Crypto-digest 05.15: GoTenna launches a bitcoin wallet that works without the Internet; Amber Baldet’s new startup Is a blockchain dapp store; FedEx CEO: adopt new tech like blockchain or be disrupted; Founders of ICO endorsed by Floyd Mayweather indicted for fraud; Whitfield Diffie talks cryptography ‘resurgence’ and blockchain; LedgerX announces bitcoin options trading upgrade.
GoTenna launches a bitcoin wallet that works without the Internet
If James Bond needed to use bitcoin on a secret mission in the jungle, he probably couldn’t drop by a Starbucks to use the wifi.
Since internet connections aren’t always available, reliable or private, cryptocurrency users need alternative ways to connect to the network. So the New York-based startup goTenna, founded in 2012 by Brazilian siblings Daniela and Jorge Perdomo, is partnering with Samourai Wallet to launch an Android app this summer that allows users to send bitcoin payments without an internet connection.
Announced Monday, the txTenna app will enable users to sync up their mobile with a goTenna device, which costs $179 per pair, then toggle the wallet app’s settings to transact offline and send the bitcoin.
“You need to be able to spend your bitcoin even in disaster areas,” goTenna engineer Richard Meyers told CoinDesk, citing the Perdomo siblings’ recent work in Puerto Rico, where goTenna devices helped people reconnect after Hurricane Maria. “As long as you have a way to charge your phone, you can be up and meshed and communicating.”
The signal needs to be within roughly a mile of another goTenna device to relay the message across the mesh network, a decades-old system for using the internet without wifi or a landline. So far, goTenna has sold more than 100,000 devices that let users tap into the mesh network.
If the offline bitcoin user is within a mile of another active device, the transaction could bounce across the mesh until it reaches a user with an internet connection.
“It offers an alternative that is more censorship-resistant,” Meyers said, adding:
“It’s going to obscure who you are and where you’re at when making these transactions. So that’s a big privacy advantage there.”
This system uses a free, unlicensed radio frequency, and it isn’t the first partnership to explore such potential for cryptocurrency networks.
It takes a village
Stepping back, a variety of projects since the Cold War have used relatively cheap and mobile radio setups to broadcast across firewalls and oceans.
Last year, renowned cryptographer Nick Szabo and blockchain engineer Elaine Ou published a proposal detailing how weak-signal radio transmissions could help boost security and the diversity of connections across the bitcoin network.
Then, in December, after the U.S. Federal Communications Commission repealed “net neutrality,” fans of ethereum, the world’s second most popular blockchain network, started flocking to mesh network technology meetups.
When net neutrality rules expire next month, internet service providers will no longer be barred from favoring or blocking specific websites and communities. It’s an opportune moment for censorship-resistant tools for bitcoin transactions.Perhaps the most important aspect of txTenna is that the cryptocurrency wallet will be an open source project.
Indeed, it was Samourai Wallet’s open source communication tools on Github that first inspired goTenna’s team to reach out to the bitcoin startup. The same txTenna code could theoretically be applied to iOS wallet applications as well.
As Meyers explained:
“It absolutely could work with any software wallet and they [Samourai Wallet developers] are not writing it specifically for the Samourai wallet anyway. It will be something any wallet provider could send transactions through.”
Amber Baldet’s new startup Is a blockchain Dapp store
Decentralized application development is harder than it should be.
That’s the guiding framework behind Clovyr, a new startup launched by two former JPMorgan blockchain employees that seeks to provide a new layer of enterprise-driven services between blockchains and user-facing applications.
Founded by CoinDesk’s “Most Influential” finalist Amber Baldet and cryptographer Patrick Mylund Nielsen, the mystery startup has been a topic of speculation since Baldet announced her departure from the investment bank last month.
Finally revealed at Consensus 2018 in New York today, Clovyr is a decentralized application store that will host a selection of well-vetted applications alongside some in-house developer tooling designed to simplify application development for enterprises.
Maintaining a “blockchain agnostic” approach to application design, Clovyr will initially provide tooling to build on both public and enterprise versions of ethereum, specifically the Quorum, Geth and Parity clients.
