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Blockchain & Crypto Analysis

Ripple’s $4 Million XRP Donation Live on The Ellen Show

Wednesday, May 23, 2018

Earlier today, Ripple teamed up with Ashton Kutcher’s VC firm, Sound Ventures, to donate $4 million to The Ellen DeGeneres Wildlife Fund.

Here’s the video.

I have mixed feelings about this Ripple advertisement.

Let’s get the positive out of the way first. A donation to a good and worthy cause is always welcome, so kudos to Ripple for that.

Now, the negative side. This advertisement seems like a very confused PR statement because I’m not exactly sure who it’s targeting.

Lately, Ripple’s primary objective has been RippleNet and XRP integration with major banks around the world. As far as I know, a Ripple-powered P2P payments app doesn’t exist at the moment, but that’s exactly what this advertisement seems to demonstrate.

The Ellen Show is a daytime TV show, and averages approximately 3.9 million viewers per episode. Historically, TV programming in this time slot is mostly consumed by females between the ages of 18 and 49, with housewives occupying the majority of the demographic. In other words, the people who are watching this show likely have free time on their hands, and I bet a bunch of them tried searching for this magical Ripple app that was able to transfer $4 million in seconds. Too bad this app doesn’t exist. Unfortunately, these are not the type of the people who would follow up and go one step further to research Ripple and XRP’s world changing potential to share with their friends at the next book club meeting.

This could’ve been such a great opportunity for Ripple, and I don’t buy the argument that this whole donation was simply out of good will. If that were the case, Ripple could’ve just made a silent donation. The truth is Ellen has millions of loyal fans around the world, and it would be silly to not leverage her platform to shill your product or service to the world – especially if your service happens to be transferring $4 million in a few seconds.

On that note, it’s unclear to me if the transaction even took place in realtime. My gut instinct is they wouldn’t pull something like that on a huge TV show like Ellen because too many things could potentially go wrong. I’m guessing the donation was made beforehand and the app we see is just a demo of sorts, but then again Ellen seems pretty emotionally struck by this donation.

Okay, enough of that. Ripple didn’t have the best timing here, but it’s still good PR for the company. Now I’m wondering if there’s some sort of payments app in the works because the app GUI does display “runs on Ripple”. Secondly, I’d like to know who provided $4 million of liquidity for the XRP-RWF side of the transfer, as it seems to be a rather exotic currency pairing at the moment. Since XRP is a public ledger, I suppose it’d be possible to locate the transaction on XRPCharts.

In News

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CHAIN ID, ActiveX, and South Korea’s Authentication Nightmare

Tuesday, May 22, 2018

In order to fully grasp the potential impact of theloop’s CHAIN ID, one must first understand the current digital authentication landscape in South Korea.

South Korea has always been technologically progressive. In fact, the world’s first smart city is situated 40 miles southwest of the country’s capital, Seoul. Thus, it’s no surprise that South Korea was one of the first countries to encourage Internet banking, shopping, and other services in the late 1990s.

It’s hard to believe now, but shopping and banking on the Internet was a completely new technology in the not so distant past. With this new way of carrying out business, both customers and businesses were wary of fraud. To dispel this fear, the South Korean government implemented a nationwide digital authentication system in the Digital Signature Act of 1999.

Authentication Certificates in South Korea

There are two types of certificates in South Korea – private and accredited.

Private Certificates

Private certificates are issued by institutions that are not accredited, or certified, by the South Korean government, and are only valid for specific services. For example, a bank might issue a private certificate to a customer that is only valid for services within the bank. Compared to accredited certificates, private ones are impossible to verify, valid only by mutual agreement by the parties involved, difficult to get compensation for, and are only valid for a limited scope of services. The only advantage of private certificates are that they are often easier to obtain.

Accredited Certificates

Accredited certificates are issued by institutions that are accredited by the government. Currently, the following institutions can issue accredited CAs – KFTC, KOSCOM, KICA, KECA, and KTNet. Accredited certificates, while more difficult to apply for, offer quite a few advantages when compared to private certificates. Accredited certificates are seen as legal binding endorsements, are valid for compensation in the event of damages caused by the certificate, and can be used for a variety of Internet services without the need for multiple certificates. Thus, the accredited certificate is by far the most popular authentication in Korea with over 33 million issued certificates.

