1st of August Reminds us of Consolidated Swiss Freedom

Happy 1st of August! For us it is important date because it refers to a historic alliance concluded in 1291 by the three cantons of Uri, Schwyz and Unterwalden. This marked the beginning of the Swiss Confederation.

For nearly 800 years, the Swiss confederation in various sizes has formed one of the world’s only republics. It has offered citizens a certain level of freedom and constancy not available elsewhere. Even today it retains some freedoms and individuals can vote locally on federal topics from town squares just by raising their hands.

It started, as we have indicated, long ago. The Old Swiss Confederacy was a joint settlement of Alpen communities. The Confederacy helped run trade routes through the Alps. In fact, the Charter was set up between the rural communities of Uri, Schwyz, and Unterwalden in 1291. It is thought to be the first document of its kind; however there may have been alliances before then.

By 1353, the in the confederation made common cause with others, including Glarus and Zug and the Lucerne, Zürich and Bern. They constituted the “Old Confederacy” that continued until late in the 15th century. By 1460, the cantons ran territory west of the Rhine and their power was increased by wins over the Habsburgs and Charles the Bold of Burgundy.

Modern Switzerland has turned out not to be so powerful. It avoided getting enmeshed directly in the EU, but it was sued by the US over banking practices a few years ago and did not stand up for clients. Instead it turned over names and was obviously intimidated by the US and the idea that its banks would be excommunicated by others around the world if they didn’t cooperate.

Additionally back in 2000, it severed the link between gold and the Swiss franc. And later it voted against a proposal to back the franc once again by a certain amount of gold.

Additionally, at the highest levels, Switzerland reflects elements of the European Union, at least informally even though it is not a member.

Switzerland  is not the independent country it was before the 21st century. It still has some of its freedoms, however, and is not nearly so intimidated as some countries that are already part of the EU.

But it could be a lot freer than it is, and represents in its compromises, the increased dominance of large regions like the EU and US over countries not part of their various blocks.

Interview Lior Yaffe of Ardor and Jelurida 

BlockCity: You are with Ardor?

Lior Yaffe: Yes, I’m one of the developers. And managing director of Jelurida the company established by the developers.

Blockcity: Listen to this: Ardor will open blockchain development to organizations and individuals across the world. The high barriers to getting started with blockchain are about to vanish.

Lior Yaffe: I believe the statement above is in the context of letting users create their own blockchain without the need to bootstrap a new network and the ability to use the Ardor APIs to develop decentralized applications.

Please refer to the Ignis Whitepaper for more details about the Ardor architecture

Blockcity: What does it use as the underlying technology, is it based on ETH.

Lior Yaffe: Of course not, it uses our own blockchain technology based on NXT and now developed into Ardor which you can think of as NXT 2.0. In a sense, we are competitors of ETH

Blockcity: You know ethereum has a bad rap nowadays.

Lior Yaffe: It will pass. They have such a good marketing machine. This discussion started from Dave’s post on Linkedin that Ardor is an Ethereum competitor which received a lot of attention. And rightly so.

Blockcity: The top four reasons ethereum will fail ultimately; 1. NOT AN IMMUTABLE BLOCKCHAIN; 2. NO SUPPLY CAP; 3. EXPLOITS AND WEAKNESSES; 4. CRYPTOCURRENCY ICOS ARE A RISK/

Lior Yaffe: Well as a competitor of ETH it’s hard for me to support ETH but this statement above is misleading. ETH will live on.

Blockcity: But with unlimited inflation.

Lior Yaffe: Well, let’s refute these claims one by one.

Nonsense, this of course this stems from the DAO incident. They made some mistakes handling this but I think that overall they did the right thing.

Not familiar enough with ETH to comment but it is a design decision with advantages and disadvantages.

Most exploits are not problems in the ETH core but in smart contracts built on top of it. Having said that, the smart contracts concepts is problematic, but for specific use cases it works very well. Our approach with NXT/Ardor is different we build the smart contracts for you.

ICOs are excellent way to raise money by startups without giving equity and other rights to VCs and wealthy investors which their interest may not align with the founder’s interests. For investors, this is a great opportunity to invest small amount of funds into startup companies. Investment avenue which has been practically closed for small investors until now.

Blockcity: What about Ardor does it have some of the same (potentially negative) attributes … What are its biggest positives.

Lior Yaffe: In Ardor we keep much tighter control over which code is running inside the blockchain. The core itself is accessible only to Jelurida developers or to 3rd party contributors but after extensive code review. This makes the code safer and reduces the chances of a systematic failure like we saw last week with the ETH parity multisig which turned out to be 0 sig wallet.

