Opinion: Real World Projects

Microsoft plans to develop a solution for creating decentralized identities. This product will allow users to have a complete control over their personal info. These identities will be owned independently of any government or organization

Blockchain technology is revolutionary, we all know that. But it’s still in its infancy, and it’s hard to find many real world use cases. Does it mean that the technology is useless? Not at all. All of us must remember that Internet was created in 1970s but it became really useful and open for everyone only 20 years later, in 90s. While some enthusiasts were dreaming about decentralized governments and corporations, the reality knocked at our door. It’s still early and it’s possible that none of these ICO projects will continue their existence in the next 3-5 years.

What blockchain projects with real world use can we remember? Not a lot among startups, a bit more among large companies. If we don’t count various cryptocurrencies, we’re left with only a few examples. Let’s take a look at them:

Ripple

Yes, a very surprising entry, but looks like Ripple does exactly what it should do. It offers a product for banks, and it tries to suit their needs as much as possible. As a result, we see more than 120 partnerships around the world. Yes, most of these banks use xCurrent, the product that doesn't require spending and transferring XRP token, but do we care? We aren't the XRP investors, and it may stay useless forever, the only thing that matters is blockchain technology. One year ago it would be hard to believe that at the end of 2018 Ripple would be one of the most solid blockchain projects. But it is one of the most solid now. At least it's really used. Recently, Brad Garlinghouse announced the anticipated launch of xRapid. Some banks won't use it, but it's very likely that some banks will give it a try. Also, let's not forget about Quorum, the blockchain of JP Morgan, that can be regarded as a direct competitor of Ripple from the inside of the banking industry. What solution will be more popular? Only time will tell. The market is big enough for several solutions.

Ethereum

Not as surprising as Ripple, but in reality, there isn't a lot to show. If you try to find any real world use cases, most likely you won't find them. Yes, it's used for trading, it's used for ICOs, but not a lot of companies want to use its network for any kind of business. Why? It's still slow. We can find the mentions of the pilot project of the United Nations World Food Programme (WFP), they use Ethereum for supply tracking in Africa. There is also a large upcoming platform komgo SA by Societe Generale, Shell, ING and City for commodities trading, working on Ethereum. Also, we can mention Food Trust, a supply chain management system by IBM, built as a private PoA version of Ethereum. It was launched a week ago, and IBM already signed a partnership with a large retailer, Carrefour, which will be using this blockchain. Overall, we need scaling, that's where the things will get serious.

VeChain

It's a Chinese blockchain, supported by the government of China. More importantly, it is a startup, not a large company, that grew up a lot. Recently, they signed partnerships with Bright Foods Group and Shanghai Xiandao Food, owned by Bright Food, owned by the government. VeChainThor is used in a supply chain, instantly tracking the origin of any goods in the supply chain. That's the real use of the project, built by some enthusiasts. Was it possible for Bright Food to develop its own solution? Yes. But instead, they used the existing one. That's how things should be done. Now they develop a solution for vaccines tracking, it's also a very serious problem for China. Fake vaccines caused a serious scandal recently, and now the government thinks how to deal with it. Given that VeChain now has a serious support from the government, it's possible that their product will be used in this case too.

IOTA

IOTA has the real world use only in theory: we'll see some products, using IOTA, only in 2019. It will be a long list: now IOTA has partnerships with Bosch, Volkswagen, BMW, Intel, Fujitsu, and it's involved in various smart cities projects. It's still too early to talk about it, but serious companies intend to use it in their products, and that's solid.

Solutions by large corporations, Microsoft DID

Ironically, while nobody wants to use various blockchain solutions by independent developers, large companies start to shine in this space. IBM, Microsoft, Mastercard — all of them develop new ways to use blockchain, and they're planning to really use it. Mastercard patented recently a technology for multi-blockchain management, this technology could be used to manage various assets across the blockchains. IBM is very active in blockchain solutions — they develop Stellar-based and Hyperledger-based solutions for equity management, for food supply chains and for identity management.

