Microsoft and MIT Explore Unique Applications of the Bitcoin Blockchain

Bitcoin Magazine
Microsoft and MIT Explore Unique Applications of the Bitcoin Blockchain

Microsoft New York and MIT Media Lab presented a 70-minute report called #Blockchain4good this week.

Speakers included Brian Forde, MIT Media Lab director of digital currency and former senior technology adviser at the White House, and John Paul Farmer, director of technology and civic innovation at Microsoft. They led discussions on using the blockchain for fraud-free voting, storage of identities, response to natural disasters and a public ledger of properties such as land.

Other speakers, including Chelsea Barabas, Ann Sim, Ryan Shea and Peter Kirby, focused on introducing the blockchain’s capability to decrease the amount of money spent annually on identity theft and records.

Civic Infrastructure

Sim, from international design and consulting firm IDEO, introduced the idea of frictionless transfer, wherein people around the world could donate small amounts of bitcoin for day-to-day tasks or to fund public/nonprofit organizations.

This summer, IDEO hosted a thematic incubator called Bits + Blocks Lab focusing on trust, transactions and participation. Six teams and 25 design entrepreneurs worked together to create various prototypes targeting different applications of the blockchain. Some of the prototypes on frictionless transactions included donation tug of war and image unlocking app through donation.

The main application that these teams and IDEO have looked into is creating a transparent voting/complaint system to develop more efficient civic infrastructure. Sim proposed that by using the bitcoin blockchain, citizens will be able to instantly report on improvements needed for public infrastructure and match government funds to allocate budgets accordingly.

This digital interaction between citizens and the government will create a transparent and unforgeable request-recovery system for public infrastructure. Furthermore, citizens would be able to track public funds of cities and even countries to check whether government funds are being allocated properly, and whether the budget is being distributed to various projects.

Sim introduced an idea called The Dandelion, which was proposed by Princeton University students who identified a park that needed a playground structure.

“Students planted a Dandelion with petals that have addresses on them. As people donate small amounts of money, the image of the playground started filling in, and the very block was being visualized,” explained Sim.


Blockchain for Identity Storage

Bitcoin blockchain-based passcard identity Startup Onename co-founder and CEO Ryan Shea led the discussion on how blockchain could be used to store identity and solve identity problems.

“There are billions of people around the world that do not have access to government-issued I.D. documents. This includes 25 percent of African-Americans in the U.S., hundreds of millions in India and refugees around the world,” Shea said. This is the result of the inefficient manual operation of governments and includes a long list of places where identification is needed, such as bank accounts, housing, government benefits and voting, he said.

All government identifications, such as passports and driver licenses, currently are delivered in a physical form. They are all printed, laminated, sealed and covered manually, which requires a lot of human labor and money to sustain.

“Approximately $25 billion (USD) are lost annually due to identity theft,” Shea said. “That’s because we don’t have a very good way of authenticating who you are, and relying on these physical documents and personal identifiable information.”

The blockchain, however, allows anyone to record data on transactions, which is unforgeable and transparent. Therefore, it is cost-efficient and time-saving for both the producers and the citizens.

For example, if a person were asked to show his personal identification documents in the middle of the street and the information is stored on the blockchain, he/she can simply go onto a platform that decodes blockchain information and show the identification quickly.


Photos courtesy of Digital Currency Group Inc.

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Bitcoin-Friendly Payment Processor Stripe Raises New Funding, Partners with Visa and American Express

Payment processor Stripe has raised new funding from Visa, American Express, Sequoia Capital and other investors, valuing the company at $5 billion, The New York Times reports. The new funding comes six months after a previous funding round of $70 million, at a $3.5 billion valuation. Stripe didn’t disclose the amount of new funding, and said only that it was “less than $100 million.”

American Express and Sequoia Capital were existing investors in Stripe, but Visa and venture-capital firm Kleiner Perkins Caufield & Byers are new investors, The Wall Street Journal reports.

The most interesting aspect of the deal is the acquisition of Visa, one of the world’s largest credit card companies, as an investor and a partner. Stripe and Visa announced a partnership to improve digital transactions, and expect to collaborate on initiatives such as payments security, as well as software like website “buy buttons.” Stripe, currently available in 25 countries, hopes to take advantage of Visa’s global reach to expand its international presence.

“As Stripe thinks about the best ways to move the overall payments ecosystem forward, the biggest determinants on the financial side are the credit card networks,” Patrick Collison, co-founder and chief executive of Stripe, told The Times. “We hope to continue working closely with them.”

“Stripe is not competing with the card networks,” added Michael Moritz, a partner at Sequoia Capital and Stripe board member. “The fact that Visa has chosen to invest in Stripe, not in PayPal, is of absolutely huge significance.”

In fact, PayPal, which recently separated from its former parent company eBay and is now an independent company, is positioning itself as a competitor and an alternative to credit card networks. Stripe, on the contrary, collaborates with the major credit card networks and positions itself as a complementary service.

Stripe launched in September 2011 to challenge legacy payment processors and now processes billions of dollars a year for thousands of businesses, from newly-launched start-ups to Fortune 500 companies. The company focuses on mobile payments, one of the fastest growing segments of the payments sector. Forrester Research estimates that Americans will spend $90 billion through mobile devices in 2017. Stripe takes 2.9 percent of most transactions processed via its platform, plus a flat commission of 30 cents per charge.

Stripe is known as a bitcoin-friendly company. The company, which first started testing bitcoin in March 2014 with an open beta program, launched operational support for bitcoin in February.

