Blockchain update

Netoil ‘tokenizes’ oil bonds. NIST releases Blockchain technology overview. CMU/SEI releases Obsidian, opines on Oil IT Journal editorial. LR joins Blockchain Maritime Labs. VeChain’s ‘Thor’ LNG transaction manager. Siemens joins Energy Web Foundation. Nvidia suffers as mining declines - was September 2018 peak blockchain?

Stockholm IT Ventures has announced a blockchain-based ‘tokenization’ deal with Netoil, Inc., a Cayman Islands-based diversified oil, gas and banking group. Netoil founder Roger Tamraz who is also chairman of SITV said, ‘We've been looking at blockchain technology to solve some of the business challenges we face at Netoil. We feel this is a great first step towards disrupting the oil business and bringing the kind of positive change that is much needed in this marketplace.’ The ‘tokens’ represent a corporate bond with a face value of €300 million, ‘secured’ by Netoil’s oil and gas production business. SITV describes tokenization as a blockchain ‘killer app’ with an ‘€1 trillion of assets’ to be tokenized in the next 12-18 months. More from SITV.

NIST has released NISTIR 8202 a Blockchain Technology Overview providing a high-level technical overview of the technology. The 68 page report suggests that the novel technology should be investigated with the mindset of ‘how could blockchain technology potentially benefit us?’ rather than ‘how can we make our problem fit into the blockchain technology paradigm?’ NIST explains the confusing interplay between identity management and transactions, which are in general anonymous. The (very large) amount of energy used is also problematical. More from NIST, although at the time of writing, NIST and many other US government websites are shut down pending resolution of the wall issue!

The Carnegie Mellon Software Engineering Institute has just published Obsidian, a secure programming language for blockchain applications. Obsidian is designed to fix defects in current blockchain programming issues that pose a risk to the adoption of cryptocurrencies and other blockchain applications.

We asked the SEI/CMU’s Eliezer Kanal what he thought of our recent contribution to the blockchain debate where we raised the issue of connecting a blockchain transaction to a physical object. Kanal essentially agreed with our analysis, ‘You are correct, the supply chain use case has a significant problem with respect to representing physical goods digitally ... blockchain enters the picture after the digitization happens and can (potentially) prevent subsequent malicious manipulation of the database, associating an identity with each transaction. Once something has a digital representation, we have blockchain benefits. It doesn’t solve the first part, though. Your points are completely correct. There are other problems with blockchain. Implementing a blockchain is really, really difficult to do correctly. Mining is mind-bogglingly wasteful and other techniques which seem to do the same thing actually allow for a lot of maliciousness. This removes some of the most significant benefits of a blockchain entirely, turning it into a really complicated distributed database. We’ve had these for decades! Other frameworks under development involve a lot of handwaving and don’t really acknowledge the difficulty. In general, moving things to the blockchain turns out to be incredibly expensive. Hence the weird concepts like ‘half-blockchain’ applications, which have none of the benefits of blockchain and all the complication.’

The Maritime Blockchain Lab (MBL), a unit of BLOC, (Blockchain labs for open collaboration) has won support from MIT’s ‘Solver’ program. MBL was selected for its work on shipping emissions monitoring, reporting and verification solutions. These have been built upon the blockchain-based Marine Fuel Assurance prototype developed with funding from the Lloyd’s Register Foundation. Solve is an initiative of the Massachusetts Institute of Technology that 'advances lasting solutions from tech entrepreneurs to address the world’s most pressing problems’.

Hangzou, China-based VeChain has partnered with Chinese energy and gas companies ENN Energy and Shanghai Gas to pilot a ‘blockchain-enabled’ liquified natural gas solution. The VeChain ‘Thor’ blockchain will be deployed at the online LNG trading exchange and support qualification certificates and SKU inspection reports. VeChain claims to connect blockchain technology to the real world with a ‘comprehensive governance structure, a robust economic model, and IoT integration’.

Siemens has joined the Energy Web Foundation an alliance that sets out to develop blockchain applications for the energy industry The ‘non-profit’ organization’s mission is to accelerate the commercial deployment of blockchain technology in the (electrical) energy sector. With a growing membership of corporate affiliates, technology partners and strategic investors active in the energy industry, the EWF claims to be a leading alliance for blockchain developments specific to the energy industry’s needs. As part of the EWF organization, Siemens aims to shape the future of blockchain-based, transactive energy applications, new prosumer-centric use cases as well as business models around operation of distributed energy systems, microgrids and financing.

Comment: MBL, EWF and other blockchain-based solutions for energy are often conflated with enabling the ‘transition’ to a greener world. This is a curious association in view of the unconscionable amount of energy used in mining. We stand by our analysis of blockchain as BS. Judging by the 50% drop in the Nvidia share price since September 2018, widely reported as due to a decline in purchases of GPGPU hardware for bitcoin mining, it could be that we have already passed peak blockchain.

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