How Accredited Certificates are Generated

Accredited certificates are issued by government-accredited institutions through a process of manual verification of a resident’s National ID and other documents. Following verification, a resident’s identifying details are hashed into a public/private key pair along with the issuing authority’s digital signature. This process places burden of proof on the issuing CA.

After the certificate is generated, the resident can use his or her public key for online financial services such as banking and shopping.

The Age of Internet Explorer & ActiveX

In the late 1990s, Internet Explorer was the most popular web browser in the world. Hard to imagine, right? In addition to basic browser capabilities, Internet Explorer also offered a software framework for plugin development called ActiveX. South Korean institutions ended up using ActiveX to develop software which allowed users to upload their certificates to authenticate financial transactions online. Keep in mind there is no industry-standard software. Thus, Koreans are forced to install many ActiveX plugins in order to use their assortment of authentication certificates. This can only be described as a user experience s***show with glaring security holes.

Over the next decade and a half, the rest of the world moved on. The online shopping and mobile device industries experienced unprecedented growth, and the FIDO Alliance was established. In short, FIDO provided a standardized protocol for supporting a full range of authentication technologies including biometric, fingerprint and iris scanners, voice recognition, and more. Korea’s inability to adapt and integrate with FIDO left the country at a disadvantage in the global business and trade sectors.

In May 2014, the South Korean government announced that authentication certificates would no longer be required for financial transactions under ₩300,000 (approximately $280). This was a response both to complaints about a Microsoft-centric culture and also the inability for foreigners to buy goods online because they are unable to apply for accredited certificates. One notable example was Chinese customers not being able to purchase clothes and accessories worn by characters on the famous Korean drama, 별에서 온 그대 (My Love From the Star). While this particular situation may seem a little silly, it’s a great example of how South Korea’s absurdly complicated authentication requirements effectively put a bottleneck on the country’s economy.

An official statement from South Korea’s Financial Supervisory Service read, “the revision is expected to improve the complicated security system and diversify payment methods by giving more freedom to financial firms to decide on their own security.” As a result of this new regulation, new services would eventually find their way into Korea’s complicated authentication landscape, but accredited certificates are still issued and used to this day.

theloop, CHAIN ID, and ICON

Last October, theloop revealed that its blockchain-based authentication solution, CHAIN ID, was already being piloted by 25 banks and securities companies in the Korea Financial Investment Blockchain Consortium. Half a year later, theloop announced that CHAIN ID would be used by Samsung (one of Korea’s largest companies) in their biometric authentication technology, Samsung Pass. Recently, ICON Foundation wrote, “in the future it is expected that there will no longer be classifications of certified/private certifications, and all certificates will have the same authenticity.”

Connect the dots.

  • CHAIN ID is already being used by some of South Korea’s largest banks and securities companies.
  • CHAIN ID is being implemented in Samsung Pass. Samsung has over 57% market share in South Korea’s mobile smartphone market.
  • ICON revealed there will only be one kind of certificate in the future.

After a little reading between the lines and a tiny amount of educated speculation, I have come to the conclusion that the majority of digital authentication in South Korea will happen on the CHAIN ID platform in the near future. This blockchain solution is being aggressively adopted by the country’s biggest financial and technology firms. If there’s really only going to be one certificate in the future, it’s obvious they will be issued by the first mover in the space – theloop’s CHAIN ID.

What is CHAIN ID?

Now that we’ve established that CHAIN ID will probably take over South Korea similar to how Thanos took over the universe in the most recent Avengers movie, let’s talk a little about what CHAIN ID is exactly and how it may or may not affect ICON in the future.

A Smart & Distributed Network

South Korea’s current authentication system relies on a centralized network of government-approved entities who are allowed to issue accredited certificates. This system works because a certificate’s trust value is backed by the accreditation and approval of the government. CHAIN ID, on the other hand, provides trust via a decentralized or distributed network.

