Liste

By Scott Purcell

2018 was a wild ride. There were negatives like jaw-dropping swings in the price of Bitcoin, and with tokens of thousands of baseless ICO’s getting washed out of the system. And there were positives of unprecedented FinTech innovation, the arrival of institutional players, the SEC (and FinCEN) beginning to provide clarity and taking select enforcement actions, and new use cases for blockchain technology.

And in 2019? A few of my thoughts and predictions on the larger trends we’ll see include…The tokenization of…everything.

1. STO’s (Securities Token Offerings) are currently the hot item that everyone is talking about. And yes, businesses will raise money and issue tokens instead of stock/bond certificates, and we’ll see new types of exchanges rise up to trade these securities. This trend will accelerate, especially given the easier path to liquidity for investors (see #5 below). But this is just the tip of the iceberg.

2. Currency will be (and is already being) tokenized. Numerous stablecoins are issued against USD held in trust. This will also happen for EUR, GBP, YEN, SGD and other currencies.

Although the current major use-case for stablecoins is as a general store of digital value, that will start to shift as ecommerce merchants begin to move away from expensive credit cards to adopt stablecoins as a low (or even “no”) fee payment method.



3. Lending will be tokenized. This is, I think, perhaps the largest and most disruptive use of blockchain technology. It’s also the one that our current US regulatory regime is least equipped to foster, nurture and oversee.

The current process for making loans and then packaging, securitizing and trading them is horribly kludgy and antiquated. This is also true for distributions of interest, principal, rents, revenue share, dividends and other remittances to lenders and investors, which will use new, highly efficient, blockchain-driven processes.

4. Real estate, automobiles, gold, diamonds, art and every asset imaginable will become tokenized such that it is liquid and easy for people to finance, borrow against or invest in. In 2018 we saw Harbor tokenize a 260-apartment student housing project at the Univ of South Carolina, and Indigogo tokenize an offering by the St Regis Aspen hotel, which is the start of what will be a mega-trend in 2019, especially as these tokens start to trade (see next paragraph).

5. Stocks and bonds will be tokenized. How can people buy shares of private companies in secondary markets? How can people in Africa buy shares of USD-priced stock on NASDAQ? How can people in the US buy shares of stock that only trade on an exchange in Asia or Europe and in currencies native to those countries? The answer will be the tokenization of those securities and listing them on digital exchanges globally. 

tZero is the first exchange to announce the listing and trading of tokenized private securities in compliance with US securities regulations, soon to be followed by tokenized trading of public securities. This will be a major, game-changing trend.

6. There will be fraud in asset tokenization.The storm clouds are already forming, and it’s exasperatingly unnecessary. “Hey buddy, wanna buy some tokens backed by the Brooklyn Bridge?” – some people are issuing tokens purportedly backed by USD, by real estate, by stocks and bonds, and by other assets without depositing the title to those assets with a regulated, audited, qualified third-party trustee.

Would a bank make a home or auto loan without holding the title to the asset? Of course not. Would a pawn shop make a loan to someone without holding the jewelry in its safe? Of course not. Yet that’s exactly what some people are doing in the early stages of this space, “give me money for tokens backed by this asset, which I’m holding…trust me.

”Most issuers are already using trust companies to hold those assets and build trust in the markets. As has been done for decades with ADR’s and securitization of real estate loans, which employ custodians to hold underlying assets.

But sadly, I think it may take well-publicized losses to wake some regulators (and lawyers, accountants, broker-dealers, advisors and exchanges) up to the fact that if the assets aren’t held by a qualified trustee, then the potential for fraud is an unmanageable risk.

7. The SEC and FinCEN will step up their investigations and enforcement actions in the space.I’m amazed that I continue to have conversations at conferences with otherwise very bright people who seem to have a complete lack of appreciation, and at times even a willful disregard for US rules and regulations.

Compliance may be a pain, breaking the rules is far more painful. I agree that there’s quite a bit of gray area that’s yet to be clarified, and that’s what gives entrepreneurs a chance to build unicorns in a formative industry when the major financial firms are too afraid to participate, but some people just continue to do dumb things which are blatant violations of various regulations.

8. Global exchanges and intermediaries will legally poach business from their US counterparts.International exchanges and platforms have gathered millions of customers who use their services daily.

