts to bring cryptocurrencies into the mainstream, given PayPal's position as one of the most popular online financial services.

“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly," said PayPal CEO and president, Dan Schulman.

"Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange.”

The service – which will be available to US users in the coming weeks and internationally by 2021 – is being powered by a partnership struck with the Paxos Trust Company, a regulated provider of cryptocurrency services. PayPal has also been granted a conditional ‘Bitlicense’ by the New York State Department of Financial Services, which is required for any services wishing to trade in bitcoin.

From early next year, customers will also be able to use their cryptocurrency holdings as a source to pay for goods from the company’s 26 million registered merchants across the globe. Consumers will also be able to convert their cryptocurrency balances into fiat currencies with the certainty of value and no incremental fees.

However, at this stage, there’s little indication as to how PayPal will be able to guarantee the certainty of value on any exchange, and concerns will inevitably remain as to whether cryptocurrencies will be stable enough to use over traditional currency in payment for goods. Bitcoin, for example, has fluctuated with extreme volatility in the last few years, and although it may have been relatively stable for the last few months, the value of the currency is still prone to swings.

Pay Pal has suggested that all transactions will be “settled with fiat currency at their current PayPal rates”. This means, in effect, that digital payments will become another funding source within the PayPal digital wallet, which also includes payment cards and various fiat currencies. The firm claims this will address previous concerns surrounding volatility, cost and the speed of cryptocurrency-based transactions.

There’s also a lack of clarity over whether PayPal’s extensive protection policies for buyers and sellers will apply to transactions made using cryptocurrencies. Given the fact these will effectively be another funding source sitting alongside other currencies and payment methods within the PayPal digital wallet, the normal levels of protection should apply.

While you may not be familiar with the tech industry’s latest acronym, DARQ, you’ve probably heard of its constituent components: distributed ledger, artificial intelligence, extended reality and quantum computing technology. Three of those four could be set to have a significant impact on the future of security, with possibilities including unbreakable encryption algorithms, AI-enhanced cyber attacks and much more.

In this week’s episode of the IT Pro Podcast, we’re joined by RSA CTO Dr. Zulfikar Ramzan to dig into the future of these technologies, and the effect they could have on cyber safety. We discuss why blockchain is the Betamax of distributed ledgers, the cost of a quantum attack, and why your next compliance officer might just be a robot.

Footnotes

• IT Pro Live: The future of encryption
• Why humans and machines work better together
• The IT Pro Podcast: Is AI the snake oil of the 21st century?
• Quantum security: The end of security as we know it?
• What is quantum computing?
• IBM hits new quantum computing milestone
• Transforming training with virtual reality
• Is IT regulation in the DARQ?
• Quantum security: The end of security as we know it?
• Do we need an algorithm police?
• What’s next for e-commerce?
• The IT Pro Podcast: Attack of the AI hackers

Subscribe

• Subscribe to The IT Pro Podcast on Apple Podcasts
• Subscribe to The IT Pro Podcast on Google Podcasts
• Subscribe to The IT Pro Podcast on Spotify
• Subscribe to the IT Pro newsletter
• Subscribe to IT Pro 20/20
• Get in touch with the podcast

As part of IBM's approach to combatting the coronavirus, the company has announced the launch of IBM Rapid Supplier Connect.

Designed to help government agencies and health care organizations alike, this blockchain-based network will help groups identify non-traditional suppliers of personal protective equipment (PPE).

With health care and frontline workers experiencing the effect of disrupted supply chains, many businesses have pivoted their assembly lines to mass-produce essential PPE. For organizations in need of PPE supplies, finding these non-traditional suppliers can present a unique problem.

Fortunately, IBM Rapid Supplier Connect can help organizations source PPE and identify existing supplies that may be going unused, allowing them to redistribute these if needed.

Buyers who access the network will benefit from using suppliers outside of their traditional supply chain and will also have access to near-real-time inventory information. Meanwhile, suppliers will benefit from having access to important user feedback and the ability to manage inventory availability.

