Day: April 10, 2018

Abra is a bitcoin-powered investment and payments app that first came to light at Launch Festival 2015 where it won the top prize at the event. The app uses bitcoin and litecoin smart contracts to represent the value of practically any fiat currency along with 20 crypto assets in the user’s wallet, where the user is always in complete control of their own private keys.

While Abra was originally pitched as an app for permissionless, borderless money transfers, the startup is now entering the realm of “crypto banking.” Abra CEO Bill Barhydt explained this change of focus in a recent interview with angel investor Jason Calacanis on This Week in Startups.

What Is Abra?

Abra was founded in 2014 when the bitcoin price was on the decline. At that time (and some would argue still today), the two main use cases of bitcoin were as a store of value (digital gold) and a conduit for permissionless, digital payments (think Wikileaks donations).

According to Barhydt, it was at this time that Abra decided to try out another often-touted use case of this new technology: programmable money. Through the use of multisignature contracts and oracles, Abra has been able to peg the value of the bitcoin (and now litecoin) in a user’s wallet to their local fiat currency. This effectively gives the user the permissionless nature of bitcoin without the price volatility.

Unlike other apps, such as Coinbase, that allow users to convert between bitcoin and fiat currency, Abra enables the user to always be in full control of their digital money.

Users are able to move money in and out of the Abra app through a variety of methods, including bank transfers and so-called Abra Tellers. These tellers are effectively individuals who will take physical cash from someone in exchange for digital assets on the Abra app or vice versa.

The Abra Pivot

Abra’s teller system has worked well enough for powering money transfers in the areas of the world where it is already active, but the startup quickly realized their users were using the app for reasons they did not originally intend.

“People were starting to use the tellers to actually buy bitcoin,” Barhydt said. “Our customers [were] pulling us to basically become an investment vehicle using crypto because it turns out we had a phenomenal user experience. It wasn’t a trading-like experience. It was a very Venmo-like experience on a phone.”

After interviewing some of their users, Abra found that many people simply wanted to gain access to bitcoin and altcoins in a simple, easy-to-use app on their phones. Abra was already uniquely setup to make this happen rather quickly with bank transfers available in the western world and their teller network growing in developing markets.

Becoming a “Crypto Bank”

Now that Abra has turned into a cryptocurrency investment platform, that aspect of the app can help bootstrap the payments part of the equation. This is similar to how bitcoin itself has grown as a medium of exchange as more people have viewed it as a potential store of value (more on this dynamic here).

Any two users on the app are able to send money to each other for free. There is only an effective charge when a user is exchanging between two different currencies.

“Now, we’re actually an investment vehicle and a payments vehicle, so it kind of becomes the crypto bank, so it’s a circuitous route to the same vision,” said Barhydt.

To clarify, a “crypto bank” is not really much of a bank at all. As Barhydt has explained in the past, Abra turns the user’s phone into their own bank using Bitcoin and Litecoin-based smart contracts. By not taking custody of user funds, Abra is able to avoid a variety of costly regulations around the world.

Later in the interview, Barhydt hinted that Abra could be extended to offer much more than currencies in their app, pointing out his intention to provide individuals in developing markets with the ability to gain exposure to Apple stock by way of nothing more than a smartphone with some bitcoin on it.

After two years in development, one of Ethereum’s earliest initial coin offering (ICO) projects has finally launched on the Ethereum mainnet. The Brass Beta version of Golem went live today, April 10, 2018, the project announced on its website.

On November 11, 2016, Golem raised 820,000 ether — worth $8 million at the time — in 29 minutes. “We’ve come a long way. From being one of the first crowdfunded projects, way past the challenges we had to face while navigating the uncharted territory that is building Golem, the time has come to take the big step: mainnet launch is here,” the project wrote.

Initially advertised as an “Airbnb” for computers, the idea behind Golem is to create a global market for your idle computing power. You can rent out your unused computing power and you will be paid for it in cryptocurrency — in this case, the Golem Network tokens (GNT).

Ultimately, the goal for Golem is to make just about anything that requires heavy computer lifting — think computer generated images (CGI) rendering, scientific calculation, machine learning and more — both affordable and accessible.

Supercomputer on a Blockchain

During its early concept phase, Golem saw itself as a “supercomputer on a blockchain.” Combined with other technologies, “it will replace the huge data centers that currently power the internet, and become the decentralized (and therefore non-monopolized and more secure) computing power behind the entire internet and just about everything on it,” Eddy Azar, a former Golem spokesperson wrote in describing Golem in October 2016.