This forms a powerful base to start funding US asset-backed loans and business capitalization from offshore investors. This is fantastic for investors globally, everywhere except the US. Some examples of how this may play out include;



A US business (of any size) wants to raise some capital. It does so using “Reg S”, which permits it to raise money from non-US investors with very few restrictions. Money flows into the company from offshore investors, which is a good thing as the business gets funded and jobs get created.

The company doesn’t have to worry about whether those investors are “accredited” or not. The company doesn’t have to make any regulatory filings. And those offshore investors can list their “stocks” or “bonds” (in the form of tokens) on a non-US exchange and start trading them immediately.

Those non-US exchanges can even publish investor research reports on the tokens they trade! A US person wants to buy a house or a car. They do so by getting a loan from an offshore lending platform (which holds title to the home or auto with a US trust company).

The offshore lender then tokenizes that real estate (or automobile) loan and sells it on non-US exchanges. And if that’s murky due to US lending regulations? Okay fine, then the offshore lender might perhaps buy the home and enter into a contract where the homeowner rents it and buys it little by little (similar to the model used by Islamic banks).

Result is the same, the profits are made by investors globally…everywhere except the US. The rise of infrastructure businesses. Much ado has been made about custodians, and rightly so. Assets need to be held by a regulated trustee.

There is a huge need for fiat on-and-offramps. And many investors will want their tokens held on statement just like they do their stocks, bonds and mutual funds. But besides trust companies and banks, there are other unicorns in the making…Tokenization of assets requires help with creating smart contracts, and with managing them.

It requires innovative blockchains that provide faster settlement of transactions, good KYC/AML, and tools to handle/reverse criminal acts. It requires front-end servicers to originate a flow of funds by connecting people who need funds with people who have money.

It requires settlement mechanisms. It requires secondary trading exchanges, intermediaries and research. It requires debt (and fractionalized ownership) servicing firms. It requires a new breed of legal and accounting representation. And it requires new types of businesses to handle/create/manage things which we cannot yet imagine.

Many of these businesses are already in play. Some are pivoting their well-established business models to address this market, including StartEngine, Republic, Overstock, Cohen & Co, PwC, and of course Prime Trust.

Others are new firms that have been purpose-built for this new era, including HBUS, TrustToken, tZero, OKEX, KOI, CoinList, Polymath, Harbor, TokenSoft, OTCXN, AlphaPoint, Daollar, BHEX, Bitrue, Carbon, Stably, AnchorCoin, Stronghold, Consensys, and countless others across all types of service providers. 2019 is going to be exciting.

I think it’s when the rubber truly starts to meet the road, following the shakeout of the vaporware that accumulated in prior years, which I chalk up as proof-of-concept for blockchain. I can’t wait for the new year.

Traditionally one of the greatest obstacles to rapid technological progress in society has been the inability for worthy projects to find the funding required for an entrepreneur to turn a vision into a reality. In response to this problem, there has been a lot of innovation surrounding alternative funding mechanisms over the past few decades.

These innovations have occurred most notably in the Venture Capital and Angel Investor circles, as well as in crowdfunding platforms such as Kickstarter. Now, though, there is another funding mechanism on the scene which is claiming to revolutionise the funding of tech projects… token sales.

A token sale is simply the creation and the sale of a cryptographically backed token (cryptocurrency) on a blockchain platform. Within this umbrella term, there are three main types of token sales: Initial Coin Offerings (ICOs), Security Token Offerings (STOs) and Utility Token Offerings (UTOs).

Historically speaking, out of the various types of token sales ICOs have grabbed the most headlines and media attention. For example, early in 2018, during the ICO hysteria, EOS raised over $4 Billion in its ICO, whilst on aggregate 2018 brought in over $21.5 billion from ICO and UTO sales.

However, since then the ICO/UTO bubble has burst and many have lost faith in the entire token sale enterprise. In their minds, this was a bubble like every other and since it has burst, it is time to move on. Although that may be true for many people, there are still quite a few who see ‘The Tokenization of Everything’ as an inevitability – to them, it is a matter of when not if.

The Tokenization of Everything (TOE) refers to a world where anything from patents to houses, to concept cars, can be represented by a blockchain-based token and then sold/traded with anyone, anywhere. So then, out of these two camps, who is right?

