IN THIS CHAPTER

Diving into novel blockchain initiates

Discovering global blockchain implementations

New blockchain startups are emerging every day. Entrepreneurs have seen opportunities to capitalize on the very powerful tools blockchains offer to move money faster, secure computer systems, and build digital identities.

In this chapter, I introduce you to some of my favorite projects and companies. After reading this chapter, you’ll have an idea of some of the amazing things happening within the blockchain software space. You may even get some ideas about what you could do yourself!

The R3 Consortium

Many banks have invested in building blockchain prototypes — many for Know Your Customer (KYC) requirements for anti-money laundering and prototypes for reducing the cost of exchanging money. They have to overcome several challenges, including the security of private information and the regulatory gray zone of cryptocurrencies.

R3 (www.r3cev.com) is an innovative company that has built a consortium with more than 75 of the world’s leading financial institutions to integrate and take advantage of new blockchain technology. R3 is improving cross-border exchange, lowering the cost of auditing, and improving the speed of interbank fund transfer and settlement.

R3’s three pillars are as follows:

• Financial-grade blockchain: R3 has developed the base layer technology that supports a global financial institution’s needs.
• Research and development: R3 has created a bilateral research center that is testing and creating industry standards for commercial-grade blockchain technology.
• Product development: R3 works in close collaboration with institutions to create products that solve problems up and down the value chain.

R3 has developed a blockchain platform for financial institutions called Corda. Corda is a distributed ledger platform designed to manage and synchronize financial agreements between regulated financial institutions. Unlike most blockchains that broadcast their transactions to the whole network, transactions may execute in parallel, on different nodes, without either node being aware of the other’s transactions. The history of the network is on a need-to-know basis.

Key features of Corda include the following:

• Controlled access: Only parties with a legitimate need to know can see the data.
• No central controller.
• Regulatory and supervisory observer nodes.
• Validation by parties to the transaction rather than a broader pool of unrelated validators.
• Support for a variety of consensus mechanisms.
• No native cryptocurrency, but now working with Ripples XRP.

T ZERO: Overstocking the Stock Market

T ZERO is a platform that integrates blockchain technology with existing market processes to reduce settlement time and costs and increase transparency, efficiency, and auditability. T ZERO is able to do this because it’s modular and adaptable.

T ZERO is a subsidiary of Overstock.com, focusing on the development and commercialization of fintech-based technologies based on cryptographically secured, decentralized ledgers. Since its inception in October 2014, T ZERO (www.t0.com) has established working commercial blockchain products.

It partnered with Keystone Capital Corporation, an independent broker-dealer located in California to create the first public issuance of blockchain equities. Together they provide brokerage services for users that trade blockchain securities.

Patrick Byrne, Overstock’s founder and CEO, led this initiative. The opaque business practices of Wall Street have opened up market opportunities for a clear and trustworthy trading platform where consumers know what they’re buying and the costs involved. The SEC declared parent company Overstock.com’s S-3 filing effective, giving Overstock.com the ability to issue blockchain shares in a public offering. It also partnered with the Industrial and Commercial of Bank of China (ICBC), the world’s largest bank, to test the platform.

Byrne achieves this through Medici, Overstock.com’s majority-owned financial technology subsidiary. Medici focuses on applying blockchain technology to solving significant financial transaction problems. Its first initiative is to clean up securities settlement.

Blockstream’s Distributed Systems

Blockstream (www.blockstream.com) has an excellent reputation in providing blockchain technologies and has a primary focus on distributed systems. Blockstream offers hardware and software solutions to organizations utilizing blockchain-based networks.

Blockstream Elements is the core software platform of the company and a segment of an open-source project. It offers several resources and a highly productive protocol for blockchain developers.

Blockstream’s major field of innovation is in sidechains, which scale the utility of existing blockchains, enhancing their privacy and functionality by adding features like smart contracts and confidential transactions. Sidechains avoid liquidity shortages that many cryptocurrencies experience. Sidechains also permit digital assets to be transferred between different blockchains.

Sidechains make it possible to practically trade company shares on a blockchain without worrying about transaction cost or slow network speeds. Distributed asset management infrastructure can also leverage the Bitcoin network, permitting individuals and organizations to issue different asset classes.

Blockstream also has worked to create the Lightning Network, a system that lets Bitcoin support micropayment without slowing down the network. The Lightning Network support high volumes of small payments using proportional transaction fees and operating very fast. It’s developing more Bitcoin Lightning prototypes and creating consensus and interoperability.

MadHive

The MAD Network founded by Tom Bolich and Adam Helfgott aims to create a new way of advertising on the Internet. Given that the Internet was built on things like pay-per-click, and social media marketing and Google and Facebook would not be the powerhouses they are today without advertising, what MadHive is achieving is very interesting. They’re building a custom ad engine with blockchain software that allows users to remain private while also giving advertisers better outcomes on several fronts.

In online marketing, companies looking to find new customers can place online advertisements on web pages that show results from search engine queries that target users search history. An ad engine enables this technology.

As a company, MadHive believes that privacy is a human right; this is different from any other ad engine on the market that needs private consumer information to operate and will do whatever it needs to obtain and link this information.

The MadHive team also believes that marketing industry efforts should never be at odds with the rights of customers. By respecting the privacy of customers, they solve the conflict of interest that marketers have when they need to share data with competitors. Blockchain technology allows for controlled and verifiable sharing of information and is a simple solution to a complex issue. The MAD Network also solves inefficiencies in the online marketing industry by quickly clearing and settling transactions.