To launch this much-needed tool, IBM employed the Trust Your Supplier blockchain-based identity platform, built by Chainyard, for qualification and identification. It also leverages its existing Sterling Supply Chain Suite and Inventory Visibility microservice. Meanwhile, Project N95 will assist with supplier vetting, and companies like Dun & Bradstreet, KYC SiteScan, and RapidRatings will contribute tools related to buyer verification, firmographic data, and supplier risk and viability scores.

The network’s current members include organizations such as Northwell Health, which is recognized as New York's largest health care provider, and The Worldwide Supply Chain Federation, which is in the midst of onboarding over 200 American suppliers from its database of 3,000 global community members.

"Northwell Health has had adequate supplies to protect patients and our staff during the increase in New York COVID-19 patient cases," shared Phyllis McCready, VP and chief procurement officer at Northwell Health. "It is through creating our own GPOs and supply chain, and joining forces with non-traditional suppliers that we have maintained an adequate stockpile of PPE and other equipment and supplies, so we are pleased to join IBM Rapid Supplier Connect."

Rapid Supplier Connect will be available to qualified buyers and suppliers in the U.S. and Canada at no cost until Aug. 31, 2020. Joining the network is expected to take a mere 30 minutes, and IBM's operational support center will provide technical support.

The investment arms of tech heavyweights Samsung and Salesforce have invested millions of dollars into the blockchain company Digital Asset as part of a Series C funding round worth an initial $35 million.

Digital Asset, which has created the open-source smart contract language DAML, will use the funds to accelerate its adoption across several industries, and raise the level of integrations.

The Series C funding was revealed in December, but the particular investors were not disclosed at the time. The $35 million will also be used to fund new products that are designed to improve the developer experience with DAML.

Meanwhile, the company has recruited Susan Hauser, Microsoft’s corporate vice president of its worldwide enterprise and partner group, to its board of directors. Hauser had previously served as an advisor to Digital Asset while working with Microsoft, where she was in charge of partnerships across several industries in the public and private sector.

“Salesforce Ventures and Samsung joining our Series C financing round demonstrates the potential that technology giants see in DAML as the standard for smart contracts,” said Digital Asset co-founder and CEO Yuval Rooz.

“Appointing Susan Hauser to the board will help us capitalize on this vision. She brings us her unparalleled understanding of customer needs and exceptional experience building an enterprise business at Microsoft.”

DAML was open-sourced by the company in 2019, and is used to create smart contracts and software that automates business processes, as well as digitally verify and enforce agreements between several parties.

The company offers integrations of DAML with partner platforms so other companies can develop their own versions of the blockchain-powered technology.

“We strongly believe that Digital Asset’s model to embed DAML in partner platforms fundamentally changes the entire blockchain market,” said a spokesperson from Samsung Venture Investment Corp.

“Digital Asset has positioned itself for success in the blockchain space and we are pleased to help it achieve its vision.”

Salesforce has previously shown a great deal of interest in pursuing blockchain-related ventures. The software company previously connected a low-code blockchain platform with its customer relationship management (CRM) suite in May 2019 to open up a host of new services for its customers.

The firm, together with Microsoft, also hopped onto an open-source blockchain venture run by the Linux Foundation in June. The Hyperledger research initiative expanded its reach with a host of new members, and was working on 13 projects using the Hyperledger blockchain at the time that Salesforce and Microsoft had joined.

IBM commissioned Forrester Consulting to conduct an Emerging Technology Projection: Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realise by deploying an IBM Blockchain Platform and Services solution.

The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of IBM Blockchain Platform and Services on their organisations.

HSBC has launched a custody blockchain platform to digitise the transaction records of private placements.

This is one of a number of distributed ledger technology projects HSBC has undertaken over the last couple of years.

The 'Digital Vault' has been developed by the bank's securities services and enables investors to access records of their private assets instead of having to request a search of paper-based records. The aim is to bring greater functionality to record-keeping.

