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West Virginia Secretary of State Reports Successful Blockchain Voting in 2018 Midterm Elections

The West Virginia Secretary of State has announced that 144 voters successfully cast their ballots in the 2016 midterm elections on a mobile, blockchain-based platform.

The Secretary of State of the U.S. state of West Virginia Mac Warner reported a successful first instance of remote blockchain voting in an official announcement Nov. 15.

Warner stated that in the 2018 midterm elections, 144 military personnel stationed overseas from 24 counties were able to cast their ballots on a mobile, blockchain-based platform called Voatz, adding:

“This is a first-in-the-nation project that allowed uniformed services members and overseas citizens to use a mobile application to cast a ballot secured by blockchain technology.”

Voting for the general elections on the platform started in September, when absentee balloting opened in West Virginia.

The first trial of the new platform took place during the state’s primary elections in April. Blockchain-based ballots were then restricted to a select group of voters such as deployed military members and other citizens eligible to vote absentee under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) and their spouses and dependents.

The Voatz system was initially developed to address the issue of low voter participation among members of the military. According to Symantec — the firm behind the Voatz system — only 368,516, or 18 percent of the 2 million service members and their families serving overseas received ballots in 2016. After counting rejections and tardy ballots, only 11 percent of said votes were counted.

While Warner noted the project’s success, his deputy chief of staff Michael Queen told the Washington Post that they have no plans for expanding the program beyond military personnel serving overseas:

“Secretary Warner has never and will never advocate that this is a solution for mainstream voting.”

According to data from the United States Elections Project, West Virginia ranks 44th of 50 states in voter participation at 42.6 percent.

Some experts have expressed concern over the safety of mobile voting. Joseph Lorenzo Hall, the Chief Technologist at the Center for Democracy and Technology, claimed:

“Mobile voting is a horrific idea. It’s Internet voting on people’s horribly secured devices, over our horrible networks, to servers that are very difficult to secure without a physical paper record of the vote.”

Conversely, Bradley Tusk of Tusk Montgomery Philanthropies has encouraged mobile voting, stating that it can turn out more voters, and as a result, “democracy would work a lot better.” Tusk Montgomery Philanthropies helped fund the Voatz app’s development.

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EOS Proves Yet Again That Decentralization Is Not Its Priority

EOS’ governance model has been questioned again.

Recently, Blockchain protocol EOS became subject of a new scandal: its governance model was questioned, as evidence showing a moderator reversing transactions which had already been confirmed surfaced on Reddit.

Crypto community was triggered once again, but perhaps it is time to face it: EOS is not really decentralized. At least it is isn’t what EOS “is after”, in the words of its co-founder Daniel Larimer.

What is EOS and how it works?

EOS.io is a blockchain-powered smart contracts protocol for the development, hosting, and execution of decentralized applications (dApps). It was launched in June 2018 as open-source software, while first test nets and the original whitepaper emerged earlier in 2017. The platform was developed by block.one, a startup registered in the Cayman Islands and lead by Daniel Larimer and Brendan Blumer.

EOS holds the absolute record in terms of funds raised during initial coin offerings (ICOs): it has managed to gather around $4.1 billion worth of investments, or roughly 7.12 million Ethereum (ETH), after fundraising for nearly a year. The number remains unmatched to date.

The protocol is supported by the native cryptocurrency EOS, currently the sixth largest crypto by total market cap. Those tokens can be staked for using network resources either for personal use or leased out for developers use — as per the project’s whitepaper, dApp developers can build their product on the top of the EOS.io protocol and make use of its servers, bandwidth and computational power, as those resources are distributed equally among EOS holders. Basically, EOS.io attempts to represent a decentralized alternative to cloud hosting services.

EOS employs a consensus model called Delegated Proof-of-Stake (DPOS). That means that its investors are rewarded with voting power and decide who gets to mine the EOS blockchain.

Thus, the EOS ecosystem rests upon at least two major entities — the EOS Core Arbitration Forum (ECAF), effectively its ‘judicial branch,’ and Block Producers (BPs), who produce blocks on the EOS blockchain — just like miners do within the Bitcoin’s (BTC) blockchain.

