uc Blockchain Payments
- jim mason
- jimm1
Key Points
- Some interesting blockchain solutions have been listed under Candidate Solutions below
- There are multiple blockchain frameworks and platforms available
- Some target enterprise, permissioned blockchain requirements like Hyperledger
References
Key Groups
Hyperledger Capital Markets SIG
https://wiki.hyperledger.org/display/CMSIG/Capital+Markets+SIG
The Capital Markets Special Interest Group (CMSIG) represents industry professionals working together to study how Hyperledger DLTs interact with Capital Markets use cases. This covers issuance and trading of instruments to continued market-making, management of risk, program-trading, regulations, capital requirements, traceability, post trade settlement, custody including corporate actions and more. This group also explores architecture, identity and performance related considerations specific to Capital Markets and DLTs.
capital market concepts
Capital Markets are a way to connect investors and borrowers for long term provision of capital. A way to invest in enterprises, so that funds from investors are put to productive use. Investors or lenders can be individuals or other entities. Borrowers are companies and governments. Although the term market applies to exchanges and associated infrastructure; financial intermediaries like banks connect the various parties together. Investors are compensated directly by borrowers or are rewarded by appreciation of long-term securities. Capital Markets include the stock market and the bond market dealing with equities, bonds, and credit markets. They can also include derivatives. Securities are a way to tokenise underlying assets and have had a long history.
CM SIG projects
https://wiki.hyperledger.org/display/CMSIG/CMSIG-Projects
Trade Finance Securitization
different than current receivables factoring
https://wiki.hyperledger.org/display/CMSIG/Trade+Finance+Securitization
Key Concepts
How blockchain can impact Financial Services
"Any financial operation that has low transparency and limited traceability is vulnerable to disruption by blockchain applications.” –Bruce Weber and Andrew Novocin
https://knowledge.wharton.upenn.edu/article/blockchain-will-impact-financial-sector/
Centralized solutions may migrate to decentralized given trust, compliance
Hosanagar expects the first wave of applications to be rolled out in “private” blockchains where a central authority such as a financial institution and its partners are the only ones with the permission to participate (as opposed to public, permissionless blockchains where participants are anonymous and there is no central authority). Applications in the private blockchains, he said, will be more secure and will offer some of the benefits of decentralized ledgers but will not be radically different from the way things work at present. However, over time, he expects smart contracts (self-executing contracts when requirements are met) to be offered on public blockchain networks like Ethereum. “When securities are traded, intermediaries provide trust, and they charge commissions. Blockchains can help provide such trust in a low-cost manner. But trade of securities is governed by securities laws. Smart contracts offer a way to ensure compliance with the laws. They have great potential because of their ability to reduce costs while being compliant,” says Hosanagar.
Werbach - Important technologies, he said, are far more likely to be integrated into the system than replace it. According to Werbach, while some firms will fail to make the transition and some new ones will take hold, “over the long-run, virtually every historic innovation that eliminated some forms of intermediation also created new forms.
Reduces friction and improves efficiency in financial systems
when a syndicate of lenders participates in a loan, having one shared ledger means they don’t all need to keep track of it independently. International payments and corporate stock records are other examples where there are huge inefficiencies due to duplicate record-keeping and intermediaries. “End users won’t see the changes in the deep plumbing of financial services, but it will allow new service providers to emerge and new products to be offered,” said Werbach.
Sharing governance strategies in new ecosystems first
“Distributed organizations serving an open community need to take care to design their governance systems, incentive structures and decision-making processes to create consensus without unduly slowing down the decision-making,” said Weber and Novocin. “Scenario planning or war gaming are worth exploring at the beginning of blockchain projects. Forward planning enables organizations to swiftly respond in a predictable way that is supportive of stakeholders. Publicizing these plans in advance can also build trust and user confidence.”
Cryptocurrency Risks to date exist
Bitcoin has shown that the fundamental security of its proof-of-work system is sound, but it has major limitations such as limited scalability, massive energy usage and concentration of mining pools. There has been massive theft of cryptocurrencies from the centralized intermediaries that most people use to hold it, and massive fraud by promoters of initial coin offerings and other schemes. Manipulation is widespread on lightly-regulated cryptocurrency exchanges.
Currency regulation and governance
There must be recognition among cryptocurrency proponents that maturation of the industry will require cooperation in many cases with incumbents and regulators,” added Werbach.