CHAIN ID leverages several aspects of a distributed network to provide a secure, scalable, and smart authentication platform. The decentralized nature of the platform makes it less prone to major hacks because data monopolization is not an issue. Secondly, decentralized networks are easier to scale than their centralized counterparts. Lastly, CHAIN ID runs on a system of smart contracts and extended feature sets can be easily implemented in the system. This means complex DApp ecosystems can easily integrate CHAIN ID for authentication services.

On the CHAIN ID platform, joint authentication certificates are issued through consensus of all the nodes on the network. These certificates are called “joint certificates” because they are generated through “joint consensus” of the network participants. As a result, these joint certificates are valid for all services offered by CHAIN ID nodes. Smart contracts ensure the network’s rules are being obeyed, keeping data secure and up to date.

The Future of CHAIN ID

On a philosophical level, the concept of identity is integral to the human condition. Proving our identity is part of our everyday lives, and this aspect of modern society moving over to the blockchain is absolutely fascinating. On a technical level, CHAIN ID is just a DApp running on theloop’s blockchain engine, but I believe it has the potential to have a profound impact on South Korea’s culture and economy. With so many major companies and institutions adopting CHAIN ID, it’s only a matter of time before we see more complex ecosystems governed by smart contracts with CHAIN ID acting as an authentication layer between the real world and digital world. Keep in mind that these DApp ecosystems will require an interoperable protocol to communicate with each other.

That’s where ICON comes in.

ICON & LINE’s Joint Venture Could Lead to 200 Million DApp Users

Thursday, May 17, 2018


The ICON team told CCN that the joint venture between ICON and LINE could lead to hundreds of millions of users of LINE potentially utilizing the ICON blockchain on a daily basis to access dApps.

I thought so.

If this ends up happening, and I think it will relatively soon, ICON will be poised to become the most widely used blockchain platform in the world. At the moment, Bitcoin, the world’s number one cryptocurrency, is estimated to have less than 28.5 million users.

In News

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ICON x LINE = Unchain

Wednesday, May 16, 2018

ICON Foundation:

ICON and LINE PLUS, a global social platform with over 200 million monthly average users (MAU) worldwide, has co-founded ‘Unchain’ to build LINE’s blockchain network. Unchain aims to develop various DApp services while building synergies with ICON to expand the blockchain ecosystem.

Until now, every partnership announcement from ICON has only involved theloop (ICON’s parent company) building private purpose-specific blockchains for various institutions. While we have good reason to believe that private solutions developed by theloop will eventually use ICON’s blockchain for interoperability if needed, this is merely speculation. Thus, today’s joint venture announcement with LINE is groundbreaking. It’s the first time a large corporation has committed to using the actual ICON blockchain, and not just a private solution developed by theloop.

H.K. Lee, technical director at ICON, has been appointed as CEO of Unchain. H.K. Lee currently develops and reviews DApp teams looking to collaborate with ICON. He has garnered deep knowledge and experience of both blockchain technology and artificial intelligence through his work.

This joint venture is much more than a typical partnership. The appointment of H.K. Lee as CEO of Unchain confirms there will be a high level of collaboration between ICON and LINE.

Unchain will create a blockchain ecosystem fueled by a token economy, where the users are rewarded for their contributions to the network. DApp services discovered through ICON and Unblock, a subsidiary of LINE dedicated to blockchain research and to accelerate DApp projects, will be integrated with Unchain. This joint venture takes blockchain and decentralization another step closer to being a part of our everyday lives.

To clarify, ICON is an interoperability-focused blockchain platform that allows for DApp development. Unblock is LINE’s blockchain research subsidiary. ICON and Unblock will both brainstorm DApp projects that could be beneficial to LINE’s social ecosystem. The integration development will be done by Unchain, which is headed by ICON’s technical director.

What is LINE?

LINE is one of the world’s most popular social apps, especially in the Asian market. LINE is operated by LINE Corporation, a Japanese subsidiary of South Korea’s Internet giant, Naver. Think of Naver as Korea’s Google.

