Civic and Votem’s Partnership Accelerates Blockchain-Based KYC Process

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Identity verification is paramount to global freedom and citizen access to public services. We see many examples of this today in terms of how barriers to documentation adversely impact issues like democratic voting processes, especially among homeless communities and refugee settlements.

Today’s developments in blockchain technology are now enabling solutions to these and many other verification issues. The use of distributed technology shows promise as a more robust, cost-effective mechanism for advancing identity trust and governance.

Civic, a provider of blockchain identity-verification technology, recently announced a partnership with technology platform Votem to launch the first Know-Your-Customer (KYC) system powered by its CVC token. This, according to leaders at both companies, signals a major leap forward in ensuring the security and transparency of the KYC and accreditation processes.

Votem’s platform provides citizens, organizations and governments around the world with the ability to easily manage or participate in online voting. It is designed to improve the effectiveness of voting by ensuring the integrity of the process, including the confidentiality of the voters’ choices and the validity of results, for both private- and public-sector elections.

Through this partnership, Civic will provide Votem with trusted identity protocols, enabling a secure and transparent environment, without the risks and costs associated with collecting and storing personal identity information.

An Early Use Case

For Votem’s public token presale for accredited investors, which commenced on February 27, 2018, Civic is registering and authenticating the presale participants without the need for usernames and passwords. They are also verifying the identity of each person using blockchain-powered attestations.

This process begins with users storing their identity documents using the Civic app. Civic, in turn, verifies the identity of each potential participant in the Votem presale and, where necessary, conducts advanced Accredited Investor checks for users in the U.S.

Through the use of this new model, Civic’s decentralized ID verification and KYC protocol is laying the groundwork for security and professionalism in the token sale effort, ensuring that Votem’s process is secure from start to finish.

Civic CTO Jonathan Smith said, “This collaboration marks another milestone for Civic’s ecosystem and for on-demand, secure and low-cost access to identity verification services. This partnership is especially impactful, not only because it is the first CVC-powered KYC, but because Votem also falls squarely in line with Civic’s long-term vision of bringing decentralized democracy to life through blockchain technology. With Civic and Votem coming together, fair and secure digital voting starts now.”

Pete Martin, CEO of Votem, concurred: “We believe this will set a new standard for token sales and are honored to be working with them in this regard. We also think this sets the groundwork for a long-term strategic partnership around the secure and accurate authentication of voters since we share a common vision of making voting more secure, accessible and verifiable. Votem was founded to improve free and fair elections around the globe and with our partnership with Civic, we know that we have a solid partner to help us achieve our mission.”

Orchestrating the Path Forward

In a phone interview with Bitcoin Magazine, while navigating through the traffic gridlock in San Francisco, Smith said that Civic is very excited about this being the first KYC/ICO project that’s actually powered by the Civic token, a very important milestone for their platform.

“Votem has always been very close to the heart and core of our mission involving the empowerment of democracy through blockchain-based identity. This project highlights the importance of identity as a fundamental building block in which voting can occur whether in a corporate system or an international government election.”  

In light of Civic’s belief that democracy is a hugely important element in uplifting citizens, Smith noted that Civic has had conversations with various government entities throughout the world. “At the end of the day, the entity has to decide what and in whom they will trust. That’s a big thing to leap over — how do I trust the data I’ve been given? Blockchain [technology] is a much better solution in terms of facilitating a strong measure of trust in the KYC provisioning of an identity. Our partnership with Votem offers a great way to demonstrate this.”

This article originally appeared on Bitcoin Magazine.

Stablecoin TrueUSD Is Now Trading on Bittrex

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TrustToken has launched trading for TrueUSD, “the first independently verified asset-backed stablecoin on the market that fixes its value to the U.S. Dollar.” TrueUSD (TUSD) is live on the cryptocurrency exchange Bittrex.

“TrustToken is proud to launch TrueUSD so that traders can easily and quickly trade into a stablecoin that is 100 percent USD collateralized and independently verified by third-party accountants,” said Danny An, co-founder and CEO of TrustToken. “The market has demonstrated that there is strong demand for a trustworthy trading pair between cryptocurrencies and U.S. Dollars. TrueUSD’s presence on Bittrex meets that need.”

Stablecoins are price-stable cryptocurrencies, meaning the market price of a stablecoin is pegged to another stable asset, like the U.S. dollar. A recent review explores the conceptual and technical aspects of stablecoins, discussing current implementations including TrueUSD.

