The Patent That Wants to Fix Crypto’s Volatility 5 1981

The number of blockchain-related jobs posted on LinkedIn more than tripled last year, according to CryptoCoin News. And blockchain patent filings more than doubled. Companies and individuals alike are innovating, exploring the blockchain’s well of possibilities. Major fintech companies, meanwhile, are gobbling up blockchain patents like they’re going out of style. But cryptocurrencies themselves still have yet to see a mainstream embrace.

The main problem with crypto right now is the same problem people have been talking about since Satoshi Nakamoto said Let there be Bitcoin: volatility. And ever since Bitcoin’s dramatic rise and fall around the turn of last year, cryptos have become virtually synonymous with wild fluctuations.

This reputation has given Bitcoin specifically, and cryptos in general, a mixed reputation. By now we’ve all heard the songs of praises from evangelists and the sour sneers of financial titans alike. Crypto is exciting because it’s unstable; crypto is unrealistic for the same reason.

The Primary Criticism of Cryptos

According to Eric Lamison-White, founder of the investor’s crypto intel platform Pareto Network, volatility is the “primary criticism of cryptocurrencies.”

But he doesn’t think it has to be that way. What if you could stabilize your crypto accounts? Lamison-White says the risks of owning cryptos are “easily mitigated by a variety of hedging techniques that are available in all other asset classes.”

He proposes treating crypto accounts like more traditional assets. “Hedging with options, futures and swaps allow for stable value or any risk profile that an owner or even a speculator would desire.”

That’s the idea behind his patent, filed in 2014, for a structure of interconnected accounts. The system “removes volatility from owning cryptocurrencies,” Lamison-White says, transferring its fluctuations into a hedge account. Here’s how it works.

Lamison-White’s System

The system requires at least two accounts: one for your cryptos and one you’ve funded with fiat currency, let’s say $400 US dollars. These accounts connect to a network of decentralized nodes, which measure the amount of cryptocurrency you have from moment to moment. If there’s any drop in the crypto’s value, the system automatically deducts from your $400 in the other account and transfers it to compensate. When the value of your crypto goes back up, the system re-deposits back into your fiat account.

This holds the value of your crypto assets steady, while transferring its volatility to your hedge account.

What makes it unique compared to other trading systems is that crypto assets can be divided into infinitely small portions. “A futures contract on oil costs $80,000 for example, although a trader only needs to put up maybe $4,000 as a minimum,” Lamison-White says. “This is because the contract represents the price of 1,000 barrels of oil or something crazy.” He notes that even hedging stocks are usually offered in units of 100 or 1,000.

Not so with crypto, where the “infinite divisibility of the asset itself” makes hedging much more finely tuned. Because cryptos are pure math instead of physical assets, “arbitrary sized contracts can be traded just as easily with larger contracts.” One future could represent one bitcoin, for example, but you can also trade in .01 increments. With fractional futures and options, people with very small amounts of cryptocurrency can be shielded from price fluctuations in a way that had only been available to the wealthiest and investment banks for most of the last millennia.

The System at Scale

The system gets even more interesting when you make it scalable. According to Lamison-White, you could have multiple people funding and connecting to the same hedge account, each using it to stabilize their own crypto accounts. Alternatively, you could connect multiple hedge accounts to a single crypto account. Suddenly the possibilities extrapolate, like tinkertoys, developing into an interconnected network of crypto- and fiat-funded accounts, with a variety of owners controlling their assets at a variety of access points, everything regulated with the intelligence and transparency of a decentralized ledger.

Patents Like This are Attracting Corporate Giants

There’s a feeding frenzy going on for patents like these. Visa filed a patent for a B2B blockchain payment system, Mastercard developed its own blockchain patent for anonymous transactions, and Wal-Mart has come out with a few as well. But it’s Bank of America that’s gobbling up the most. With claims to at least 43 live blockchain patents, the financial giant holds more than any other person or company.

Whether they’re just trying to get a leg up on the future of tech, or positioning themselves to harangue the little guy with barrages of lawsuits for intellectual property rights, we’ll just have to wait and see.