LINE’s Market Share

LINE currently has over 200 million monthly average users, and is the social platform of choice in Japan, Taiwan, Thailand, and Indonesia. I currently live in Tokyo, Japan, and can confirm this is definitely the case. LINE is the only app I use to keep in touch with my friends here. Not Facebook, not WhatsApp, not WeChat. Just LINE.

LINE Services

In addition to messaging, LINE also offers several social services to its users – LINE Pay, LINE Taxi, LINE Delima, LINE Points, and more.


Think of LINE Pay as Apple Pay, Venmo, and Splitwise combined into one app. It allows users to pay merchants, send money to each other, and split bills. For users who prefer physical payment cards, LINE also offers a LINE Pay Card via Japanese credit card company JCB. The card is linked to users’ LINE account, and offers rewards in the form of LINE Points.

Earlier this year, Bloomberg reported that LINE Corporation is “working to integrate cryptocurrencies into its messaging platform”. Now that we know LINE has committed to using ICON’s blockchain, we can speculate that ICX and its upcoming DEX platform may be used for liquidity between fiat (JPY, KRW, etc.) and LINE’s yet-to-be-announced crypto token.

I personally think LINEcoin (LNX) sounds cool.

LINE Points

LINE Points is the platform’s “reward and incentive token”, and can be earned by completing tasks on the LINE ecosystem. LINE Points can be redeemed by participating in LINE events or using the LINE Pay Card. LINE points can be converted to Lawson (a Japanese convenience store) Ponta points, Seven Eleven Nanaco points, Amazon gift cards, and more.

In it’s current form, LINE Points already offers an incentive-based reward system to users who participate on the network. I wouldn’t be surprised to see LINE Points rebranded as “LINEcoin” in the future, with the purpose of functioning as a platform token for LINE’s upcoming blockchain ecosystem.


LINE Taxi is a service that allows users to call taxis in over 90 cities in Japan. Bloomberg reported that Uber has less 1% of market share in Tokyo, Japan, which happens to be the world’s largest cab market. Part of Uber’s difficulty in the Japanese market is due to local taxi operators like Nihon Kotsu Co. (Tokyo’s largest cab company) releasing their own apps.

Interestingly enough, LINE Corporation has a confirmed partnership with Nihon Kotsu Co. giving users “access to approximately 3,340 cabs throughout the Tokyo area for the initial release”. LINE is planning to “increase cab availability by capitalizing on the nearly 23,000 taxis owned by Nihon Kotsu’s network of 129 partners as it expands to attain the industry’s largest taxi pool” in the future. With over 50 million LINE users in Japan, it’s no wonder why the nation’s largest taxi company has chosen to partner with LINE instead of an overseas solution with minimal Japanese adoption like Uber.

It’s important to know the LINE Pay is the only payment method accepted on LINE Taxi. If we do see a LINEcoin in the future,  it could be used as both a payment method for LINE Taxi and also as a reward incentive for users to use LINE Taxi to call taxis. On many blockchain platforms, rewards are correlated with a user’s activity on the platform. Thus, it’s possible that a theoretical LINE Taxi DApp incentive system could be tied to the user’s contributions to other DApps on the network. Secondly, Japan’s taxi industry is worth approximately $15 billion, and LINE Taxi’s respective transaction volume could theoretically be leveraged as a liquidity source for LINE’s crypto token on its parent blockchain – probably ICX on ICON.

LINE Delima

After launching a successful mobile delivery platform in Thailand, LINE launched Delima in Japan, a food delivery service connecting users to over 14,000 restaurants around the country. In September 2017, it was reported that Delima gained over 1.5 million users in the first 50 days after its launch. Similar to LINE Taxi, Delima accepts LINE Pay as a payment method and rewards users with LINE Points.

LINE Advertising

Advertising accounted for approximately 44% of LINE’s revenue in 2017. By using the LINE Points system, advertisers can reward users for completing certain tasks. Here’s an example graphic from LINE’s advertising guide.