The MAD Network is still under active development, but they already have paying customers. To learn more about the work they are doing, check out their website at https://madhive.com/.

Blockdaemon

Blockdaemon is a Docker for blockchain development. Blockdaemon lets you get up and running quickly when you want to build a decentralized application (Dapp), so you don’t have to worry as much about understanding each protocol and its native languages — you can just build the app you want. Through the Blockdaemon system, you can orchestrate your blockchain networks across multiple clouds and data centers. They also help you set up testnets and mainnets. If you would like to build a blockchain application or use some blockchain functionality in your app, but you don’t want to learn everything about how to build and maintain blockchain software, Blockdaemon is a good alternative. You can learn more about what they’re doingat https://blockdaemon.com.

Gemini Dollar and Exchange

Gemini has operated as a cryptocurrency exchange for several years. Founded by the famous Winklevoss twins, it has been conducted differently than other exchanges. Licensed and run out of the state of New York, it has been subject to more oversight. A new and exciting development is the new stable coin Gemini released in 2018 called the Gemini dollar; this is an ER20 token on Ethereum that tracks the value of the U.S. dollar.

You can check out their smart contract at https://etherscan.io/token/0x056Fd409E1d7A124BD7017459dFEa2F387b6d5Cd.

Unlike many other stable coins, Gemini has embraced regulation. The U.S. dollar deposits that back the Gemini dollar balances are audited every month by BPM, LLP, a registered public accounting firm. The accounting firm checks to make sure there is always a one-to-one ratio of U.S. dollars to Gemini dollars. Gemini also went the extra mile and had their code audited for security. Given that smart contracts have proven to be vulnerable to being executed in unexpected ways, this gives a little more assurance that the funds will not disappear.

Decentraland

Decentraland is a virtual reality game that is built on the Ethereum blockchain. It allows users to develop and buy land within their virtual world. You can create, experience, and monetize content and applications. Decentraland is a more extensive platform that enables users to create their games within the context of Decentraland. Within the game, you find things like casinos, music, workshops, and more.

Decentraland started as a small proof of concept in 2015. They distributed ownership of digital real estate. At first, the land was represented as a pixel on a 2D grid. Each pixel had a bit of data that described it and allocated ownership. In late 2017, the Decentraland team started work on a 3D virtual world. It’s divided into parcels instead of pixels. The owner of each parcel of land can associate it with a hash reference to a file.

The new 3D virtual space within Decentraland is now called “LAND,” and it functions as a token. LAND is a scarce nonfungible digital asset. An Ethereum smart contract enforces the rules of LAND. LAND is divided into parcels that are owned by users and purchased using an in-game currency called “MANA.” The Decentraland software development kit (SDK) provides everything you need to build interactive games or static 3D scenes. You can learn more about Decentraland at https://decentraland.org.

TransferWise

TransferWise is a peer-to-peer money transfer service that allows you to move money from one account and currency to another. It matches people’s request to move money and exchange currency and supports about 300 currencies at the time of writing. TransferWise is not specifically blockchain, but it may interact with permission blockchains such as Ripple in the future. It offers what it calls a borderless account, which lets you use a MasterCard debit card. So it’s easy to move and spend your money wherever you are in the world. TransferWise advertises low conversion fees and zero transaction fees.

Created by two Estonians in 2010, TransferWise has over 4 million customers and helps them transfer more than $4 billion every month. It also has support from industry disrupters like Richard Branson, Max Levchin, and Peter Thiel.

You can learn more about what TransferWise is doing at https://transferwise.com.

Lightning Network

The Lightning Network is a project that started in 2015 to address the capacity issues that the Bitcoin blockchain was having. It’s a second layer over the Bitcoin network that takes transaction of the blockchain and it then batches the transactions. Lightning enables you to transfer Bitcoin almost instantly and at a lower cost. Because the operations are “off chain,” security is enforced by smart contracts between you and the other party that you’re transacting with. The peer-to-peer nature of Lightning means that it can scale to any market demand and exceed the capacity of legacy payment rails.

The Lightning Network also has support across blockchains. This allows you to exchange tokens or cryptocurrency from one blockchain to another. Called cross-chain atomic swaps, these transaction use heterogeneous blockchain consensus rules, where each node is equal. The limitation is that the two blockchains must have the same cryptographic hash function.

Learn more about Lightning at https://lightning.network.

Bitcoin Cash

Bitcoin Cash, also known as BCH, is a newer Bitcoin fork that has focused its efforts on increasing transaction speed and lowering transaction costs. The Bitcoin project and its community split in two in 2017. The Bitcoin Cash team focused on making it easy to use Bitcoin on a daily bases as a means of payment for anyone. BCH is a peer-to-peer electronic cash system that is permissionless and decentralized. There are no third parties and no central banks. The underlying Bitcoin Cash protocol takes its place.

You can find Bitcoin Cash on most exchanges with the BCH ticker symbol. And the Bitcoin Cash protocol will never allow there to be more than 21 million BCH coins in existence. You may consider using Bitcoin Cash because you can send money to anyone, anywhere in the world, at any time, any day of the year. The protocol never sleeps. The fees are low, so no transfer is too big or too small. And you never need anyone’s permission or approval. Like other cryptocurrencies, you are your bank and you need to take all the same precautions you would with any other digital asset. This also means that no one can seize your money or freeze your account or block your transactions. Learn more at www.bitcoincash.org.