Blockcity: Are there other issues. What are the biggest strengths? Combatting bloat? Simplicity? Ease of use?

Lior Yaffe: I’ll answer with a question, do you remember your first Bitcoin transaction?

Blockcity: Yes.

Lior Yaffe: Do you remember the 3rd one?

Blockcity: I think so.

Lior Yaffe: Well, you were supposed to answer “no”, anyway, you realize that they are still stored in the Bitcoin blockchain even though you probably don’t care about them and will be stored there forever.

Blockcity: Yes.

Lior Yaffe: And every new node which downloads the Bitcoin/ETH/NXT blockchain has to revalidate all transactions since the Genesis block, otherwise it may end up on a malicious fork. So this model of linear growth forever cannot be sustainable, right?

Blockcity: Presumably not. So the biggest positive is that Ardor does away with the repetitious transaction notes.

Lior Yaffe: With Ardor we have a unique parent/child chain design which allows us to remove transactions which are no longer important from the consensus, but still maintain the same security guarantees.

Blockcity: Why Nxt and Ardor? Why did they move ahead so quickly when others are left behind?

Lior Yaffe: The blockchain technology is still in its infancy but it is not going away any time soon. I think that both with NXT and Ardor we are way ahead of the game with our understanding of how to build decentralized applications which are safe and scalable. This is because we have almost 4 years of perspective and experience and because we learn from our mistakes. Those who start to build new blockchain solutions now, will have to re-learn thing that we already understand.

Blockcity: Will you update Ardor after you bring it out. Are there some changes/updates that you will make later on once you see what the reception is like?

Lior Yaffe: Of course, when Ardor is released it is like any cutting edge technology. It will need a lot of work to accomplish everything we are planning. There will likely be several mandatory upgrade cycles during 2018 until we complete our product roadmap which will be published soon as part of the Ignis ICO Whitepaper.

Blockcity: Also, is Internxt a competitor?

Lior Yaffe: Never heard of Internxt, frankly, we have so many people that boldly copy our work without giving back anything or coming up with ridicules claims.

Blockcity: This was a good summary of what you are doing today.

Lior Yaffe: Thank you very much.

Blockcity: Have a great day, and thanks!

TokenStars Supports Atheletes

TokenStars is aiming to disrupt talent development by providing funding resources to athletes and other celebrities.

The company’s ambition to tokenize people starts with ACE – a project supporting young and experienced tennis players. With tennis being one of the most popular sports globally, ACE aims to introduce 1 billion tennis fans to the blockchain world.

“At the moment, the top 10 athlete management agencies have $1.19B in yearly commissions and 3,731 years of contracts signed. The industry is bigger than the GDP of Serbia, Bahrein, Brunei or Cyprus. ACE disrupts this market, decentralizing it and sharing the value among the community,” says Pavel Stukolov, TokenStars cofounder and CEO.

“Lack of funding is a typical problem which almost all tennis stars faced as juniors. Their funding options are limited by parents’ money, loans from friends, and small grants from local tennis federations and talent management agencies. The top 10 TMAs have over $25B in contracts under management and have a monopoly on deciding who is going to have a career and who is not. Mistakes based on gut feeling are inevitable in this process. As a crowdfunded project, ACE has the potential to disrupt tennis talent representation and protect rising stars from being overlooked,” says Sergey Demekhine, Coaching & Scouting Advisor.

TokenStars also has strong support from its first believer and investor, Forbes top-30 internet entrepreneur Elena Masolova.

“Aspiring tennis players need approximately $100K a year to build a career. Some have to put everything at stake – just like Olympic medalist and 5x Grand Slam winner Maria Sharapova, who came uninvited from Russia to Nick Bollettieri Academy in Florida at the age of 9. Her father had to work as a dishwasher just to cover her bills. Later she earned $36.5M in prize money and $285M in sponsorship deals. With ACE, young players like Maria Sharapova can get funding for academy costs, coaches, sparring partners, and tournament participation, as well as help with signing sponsorship agreements,” says Elena Masolova.

The successful initial sale will allow ACE to support at least 20 tennis players and 2-5 established PROs who have already accumulated celebrity status. Depending on the results of the token sale, ACE might manage to sign several full-time coaches and open a small academy for ACE juniors.

Cryptocurrencies: Are They Real or in a Bubble

Billionaire investor and founder of Oaktree Capital Management has said that cryptocurrencies ‘aren’t real.’

