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The blockchain: Man, myth, or legend?

This week on the podcast we zero in on blockchain with Tradestreaming’s payments reporter, Josh Liggett. Josh drills down on his monthly Blockchain Hype Meter, which looks at how the mainstream media covers the space in an effort to distill signal from the noise. To be sure, distributed ledger technology portends to be super transformative — but there’s a vast distance between there and here.

We also talk about newly-launched cryptocurrency Zcash and why there was so much excitement around its launch. We’ll also chat about the growing influence of just a handful of people on the future of the blockchain.

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Below are highlights, edited for clarity, from the episode.

Blockchain Hype Meter

We decided to start the hype meter as our creative way to cover what’s happening in the world now. We cover the FT, WSJ, CNBC, Bloomberg and NYT. Inside all the sass and fun we have covering the hype around blockchain, it’s important to realize not much is really happening right now. But it is the appropriate time to begin discussing it and have the important conversations about what the impact of the blockchain will have on the financial services industry.

Harvard report on the tightly-controlled blockchain

A hacker and associate professor at Harvard got together and argue that it’s actually a very small group of people who make decisions about the direction of Bitcoin. There’s a programmer in the Netherlands who has a lot of decision power, including over block size. Tradestreaming’s Gidon Belmaker also explains that only 15 mining pools control global mining operations. It’s not just mining — they also control the verification and approval of all transactions.

Blockchain around the world

Tradestreaming’s Hadas Tayeb joins the podcast to talk about what’s going on in Japanese blockchain news. On November 2, a consortium was launched with support from the Japanese government. The government is trying to spur innovation by encouraging large investment companies to invest in fintech startups, including those focused on distributed ledger technology.

 

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Blockchain October Hype Meter: Zcash for all!

blockchain hype meter

Every month we publish our Blockchain Hype Meter, a curation of blockchain and cryptocurrency articles in mainstream media. An event that caught our eye was the debut of a new cryptocurrency called Zcash at the end of October.

Typically, this isn’t noteworthy — cryptocurrencies launch all the time. But Zcash had an exciting first day of trading. Zerocoins, the coin Zcash released, had a day low of $32,000 and a high of over $2 million a coin. That’s right, there was a $1.9 million spread between the day’s high and low.

Here’s the chart showing the movement since launch day.

1_50200027_zec_btc_market_-_poloniex_bitcoin_cryptocurrency_exchange

The highs and lows of Zcash can be attributed to two factors: supply and demand. A little over 100 zerocoins were available on day one. 300 more were added on day two, and 80,000 will be available by the end of November. I didn’t pay much attention in my ECON 101 class, but I remember something like more supply leads to lower prices or something like that.

But price stability may not be the biggest issue facing Zcash and users.

Here’s the difference between the Zcash and other cryptocurrencies in the company’s own words:

“Unlike Bitcoin, Zcash transactions can be shielded to hide the sender, recipient, and value of all transactions on the blockchain. Only those with the correct view key can see the contents. Users have complete control and can opt-in to provide others with their view key at their discretion. Zcash transactions do not depend on the cooperation of other parties.”

Zcash uses encryption to hide transfer information, creating untraceable global instant payments. I’m sure people will use this level privacy to make anonymous donations to their local animal shelter instead of laundering money, buying illegal products and services, and funding terrorism.

Government officials were already calling to ban the anonymous cryptocurrency before it was even launched. Stefano Quintarelli, Italian IT expert and member of Parliament, expressed his view in a recent blog-post.

Here’s the translation:

“An anonymous currency exists and is cash. But that ‘does not allow, unlike cryptocurrencies, to be exchanged from one side of the planet in zero time, and in unlimited quantities. For all these features a completely anonymous cryptocurrency has all the credentials to become the tool of choice of crime payments of money laundering and financing terrorism.”

Quintarelli is calling for a ban on Zcash, taking to Twitter the day before the launch:

stefano_quintarelli___quinta____twitter

So why so much talk about Zcash? Well, it just happened, plus it embodies  blockchain hype. People are clamoring to purchase the new currency, while others are trying to outlaw it. It’s unclear where the price will settle or if it’s even possible to ban a cryptocurrency that itself is encrypted. Sounds like lots of hype with little understanding of the future of the currency.

Without further ado, here’s the October Blockchain Hype Meter

It was a much more stable month for blockchain after the myriad of September announcements. Stable doesn’t mean less coverage, though. There were articles and small happenings, but no crazy events like digital wallets on satellites.

Along with the Zcash debut, Wells Fargo and ANZ tested distributed ledger technology. Visa and MasterCard announced blockchain initiatives for b2b transactions. R3 teamed up with blockchain provider Ripple and 12 global banks for blockchain enabled cross border payments. Walmart will be using blockchain to track pork in China ,as well.

And there was the start of (gasp!) an actual incumbent blockchain transaction. Commonwealth Bank of Australia, Wells Fargo, and Brighann Cotton have arranged a shipment of cotton from Houston to the Chinese port Qingdao to be delivered in November. When the 88 bales of cotton valued at $35,000 are scanned at the arrival port, smart contracts will trigger a blockchain-enabled fund transfer.

The Fed also got involved, finally taking a stand on blockchain by announcing an announcement to be released in December. Wait, what?

Notable Hype Articles (Total HYPE: 79)

Notable Not Hype Articles (Total not HYPE: 6)

October HYPE meter score

73 (d3fc0n2: Is there a DAO I can invest in?)

  • Change from September: -54