Speaking to CoinDesk, Baldet hinted that bitcoin-facing applications will also be possible, and further blockchain integrations may be added to the decentralized collection in future.
In a public beta planned to launch later this year, the team intend to provide an initial development framework for enterprises looking to build on the tech, as well as other potential novelties such as tooling for data analysis on private datasets – something that Baldet anticipates will be a popular product.
“Right now there’s no way to keep data private at its point of origin and also enable big data analytics, but there could be,” Nielsen said in a press release.
Going forward, the team plans to launch a full tech stack for privacy-protecting decentralized application design, that would achieve compliance with upcoming data protection law, the GDPR.
Baldet told CoinDesk:
“We’re trying to empower people to build things themselves.”
Connecting the dots
According to the team, while the technology is there, there’s a gap in application design that has been stifling innovation across the board.
Companies looking to integrate decentralized tooling are faced with the confusion of digging through open-source development platforms.
“It’s so easy to miss useful new tools,” Baldet said.
On Clovyr, developers and enterprises won’t need to go through the process of building the tooling from scratch that may have already been executed.
“We’re doing all that heavy lifting so they can accelerate and iterate faster,” Baldet told CoinDesk.
The application store will also enable the development of hybrid blockchain formats, such as enterprise chains that can link up to public network’s to publish attestations or transactions.
According to Baldet, the latter will beneficial to enterprise looking for the scalability and control of a permissioned system combined with the security parameters of a public blockchain.
But it will feedback into the public ecosystem as well, Baldet said.
“We’re bringing modern software development lifecycle practices to decentralized applications so people can save their time and resources, and finder a broader audience for their big idea,” she told CoinDesk.
In the future, Baldet expects that the public and enterprise-focused applications will blur into a much more user-orientated experience.
Rather than evaluating tools based on their creators, Baldet said, “the users will start asking, does it do what I need it to do and does it meet my personal requirement?”
At the same time, businesses have a much clearer resource to work from in order to enter the industry. Baldet explained:
“And those corporates, all they need to do is onboard Clovyr then they can experiment across the entire field of apps and mash stuff up. So that’s what it will do, it’s good for everyone.”
The beta version of Clovyr will be a collection of developer tooling.
“First thing we need to do is get the nuts and bolts of a workable developer framework out there,” Baldet said.
Going forward, Baldet and Nielsen’s experience in building J.P. Morgan’s Quorum, which contains multiple privacy-enforcing layers, will result in tools that can help people build in a way that protects user data.
“We want to provide very clear privacy-preserving stacks [that] we recommend you go with if you don’t know where to start,” Baldet said.
While the team has yet to fully expand on what such a privacy-preserving system would look like, Baldet hinted that such applications should be more conservative about what information is shared on-chain, and suggested using the shared ledger merely as a coordination device.
Plus, Baldet and Nielsen both hinted that such privacy-preserving features could come with data-analysis capabilities as well.
Nielsen told CoinDesk:
“Currently privacy is seen as incompatible with data-driven insight, but that doesn’t have to be the case.”
Notably, the startup’s applications intend to provide compliancy for the GDPR, a strict data-protection law that comes into force in Europe this month that some have worried may cause problems for public blockchain data.
“It’s certainly a challenge, but we just need to be smart about designing around the constraints,” Baldet told CoinDesk.
But Baldet’s concern for data privacy runs deeper than the GDPR legislation as well.
She told CoinDesk:
“Privacy isn’t just a law, it’s also just a human rights issue for users of the system.”
FedEx CEO: adopt new tech like blockchain or be disrupted
“Blockchain has the potential to completely revolutionize what’s across the border.”
Speaking at CoinDesk’s Consensus 2018 in New York today, Fred Smith, chairman and CEO of the U.S. logistic giant FedEx, doubled down on his commitment to embracing blockchain technology as a way for the decades-old company to maintain its game in a rapidly changing digital world.
Smith explained that one major issue that the logistic and transportation industry has faced is the “massive amount of friction” in cross-border logistics, since different countries have different standards, regulations and terminologies.