Whether or not Lamison-White anticipated the blockchain patent arms race, he was ahead of the curve, filing for his patent in 2014. It could be the thing to finally put skeptical minds to rest about the viability of crypto assets. And with big financial institutions like Bank of America placing a premium on innovative blockchain patents, he may have spun ether into gold.

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I grew up in the Silicon valley under the technological mentorship of Steve Wozniak. I'm a proud member of the Choctaw Nation, I've lived, worked and traveled all over the world, and I now write in the Pacific Northwest.


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These Six Blockchain Startups Just Got Seed Funding From UNICEF 29 2829

The United Nations International Children’s Emergency Fund is investing $100,000 in blockchain tech. Six startups have won the bid for the funding, and have one year to develop prototypes of open source software that addresses global issues such as mobile phone access, financing for social projects, or healthcare transparency.

Back in January 2018, UNICEF called for applicants, offering tens of thousands of dollars in seed financing to “for-profit  technology start-ups that have the potential to benefit humanity”. They received over 100 applications from 50 countries, and chose the following six to invest in:

Atix Labs

‘On a mission to democratize social impact financing using blockchain technology’

Argentina’s Atix Labs is developing a platform for funding small to mid-sized startups in Southeast Asia. The network connects social enterprises in need of funding with financers from all over the world. In their system, funds will be traceable, so it’s clear where exactly they’re used and how much of a social impact they actually end up having.

The problem with social impact financing and traditional crowdfunding, they say, is not access to capital, but transparency between financier and financed. Blockchain is a natural solution.


‘Developing a blockchain and AI software to increase transparency and accountability of government allocations of resources’

Mexico’s OneSmart is building smarter cities through a prototype that holds governments accountable for their uses of funds and delivery of services. They site the rapid growth of urban areas as evidence of the need for an updated system of governance.

Their platform, they say, builds a “more trustable public administration but also a very efficient one”. And it benefits governments by allowing them “to have continuous access to new and better data”. Fortifying city administration with clearer, more secure information management will, OneSmart hopes, make for more transparent and accountable government resource allocation.


‘Shifting clinical data ownership to users by using a healthcare blockchain’

Prescrypto, also from Mexico, is building a system called RexChain to shift control over sensitive medical data to the hands of patients. It makes prescriptions and health records portable by digitizing them, secure by storing them on the blockchain, and easier for patients to access and share with the doctors they trust because it’s under their control.

They say that “since patients are often treated by many rotating doctors, it is difficult to make relevant and accurate clinical information readily available to many doctors and providers.” This can be especially true in developing countries. Prescrypto also cites the vulnerability of medical information to commercial exploitation as a reason to make it more secure and user-controlled. Decentralizing this information on a secure blockchain, they say, “offers a novel improvement”.


‘Using a blockchain platform to make the food and vaccine supply chain transparent and accountable’

India’s StaTwig is fixing the supply chain behind food and vaccine delivery to make sure resources are delivered efficiently to children in need. Their platform connects everyone in the supply chain—financers, producers, regulators, distributors and consumers—for a transparent process.

Getting food and vaccines to children can be difficult in some places, and efficiency gaps in the supply chain create unnecessary losses of critical resources. “Nearly 30% of all the food goes to waste during its storage and transportation and the number is nearly double for vaccines,” they say of refrigerated (or “cold-chain”) transportation chains. “50%-60% of vaccines lose their efficacy because of cold-chain failures, however,  supply chains account for nearly 80% of the costs of the vaccines.” Their software simplifies and better organizes supply chain data to prevent such failures and losses.


‘A platform to collaborate on initiatives addressing social and environmental challenges’

Tunisia’s Utopixar is creating a social tool to foster collaboration in organizations, communities and other groups facing environmental and social challenges. Utopixar says after the Arab Spring rippled through Tunisia, it became clear that “innovative incentive systems have the potential to engage people to solve local challenges.” Their token system rewards users for partaking in community decision making, or contributing solutions to local educational, employment, or environmental problems. Tokens earned by community participation will be redeemable as cash, or as credit in community marketplaces.