“We want to enable merchants to add new payment instruments as easily as possible, and are really happy we’ve been able to provide Bitcoin support to Stripe Checkout users with just one extra line of code,” said Collison.

American Express and Visa haven’t been overly bitcoin-friendly so far – and MasterCard has been openly and bluntly opposed to Bitcoin – because the three credit card networks understand very well that bitcoin could start eating their lunch someday soon. However, it appears that all three companies are exploring uses of bitcoin and the blockchain. Funding and collaborating with Stripe could be a way for American Express and Visa to gradually integrate selected aspects of bitcoin and blockchain-based fintech into their own operations.

Photo TechCrunch / Flickr

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Ethereum Project Opens Up New ‘Frontier’ for Developers


You could hear a pin drop at the recent Toronto DEC_TECH conference as Vitalik Buterin told a standing-room-only crowd about his remarkable journey to build Ethereum – a decentralized open source peer-to-peer web-based platform – that he calls “the foundational platform for everything.”

Buterin has been called a “crypto-anarchist visionary,” and at the age of 21 he has already beat out Facebook’s Mark Zuckerman to win the World Technology Prize for software development and invented the Ethereum blockchain.

At the DEC_TECH event, Buterin shared his “Launch Roadmap” for the release of different components of the Ethereum project:

Frontier – soon! (we now know it’s July 29/30)
Homestead – 2 to 4 months
Metropolis – 4 to 8 months
Serenity – 6 to 12 months
Virtual Machine upgrades – 1 year, 2 months
Scalability – 2 years

Ethereum launch – how it will happen

 The launch of Ethereum will take place late July 29 into early July 30, depending on what part of the world you’re in.

This will be the launch of the first component – “Frontier” – named after the American Wild West, where programmers will fight to survive in a relatively primitive and unexplored environment.

It is expected any day now, but the Ethereum team, like Nassau before a shuttle launch, has missed some expected launch dates to ensure that all systems were well tested and coordinated before hitting the “on” button.

Anthony Di Iorio, Ethereum co-founder, explained that the Frontier stage, will be mainly for the developers.

“The majority of focus and current goal of Ethereum is to get the tools into the hands of developers and to show them how they can create the products end users will eventually value,” he said. “Less time and resources have been spent explaining Ethereum to end consumers, enterprises, and institutions.”

Bitcoin Magazine asked Stephan Tual, chief communications officer for the Ethereum project, what kind of response they are expecting from developers on July 29/30. He explained:

“In terms of users for Frontier, it’s impossible to tell of course,” he said. “We have 15K followers on Twitter, and receive about 100K page views on our website per month. Frontier is a very technical launch targeted at developers and we expect the user base to grow slowly from there.”

On his blog, Tual explains why the Ethereum launch is not really a launch at all:

“Frontier is now feature complete and its codebase has been frozen for two weeks. As a team we are currently reviewing the final steps for the release, not all of them technical. There will be no countdown – Ethereum is not something that’s centrally ‘launched,’ but instead emerges from consensus. Users will have to voluntarily download and run a specific version of the software, then manually generate and load the Genesis block to join the official project’s network.”

Ethereum Crowdfunding

Di Iorio was involved in the initial crowdfunding for Ethereum and told Bitcoin Magazine that at the time, in September 2014, it was the most successful crowd sale in history (over $18 million USD was raised). Now it is still the third most successful of any crowdfunding venture to date.

“The key with the crowdsale of ether was to make it available to as many people as possible and to build a global community,” Di Iorio said. “We’ve always been about inclusiveness and considered the project a community-led effort.”

Ether is the currency that goes with Ethereum, but unlike bitcoin, is not meant to be a general means of payment, but a specific funding device for the Ethereum project.

Ethereum has No Headquarters

Although Toronto was the birthplace of Ethereum, it would be hard to say where the company’s center is, and that’s part of the plan to stay decentralized. There are members of the Ethereum team in Switzerland, London, Amsterdam, even Brazil.

When Buterin was asked at DEC_TEC “Why do you do it?” he said, “To make things better for people, simpler and easier to use. I do it because it needs to be done.”


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Benjamin Lawsky: ‘I’m Doing No Work in the Digital Currency Space’

The former superintendent of the New York Department of Financial Services (NYDFS) and the creator of the much maligned BitLicense revealed today that he’s not working in the digital currency space.

“I’m doing no work in the digital currency space,” said Benjamin Lawsky at the America Banker Conference in New York City.

“The rules are clear,” Lawsky explained. “I can’t work in the Bitcoin space on anything related to my work at NYDFS or BitLicense.”

When Lawsky announced in May that he was stepping down, he revealed that he would be launching his own legal consultancy. The New York Post had reported that Lawsky “plans to advise companies on financial matters such as cybersecurity and digital currencies like bitcoin, a new sphere of regulation he helped spearhead in New York.”

The final version of BitLicense was released on June 3 as a way to regulate the businesses. The arguments against it were that it put too high a financial burden on young startups in the city.

Many opined that Bitcoin businesses might simply leave New York rather than deal with the hassle. ShapeShift, the company founded by Erik Vorhees, announced on CNBC that the business would be leaving New York entirely.

While Lawsky was clear on not working in the digital currency space, he did leave himself a small opening when he said that if he ever does have clients in that space, he won’t be able to do anything with regard to BitLicense. According to him, there is a lifetime ban on his ability to work with companies on BitLicense.

The leadup to the BitLicense had many parties interested, but it was revealed at the conference that the largest audience watching the BitLicense announcement was from China and Russia.


Photo New America Foundation / Flickr

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