TrustToken, founded in 2017 by a team from Stanford and UC Berkeley universities, Palantir and Google, has developed a legal framework for collateralized cryptocurrencies and a technical platform to tokenize real-world currencies and assets. TrueUSD is an ERC20 stablecoin that is claimed to be “fully collateralized, legally protected and transparently audited.” It is issued only against existing fiat reserves held by a central issuer, using multiple escrow accounts to reduce counterparty risk and to provide token holders with legal rights to the funds.

An interesting question is: Why would one want to buy a stablecoin? Instead of spending, say, U.S. dollars to buy a cryptocurrency whose value is pegged to the U.S. dollar, why not just keep the U.S. dollars in the bank? An answer is that a stablecoin can offer the best of both worlds: the stability of a fiat currency and the efficiency of a blockchain-based cryptocurrency with fast, cheap and traceable transactions.

Therefore, while stablecoins don’t offer value to speculators, they do offer value to digital cash users. “Normal people and businesses can enjoy the benefits of digital currencies (faster transaction speed than ACH [Automated Clearing House], global reach) without the volatility of Bitcoin,” notes the TrustToken FAQ. “Now you can pay a salary, take out a loan, or buy coffee with a cryptocurrency, enabling a new economy of cryptocurrency financial applications.”

According to a TrustToken blog post, TrueUSD launched on Bittrex first because it is the largest cryptocurrency exchange by trading volume in the United States, has solid Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance practices, and is frequently used by institutional traders.

“Bittrex is committed to providing our customers with an extensive selection of blockchain technologies and digital tokens,” said Bittrex CEO Bill Shihara. “Our rigorous listing review not only identifies tokens that have innovative features, but also passes our robust compliance process. We look forward to having TrueUSD on the Bittrex exchange.”

At this moment, there is only a BTC/TUSD pair, and traders who want to exchange other coins or tokens for TUSD need to go through Bitcoin first. The TrustToken team is working toward developing more trading pairs to be implemented in the future.

Anyone with a Bittrex account can use the exchange to trade TrueUSD for BTC. To exchange TUSD for U.S. dollars, TUSD holders should follow the redeeming procedure outlined in TrustToken’s guide for traders. “If you hold TrueUSD tokens, pass a KYC/AML check, and comply with our terms of use, you have a legally enforceable right to redeem those tokens for the money in the TrueUSD escrow accounts,” ensures the guide. The redeeming process, partly implemented through Ethereum smart contracts, burns — deletes from circulation — the TUSD tokens and wires U.S. dollars to a previously indicated bank account.

The TrustToken team takes compliance seriously and intends to work with regulatory authorities. The introductory TrustToken post notes that smart contracts that issue tokens can help enforce compliance, for example, by ensuring that buyers are accredited investors or are citizens of certain countries.

This article originally appeared on Bitcoin Magazine.

FinCEN Deals Major Regulatory Blow to ICOs and Exchanges

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The U.S. Securities and Exchange Commission (SEC) has been proclaiming for a while that initial coin offerings (ICOs) are securities. Now, in the latest regulatory backlash against ICOs, the federal bureau charged with enforcing the nation’s laws against money laundering has decided that, effectively, anyone who sells tokens is an unregistered money transfer business.

Financial Crimes Enforcement Network (FinCEN) made public a letter on March 6, 2018, that Drew Maloney, FinCEN’s assistant secretary for legislative affairs, sent to U.S. Senator Ron Wyden last month.

The letter summarizes FinCEN’s interpretation of the current laws and regulations as they relate to ICOs. According to FinCEN, anyone issuing an ICO is a money transmitter subject to the Bank Secrecy Act. As such, they are required to register with the federal government, collect information about their customers, and take steps to combat money laundering and the financing of terrorism by their customers.

The letter reads, “… a developer that sells convertible virtual currency, including in the form of ICO coins or tokens, in exchange for another type of value that substitutes for currency is a money transmitter ….”

Exchanges also qualify as money services businesses (MSBs) according to FinCEN. “An exchange that sells ICO coins or tokens, or exchanges them for other virtual currency, fiat currency, or other value that substitutes for currency, would typically also be a money transmitter,” wrote Maloney.

An ICO registered as a security, however, would not be considered a money transmitter. Maloney stated that FinCEN was working closely with the SEC and the Commodities and Futures Trading Commission (CFTC) to “clarify and enforce” the legal and reporting obligations of businesses involved in ICO activities.

It is worth noting that according to February 6, 2018, senate testimony by SEC Chair Jay Clayton, no ICOs that raised capital in 2017 had so far registered or made clear that they had any plans to register with the SEC.

