Crypto-digest 05.11: This Crypto vending machine can tell if you’re 21 and sell you beer; Korea’s biggest crypto exchange raided over suspected fraud; Ethereum futures go live on UK trading platform; Ethereum co-founder battles ‘Dr Doom’ roubini to crypto debate draw; IBM, Global Citizen seek Blockchain solutions for humanitarian aid; Telefonica, Blockchain startup team up to secure smartphone apps.

This Crypto vending machine can tell if you’re 21 and sell you beer

“We’re definitely not in the beer-vending business.”

That might not be something you’d expect the marketing manager for a crypto tech company to clarify, but it’s perhaps now necessary when discussing Civic, the startup founded by entrepreneur and “Shark Tank South Africa” star Vinny Lingham in 2016.

Announced Friday, the San Francisco-based startup will unveil the world’s first “crypto beer vending machine” at CoinDesk’s Consensus 2018 next week. No gimmick, Civic sees the prototype, built and branded in partnership with beverage giant Anheuser-Busch, as a way to demonstrate the utility of blockchain-based identity verification schemes.

In short, any conference attendee will be able to walk up to the machine with their Civic app, where they can verify whether they are of legal age and make a purchase.

Civic’s Titus Capilnean told CoinDesk:

“We’ve been thinking about practical ways of bringing crypto technology to a more mainstream audience, and how can we go so so niche that it’s so easy to understand for a regular individual. Proof of age seemed like the best low-hanging fruit.”

In this way, Capilnean argues the model also circumvents issues with using traditional ID verification techniques in such settings, including being equipped for the variety of IDs consumers might use, as well as the handling of data transmitted or stored in the verification process.

Going even further, the demo illustrates how blockchain technology could one day enable the makers of all kinds of age-restricted products to move into the vending machine market.

“It’s not limited to just beer, it could be for any kind of age-restricted product. Unmanned entrance to casinos, and then for the vending machines, we can see this going into concerts, ballgames, venues, conferences,” he said.

Still at present, that future might be some ways off.

While the prototype is now said to be in transit to the New York Hilton for the event, it’s the first and only in production by the company, and there are no plans at this time for either Civic or Anheuser-Busch to move forward with any wider distribution.

Civic said the machine will aim to release up to 600 free beers daily at the conference.

Where the token fits

Still, there are additional considerations for Civic aside from marketing.

Looking ahead, the demo also provides a glimpse of how a wide range of devices could soon be connected to Civic’s identity marketplace, now scheduled for a Q3 launch.

Announced last June, Civic sold $33 million-worth of its CVC tokens to investors ahead of an initial coin offering (ICO) for its protocol that saw more of its custom cryptocurrency dispersed to users. Today, the value of the network is $113 million, according to data from CoinMarketCap.

As described by Lingham last year, the idea was to enable banks and other entities that store and safely hold the data necessary to verify users to offer up their ability to provide a kind of know-your-customer service.

So, the tokens, while not necessary for the demonstration (the beer distributed at Consensus 2018 will be free of charge) could be integrated into later iterations. Essentially, vending machines that need to verify that an ID is valid will need to purchase Civic tokens in order to enact the query and verify the blockchain data.

“In this case, the machine requesting the identity will have to pay for the verification,” Capilnean explained, concluding:

“Everyone contributes to the token economy, the service providers pays for the IDs, the validator gets the ID and the consumer gets the product.”

Korea’s biggest crypto exchange raided over suspected fraud

Prosecutors in South Korea have reportedly raided the largest cryptocurrency exchange in the country, UPbit.

According to CoinDesk Korea, investigators from the Prosecutors’ Office of the southern district of Seoul, the country’s capital, searched the head office of the exchange in the Gangnam-gu district on May 10-11.

UPbit is suspected of fraud for allegedly selling cryptocurrency to customers that it does not actually hold, according to the report. “We have secured hard disks and accounting books through confiscation. Analysis is expected to take days,” the Prosecutors’ Office stated.

When asked for comment by CoinDesk Korea, an UPbit representative said, “At this time, I cannot answer anything about this seizure.”