BPs earn EOS tokens produced by inflation — according to some estimations, top three EOS BPs obtain around 1000 tokens per day. They are elected through the constant voting process, and their number is capped at 21 — consequently, the top is fluid, and BP candidates who earn enough votes can replace the BPs in power any minute.

Decentralization supporters’ nightmare: EOS reverses previously-confirmed transactions

On November 11, a screenshot showing a ECAF moderator reversing transactions which had already been confirmed, was posted on Reddit, and gathered hundreds of comments.

According to Reddit user u/auti9003, a dispute allegedly involving a phished EOS account was referred to one of the platform’s “arbitrators” Ben Gates, who decided to reverse transactions that happened without the owner’s permission. This, the user noted, involved undoing transactions which had already received network confirmations — most of cryptocurrencies would require a hard fork for that (like Ethereum with DAO), but EOS relies on a more flexible model.

Summarizing, the arbitrator referred to the EOS constitution as a basis for the decision. He wrote:

“Under the powers afforded to me as arbitrator under article 6 of the Rules of Dispute Resolution, I, Ben Gates, rule that the EOS account in dispute should be returned to the claimant with immediate effect and that the freeze over the assets within the said account is removed.”

That move outraged decentralization maximalists, as Reddit responses mostly claimed that EOS had failed to prove its use case versus other more traditional centralized structures.

“Why would anyone use this over a bank account and traditional legal system?” the most popular comment reads, adding:

“These guys raised ($4 billion) to recreate the legal system using a token that is neither censorship resistant, nor immutable.”

Is EOS even trying to be decentralized?

EOS’ model of governance has attracted controversy before: for instance, in early October, allegations arose accusing the platform’s major Block Producers (BPs), including Chinese crypto exchange Huobi, of “mutual voting” and “collusion.”

Essentially, an alleged leaked Huobi spreadsheet suggested that main EOS nodes were involved in mutual voting along with pay-offs to remain in power of the EOS blockchain and keep their profits.

Soon after, Block.one, the developer of EOS, published a statement, saying it was “aware of some unverified claims regarding irregular block producer voting, and the subsequent denials of those claims.” Nevertheless, there was no further update on the matter, while Huobi remains EOS’ top BP as of press time.

Further, in June, an even bigger scandal occurred, when EOS BPs overrode an ECAF decision and froze seven accounts associated with phishing scams after the arbitration body failed to promptly come up with a response. The ECAF later retroactively ordered the accounts frozen, but the BP conference call-based decision caused some to question EOS’ decentralized system, and to label the move as ‘power abuse.’

Less than a week after, another ECAF order to stop processing transactions involving 27 more addresses surfaced. Interestingly, it lacked any explanation for blocking the addresses, promising to do so on a later date.

That attracted another round of harsh criticism from the crypto crowd, and, after an apparent fake ECAF order began to circulate on social media sever days later, some BPs, notably EOS New York, announced that they would suspend execution of any such orders, as they couldn’t’ tell if they were legitimate. Yet again, the ECAF and BPs struggled to coordinate their action, and that many decisions on EOS blockchain were handled by centralized entities.

On November 1, more detailed and grounded criticism of EOS’ governance model arrived, as blockchain testing company Whiteblock published results of “the first independent benchmark testing of the EOS software.” Essentially, the investigation came to several conclusions about the EOS, the most bold of which was that “EOS is not a blockchain,” but “rather a distributed homogeneous database management system,” because its transactions were reportedly “not cryptographically validated.”

Additionally, the research results showed inaccuracies in performance claims. In July, EOS’ chief technology officer Daniel Larimer tweeted that EOS was performing 2351 transactions per second (Ethereum, for comparison, can process around 15). The Whiteblock report, however, showed that with “real world conditions” of round trip latency and 0.01 percent packet loss, EOS performance was below 50 TPS, “putting the system in close proximity to the performance that exists in Ethereum.”