FinCEN’s letter comes less than a week after reports surfaced that the SEC sent a wave of subpoenas to ICO projects demanding details of the structures of ICO sales and pre-sales. If ICOs are deemed securities, all ICO issuers that sold to U.S. citizens could be criminally guilty of a felony for violating U.S. securities laws and possibly subject to five years in prison.

Now, with FinCEN jumping into the regulatory landscape, things are getting even stickier for ICOs. If what FinCEN is saying holds merit, anyone who sells tokens to U.S. residents while, at the same time, failing to register with FinCEN as an MSB and failing to perform the know-your-customer (KYC) and anti-money laundering (AML) compliance obligations could also face several years in prison under a felony conviction.

Employees and investors of ICO companies could be held criminally liable, too. Worse, the federally related offense of wire fraud, which includes sending money over the internet to avoid reporting requirements, could easily be tacked on to all the above. (In November 2017, Western Union, the world’s biggest money transfer company, had to pay $586 million on charges of wire fraud.)

In a blog post response, blockchain advocacy group Coin Center, who published the FinCEN letter, took issue with FinCen’s assessment, including the way in which FinCEN classifies the roles of miners (those who create virtual currency) and developers.

Coin Center called for more clarity on the issues through open consultation and discussion: “This is a complicated and consequential legal interpretation, and one that should be discussed, unpacked, and eventually finalized in a more formal and transparent setting …”

It is likely that regulatory laws surrounding ICOs will only be settled in court, perhaps even the Supreme Court. In the meantime, any projects considering raising funds through an ICO will have to think carefully about how they structure that ICO and whether they even want to sell tokens to U.S. citizens to begin with.  

This article originally appeared on Bitcoin Magazine.

Halong Mining Is the First Bitcoin Mining Hardware Producer to Implement Overt AsicBoost

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Halong Mining announced today, March 7, 2018, that it is embedding AsicBoost in its DragonMint mining hardware. Halong Mining is able to do so because it joined the Blockchain Defensive Patent License (BDPL), giving them access to the patent-pending technology, which utilizes a trick called “version rolling.” With AsicBoost, the DragonMint machines should be up to 20 percent more energy efficient than they would otherwise be.

“We have produced and will continue to produce a significant amount of version-rolling AsicBoost enabled miners, enough to incentivize other manufacturers to follow suit, which they are now freely able to do if they join the blockchain defensive patent initiative to help protect the industry from patent aggression,” the hardware producer writes in its announcement.

As far as publicly known, no other mining hardware producer has implemented the overt version of AsicBoost in its application-specific integrated circuit (ASIC) chips so far.

AsicBoost

AsicBoost was invented by former CoinTerra CTO Timo Hanke in 2016. The technology takes advantage of a quirk in Bitcoin’s proof-of-work algorithm, which lets miners take a sort of “shortcut” to find a new block. This can be done both overtly as well as covertly — though the latter variant is currently not as effective on Bitcoin and has negative side effects, such as an incentive to limit the total number of transactions that are included in a block.

“Unlike covert forms of merkle grinding, [overt AsicBoost] has no incentives to create smaller blocks, nor does it interfere with upgrades to the Bitcoin protocol,” Halong Mining writes.

The Halong Mining announcement is the latest in a series following the introduction of the BDPL, an open initiative to share patents between licensees. Last week, California-based Little Dragon Technology LLC, the current holder of the pending AsicBoost patent, announced its intention to join the BDPL. This was followed yesterday by an announcement from Bitcoin mining pool Slush Pool that its pool software is now AsicBoost compatible. According to Halong Mining, mining pools ckpool.org and Bitcoin India have since enabled AsicBoost support as well.

“After Little Dragon Technology LLC acquired the patent from the original inventors, we negotiated a license to use AsicBoost in our miners on the understanding that AsicBoost would be opened up to everyone to use, under some form of defensive patent license, in the hopes it can help protect decentralization of Bitcoin mining,” the Halong Mining announcement states.

Regarding the timing of the announcement, Halong Mining said, “Whilst this was being arranged, we were unable to announce our intended use of AsicBoost technology until the patent holder fully opened the patent for all to use under defensive licensing terms which occurred on March 1, 2018.”

Patent Controversy

While AsicBoost has been subject to much controversy in the past, most of that controversy surrounded the patent on the technology — which could skew competition by state enforcement — and the alleged covert use of it. By making the technology equally available to any company that joins the BDPL, Little Dragon Technology hopes this controversy will come to an end.

Halong Mining shares this sentiment:

“It’s been a long road, but we believe overt version-rolling can create the right incentives for other patent holders in the industry to join the BDPL and create a strong, defensive pool of patents in exchange for access to the technology for energy efficient optimization of the Bitcoin mining process.”

