CoinGeek Conversations

The European Union takes an active interest in Bitcoin and blockchain, with multiple initiatives to study, encourage and, potentially, to regulate the sector. 

At the heart of this work is the European Commission’s Digital Innovation and Blockchain Unit, whose head is Pēteris Zilgalvis, a political scientist and lawyer and, quite recently, a visiting fellow at St Antony’s College, Oxford where he wrote about fintech and blockchain.

Pēteris is keen to stress that the Commission is not intent on regulating unless there is a clear reason to do so. The overall approach, he says, is that “first of all, we don't rush in”. The subject of Bitcoin and blockchain have been followed by officials within the European Commission for at least seven years, so “if it was ever true that 'if it moves, the European Commission regulates it', it hasn't.”

So, “while ...we support investment and infrastructure, for instance, in artificial intelligence, blockchain, IOT, 5G, we're not going to have a regulation on blockchain - the same way we don't have a regulation on transistors or on servers or on other items of technology.” 

The focus will be at a higher level, in the applications working on blockchain, such as tokenization products. But again, the emphasis will be on waiting to be sure of what, if anything, is needed. In relation to smart contracts, for instance, “the question is still very open. Does anything need to be said about it legally? But we're asking, especially in the cases of small cross-border use across the 27 countries of the EU for instance, if there are problems that perhaps need to be addressed to ensure you don't have to have a different type of smart contract or a different registration in many different jurisdictions.”

A more pro-active EU approach is seen in the European Blockchain Services Infrastructure, an initiative through which the EU member states are setting up their own blockchain network with “nodes at the country level, probably ministry level, eventually municipality and regional level. So hundreds and maybe even thousands of nodes.” 

With more than 30 nodes in the network initially, the project will be in deployment this year, starting with projects in a number of areas of interest to public service providers: “regtech, ...diploma certification and also self sovereign identity and audit document authentication and publication.”

Another approach involves money from the European Investment Fund to back blockchain startups. This part of the fund is now worth 100m Euros, but will rise to 400m soon. It’s already backing Helios, a decentralised platform for building social media apps, for instance. 

Pēteris stresses that it won’t be him or other EU officials deciding which startups to support. Rather, the money “goes out to venture capitalists who make the choices with no interference from us”. He draws parallels with SBIR in the United States, the Small Business Innovation Research programme which has been funding research and development in small companies in the States since 1982. 

Being blockchain-agnostic, the EU is not able to back BSV specifically, of course. But what about, at least, the idea that a single blockchain, in principle, would deliver the best results for the ecosystem as a whole? “I think almost everyone agrees, whichever analysis you read, that there will be less blockchains than there are now or less blockchain pr

If Bitcoin SV succeeds in the way its developers and entrepreneurs hope, it will be the biggest change in technology infrastructure since the mass adoption of the Internet more than 20 years ago. But will ordinary users be open or resistant to that kind of change?

Lee Rainie of the Pew Research Centre studies public attitudes to technology and has been responsible for more than 650 reports based on Pew surveys of people's online and Internet usage. So how does he see the prospects for Bitcoin and blockchain entering the mainstream? 

“We live in an environment where people's trust in each other and in institutions is declining, particularly in the developed world,” Rainie says, “and so blockchain has been held out as a really interesting alternative way to rebuild trust, using technology as the centrepiece of mediating interactions between people ...Some of the most interesting applications of blockchain are not about cryptocurrency, they're about trusted systems of documentation and smart contracts.”

If that promise could attract users by mitigating their fears about trust, Rainie does not go so far as to suggest that technology could solve all the problems: “this can't just be done by technology. You can't flip a switch and all of a sudden trust is restored and systems operate beautifully. You need human actors to design those systems, monitor those systems, explain those systems.”

In terms of mass adoption, Rainie says that it may not be a question of waiting for the ‘killer app’ that will act as a tipping point for wide acceptance of the technology: “it possibly won't be sort of a big bang moment where all of a sudden a critical mass of people are using it. And then the rest of the world says, 'oh, we've got to get on board'. It might be more evolutionary.”

It could be that adoption will first happen at an industrial level - more ‘behind the scenes’ - in sectors like supply chain and the financial markets. 

