Blockstream, Swiss IT Consulting Firm Sign MoU for Blockchain Integration Services

Global blockchain company Blockstream has partnered with а Swiss crypto consulting firm to launch a blockchain-driven settlement network, according to a press-release Dec. 17.

Inacta AG and Blockstream have reportedly recently signed a Memorandum of Understanding (MoU) to provide integration services for Liquid — a sidechain solution launched by Blockstream in October. Liquid reportedly combines key features of public and permissioned blockchains, allowing for the issuance and transfer of different crypto tokens.

As per inacta AG’s release, the company will focus on “helping financial institutions to leverage the benefits of the Liquid blockchain.” The Swiss firm will provide support for clients considering issuing their own assets via Liquid.

In addition to that, inacta has integrated Liquid with its own platform, Tokengate, that was initially developed to make the initial coin offering (ICO) market in Zug Valley compliant and transparent.

This week, Blockstream also announced that it has expanded its crypto satellite services. The company is now broadcasting the BTC blockchain to all of Earth’s major land masses, with the recently-added fifth satellite covering the Asia Pacific region.

Switzerland’s Zug Valley, dubbed Crypto Valley for hosting multiple industry-related startups, has recently been ranked the fastest-growing tech community in Europe.

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Blockchain and Elections: The Japanese, Swiss and American Experience

Free and fair elections are one of the pillars of healthy democracies. From the United States to Sierra Leone, advocates of blockchain believe that the technology can bring a new level of transparency, fairness and efficiency to the electoral process. In spite of the enthusiasm of the blockchain community — and tentative support from political bodies — attempts to implement the technology have enjoyed mixed success and have faced impassioned criticism.

Japan’s scientific hub trials blockchain

In late August, the Japanese city of Tsukuba trialed the use of blockchain technology in its  voting system. Tsukuba is a city already closely associated with scientific research, and the recent blockchain trial is the city’s latest move to explore new ways to innovate.

Voters were able to participate by using their My Number Card — a 12-digit ID number issued to all citizens of Japan, which was introduced in 2015.

A release published on the city’s official website stated that the voters were able to cast ballots for the implementation of different social programs. Participants were able to choose which of the 13 initiatives they felt were most worthy of financial support, varying from the development of equipment to improve cancer diagnosis to a program for sound navigation in cities and new equipment for outdoor activities.

As cited by Cointelegraph, the trial was conducted to establish whether blockchain’s democratic and transparent properties would lend themselves well to the minimization of foul play in the voting process.

Although initially skeptical about the potential of blockchain, Tsukuba’s mayor Tatsuo Ugarashi said:

“I had thought [blockchain] would involve more complicated procedures, but I found that it’s minimal and easy.”

Although Japan’s most recent trial with blockchain appears to have gone smoothly, not all government efforts to capitalize on the technology’s potential have enjoyed the same reception.

Sierra Leone: The blockchain election that wasn’t

On March 7, 2018, it was reported that Sierra Leone had become the first nation to implement blockchain technology in the electoral process.

Agora Technologies, a Swiss company, published a series of tweets stating that it had overseen Sierra Leone’s first blockchain-based election:

The reality turned out to be a little different. In fact, Agora had actually been observing the voting process and running an entirely separate blockchain trial alongside the election to illustrate how future elections could be carried out using the technology.

The National Electoral Commission of Sierra Leone (NEC) sprang into action and published its own statement via twitter, denying that there had been any use of blockchain technology during the election:

Agora CEO, Leo Gammar, was forced to rectify Agora’s seemingly misleadingly statements. The fact that the group were accredited to trial their own blockchain system alongside the election indicates that, in spite of the media frenzy, governmental bodies are opening the door to new ways of of making the electoral process more efficient — and blockchain is one of them.

In spite of the seemingly rosy relations with Sierra Leone’s NEC, reception of the company’s involvement in the election has been mixed. Morris Marah, founder of the Freetown-based Sensi Tech Hub, expressed his concerns to RFI:

“What these guys [Agora] are saying is great. But they haven’t really tested it because they basically took a paper card of the results and put it on their system. That’s what everybody else is doing, that’s not new.”

Switzerland’s ‘Crypto Valley’ trials blockchain voting

In recent years, the Swiss town of Zug has become famous less for its mountain views and quaint Swiss architecture, but more for its association with low tax rates and cryptocurrency. The recent influx of crypto groups establishing bases in the central canton has led to it being dubbed “Crypto Valley.”

Keen to establish itself as a blockchain capital, the municipality allows payment in Bitcoin for services and recently completed a successful trial of blockchain voting.