It's clear, cryptocurrencies ( where they are legal ) need to comply with KYC, AML and other financial regulations. Blockchain should make that governance simpler and lower cost.
Blockchain continues to evolve
Weber and Novocin expect that in the next few years, many more businesses will implement private blockchains to improve the transparency and traceability of their financial operations, supply chains, inventory management systems and other internal business systems. Clearer standards will be adopted and a few high-profile projects will emerge. Meanwhile, they said, R&D will continue among the many decentralized blockchain projects to invent more scalable public ledgers
Stable coin concepts
Sharat Chandra
The #stablecoins Ecosystem :
A typical stablecoin ecosystem in terms of the three core functions-
1.Issuance, redemption and stabilisation of value of the coins.
2. Transfer of coins among users.
3. Interaction with users (ie the user interface)
Issuance and stabilisation typically require a central governance entity to govern the stability mechanism, and the transfer of coins among users is typically ruled by the DLT protocols .
In contrast, the user interfaces for stablecoins do not necessarily include a high-level governance entity or protocol. It is possible that entities might perform multiple roles across different functions. For example, some stablecoins have a central governance body over issuance and stabilisation as well as over transfers.
Source : Bank for International Settlements – BIS Paper - Investigating the Impact of Global Stablecoins.
Ashutosh Dubey Arjun Vir Singh Leah Cal
https://www.linkedin.com/company/bis/
verified.me SecureKey design
Design overview for Fabric with proposed enhancements for DID, Indy support
https://docs.google.com/document/d/1ENMO-S7i0ef09IRx5teE-eJbRMFsaKSXEdatcufvjPM/edit
SecureKey Technologies is launching an interoperability initiative aimed at establishing common standards and development frameworks for next generation digital identity networks.
Contributions
We will support the efforts within the Hyperledger and Decentralized Identity Foundation (DIF) communities to help create innovative distributed ledger technologies and digital identity networks. We believe that creating cross-project and cross-network standardization and interop along with common development frameworks represents the next step in transforming the digital identity space. In particular we support, and look forward to contributing to, the efforts of Hyperledger Fabric, Indy and the newly proposed Aries project along with DIF’s Identity Hub efforts.
Contributions will be directed towards the community projects above as well as open project extensions within the TrustBloc initiative.
In particular, we will contribute:
- Hyperledger Fabric performance and customization improvements. We are excited to contribute improvements we learned while building and taking our network operational.
- Enable DIDs to be managed and exposed from Fabric, and more generically enabling document provenance.
- A model for digital identity exchange based on DIDs, Verifiable Credentials, and Hubs.
- Efforts towards interoperability with the newly proposed Hyperledger Aries project, in order to use a Fabric-based ledger and our digital identity model. We think it’s critical to allow variation on top of a common base.
- Tooling and demos to enhance developer experiences building digital identity networks.
About SecureKey
SecureKey builds identity networks like Verified.Me, the Canadian identity sharing Network supported by seven major banks, mobile operators, a major credit agency, and other providers in Canada. Verified.Me provides a user centric, privacy protecting identity platform for services that trust the individual’s identity established at their financial institution and other connected organizations. Users can link in account information across services for a convenient but highly reliable digital identity where information is delivered in real time.
Technical Brief
In the following diagram, we provide an overview of the components related to the TrustBloc initiative. We will follow-up with additional details and data exchange flows.
IBM Cross Border Carrier Payments solution coming
https://finance.yahoo.com/news/softbank-develop-cross-carrier-blockchain-050039037.html
SoftBank is teaming up with IBM to develop cross-carrier blockchain solutions, with the focus on technologies that will allow smartphone users to make local payments when traveling overseas and roaming.
first project being undertaken by the CBSG is the Cross-Carrier Payment System (CCPS), which is aimed to allow mobile-phone customers to pay locally using their devices when traveling outside their home countries.
TBCASoft will be using the IBM Blockchain Platform, IBM’s Hyperledger-powered enterprise blockchain solution.