He told the audience:
“For cross-border shipments, ‘trust’ is legal requirement for every transaction. What blockchain has is a potential for the first time ever to make the information available for everybody.”
As such, the FedEx chief praised the “chain of custody” that blockchain can bring to the entire logistic industry.
All this talk isn’t just hot air, either – FedEx joined the Blockchain in Transportation Alliance (BiTA) in February this year in a bid to explore potential blockchain applications alongside other partners within the logistic industry.
At the time, the firm also launched a pilot program to establish what data would be needed for a distributed ledger to ease disputes between customers sending and receiving goods through FedEx. The shipping giant also wants to use blockchain to store its records.
Also speaking at the panel session, Robert Carter, FedEx’s CIO and executive vice president of information services, said the firm will first explore that deployment in the freight industry, since one single ship could contain millions of transactions at the same time.
“We move easily 12 million shipments a day and that more than doubles during the peak seasons. While we absolutely believe this technology is going to scale, right now it makes sense for us to do this in our freight world,”
Answering a question from the panel’s host, author Don Tapscott, on how he persuaded Smith to approve the decision on blockchain exploration, Carter said, in fact, it was the other way round.
“It’s Fred that dragged me into this,” Carter said, adding:
“The application of these custody chains … is so critical to the information aspect. We’re operating on this plane between the physical world and the digital world.”
Speaking on the importance of moving with the times as a company, Smith concluded:
“If you are not operating at the edge of new technologies, you will surely be disrupted. If you are not willing to embrace new technologies like internet of things and blockchain to face those new threats, you are, maybe subtly, at some point … going to extinction.”
Founders of ICO endorsed by Floyd Mayweather indicted for fraud
The three co-founders of cryptocurrency firm Centra Tech have all been indicted by a grand jury, the U.S. Attorney for the Southern District of New York announced Monday.
Raymond Trapani, Sohrab Sharma and Robert Farkas have all been accused of planning to defraud investors through their company’s token sale. U.S. Attorney Robert Khuzami further announced that authorities had recovered more than $60 million in funds from the co-founders.
All three are being charged with counts of conspiracy and the commission of securities and wire fraud, according to a release.
Centra reportedly offered “cryptocurrency-related financial products,” and its founders allegedly created “a scheme to induce victims to invest millions of dollars’ worth of digital funds for the purpose of unregistered securities,” according to the release.
However, the three also allegedly withheld important information or otherwise mislead investors, including claims about its ties to payments companies.
The company’s token sale was endorsed by heavyweight boxer Floyd Mayweather, claimed to have developed partnerships with Visa and Mastercard to create financial products. The SEC says that these partnerships never existed.
The charges were first revealed earlier this year when the U.S. Securities and Exchange Commission filed charged Sharma and Farkas with fraud, as previously reported. The Department of Justice later produced criminal charges of its own against all three co-founders.
The three remain in custody pending further action by the courts.
Whitfield Diffie talks cryptography ‘resurgence’ and blockchain
“This is very fulfilling because when you thought the subject [of privacy and cryptography] must have run its course, it flares up again.”
Those words, from cryptography legend Whitfield Diffie, perhaps captured the essence of the first day of CoinDesk’s Consensus 2018 conference. Diffie famously co-authored a landmark paper in 1976 that laid the foundations for public key cryptography, a key element of modern internet security and of cryptocurrencies.
During a freewheeling, jovial fireside chat with zcash founder Zooko Wilcox, Diffie praised blockchains and cryptocurrencies, saying the technology represents a “resurgence” of the work he helped start in the 1970s to empower individuals and strengthen privacy.
The current era, he said, reminds him of the time around 1997, when attendance at cryptographers’ conferences suddenly jumped from the hundreds to the thousands.
“These last few years have been another resurgence of cryptographic technology, and blockchain is now a huge refocus on the cryptographic aspects of these things.”
Wilcox echoed that sentiment and credited Satoshi Nakamoto for triggering this renaissance – causing Diffie to joke that they should “get another chair” on stage for bitcoin’s unknown, pseudonymous creator. Still, Diffie – whose work has focused more on securing communications than financial transactions – similarly gave props to Nakamoto for accomplishing what many before in his field could not.