For example, an advertiser like Coca Cola can instruct a user to download its official app, add Coca Cola as a friend on LINE, watch a video about a new drink, and then complete some sort of scavenger hunt in the physical world, in exchange for LINE Points.

There are quite a few blockchain projects in the advertising include AdEx, Basic Attention Token, and most recently Blue Whale on the ICON platform. This section of Blue Whale’s white paper recently caught my attention.

Big Data & Machine Learning Solution. The decentralized network, based on the same SaaS architecture as the Blue Whale’s Booking Software, is the optimal solution for collecting data. Data collected in this manner will be saved to the database in real time.

Blue Whale Big Data & ML Architecture

The saved user data will be tagged according the type of goods/services purchased through the Booking Software. The tagged and categorized data will then be used to train the Machine Learning algorithm for two different uses.

  • Using visitors’ data to aggregate and create a predictive list of potential future purchases.
  • Analyze target visitor’s purchase data to find lookalike visitors.

I think LINE could also implement some sort of machine learning into its own advertising tools. By leveraging user data stored on the blockchain, this advertising platform could take into a user’s activities on other LINE services to create extremely targeted advertising funnels and flows that appeal to the user’s interests and lifestyle. On the advertiser side, data generated from analysis of user behavior could be used to optimize ad spend.

LINE in Popular Culture

Lastly, I want to mention LINE’s brand image. The ecosystem has a number of recurring characters called LINE Friends, whom have manifested themselves into global business opportunities in the physical world – stores, cafes, media content, character goods, character licensing, and more.

LINE Store in New York City.

In the digital world, LINE Friends come in the form of LINE Stickers within the messaging app. While the app comes with a selection of stock stickers, users can also purchase new stickers with LINE Points. You may think this whole concept is silly, but LINE actually made over $268 million in 2016 from selling digital stickers.

LINE Stickers like these can be purchased in the LINE app.

In a blockchain environment, this model can be thought of as “asset tokenization”, and is similar to what Cryptokitties has managed to achieve. Imagine a blockchain-based marketplace that allows P2P exchange of tokenized stickers of varying degrees of rarity. Stickers could be exchanged for LINEcoin or other assets in the LINE ecosystem (perhaps a ticket to a sold-out LINE event), and the value of all these digital assets (denominated in LINEcoin) could be determined by live market dynamics calculated by user data recorded on the blockchain. I think this model could actually be fairly successful in the Japanese market where people love the concept of seasonality and “limited edition things”.


No matter how you look at it, this joint venture between ICON and LINE is groundbreaking. As far as I know, it’s the only partnership between an Internet giant and a blockchain platform that has been publicly disclosed.

Over the next few years, I expect to see a few of LINE’s current services transition into DApps on the ICON platform governed by AI-enabled smart contracts (DaVinci, Korea’s leading artificial intelligence and machine learning platform is made by the same people who created ICON) with “LINEcoin” acting as fuel for the network, a user-incentive token, and a liquidity source for ICON’s DEX.

Update (May 17, 2018) – In an interview with Joseph Young from CCN, the ICON team stated that “the joint venture between ICON and LINE could lead to hundreds of millions of users of LINE potentially utilizing the ICON blockchain on a daily basis to access dApps.”

UPbit – Raided. Audited. Cleared.

Wednesday, May 16, 2018


Rumors that South Korean cryptocurrency exchange UPbit came under fire last week, as the exchange’s headquarters were raided over claims that the company was involved in fraud by inflating its balance sheet. Now, following an audit performed by an outside accounting firm, investors can breathe a sigh of relief, as the audit revealed that the company has done nothing wrong.

A few days ago, I said this whole UPbit situation made no sense.

After an internal audit, it turns out UPbit was not at fault and all customer funds are accounted for. What I really want to know is who caused this FUD in the first place, and how much profit he or she made shorting the market and buying back at the bottom.

In News


Substratum Releases Open Beta v0.3.0

Friday, May 11, 2018

Earlier tonight, Substratum released their highly anticipated open beta of SubstratumNode. The release is designated v0.3.0, and is essentially the CLI utility packaged with a simple GUI for non-technical users.