Then, unlike the Internet, where users are aware of the technology, people may not even realise that they’re using blockchain: “there will be ways in which people's finances absolutely are underpinned by blockchain technology. There are ways in which their interactions with government agencies, when they want to get a national identity card for their newborn child - now, that's going to be probably a blockchain system. But if you ask them in a survey, 'are you a blockchain user?' they might not say yes.” 

If blockchain isn’t adopted by a ‘pull’ factor of attraction, it could be nudged forward by reservations about the tech giants, and the whole ‘surveillance capitalism’ model of targeted advertising and data collection. 

Pew’s latest research didn’t poll the public, but instead was one of a series of studies that Rainie has ordered as Director of Internet and Technology Research, soliciting views about the future of technology from almost 700 experts, whom the report describes at “'technology innovators, developers, business and policy leaders, researchers and activists”. The study found that the experts “very explicitly invoked how blockchain can be a restorative to people having confidence that their data were treated well and that their interactions with other people were being chronicled and mediated in a responsible way, that there were fewer opportunities for bad actors to step into the middle of the process.”

In that respect then, Pew is reporting an optimistic view of the prospects for blockchain among a wide range of people who should be well placed to predict the future. On the other hand, it seems the experts themselves aren’t too confident about their own powers of prediction. Rainie investigated that in a previous study: “one of the things that we asked in years gone by was whether these experts

There’s been plenty of talk about how there should be blockchain solutions to the Covid crisis. Now, finally, there’s action. The Bayesian Group, a Toronto-based AI and blockchain-oriented markets analyst, is launching a token on the Bitcoin SV blockchain that will allow the monitoring of individuals’ self-reported health updates and offer ‘heat maps’ of localised virus outbreaks.

Bayesian’s Eric Bernhard said that users would be invited to update their status daily with a simple message about how they were feeling which could be delivered over many different communications channels, including social media and texts. 

Then if “you're sitting at home and wondering whether or not you should go to the grocery store,” Bernhard explained, “you go check out the Covid token heat map and you can zoom into your area and know that the 3000 people around you have said, ‘I'm feeling OK’.”

The idea is to make a forward-looking, preventative model - as opposed to Internet tracing apps which are retrospective, in that they start with someone who already has the virus and go back into their history to see who they have been in contact with. 

By putting individuals’ results on the blockchain, the Bayesian app will solve many of the problems around data ownership and privacy that limit the utility of other models. By working with a decentralized system, Bernhard says, “that means that nobody owns the data. There's no ownership”. And that allows that results to be shared, to the benefit of the whole population, as opposed to apps controlled by, say, the NHS or John Hopkins University, when “no one gets access to it except the people that are allowed access”.

To make the app work globally, Bayesian is partnering with a wide range of organisations who will receive users’ health update messages. That could be via Twitter, Slack or through an email provider. Users are just asked to respond to a very simple question like “how are you feeling today?”. And to overcome language barriers, their answer can be given on a numeric scale. In developing countries, users can simply text their response on a feature phone. 

Initially, Bayesian will be subsidising the project by paying its blockchain transaction fees: “we want to contribute to the ecosystem of Covid data, because we think it’s beneficial.” Eventually, there might be income from corporations who could use the data to help with business decisions such as when to open stores, for instance. 

The Covid project hinges on the willingness of ordinary people to spend time sending it data. However simple it’s made, will people choose to participate? “Our challenge,” Bernhard says, ”is to communicate the benefits to people [by saying] ‘take five seconds while you're waiting. You have extra time because you're not commuting or you're on your walk ...just take five seconds, go into the same places that you already go and just make a quick status update. And that can help your entire community and protect your family, because the more information you know about the areas around you, the better it is for your family.”

It’s been a busy couple of months for the gaming platform company Kronoverse. They received fresh investments from Persimmon Hill Ltd as well as a third investment from Calvin Ayre, founder of Ayre Group and CoinGeek. They are also set to announce the open beta date for their skill-based fighting game CryptoFights. 

David Case, Kronoverse’s Chief Architect, said that their platform will enable developers to build on the Bitcoin SV blockchain rather than the traditional networking layer of cloud servers. For gamers, it’s a new era of digital ownership of in-game assets and the chance to profit from trading items through a marketplace.  