Private placements, which are stocks, bonds or securities from private investors, are tailor-made transactions with records that have not generally moved from paper to electronic format because of a lack of standardisation, the bank said. It aims to move $20 billion (£15 billion) worth of these assets by March, according to Reuters.

The banks said its decision to use blockchain was in response to an increasing number of clients investing in private assets that are looking to pick up the kinds of yields not widely available in the public markets.

By using blockchain to underpin the Digital Vault, HSBC said it gives it the option to move more of the transaction lifecycle on to the ledger in future.

"Our clients want real-time visibility of their private placement transactions so that they know when they will receive the coupon on a private debt transaction or to facilitate an audit of transaction records," said Stephen Bayly, CIO of HSBC securities services.

"Private assets are prime candidates for digitisation and we see this platform as a key step on the journey as the model evolves. We are preparing for the future, in which the full transaction lifecycle could be stored on a ledger, including issuing digital tokens instead of paper certificates."

This follows on from the banks offer blockchain-based projects, such as the $250 billion Forex trade deals announced earlier in the year and its first blockchain transaction completed in 2018.

China has announced it is ready to roll out the world's first digitized domestic currency, attracting the attention of financial service industries across the globe, despite a lack of available details.

The cryptocurrency's launch through the Digital Currency Electronic Payment (DCEP) project will ignite a race between commercial banks to provide the best cryptocurrency services, a Chinese central bank official told Reuters.

The DCEP project will be powered and secured in part by blockchain technology, much like bitcoin and Facebook's proposed digital currency, Libra.

In his October testimony to the US Congress, Facebook CEO Mark Zuckerberg pressured lawmakers to allow Libra's launch to move forward, arguing that "while we debate these issues the rest of the world isn't waiting," and adding that "China is moving quickly to launch similar ideas in the coming months".

In line with the DCEP project's two-tier approach, the People's Bank of China will first issue the cryptocurrency to commercial banks, then those institutions will send it to the public.

"During the research period, and also the issuance period there will be a horse race approach," the central bank's head of digital currency research Mu Changchun told a Hong Kong forum. "The frontrunner will take the whole market - who is more efficient, who can provide a better service to the public - they can survive in the future."

Mu anticipated that if one commercial bank takes the lead, it is likely that "the technology they use will be adopted by other parties".

The digital currency will allow even more oversight for Chinese regulators over the country's monetary flow, as well as protecting China's capital borders and prevent illegal cash flows as other global payment systems emerge that could threaten the currency's sovereignty.

The EU has stalled Libra's launch since Facebook announced the project in June, fearing the risks a private digital currency might pose to the financial sector, and backed a public alternative instead.

The EU has now drafted a document urging the European Central Bank to issue a public cryptocurrency and develop a common approach to digital currencies to help regulate the new monetary form.

Regulators initially ignored stablecoins because of how small they were, but Facebook's announcement of Libra - a cryptocurrency with billions of potential users - sparked a global push for regulation of private digital currencies in public financial markets.

The new EU document, due to be discussed by finance ministers on Friday, reiterates potential threats of private currencies, including money laundering, cybersecurity, the functioning of payment systems, taxation, and cyber security.

"At the very least, we need a robust regulatory framework to deal with virtual currencies," said the financial leader of the largest EU Parliament grouping, Markus Ferber. "The (executive EU) Commission has been way too ... complacent on the issue so far. With the threat of Libra on the horizon, it is time for action now."

For the past few years, blockchain has remained one of the biggest buzz words in the tech industry.

It's not all hype, though, as blockchain is a seriously disruptive technology. It is a form of distributed ledger technology, made famous because it is the system on which Bitcoin and other cryptocurrencies are built upon. But, as we are slowly beginning to find out, there is more to blockchain than just digital money.

There are a number of different use cases being explored. HSBC, for example, is using it as a digitised record of transactions. This was launched in 2019, as a 'custody blockchain' platform that enables investors to access records of private assets instead of requesting a search of paper-based documents. HSBC said it aimed to move $20 billion (£15 billion) worth of assets this way by March 2020.