However, the exchange’s support website confirms the investigation in a note posted today and states that its services are still operational, saying:

“UPbit is currently under investigation by the prosecution, and we are working diligently. UPbit services such as all transactions and withdrawals are operating normally. Your assets are kept securely in your account, so you can rest assured that you can use UPbit services.”

The news comes as authorities in the country have been investigating cryptocurrency exchanges amid regulatory tightening in the country.

In March, prosecutors reportedly raided the offices of three cryptocurrency exchanges on suspicion of siphoning off funds from customers’ accounts. One of the exchanges raided was Coinnest, the fifth largest in Korea at the time. Kim Ikhwan, the firm’s founder, and another executive were taken into custody in early April.

Edits: (08:55 UTC) This article has been edited to clarify the the reason for the raid. (10:22 UTC) Updated to add UPbit website statement.

Ethereum futures go live on UK trading platform

Digital asset trading service Crypto Facilities is launching ethereum futures contracts.

Announced Friday, the U.K. startup claims the news marks the first time futures for ether – the cryptocurrency that powers the ethereum blockchain – will be traded on a regulated platform. Investors will be able to take long or short positions, which will let them “broaden investment opportunities and manage risks more effectively,” according to the firm.

In a statement discussing the new offering, Crypto Facilities chief executive Timo Schlaefer noted that ether is the second-most liquid cryptocurrency after bitcoin, with a daily trading volume in the excess of “billions of dollars.”

Schlaefer added:

“We are excited to be launching ETH futures. The ethereum network is the pre-eminent blockchain for smart contracts, and we believe this new trading instrument will attract more investors and bring greater liquidity to the marketplace.”

The company will work with liquidity providers Akuna Capital and B2C2 to help back its contracts. Akuna’s head of digital assets, Toby Allen, said in a statement that his firm was “looking forward to seeing this much-needed product fill a gap in the market.”

The creation of an ethereum futures contract is “another giant leap in the development of the crypto asset class,” he added.

B2C2 founder Max Boonen similarly called the move “a natural next step” for ethereum’s token.

“The continuing evolution and commoditization we’re seeing in ethereum will further increase liquidity in the marketplace, enabling participants to exchange assets seamlessly and unlock value. We look forward to providing liquidity for this new product,” he said.

Stepping back, this is not the startup’s first touch with futures products. Crypto Facilities already offers bitcoin and XRP futures contracts, as previously reported by CoinDesk.

Moreover, the firm provides CME Group with the CME CF Bitcoin Reference Rate, which the Chicago-based exchange uses to offer its bitcoin futures contracts.

Ethereum co-founder battles ‘Dr Doom’ roubini to crypto debate draw

Nouriel Roubini was in full attack mode in his latest crypto debate.

“The entire crypto land is more unequal in terms of income and wealth than North Korea,” he said Wednesday afternoon, and the jabs didn’t stop there, with the former Clinton administration economist, better known as “Dr. Doom” for his prediction of the 2008 financial collapse, taking his criticism of all things crypto to new levels.

Still, this was perhaps to be expected. After antics onstage at the Milken Institute Global Conference earned him headlines, the organizers of the Fluidity Summit invited Roubini to go toe-to-toe with ConsenSys founder Joseph Lubin, with Roubini playing the bear to Lubin’s bull.

Long a cryptocurrency basher, Roubini didn’t make a different case this time, though his arguments were perhaps distinguished by their breadth and energy. (The moderator, former COMEX Chair Donna Redel, even went so far as to use a whistle on him at one point to rein in the conversation).

Alleging various miners, exchanges and cryptocurrencies have cultish followings, Roubini argued against the idea cryptocurrencies are decentralized, positing that these groups tend to have significant sway over the development direction a protocol takes.

Roubini told the audience:

“The whole point of the crypto world is to say we don’t believe in central banks … everything is going to be decentralized. I see totally the opposite in crypto land.”

As expected, Lubin came to the industry’s defense with point-by-point counter examples that articulated a broad thesis for how blockchain will enact change.

“We’re building systems that are fundamentally, atomically about collaboration,” Lubin said.

