The Chain: BMW to use blockchain to source ethical cobalt; more hacks
All the latest from the blockchain and crypto 'space' in Asia Times' new daily column
Resisting the chain gang
An early mainstream adopter of blockchain has been the motor industry, and BMW has just announced it is turning to the technology to help source ethical cobalt.
Prices for this finite but increasingly in-demand mineral, which is an essential component in cellphone, laptop and electric vehicle batteries, have surged recently. And sourcing is problematic, as most of the world’s supply comes from the war-torn Democratic Republic of Congo, where mining is often done by hand and the use of child labor is common.
The German carmaker is working with UK start-up Circulor – which, rather wonderfully, claims to inhabit “the intersection of artificial intelligence and blockchain” – on a pilot project that will barcode “clean” cobalt to then track it using blockchain.
BMW is working, too, with China-based VeChain and Oxford University on another blockchain project that will also authenticate goods traveling along its supply chains. Porsche, Mercedes and VW have all recently announced blockchain initiatives, while the Toyota Research Institute has, since 2017, been working with MIT on blockchain-based research to develop driverless vehicles.
Toyota believes the decentralised nature of blockchain can help solve cybersecurity concerns while also providing data from “hundreds of billions” of driver-miles to make autonomous cars safe. What could possibly go wrong?
Is blockchain ready?
Another supposed key early mainstream blockchain adopter is the banking industry. However Swift, the organization that facilities the majority of the world’s international money transfers, has just said blockchain technology is not yet ready to process the billions of dollars that its moves between banks every day.
After announcing the conclusion of a “proof of concept” blockchain project, Swift said “further progress is needed… before [blockchain] will be ready to support production-grade applications in large-scale, mission-critical global infrastructures.”
Swift tested blockchain by attempting to reconcile live international payments between 28 banks. While saying the project “went extremely well,” it concluded that there remain “operational challenges” before blockchain technology can be used across all of its 11,000 members-network.
Swift is certainly under pressure here as virtual currencies are claiming they can slash remittance transfer times and costs. Yet the caution is also understandable. The 2016 heist that saw US$100 million spirited between the Federal Reserve Bank of New York, the Bangladesh Bank and the Manila-based Rizal Commercial Banking Corp, before the money somehow disappeared into the ether that is the Philippine casino industry, seems to have at, its core, a hack of the SWIFT payment system.
Hacks, hacks and more hacks
And so from hacking to, well, more hacking…
The price of cryptos continued to tumble yesterday. Bitcoins were trading at more than US$11,000 on Tuesday night (UTC) but by Friday morning were sliding towards US$8,000 and the initial cause was said to be a US Securities and Exchange Commission (SEC) announcement that all crypto-currency trading platforms will have to be registered and regulated. But another reason emerged yesterday.
The rapidly-growing crypto trading exchange Binance confirmed rumors that it was the victim of a sophisticated hack attempt that attempted to both manipulate the market and steal coins. Unbeknown to Binance, hackers had successfully “phished” for a number of user logins back in January, before falling silent.
The hackers woke again on Wednesday when, in a two-minute period just after the market opened, they used the stolen logins to buy a “large number” of the lesser-known digital currency, Viacoins, which caused its price to surge by 140% in 30 minutes. The hackers then moved to exchange the Viacoins for Bitcoin, which they then tried to immediately withdraw. This caused the exchange system to trigger an “automatic risk management” alarm, said Binance, which halted the withdrawals. “All funds are safe,” Binance said on Thursday.
Binance has been one of the poster boy darlings of the crypto world. In less than a year it has attracted more than six million users to become one of the biggest exchanges in the world and this has made its founder, 41-year-old Changpeng Zhao, one of the planet’s youngest billionaires.
Zhao moved his business from China to Japan at the end of last year, as Beijing tightened its grip on crypto trading, and the latest hack is just more bad news for Tokyo’s beleaguered exchanges, which are already having a tough time from regulators. This week, Japan sanctioned seven cryptocurrency exchanges for regulatory lapses in an attempt to clean up the sector after the US$530 million hack of Tokyo-based Coincheck earlier this year. So what comes next?
Theft victims turn a profit
What comes next is an unexpected payout for the hack victims. It’s a case of profit from crime, but in a good way. Victims of January’s Coincheck heist have been worried about how and when they will be reimbursed. By any measure, US$530 million is a large shortfall to make up. But the Japanese crypto-currency exchange has just announced that the 260,000 traders who lost money in the theft will be reimbursed – but at a rate much higher than the current market value.
Coincheck will start pay-outs next week and will issue a total of US$440 million, which is $262 million higher than today’s trading rate. Only in the weird and wonderful world that is crypto.