After two and a half years of research and development, building their flagship game CryptoFights, Kronoverse is fully utilising BSV’s software development capabilities: “I fell in love with blockchain and the whole concept of having these immutable ledgers,” said David. “That brings so much value to competitive gaming because you’re not relying on an authority of some company’s database to tell you what happens.” 

But why BSV over the other blockchains? It comes down to scalability. As with many developers, Kronoverse’s journey started on Ethereum. But the Ethereum main chain was “very slow and very expensive” and David found its Proof of Authority system (an algorithm that increases the speed at which transactions are validated) was unsatisfactory compared to the principle of Proof of Work which governs the BSV blockchain: “as you start building these other things that ride on top of it, well then you end up having to recreate the blockchain again.” 

“In Ethereum you have this concept of ‘every validator needs to process every transaction in the exact same order’ - which means that from a development standpoint you’re always single threaded.”  

It was Bitcoin SV’s UTXO model which was the clincher. UTXOs (unspent transaction outputs) are processed continuously and are responsible for beginning and ending each transaction. “Rather than being single threaded you can be as multithreaded as there are different UTXOs in the database, so you can process billions of things at the same time” said David. That eliminates the speed limitations they experienced on other blockchains. 

As well as the fixed protocol, “the main killer feature on BSV that put it over the top, was opening up the opportune storage space. So, instead of having 200 bytes of data in one transaction, we can now put 100,000 bytes of data” allowing Kronoverse to put real, useful information on chain. In practical terms, that means each move a player takes in CryptoFights is permanently stored, publicly, on the blockchain. 

The source code to the game is also publicly available on the blockchain, which is revolutionary in eliminating in-game cheating. For gamers who purchase in-game items, the Kronoverse platform will allow true ownership of their gaming assets. In traditional centralized gaming, you never actually own the items that you purchase. For example, if there is a server issue or a gamer’s account is compromised or suspended, players risk losing their items. On the blockchain, purchased items will remain in a player’s control, even if they’re no longer playing a specific game, allowing them to trade or sell the items for profit. Kronoverse’s marketplace provides a space for trading gaming items but players can choose whether to use it or trade elsewhere. 

Understanding how to work on blockchain can seem like a different language for game developers, David said. But the Kronoverse platform unlocks the game developer experience on BSV. The platform provides developers with the tools to build their games on the blockchain by allowing them to use simple JavaScript without having to worry about blockchain technicalities.

In the first of two CoinGeek Conversations about gaming and Bitcoin SV, we talk to Gu Lu, the founder of Satoplay. Next week, we hear about Kronoverse from the company’s Chief Architect, David Case. 

Gu Lu is an entrepreneur with an impressive track record in the gaming industry, having worked as a game developer for more than a decade, for the likes of UBISoft, the French game publisher, and CCP Games, an Icelandic company. 

Since 2018, he’s been immersing himself in blockchain technology, and then, as he says “I found BSV, so I’m here. That’s it!”

The idea behind his start-up, SatoPlay, named after Satoshi Nakamoto of course, is to develop games that are different from the existing betting and gambling businesses that are using blockchain technologies. 

“We want something more widely adopted,” he says, “more casual, more child-friendly. That’s why we don’t do betting or gambling. SatoPlay should be game-centric, not money-centric.”

By making SatoPlay a platform, rather than releasing individual games, Gu Lu says he’ll be able to provide continuity for players, because they’ll be able to maintain their gaming records and resources on the platform even as particular games go in and out of popularity. 

Having initially experimented with EOS, Gu Lu is impressed by his BSV experience. Already transaction fees have fallen: “when we first used BSV transactions to save players’ game data on chain a few months ago, it cost us 1000 Satoshis per transaction. Now, with Merchant API, the cost is reduced to 50.”

And he has high hopes for the Metanet as “a natural for structuring an expressive and flexible layout of a lot of game data.”

As BSV develops, so will SatoPlay, with an ambition, eventually, to be creating open worlds as part of a “large scale, in-game virtual economy”. For that, Gu Lu will be drawing on some of his experience in the more conventional parts of the games industry, where he was a 3D game programmer and “happened to know some VR traits as well”. 

