CryptoAM: EOS speculates, Maersk delivers, Iran suffers

*Happy Tuesday CryptoAM. Hope those of you reading in the U.S had a fantastic 3 day weekend! Lots of new developments happening in the crypto world…

Three things you need to know:

One: Maersk blockchain platform TradeLens receives big boost

Two major shippers, CMA CGM and MSC Mediterranean Shipping Company, have agreed to join IBM/Maersk backed TradeLens blockchain platform. With this announcement, nearly half of all shipped cargo will now be tracked by TradeLens in a major win for enterprise blockchain.

Some context: Maersk launched TradeLens last year in conjunction with IBM to help disrupt cargo shipping, a notoriously low-tech industry. So far the platform has proven itself to be valuable, mostly due to the outdated practices that permeate cargo shipping. As of now, more than 100 companies are on-boarded and using the platform to track and automate shipment paperwork.

From the IBM press release last August:

More than 154 million shipping events have been captured on the platform, including data such as arrival times of vessels and container "gate-in", and documents such as customs releases, commercial invoices and bills of lading. This data is growing at a rate of close to one million events per day.  Traditionally, some of this data can be shared through the EDI systems commonly used in the supply chain industry but these systems are inflexible, complex, and can't share data in real-time. Too often, companies must still share documents via email attachment, fax and courier. TradeLens can track critical data about every shipment in a supply chain, and offers an immutable record among all parties involved.

In an interview with Reuters, Maersk Executive Vice President Vincent Clerc outlined a couple of surprising points:

  • Paperwork accounts for an average of 20% of the cost of shipping a container from one place to another. A significant part of that administrative cost can be shaved off once the platform is used at full scale.

  • The shipping industry has seen stunted innovation since the container was invented in the 1950s, with “lots of processes in our industry actually predating the container” (!)

The big picture: This is one of the best use cases so far of private blockchain architecture, and is part of a larger trend of the world becoming more comfortable with blockchain adoption.

  • Generally you’ll find enterprise blockchain used in industries which rely heavily on outdated database driven systems and with lots of legacy code that require revamping, but for some reason haven’t been improved upon yet.

Many traditionally “crypto” people write off private blockchains as they aren’t necessarily a “blockchain” as they don’t have truly decentralized consensus or even a consensus algorithm. More generally, these technologies can be classified as a distributed database.

Whether you call it a blockchain or not is irrelevant — it’s a word with no true definition now anyway.

The hype around blockchain has brought the concept of a distributed database back into the consciousness of the public, and that interest has proven strong enough to move legacy institutions to change their underlying infrastructure. Whether this is truly a blockchain is hotly debated but truly doesn’t matter. What matters is that the world is adopting better technology.

Two: IOTA announces Coordicide & EOS is preparing something big

Relatively large announcements this week for two alternative protocols EOS and IOTA.

*EOS: Block.One released a teaser video in March with the message “Washington DC, June 1st 2019”, kicking off rampant speculation that something large was coming.

  • The anniversary of the EOS main-net launch is now 4 days away, and speculation around large announcements continue to grow.

  • Yesterday Block.One purchased around $20M of EOS RAM (needed for launching applications on EOS), an indication they might be planning to launch something soon.

Some rumored (& highly speculative) announcements:

  • A Steemit competitor on EOS

  • Eric Schmidt will join the board of directors

  • EOS will move its headquarters to Washington DC

  • Facebook will be using EOS to launch

EOS is up around 25% over the last week.

IOTA: The IOTA foundation announced they have figured out how to remove the “coordinator” from their architecture, a move that will finally allow IOTA to become a fully decentralized protocol.

For those less familiar, IOTA is a distributed ledger technology structured differently than your traditional blockchain architecture. From the IOTA website:

IOTA is a revolutionary new transactional settlement and data transfer layer for the Internet of Things. It’s based on a new distributed ledger, the Tangle, which overcomes the inefficiencies of current Blockchain designs and introduces a new way of reaching consensus in a decentralized peer-to-peer system.

Since the Tangle is such an experimental technology, it was necessary for the IOTA foundation to introduce the concept of a “coordinator” which managed and verified the transactions on the network in a centralized manner.

  • Removal of the coordinator is a complicated computer science problem due to the way the Tangle is built, and it was unclear if the IOTA team was going to be able to accomplish the task.

  • Detractors of IOTA have pointed to the coordinator as proof that IOTA is a centralized protocol and that the Tangle was fundamentally broken.

With this announcement, the IOTA team marks a big win in their book. They have a launched a website and a whitepaper detailing specifications for what they call the “Coordicide”, and are planning to fully remove the coordinator in early 2020.

IOTA is up 10% on the news.

Three: LocalBitcoins bans buying in Iran

Image result for localbitcoins pic

No one entity can shut Bitcoin down. That much we all already know. But we would be amiss to think that its impact can’t be impeded by governments and companies.