Here’s what the GUI looks like.

The installation process was pretty simple. After installing the SubstratumNode package, the only thing I had to was change my DNS to (localhost). SubstratumNode requires this step because network traffic needs to routed inward to SubstratumNode before going to Substratum’s decentralized network.

There isn’t too much else to report on at the moment, except that SubstratumNode does work. The juicy features will come in future releases.

  • CORES neighborhoods will come in v0.4.0.
  • SUB staking rewards will come in v0.5.0.

More information regarding the open beta, along with installation links and instructions, can be found on Substratum’s official website. SubstratumNode is available for MacOS, Windows, and Linux. It’s great to finally see a MVP from Substratum, and I look forward to running the full node.

Samsung Pass to Use theloop’s CHAIN ID

Friday, May 11, 2018

ICON Foundation:

On May 11th Korea Financial Investment Association (KOFIA), which theloop is participating as a technical partner to develop CHAIN ID, has signed an MOU with Samsung Electronics to incorporate CHAIN ID in Samsung’s ‘Samsung Pass’ service.

Samsung Pass is an “identity management as-a-service” that enables secure access through biometric authentication. For Apple users, Samsung Pass is essentially Samsung’s version of Touch ID & Face ID. Samsung phones account for over 50% market share in the South Korea mobile phone market, so this partnership with Samsung is quite significant.

In February, Samsung announced a partnership with HYPR, another decentralized authentication solution. From HYPR’s website, it’s obvious that this technology is a game changer—use cases include online banking, retail, insurance, employee access, VPN access, ATMs, cars, homes, and more.

After today’s announcement, I think Samsung is currently working with several decentralized authentication solutions targeted towards different purposes. For example, theloop has consistently mentioned CHAIN ID being used in the securities and banking industries. On the other hand, HYPR’s vision includes use cases like employee access and IoT security. From a business standpoint, working with multiple solutions is a good idea for Samsung in case one of the companies fail.

CHAIN ID is the world’s first blockchain based joint authentication system developed using theloop’s blockchain engine ‘loopchain’, and is being used by 11 securities companies in Korea.

ICON has already told us that CHAIN ID is being used by securities companies in Korea. On May 9, 2018, Korea’s Money Today revealed Korean banks will start using an unspecified blockchain identification service later this year. Interestingly enough, KEB Hana Bank and Woori Bank have reported they are currently preparing to support the Samsung Galaxy S7’s iris scanning feature, which is a module of Samsung Pass. Secondly, Yonhap News Agency also reports Shinhan Bank is also considering implementing this technology for their customers.

It’s worth noting KEB Hana Bank and Shinhan Bank both appear on theloop’s list of official partners, while Woori Bank announced a partnership with theloop and its parent company DAYLI Intelligence to cooperate in the blockchain and digital money business.

Connecting the dots, we can presume theloop’s CHAIN ID will see real world consumer use as a result of Samsung Pass integration very soon. While I’m not sure if any of this directly affects the ICON platform, it’s plausible that various CHAIN ID implementations in different industries will need to talk with each other at some point. Perhaps that interoperability can be provided by the ICON blockchain in the near future.

We believe that this MOU with a leading global conglomerate is a big step towards both real-world adoption and globalization of blockchain technology.

In order to understand the real impact of this partnership announcement, one must read in between the lines. By securing a partnership with a large conglomerate like Samsung, theloop and ICON have positioned themselves as the premier enterprise blockchain in Korea. Investors FOMO into ICX just like how other corporations interested in implementing blockchain technology will FOMO onto the ICON network in the not so distant future. This is the birth of ICON’s network effect—the true value of a blockchain.

