Big banks want to issue new blockchain bond on Ethereum, but there’s a catch

Even the goddamn World Bank isn’t immune to blockchain hype: it has mandated that the first ever bond be issued via blockchain.

The Commonwealth Bank of Australia (CBA) will be issuing what’s being called “the Kangaroo bond.” Bonds are used by businesses to raise capital – when investors buy them, they are essentially loaning money directly to the issuer. The debt is repaid over time, typically with a bunch of extra dividends.

To set it apart from the traditional concept, the banks are calling their spin on it ‘bond-i’ – an acronym that stands for “blockchain operated new debt instrument.”

“Blockchain has the potential to streamline processes among numerous debt capital market intermediaries and agents,” a joint press release reads. “This can help simplify raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”

The bonds will be “created, allocated, transferred and, managed” through a private, Ethereum-based blockchain. Its infrastructure is to be handled through Microsoft’s Azure cloud computing system by way of a data center in Washington DC.

The language here is important. Leveraging solutions like Azure and data centers suggests the current implementation of bond-i probably isn’t entirely decentralized – a trend often frowned upon in blockchain circles.

Indeed, criticism aimed at half-assed blockchain solutions often focuses on the fact that using centralized infrastructures creates single points of failure within such systems.

This has really been unchartered territory until now – despite it being an obvious application of the technology. It’s pretty much on trend for CBA, too. Just last week they announced they had employed the use of a distributed ledger to ship a bunch of almonds to Germany .

While CBA says interest in the bonds has been “strong,” there’s really no way to tell just yet. There’s also a certain irony in the World Bank demanding debt be managed via blockchain, considering we were meant to be freed of it via cryptocurrency.

Yep, it’s great that corporations are using blockchain, but we’re still yet to see proof the technology can really work on a commercial scale. Misuse of the technology through a bad implementation could set the industry back considerably – especially with financial instruments such as bonds in play.

This blockchain mining system helps people who can’t afford bail

The New Inquiry, a non-profit, recently unveiled its blockchain mining system designed to give freedom to people awaiting trial who can’t afford to post bail. Slacktivists unite: anyone can donate their unused processing power to the cause.

Bail Bloc is software that lets you utilize unused processing power to mine for cryptocurrency, specifically Monero, which is then donated to the Bronx Freedom Fund . That donation is used to post bail for individuals who are incapable of coming up with the money to post their own bond, according to a white paper outlining how The New Inquiry intends to use the funds.

When you hear that someone put bail-bonds on the blockchain you’re likely to respond with a mixture of disbelief and cynicism — at least if you’re a technology journalist. The biggest concern here would be that a group or company is further monetizing the criminal justice system.

This is not the case with Bail Bloc. Grayson Earle co-creator of the program, told TNW:

Millions of Americans are introduced to the justice system, for the first time, upon being arrested. For some a poor decision, like driving while under the influence, turns into a costly legal experience involving a night in jail, exorbitant lawyer fees and court fines, and mandatory attendance at a few classes. The same crime has an entirely different punishment when committed by a poor person.

According to research conducted by the non-profit:

If you’re a wage worker who can’t afford to post bail, but also can’t afford to miss work to stay in jail, a guilty plea with probation probably sounds better than proving your innocence. In essence, the American justice system is a farming operation designed to squeeze either money or convictions out of people in the most efficient way possible – philosophically speaking, of course.

What isn’t philosophical is the very real nature of cryptocurrency to seemingly create money out of thin air. According to Earle:

Bail Bloc has the potential to not just give people their freedom, but to give the justice system a bit of dignity back. It lets people give away something they aren’t using in order to provide a way for poor people to have the same opportunity as a person who can afford bail.

Furthermore, when a person released on bond attends their court date the funds are returned to Bail Bloc, and recycled for use again.

The idea, when it comes to justice, is that your access to a fair trial by a jury of your peers shouldn’t rely on how much you’re able to spend. Bail Bloc is a good start.

If you’re interested in helping please click here and download the free, easy-to-use software to contribute to the cause.

Research: Cryptocurrency exchanges have pretty weak password security

Paranoid cryptocurrency traders might want to go the extra mile and set up an even stronger password than their preferred exchange desk suggests. New research indicates that most exchanges in the blockchain space allow users to create accounts with poorly secured passphrases.

Password manager app Dashlane examined the password protocols of 35 leading cryptocurrency exchange desks and discovered over 70 percent of these companies let users secure their accounts with inadequate passwords.

“Signing up for a cryptocurrency exchange is akin to signing up for a bank account,” said Dashlane CEO Emmanuel Schalit. “With your bank account, credit cards, Bitcoin, and other digital assets potentially stored on the exchange, it’s critical that your account is locked down on the security front.”

“The fact that most exchanges allow their users to create incredibly weak passwords should serve as a wake-up call to the entire industry,” he continued.

The researchers found that “a staggering 43 percent of exchanges let users create accounts using passwords with seven or fewer characters, and 34 percent do not require alphanumeric passwords.” The study further pointed out that testers were able to open trading accounts with weak passwords like “12345,” “password,” and in one case – just using the single letter “a.”

Dashlane has since ranked the password security requirements of these exchanges on a score from one to five. Here is the full list:

Among other criteria, the researchers looked whether exchanges require at least eight-plus character passwords and alphanumeric combinations. They also considered whether the exchanges have implemented some sort of “password strength assessment” tool, an email confirmation mechanism, and two-factor authentication.

In all fairness, cryptocurrency exchange desks are hardly the only internet-based companies failing to encourage their users to adhere to proper password security practices.

Indeed, previous research conducted by Dashlane discovered that 46 percent of all consumer websites have failed to implement even the most rudimentary password security policies. The list of offenders included giants like Google, Amazon, PayPal, Reddit, and more.

Meanwhile, anyone infatuated with bad security ought to check out this GitHub repository which collects the worst password practices across the web.

And in case your password sucks: there is no better time to update it than now.