It was a capstone conversation to a day of cheerleading institutional investment in crypto. Perplexingly, some of Roubini’s toughest barbs seemed to thrill much of the crowd, though it’s hard to tell if this represented real sentiment or if crypto enthusiasts just love a good show.

Nevertheless, investor Jehan Chu of Kenetic Capital saw the crowd as very much on team crypto.

He told CoinDesk:

“This isn’t winning hearts and minds. Everyone is here to do business.”

Peace Offerings

And much of this is a credit to Lubin, who was more nuanced onstage, granting imperfections but attempting to couch them as technological waypoints rather than insoluble problems.

Lubin tried to even concede to Roubini on some of his smaller points. For example, he took on mining, saying, “I agree that the mining systems are susceptible to centralization.”

Promising that a proof-of-stake protocol for ethereum should be deployed soon, he said it will enable people to replace all that hardware infrastructure with “a bond, an economic bond on the blockchain.” He even argued that it will be more secure than bitcoin’s pioneering proof-of-work system.

In this way, some of the earlier panelists pointed to some of the very difficult challenges decentralization presents. Stefan George, the CTO and co-founder of Gnosis, a prediction market whose early 2017 initial coin offering (ICO) hinted at how big the year in crypto would be, expressed frustration at working with a slew of wallets with different configurations. “We all need to agree on one API,” he said.

And Alex Wearn of IDEX spoke more broadly to the competitiveness of decentralized applications. “It’s not going to happen unless usability pretty much matches the centralized experience.”

Roubini was less circumspect. He said that the dapps on the market are by and large pyramid schemes.

Each time Lubin described progress, Roubini dismissed it out of hand. For example, he argued that the crypto-iluminati have been saying for years that scaling problems could be fixed.

“I’ll show you the code,” Lubin offered. It was probably his biggest applause moment of the whole debate.

In another example, Roubini said “cryptocurrency” was a misnomer because it’s not really money. To be money, he argued, it has to be a unit of account, a means of exchange and reliable store of value.

Lubin countered by pointing out that MakerDAO has made a stable coin on ethereum that has, he said, something like $1 billion dollars in value in it. Even as ether tanked early this year, the MakerDAO token held steady at its peg with the dollar.

Roubini, however, was hardly impressed.

So who won?

Still, surprisingly, if the winner were measured by who got the most big laughs or big rounds of applause, it would go to Roubini.

In fact, Roubini’s biggest moment probably came when he first pointed out that there was no good reason for a business to limit customers with a token. He asserted that if every company only accepts tokens for its goods or services, there will be no way for people to know how to compare prices.

“You’re going into a world of ‘The Flintstones’ or barter,” Roubini said. “It’s totally inefficient. It’s never going to work”

That’s not to say Roubini was the only one in the room with doubts, though he may have been the only one committed to them. Even Lubin didn’t miss his chance to say something about forthcoming regulatory action, but he spun it the same way as everything else: a speed bump on the way.

“Although there will be some negative news around some of the projects that sold tokens, there will also so be some good news, and we will see a lot of that in 2018,” he said.

But again and again Roubini argued that ethereum itself should start policing scams and kicking them off the platform now, not addressing how that would run fundamentally counter to the censorship resistance ideology engineered into these platforms. But it did reflect the core idea that all of his arguments stemmed from.

He said:

“I do believe in centralization.”

So even if Lubin did win the debate, it seems clear he could never win over Roubini. Nor could Roubini ever win over him. That fundamental ambivalence, one widespread among smart people during what Lubin called “exponential times,” was well captured by another crypto diehard at the end of a prior panel.

“Some of this could be permanent that we’re putting on a blockchain,” Samantha Radocchia of the supply chain company Chronicled said. “I’d like to encourage thinking about that.”

IBM, Global Citizen seek Blockchain solutions for humanitarian aid

IBM and Global Citizen are issuing a challenge to the world’s developers: use blockchain to revolutionize how donations are made to humanitarian causes.

The tech giant and the anti-poverty campaign movement are partnering on “Challenge Accepted,” inspired by the United Nations’ Envision 2030 initiative, which aims to improve the lives of impoverished and at-risk people.

Developers taking part in Challenge Accepted will use IBM’s Blockchain Platform Starter Plan to build a network that encompasses all aspects of the donation process.

