US Regulator Wants to Adopt Blockchain to Maintain Pace with Market Manipulators

The chair of the U.S. Commodity Futures Trading Commission (CFTC) has said that he wants to adopt blockchain to “keep pace with those who attempt to defraud, distort, or manipulate” financial markets.CFTC Chairman Giancarlo Envisions Compliance Built into Business Operations Through Smart ContractsJ. Christopher Giancarlo spoke about the use of blockchain and machine learning for regulatory purposes at Georgetown University. The head regulator is confident the digital era will prove to be a positive factor to better oversee financial markets.“These tools will become even more paramount as emerging blockchain technologies seek to decentralize markets or disintermediate traditional actors. It is critical that we have the ability to keep pace with those who attempt to defraud, distort, or manipulate.”Giancarlo gave several examples of adoption of new technologies at the regulatory level.These include “using machines to independently identify segments of the markets where concentration risks or unrecognized counterparty exposures are emerging and flag them for staff consideration and action” and “new machine-learning based surveillance tools” designed to “sniff out patterns of likely illegal trading activity or attempts to manipulate markets for enforcement analysis.”The CFTC chair said the ongoing digital revolution in the world’s trading markets have far-ranging implications for capital formation and risk transfer. He added that he expects the majority of standard tasks to be managed by machines as automation technologies are paired with blockchain to standardize and distribute data to market actors and regulators.“We can also envision the day where rulebooks are digitized, compliance is increasingly automated or built into business operations through smart contracts, and regulatory reporting is satisfied through real-time DLT networks. The machines here at the CFTC would have the ability to communicate regulatory requirements and consume and analyze the data that comes in through such systems.”Giancarlo has recently stated that cryptocurrencies “are here to stay” and that many countries across the globe are hungry for functioning currencies, which shows there is a market for digital currencies. He is, however, skeptical about cryptocurrencies’ ability to rival the dollar or other hard currencies.While the U.S. CFTC is yet to adopt blockchain technology to better oversee financial markets, the financial watchdog has won its first Bitcoin fraud action. A  New York federal court has ordered Gelfman Blueprint and its CEO Nicholas Gelfman to pay over $2.5 million in civil monetary penalties and restitution over their +$600,000 Ponzi scheme.Related Reading: CFTC Chair: Cryptocurrencies Have a Future, They Are Here to StayFeatured image from Shutterstock.

AI Requires the Computational Capacity that Blockchain Provides

Centralized data servers might not cope with the power AI needs. At best, they can be least slow and expensive. Could blockchain-based decentralized marketplaces for computational power be the answer?

Artificial intelligence (AI) — much like the internet of things (IoT) and blockchain — is set to become a foundational technology. These technologies will not only integrate but could also rely on each other to exist. According to Forbes and Gartner, by 2020, 85% of customer interactions will be managed by AI.

However, AI’s compiling, rendering, and predictive analysis is extremely resource-intensive. Just two years ago it took 26 hours to map a human genome when AI is used in science and medicine. Today it takes around an hour and the computational power do so is still substantial. Centralized data servers might not be able to cope with supporting wide, daily, application of AI.


Is this What Bitcoin Was Built For?

Blockchain, or distributed ledger technology (DLT), may provide the computational resource AI needs by utilizing the computing power of many machines. In some ways, this is what the Bitcoin protocol was designed to do. Siim Õunap, COO of Savii Digital told Forbes:

One of the little-known reasons behind the creation of the Bitcoin protocol was to get enough computing power to solve complex mathematical problems that no one computer could by itself. As the process went on, it evolved and virtual currency was born.

Õunap says the Bitcoin blockchain created an ideal solution to combine hardware efforts to power technologies like AI and IoT.

Professor Andrew J. Hacker of Harrisburg University, and founder of Thought AI, a public mineable blockchain for the “AI Superhighway,” says it’s not just computational, or “compute” power that’s important. So too is the data fed to AI and what happens to the results. Hacker says:

Blockchain technologies hold the promise of adding structure and accountability to AI algorithms and the quality and usefulness of the intelligence they produce.

Thought AI uses a 3-layer model of hybrid data, algorithm superstructures and blockchain to efficiently utilize “compute power.”

Decentralizing Computational Power

Currently, geneticists wanting to map genomes might need to outsource the task to centralized processing farms like Amazon’s data centers. Something that is slow and expensive.