TBCASoft technology helps “optimize” clearing between different carriers and transaction records, according to the announcement, and allows for the interoperability of mobile networks and the bolting on of networks of merchants to enable payments
SSI and VC to manage payments with Location Authentication Factor
Debajani Mohanty• 1stAmazon Bestseller Blockchain Author of 5 Books, India's Top 30 Blockchain Influencer by Singapore Fintech News, Mentor, Speaker, DID/SSI Expert
Details on the Location tracking solution for authentication
fraud-prevention-2021-Location-Location-Location-Report-November-2020 pdf
Proposed US Legislation for Digital Money and Digital Assets
Sen Lummis introduced bill for Responsible Digital Asset Innovation
US-Digital-Asset-Bill-220607-Lummis-576008331-Lummis-Bill-Draft.pdf file
Lummis Digital Asset Bill draft 2022 ** link
digital-asset-bill-2022-Lummis-Bill-Draft.pdf file
Lummis Bill Draft 2022 summary 2022 link
Sen Elizabeth Warren introduced Digital Money Anti-Money Laundering bill
Elizabeth Warren Digital Asset Money Laundering Act bill
https://finance.yahoo.com/news/elizabeth-warren-crypto-bill-sent-120000157.html
https://www.yahoo.com/finance/news/congress-killed-landmark-wildlife-bill-201900415.html
Elizabeth Warren Digital Asset Money Laundering Act bill
change would have ended a legal tax-avoidance strategy widely used by crypto traders to generate dubious losses with so-called wash sales, by selling tokens and immediately buying them back. Among those using the loophole was bankrupt crypto exchange FTX
Ex U.S. Sen. Pat Toomey introduced bill to regulate stablecoin
https://www.yahoo.com/finance/news/one-crypto-favorite-us-senators-220322030.html
Toomey decided to introduce a bill as a guide for next year’s lawmakers who’ll be under pressure to do something about digital assets.
I hope this framework lays the groundwork for my colleagues to pass legislation next year safeguarding customer funds without inhibiting innovation
retain privacy for stablecoin transactions, set up the Office of the Comptroller of the Currency as a licenser of companies issuing payment stablecoins, let nonbank entities issue the tokens and clarify that stablecoin issuers that don’t offer interest wouldn’t have to worry about securities laws.
It would also require the digital tokens – designed to maintain a steady value by pegging to an asset such as the dollar – be fully backed by reserves, and it nods toward maintaining existing state-based supervision
Toomey's Stablecoin Bill proposal
https://www.banking.senate.gov/imo/media/doc/stablecoin_trust_act_section-by-section.pdf
Section 3: Issuance of Payment Stablecoins Authorizes the following entities to issue payment stablecoins: o Depository institutions; o Entities that receive a new federal license designed specifically for payment stablecoin issuers; o State-based money transmitting businesses, non-depository trust companies, and other entities authorized by state banking supervisors; and o National trust banks. Provides that entities with the new federal license and other payment stablecoin issuers with similar business models will be granted Federal Reserve master accounts and services.
Section 4: Disclosures, Redemption Policies, Attestations, and Permissible Assets for Payment Stablecoin Issuers Establishes new, standardized public disclosure requirements for all payment stablecoin issuers, including: o What assets back the payment stablecoin; o Redemption policies; and o Attestations from registered public accounting firms. Requires all issuers to fully back their payment stablecoins with high-quality liquid assets.
Section 7: Exemption from Securities Requirements Clarifies that payment stablecoins are not securities and payment stablecoin issuers are not investment companies or investment advisers.
Section 8: Privacy Protections for Digital Assets Payment Stablecoin Users Applies existing privacy and data security requirements to payment stablecoin issuers. Rejects the notion that existing and antiquated Bank Secrecy Act reporting requirements should be applied to new technologies like digital assets. Clarifies that private transactions not involving an intermediary or a financial institution do not need to be reported. Section 9: Treatment of Insolvent Payment Stablecoin Issuers Protects consumers by clarifying that payment stablecoin holders would have priority in the event of an issuer’s insolvency.
Proposed EU Legislation for Digital Money and Digital Assets
Potential Value Opportunities
VISA proposes automated payments of Ether from Ethereum wallets - 2022
solve the problem of how an ether owner could pay a bill with crypto at a future date while temporarily away from internet service.
The EthereumETH +0.1% network today offers externally owned accounts (EOA), or user accounts, and contract accounts, which automatically run code known as smart contracts.
the Visa team is working with Ethereum developers outside the company to increase the capacity to handle large volumes of transactions, provide increased security, interoperate with other blockchains, and do it all while ensuring users’ privacy is protected, according to Gu.
i>>> assumes self custody will work well >> a larger push by crypto developers to emphasize the early “not your keys, not your crypto” mantra, that opposes centralized exchanges and other entities maintaining custody of digital assets owned by their customers.
