A tale of two Canadas

As someone who grew up and was educated in Canada, even though I no longer live there, I’m always keen to keep up with what’s happening. So, I was fascinated to read this article by Trenton Paul, a tech enthusiast, on the gap between Toronto and Quebec. He describes Toronto as being all set to become the country’s first smart city, while Quebec has been overrun by bitcoin miners, which appears to be to the detriment of the city. He puts forward an interesting theory — that Canada can’t find a balance when it comes to implementing new technology.

In Quebec, he takes us on a brief tour of an old factory that is now owned by Bitfarms, one of North America’s largest cryptocurrency mining operations. Here there are 7,000 machines doing the same repetitious task, and their number is expected to double this summer. Fans whirr everywhere trying to keep the machines cool and he describes the working conditions as akin to “working in an IT sauna.” He points out that maintaining this process uses up more energy than the nearby Montreal Canadiens’ hockey arena. And, the local energy company Hydro-Quebec has been trying to attract more mining operations to the city, and the mining operations have been flocking there.

What’s the problem in Quebec?

Quite simply this: the number of applications from mining firms wanting to set up in Quebec could potentially make the city a global hub for crypto mining, which sounds great, until you realise that if all of them were in full operation they could cause the collapse of the electricity supply to the Quebec region.

Bitcoin miners also prefer to use clean energy, which means they avoid countries like the U.S. and China where fossil fuels are in wider use. Hydro-Quebec promises that mining operations there are fuelled by hydroelectric power and that the power used for the mining companies is “surplus” — an extra 100 terawatts of low-impact energy. The problem is this, as Trenton Paul says: “as demand grows and more energy is needed to power these machines, the power supply available will not be able to sustain much longer.”

Some joined up thinking is needed

Meanwhile in Toronto, city officials are getting ready to promote it as the country’s first smart city, with Alphabet’s subsidiary Sidewalk Labs planning a timeline for building a smart complex.

As we are still in the early days of this technological ‘gold rush’, it is impossible to say how this will all pan out to Canada’s benefit, but what is clearly required is a ‘One Canada’ policy that brings balance to the implementation of new technology and offers some sound, joined up thinking.

Why you need a decentralised identity

We have all been warned about identity theft. Even the big banks like Barclays are running TV ad campaigns showing customers how a phone call that seems to legitimately come from your bank can be used to steal your online banking pin number. There is plenty of information out there about how to keep your details safe, but no matter what precautions we take, there are always bad actors out there (this is now a ‘polite’ way of referring to people who are nothing more than criminals) who are relentless in their search for new ways to access our private information.

Tomislav Markovski, writing on Medium tells a story about how he nearly became the victim of bank fraud when he rented a property. After providing every possible kind of document to the real estate agent, including bank statements and investment portfolio details, he received a call from his bank a few days after he had moved in saying that someone wanted to cash a large check drawn on his account. Markovski knew he didn’t have that much money in is account, but the bank then told him that “he” had made a transfer from his savings account by phone. Of course, he’d made no such call, and thanks to his bank calling when they did, the theft was stopped. But, as he says, it was a “masterfully crafted plan that involved just four key steps”

1. Call the bank pretending to be Markovski

2. Change his phone number (to confirm large withdrawal)

3. Transfer all his savings into his current account

4. Have a fake cheque made and present it to the bank for withdrawal

They were able to do this because they had access to all the necessary information on him, including his social security number. They couldn’t catch the scammer, but it made Markovski think about why so much information was required to rent an apartment and why are we still relying on physical documents.

Blockchain has a solution — decentralised identity

Blockchain technology is opening up a range of possibilities to prevent this kind of crime and decentralised identity could be the way forward. As Markovski says, decentralised identity is “publicly discoverable identity information.” It uses blockchain technology to provide tamper-evident information about an entity or a subject and “allows a model of truth to be established between parties that rely on communication and exchange of data.”

There are already a few platforms working on this, including Civic, uPort and Sovrin. As Markovski says: “Decentralized identity platforms will change the current broken identity system that relies on numerous online services requiring us to remember passwords for each of them. They can help us protect our personal information and allow us to control how this data is shared.”

Until these platforms gain mass adoption — be careful out there!

