Blockchain federalism – When the Swabians pass by Berlin

On Monday, June 18th, Stefan Krebs, CIO of the state of Baden-Württemberg, was presented with a strategy paper to make his state fit for blockchain adaptation. Among the initiators are well-known names such as IBM, Daimler, Stuttgart Stock Exchange or Bosch – companies that have already gained initial blockchain experience. In addition to a general improvement of the Blockchain ecosystem in business and administration, the goal is to include small and medium-sized companies in the crypto-economy.

Blockchain as part of Bitcoin evolution

Although a single state initiative will not be decisive in determining whether Germany will keep up with the blockchain economy and the Bitcoin evolution, it can undoubtedly be one important impulse among many. The last few months have shown that initiatives at EU or federal level often progress very slowly. Impulses from the lower administrative levels, i.e. from individual municipalities and federal states, can help to raise the profile of the issue in the discourse at EU and federal level like seen here: The more municipalities and federal states push blockchain projects, the more likely it is that the federal government will also be prepared to implement crypto-friendly regulation.

Stuttgart, not Berlin
Competition at state level could thus lead more quickly to small blockchain use cases and sandboxes than is the case at federal level. Baden-Württemberg in particular can play a leading role in Germany as a federal state. Although the Berlin blockchain startup scene may have great long-term value creation potential, the corporations and the so-called hidden champions are more likely to be found in Baden-Württemberg. Here, blockchain technology can lead to economic success much more quickly than is the case in other regions of Germany.

The mechanical engineers and automotive suppliers in the Ländle need a secure decentralised infrastructure in order to successfully implement the Internet of Things within the framework of Industry 4.0. So if a production machine automatically orders new raw materials, simultaneously initiates payment and communicates this information to the other machines via machine-to-machine communication, then some blockchain use cases are necessary. In logistics and supply chain management in particular, the short-term value creation potential is greater than in most other industries – including finance and energy. As efficient as most companies in Baden-Württemberg and in Germany may be, there are still large friction losses and inefficiencies in the external relationship with external service providers, which can be drastically reduced by blockchain solutions such as IBM.

Blockchain federalism in Bitcoin evolution

It is difficult to measure in advance how high the effective benefits of such Bitcoin evolution initiatives will ultimately be. For sustained success, the pithy announcements must be followed by action like this For this to succeed, there needs to be an exchange between block-chain start-ups and the old economy. However, this is exactly where things are lacking so far: the medium-sized companies in Baden-Württemberg and the start-ups in Berlin, Hamburg or Munich are not yet quite compatible. Thus, there has long been a lively exchange within the blockchain scene at the countless Meetups, but industry representatives have only rarely been seen here so far. Too bad!

Hopefully the initiative will also infect the remaining 15 federal states, so that in future each federal state will have its own crypto valley, which is in active exchange with the others – decentralised, as provided for by federalism.

Elon Musk comments for the first time on Ethereum – because of a scam

Crypto currencies made it into the mainstream media some time ago. Spectacular rises and falls in the price of Bitcoin, hundreds of millions of hacks at Mt.Gox & Co. and scandalous cheating tricks à la Bitconnect. The reporting is predominantly negative and that is again the case this time. Elon Musk has spoken about crypto currencies for the first time.

The founder of Tesla wonders who is running the “Etherium” scambots. The spelling mistake with the name of the second largest crypto currency suggests that he didn’t deal too deeply with the topic. Incidentally, the tweet to which Musk responds didn’t refer to a scambot or ethereum, but to a young man who asked Musk to send him Bitcoin. It was only a matter of time before the topic would reach famous personalities outside the cryptospace sooner or later. Because the scam lives on the fame and range of well-known people.

How the Bitcoin evolution works

The scam creates a fake account. The Twitter Bitcoin evolution address is written so similarly that the difference is not noticeable in hasty moments. So @elonmusk would become e.g. @elonmusc. Such an account then announces an alleged giveaway in the answers to a real tweet of Elon Musk. In this case, for example, one to ten ETH should be sent to one ETH address. Participants are promised the return of the doubled amount. It sounds simple and transparent. But enough people actually fall for this trick. For the scammers, it’s very lucrative: little effort and income from Ethereum worth hundreds to thousands of euros.