Thus, the investigation concluded that “the foundation of the EOS system is built on a flawed model that is not truly decentralized.” Later, on November 6, the EOS Alliance, a non-profit organization formed by EOS community members and block producers with the role to “facilitate the dialogue within community,” published a response signed by its Interim Executive Director Thomas Cox. Dubbed “Yes, EOS is a blockchain,” it criticized Whiteblock’s “provocative paper,” noting that the benchmarking firm “only recruited Ethereum folks for the project.”

Still, EOS’ chief technology officer Daniel Larimer confirms that his company does not aim to be decentralized. In an interview with YouTube blog “Colin Talks Crypto” aired on October 3, Larimer clarified his vision:

“Decentralization isn’t what we’re after. What we’re after is anti-censorship and robustness against being shut down.”

Nevertheless, Larimer added that his project was still more decentralized than Bitcoin and Ethereum, because it takes 11 BPs to control the majority of EOS network, while BTC and ETH relied 4 and 3 pools respectively.

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EOS ‘Reverses’ Previously-Confirmed Transactions as Pundits Decry Centralization

An EOS “arbitrator” used the project’s constitution to manually undo transactions from a phished account, evidence suggests.

Blockchain protocol EOS found itself at the center of fresh controversy Nov. 9 after evidence emerged on social media appearing to show a moderator reversing transactions which had already been confirmed.

According to Reddit user u/auti9003, a dispute allegedly involving a phished EOS account was referred to one of the platform’s so-called “arbitrators” who decided to reverse transactions that occurred without the owner’s permission.

This, the Reddit user notes, involved undoing transactions which had already received network confirmations.

Summarizing, the arbitrator, Ben Gates, referred to the EOS constitution as a basis for the decision. He wrote:

“Under the powers afforded to me as arbitrator under article 6 of the Rules of Dispute Resolution, I, Ben Gates, rules that the EOS account in dispute should be returned to the claimant with immediate effect and that the freeze over the assets within the said account is removed.”

EOS has frequently garnered criticism from cryptocurrency sources due to its alleged lack of decentralization, a characteristic which CTO Daniel Larimer himself confirmed in an interview last month.

“Decentralization isn’t what we’re after,” he told YouTube series Colin Talks Crypto, adding:

“What we’re after is anti-censorship and robustness against being shut down.”

In June, EOS “froze” seven accounts that were suspected of having been compromised through phishing scams, with EOS Block Producers (BP) shortly after reportedly receiving a separate emergency order to stop the processing of transactions for 27 accounts with reasoning to follow.

On Reddit, responses to the alleged transaction reversal centered around the concept that without decentralization, EOS had failed to prove its use case versus other more traditional centralized structures. The project’s $4 billion year-long Initial Coin Offering (ICO) was also highlighted.

“Why would anyone use this over a bank account and traditional legal system?” the most popular comment reads, adding:

“These guys raised ($4 billion) to recreate the legal system using a token that is neither censorship resistant, nor immutable.”

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Singapore Gov’t Develops Blockchain Based Security Token System

An automated Delivery versus Payment (DvP) platform has been jointly developed by the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX). Its purpose is to allow the settlement of tokenized securities across various blockchain platforms.

Simplifying Post Trade Processes

In a joint release over the weekend the MAS and SGX stated “This will help simplify post-trade processes and further shorten settlement cycles,” The DvP system operates with payment and product changing hands simultaneously ensuring that securities are delivered only when payment is made according to reports.

The system has been developed along with technology partners Anquan, Deloitte and Nasdaq. Prototypes of the DvP have already shown that settlements can be made in various digital tokens on different blockchain platforms. An industry report detailing payment settlement using smart contracts has already been published by the MAS and SGX.

MAS chief fintech officer Sopnendu Mohanty said;

“This project has demonstrated the value of blockchain technology and the benefits it can bring to the financial industry in the short to medium term. The concept of asset tokenisation, as well as other learnings gleaned from this project, can potentially be applied to a broad spectrum of the economy, creating a whole new world of opportunities.”