It’s still early days for SatoPlay, but Gu Lu already has his own in-house game tester - in the form of his nine-year old son. His feedback? “The games are enjoyable, but he doesn’t know how to use BSV.” And he already wants to create his own game for SatoPlay. 

So you want to take out a Netflix subscription, top up your phone’s pay-as-you-go credit, buy music or give someone Uber vouchers? Now you can open up your Centbee wallet and purchase all those products and more with BSV.

It’s another step forward for the South African business co-founded by Lorien Gamaroff. Lorien explained that rather than trying to convince individual retailers to accept BSV, they realised they could “become a service provider ourselves ...if we actually bundled value added services directly into the wallet”.

As a result, when you click on the Menu button on the Centbee home screen, the list that opens, containing all the usual wallet options like Send, Receive, and Transactions, also includes Buy. Pressing that reveals a list of mainstream services that you can spend money with through the wallet app. 

“So now what we've got,” says Lorien,”is a reason for somebody to have Bitcoin - and not just for speculation”.

It’s a service that will have real practical value in Africa, where many people buy utilities with prepaid credit: “when you run out [of electricity], your meter will switch off and you'll have to go and purchase more electricity to top up”. That means finding a vendor, probably someone in a store or at a particular location, where you pay, and receive a pin code to enter on your meter at home. Of course, it could be a considerable journey, and stores aren’t always open. 

Now, instead, you can choose a certain value of electricity to buy through your Centbee wallet, and the wallet will return the pin code for you to enter on the meter. 

The secret to the range and depth of the businesses with which Centbee is integrated lies in the establishing of connections with service providers who already deal with multiple companies. “We didn't want to go and have to convince all the utilities across the country to sell us electricity for Bitcoin, or the mobile telcos, or all the other digital service providers like Google and Netflix. So what we have done is we've found partners that already have those integrations into those service providers. And we've got the relationship with those middlemen service providers.”

Whilst Centbee has deep roots in Africa, for Lorien, the experience they are gaining there is just the first stage in a bigger plan: “We don't see ourselves just as a South and Southern African company. We do see ourselves as a global company. And now that we've worked out these models, we've managed to develop the technology and we also figured out what sorts of relationships are required to be able to roll these services out, we're certainly going to now look to expand into many other countries”

Bitcoin’s peer-to-peer node design solves security problems, Dr Craig Wright explained. Even if more than half the nodes are compromised - which would be hard -, the network can still be recovered: “if there's a single uncompromised node, it provides a legal evidence trail. So when people say ‘a 51 percent attack’, it's actually more resilient than even that. If you have one percent of the network providing actual valid information and not the attack, you now have a legally verifiable evidence trail that can be rebuilt.”

In a wide-ranging interview in front of an audience of developers and entrepreneurs at the Cambrian SV event in Lisbon in February, Dr Wright, Chief Scientist of the London blockchain and Bitcoin research company nChain, was talking about the fundamentals of Bitcoin - his creation as Satoshi Nakamoto, back in 2009. He was in conversation with Ryan X. Charles, the founder of Money Button, who wanted to learn more about Dr Wright’s thinking when he created Bitcoin.

Dr Wright said that unlike security attacks on Windows or Linux, where the discovery of a single vulnerability can cause widespread problems, the development of a network of mining farms for Bitcoin SV means that an attempted attack would be the equivalent of “having to attack multiple companies with multiple different security policies, multiple implementations. And that’s far more difficult”.

And as the BSV ecosystem develops, its distributed nodes will become increasingly differentiated, making it even more secure: “in the future, I see the one [BSV] protocol, but I see individual mining farms will start developing their own software. Some of this already happens and it will be a more effective and efficient version for them ...and that will make it more and more complex for anyone attempting to attack the network.”

What’s more, the incentive design behind the node system means that its size self-regulates as individual nodes join or leave: “if you have, say, 100 distributed global nodes in big companies and data centres ...imagine what happens if something happens to one of the nodes - they're suddenly taken out in a disaster or hacker attack or something like this ...The profitability remains the same overall. So those other remaining nodes earn more. And this is the wonder of economics. So people see profit and once profit is distributed and noticed and seen, then other people will go, ‘oh, it's time to turn on my node’ ...And the network will self-heal because people will will see the money and see the suddenly increased profit margin from mining this area and will have idle machines that they turn on.”

