Blockchain Companies Dominate the Forbes Fintech 50 List 2018 0 80

The headlines have been dominated by the crypto world of late. Mostly, the record highs and plummeting lows of Bitcoin’s value and hackers syphoning off money from major ICOs. All this negative press is enough to make investors nervous, but it isn’t all bad news. In fact, as Forbes releases its Fintech 50 list for 2018, nine of the companies are blockchain.

The Impact of Blockchain on the Financial Industry

Beyond the concerns about digital currency, whether Bitcoin’s real value has been inflated, and major banks banning purchase of it with their credit cards; blockchain has further implications for the financial industry. In fact, blockchain technology could be the answer to many an outdated and inefficient solution in the banking world, revolutionizing how financial transactions are recorded and carried out worldwide.

The fact that blockchain technology can trace specific transactions and provide transparency make them music to the ears of agencies like the IRS and FBI. Blockchain doesn’t just drive efficiency, it changes the whole manner in which trust is federated between buyer and seller, government agencies and countries.

By using smart contracts, blockchain digitalizes and automates the information, removing various counterparties that were previously involved in that process, effectively cutting out the middleman and creating greater transparency. Let’s take a look at some of the companies causing a stir in the blockchain community:

The Bitfury Group, Amsterdam

The Bitfury Group make hardware and software that allows for Bitcoin mining and security. They also provide software that supports blockchain in supply chains for government and insurance, specifically working with the government of Georgia to transfer land titles to the blockchain.

According to Valery Vavilov, CEO & Co-Founder and one of the richest men in cryptocurrency, “The internet allows us to digitize information and transfer it globally, but it lacked a solution to digitize and securely transfer assets. The Bitfury Group utilizes the technology of the Blockchain to allow companies to successfully digitize their assets and safely transact them over the internet – making the world safer, simpler and more efficient.”

Chainalysis, New York

It’s bad news for would-be crypto criminals with companies like Chainalysis gaining protagonism. With customers including the IRS, FBI and Drug Enforcement Administration, this newcomer to the Forbes Fintech 50 is allowing major institutions and law enforcement agencies to trace specific transactions. This could mean an end to money laundering and illicit transactions.

Claiming to “protect the junction between finance and the decentralized internet,” Chainalysis is the leading provider of anti-money laundering software for Bitcoin, with customers racking up over $15 billion worth of transactions on their platform.

Coinbase, San Francisco

Widely recognized as the easiest and most user-friendly platform to start your journey into the cryptocurrency world, most people have been introduced to Coinbase by now. Trading in Bitcoin, Ethereum and Litecoin, this trusted tool offers customers digital currency wallets, and has already racked up over 10 million users, registering more than $1 billion in revenue and over $50 billion in transactions. Its Co-Founder, Brian Armstrong, also made the Forbes list of the Richest People In Cryptocurrency.

Shapeshift, Zug, Switzerland

They say it’s all about location, location, location, and Shapshift’s headquarters in a country famous for its financial institutions is no accident. Claiming to be the “safest, fastest asset exchange on earth,” users can trade in up to 70 different cryptocurrencies, without even setting up an account or having a wallet. How very Swiss of them.

With a focus on privacy, Shapeshift does not accept fiat currencies and does not link to any bank accounts. The benefits of this were accidentally showcased not so long ago when the company was hacked into by a disgruntled employee. No crypto was lost at all, due to the fact that the company does not hold onto customer funds.

As the fintech industry begins to reach something close to maturity, it’s clear that blockchain is leading the charge in 2018. With an emphasis on transparency, security, and privacy for those who want to keep their financial transactions under wraps, there’s a blockchain company out there to tackle most financial woes.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

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DApp Frameworks Will Improve the Blockchain — Here’s How 1 218

Scalability has always been a problem for blockchains, and it’s the main reason blockchain technology hasn’t reached mainstream adoption. Whether in blockchain fintech—where comparisons of the Bitcoin blockchain’s 10 TPS to Visa’s 24,000 TPS abound—or in other sectors blockchain has touched, this is holding many otherwise promising companies back from delivering new, innovative kinds of value to the public. While larger and better-resourced companies have managed to overcome this problem through sidechaining and/or sharding, there is no substitute for the real thing. DApp scaling frameworks may be a foundation to build widespread solutions to this problem.