“There were a good 10 years when privacy and cryptography were almost embarrassing to talk about in public,” Wilcox said.
He cited the famous (or infamous) 1999 quote from Sun Microsystems co-founder Scott McNealy, who remarked: “You have zero privacy anyway, get over it.”
“In the ensuing 10 years, everyone sort of fell in line on that – until Satoshi,” Wilcox said.
Diffie echoed that, saying: “For years many people [in cryptography] thought about how to develop money techniques, and nobody succeeded before that.”
That solicited a deadpan response from Wilcox – “Yeah, I know” – alluding to his own work in the 1990s at Digicash, a storied but unsuccessful digital currency venture.
‘Bulletproof or useless’?
On a related subject, Diffie said he was not worried that the financial fortunes of the cryptocurrency market would compromise its cypherpunk ethos.
“In some sense, you can’t be a revolutionary force without eventually taking over the establishment,” he said, drawing laughter from the audience. “So I don’t see a conflict between business development and political development.”
In fact, Diffie said that introducing market forces into protocols (as cryptocurrencies do) can be a powerful catalyst for the advancement of privacy-enhancing technology since battle-tested systems are likely to earn higher valuations than vulnerable ones.
“I like that phrase ‘introduce market forces,'” Diffie said in response to a question from the moderator and CoinDesk research director Nolan Bauerle. “The market force view of the development of cryptography may be the best single one we have, because so few things depend on this balance … of offensive techniques and defensive techniques.”
Wilcox agreed in theory, though he cautioned that in the case of cryptocurrencies, market forces don’t tend to distinguish between different coins at present.
Cryptocurrency prices tend to go up and down in unison, he said, “regardless of whether the coin has proven to be bulletproof or useless.” In the long term, though, “I assume they eventually will because I think the markets do that,” Wilcox said.
Looking back on the breakthrough he helped bring about decades ago – which is widely hailed for breaking governments’ monopoly on cryptography, thereby giving private companies and citizens access to encryption tools – Diffie said it had a similar decentralizing effect compared to today’s blockchain projects.
“If you don’t have public-key [cryptography], it’s not that you have to know the people you talk to, but you have to be connected to them by an administrative authority,” he said, adding:
“That works wonderfully for the U.S. military, it has lots of employees, a million or more and has a key management structure that follows. That just plain won’t work for an internet of commerce.”
LedgerX announces bitcoin options trading upgrade
Bitcoin derivatives platform LedgerX is launching a new, simplified interface that lets bitcoin investors earn interest on their holdings.
The new service, announced Tuesday, operates similarly to its existing bitcoin call options with a streamlined user face for investors, according to LedgerX president and chief risk officer Juthica Chou.
“We’re seeing more and more demand for people who want to earn some sort of interest off their bitcoin and lending is not exactly natural to people – especially lending where they earn their interest back in bitcoin. So we’re seeing participants come back to trading.”
Essentially, participants place a bet on what bitcoin’s price will look like at some point in the future. If the price grows to that level within the time period, the participants recoup their investment. In the event that it doesn’t, participants can sell their coins and receive fiat currency from the profit on that sale.
This is “by far the largest trade that we’ve seen people coming in to do,” Chou said. “I would say that more than half our volume has been in this kind of trade.”
“The contract that people are entering into here is such that they’re selling an upside call option, so probably call it [two times] where bitcoin is now. If bitcoin tanks, they still collect the exact same premium and if bitcoin goes up then they end up selling bitcoin at about [two times],” she explained.
Chou added that “overall, I think the volatility is what impacts us … the more [bitcoin’s price] moves, the more fiat [investors] can collect.”
Only eligible contract participants, as defined by the U.S. Commodity Futures Trading Commission, can trade in these call options, however. Users need to undergo “the same [know-your-customer] and application process as standard LedgerX” participants, said Chou.
“I think given the price action people are going to be more and more interested … we’re very excited, because this is something we’ve seen a lot of on the LedgerX platform.”