The small-scale vote involved only 72 out of the 240 citizens with access to the online voting system, who participated in the non-binding trial vote between June 25 and July 1. The test questionnaire asked citizens to vote on both minor municipal matters as well as if they think a blockchain-based eID system should be used for referendum votes in the future. The Swiss News Agency writes that three people indicated that it was not easy to vote digitally, 22 responded that they would use blockchain for tax returns or surveys, 19 responded they would pay parking fees with their digital ID, and three said they would use it for borrowing library books. Communications Chief for Zug, Dieter Miller, called the premier a success.

West Virginia trials blockchain voting, but clouds threaten its blue sky thinking

West Virginia is set to allow citizens serving in the armed services — along with other citizens living abroad — to vote via smartphone with an app called Voatz in November 2018. This will be the first instance of voting on a smartphone in a federal election.

West Virginia officials posted a PDF outlining the process:

“All that is needed to cast their vote is a compatible Apple or Android mobile device and approved, validated State or Federal ID.”

The idea for the app first surfaced at a hacking summit hosted by the South by Southwest technology festival in Texas.

West Virginia Secretary of State Mac Warner was impressed with the app’s system of biometric authentication and the elements of blockchain-based security. Both Warner and the Boston-based startup that created Voatz claim the system is secure.

The state successfully carried out a pilot in May.

The recent fanfare over blockchain technology in voting procedures is being played out against a backdrop of scandal in relatively recent electoral history. The year 2000 saw reports of a miscount and, in 2016, several individuals were alleged to have cast ballots in more than one state.

A Brookings Institute report stated that the National Conference of State Legislatures has put forward a number of considerations needing to be addressed for a wider-scale implementation of electronic voting — such as security, voter coercion, authentication and the inconvenience for local officials. Although positive about the potential for blockchain technology to transform the voting process, the report concluded that blockchain needs to be comprehensively tested to take into account the cost and scale of wider implementation.

Matt Blaze, a cryptography and security researcher at the University of Pennsylvania, voiced criticism to the report, stating that blockchain introduces weaknesses into the system. Blaze also said that securing the voting system “is more easily, simply, and securely done with other approaches.”

Marian K. Schneider, president of Verified Voting, also blasted the Voatz app, stating that it is less of a blockchain-based app and more of a standard mobile app with a blockchain attached. The key concern is that, although the app encrypts the voter’s data, the current system cannot guarantee the voter’s phone and service network will be free from vulnerabilities. With regard to the protection of sensitive information as it travels over the internet from the app, Schneider said:

“I think they’ve made a lot of claims that really don’t justify any increased confidence in what they are doing versus any other internet voting system.”

Voatz claims the criticism leveled against it is “false propaganda” and that “most comments in the thread are incorrect or misrepresentations.”

However, criticism of the app’s capabilities are not entirely unfounded. A trial in Utah resulted in the startup being unable to support a high concentration of downloads shortly before polls opened. Voatz, however, remained upbeat and described the incident as a “valuable learning experience.”

Critics remain unimpressed

While most of the criticism for online and mobile voting has been targeted at specific flaws in programs, there are several prominent critics who disagree with the notion entirely.

Bruce Schneier, a cryptographer, computer scientist and author of several books on cryptography and computer security, published a blog in opposition to the use of blockchain in elections.

“The only way to reliably protect elections from both malice and accident is to use something that is not hackable or unreliable at scale; the best way to do that is to back up as much of the system as possible with paper.”

Schneier believes that past efforts to automate the voting system bear a message about the potential dangers of such a transformation. In 2007, the states of California and Ohio carried out comprehensive audits of their electronic voting machines. The outcome was far from positive. The review found that vulnerabilities were endemic throughout almost all components:

“Researchers were able to undetectably alter vote tallies, erase audit logs, and load malware onto the systems. Some of their attacks could be implemented by a single individual with no greater access than a normal poll worker; others could be done remotely.”

This is not the only instance where electronic voting machines have been compromised. In 2017, the Defcon hackers’ conference collected 25 pieces of equipment and challenged the attendees to compromise them. By the time the weekend was over, the participants had loaded malicious software onto devices, anonymously compromised vote counts and caused the devices to crash. “These were bored hackers,” writes Schneier, “with no experience with voting machines, playing around between parties one weekend.”

With regard to the best solution, Schneier wrote:

“Security researchers agree that the gold standard is a voter-verified paper ballot. The easiest (and cheapest) way to achieve this is through optical-scan voting. Voters mark paper ballots by hand; they are fed into a machine and counted automatically. That paper ballot is saved, and serves as a final, true record in a recount in case of problems. Touch-screen machines that print a paper ballot to drop in a ballot box can also work for voters with disabilities, as long as the ballot can be easily read and verified by the voter.”