Speaking of identity management, the recent news about Microsoft Decentralized Identity (DID) look very promising. They plan to offer tools to create, manage and verify decentralized identities with ease, it won't be harder than registering in Facebook. At the same time, they won't be storing it: the blockchain will be used only for storing metadata, while the data will be encrypted and stored off-chain, on the user's device or in some storage. Microsoft will offer their Azure cloud servers, but it won't be obligatory to store the identity there. Is it a giant leap forward? Definitely! Microsoft is a large company with practically unlimited resources, and it owns the most popular OS ever — Windows. Personal computers are less popular nowadays, but the majority of them still have Windows onboard. Microsoft can easily integrate their DID solution into Windows platform, replacing Microsoft accounts with Decentralized Identities. Overall, it would be easier for them to promote it, and to change the way how we manage our private data and how we share it with various sites and applications. That's what we can call a revolution.

Aside from Microsoft story, we clearly see a trend. Blockchain is becoming popular, large companies invest in blockchain developments, large companies become the part of this trend. Maybe in a few years they will overtake small companies and will dominate in this space, because, well, it's just a technology, it's not a holy grail or a forbidden knowledge, and IT companies have the experience and the long history of building successful user-friendly products that stand on the shoulders of open-source technologies. So, the competition will be very tough.

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China-centric Approach to Blockchain Building Up for Present, Future

New developments seem to support the view that China’s vision to globalize its currency in a digital form is taking shape while an ecosystem builds around the Chinese agenda to make blockchain its present and its future, the new China Blockchain Report by Forkast has suggested. Blockchain is already playing a large role across China’s economy, it adds, and it will only continue regardless of whether an outsider sees it as unclear or not as long as Chinese enterprises embrace it and governments at all levels direct it be deployed in various use cases across industries  in both the public and private sectors. While the momentum continues to build up, coupled with the speech by Chinese President Xi Jingpin which spurred a renewed interest in the blockchain space, the report emphasized that the proposed launch of a digital currency now formally known as the digital currency electronic payment (DCEP) is key. “According to reports and the PBOC’s statements, the digital currency would replace M0, or the money in circulation, of which central banks generally have the most control. For China, this is important considering how private companies are digitizing currency through popular mobile payment platforms WeChat Pay and Alipay. A substantial portion of the payments that drive the consumer economy has shifted to these platforms, which means they have moved from M0 to M2, of which central banks have less control. While M2 includes M0 (in addition to M1, the amount of cash held in checking accounts), it largely refers to the funds and credit in commercial bank accounts — where WeChat Pay and Alipay currency is held.” It points at the PBoC’s interest to have a firm handle on the broader economic cycle including the future of international transaction settlement to which Facebook’s proposed Libra has triggered a sense of urgency to get the DCEP operational. Some member countries of China’s Belt and Road Initiative (BRI) programme which seeks to connect Asia with Africa and Europe via land and maritime networks have signed an agreement with Chinese digital asset exchange Huobi to cooperate in building the next generation of blockchain-based financial infrastructure. Indonesia, Uzbekistan, and Kazakhstan joined the alliance to develop and implement a national blockchain service infrastructure which spans across public networks, regions, and institutions, according to Xinhua. Ethereum co-founder, Joseph Lubin, once sought to get the Chinese government to work with Ethereum  touting it as “the strongest of the blockchain technologies” for the BRI. But Ethereum is currently not a fit for the DCEP which will likely have elements of blockchain technology and still be centralized, it handles the less than 300,000 tps needed, and China’s Great Firewall (the government’s tool for blocking websites within the country) has reportedly blocked the most popular Ethereum blockchain explorer, Etherscan, for unclear reasons. There is also the Hong Kong link to the growing ecosystem as a possible springboard to capturing opportunities within China particularly in emerging technologies. The central banks of both Hong Kong and Thailand, which have a working relationship with China, are reportedly working to explore blockchain-backed digital currencies to facilitate quicker payment in bilateral trade (worth US$19.6 bln in 2018). Their digital currencies, based on a two-tier issuing system,  is to speed up cross-border trade settlement  and a step forward in Project LionRock-Inthanon which  involves the issuance of a token to Hong Kong banks taking part in the pilot programme. Startups in China, especially blockchain-based, may take the advantage to shape their business models for local use cases while non-Chinese projects stay out of China or conform to given standards.
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Russia and China Have Built a New Gas Pipeline That Has Everything—Except Profit