Short-term outlook (-12 months)

The token sale model receiving the most hype at the moment is the STO, to the extent that a quick Google search of the term will show many proclaiming 2019 to be ‘the year of the STO’. STOs are tokens representing securities, created on top of an existing blockchain platform.

The main benefit of using an STO as opposed to any other type of token offering is that it operates in a space with clear regulatory frameworks which guide issuers and investors alike. The claims being made are that this token sale model will revolutionise all types of project funding, specifically where VCs, Angel Investors or IPOs are involved.

The perceived benefits are summarised in a Nasdaq issued report (Security Tokens Set To Take Center Stage in 2019) which states that“Security tokens digitally represent ownership in any asset, such as a piece of a tech startup or a venture capital fund and can provide investors with various rights to that company or fund.

Furthermore, Security tokens provide liquidity to investors, access to compliance features to issuers, and a framework for oversight to regulators. ”Under close inspection of the current state of the market, however, these claims fall apart. The infrastructure that is necessary for a fully optimised STO market to operate has barely begun construction, who knows how long it will take to build?

Furthermore, the claim that STOs will provide token owners access to a liquid secondary market also seems to be a wild exaggeration. Quite simply, the Securities and Exchange Commission (SEC) in the US has very strict requirements and protocols for self-proclaimed ‘Securities Exchanges’ and will take action against any exchange not complying with these requirements.

Consequently, there are no sizeable exchanges accepting STOs for secondary sale at this moment. Essentially this means the token becomes “a zombie coin” in the words of Trevor Koverko CEO of PolyMath (an STO platform). Taking this into consideration along with other points not mentioned here, the short-term prospects for STOs as well as the Tokenization of Everything is pretty bleak.

But is this the case for the medium to long-term?

Medium to long-term outlook (1-10 years)

Due to the factors stated above, it seems that the TOE hypothesis and all the promise that holds for tech startups/companies will not be coming true in the short term.

However, I believe the medium to long-term prospects to be much more promising.Let me explain: ICOs will always be the go-to funding mechanism for new blockchain platforms, this is simply due to the historical success of this strategy.

For example, EOS, Ethereum and Waves all did ICOs to raise initial capital for their projects and are now amongst the biggest and most successful blockchain platforms in the world. So too does it appear that UTOs will also be the best option for teams building Decentralized Apps (Dapps) on top of these blockchains e.g. games, lending platforms, sharing economy apps etc.

Furthermore, reiterating what was previously mentioned about STOs – I do believe they will be a viable alternative to legacy systems (VCs, Angel Investors and IPOs) but the timeline will be much longer than the community perceive and there are other questions that need to be answered before we can go forward.

Due to the immaturity of the industry and no precedent having yet been set to call upon, I will leave you with some open-ended questions to consider with regard to the role of STOs in the TOE:?       

How hard/long/expensive is it to become a registered STO in your jurisdiction and is it worth it??       

How big is the liquidity pool for these STO exchanges (plus their secondary markets)??       

What exactly can be considered an STO and will we need another token sale model in order to make the TOE a reality?

In summary, the token sale market is shrouded with uncertainty at this time; there are a lot of big claims being thrown around but little evidence to show their viability at this moment.

That being said, token sales and their applications to the technology industry can offer massive benefits relative to legacy systems, especially for those who do not have access to sophisticated and fairly stable financial systems (like we do in Europe), and the fact that they raised over $21 Billion in 2018 is an indicator of this truth.

What we need to see going forward is attention being paid to the development of the infrastructure for these markets and clearer governmental frameworks surrounding the space.

There must be substantial progress in both of these areas before the Tokenization of Everything can occur and unlock the entrepreneurial potential pent up in entrepreneurs and innovators all across the world.

By  Anthony Broderick – Cryptocurrency Analyst & Media Editor atCoinSchedule

CoinSchedule Limited is an Information Society Service Provider. If you would like to have your company featured in the Irish Tech News Business Showcase, get in contact with us at [email protected] or on Twitter: @SimonCocking

If 3D printing technology wants to get ahead of its inherent security issues, the best way would be to adopt blockchain.