That said, every project needs to start somewhere, and, for now, the single use case for the Golem Brass Beta version will be rendering 3D computer graphics, allowing a user to distribute the CGI processing of any Blender and LuxRender scene over the Golem network.  

Risks are inherent in any beta version of a software, and Golem is clear in letting people know about those. The project states, “… even though this new stage will expose our project to diverse risks, it is not possible (or responsible) to say a product is finalized without real users.”  

Will It Scale?

Of course, scalability will become a potential issue for Golem — and the big question is, will Ethereum, which slowed to a grind when the popularity of CryptoKitties exploded, be able to handle the increased use?  

Brass Golem is the first stage in the project’s roadmap. The next big leap will be Clay Golem, then Stone Golem, and finally, Iron Golem. With each release, the platform will be upgraded and become more powerful as it approaches its full potential.

Alongside the release of Brass Beta, Golem has also announced a bug bounty competition, where users can earn money to spot and report bugs in the software.  

On April 5, 2018, a blow to bitcoin occurred when the Reserve Bank of India (RBI) banned banks and regulated financial entities from dealing with cryptocurrency.

Despite the media report that 10 percent of Bitcoin transactions happen in India, the news does not come as a surprise, considering how the nation has clamped down on cryptocurrency regulation so far this year. Since 2013, the nation’s financial regulators have warned about the difficulties of controlling cryptocurrencies and, like most other stricter regulatory governments, preventing the new asset classes’ most nefarious use cases: money laundering and terrorist financing.

The Indian regulators’ treatment of cryptocurrency is even less of a surprise when considering what they have done in the past to their own fiat currency, the Indian rupee. Back in 2016, the RBI announced the demonetization (stripping a currency of its value) of all ₹500 and ₹1,000 banknotes of the Indian rupee, stating the action would help crack down on murky shadow economy activity (counterfeiting, terrorism, etc.).

Based on this information, it’s not a stretch to assume that a seemingly anonymous and sovereignless computer currency should seem out of RBI’s monetary policy comfort zone. Taking the time to perform due diligence might also be a detracting task for a government that wants to maintain tight regulatory control but also has other, more politically crucial projects to execute.

India’s Other Political Projects

In a 2018 world economic report, the International Monetary Fund stated that Asia accounted for over half of the world’s economic growth within the last year; within Asia, India has been recognized as the fastest-growing nation.

Another report indicated that to meet its accelerating growth, India has invested a record $18 billion this year (March 2017-18) to build and improve roads. These efforts are a part of Indian Prime Minister Narendra Modi’s greater goals and promises to increase employment and connectivity through increased government spending on infrastructure.

Even as the RBI is banning financial entities from dealing with cryptocurrency, it continues to explore blockchain technology and the utility of employing its own cryptocurrency. One company that worked as an advisor and eventually contributed to a white paper RBI published on blockchain technology is MonetaGo. On its website, MonetaGo describes itself as “simple blockchain integration with legacy systems,” that “works with financial institutions and central banks around the world to provide permissioned blockchain solutions.” In a word, MonetaGo does private blockchains. Also, they take credit as the first real (meaning live with no fall-back system) blockchain deployment solution in India and one of a few worldwide.

While the MonetaGo CTO Brendan Taylor explicitly stated that the Reserve Bank of India had “nothing to do with this particular deployment,” he did state that “the RBI has been publicly supportive of exploring blockchain technology for the use cases we [MonetaGo] are examining.”

Hashing to Prevent “Shotgunning”

Bitcoin Magazine spoke to Taylor to find out more about MonetaGo’s deployed blockchain solution. Essentially, MonetaGo provides a platform that prevents fraud when financing receivables. The Reserve Bank of India has provided three licenses to three exchange entities: RXIL, A.TReDS and M1xhange. (Note: These licenses are not directly related to the MonetaGo platform; they are for operation of the exchanges normal business.) Even though each of these exchanges competes within India’s receivable financing market, they can use MonetaGo to prevent systemic fraud, financing the same receivable on multiple exchanges simultaneously.

“It’s a pretty common flaw in the U.S. and anywhere else in the world where you’re financing an asset. It’s called ‘shooting the gap’ or ‘shotgunning.’ Someone tries to finance an asset multiple times as quickly as possible by as many financiers as possible,” said Taylor.

In a nutshell, the platform hashes information necessary for each receivable to be identified as a “digital fingerprint” then shares it across the platform — meaning among the three exchanges — so that duplication can be flagged. For those who know slightly less about financing assets than they do about cryptocurrencies, MonetaGo’s value can be thought of as preventing a double-spend in India’s receivable financing market.