The new Russian-Chinese gas pipeline that opened this week is a perfect symbol of what has become one of the world’s most important relationships: a long-term, strategically conceived, physical bond between two countries united in their desire to resist U.S. domination of the world order. For Russia, it offers a new source of foreign earnings and reduced dependence on a mistrustful Europe to pad its budget. For China, it brings a new, and cleaner, source of energy that neither the U.S. Navy nor U.S. Treasury can interdict. For both, it represents insurance against any future accidents in relation to other key markets and suppliers. With all that in favor, who needs it to make money too? Bigger, but maybe not better Whatever else it is, the so-called Power of Siberia project is a colossal feat of engineering: over 1,800 miles of pipeline laid from the Chayanda field in Russia’s Yakutia province to the northeastern-most tip of China, crossing land susceptible to earthquakes, extreme temperatures and, most recently, forest fires. When fully on-stream in 2025, it will deliver 38 billion cubic meters (1.36 trillion cubic feet) of gas a year—just under 10% of what the European Union consumed last year. The pipeline cements a relationship in which Russia feeds China with commodities and the odd bit of sophisticated weaponry, while China ensures a steady flow of money and consumer goods that lessens the pressure of sanctions that the West imposed five years ago to punish Russia for its invasion of Ukraine. That two-way trade topped $100 billion for the first time last year. But as often is the case with central planning, big doesn’t always mean economically optimal, especially when the fine points of the business are left to two state-owned firms with reputations for poor governance. Vitaly Yermakov, an analyst with the Oxford Institute for Energy Studies, argues that the only reason the project still has a positive Net Present Value (accountancy-speak for being economically worthwhile) is because Russia’s ruble collapsed in 2016, meaning that the future dollar revenue from gas sales will cover the enormous, ruble-denominated costs it racked up building it. Profit vs. economic pressures Gazprom, the world’s biggest gas producer and the only Russian company allowed to export piped gas, originally estimated development costs at $55 billion, but analysts reckon the ruble collapse has capped costs so far at $29 billion. Even so, Gazprom’s net debt had risen from 895 billion rubles before the project started to 2.47 trillion rubles—over $38 billion at current exchange rates—as of September. (The Power of Siberia isn’t the only mega-project draining cash from dividend-starved shareholders.) IHS Markit analysts Jenny Yang and Anna Galtsova argued in a note this week that it’s impossible to say for sure whether Gazprom will make a profit on the project, as details of the contract pricing are not public knowledge. More will become known as analysts can map future customs data against Gazprom’s declared revenue and tax payments. But many reckon that the project is, at best, only borderline profitable, having been conceived at a time when oil prices—to which Gazprom has always linked its contracts—were nearly twice today’s level.  “Upstream tax exemptions are critical for project profitability,” the two wrote in a research note earlier this week.  The project is completely exempted from the royal tax imposed on all extracted hydrocarbons for 16 years, and loses that exemption in stages over the following eight years, but it hasn’t been formally exempted from the uniform 30% duty that Gazprom pays on its other piped exports. Gazprom Management Committee Chairman Alexei Miller and Russia’s President Vladimir Putin inspect mock-ups of the Power of Siberia gas transmission system in 2017. (Photo by Alexei NikolskyTASS via Getty Images) The Russian budget will still get a cut since the export duty that makes Gazprom’s sales to Europe such a cash cow will raise some $2.3 billion a year by 2025, if prices are comparable to those at the European border, OIES’s Yermakov says. (Russia’s mammoth LNG projects currently under development in the Arctic have been exempted from the export duty to ensure their economic viability, further evidence that the mere fact of being an important supplier to China is profit enough in the Kremlin’s eyes.) Nor does the business of making money on the Power of Siberia’s gas get any easier once it crosses the border, where PetroChina, the buyer of the gas, is equally subjected to social as well as economic pressures. Reuters in October quoted Ling Xiao, a PetroChina vice president in charge of gas marketing, as saying that although Siberian supplies would be cheaper than piped imports from central Asia, the company “will still be making a loss as (the price) exceeds that of domestic city-gate benchmark rates.” Heilongjiang and Jilin, two industrial regions in China’s northeastern rust belt that will be the first connected to the pipeline, don’t have the economic strength to absorb all the gas it brings, Galtsova and Yang argue. However, that may not worry state planners whose main concern is to cut toxic pollution in the regions by upgrading a coal-fired energy system to a gas-fired one. The Chinese section of the pipeline is due to be extended to Beijing and the surrounding Hebei region next year, with a further extension along the eastern seaboard down as far as Shanghai slated for 2021. Galtsova and Yang reckon it will be competitive in Beijing but will struggle to compete with LNG arriving by sea in Shanghai, because of the higher costs of piping it that far. Driven by diversification So why bother? In one word—diversification: the same security-of-supply argument that has led European buyers to sign up for LNG from the U.S. and elsewhere in increasing volumes in recent years (and the same reason Russia has spent billions on pipelines bypassing the unreliable transit state of Ukraine). Russia is diversifying its exports away from a European market that is stagnating (sales volumes aren’t expected to grow for the next five years), that’s rapidly turning hostile toward even the cleanest fossil fuel, and whose antitrust regulators have it on an increasingly tight leash. A stack flares at the Chayanda oil, gas and condensate field, which supplies the Yakutian gas production centre, a resource base for the Power of Siberia natural gas pipeline. (Photo by Vladimir SmirnovTASS via Getty Images) China, in turn, is getting relief from the self-imposed pain of Beijing’s tariffs on imports of U.S. LNG, which have cut off a valuable source of energy—albeit a secondary one well behind Australia, Qatar, and Turkmenistan. Although demand growth has slowed this year, “China’s energy needs are so great that they really need more of every form of energy,” says Stephen O’Sullivan, head of energy research at TS Lombard in Hong Kong. Even at full capacity in 2025, the pipeline won’t account for more than one-sixth of China’s estimated import needs, according to estimates by Sinopec, China’s other oil and gas champion. O’Sullivan adds that “there’s no reason why U.S. LNG can’t be competitive,” in China in the long term, arguing that tariffs, rather than changing fundamentals, are responsible for the “abrupt” halt in shipments this year. “China would like to buy more U.S. LNG because it addresses the (U.S.’s) trade deficit issue,” he points out. Beijing first imposed a 10% import tariff on U.S. gas last September in response to the first wave of U.S. tariffs on Chinese goods. Beijing raised its tariff to 25% starting June 1, and the Chinese market has been effectively closed to U.S. gas since then. Since U.S. companies have to answer to their shareholders and make a profit, it’s likely to stay that way for the foreseeable future. More must-read stories from Fortune: —Want a SIM card in China? You’ll now need to get your face scanned first —CEOs are facing fierce pressure on climate change—from their own kids —2020 Crystal Ball: Predictions for the economy, politics, technology, and more —In the wake of Brexit, Amsterdam is the new London —These are the jobs artificial intelligence will eliminate by 2030 Catch up with Data Sheet, Fortune’s daily digest on the business of tech.
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Microsoft Unveils Blockchain Solution To Make AI More Trustworthy