In a 22-page memo to his clients, Howard Marks calls cryptocurrencies ‘innovative investments,’ but is clear they are not real. He says:

I’d guess these things have arisen from the intersection of (a) doubts about financial security — including the value of national currencies — that grew out of the financial crisis and (b) the comfort felt by millennials regarding all things virtual. But they’re not real.

Marks believes cryptocurrencies are a fad similar to Tulipomania. Does he have a point? Certainly tulips went down in value from their peak and have never gone back up.

But when it comes Tulipomania, there are a number of issues to consider. For one thing tulips had only recently been introduced and become popular, so part of the initial high price may have been due to newness of the flower.

UCLA economics professor Earl A. Thompson says in a 2007 paper that the government had something to do with it. The Dutch parliament changed how tulip contracts functioned. In fact, futures contracts were to be presented as option contracts. Futures buyers didn’t have to buy the tulips but only compensate the sellers with a small percentage of the cost.

If we accept this explanation, then Tulipomania was not merely a outrageous outbreak of high end manipulation but more or less a rational response to market conditions. If Tulipomania can be explained as something other than a mere mania, then we can look for similar reasons in the present day as they affect the cryptocurrency market.

In fact, government has encouraged cryptocurrencies by make the dollar and other major currencies increasingly overpriced. Many of the buyers of cryptocurrencies are looking for something, anything, that will take the place of national currencies.

If this is so, as it seems to be, then we can expect that cryptocurrencies may fall a great deal during the next market crash, but at least some will not lose all value. In fact some may maintain value just like some dot.com stocks continuing strong to this day.

Is there a bubble in cyrptocurrencies. There seems to be and it could go higher, even much higher. Eventually there will be a crash. But that doesn’t mean that all cryptocurrencies will wither away. Chances are some will remain, changing the face of money with the addition of private currencies.

Now People May Be Able to Sell Tiny Percentages of Assets

Soon people may be able to sell parts of assets instead of the whole thing. This could be done with special tokens that allow individuals  to monetize fractions of assets, from houses to cars to paintings to decorative vases and more.

Almost anything you can think of can be monetized and even traded on a token market. This enables asset owners to more effectively leverage the value of previously illiquid holdings.

​LAToken is the platform that does this. It tokenizes assets and makes them tradable.  An investor needs LATokens to buy asset tokens created on the platform and pay fees for the creation of asset token and transactions.

The platform is based on an existing home equity marketplace, founded by the CEO of LAToken, that has facilitated 12,000 mortgage offers and more than 1,000 deals for 7 banks and 25 investors in the past year.

“My dream is to make NASDAQ on Blockchain with a wider range of tradable assets and a dramatic reduction of listing costs, settlement time, and transaction costs,” says Valentin Preobrazhenskiy, CEO of LAToken, former portfolio manager at Avega Capital, and creator of a back office for hedge funds.

Asset owners can quickly get cash by issuing LATokens and selling fractional shares via the LAT marketplace, while keeping the actual asset for their use instead of borrowing money and paying interest or renting.

“The secondary and primary markets of fractional ownership of home equity and mortgages are now on the verge of a breakthrough, thanks to cryptocurrency Blockchain smart contracts,” says David Drake, chair of LDJ Real Estate Fund and member of LAToken’s Advisory Board.

Will it work? It is certainly an interesting idea. Tokens can be bought starting on August 22.

Mt. Gox Embezzler Found?

Mt Gox founder and former CEO Mark Karpeles, is on-trial in Japan regarding bitcoin embezzlement. Karpeles has pleaded not-guilty to taking some ¥341 million in customers’ funds and has been quoted as saying, “I swear to God I am not guilty.”

Even though most defendents in Japanese courts go to prison, it seems like Karpeles may be telling the truth. A man who may be the real money launderer has been arrested in Greece. He is a Russian national, Alexander Vinnik.

Vinnik supposedly ran a $4 billion money laundering operation, and certain documents suggest Vinnik was in possession of bitcoins from Mt Gox.  Karpeles himself thinks Vinnik is behind the missing bitcoins.

The trial continues.

SEC Extends Regs to Internet ‘Securities’

The US Securities and Exchange Commission has said tokens “are subject to the requirements of the federal securities law.”

Those “tokens” represent securities, says the SEC. It adds, “…the Commission deems it appropriate and in the public interest to issue this Report in order to stress that the U.S. federal securities law may apply to various activities, including distributed ledger technology, depending on the particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular offer or sale.”

Stephanie Avakian, co-director of the SEC’s Enforcement Division, said:

“The innovative technology behind these virtual transactions does not exempt securities offerings and trading platforms from the regulatory framework designed to protect investors and the integrity of the markets.”

