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Public or Private Blockchain – best for your Supply Chain?

The technical details of Blockchain technology can be difficult to understand at times and one of the things which confuse corporations is whether to use private or public blockchain for their supply chain. This blog will help you understand the difference between private and public blockchain networks. Introduction Among the numerous use cases of Blockchain, […]

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The technical details of Blockchain technology can be difficult to understand at times and one of the things which confuse corporations is whether to use private or public blockchain for their supply chain. This blog will help you understand the difference between private and public blockchain networks.

Introduction

Among the numerous use cases of Blockchain, its application in Supply Chain Management is widely regarded as one of the most revolutionary. According to a research by ResearchAndMarkets.com, The Global Blockchain Supply Chain Market was valued at $93.16 Million in 2017 and is projected to reach $9,852.91 Million by 2025, growing at a CAGR of 80.2% from 2018 to 2025. This shows the immense potential of Blockchain technology in the Supply Chain Management domain.
But Blockchain technology can still be intimidating and the decisions regarding the selection of a Blockchain network might affect a lot of factors including the performance of the system or the cost involved or its interoperability. These factors depend highly on the decision about whether the Blockchain network is Public or Private in nature.

What are Public and Private Blockchains?

A Blockchain network is a peer to peer in nature which means that each participant has a copy of the ledger and each time a new block is added it gets updated in all the systems.

The sole difference between a public and a private Blockchain network is regarding who is allowed to participate in the network. 

In the case of public Blockchain networks, anyone and everyone are allowed to participate. This means that they can have a copy of the Blockchain and can see all the transactions happening. The public networks have some kind of incentivizing mechanism which encourages more participants to join. Bitcoin is an example of a public blockchain network.
A public blockchain network requires a substantial amount of computing power as the participants are required to solve complex cryptographic problems called Proof of Work to verify the transactions and keep everyone on the same page.

In Private blockchain networks, participants can only be added after an invitation and the network is usually permissioned in nature. This means that unlike public blockchain networks, not everyone is allowed to participate and also that the scope of participants is also limited. This scope is dependent on the network starter. Hyperledger Fabric is an example of a private blockchain network. 

Private Blockchain networks are particularly aimed at enterprise usage. Private Blockchains can be set up in a way so that only the entities participating in the transaction will have access to it and the other entities do not have access to it.

https://www.ibm.com/blogs/blockchain/2017/05/the-difference-between-public-and-private-blockchain

Requirements for Blockchain-based Supply Chain Solution

The discussion and debate regarding the use of Private or Public Blockchain networks will go on but in this debate, we must remember that a Blockchain-based Supply Chain solution for enterprises should adhere to the following requirements:

  • Operational Integrity
    There needs to be well defined and clear contractual agreements regarding the daily operations, so organizations and corporations have some sort of accountability and liability mechanism in case something goes wrong.
  • “Know Your Customer” Compliance
    KYC is an important and crucial regulatory issue, especially in services that deal with payment and financial service providers.
  • Interoperability
    A blockchain-based supply chain solution should work seamlessly with the existing ERP, CRM, and WMS systems that the corporations already use.
  • Security Requirements
    There should be adequate measures for the protection of data of the entities with proper data segregation, control requirements, and data privacy. 
  • Scalability
    A blockchain solution should not only be limited to a pilot but has to grow along with the corporation in terms of transaction volume, customers, and other metrics.

Features to consider regarding Blockchain Network

While we may weigh down the pros and cons of Private and Public Blockchain networks, we must consider that the solution will depend on the particular requirements of the enterprise. These requirements will be completely unique for the enterprise or the industry. 

Corporations must also keep in mind that if there are some existing consortiums in their industry, it is easier and more suitable to join those consortiums as it promotes standardization in the industry and makes it easier for businesses to do work with each other. 

The following are some considerations for the blockchain network whose importance defines which network is suitable for your enterprise. 

  • Data Access
    In public Blockchains, everyone has access to the data and can take part in the network, while in private networks only selected and authorized entities can make additions or changes to the network. In public networks such as Ethereum, every transaction is broadcasted to all the participants while only selected entities who have access to private networks can see the transactions.

    Since most of the data regarding enterprises is confidential, public blockchain networks are incorporating new and innovative concepts to allow the sharing of data. One such concept is Zero-Knowledge Proof. Zero-Knowledge Proof allows for the sharing of data without disclosing the details such as price or people involved. 