Speaking at the 2019 Pacific Design & Manufacturing Show, Jack Heslin, President of 3D Tech Talks, a 3D printing consultancy, said as 3D printing becomes cheaper, easier, faster, and more ubiquitous, the very nature of the technology is going to demand the security afforded by blockchain.

It's all about what Heslin called the Digital Thread of Additive Manufacturing (DTAM), “the single, seamless strand of data that stretches from the initial design to the finished, 3D-printed part.”



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If you've never heard of such a thing for 3D printing that's okay, because Heslin said such a thing really doesn't exist. “The [3D printing] process is linear, but it's not single or seamless,” he said.

3D-printing moves through several stages: from concept, to CAD file, to generative design (when available), to the actual 3D print. Then comes the post print process, and finally support if and when it is needed. All these steps each represent a point of vulnerability in which a 3D print can be corrupted or even stolen, putting company's intellectual property at risk.

“The digital thread of manufacturing has vulnerabilities. Design files can be stolen,” Heslin said. The one that scares me the most is that design files can be hacked to deliberately put in a flaw...I'm not saying it's happening right now, or it's easy to do, but it is a concern.

”Research has already shown 3D printing has a growing need for cybersecurity. Researchers from New York University's Tandon School of Engineering for example have found that there are serious security issues around 3D printing that could present significant safety hazards due to counterfeit parts and products, or products being deliberately printed with hidden flaws and built-in failures.





The Liberator (shown) is a single-shot gun that can be 3D-printed using unsecured files available on the Internet. (Image source: NotLessOrEqual [CC0]) In 2016 researchers from the University of California, Irvine demonstrated a novel approach to 3D printer hacking when they revealed that the source code to produce 3D-printed parts can be stolen by recording the sounds the printer makes.

All of this leads to implications for a number of issues Heslin pointed out. Aside from printers being taken offline by malicious entities and concerns of stolen IP there are also larger issues, particularly around gun safety.

For several years now a debate has raged about 3D-printed guns. Recently, a would-be domestic terrorist in Texas was arrested and sentenced after he was found in possession of an illegal AR-15 assault rifle that he was able to assemble with the help of 3D printed parts created using files freely available on the Internet.

One step beyond this, Heslin noted, would be the illegal and unauthorized printing of military machine parts and weapons or hacking 3D printer files to do deliberate damage to sensitive equipment or machines.

In a 2016 paper, “dr0wned – Cyber-Physical Attack with Additive Manufacturing” a team of researchers were able to hack a PC connected to a 3D printer and from there make secret alterations to the 3D printing files for a $1000 drone that caused its propellor to fail mid-flight.

So how does blockchain address all of this? Blockchain works by creating a distributed, encrypted ledger across any number of parties that can be used to verify not only identities but also the status of any particular job. That means every entity involved in any stage of a 3D print is aware of what all the others are doing at any time in a safe and secure manner.

Since a blockchain is decentralized, meaning no single entity owns it, stealing or altering a 3D printed file from a blockchain is not about tricking a single computer or printer – you'd have to hack every entity that was a part of that particular chain, which is exponentially more difficult, if not sometimes impossible.

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“When you have multiple stakeholders in the process you have to ask is consensus required across stakeholders,” Heslin said. In that regard blockchain can provide authority to print and authority to send files to be printed.He also pointed to the audit trail benefits offered.

“We all know about Six Sigma and ISO – a lot of it is about audit trails,” Heslin said. “Blockchain, by nature, is an audit trail. It shows every edit and iteration in the process. ” Furthermore, because the audit trail is decentralized it becomes immutable and cannot be erased.Even as early the conceptual level there are benefits.

“If you're a design engineer and you send parts to a service bureau to be 3D printed, you don't know if anyone else printed that part,” Heslin said. “Look at a site like Thingiverse. You can see how many times a file has been downloaded, but you have no idea how many times something has been printed...or if its being sold without your permission.

”There are already companies working on this. In 2017 GE filed a patent for an additive manufacturing (AM) system that is “an AM device configured to implement a distributed ledger system...wherein the the distributed ledger is a blockchain ledger.

