In a recent Deloitte Tech Trends 2017 report, titled ‘Blockchain: Trust Economy,’ the authors Eric Piscini, Gys Hyman, and Wendy Henry highlight the benefits of implementing blockchain technology in the so-called “trust economy.” The report defines the trust economy as the online identity and reputation of companies and individuals.
The Trust Economy
In today’s digitalized world, a company’s or an individual’s public perception is no longer driven by what newspapers or television say about them. Reputations are now primarily driven by their digital presence and online peer reviews. Whether you are a company selling products on online vendors such as Amazon or whether you are an individual renting our your spare room on Airbnb, reviews about you or your goods/services aid the potential customer in their buying process. As a society, we are getting accustomed to trusting a person’s online reviews, forming the foundation of the trust economy.
Greater Transparency with the Blockchain
Priscini, Hyman, and Henry state in their report that the blockchain is gradually outgrowing its cryptocurrency roots and is now “assuming the role of trusted gatekeeper and purveyor of transparency.” That is exactly why the blockchain is the ideal underlying technology to build the base of the emerging trust economy.
The distributed ledger technology allows for secure decentralized storing and sharing of data, such as financial transactions in the case of bitcoin. Due to the blockchain’s open-source nature, it can also be augmented to execute smart contracts and create a broad range of other applications. Given the capabilities of this new technology, this is why storing digital identities, and peer-to-peer reviews of individuals and companies, on the blockchain would make sense for the trust economy.
Blockchain-based digital identities and trust ratings are already on the radar of peer-to-peer lodging platform Airbnb. Airbnb’s CTO Nathan Blecharczyk told CityAM on the topic of blockchain technology and its potential use as an immutable database that:
“...within the context of Airbnb, your reputation is everything, and I can see it being even more so in the future, whereby you might need a certain reputation order to have access to certain types of homes. But then the question is whether there’s a way to export that and allow access elsewhere to help other sharing economy models really flourish. We’re looking for all different kinds of signals to tell us whether someone is reputable, and I could certainly see some of these more novel types of signals being plugged into our engine.”
The Blockchain in Action in the Trust Economy
Currently, different centralized platforms display individuals and companies trust levels. You can find feedback and ratings on digital platforms such as Amazon, eBay, Airbnb, Bitbond, LocalBitcoins, UpWork, and Uber but each platform has its own ratings and comments. If, instead, all reviews would be stored on a distributed ledger where access is only permissioned when the person or company provides an access key to the counterparty who wants to assess the reputational rating, this could establish a whole new level of trust that would help the sharing economy grow.
Not only can a blockchain-based digital identity and trust level verify that the person exists but his or her trust attributes could also be automatically embedded into smart contracts when engaging in business transactions with them.
For example, if you are looking to rent a room from someone in a new city you are visiting for a weekend, you could assess the homeowner’s trust level when inquiring about the availability of the homeowner’s property for the specific dates. Once it has been made clear that the property is available, both parties can assess each other’s digital identity and trust ratings.
Then, if both parties are happy with one another’s digital reputation, a smart contract could be executed, which states the terms of the short-term rental agreements and completes the payment for the service provided all terms of the contract have been met once the stay has been completed. As no centralized authority would be used to process the transaction, it decentralizes the entire sharing economy, making it cheaper for consumers and easier to transact for those offering products or services.
Another example would be car sharing. If someone was to give his or her vehicle up for car sharing, the car could be found by a potential driver using a mobile app. Once the driver has indicated his or her interest in using the car for a set period or time or a set route, both the car owner and the driver could assess each other’s digital reputation through the app and then agree to the terms and conditions of the temporary car rental. The agreement would then be executed through a smart contract, and the payment would be made electronically once the ride is finished. This entire process could be developed using blockchain technology.
The three most important functions of blockchain technology; the ability to store records, to exchange digital assets without friction and the possibility to execute smart contracts, as identified in Deloitte’s report, provide the right technological infrastructure for a more efficient and streamlined trust economy of which the wider sharing economy would benefit greatly.