Similarly, IBM used blockchain as part of a system that can track the origin and ownership of jewellery. This was dubbed 'TrustChain' which is a robust system of record that the jewellery industry could use, running from precious metal suppliers through to jewellers.

The basic premise of blockchain is that it is a secure method of data storage, as data resides in a limited number of 'blocks' that make up a chain. The data sent or received over the chain can be seen by any person, whenever they like, and all changes are confirmed and uploaded at the same time. The blocks form a chain, which each new one including a cryptographic hash of the previous one and the time it was saved.

New use cases

No-one really knows who invented blockchain. Its initial research paper was published under the name 'Satoshi Nakamoto', the same person attributed to the creation of Bitcoin but it's likely that the name on the paper was a pseudonym for a group of people who all had a hand in the technology's development.

Blockchain solved the problem of 'double spending', recording what transactions had taken place on the network and preventing users from using the same digital token more than once. It also presented the opportunity for the currency to be decentralised, so governments and other authorities were not required to regulate or oversee it, making it a completely free, global currency.

However, the idea of having a distributed ledger that is not owned by anyone clearly has benefits. For one, it's super-secure because no one owns the original file and it can be updated without the threat of a hack.

It also means even the most sensitive information such as that related to personal identities, medical information and insurance records can be stored in a place that can be made accessible by all parties in a way that's trusted.

Now that the technology has been in the public domain for a good few years, companies are finding innovative ways of deploying it. There are, for example, a slew of cannabis startups using blockchain to get a head start in an emerging industry. Most recently, startup TruTrace Technologies partnered with auditing firm Deloitte to track cannabis using blockchain technology, according to Proactive Investors.

The system tracks the drug from seed to sale in order for customers and retailers to know the history of the product as it passes through the supply and consumption chain.

The rise of blocks

Blockchain relies on blocks of data connected in a chain, as its autonym name suggests. The chain is cryptographically secured and distributed among those that want to change or tweak parts using a network. As the chain evolves, new blocks are added and the person or node that adds that block is solely responsible for authorising it and ensuring it's correct.

What's unique about blockchain technologies is that none of the blocks can be changed or removed after being added - a reason to ensure it's definitely correct or accurate before adding to the chain.

The way blockchains are created makes them perfect for highly regulated industries that need to have a paper trail of changes. Because it's tamper-proof, the financial sector is one of the industries taking the technology seriously and it was created for Bitcoin for exactly this reason.

Bitcoin miners add the blocks, acting as nodes in a huge peer-to-peer (P2P) network. Everyone works together to validate transactions, without changing anything in the chain. Because every block is linked together in a chain, nothing can be changed without breaking the chain and to change anything, it would need every person who's ever added a block to change their additions - an impossible task when so many people are using a single network.

Not all blockchains are built the same, and the time it takes to process blocks of transactions can vary. Given the nature of buying and selling, cryptocurrency blockchains tend to be the quickest examples. The Ethereum blockchain, which supports the Ether cryptocurrency as well as countless other industry projects, is able to process transactions in around 15 seconds, whereas Bitcoin's network generally takes around 15 minutes.

More affordable and efficient

Blockchain networks can operate through multiple computers across the world, sometimes thousands, in an open P2P configuration. There is no centralised database or server, and because of this users, or nodes, can organise and audit information quicker and more effectively. But the time taken to verify information does scale with the size of the network.

There are benefits to the nature of blockchain networks, with implications for privacy and security. For instance, the fact the data is not stored in any one location means it is difficult, if not impossible, to hack these networks and steal any data, or shut them down. They are also able to withstand the risk of outages, as all nodes would have to be individually taken down for the blockchain to be knocked offline.

Cooperation and collaboration are normally at the heart of most blockchain networks too, with the various users operating under a shared goal. For example, users in the financial services sector would be working to building a safer and more secure method for storing and processing transaction information. While a physical file room may have once been a fixture of such operations, a blockchain network can enable one to transmit data far quicker, and more accurately.

