Issue 4: Name that Database!

DCG Connect — Week of June 12, 2017

DCG Connect

Published in

DCG Connect

5 min readJun 21, 2017

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Blockchain Misunderstood: Language

A complaint we’ve continued to hear often is that the terminology in this space is very confusing. Blockchain vs. distributed ledger technology (DLT), distributed vs. decentralized databases, P2P network — the taxonomy available for enterprises isn’t yet helpful for understanding why these technologies are (or aren’t) useful. For example, when people realized Corda was a distributed ledger not a blockchain — from an enterprise’s point of view, is that an important distinction? There are definitely some groups (developers, academics) who do and should think a lot about these things, but there’s a lot more work to be done as well translating the value proposition from technologists to enterprises. Maybe a good proxy for how long to spend on these differences is how often in your line of work you’ve heard MySQL and Facebook in the same sentence.

More clearly defining blockchain/DLT/distributed technology in the enterprise space (i.e. with the focus on what it does for the business and why it’s better than existing alternatives) is an important problem to solve. Done properly, we believe this would meaningfully improve dialogue in the industry and drive adoption where appropriate because the value proposition would be clearer for businesses. Again, this is not to say that these differences aren’t important because they are (public vs. private, etc). But, if you’re a business trying to understand how this technology could impact you, the questions that really matter are, “what does this accomplish for us and why is this better than what we’re using now?” Stay tuned for our DCG Blockchain Ecosystem map…coming to a screen near you!

Company Spotlight: Cobalt

In the financial services industry, the economic reasons for adoption of blockchain or distributed ledger technology in the near term has usually been cost savings. Post-trade settlement across various markets is a big target for this (lots of reconciliation, bloated middle/back office staff, various overhead costs). Cobalt, one of Digital Currency Group’s newest portfolio companies, is tackling the legacy post-trade infrastructure in the FX markets.

Cobalt’s use of distributed ledger technology will aim to significantly reduce risk and cut post-trade costs by up to 80%. Current complex post-trade infrastructure sees FX market participants incur multiple unnecessary license fees, ticketing charges, IT overheads and staff costs.

The company’s platform creates a shared and verified view of a transaction, via a peer-to-peer private network for all parties involved, which means those parties require fewer resources to settle the transaction. We’ve previously mentioned that Citadel Securities and XTX Markets were two of their 22 beta participants. Cobalt also recently launched a new service called BlueSky, which enables permissioned 3rd party technology providers to develop their own applications using participants’ reconciled data on Cobalt’s network.

Partnerships & Projects

Swedish power company Vatenfall to conduct POC for P2P trading in wholesale energy market | The POC, implemented by Ponton, will include Vatenfall’s trading business and 22 other European energy trading firms. The goal is to prove cost savings from avoiding a centralized energy marketplace without sacrificing trading volume or transactional speed.

Bitmark partners with UC Berkley School of Public Health for public health research | Bitmark will fund research fellows at Berkley to conduct studies using Bitmark technology. Basically, a participant can use the Bitmark network to securely share their personal data with researchers while maintaining ownership of it. In return, those researchers can share exactly how they’re using the data in their work.

Chain is working on many network projects | Their last announced project was with Nasdaq and Citi a few weeks ago. According to CoinDesk, Chain is working on “about a half dozen” projects of a similar size. We’re excited to see more successes in the pipeline!

Western Union testing an integration with Coinbase | Coinbase, one of the most popular digital currency exchanges, will use Western Union’s services on the back-end for for fiat transfers (in the trial only, which is with Western Union employees). “Will digital currencies wipe out the remittance business?” customers are asking Western Union.

Many exchanges experimenting with blockchain technology | Nasdaq, Deutsche Borse Group, Australian Stock Exchange — just some of the exchanges who are testing various implementations of blockchain technology. Deutsche Borse Group for example, the largest stock exchange in Germany, has three separate integration projects: (1) tokenized securities (2) commercial bank money on a blockchain and (3) cross-border security transfers.

Walmart’s blockchain-based supply chain test with IBM and Tsinghua University went very well | The project, which focused on tracking pork in China, had very positive results: “Walmart explained that the technology has helped it reduced the time it takes to track food from days to minutes, enabling more effective response in the event that tainted products are discovered.”

*DCG is happy to note that Bitmark, Chain, and Coinbase are all portfolio companies.

Regulation & Policy

China’s central bank to release new bitcoin exchange rules later this month | Someone from the People’s Bank of China thinks regulators are likely to ban the exchanges from providing leveraged trading, financing, and margin trading services.

Dubai Airport wants to be passport free with blockchain technology |
Dubai has hired ObjectTech to develop a digital passport to allow passengers arriving in Dubai Airport “to step off their flight and walk straight to baggage reclaim via biometric verification whilst they walk.”

Coin Center testified in Congress (at the same time as James Comey) | There were two separate hearings occurring at once. The first hearing covered the national security implications of virtual currencies, while the second focused on consumer choice enabled by FinTech and how the regulatory landscape was impacting innovation in the US (its pushing it outside the country).

And in state regulatory news…

Washington state has new money transmitter laws, effectively July 23rd
Digital currency traders exempt from money transmission regulations in New Hampshire
Nevada the first state to ban local taxation of blockchain usage

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