Blockchain solutions in development include services like Tatau, a decentralized marketplace for GPU power. Tatau matches a computationally intensive project with connected platform members who will share their system resources. Tatau’s CEO and co-founder Andrew Fraser says:

Demand for AI computation is doubling every 3.5 months with costs increasing proportionately. Traditional suppliers, such as Amazon and Microsoft, use price as a lever to control usage – this restricts innovation.

Tatau has completed a $1.5 million round of seed funding and plans to launch in June 2019. Fraser adds:

We want to unleash AI innovation by dramatically reducing the cost of computing by harnessing the globally distributed GPUs used by crypto miners and making them available for compute by AI companies via our platform.

Another such solution, Golem, is also a decentralized power platform that calls itself the “Airbnb for Computers.” Golem raised $8.6 million in its ICO in 2016.

Blockchain could commoditize and tokenize raw computational processing power in order to deliver resources to other new technologies like AI. Wide-scale hardware development will also be needed to support the arriving age of AI, IoT, and blockchain.

Will blockchain power AI. What do you think?

Images courtesy of Shutterstock.

Canada Border Services Test Blockchain Technology to Streamline Processes

The Canada Border Services Agency (CBSA) is the latest entity to partner with a blockchain-based platform in a bid to make its systems more efficient.

Tracking goods is an intensive business, relying on many people and many documents. However, when you put these two components together in a high-stressed and fast-paced, human errors and misplaced documents could be the name of the game. Blockchain technology may be the solution to this.

According to Cision, the Canada Border Services Agency (CBSA) is testing out the technology as they partner with  TradeLens, a blockchain-based digital shipping platform. The latter was created by Maersk and IBM as a secure and efficient global trading solution.

Canada Finds a Blockchain Solution

If we’re talking about fast-paced, then the CBSA is definitely a good example. The agency processes about 58,600 commercial releases, 14,400 trucks, 240,000 mail items, and 127,400 courier shipments every day. The CBSA is investigating how blockchain can make processes more efficient, transparent, and streamlined.

The agency’s president, John Ossowski, elaborated:

This development is an example of the Government of Canada using innovative technology to easily and securely facilitate trade and engage in global trading ecosystems in a modern, productive manner. TradeLens could create a singular, trusted digital supply chain for all shipments entering Canada. The TradeLens pilot gives us an opportunity to not only find process efficiencies and gain analytical insights, but improve data providence, accuracy and targeting capabilities. The end result may be a faster and more reliable national supply chain, which could positively impact Canada’s economic output.

TradeLens will be able to provide stakeholders with real-time data and because records are permanent and immutable, it will also give the agency a reliable paper trail, albeit in digital form, for auditors and other authorities to follow. Mike White, who is the Head of TradeLens at Maersk, explained:

We look forward to working with the CBSA to pilot how the quality and timeliness of data in TradeLens can act as a catalyst for significant productivity gains and optimized financial cycles. Our goal is to play a leading role with all members of the World Customs Organization to help them attain faster processing of global trade data into a more effective, simplified structure and process that addresses their current challenges and future needs to improve the customer experience.

IBM Making Blockchain Waves

IBM seems to be making a name for themselves when it comes to developing blockchain-based solutions. Major U.S. retailer, Walmart, is just one of the well-known brands benefiting from an IBM partnership. TradeLens, which is built on the IBM Cloud, can reduce certain transit times by as much as 40%, which translates to savings of thousands of dollars. Some supply chain processes would also be streamlined from, for example, 10 steps to only five. The president of IBM Canada, Ayman Antoun, concluded:

We believe blockchain can play an integral role in digitizing and reinventing shipping for agencies like the Canada Border Services Agency, who are responsible for moving nearly 500,000 commercial transactions safely across Canadian borders daily. TradeLens provides a common approach to building a strong, secure and connected digital trade network that benefits all participants equally. Our work with Maersk and other enterprises in the shipping ecosystem has shown that blockchain can be used to transform a vital part of how global trade is conducted as members like the CBSA and Port of Montreal begin to interact more efficiently, securely sharing important transactions through real-time access to shipping data and shipping documents.

In addition to supply chain management, blockchain technology has also been used in online gaming and voting initiatives while the benefits of distributed ledger technology have recently been reported on by the Euro Banking Association (EBA).

Do you think that blockchain technology will make a positive impact at the CBSA? Will similar agencies also begin looking for blockchain-based solutions? Let us know in the comments below!

Images courtesy of Pixabay and Shutterstock.

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