The scope for blockchain to reduce the risks of fraud, and allow for more affordable financial processes, is greater too - with many systems such as these, albeit in their infancy, already producing some results. Santander, for example, earlier this year rolled out a blockchain technology based on Ripple that could accelerate payments across borders.

Public vs private

Much like the field of cloud computing, the function and implementation of blockchain can vary significantly depending on whether it's designed to be public or private. The primary distinction between these types comes down to who can access a system.

Public

Public blockchains operate a shared network that allows anyone to maintain the ledger and participate in the execution of blockchain protocol - in other words, authorise the creation of blocks. It's essential for services such as Bitcoin, which operates the largest public blockchain, as it needs to encourage as many users as possible to its ledger to ensure the currency grows.

Public blockchains are considered entirely decentralised, but in order to maintain trust, they typically employ economic incentives, such as cryptocurrencies, and cryptographic verification. This verification process requires every user, or 'node', to solve increasingly complex and resource intensive problems known as a 'proof of work', in order to stay in sync.

This means public blockchains often require immense computational power to maintain the ledger, which only worsens as more nodes are added, and predicting how much that will increase is difficult. Given the number of voices in the community, it's also incredibly difficult to reach a consensus on any technical changes to a public blockchain - as demonstrated by Bitcoin's two recent hard forks.

Private

Private blockchains are arguably the antithesis of what the technology was originally designed for. Instead of a decentralised, open ledger, a private blockchain is entirely centralised, maintained by nodes belonging to a single organisation or entity.

It's a novel design tweak that has allowed the technology to flourish within those organisations looking for the same streamlined transactions afforded by public blockchains, only with highly restricted access. As there are fewer participants on the network, transactions are normally cheaper and verified far quicker on private chains, and fixes to faults or network upgrades can be implemented almost immediately.

In order to share the data stored on a private chain, they often operate using a permission-based system, in which node participants are able to grant read access to external parties, such as auditors or regulators looking to check the inner workings of a company.

Unfortunately, as there are fewer nodes maintaining the blockchain, it can't offer the same high levels of security afforded by decentralised chains.

Consortium

'Consortium' is best described as the 'hybrid cloud' of blockchain. It provides the robust controls and 'high trust' transactions of private blockchains, only without being confined to the oversight of a single entity.

It sits somewhere in the middle. Although they provide the same limited access and high efficiency afforded by private blockchains, dedicated nodes are set aside to be controlled by external companies or agents, instead of having only read access under a private blockchain.

The easiest way to understand how it differs is to think of consortium blockchains as the equivalent of a council group - with each member having responsibility for maintaining the blockchain, and each having permissions to give read access.

Given its collaborative design, it's a perfect solution for supporting the work of government committees or industry action groups where a number of companies may come together to tackle an issue - whether that be industries working to combat climate change or maintaining a shared ledger to support the work of the United Nations.

Blockchain vs Distributed Ledger Technology

The term blockchain is often deployed to refer to a host of similar yet different technologies and is often falsely used to refer to any decentralised distributed database. Blockchain is, in reality, only one form of the emerging distributed ledger technology (DLT).

DLT is a form of technology comparable to a database but distributed across multiple physical sites and locations, regardless of how near or far from one another. The purpose of such a phenomenon is to avoid having to rely on a centralised storage system or the need for a middle-man, like a network, to authorise and record changes to the records. When changes are requested, the lack of a centralised system means approval is demanded from all notes across a DLT network.

This concept is being adopted by businesses and organisations at a fast pace, and across various industries. This is not just an innovation developed and taken up by tech companies, but sectors like manufacturing and finance.

There are a number of formats in which DLT arises, but the central idea of a diversity of control is at the heart of all of these. One form of distributed ledger, for example, allows data to be stored on separate nodes, such as banking records beginning with each letter of the alphabet dispersed among different locations Rather than replicated to each area, like in a database as we've always known, the data is spread across parts of a network.