Furthermore, both Little Dragon Technology and Halong Mining said that they hope the Blockchain Defensive Patent License, with AsicBoost now included, will provide a strong incentive for all other mining hardware manufacturers to join the initiative. This would require competing hardware manufacturers to share any patents under the same license, potentially rendering mining hardware patents altogether obsolete.

“The more widely deployed version-rolling is used, the stronger the incentives will become, since version-rolling is the most efficient form of AsicBoost and will deliver efficiency gains in addition to any hardware optimizations or silicon process node,” Halong Mining stated.

BtcDrak, the pseudonymous Bitcoin developer behind Halong Mining, also proposed a Bitcoin Improvement Proposal (BIP) on the Bitcoin development mailing list referencing AsicBoost. The proposal itself is more generic, however, as it creates a future-proof space for mining optimizations that miners may come up with in the future.

While overt use of AsicBoost does not require a Bitcoin protocol change, it may interfere with the established soft fork activation process. More specifically, AsicBoost interferes with how some software clients interpret potential soft fork activation on the network, which could result in false positives. To mitigate this risk, software clients might need to be updated to allow for fewer soft fork upgrades simultaneously.

“I apologise for the inconvenience in advance, but this is the unfortunate result of restraints while negotiating to get the patent opened and licensed defensively in the first place,” BtcDrak wrote.

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Halong Mining told Bitcoin Magazine it expects to start shipping DragonMint machines before the end of March 2018.


For more background and information on the Blockchain Defensive Patent License and Little Dragon Technology’s decision to join the initiative, read Bitcoin Magazine’s cover story for this month: There Is a Bitcoin Patent War Going On, but This Initiative Could End It.

This article originally appeared on Bitcoin Magazine.

Bitcoin Eyes $10K After High Volume Drop

Bitcoin is looking increasingly heavy and could test the $10,000 mark in the next 24 hours, the price charts indicate.

Slush Pool is Now Compatible With AsicBoost Bitcoin Miners

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Slush Pool, Bitcoin’s first and oldest mining pool, announced support for AsicBoost today, March 6, 2018. Slush Pool users that have the technology embedded in the application-specific integrated circuit (ASIC) chips in their mining hardware can connect to the pool to mine more efficiently and, thus, more profitably.

“The protocol extension we propose and already implemented allows [miners] to use overt AsicBoost over stratum protocol, which was not yet possible,” Slush Pool CTO Pavel Moravec told Bitcoin Magazine. “Mining can now get even closer to the theoretical lower limit on power consumption so that there is less space for finding optimization.”

AsicBoost was invented by former CoinTerra CTO Timo Hanke in 2016. The technology takes an advantage of a quirk in Bitcoin’s proof-of-work algorithm, which lets miners take a sort of “shortcut” to find a new block. This can be done both overtly as well as covertly — though the latter variant is currently not as effective on Bitcoin.

The update to the Slush Pool software is technically modest. It essentially allows Slush Pool miners (or “hashers”) to slightly change what a Bitcoin “block header” looks like: the part of the block that includes data about the block itself. Similar data has been used to signal readiness for soft fork upgrades, but it can be also used for AsicBoost and potentially for less obvious things (like internal accounting).

Although Slush Pool, which currently claims about 11 percent of total hash power on the network, is compatible with AsicBoost starting immediately, there is currently no known mining hardware that takes advantage of the technology — yet.

Patent Controversy

Earlier this week, Little Dragon Technology LLC, the current holder of the patented AsicBoost technology, publicly announced that it would be the first company to join the Blockchain Defensive Patent Licence (BDPL) initiative. This commitment makes the AsicBoost patent available to any company that also joins the BDPL — on condition that these companies share their own patents under the same license.

“We knew that the AsicBoost licence would be available within a defensive patent pool, so we started to prepare the extension some time ago,” said Moravec on the timing of the Slush Pool announcement. “We didn’t want to publish anything before the AsicBoost patent is really out and available.”

While AsicBoost has been subject to much controversy in the past, most of that controversy surrounded the patent on the technology — which could skew competition — and the alleged covert use of it. By making the technology equally available to any company that joins the BDPL, Little Dragon Technology hopes this controversy will come to an end.

Slush Pool, too, believes the BDPL could play a key role here.

“Patents are a problem if they’re not available to all equally,” Moravec said. “Mining is about having an edge. A participant with significant advantage leads to single dominant miner. So it’s actually better if everyone uses AsicBoost. If the patent exists and is made available, then it is fine. It equals the playing field.”