  • System Performance
    System Performance refers to the speed with which transactions are written on a blockchain network. Generally, public networks tend to be slower than the private networks because of the wider polling needed to achieve consensus. Hence, if enterprises need to store and share huge amounts of data, a private blockchain is the way to go.
  • Interoperability and Standards
    Public Blockchain networks are more interoperable since their decisions are based on the wider community consensus in comparison to the selected few who make decisions in the private network. Although, organizations such as  International Standards Organization (ISO) and industry groups such as the Blockchain in Transportation Alliance (BITA), Digital Container Shipping Association (DCSA), W3C and the United Nations Centre for Trade Facilitation and Electronic Business (UN/ CEFACT) are heading the work to achieve standardization in the industry. 
  • Total Cost of Ownership
    There is a cost involved when using a Public Blockchain called ‘gas’ which is the transaction fee paid to the creator of the block. There is no such transaction fee involved in the private blockchain networks but the upfront cost is usually higher than that of a public blockchain. Private blockchains also require resources to support and maintain the infrastructure which is quite less in public blockchain projects.
  • Compliance for Personal Data Protection
    Governments all over the world are enforcing stronger policies regarding the storage and processing of personal data. One such law is the European Union’s General Data Protection Regulation (GDPR) which presents a robust global standard for the storage and processing of the personal data of persons living in EU member countries.

    Since data on public blockchains can be accessed by anyone, enterprises are facing difficulty in protecting their personal data and their trade data. This is why enterprises are moving towards private blockchain networks to comply with the data protection laws.

    Although, some public blockchains are coming up with innovative solutions to comply with the data protection laws such as sophisticated ID management with obfuscation. 

  • Governance
    Public blockchains are governed by the masses i.e. majority of the users whose interests might not align with those of the supply chain operators. Private Blockchains on the other hand are constituted of supply chain entities only whose goals, objectives, and interests align more.

    Private Blockchains can also face some governance issues if, say, the owner of the network introduces some fees or changes regulations. Hence, there needs to be a prior agreement between the parties of the supply chain regarding the interests, goals, and objectives. 

http://www3.weforum.org/docs/WEF_Inclusive_Deploymentof_Blockchain_for_Supply_Chains.pdf

Conclusion

The debate between whether private blockchains are better or the public ones, comes down to the enterprise which has to use it. There is no clear cut answer to the question as it totally depends on the individual needs and requirements. The industry is still in the building phase and enterprises need to learn about what they specifically need instead of what’s better for everyone else.

The decision on whether to use Public or Private Blockchain will depend on the particular use case and the features which are particularly required by the enterprise.

QuillTrace, A Complete Supply Chain Solution

QuillTrace is a Blockchain-based procurement platform by Quillhash which makes the supply chain of any business transparent, sustainable, and secure by integrating with the existing Supply Chain systems.
The Blockchain experts at Quillhash will guide you in selecting the perfect Blockchain network for your supply chain. We can build a Blockchain-based supply chain solution specifically for your requirements to aid you in increasing transparency in your supply chain, in turn increasing sales.
Contact us now for a demo!

Source: https://blog.quillhash.com/2020/06/30/public-or-private-blockchain-best-for-your-supply-chain/

Blockchain

Justice Department extradites alleged BTC mining ponzi operator from Panama

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Per a Monday announcement, the U.S. Department of Justice and the Southern District of New York have extradited a leader of alleged ponzi scheme AirBit Club from Panama. 

Gutemberg Dos Santos is one of six operators of AirBit Club indicted, and the last to come into the U.S. to face trial before the SDNY. Dos Santos is a dual citizen of Brazil and the U.S. Authorities initially apprehended five of the six back in August, with a sixth avoiding authorities until October. 

The DoJ alleges that AirBit Club sold “memberships” that promised guaranteed returns. The six operators marketed their returns as being the product of the club’s mining operations and trading strategies. Per the DoJ, those operations didn’t exist. Instead, membership dues went to funding further marketing all around the world, including massive events to recruit new members and jet-set lifestyles for themselves.

Some of these events are viewable on AirBit Club’s still-active website, with the most recent taking place in São Paulo, Brazil, last year. 