ETH Scams cast a bad light – not only on Ethereum

Victims of these scams are mostly newcomers to cryptospace. If they look for help in the forums of the crypto community, they learn there unfortunately that not much can be done for them. In the forums they also make fun of the scammers and even the victims. It is their own naivety or greed that is responsible for these incidents. Of course this gives a very bad impression to people who are waiting for crypto currencies or are sceptical about them. Twitter, too, has to put up with negative publicity through this scam.

We must stop focusing on our various clones and why Twitter, apparently, does not give a flying fuck, and instead put our attention on the genetic flaw in our species that allows an individual to believe that anyone, at any time, throughout history, has ever given away money.

Is the criticism of Twitter justified?
It is not the case that Twitter does nothing about these scams. Messages are usually checked within 24 hours. They can be done both by the people you have stolen your identity from as well as by other users. The problem is that a tweet can find victims within the first hour of being sent. What critics like McAfee disregard is that Twitter alone is massively overtaxed by laws such as the Network Enforcement Act and the new EU-wide data protection regulation. The scam is new and answers have yet to be found.

How can the problem be solved?
Radical solutions such as the introduction of stopwords on Twitter are probably not the answer. The introduction of a stopword mechanism in which you are not allowed to call “Ethereum” and “Giveaway” would be of little use. Since these words can easily be paraphrased. Other possible combinations such as “ethereum” and “send” would amount to censorship and would be as negatively received in the crypto world as the ICO bans on Facebook and Twitter.

In fact, there is already a simple and quick solution to the problem. The block function can prevent certain accounts from responding to their own tweets. Past tweets will also be deleted from your own timeline. You can’t demand that a McAfee does this for every single scam account. However, you should also be a little reluctant to criticize.

Facebooks Ben Davenport switches to Bitcoin Startup BitGo

Software engineer and Bitcoin investment angel Ben Davenport has left Facebook after three years to join BitGo, a company that helps users and organizations better protect their Bitcoin assets. Davenport, who invested in at least seven Bitcoin startups very early on, joins the company as head of product management and co-founder of BitGo. He says, “I think BitGo is a leading pinier in Bitcoin security.”

BitGo and Multisig

Davenport pointed out that BitGo was one of the first companies to launch Multi Signature (or “Multisig”) Bitcoin Wallets. Multisig Bitcoin Wallets are characterized by a higher level of security than traditional Bitcoin Wallets. Most Bitcoin wallets in use today are based on a private key – that’s all you need for a transaction. However, if you lose this key, you no longer have access to your credit and if the key is stolen, your entire credit can be stolen.

Multisig, on the other hand, uses several keys. In order to release a transaction, for example, at least two of three keys must be entered correctly. Additionally a redundancy is provided. This means that if you lose a key, you can still access your credit with the other keys.

For conventional wallets, BitGo currently uses three keys: One key for the user, one for BitGo, and one key is stored in an offline backup. To access the account, the user needs at least two of the three keys. Since at least two keys are required to gain access to a wallet, there are several sources instead of one source to which, for example, a hacker must gain access. For commercial use, however, the company is planning a much more complicated encryption technique. With this type of encryption, BitGo will make use of modern tools that are also used in corporate accounting software products.

Complex systems

Large organizations have complex systems by nature. Companies have different management levels from the CEO down. Somewhere in between is the accounting that moves the company’s funds. “All these people act with Bitcoin, but at the same time have to fulfil their function,” explains Davenport. “This includes transaction limits, speed limits and approval chains, among other things”.

And this is where BitGo comes into play: BitGo wants to offer companies the possibility to better control Bitcoin processes with several private keys. This option coupled with a cold storage (offline wallet) will provide companies with an enhanced level of security.

Multisig also offers a form of transaction sharing, Davenport said:

“This type of transaction sharing does not yet exist for the Bitcoin. BitGo will make it possible.”

BitGo will also not only focus on traditional companies, says Davenport, adding that the product will also be of interest to Bitcoin stock exchanges, mining pools or wallet providers.