That’s exactly what looks to have happened with the announcement that LocalBitcoins, the Finland based exchange, has halted trading for Iranian users. The most likely reason: pressure from the US government over sanctions placed on Iran.

What is LocalBitcoins? It’s an important peer-to-peer exchange that has a particularly strong presence in developing countries. The majority of its trading volume is fiat-to-crypto, suggesting that the platform is used less for speculation than other exchanges and so is more indicative of real demand for Bitcoin. It has rich information about transaction volumes in different parts of the world, take Iran as an example:


Why is this news important? It chokes liquidity and availability of Bitcoin to Iranian users, at a time when monthly inflation for Iranians is 50%. At exactly the time when Iranians could benefit from a non-government controlled currency as a store of value, they are having this ability diminished.

Be smart: Yes there are decentralized exchange alternatives that people can use instead, such as Bisq and Hodl Hodl. But these platforms have far less liquidity than LocalBitcoins and lack the escrow based services that make LocalBitcoins more secure and safe for users. It’s hard enough as it is for most people to understand crypto, let alone know where and how to buy it.

This is not a simple situation and I predict we’ll see more of this tension in the industry moving forward. On the one hand we have the US government trying to punish a government that has strong ties to terrorism, and no doubt some terrorist groups have used crypto in trying to avoid sanctions. On the other hand you have regular Iranian citizens trying to help themselves and mitigate against the worst effects of a currency crisis, which is no fault of their own.

You can’t help but be intrigued by the geopolitical complexities that crypto creates.

Also in the news:

Market Outlook:

Quick Take

Direction: We broke through a massively key level this past week — 8400. That was the level we couldn’t break on the last of the major bull traps in 2018. This to me signals that the bull trend is fully intact.

With that being said, I’d be surprised if we didn’t experience a pullback from currently trading levels (8700). I’m a buyer at the 8200-8400 level. After large candles we’ve generally experienced pullback and I would be very surprised if we broke 9000 before retesting 8200-8400. If do break 9000, the next level to watch for is 9660.

Currently I’m sitting in spot, waiting to enter at those levels on margin.

What I’m thinking today:

Using Bitcoin vs WeChat or M-Pesa

A topic that often gets debated:
Why would people use crypto when they already have access to applications like WeChat in China, or M-Pesa in Kenya?

Both these systems have millions of users and are highly effective. M-Pesa alone is estimated to have lifted close to 200,000 Kenyans out of poverty by giving the population access to a digital store of value and accompanying financial services. WeChat recently hit 1 billion daily active users.

Let’s start by admitting the obvious; the usability of these applications far exceeds that of crypto and will likely continue to for the foreseeable future. This reason alone, combined with the advantages of incumbency, are enough to ensure they’ll outcompete similar crypto applications on total number of users.

But that doesn’t mean there aren’t some significant shortfalls, and opportunities for crypto applications to appeal to mainstream consumers:

1. Trust in centralized entities

Users of WeChat and M-Pesa put their faith
in Tencent and Safaricom, the companies that own each platform respectively. This can be useful in some cases; if users have problems then these companies have the ability to resolve these. There have also been cases where M-Pesa customers have had funds stolen through SIM swaps but have been compensated by Safaricom. If you have problems with your bitcoin wallet or something gets hacked - you’re out of luck.

The downside of this centralized approach however can be significant. Users put faith that the servers of these companies, which hold the financial information of millions of users, are secure. For the most part it doesn’t appear that either Safaricom and Tencent have suffered any major hacking of their systems, but it remains a risk going forward. Particularly in the case of M-Pesa, where close to 50% of Kenya’s money flows through the system.

There’s also the question of what happens if the company’s servers temporarily crash, affecting people’s ability to access their money. This has increasingly been the case with M-Pesa, which has experienced multi-hour outages. With Bitcoin if you have a solid internet connection and sufficient transaction fees then you’re golden, no need to worry about servers crashing.

2. Worldwide Use

Regardless of where the other person is in the world
if both people have a Bitcoin wallet, then they’ll be able to send and receive Bitcoin between themselves. This isn’t possible for users of WeChat or M-Pesa (or even PayPal). I can’t send my Kenyan shillings to someone in New Zealand using M-Pesa without going through the time and costs of traditional banking infrastructure. Even using apps like BitPesa I’m still subject to a 3% transaction fee - something that isn’t an issue when sending Bitcoin (unless I’m converting back to fiat afterwards).

There are also other issues such as privacy, reliance on fiat currency, and the potential for higher transaction fees.

There isn’t a whole lot of content comparing and contrasting successful digital currency systems like WeChat and M-Pesa with crypto specific applications - watch this space in the coming weeks for a more comprehensive and cost-specific break down between the two approaches.

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Nothing written in CryptoAM is legal or investment advice and should not be taken as such. CryptoAM does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.

*Wave Financial has financial investments in EOS.