W3 Engineers

‘Developing an open-source messaging solution providing connectivity in remote areas’

Bangladesh’s W3 Engineers is building a mobile messaging app for refugee camps that uses mesh technology, so it doesn’t require an internet connection. “Refugees deem connectivity to be critical in their daily lives,” they say, “and they are willing to make large sacrifices to get and stay connected, sometimes prioritizing it over essentials like food, healthcare, education, and clothing.”

With a mesh system, paying for internet or mobile carriers is no longer necessary. The more people install the app, the stronger the mesh network. W3 Engineers is hoping to connect the world’s 68.5 million people displaced by violence with access to online healthcare, education, entrepreneurial opportunities, and communication with their loved ones.

Funding the Future of Social Impact

Investments in these companies, UNICEF says, “are part of UNICEF’s larger blockchain explorations of using smart-contracts for organisational efficiencies, creating distributed decision-making processes, and working to build knowledge and understanding of distributed ledger technology both in the United Nations and in the countries where UNICEF works.”

These blockchain startups represent only a fraction of the UNICEF Investment Fund’s tech funding. Their list of 33 financed companies for 2019 so far includes developers of AI, IoT, VR, and extended reality (XR), in addition to blockchain. These efforts apply the latest technology to the problems of the world in most urgent need of solutions.

South Korea to Launch K-Voting: Elections by Blockchain 4 2865

South Korean officials are developing a blockchain based voting system, scheduled for completion by the end of the year. Naturally, it’s called K-Voting.

An election watchdog called the National Election Commission, along with the Ministry of Science and ICT, started developing the system in June in pursuit of a more reliable and secure online voting system. The ministry hopes the transparency of the blockchain will prevent any tampering with election results, because anyone, including the candidates, can see the data and vet the results themselves.

The launch will begin by testing the system with lower-stakes trial runs, like surveys. After assessing the results of the trial runs, the ministry and the NEC will launch the full version of K-voting, which will use the blockchain throughout the entire voting process, from voter authentication all the way through tallying election results.

“We expect the blockchain-based voting system to enhance reliability of voting,” said ministry official Kim Jeong-won. “The ministry will continue to support the application of blockchain technology to actively utilize it in areas that require reliability.”

It’s Not Korea’s First Dance With Blockchain Voting

This isn’t the first time South Korea has used blockchain for voting. Last March, citizens used a voting platform developed by Blocko to decide how to prioritize community projects in the local budget. The blockchain election took place in Gyeonggi-do, South Korea’s most populous province, which surrounds Seoul and is home to many federally administrative buildings including the Ministry of Science and ICT headquarters. With 9,000 participants, the vote was smaller in scale than what the ministry hopes to implement now. But the success of the project boosted confidence in the potential of the distributed ledger for regulating and securing online elections.

“Blockchains will change the world within a few years just as smart-phones did,” Gyeonggi-do Governor Nam Kyung-Pil said at the time. “We can complement the limits of representative democracy with some direct democracy systems by using blockchains, the technology of the Fourth Industrial Revolution.”

“Numerous institutions have contacted us to adopt a blockchain-based voting system after the voting in Gyeonggi-do,” said Blocko CEO Won-Beom Kim following the success of the project. “By using a blockchain technology in online voting, we can save expenses required to maintain a central management agency and time to collect vote results.”

Blockchain Voting in West Virginia

For this year’s midterm elections in the US, West Virginia introduced a blockchain-based app to replace absentee ballots. The app was specifically geared towards West Virginia residents serving overseas in the military.

Around 144 West Virginians in 30 different countries apped in their votes on the platform, which was developed by Boston-based startup Voatz. West Virginia reported the experiment as a success. “This is a first-in-the-nation project that allowed uniformed services members and overseas citizens to use a mobile application to cast a ballot secured by blockchain technology,” West Virginia Secretary of State Andrew “Mac” Warner said following the midterms.

Despite the professed success, Warner’s Deputy Chief of Staff Michael Queen told the Washington Post they have no plans to expand the project, and “will never advocate that this is a solution for mainstream voting.”

The Precedents Are Set for ‘Direct Democracy’

But West Virginia has set a precedent, and now blockchain voting has a foot in the door Stateside. A bolder election-by-blockchain enterprise like South Korea’s K-Voting could inspire change in the States where election reform is desperately needed. If K-Voting takes hold, it could change the face of democracy worldwide.

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