” The basic premise of the system is to use blockchain to identify and verify builds, and the authors of those builds, in an AM system.Wipro, an India-based IT consultancy, is developing a blockchain system for AM specifically targeted at fighting IP theft. As the company's website states:

“3D printing empowers small manufacturers to create new products anywhere. The creators can share the files to a secluded printing facility. Blockchain can help set up such small independent value chain to make the production processes nimbler. The smart contracting application can ease out the transactions to assure integrity of product history, production process details, ownership and much more. It will also help to locate the most feasible printing facility and reduce the negotiation time regarding price, date of availability etc. At last the blockchain would capture the digital trail of the product, with details such as the type of raw material used, the source of raw material, production parameters, technical specifications, where it was manufactured, how it was stored and maintained etc.”

Where blockchain is typically looked at more on the software end, as with Bitcoin and other cryptocurrencies that have made it so popular, Heslin said 3D printing holds an “interesting extra layer in that this deals with physical products.

”And while cyberattacks against 3D printers have been confined mostly to research labs, 3D printers will only become a more enticing target for hackers as more and more printers are connected via the IoT and more and more companies trust 3D printers with sensitive files and information.

There's a shift happening in which what's most valuable won't be the end product, but rather the information that enables that end product, Heslin said.

“You can't say with certainty that we can do this. But this issue is serious enough you have to address this.”Chris Wiltz is a Senior Editor at  Design News covering emerging technologies including AI, VR/AR, blockchain, and robotics.

Facebook CEO Mark Zuckerberg is exploring the possibility of leveraging blockchain technology for the company’s third-party login services.

In an interview with Harvard Law Professor Jonathan Zittrain on Wednesday, Zuckerberg said a move from the existing centralized Facebook Connect to a distributed system could empower users and app developers alike.Volume 0% Multiple reports have been floating since last year on Facebook‘s possible plans with blockchain technology, but this marks the first time a company representative has shared any tangible details.

According to Zuckerberg, the users would be able to store their information on a decentralized system and have the choice of logging into various platforms without going through an intermediary — in this case, Facebook. Zuckerburg says this should give users greater control over their data.

Zuckerberg pointed out that this system would also benefit app developers whose access to users’ data can be cut by intermediaries like Facebook and Google at any time, if they are found to be in violation of their policies.It’s worth noting that Facebook won’t be the first one to explore this concept.

Indeed, a ton of blockchain startups have raised money over the years promising to make this blockchain dream a reality. Unsurprisingly, none of them have yet succeeded in creating a useful identity management solution.Zuckerberg himself admits that he hasn’t yet found a way for blockchain-powered logins to work in reality.

But even if with all its resources and technical talent, Facebook manages to make this a reality, will it make user data more secure? The use of blockchain technology can ensure greater security and privacy during the transaction process of the information itself, but the data will be accessible and retainable to other parties in the same manner as with centralized means.

The user will still have no control over how the information is treated once they have chosen to share it with the third party. Unfortunately, this is where most data breaches take place.Consider the infamous Cambridge Analytica incident, for example. Facebook users thought they were giving consent to have their data shared with an app developed by a Cambridge University psychology professor.

In turn, the professor ended up sharing the data with third parties leading to one of the largest political scandals in the digital age’s history.The use of blockchain for giving consent in this case couldn’t have prevented this incident. But it would have shifted the responsibility of securing personal information the users themselves instead of Facebook. It’s unlikely that individual users will be better equipped to tell apart bogus apps than the social media giant.

In light of the multiple data breach revelations that came in the aftermath of Cambridge Analytica, Facebook has been facing scrutiny from multiple federal agencies in the US and authorities elsewhere in the world.It is no wonder that the company is looking into options on limiting its legal liabilities. A blockchain-based login system could allow exactly that, with the onus of securing their personal information shifting entirely to the users themselves.

Nevertheless, it will be no cakewalk to make this concept a reality, even for a company like Facebook.In addition to the usual challenges faced with building products on blockchain, Facebook has to battle the fact that the use of blockchain is completely antithetical to Facebook‘s existence.

Zuckerberg kept talking about removing the intermediary from this process throughout the interview. But, Facebook is the intermediary as himself admits. Essentially, Facebook wants to offer a service to ensure that the users don’t have to rely on Facebook to securely login on a third-party app?

Someone solve this riddle for me.It doesn’t sound like Facebook has its idea sorted out. I, for one, won’t be expecting to see this proposition come to life anytime soon.