After discussing the security design of Bitcoin, Dr Wright went on to explain how, in contrast, private blockchains fall far short of what he had built with Bitcoin: “a private blockchain is an anathema. It's anti security ...It just means you've massively misunderstood the entire technology and have just used jargon to make up some junk because the entire security of the system is [based on] publishing widely.”

Blockchain technology is moving from the periphery to the centre of the financial world. As a former Executive Director of the IMF and an Alternate Member of the Governing Board of the Swiss National Bank, Thomas Moser is somewhere near that centre. He also confessed to finding blockchain technologies “fascinating”, and has done for a long time. 

Back in 2013, he wanted to buy some Bitcoin, not for speculation, but “because I wanted to go buy a coffee”. He checked with the compliance department in his bank but was told he could only buy Bitcoin if he held it for at least six months - to avoid falling foul of regulations that stop bankers speculating.

So Moser passed (“which was probably a mistake”) but continued to follow Bitcoin and blockchain even though it seemed to have little to do with the work of central banks. 

Today, the two sectors are starting to converge. Moser offers insight into a groundbreaking initiative in Switzerland. It’s called SDX (Swiss Digital Exchange) and is a system which will put “the entire process from trading, processing, settlement and then also custody services, all on a blockchain.” SDX is a project run by SIX, a Swiss public-private partnership which provides financial market infrastructure in the country, including to the stock exchange. 

Moser is a realist about blockchain technologies and says that having looked at experiments by the Bank of Canada and the monetary authority in Singapore, he concluded that they were “really not more efficient compared with the current system”. That’s because “with modern infrastructure, payments between banks at least and within a single country are extremely efficient.” But he has high hopes for projects like SDX, particularly if they can capitalise on blockchain’s strengths, one of which, he notes, is its ability to make cross-border payments.

When it comes to Bitcoin SV, Moser says the Swiss National Bank is “basically blockchain agnostic”. But the bank does want to work with existing ‘private sector’ blockchains rather than creating its own. 

In the long-run, Bitcoin and central banks may find themselves in competition, rather than working together. Moser asks “what preserves the value of the money that you use better? Is it a central bank with its monetary policy or is it basically code - that you have something encoded that just provides you a very stable growth of the money supply?” 

It’s too early to say how that will play out, Moser says. But he doesn’t believe future rivalry between central banks and blockchain technology is likely to be around the presence or absence of regulation: “sometimes I have younger people come to me and say ‘the state comes now and regulates and kills everything’. And I usually say ‘the funny thing is, it's the companies, it's the customers that ask for regulation they ask for protection. They want to have legal certainty.’ And what's difficult is just to figure out how this new technology fits with the old regulation and how we can actually integrate two things.”

Moser has been in discussion with Craig Wright: “he came to the Swiss National Bank about a year ago ...and I asked him I said 'as a central bank, if I issue a digital currency, I will probably do it in a centralised way. Why would I need the blockchain?' And his answer to me was, amongst different things he said, transparency. You know, you get full transparency in the blockchain. So I think these are all questions that will clearly occupy us in the future."

What’s wrong with Silicon Valley? Dr Katy Cook, a psychologist, interviewed more than 200 tech industry workers, to provide a kind of psychoanalysis of its culture. The results are not encouraging, although she stresses that the people themselves aren’t the problem: “no-one I met was evil ...Every one of them was a nice person”.

Cook is interested in the values and motives of the big tech companies, where, she says, there’s been a profound shift. The original, somewhat hippyish values - things like sharing, freedom and the open source source movement - have been replaced by a new set centred on profits, shareholder value and market dominance. That change “represents what we might expect from any person or group in a position of unchecked power”.

She describes it as a “hyper-capitalist system ...this kind of extractive advertising-based world.” In her book, The Psychology of Silicon Valley, Cook diagnoses the root of the problem as a lack of emotional intelligence within some of these companies. As a consultant, it’s something she is in the business of trying to help companies tackle.