The Two Doors of Crypto Perception

You may have seen a photo of a dress circulating on social media last year. People were asked what colour the dress was. Some saw white and gold, some lilac and gold, and others saw blue and black. The post demonstrated that perception is not universal, and the same can be said about cryptocurrency and blockchain technology, which can be viewed through two lenses.

Data and code first

There are those who perceive the technology to be the most important aspect of this new space and the one that will outlast all other aspects. Some people see the blockchain as a gigantic network of global computers working on the decentralised principle. Most often these ‘believers’ are software designers and developers who are focused on code and data. They see lots of potential in the blockchain for implementing new forms of software with new capabilities. It offers them data storage that is resistant to censorship and is immutable. It can also be audited and the code can’t be changed once it’s in use. This is one group, but there is another.

New money

Another group perceives the technology as merely a tool that is necessary to create a new form of money. This group is more likely to be made up of people from backgrounds in economics and finance. They look at it from a perspective of the history of money and bring the idea that all forms of money have specific properties: resistant to forgery, secure, durable, measurable and divisible. So this group sees cryptocurrency as a new version of ‘sound money’. Some of them are sceptical about fiat currencies and aren’t fans of centrally controlled monetary policies. They see cryptocurrencies as a revolutionary new form of global money and the antidote to what they see as the questionable modern experiment of fiat currency.

The bigger picture

What does this leave us with? One group see crytpocurrency as the single useful purpose of the blockchain, while the other sees cryptocurrency as just one component in what the blockchain can do.

The ‘new money’ group actively buy cryptocurrencies and want to encourage mass adoption so the value of the coins increases. The blockchain-focused group is more enthusiastic about projects that experiment, add features, and explore the blockchain tradeoff-space.

But, what we can take away from this is that both views complement each other and one keeps the other in check. There is room for both perspectives and those working in the crypto space would do well to take a step back and take in a wider perspective that includes the views of both these groups to see exactly where the crypto space is heading.

Are ‘no fee’ exchanges becoming a trend?

An article in yesterday’s Fortune magazine alerted me to what may be an emerging trend. I’m talking about ‘no fee ‘ exchanges. The latest one to arrive on the scene is Voyager and it’s bringing the competition to RobinHood, which is the best-known exchange to day that doesn’t charge commission fees.

It is Uber-funded

Voyager has some big names behind it that are bound to give it plenty of publicity and create trust as well, unless you really dislike Uber, for example, because Oscar Salazar, the co-founder of Uber, and Philip Eytan, one of Uber’s biggest investors are Voyager’s founders. And you see what they did — they called it ‘Voyager’, this connecting the exchange with transport. The CEO is Stephen Ehrlich who came from his position as CEO and founder at Lightspeed Financial, a retail brokerage.

Will Voyager have the same power as Uber?

So, the focus is on no fee trading, and it’s interesting that Voyager has opted to join RobinHood in this niche market sector that aims to reduce the cost of trading cryptocurrencies. However, given the business background of Voyager’s investors it makes perfect sense. Uber disrupted the global taxi market (well, almost globally) and once it opened that market up there has been no going back. ‘Uber’ is so popular, it is probably a verb by now, as in “Are you Ubering tonight?” — just like “Google it!”

What is Voyager offering?

Initially, Voyager will list 15 cryptocurrencies, drawn from the list of the 25 best-performing networks, including bitcoin, ethereum and bitcoin cash, among others. The new CEO also told Fortune that it is considering listing tokens like XRP and Stellar’s lumens, because those aren’t listed on any major U.S. exchange. He also said, “If you see it being traded today by some of the most prominent players, we will definitely have those plus some.”

How will it make money if there are no fees? Ehrlich explained, “In lieu of trading fees, Voyager will make up the difference in revenue by beating the average price of the coins at the point in time we execute the trade.” Basically, Voyager believes it can consistently execute buy and sell orders at better prices than customers would often get by just visiting one exchange, such as Coinbase or Binance.

The platform goes into beta testing this week and an app should be available by late October and it also intends to add crypto news and analysis to help its customers make buy/sell decisions, as well as additional tools for the institutional investor segment to its platform.

Currently the team is hard at work securing licenses in a number of U.S. states including California, Massachusetts, Missouri, New Hampshire and Montana. Its goal is to operate in at least 40 U.S. states. Could this be the start of a ‘no fee’ exchange trend, or will Voyager simply make the space its own — just like Uber?