Blockchain simply refers to one iteration of this form of technology, more specifically, a data structure that takes the shape of entries stored in blocks. This form of structuring data offers an element of synchronisation between parts of a network - and it's essential for supporting innovations like Bitcoin.

Despite its success as the building block of currencies like Bitcoin, the system doesn't necessarily need to have miners and tokens to qualify as a blockchain - the term simply refers to the structure of arranging data into blocks. Blockchains, as a result, are decentralised ledgers where data is replicated rather than distributed.

Unfortunately, the frequency at which blockchain and distributed ledger are used interchangeably has created confusion over the technology as a whole, leading many to dismiss blockchain as simply a tool for Bitcoin.

Chief executive of virtualisation giant VMware, Pat Gelsinger, has hit out at cryptocurrencies such as Bitcoin and Facebook's Libra, arguing that their usage is unsustainable and fuelled by criminal activity, comparing them to opioid addiction.

As part of his opening keynote for VMworld 2019, Gelsinger touched on the idea that technologists have an obligation to make sure that the technology they create is being used for good purposes. He noted that while technology itself is neutral, it often leads to unfortunate outcomes if not closely monitored.

"[Blockchain has] given way to Bitcoin, which I will argue is bad. 95+% of its uses are illicit and criminal, and it is a climate crisis, consuming almost a household of energy for every single ledger entry. Bitcoin today is not okay. But the underlying technology is extremely powerful, and blockchain and distributed ledgers are not the problem."

Speaking to IT Pro, Gelsinger stated that although blockchain technology (of which VMware is a provider) can be a powerful enabler for more efficient currency models, there is no major world government that is going to "disenfranchise currency from their political and governmental control processes".

"As a result, what's it used for? 95% is criminal activities! So how can you call that good? If I turn the world into opioid addicts, right, and I made it feel a little better in getting there, was that good or bad?"

He also blasted Libra, Facebook's nascent cryptocurrency platform, which has come under extreme scrutiny from lawmakers and financial experts, including US treasury secretary Steven Mnuchin, who called it a "national security risk". Gelsinger voiced similar concerns, declaring that the company lacked the credibility to undertake such a project.

"I'm not a Libra expert here," he told IT Pro "but I think Facebook has no credibility in the social domain, much less in the finance domain, to bring forward a new model of currency for the world."

The Information Commissioner's Office (ICO) has issued a joint statement to Facebook's Libra subsidiaries expressing concerns about the company's data protection framework to accompany its upcoming stablecoin.

The British ICO joined Albania, Australia, Canada, Burkina Faso and the USA's data protection officials, alongside the EU's Data Protection Supervisor Giovanni Buttarelli, as signatories to the statement.

In it, the signatories jointly asked Facebook and the 28 other companies behind the Libra project to answer questions about how its data policies will adhere to data protection laws.

This international effort to address Facebook and the Libra Network is a significant one because data protection regulators have never had to govern a cryptocurrency before.

The signatories acknowledge the "broad public statements" made by Facebook and its subsidiary Calibra on the topic of privacy, but note that data handling practices regarding the safekeeping of sensitive information haven't been specifically addressed.

"Additionally, given the current plans for a rapid implementation of Libra and Calibra, we are surprised and concerned that this further detail is not yet available," the statement read.

In response, the collective data watchdogs expect the Libra Network to satisfactorily address a heavily detailed list of questions including how assurances will be made regarding its robust data protection measures, compliance of data processors and the uniform application of compliance policies across all departments and arms of the Libra Network.

The statement also references Facebook's questionable data dealings from years gone by, concerning "hundreds of millions of users", and how the company's mere involvement in the project presents additional privacy concerns.

"The ambition and scope of the Libra project has the potential to change the online payment landscape, and to offer benefits to consumers," said Elizabeth Denham, UK information commissioner. "But that ambition must work in tandem with people's privacy expectations and rights.