The most scathing criticism for the concept comes from the Center for Democracy and Technology’s Joseph Lorenzo Hall, who calls the whole thing a “horrific idea”:

“It’s internet voting on people’s horribly secured devices, over our horrible networks, to servers that are very difficult to secure without a physical paper record of the vote.”

However, this barrage of criticism does not seem to have deterred governments from seeking to implement the technology in the near future. By now, we can talk only about the municipal, not national experiments, but given they were held in the U.S., Japan and Switzerland, it wouldn’t be an exaggeration to acknowledge a certain interest in DLT from the world’s leading democracies.

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Swiss Crypto Mining Firm Faces Enforcement Action for Potentially Unauthorized ICO

The Swiss Financial Market Supervisory Authority (FINMA) has launched enforcement proceedings against crypto mining firm Envion AG over its potentially unauthorized token sale, according to a FINMA press release today, July 26.

Swiss-based Envion AG is an off-grid mining company that claims to use decentralized, clean energy to power its mobile mining units, and completed its month-long Initial Coin Offering (ICO) for the EVN token in mid-January this year.

FINMA’s investigation into the case to date suggests that in the context of its ICO, Envion AG accepted approximately 100 million francs (around $100.01 million at the time) from over 30,000 investors in return for issuing EVN tokens “in a bond-like form.”

The regulator clarifies that the proceedings are focused on “possible breaches of banking law resulting from the potentially unauthorized acceptance of public deposits” during the token sale.

While FINMA declines to comment any further on the case until it concludes its proceedings, the Swiss context provides a robust and differentiated framework for ICOs, the most recent version of which was released by FINMA in mid-February of this year –– a month after the conclusion of Envion’s fundraising.

Earlier guidance for domestic ICOs had been published by the regulator in September 2017, which set the precedent that token sale conduct would be considered “case-by-case” –– but notably already indicated that an ICO “generally necessitates” a banking license for accepting public deposits.

Earlier this month, Switzerland was ranked second “most favorable” country worldwide for ICOs, with the U.S. sealing the top spot and Singapore third. The research was based on publicly available data for the number of ICO projects per country which made it onto the ‘Top 100 ICOs’ global list by funds raised.

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FINMA Seeks to Stem Exodus of Swiss Cryptocurrency Firms


The Swiss Financial Market Supervisory Authority (FINMA) has met with representatives of the country’s banking sector in the hopes of stemming a nascent exodus among cryptocurrency companies from Switzerland. The companies’ departures have been attributed to two Swiss banks’ decisions to no longer provide financial services to businesses dealing with virtual currencies.

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FINMA Acts to Prevent Crypto Exodus

FINMA Seeks to Stem Exodus of Swiss Cryptocurrency FirmsSwitzerland’s financial regulators are taking steps intended to stem the perceived exodus of cryptocurrency companies from the nation, recently holding discussions with the Swiss National Bank and bankers’ association on how to increase the accessibility of financial services to cryptocurrency ventures.

As it stands, many analysts have predicted that many companies operating with virtual currencies will continue to leave Switzerland in favor of jurisdictions whose financial institutions are more amenable to crypto companies, including Liechtenstein, Gibraltar and the Cayman Islands.

Officials Seek to Preserve Swiss Crypto Industry

Despite cryptocurrency-related activities comprising a small portion of Switzerland’s financial industries, Swiss officials are viewing the country’s virtual currency as a valuable asset that should be preserved.

The finance director of Zug – a Swiss canton has been dubbed “Crypto Valley” following the establishment of between 200 and 300 virtual currency companies in the jurisdiction during recent years – Heinz Taennler, has warned that the crypto exodus may continue should the government fail to take action to guarantee the provision of financial services firms operating with virtual currencies.

“All their banking relationships are going to Liechtenstein,” Mr. Taennler stated. “There are hundreds of jobs that have been created, and every job is important.”

Virtual Currency Firms Appeal to Central Bank

According to Thomas Moser, an alternate member of the governing board of the Swiss National Bank, several cryptocurrency companies appealed to the country’s central bank regarding concerns pertaining to the provision of financial services to the sector.

Mr. Moser stated that “They raised concerns about problems with opening bank accounts, which was a worry for them, and asked for help. I said this was not something the [Swiss National Bank] dealt with, but they should speak with FINMA.”

“We would not want to close the door on the opportunities that such innovation (cryptocurrencies) might bring,” Moser added.

Do you think that Swiss crypto firms will continue to seek alternative jurisdictions? Join the discussion in the comments section below!

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