One of the six indicted was Scott Hughes, a California attorney who, the DoJ alleges, aided AirBit Club’s leadership “by, among other things, helping to remove negative information about AirBit Club and Vizinova from the internet.” Possibly by threatening libel suits to shut down dissent. 

Hughes also stands accused of helping the operation to launder income via various client accounts. 

One of the most famous ponzi schemes in crypto is PlusToken, which recently saw over $4 billion worth of crypto assets confiscated by the Chinese government. 

Source: https://cointelegraph.com/news/justice-department-extradites-alleged-btc-mining-ponzi-operator-from-panama

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Blockchain

Wall Street Giant Guggenheim Fund Seeks SEC Approval to Buy Bitcoin Worth up to $500 Million

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  • Guggenheim Partners is among the largest investment and advisory financial services companies. The Wall Street giant filed a document with the US Securities Exchange Commission (SEC) to enable one of its funds, dubbed the Macro Opportunities Fund, to allocate millions of dollars in bitcoin.
  • According to the filing, the Fund plans to spend 10% of its net assets on bitcoin through the leading cryptocurrency manager – Grayscale.
  • “The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”), reads the SEC filing.

  • Fidelity and Morningstar estimate that the Fund in question has about $5 billion in assets under management. Should the Fund indeed allocate 10% of this amount into BTC, it would mean a purchase worth $500 million.
  • With Bitcoin’s price hovering around $18,000 as of writing these lines, this substantial purchase would amount to about 27,650 bitcoins.
  • The SEC filing describes cryptocurrencies as “digital assets designated to act as a medium of exchange.” The document also listed several risks associated with cryptocurrency investments. 
  • Those include lack of digital asset exchange regulation, GBTC’s historical “significant premium,” and uncertainty around taxation, regulations, and more.
  • 2020 has turned out to be the year with the most substantial institutional BTC purchases. If Guggenheim proceeds and buys bitcoin, the Wall Street giant will join the likes of MicroStrategy and Jack Dorsey’s Square
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Source: https://cryptopotato.com/wall-street-giant-guggenheim-fund-seeks-sec-approval-to-buy-bitcoin-worth-up-to-500-million/

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Blockchain

Respected Financial Historian Calls for Bitcoin Integration into U.S. Financial System

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Financial historian and Milbank Family Senior Fellow at the Hoover Institution at Stanford University, Niall Ferguson, has penned a lengthy piece on Bitcoin which is getting noticed by the crypto community.

In it, the former Harvard and Oxford University professor commented on how the traditional naysayers and debunkers have softened their collective stances this year as the asset outperforms most other traditional investments.

Big Bitcoin Endorsements

The piece was re-tweeted a number of times, most recently by 10T Holdings co-founder Dan Tapiero who observed that this could garner huge attention. Of particular note were the comments on the integration of Bitcoin into the U.S. financial system;

“Rather than seeking to create a Chinese-style digital dollar, Joe Biden’s nascent administration should recognize the benefits of integrating Bitcoin into the U.S. financial system,”

Ferguson made additional references to China’s digital yuan adding that its potential for adoption for remittance payments or cross-border trade settlements is ‘substantial’.

The Bloomberg columnist had previously written on the virtues of Bitcoin stating that there are far fewer coins in circulation than there are millionaires on the planet.

“If millionaires collectively decided to hold just 1% of their wealth as Bitcoin, the price would be above $75,000 — higher, if adjustment is made for all the bitcoins that have been lost or hoarded.”

Big Names Paying Attention

He made reference to a number of big names in the financial world including Paul Tudor Jones, Stan Druckenmiller, Bill Miller, and even Ray Dalio that are now appearing to turn bullish. Even ardent Bitcoin detractors such as Peter Schiff and Nouriel Roubini, also mentioned in the article, have started to change their tune.

He added that adoption has much further to go, quoting Argentine-born tech investor Wences Casares who stated after ten years of working well without interruption, with close to 100 million holders, adding more than a million new holders per month and moving more than $1 billion per day worldwide;

“it has a 50% chance of hitting a price of $1 million per bitcoin in five to seven years’ time.”

The advantages of sovereignty and scarcity are obvious at a time when the supply of fiat money is exploding, Ferguson added, concluding that there was a clear demand for more privacy when it comes to a payment system that will inevitably replace cash.

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Source: https://cryptopotato.com/respected-financial-historian-calls-for-bitcoin-integration-into-u-s-financial-system/

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