What are DApps?

DApps (decentralized apps) use blockchain technology to deliver peer-to-peer value through product offerings, services, or new forms of value. Built on blockchain technology, dApps use its decentralized, trustless, peer-to-peer structure to let users transact between each other without a centralized authority through an encrypted medium (such as NASGO’s platform that we’ve reported on previously).

While this is an otherwise revolutionary solution to the problem of over-centralization, it comes with its own set of baggage. Imagine if every transaction or purchase you made had to be confirmed by a network of other people before completing. This, the consensus protocol—on which Bitcoin, Ethereum, and other leading blockchains are built—is one of blockchain’s greatest strengths, but also one of its greatest weaknesses. For any  blockchain to work as intended, every node participating in it has to confirm every transaction that happens on it.

On the positive side, this massively increases transaction immutability, verifiability and transparency. Unfortunately, it also makes transaction per second (TPS) speed very low. Slow processes usually don’t scale. And without scalability, blockchain technology cannot reach mainstream usage. Right now, only about 8 million people globally use any form of cryptocurrency. To reach mainstream usage, 800 million people must consistently use it.

It sounds like a chicken-and-egg problem, but the blockchain space is already developing resources to overcome this issue. DApp scaling frameworks are one way. They are bundles of code inside blockchain protocols that let distributed apps distribute themselves in a semi-scaled way, letting a blockchain scale improve its TPS and allow more transactions than ever before. Unfortunately, not many developers have access to these, and the few that do have only built the earliest versions of this technology, which brings up the question: is this really a workable solution right now?

What We Have Now

DApps are hard interact with. They’re slow, confusing, and rely on 3rd-party software which only the most sophisticated consumers can readily use. Yet the chief issue here is speed—the key performance measurement of all distributed systems is scalability, and without it, dApps have no real business case or value proposition, let alone any realistic user acquisition strategy. Yet there are fixes for this problem, but little implementation and even less progress on their collective maturation. They exist in five categories, below:

1. Low-Level Optimizations

2. Parallel Blockchains (“sharding”)

3. Homogenous Vertical Scaling

4. Heterogeneous Vertical Scaling

5. Heterogeneous Interconnected Multichains

6. Multilayered dApp development toolboxes

There’s not much to be said for the solutions in the first category. Most of them—consensus algorithms, PoS migrations, parallel processing on transactions and code optimizations in the Ethereum Virtual Machine—are low-level and impermanent band-aids to the deeper problem.

The best of the solutions in the second, third, and fourth categories are at this stage still in the proof-of-concept phase, being built almost exclusively by and for Ethereum and Bitcoin, such as projects like Plasma and the Lightning Network. These are getting the most traction here only because they’re developing out of Bitcoin and Ethereum, but are nontheless still are very early-stage.

The idea behind Plasma is to take smart contracts, give them self-governing alongside self-execution properties to let the Ethereum root chain essentially create buds or “shards”—tiny sidechains each monitoring one aspect of a transaction instead of putting that combined pressure on the root chain—to distribute consensus, letting blockchains dramatically scale their TPS. Lightning Network deals more exclusively with payments—it’s a second-layer payment protocol next to the root blockchain, using a peer-to-peer system to let users make cryptocurrency micro-payments. Both platforms are examples of how some blockchain companies are using secondary and tertiary parallel blockchains to scale their TPS.

Concepts like Polkadot—scalable heterogeneous multichains—provide foundations for later functionality in the area of relay-chains, where the goal is to build validatable, globally connected, frequently-changing data structures on top of these frameworks.

Companies like MenloOne—multilayered dApp development toolboxes—create and deploy digital tools for dApp developers to use when they’re building. They include:

  • A layer for communication.
  • A layer for governance (given lack of server admins to ban malicious users in a decentralized network).
  • A local wallet for smooth transactions (no more MetaMask popups).
  • A core layer, a network of content nodes which cache mirror versions of blockchain data.