The SEC also warned about risks for participants:

“Investing in an ICO may limit your recovery in the event of fraud or theft. While you may have rights under the federal securities laws, your ability to recover may be significantly limited,” the bulletin read.

Such a statement bring the weight of federal regulations to bear on new technology. The SEC hasn’t done much to adjust regs. It’s simply applied them.

It is one more example of how new technology is going to be treated like what has come before even if it is different.  The SEC like many regulatory agencies, is basically interested in control.

Protecting the investor is fairly far down on the list and the SEC is not set up to do it anyway. The market protects investors, not manmade laws and regs.


Is Dubai Making Things Worse?

Dubai is on its way to being the first blockchain-powered government by 2020. Holding forth at the CIOMajlis (Chief Information Officer’s) session on ‘Blockchain Technology,’ Ahmad Al Mulla, chair, reportedly had this to say:

Dubai is a frontrunner in adopting the latest technology and has set a goal to become the world’s first government to execute all implementable transactions on the blockchain by 2020. The government initiatives in this direction present tremendous business opportunities for the private sector in the UAE.

HH Sheikh Hamdan bin Mohammad bin Rashid Al Maktoum, Crown Prince of Dubai, started the Dubai Blockchain Strategy. And  Dan Frankel, Blockchain City Adviser to Dubai believes distributed ledger technology could reduce banking costs by $15 to $20 billion.

The nation has done a lot to start down this path. Recently Dubai  signed up with U.K.-based ObjectTech to build digital passports. Additionally, UAE retail banking giant Emirates NBD will use a distributed ledger against check fraud and to add to security.

The government is allowing citywide blockchain payments. Dubai is on the way to being a true blockchain city.

Of course, many if not most of the improvements stated herein work to the advantage of the Dubai government.

One of the hopes of blockchain and certainly cybercurrencies, is that they won’t just make existing practices more efficient, but that they will fundamentally change the way things are done and make systems less invasive and freer.

Right now much of what Dubai and other countries are doing makes what is already obnoxious more intolerable. Passports have only been around in quantity for about 100 years but now Dubai will make them digital so that they can keep you permanently on file in a more efficient way.

Most everything Dubai is doing is making the collection of information more intense. That is a far cry from using the Internet to encourage freedom.

Freedom will have to come outside of established states. Perhaps with island states and other kinds of non traditional living dedicated to less rather than more officialdom.

Just because Dubai is applying blockchain to passports doesn’t fundamentally change the bureaucracy and in the long run may make it worse.

Trump Gave the Order to Take Down AlphaBay and Hansa

U.S. Attorney General Jeff Sessions has said that the impetus for recent darknet raids was President Donald Trump telling the DOJ to take down cybercrime outlets like AlphaBay.

In a speech, he reportedly told  the District Attorneys office, “[Donald Trump] gave us several directives. One is to dismantle transnational criminal organizations. That is what we are announcing today. Dismantling of the largest dark website in the world by far.”

Sessions said the raids were tied to the fight against opioid addiction. And he added, “One victim was just 18 years old when, in February, she overdosed on a powerful synthetic opioid which she had bought on AlphaBay. The drug was shipped right to her house, through the mail.”

AlphaBay and Hansa, were two of the biggest darknets but both have been removed. More arrests doubtless will take place as governmental confrontations  continue.

But the responses to the take-downs from readers were notably less enthusiastic than Sessions determined declarations.

Faith Sloan wrote, “The big pharmaceutical industry lines the government pockets. They didn’t have to go in the “Darknet” to shut down drug dealers. All they had to do was go to New Jersey, USA. Data from the Centers for Disease Control and Prevention show that more people die from legally prescribed drugs than from heroin and cocaine combined … Give me a break Mr. Trump …”

Blindfolded wrote, “If Mr. Sessions wants the laws to be respected, he needs to create respectable laws. He’s fighting against markets, and will never win.”

Many lives will be shattered from the latest “War on Drugs.” It would surely be better to legalize drugs as the United Nations is trying to do than to just crack down on them. At the Federal level the US seems to be going in the wrong direction.

Internxt May Change the Internet

Internxt is making the Internet more usable for everyday people. Using cloud technology, they are making it more decentralized.

Today websites are often hosted in one piece on servers. As a result, large companies like Google can gain access to them. Tomorrow files will be fragmented, and placed in a number of different servers. People will have more independence and few will have access to them, as  they will be encrypted.

Internxt is making a decentralized cloud, and performing in other ways to decentralize the web. A whole team of developers is dedicated to turning Internxt into a reality. Internxt should be ready in 2018, and an ICO  will be launched, it is said, by the end of August.