For cases in which the information of an existing invoice is altered to appear new, MonetaGo’s network doesn’t block the financing, but it does still alert exchanges so they can perform additional due diligence. MonetaGo doesn’t participate itself in the network. Since it’s decentralized across the exchanges, MonetaGo does not control the data: It simply built and maintains the platform.

No Tokens, No Regulators, No Problems

According to Taylor, it’s difficult to say how often this type of fraud happens in India. Exchanges like these have only been operating for about a year. And though this use case of preventing fraud in financing receivables might seem minor compared to the more ambitious blockchain applications that have been conceptualized, Taylor admitted they will continue assessing the financial supply chain for more opportunities.

In the simplest terms, MonetaGo’s regulatory advantage is that they do not use tokens.

“The only purpose of the network is to transfer information between people and ensure the integrity of that data,” said Taylor. MonetaGo’s role is to transfer information among the three competitive exchanges.

He then laid out the fundamental difference between what MonetaGo does versus a blockchain enterprise solution that uses a token:

“A token essentially allows for accounting arithmetic to be performed on a blockchain to maintain value of a particular asset while transferring ownership of it. We [MonetaGo] are not doing that because we are not transferring any value or ownership of anything. We are just transferring information from one party to another — that’s the fundamental difference.”

He went on to explain that although this live deployment lined up just as RBI banned financial entities from dealing with cryptocurrencies, MonetaGo has been working on its blockchain solution platform since 2015. According to Taylor, deploying a tokenless blockchain solution takes significant time and effort, “It’s no mean feat to get a bunch of competitors to agree upon the same technology to use.”

The battle over who was at fault when millions of nano (XRB) vanished from an Italian cryptocurrency exchange earlier this year rages on. In the latest twist to the story, the Nano Foundation is launching a legal fund to support the victims and says it will match up to $1 million in donations.

Stepping back, in February 2018, 17 million XRB, worth $170 million at the time, went missing from BitGrail, rendering the exchange insolvent. Accusations and speculation followed. BitGrail owner Francesco Firano (better known by his pseudonym “the Bomber” on social media) insisted the problem stemmed from a bug in Nano, while the Nano team pointed their fingers at BitGrail. Meanwhile, the victims of the breach were left to wonder whether this was a planned exit scam or an outside hack.

Lawsuit

Some of the victims placed the blame on Nano, and on April 6, 2018, a class action lawsuit was filed, charging Nano (formerly RaiBlocks) and its core team members with selling securities and alleging that the team encouraged investors to open accounts on the distressed and unknown BitGrail exchange. The class action is also seeking a court ordered “rescue fork” to return funds lost in the hack.  

Now, in what appears to be a direct response to the lawsuit, the Nano Foundation announced on a Medium post on April 9, 2018, a fund to support the victims of the breach in their legal efforts to reclaim those funds. “We felt it was important to help ensure that victims who could not afford their own representation would receive the same quality of representation as those who could,” Nano Foundation wrote.

Enter Enger

Nano claims it reached out to Espen Enger, a citizen of Norway, who now represents over 1,400 BitGrail victims throughout February 2018. (Enger, himself a victim of the breach, posted a March 12, 2018 video update of his efforts on YouTube.)

After a series of discussions, Nano says it “became confident that Mr. Enger was the best-prepared person to manage a legal fund and a large group of BitGrail victims in their pursuit of justice in Italy.” Shortly thereafter, Nano met with Enger and the Italian law firm BonelliErede.

As a result of these meetings, the Nano Foundation decided to match the contributions of the victims to the legal fund established by Enger up to $1 million. The hope is the gesture will encourage a windfall of donations and establish a total legal fund valued at $2 million.

So far, the victims represented by Enger have raised over $300,000 in a variety of currencies; Nano’s contributions will raise that to $600,000. Nano claims the legal fund will be spent solely on behalf of the victims in their efforts to pursue their legal interests in connection with the BitGrail insolvency.

“Mr. Enger has assured us that any money remaining after those efforts will be returned to the victims,” Nano said in the statement, adding, “Beyond the donations we make, Nano Foundation will not have any access to or control over the funds.”

Nano also says future updates regarding the victims’ legal actions will come from Enger. Meanwhile, Nano continues to hold its ground, stating: “To date, all reliable evidence we have reviewed continues to point to a bug in BitGrail’s exchange software as the reason for the loss of funds.”