Nevertheless, blockchain technology is still in its infancy. Many liken the state of blockchain technology today, to the situation with the Internet in the early 90’s. While blockchain pilot projects and proof-of-concepts are currently flooding all of the key industries, there are very few existing blockchain solutions today that solving business problems or making operational processes more efficient. It will take time before blockchain technology will be used to store digital identities and trust ratings on a global scale.
Legal frameworks still need to be created for technologies such as smart contracts and digital asset transfers to become fully accepted, while the technological challenges of implementing this new technology also still need to be overcome. Once that day comes, however, the trust economy will flourish, and both service providers and consumers will reap the benefits.
The ominous, new set of rules that a bitcoin exchange must adhere to has begun to make their business dealings more difficult. For many Chinese cryptocurrency exchanges, this is proving to be too much of a strain, as evidenced in this HaoBTC partial shutdown. HaoBTC made the sudden change to their operation, shutting down their exchange even though at the start of February the company had announced the introduction of new deposit fees for their exchange services.
“We don’t provide margins and futures (trading) now, but we will provide margins in the future. Unlike other Chinese exchanges, like OKCoin and Huobi, our exchange uses the maker/taker model, that means we charge fees on exchanges,” stated HaoBTC Vice President Xiong Yue speaking to CCN in December.
The announcement included news of a large deposit fee to be added to the user's costs, but even with that substantial fee change, it merely served as a foreshadowing of the soon coming closure.
Additional information about HaoBTC’s exchange reveals that their exchange operation will cease to exist on February 15, with any unfinished business or unfilled orders at the time to be automatically canceled or reversed. RMB deposits will stop altogether on February 17. For now, it looks like all of their other bitcoin services, including the mining pool and online wallet, will continue to operate without delays or changes.
BTCManager’s weekly cryptocurrency market outlook identifies the best trading opportunities in the largest cryptocurrencies, providing precise trade ideas, as well as a brief recap of the previous week’s price action for bitcoin, ether, and others.
The weekly chart below for BTC-USD shows indecision amongst market participants, indicated by the bearish Doji candlestick. Bulls will be pleased that the market has respected key support levels, such as the base ($890.65) and 50 percent level ($944.20) of the bullish Marubozu candlestick formed in the last week of December.
The significance of the two support levels remaining intact is that an upward trend is still in place. This is also confirmed by the Awesome Oscillator, which has switched color to green this week and has moved higher. Also, the conversion line (blue) held as support, with the market bouncing higher from this level. Therefore, with the conversion line holding as support, we should see the market continue higher.
However, the conversion line (blue) and base line (red) are now horizontal, suggesting the market will be attracted to these support levels before moving higher. Also, the market needs to push BTC-USD above $1074.69 before February 26, otherwise the case for a bearish outlook will strengthen.
Ether returns to long-term equilibrium, as shown below, with the market contained by the green Ichimoku cloud. Last week’s price action saw bears and bull fight hard but the market showed little volatility. A dragonfly doji forms at an important resistance zone, that is inside the Ichimoku cloud, suggesting the market may be finding a ceiling.
Moreover, the market fails to test the fractal resistance at $11.63786, highlighted below. If buyers are unable to penetrate above $11.63 as well as the Ichimoku cloud, then it means sellers remain in control and there will be more scope for downside moves rather than moves to the upside.
We look to place limit buy orders just above $11.63 and limit sell orders just below the lower span of the Ichimoku cloud, that is around $10.9405. A bearish Kumo breakout, which means that ETH-USD pushes back below the Ichimoku cloud, will point to a decline toward fractal support at $7.01012.
Monero held its own against sellers last week, but there is a stronger likelihood for XMR-USD to test support around $10.48 as indicated by the base line (red). After posting a fresh high at $13.40, monero has slided lower. The market remains trapped in between the horizontal conversion line (blue) and base line.
A failure for XMR-USD to break above $13.40 this week will point to further downside, as a fractal resistance will form. Consequently, the market will then want to establish a new floor, with the most recent fractal support only providing a foundation at $4.19.