But Cook’s thesis has implications for all of us as she also claims that the products of the big tech companies reflect their values. Brilliant minds are at work but they are drawn from a narrow range of backgrounds. The lack of diversity in the Valley leads to the extraordinary concentration of resources on ‘problems’ that would hardly be recognised beyond its narrow  wealthy, mostly-male demographics. 

Cook has some fun with this, describing the startup that created a service which sent a car to your car at home to fill it with petrol, to eliminate the ‘pain point’ of having to visit a garage. Or there’s the expensive high tech Juicero kitchen gadget which empties an expensive, specially-produced bag of fruit juice into a glass - when it turns out that you can easily do that yourself by squeezing the bag, with no help needed from a machine.

When it comes to the growing Bitcoin SV ecosystem, Cook suggests that in terms of values, there are lessons to be learnt from the Internet and Silicon Valley experience: “you have the advantage of having witnessed the last 20 years - and the pitfalls of not behaving in a way that's legally responsible [or is] ethically dubious. I think you have a good model for how not to act too which is just as important”. 

Indeed, some painful examples of tech companies that found themselves in trouble could act as powerful warnings: “no-one wants to be on the cover of Time magazine looking like a battered man like Mark Zuckerberg”.

On the other hand, like it or not, millions of people have been forced to rely on the tech companies in a way they never have before during the pandemic lockdowns. Cook notes that Silicon Valley “hasn't had a lot of bad PR” in the past few months. 

But users have had a chance to test tech services beyond what they probably ever wanted: ”I think the fact that we're spending so much time on technology makes a lot of people cognizant of the fact that they would rather spend time with people in real life and would rather go out to a restaurant or have an in-person conversation. It doesn't feel emotionally good to be in front of a screen as much as we are right now.”

You can download a free ebook version of Katy Cook’s ‘The Psychology of Silicon Valley’ from her website and find a link to order a print copy on Amazon. 

Jackson Laskey is a piano-playing, poker-playing New Yorker who runs Unbounded Capital, a venture capital and hedge fund that invests in Bitcoin SV.

All three of his areas of expertise contribute to each other. Winning at poker has provided the income he needs to live in New York and be a jazz pianist - which doesn’t pay well. And being able to size up his opponents round the card table has contributed to his venture capital work. “Certainly developing a good poker face has been a useful skill in dealing with entrepreneurs,” he admits. 

Before moving his VC fund to BSV exclusively, his instincts about people were useful: “getting bad feelings from a lot of entrepreneurs we were dealing with I think saved us a lot of money.”

Now in the BSV world, he says that kind of intuition “hasn't been a skill I've needed as much”. He sees BSV as associated with “a tendency towards honesty”. But it’s not a get-rich-quick scheme: “people say Bitcoin SV is an intelligence test. I think that's true. But I also think it's a values test because you're not signing up for an easy way to make money.”

There’s another way that poker has helped his business life: it provides a kind of controlled experiment in risk-management. Jackson’s critique of investors in the wider crypto sector, beyond BSV, is that they’re been results-oriented when they should be process-oriented. And that’s another thing that poker can teach you: 

“The pacing is fast enough to teach good lessons where in the investing world, sometimes, you can wait a decade for a bet to pan out. Yet it's slow enough that it forces one to be extremely diligent about being process-oriented and not results-oriented. And I think identifying results-orientedness in the crypto space was a big part of how we got to the point where we're at. It was very obvious to us as poker players that the strategies being employed couldn't be correct.”

By creating a combined venture capital and hedge fund, Jackson believes he can mitigate some of the structural weaknesses of traditional VC funds, where there’s pressure to invest in startups as quickly as possible, whatever their quality, because the business model is all about raising money and deploying it. By adding a hedge fund where investors’ money can also be used, “we're not pressured or incentivized to try and deploy as much as possible into businesses we've selected in the early stages ...we always have something to do with our capital.”

VC funds are often viewed with suspicion in BSV startups, partly because they’re associated with tech giants in Silicon Valley whose model is very different. Some BSV entrepreneurs believe they are creating businesses that will generate money from day one and that VC money won’t be needed. 

Jackson acknowledges many of the criticisms of the traditional VC industry but believes Unbounded Capital still has plenty to offer: “I do think there's a really huge opportunity for businesses in this space and those businesses will need funding in some way - or at least many of them will.”