There’s a gamification aspect as well – along the way, developers who perform certain actions can earn “points” that they can then redeem for access to IBM experts, for example.

Stepping back, the UN and other assistance groups have previously explored using blockchain to track aid to impoverished areas. Cryptocurrencies, too, have served as a platform for facilitating donations to a range of causes, from clean water access to the provision of electricity for a school in South Africa.

And in what is perhaps the most notable trial of its kind to date, the World Food Programme (WFP), the food assistance arm of the United Nations, tapped the ethereum blockchain to authenticate and record disbursement transactions.

More than money

Simon Moss, a co-founder of Global Citizen, argued in a blog post published Friday that the technology has the potential to change the face of humanitarian aid.

And it’s not just the money that would be better accounted for, he said – organizations can use a blockchain to improve transparency in the flow of goods being delivered as well.

“Blockchain can provide clarity on not only who is donating, but how money and supplies flow through organizations that provide aid – such as tracking a gallon of water purchased by an organization to the location where it was delivered,” he wrote.

Kathryn Harrison, who leads product management for the IBM Blockchain platform, told CoinDesk that the initiative grew out of internal conversations earlier this year about the “opportunities to use this technology in areas that we can do some pretty substantial social good.”

“I think it’s a really exciting opportunity to help engaged citizens see how they can build something that’s going to drive accountability and improvement in the [non-governmental organization] sector,” Harrison said.

A link in the chain

Harrison also framed the challenge – which runs from May 15 to July 14 – as part of the wider work being done at IBM on the blockchain front.

“We’re focused on so many different types of use cases. We look at food safety, we look at microfinance, we look things like the environment and carbon credits and energy savings,” she explained. “And this just seems like another opportunity to empower developers to put their skills to use for good.”

At the end of the challenge, five winners will be chosen from the pool of contestants. Harrison said some of the projects may be listed in the IBM Blockchain Platform, opening up those templates to other users – and winners could potentially take their projects further through IBM’s Garage workspaces. The winners will also receive tickets to Global Citizen’s Global Citizen Music Festival in September.

The challenge is an opportunity for developers looking at aid-focused uses of blockchain to advance their ideas – but as Moss contended in his blog post, there’s a bit more at stake here.

He concluded:

“This is a bold reinvention of how philanthropy and donors interact.”

Telefonica, Blockchain startup team up to secure smartphone apps

Spanish telecoms giant Telefonica has partnered with security technology startup Rivetz to develop smartphone security solutions for blockchain-based transactions and messaging, the companies announced on Thursday.

The partners will combine Telefonica’s network security services with Rivetz’s blockchain and trusted-computing technologies to explore decentralized solutions for security and data controls. The work will specifically be aimed at improving applications for secure messaging and cryptocurrency wallets.

The firms said they intend for their end product “to provide cybersecurity controls and protection to hold multiple cryptocurrencies, assuring the digital assets and processes are protected within a device’s hardware.”

“Trusted computing technologies are not an end by themselves,” said Sergio de los Santos, head of the Discovery and Innovation Lab at Telefonica’s cybersecurity arm, ElevenPaths. Instead, they “are an opportunity to improve mobile users’ security, providing a research and innovation framework in the context of cybersecurity.”

The companies also intend to examine new ways to automate the backup and recovery of user identity information by leveraging existing mobile hardware security.

“Blockchain access and secure messaging are core building blocks to automating the user experience when it comes to digital services,” Rivetz CEO Steven Sprague said in the statement.

Rivetz and Telefonica cited the growing body of projects related to blockchain and the internet of things (IoT) as the impetus for the partnership, noting that Rivetz’s technology has been in beta since January of this year. The partners will merge their “enhanced” version of the tech with Rivetz’s current app developer and plan to offer the product to chosen partners by June.

Neither Rivetz nor Telefonica is new to the blockchain space. This week Telefonica announced that it had joined a blockchain settlement trial for the telecoms industry led by Colt Technology Services and PCCW Global. Rivetz has been involved in the industry since 2014,the firm when it started developing cybersecurity protection for bitcoin wallets.


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