Unsurprisingly, ICX/BTC rose only ~4% following the announcement of this incredible partnership. I generally try to stay away from discussing price action, but does anyone else think there’s some serious market suppression going on with ICX? It reminds me of XRP’s sideways action before a monstrous rise to $3. Just something to consider…

UPbit Cryptocurrency Exchange Allegedly Raided by South Korean Authorities

Friday, May 11, 2018


South Korea’s Financial Supervisory Service sent 10 investigators to the head office of UPbit, located in Gangnam-gu, Seoul, at 10 am on the 11th. UPbit is under investigation for transferring customer funds from their accounts to an executive’s account.

The story here is that an executive at UPbit transferred customers’ coins into his or her own personal account. Like any other centralized exchange platform, trading on UPbit isn’t a transparent process. A similar event happened over at BitGrail a few months ago, where over $150 million worth of XRB was “stolen” over a period of a few months without customers’ knowledge. Always remember the exchange controls the balance you see on the computer screen. It doesn’t matter if those coins actually exist or not.

Regarding this event, it would be truly stupid for an executive to siphon customer funds like this. Obviously greed is the motivating factor, but why is it necessary to be greedy when you’re an executive at one of the biggest exchanges in a country that holds a very supportive stance on cryptocurrencies and blockchain projects. Cryptocurrency is an emerging asset class in its infancy. Now is the wrong time to be greedy when there’s still so much easy money to be made in the future. This makes no sense unless the executive happened to be on his or her way out.

It’s unclear if this news was the cause of BTC’s ~7% drop today. If so, remember what happened after Bithumb’s “raid” a few months ago?

In News


MOU between theloop — aSSIST Business School

Friday, May 11, 2018

ICON Foundation:

On May 10th, 2018, theloop and aSSIST (Seoul School of Integrated Sciences & Technologies) Business School signed an MOU for blockchain education alliance. The two parties have agreed to develop and provide blockchain training programs.

It’s great to see theloop expanding further into the education sector. I don’t know what the exact curriculum will entail, but I bet there will be a heavy emphasis on theloop’s blockchain products including ICON. If this is the case, theloop is literally paving the way for adoption of the ICON platform, especially with Korea’s recently changed stance on launching ICOs.

It was not easy to find good education institution which can provide both technical and business course of blockchain. Through this cooperation, it is expected bring out blockchain experts who can apply blockchain technology in business area.

Bullish on ICON. Bullish indeed.

What is Blue Whale – Part 1

Friday, May 11, 2018

Blue Whale is a blockchain project that promises to revolutionize the gig economy by cutting middleman costs and introducing traditional concepts like benefits and pensions to freelancers around the world. As a freelancer myself, this project seriously caught my interest. In this first post, we’ll take a look at the current state and weaknesses of the gig economy.

What is the Gig Economy?

Before we dive into the details behind Blue Whale, let’s take a moment to understand what “gig economy” means. If I understand it correctly, “gig economy” refers to the various participants in the freelancing industry.

  • A business uses Fiverr to find a graphic designer to create a new logo.
  • A local guide uses Airbnb to sell experiences to tourists.
  • A driver uses Uber to locate customers who need a ride somewhere.

In the examples above, there are always three or more parties that make up the gig economy — freelancer, client, and a marketplace platform.

The world is becoming more Internet-centric each year, and the global surge in the number of freelancers reflects this fact. Between 2012 and 2017, the number of Internet users globally grew from 2.4 billion to 3.58 billion. In other words, over 1 billion new people were presented with the opportunity to market their freelance skills and services to the world in the last five years.

Number of internet users worldwide from 2005 to 2017 (in millions).

I believe there’s also a cultural shift going on, especially in my current age demographic (22–28). The previous generation placed heavy emphasis on securing a stable 9–5 job immediately after graduating from university. This is simply not the case anymore for us “millennials”. Many of us value freedom above financial security, and choose to live and work as freelancers. In fact, 36% of the USA’s workforce already classify themselves as freelancers, with a staggering 50% of millennials committing to the freelance lifestyle. This number is projected to increase even further in the coming years.

What’s Wrong with the Gig Economy?

Millions of people around the world are making a successful living in the gig economy, so it must already be perfect, right? The Blue Whale Foundation doesn’t think so, and their primary arguments revolve around reliance on centralized marketplace platforms, job security and benefits, and expensive advertising and marketing costs.