As Microsoft plants more flags in the blockchain space, the company is trying to create meeting points between blockchain and artificial intelligence (AI). Microsoft is very pro-AI and is trying to use blockchain technology to attract more of its corporate clients so that they are a bit less on-edge and more trusting of the advantages offered by artificial intelligence. At the recent Ignite conference in Orlando, Florida, the company announced the Azure Blockchain Data Manager, a new software that will greatly benefit many firms – especially those who handle a lot of data – to add a lot of security and transparency to all of their proceedings. Speaking on the importance of blockchain and AI, Microsoft Azure Blockchain Engineering Principal Program Manager Marc Mercuri said that using blockchain, firms can make sure they take advantage of the AI revolution, without fear. “From manufacturing to energy to public sector to retail, AI is digitally transforming businesses in every vertical. Blockchain can ensure that everything from the algorithms to the data going in and out of them is trustworthy.” The Azure Blockchain Data Manager is designed to make data connection very easy between nodes or even smart contracts, with this data also available to other databases for synergy. Blockchain can be used to verify all information about the origins of data including its input and output, before AI is applied, ensuring more iron-clad results. In addition, all parties to a particular transaction or process can scrutinize data making sure everyone is satisfied before the information is acted upon using AI. This greatly improves the credibility accorded to whatever conclusions eventually presented by the AI models. According to Monish Darda, the co-founder and CTO of Icertis – a cloud service that tested an early version of the Azure Blockchain Data Manager, the new offering also reduces risk and ensures trust because in the event that there’s any doubt with the final results, all of the data fed into the AI model can be checked. “If my model is trained from that data, it gives me a transaction ID or a hash of the transaction written in the blockchain, and I can then go deep and say, ‘hey, two years ago I got these 10 data points that I used in my machine learning model, that influenced my calculation of risk’.” The post Microsoft Unveils Blockchain Solution To Make AI More Trustworthy appeared first on ZyCrypto.
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