"Facebook's involvement is particularly significant, as there is the potential to combine Facebook's vast reserves of personal information with financial information and cryptocurrency, amplifying privacy concerns about the network's design and data sharing arrangements."

This joint statement isn't the first time Facebook's Libra coin has garnered harsh criticism from the industry. Back in July, US treasury secretary Steven Mnuchin branded Facebook's cryptocurrency "a national security risk" before adding the tech giant had much more work to do before he could be comfortable with the idea of its release.

Shortly after Libra's June 2019 announcement, industry experts were quick to throw speculation in the direction of the cryptocurrency. One cryptography expert said that Libra suffers fundamental design flaws which could enable third-party data sharing.

Libra is a stablecoin announced by Facebook earlier this year - a cryptocurrency tied to a fiat currency such as a dollar or euro so the wild Bitcoin-esque price fluctuations wouldn't be an issue to contend with. It will operate much like how Bitcoin does now, using an electronic wallet to exchange funds over a managed blockchain network.

Facebook has said Libra will use "all the same verification and anti-fraud processes that banks and credit cards use, and we'll have automated systems that will proactively monitor activity to detect and prevent fraudulent behaviour".

However, as today's statement indicates, this hasn't done enough to assure regulators of the currency's data protection compliance and we can only wait and see if Facebook opens up about its policies to appease the likes of the ICO.

A Europe-wide platform that aims to digitise evidence for law enforcement has been given the go-ahead with backing from a 19 member-strong consortium.

Supported by the European Union's (EU) Horizon 2020 funding programme, the lawful evidence collecting & continuity platform development (LOCARD) aims to automate the collection and documentation of digital evidence for law enforcement.

One of the major challenges in this area is managing the rising number of data sources and data volume as the nature of crime becomes increasingly borderless. The holistic approach to handling digital evidence that LOCARD aims to foster will, it is hoped, lead to findings presented in the court of law in a more seamless way.

This process will take approximately 36 months to complete and follows the publication of an EU report in 2018 that called for a set of tools to manage the rising digitisation of the criminal justice system.

The blockchain-powered system will also increase the trust in handling and processing the evidence by providing secure transport and storage to the data.

Although the applications of blockchain technology have been rather abstract, with cryptocurrency dominating the area, a handful of industries have developed practical applications. The financial services industry, for example, has developed platforms that ease the process of currency exchange across borders.

LOCARD has been devised to serve a number of law enforcement purposes such as creating technology to live-stream data as evidence, and allow investigators to publish anonymised data that can be used to find patterns.

Its backers are hoping that organisations finding themselves the victims of crime are also able to monitor the progress of their digital investigation in real-time using this platform.

Among the 19 organisations backing the project is an identity and privacy-centric think tank known as the European Association for e-Identity and Security (EEMA), which focuses on identification and authentication, as well as trust and privacy.

"The exponential increase in the volume of digital evidence, emerging from a diverse array of sources such as smart devices, cloud services, surveillance systems, social media etc, presents organisations, law enforcement and prosecutors with an immense challenge but also a vast opportunity," said chairman Jon Shamah.

"Being able to swiftly gather evidence from a wide range of sources and manage the data in a way that preserves the chain of custody will enable cases to be investigated thoroughly, prosecuted faster and with higher success rates."

The value of Bitcoin dropped more than 10% in the wake of intensifying scrutiny levied at Facebook's own contentious cryptocurrency project from US regulators.

The social media giant's Libra coin was declared a "national security risk" by the US treasury secretary Steven Mnuchin, as he lumbered all cryptocurrencies under one umbrella and claimed they facilitate crime.

"To a large extent, these cryptocurrencies have been dominated by illicit activity and speculation," Mnuchin said in a White House press conference. He added he wasn't comfortable today with the idea of Facebook launching a cryptocurrency, and that the firm had a lot of work to do.

"Cryptocurrencies such as Bitcoin have been exploited to support billions of dollars of illicit activity, like cybercrime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking," he said. "Many players have attempted to use cryptocurrencies to fund their malign behaviour."