Centralized Marketplace Platforms

Airbnb, Uber, and Fiverr are three examples of centralized marketplace platforms. These tech giants match freelancers with clients, and provide communication and transaction services. In exchange for this service, these platforms charge a commission rate or service fee.

Examples of commission rates from Blue Whale’s white paper.

In Blue Whale’s white paper, they state that Uber charges up to 42.75% and Fiverr charges up to 22.9%. I have a few friends who use Airbnb Experiences to market their own tours, and they told me Airbnb’s commission rate is 20%. Depending on how you value these platforms, the presented commission rates could be considered reasonable to exorbitant.

In my opinion, Airbnb’s 20% commission on Experiences is completely reasonable —especially in highly penetrated markets. Japan currently has over 55,000 Airbnb listings, and this number is projected to increase as we inch closer to the 2020 Olympics in Tokyo.

Let’s say Tokyo accounts for 60% of Japan’s listings — that’s ~33,000 properties. With a 50% booking rate (my guess is the actual booking rate is much higher) and an average three night stay with two guests per property, you’re looking at an exposure to ~4 million people who may find your Experience as a result of their Airbnb accomadation booking.

Tokyo, Japan is one of Airbnb’s most popular markets.

It’s also important to assign value to the legal hurdles that Airbnb had to jump through in order to penetrate a popular market like Tokyo. They spent A LOT of money to build the number one accommodation platform in the world, and now they’re enabling tour guides and skilled people around the world to host experiences for an established user base. This doesn’t even take into account the fact that Tokyo’s hotel industry is severely overcapacity and overpriced, and many tourists are essentially forced to use Airbnb to get a good deal. I think a 20% commission rate is okay.

On the flip side, Uber charging up to 47.25% as a result of booking fees in addition to the advertised 25% commission rate is bull****. This means an Uber driver only nets $18,462.50 from $35,000 worth of fares, and this doesn’t even take into account other things like gas expenses and insurance. Now I really don’t understand how people can try drive for Uber “full time”.

While I agree that some centralized marketplace platforms (Uber) are gauging users with ridiculous fees, it’s important to realize that some platforms (Airbnb) actually charge reasonable rates that are in line with the services and exposure they offer. Decentralizing marketplace platforms and eliminating the middleman may be beneficial to certain industries, but it’s definitely not a blanket solution for every industry—at least not in the foreseeable future.

Job Security & Benefits

Freelancing platforms don’t offer much job security and traditional employee benefits. For example, Uber treats their drivers as independent contractors. This means drivers do not receive health insurance and other employee benefits. Uber offers low-liability car insurance when the Uber app is on, but drivers must provide their own car insurance when the app is off.

Other downsides of freelancing include lack of traditional benefits like paid time off and retirement pensions. If a decentralized blockchain platform can generate enough value to offset funds to provide these benefits to freelancers, this would be truly amazing.

Advertising & Marketing Costs

Blue Whale claims the average small business spends ~$10,000 per month or ~$120,000 per year on Google Adwords and Facebook ads. According to Sageworks, the average small business spends 1–5% of revenue on advertising. With this in mind, a business with a $10,000 per month ad budget should be bringing in between $2.4 million to $12 million in revenue. I wouldn’t classify these numbers in the small business category.

While the presented numbers may be a little inflated, I do get Blue Whale’s point. I ran a small business in the past, and it was difficult for us to spend our hard earned profits on Facebook ads ($1.72 Avg. CPC) and Google Adwords ($2.32 Avg. CPC). Another thing to consider is that CPC costs in freelancer-saturated industries are likely to be on the higher side due to more competition. For example, a freelancer running a web hosting or web design business (two highly saturated niches) may have a difficult time marketing their business without significant ad spend.

If a decentralized blockchain could help reduce advertising costs and level the playing field when it comes to the relationship between ad spend and ad display, that would certainly be a relief to many small business owners.
In the next post of this series, we’ll take a closer look at Blue Whale’s WORK System, and how it will be used to change the gig economy.