Furthermore, Little Dragon Technology believes that the AsicBoost patent is so powerful that all mining hardware producers must join the BDPL if they wish to remain competitive. As such, these hardware producers must then also share their own patents with other licensees, effectively rendering mining hardware patents altogether obsolete.

“We definitely expect that all manufacturers will use AsicBoost in future. It’s just more efficient and if it is available, then it would be bad for them to not use it,” Moravec said. “The only reason not to use it would be a desire to engage in patent wars.”

For more background and information on the Blockchain Defensive Patent License and Little Dragon Technology’s decision to join the initiative, read Bitcoin Magazine’s cover story for this month: There Is a Bitcoin Patent War Going On, but This Initiative Could End It.

This article originally appeared on Bitcoin Magazine.

Wyoming Blockchain Bill Rockets Ahead for Signing

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In a landmark development for blockchain advancement, Wyoming’s state legislature has cleared what is known as House Bill 70 (HB 70), which exempts various types of crypto assets from securities laws. The bill was originally passed by Wyoming’s House of Representatives last month on February 20. It is now headed to Governor Matt Mead for signature.

According to public records, it passed by a vote of 27–3, with no senators abstaining. This final vote, which was expected to occur last week, was held up at the last minute for further discussion. Nevertheless, lawmakers completed work on legislation to exempt cryptocurrencies from state money transmission laws. They also approved the use of blockchain-based records for corporations.

Through this legislation, lawmakers hope to carve-out space for tech developers involved in the creation of what are known as “utility tokens.” The exemption would be directed at those utility tokens which are not marketed or promoted as investments and are able to be exchanged for goods and services.

The first of its kind, HB 70 provides legal guidelines on how certain types of cryptographic tokens are accounted for. And in a similar development, HB 19, a Bitcoin-friendly bill, is also steadily making its way through the Wyoming legislature. Also unanimously passed in the House, it exempts cryptocurrencies from the state’s money transmission laws.

Wyoming’s History of Setting Precedence

Wyoming is a state known for its rugged individualism with the desire to achieve “first mover advantage” in key areas of legislation. It is often dubbed the “Equality State”: the first state to grant women voting rights and the first state to elect a female governor.

With respect to business and commerce, it originated the Limited Liability Company (“LLC”) in 1977. Today, nearly two-thirds of businesses formed throughout the U.S. choose the LLC corporate entity format. LLCs formed in the state of Wyoming are on par with better-known Nevada and Delaware corporations in offering stellar asset protection.

A Wyoming native and former Wall Streeter, Caitlin Long, the co-founder of the Wyoming Blockchain Coalition and former chairman and president of enterprise blockchain company Symbiont, has been an enthusiastic champion of this blockchain legislation.

Long said in an email response to Bitcoin Magazine: “HB 70 is one of five blockchain bills supported by the Wyoming Blockchain Coalition, and four are already in the Governor’s inbox (the fifth is likely to pass tomorrow). The Governor has three days to sign the bills, and most of them take effect immediately after he signs. All five are designed to attract software companies to move to Wyoming, as well as to attract businesses to register in Wyoming even if they don’t move there.”

According to Long, HB 70, coined the “utility token bill,” represents the first time in the world that an elected body has recognized utility tokens as a distinct asset class that is neither a security nor money. She said that while the bill gives the industry a friendly state in which to base operations, it does not resolve the federal regulatory questions for utility token issuers. Regardless, she said, it can help set precedence in litigation and influence federal policy.

Long said that two of the other five bills are designed to be cryptocurrency-friendly, exempting cryptocurrencies from both Wyoming’s money transmitter laws and property taxes. Wyoming, she explained, already has zero income taxes or franchise taxes, so these bills are quite friendly to crypto businesses and crypto owners who want to move to the state.

Finally, she pointed to the last two bills aimed at attracting more businesses to register in Wyoming, which ranks third behind Delaware and Nevada in the number of new business registrations. She concluded: “The race is on to see which state, Wyoming or Delaware, will be the first to accept registrations in blockchain form. Game on, Delaware!”

This article originally appeared on Bitcoin Magazine.

“Cryptocurrency,” “Blockchain” and “ICO” Make Their Merriam-Webster Dictionary Debut

Anyone needing an established definition for "cryptocurrency," "blockchain" or "ICO" now has a trusted resource: the Merriam-Webster Dictionary. On March 5, 2018, Merriam-Webster announced the addition of 850 new words, phrases and new meanings for existing words to merriam-webster.com and to the Merriam-Webster’s Collegiate Dictionary print edition.<br /> Oh hey. Cool news.

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