These incorporate fragmented systems to make dApp development easier for professionals.

Together, solutions in these categories are working to help top blockchains scale TPS to thousands per second.To become adopted by the mainstream public, these frameworks will need to use a variety of different tools to make transactions effortless for blockchains to process.


What do you think about the scalability of blockchains today? Is it a problem for you or are you unaffected? And, what do you most want to see happen in this area of blockchain technology in the near future? Post in the comments below to let us know!

Chinese Crypto Leader Li Xiaolai Suddenly Retires 0 70

One of China’s most prominent Bitcoin investors has announced his retirement from the crypto world. Billionaire Li Xiaolai is the founder of BitFund, a crypto venture capital firm that has fostered a slew of Bitcoin-related startups.

Li’s announcement of his decision to withdraw from cryptospace—and investing otherwise—came unexpectedly via his page on Chinese social media site Weibo.

“From this day on,” his post reads, according to TechNode’s translation, “I, Li Xiaolai, will personally not invest in any projects (whether it is blockchain or early stage). So, if you see ‘Li Xiaolai’ associated with any project (I have been associated with countless projects without my knowledge, 99% is not an exaggeration), just ignore it.”

Li is a former school teacher, and claims to be the first person in China to openly trade Bitcoins, rather than hiding behind its famous anonymity. Now, retired from both teaching and investing, he says he’s not sure where to go next. “I plan to spend several years to contemplate on my career change. As for what I’m doing next, I’m not sure just yet.”

Li closed his post by expressing that he still maintains a long term optimism about the blockchain.

Li’s Ventures Grew Crypto Capital, Controversey

Through BitFund, Li has incubated a number of blockchain related startups, including an off-chain wallet called Bitfoo, the crypto exchange YUNBI, and HashRatio, a miner manufacturing company. Li organized 2014’s Global Bitcoin Summit in Beijing, back when you could get a BTC for as little as $440, and years before China instated its full ban on cryptocurrencies.

Earlier this year, Li also acted as managing partner of Hangzhou Xiong’An Blockchain Fund, a billion dollar fund backed by the Hangzhou government. Li stepped down after fellow venture capitalist Chen Weizing introduced a series of accusations against him.

Included in the eleven accusations, which Chen broke on social media and messaging platform WeChat, were a supposed debt of 30,000 BTC that Chen says Li failed to pay on time. Li published a point-by-point response to Chen’s accusations, addressing the 30,000 BTC debt by saying “it’s not true… Chen is just muddying the water.”

Though Li called them “defamations,” and Chen did not offer supporting evidence for his allegations, Li said Chen’s antics “brought material and negative impacts on the reputation of Xiong’An Blockchain Fund” and that his resignation would “let the Hangzhou government continue its push for blockchain development.”

Li was the subject of controversy on another occasion when, in a candid conversation he did not know was being recorded, he outed several influential organizations as scams and said that the best way to succeed in blockchain, even if your project is worthless, is to get famous and build consensus.

The State of Crypto in the People’s Republic

All crypto and blockchain related websites are blocked by the Chinese government, and citizens are forbidden from engaging in crypto transactions. The People’s Bank of China released a statement on August 24th warning against ICOs, which they consider to be “illegal fundraising, pyramid schemes, and fraud.”

But the rules have been difficult to enforce, and crypto still enjoys an active user base in China. Beijing Sci-Tech Report, China’s oldest technology publication, is now the first Chinese publication to accept BTC as payment from its subscribers. Chinese crypto channel cnLedger announced in a tweet on September 25th that Ethereum Hotel, China’s first hotel to accept ETH as payment, is open for business in Sichuan Province.

A Crypto Landscape Without a Leader

The sudden exit of Li Xiaolai from the Chinese crypto scene could have caveats, or greater implications. Weibo users expressed their support and gratitude following his announcement, but some also speculated that his choice of words leaves room for Li to continue investing in crypto indirectly, perhaps through funds or corporate entities. Whether that will be the case or not, for many, his resignation marks the loss of a public blockchain leader.

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