Nasdaq senior vice president, Magnus Haglind, added; “In collaborating with SGX and MAS on this unique ecosystem of converging blockchains, we have demonstrated how to create interoperability between multiple networks to secure settlement between different assets – this is a major step in the application of blockchain to the capital markets,”

While SGX head of technology and project chair, Tinku Gupta, commented; “We are delighted to drive this important industry effort to accelerate innovation in the marketplace. Based on the unique methodology SGX developed to enable real-world interoperability of platforms, as well as the simultaneous exchange of digital tokens and securities, we have applied for our first-ever technology patent.”

The project was originally announced in August as a spinoff from another project, ‘Ubin’, a collaborative project with the financial services industry. It comes just days before the Singapore FinTech Festival 2018, which runs from November 12 to 16. It is expected to have over 250 speakers, 450 exhibitors and nearly 40,000 participants at the event. The city state recently held Crypto Expo Asia, an event solely focused on cryptocurrencies.

Singapore is currently playing host to ‘token day’ which is actually a three week period running from October 31 to November 18. It has been implemented to bring crypto to the masses by raising awareness and encouraging use and adoption. Vendors in the city’s Chinatown will be accepting crypto payments and offering various goods in exchange for digital assets.

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Meet Mattereum, a ‘Deeply Weird’ Startup, Hoping to Transform Smart Contracts

Mattereum, an unorthodox startup, hopes to revolutionize the world of smart contracts by transforming them into enforceable legal contracts.


High Weirdness in London

TechCrunch’s Jon Evans notes that Mattereum’s project has been kindling in London for roughly a year-and-a-half, with an eclectic “[…] team of lawyers, cryptographers, software engineers, and/or former military consultants.” The project revolves around an attempt to bring together smart contracts and real-world legal contracts, altering traditional landscapes of ownership and legality.

Mattereum’s white paper, available via the company’s website, was published in October of this year. The paper describes Mattereum’s goal of developing:

“[…] commercial infrastructure to turn smart contracts into legal contracts that can be efficiently enforced all over the world, without needing new legislation

Mattereum describes the tremendous task of navigating “[…] a nearly almost infinitely knotty tangle of legal precedents, gray areas, and jurisdictions.” 

Smart Contract Stradivarius

Mattereum’s chief asset is a wildly pricey Stradivarius violin worth $9 million. Violins from the 17th and 18th century Stradivari family are among the world’s most coveted, expensive, and unique instruments.

It will not simply be tokenized and sold in a crowd sale. The governing committee for the instrument will have legal decision-making powers over the instrument, protecting and curating it on behalf of the token holders and posterity, in accordance with a written constitution.

Violin

The Stradivarius serves as perhaps the prime example of the Mattereum’s system. The white paper describes the process through which an object like the Stradivarius becomes “programmatically” tokenized, licensed, marketed, and sold to investors:

Assigning legal title over that violin to one of Mattereum’s registrars […] which then licenses control via a set of smart contracts (say, on the Ethereum blockchain) means the violin instantly becomes not just a physical asset but a digital one […]

Diagram from Mattereum's White Paper

Dream Team

Mattereum’s central team is headed by CEO Vinay Gupta, who TechCrunch describes as “[…] the mad-or-visionary-depending-on-who-you-talk-to global resilience guru turned Ethereum launch coordinator turned CEO.

The team also includes Chief Scientist Ian Grigg, the man responsible for creating the Ricardian Contract in 1996. Mattereum’s description of Ricardian Contracts makes it plain to see why Grigg is a choice selection for the project.

Ricardian Contracts represent the canonical design pattern for tying a legal contract to a digital asset issued over the internet and is central to the Mattereum platform.

Also of note among the team is Dr. Aeron Buchanan, an Oxford Robotics grad and former COO of Ethereum Foundation. Legal heads also lurk among the team. Chief Legal Officer Chris Wray is similarly an Oxford graduate, as well as maintaining a law degree from City Law School.

What are your thoughts on Mattereum’s smart contract project? Don’t hesitate to let us know in the comments below!


Images and media courtesy of Shutterstock, Mattereum.com