We wait for the week’s candlestick to form before making any suggestion on positions with XMR-USD, as it is likely the altcoin will trade sideways between the conversion line and base line.
ETC-USD looks to experience downward momentum as indicated by fractal analysis but lies just above an important support level as indicated by the Ichimoku Kinko Hyo indicator. Given ether classic’s age, only the conversion line and base line have formed so far, shown below, with the Ichimoku cloud (or Kumo) yet to come into existence.
Buyers managed to get ETC-USD to a fresh high at $1.509999 last week but were checked by sellers, pushing the close down much lower to $1.21. Downward momentum is highly likely if the market remains below $1.509999 until Sunday, 26 February; a fractal resistance will form at this level and the market will take the ‘path of least resistance’ towards fractal supports around the $0.7047 level.
The base line has started to form and has converged with the conversion line, suggesting momentum is neutral. Both form a support level just above the $1.00 psychological level. We wait for a test of this level to determine the future direction over the long term.
A weekly close below $1.0339 will point to a bearish outlook over the long-term. However, if the week’s price action remains above $1.0339 then we should favor buy positions. Also, we can set limit buy orders just above $1.509999 to profit from a bullish breakout or limit sell orders around $1.02 to profit from a bearish breakout.
In our previous cryptocurrency report, we highlighted MAID-BTC as good buy. The chart below shows that buyers dominated MAID-BTC in the week ending February 12. The market managed to close above the Ichimoku cloud, also known as a bullish Kumo breakout, and gives a strong buy signal. We expect a long-term upward trend to develop for MAID-BTC, with targets highlighted on the chart below by the horizontal yellow rays.
The market’s momentum has just turned into the bulls favor, as illustrated below. For instance, the conversion line is crossing above the base line, suggesting a switch from bearish to bullish momentum is taking place this week. Given that the price is above the Ichimoku cloud, this provides a strong bullish signal once confirmed on Sunday, February 19.
Also, we see that the Awesome Oscillator is rising and pushing higher into positive territory, signalling that bulls have gained the upper hand and will start to exert their dominance over the market, tending towards resistances at 0.00024 and 0.00025705. The green Ichimoku cloud just above 0.00015 should provide support in case of any correction.
Counterparty (XCP) has shown some strong gains against bitcoin, with the weekly price action displaying some interesting signals on the chart below.
Firstly, notice that last week’s price action broke resistance provided by the conversion line (blue). This bullish signal gives the first indication of a change in trend and that XCP-BTC did actually bottom out during December 2016, just below 0.0020. Once the price breaks above the conversion line, it will then tend to act as support, around 0.0032, and increases the likelihood of uptrend continuation.
The market will now tend towards the equilibrium zone as indicated by the Ichimoku cloud below. Notice that buyers previously bid the market up to this area but sellers forced the market back down, with a fractal resistance forming at 0.0048542. Therefore, buy positions could target this level initially.
Secondly, the Ichimoku cloud is relatively thin, suggesting that weak resistance will be found around 0.0052 for the weeks ahead. We could see a bullish breakout with a close above the cloud and would indicate the beginning of a long-term uptrend. Therefore, higher-risk buy positions taken now should also look to target further fractal resistances at 0.0069 and 0.00831.
Bullish momentum is starting to fight back. Upward energy may remain weak as the Awesome Oscillator remains below the zero threshold, however, the upward trend and curvature of the oscillator suggests there is a good chance for further upside in XCP-BTC.
The weekly chart below shows two important facts; firstly, XEM-BTC needs to breaks the recent high at 0.00000719 before Sunday, February 19, otherwise a fractal resistance will form at this level. Further gains are anticipated if XEM-BTC pushes above 0.00000719 and limit buy orders could be placed just above this level to capitalize on a breakout.
Secondly, the market faces resistance provided by the base line (red). A weekly close above the base line is required to increase the chances of further gains over the long term, and for an attempt at the Ichimoku cloud.
The Awesome Oscillator shows that while bullish momentum is starting to pick up, it is still weak. Therefore, we wait for confirmation with a close above the base line on the weekly timeframe to enter into further buy positions for XEM-BTC.