The treasury secretary also clarified that preventing bad actors from using cryptocurrencies was his number one priority in terms of regulating digital payments. Facebook, as well as other companies, he continued, had a long way to go before they could convince the US administration they have reached that place.

Experts last month also claimed Libra has fundamental design flaws that could permit third-party data sharing, with the fledgeling cryptocurrency expected to come under the scrutiny of the US Senate Banking Committee today.

Facebook announced its cryptocurrency in June as a means to allow its billions of users to send and receive payments without the need for a banking intermediary. The token differs from Bitcoin, in that it's a stablecoin, and is targeted at individuals who are unable to access traditional banking.

In the wake of mounting scrutiny levied against Libra from government officials, however, the price of Bitcoin fell approximately 11% between Friday and Monday, where it hit a low of $9,855. The most widely-recognised digital coin has risen in stature over the last several months, after languishing at less than $3,000 as recently as March this year.

Mnuchin's comments have also been delivered in the wake of a scathing assessment of blockchain-powered digital currencies from the US President Donald Trump last week. Trump tweeted he was "not a fan" of Bitcoin and other cryptocurrencies, and that Facebook's Libra coin "will have little standing or dependability".

Leaders attending the G20 summit on Osaka, Japan last week have officially welcomed the adoption of cryptocurrency guidelines that could see a significant change in how digital currencies afford protections for criminals.

The global money-laundering watchdog the Financial Action Task Force (FATF) finalised its official guidelines on 21 June that would see all cryptocurrency exchanges compelled to collect and send personal information of the originator when conducting transactions to reduce anonymity.

Dubbed 'the travel rule', section 15 of FATF's G20 report (PDF) states that exchanges must collect and transmit personal information such as the originator's name, bank details, location information and the recipient's account number during transactions.

The personal information would have to be sent from the originator's service provider to the recipient's service provider. These rules wouldn't affect person-to-person transactions made away from a cryptocurrency exchange, but information about each trader of a transaction would be collected and transmitted.

It's thought that exchanges will have to establish an encrypted messaging system to communicate the necessary information but doing so will demand a huge collaborative effort.

The finalised rules were presented to leaders at the G20 summit held between on 28-29 June who said: "We reaffirm our commitment to applying the recently amended FATF Standards to virtual assets and related providers for anti-money laundering and countering the financing of terrorism".

"We welcome the United Nations Security Council Resolution 2462, which stresses the essential role of the FATF in setting global standards for preventing and combatting money laundering, terrorist financing and proliferation financing," said Prime Minister Shinzo, sitting alongside President Trump.

"We reiterate our strong commitment to step up efforts to fight these threats, including by strengthening the FATF's global network of regional bodies. We call for the full, effective and swift implementation of the FATF Standards."

The comments made at the summit mark the first time the world leaders have officially voiced their support for the guidelines and call for their swift adoption.

Many industry leaders have spoken out against the FATF rules, claiming that the effort it would take to become compliant would be gargantuan as well as being hugely expensive.

"It's either going to require a complete and fundamental restructuring of blockchain technology, or it's going to require a global parallel system to be sort of constructed among the 200 or so exchanges in the world," said John Roth, chief compliance and ethics officer at Biitrex, speaking to Bloomberg. "You can imagine difficulties in trying to build something like that."

While FATF's idea is sound, the oversight of the guidelines is that they have a good chance of driving people away from exchanges and into person-to-person transactions which would retain the anonymity criminals seek in cryptocurrencies.

"I get why the FATF wants to do this," Jeff Horowitz, chief compliance officer at San Francisco-based Coinbase, speaking to Bloomberg. "But applying bank regulations to this industry could drive more people to conduct person-to-person transactions, which would result in less transparency for law enforcement. The FATF really needs to consider the many unintended consequences of applying this specific rule to virtual asset service providers (VASPs)."

Although the rules won't be legally binding, if VASPs fail to apply the rules then they could be locked out of the global financial network which could ruin an exchange.