Central Bank Digital Currency Opportunities
https://medium.com/@vipinsun/central-bank-digital-currency-1af7e072e660
cbdc-article-vipin-2020-medium.com-Central Bank Digital Currency.pdf
This article explores the effects of digital currency issued by central banks focusing on monetary policy and control aspects of Central Bank Digital Currency(CBDC).
The Visa proposal would essentially merge the two into a single account, turning the smart contract for executing commands into a software wallet for storing cryptocurrency
EU CDBC paper - 2020
CBDC-EU-paper-2019-document.pdf
Potential Challenges
Candidate Solutions
IBM Food Trust Network
| https://www.ibm.com/blockchain/solutions/food-trust | IBM Food Trust Network |
| https://www.ibm.com/downloads/cas/E9DBNDJG | Food Trust Overview ( view here ) |
| https://github.com/IBM/IFT-Developer-Zone/wiki/doc-Message-Types | Message Types |
| https://github.com/IBM/IFT-Developer-Zone/wiki/APIs | Food Trust API's |
| https://food.ibm.com/ift/api/connector/swagger-ui.html | Swagger Tests for API's |
| https://www.gs1.org/sites/default/files/docs/epc/EPCIS-Standard-1.2-r-2016-09-29.pdf | EPICS standard for trading partners |
Food Trust Value List
| Value | Features | Description |
|---|---|---|
| Safety | Transparency Traceability | Trace food instantly – with end-to-end supply chain data visibility – to help ensure food safety and regulatory compliance. |
| Supply chain efficiency | Shared immutable ledger | Access a shared and immutable digital ledger in real time – rather than ink on paper – to find choke points and uncover opportunities to speed your supply chain. |
| Food Freshness | Traceability Shared data | Gain instant and efficient food tracing from source to consumer to more accurately judge peak freshness and remaining shelf life – and reduce product loss. |
| Sustainability | Shared data Immutable ledger Smart contracts | Rely on shared data and an immutable ledger to help ensure the promised quality of products and that food comes from a sustainable source. Smart contracts improve data quality |
| Brand Trust | Transparency Traceability | Gain a competitive advantage as you add transparency and specificity about the sourcing of your food products. Build trust in the safety and quality of your brand. |
| Food waste | Shared data | Identify waste hot spots and speed responsiveness using better visibility into your food supply chain. Reduce costly food waste and boost your bottom line. |
| Food Fraud | Shared data Immutable ledger Smart contracts | Data-sharing across the food supply helps eliminate chances for fraud and errors – and can help preserve the integrity of raw materials, products, and packaging. |
Verified.me - a secure blockchain identity framework for Canadian banks on IBM Blockchain
Verified.Me, by SecureKey Technologies Inc., is the new and secure way to help you verify your identity, so you can quickly get access to the services and products you want online, in person and on the phone.
Verified.Me helps verify your identity using personal information that you consent to share from your Connections, like your financial institution, with service providers you want to transact with.
https://verified.me/wp-content/uploads/2019/04/VerifiedMe_General_Overview_Script_EN-1.pdf
Fetch.AI - smart blockchain tokenomics framework
Agents
Fetch.AI is a decentralised digital world in which useful economic activity takes place. This activity is performed by Autonomous Agents. These are digital entities that can transact independently of human intervention and can represent themselves, devices, services or individuals. Agents can work alone or together to construct solutions to today’s complex problems.
Open Economic Framework
The digital world in which agents live is called the Open Economic Framework (OEF). This world acts as the ultimate value exchange dating agency: each agent sees a space optimised in real-time just for them, where important things are clear and visible and less important things are simply removed. The OEF provides the senses for agents: their sight, touch and hearing to present to them a world unique to the viewer.
Smart Ledger
Underpinning the digital world is the smart ledger: a new generation of learning ledger that provides a collective super-intelligence to support agents’ individual intelligences. It provides market intelligence, previously locked up in centralised silos, to everyone so that any agent that wants something is assured of the shortest possible route to find another that has it. Fetch.AI’s smart ledger scales to support millions of transactions per second and is able to restructure itself to present the OEF’s digital world to the agents that use it.
Step-by-step guide for Example
sample code block
With EarthId's "On-Demand Location Tracking" use case
* Payment processing can get #fraudprotection without the concern of #privacy and #safety of customers
* FI can use the verified location data in their risk engines and other fraud detection processes.
* Effective KYC/AML and sanctions compliance can be achieved by eliminating cracks in customer/client on-boarding processes that bad actors are exploiting