How the Tech Behind Bitcoin Could Revolutionize Wall Street

From its mysterious origin storyto its ties to black market dealings, Bitcoin has been closely watched since its emergence in 2009. But the digital currency hasn’t captured attention for controversial reasons alone. Many believe the underlying technology that powers bitcoin transactions, a system known as blockchain, has the potential to upend how Wall Street does business.

At its most basic level, a blockchain is a new means of structuring and distributing data. It allows financial companies and other institutions to create a digital ledger guarded by cryptography that can be shared among participants in a transaction. This makes it so that authorized participants can alter the ledger without awaiting approval from a central authority, often resulting in faster and more secure transactions that can save financial institutions time and money.

Bitcoin itself is in the throes of a tumultuous year, as the community is divided by deep philosophical differences. But some observers say blockchain will thrive regardless of bitcoin’s fate. More than 100 executives from major Wall Street firms likeCitigroup, Visa, and Fidelity recently gathered at Nasdaq’s New York offices to experiment with blockchain. The event was hosted by Chain, a startup that specializes in developing blockchain systems for assets like corporate securities and loyalty points.

TIME recently spoke with Chain CEO and co-founder Adam Ludwin to learn more about blockchain and the potential it holds for Wall Street and beyond. Below is a transcript of our conversation. It has been edited for length and clarity.

TIME: The blockchain system was discovered and popularized through bitcoin. How will Wall Street use blockchain technology differently than the bitcoin system does?

Ludwin: This whole idea for a blockchain was invented to solve this double spending problem that had been challenging computer scientists for a long time. And in the bitcoin whitepaper, all of these concepts were put together in a very elegant way that launched a new Internet-based network that was open and decentralized.

The problem is, we have to adopt a new currency with bitcoin should we want to use it. So I can send bitcoin to Vietnam and that’s wonderful and very powerful, however that means I have to get bitcoin and my receiver needs to be willing to accept it.

And then beyond that, the senders and receivers have to be willing to essentially adopt the governance, scalability, and transparency features of bitcoin. And by the way, I don’t think bitcoin is a failure. I think bitcoin, despite all the controversy, is alive and well today. The reason that we’re doing something else is that we’re not interested in moving bitcoin. Bitcoin has already solved that. We’re interested in building new networks that move dollars, stocks, bonds, loyalty points, gift cards, you name it, in the same manner with the same speed and directness that bitcoin moves.

There has been a lot of buzz about how blockchain technology could make financial transactions faster, cheaper, and more secure. Can you go into more detail about how exactly it will do that, and where we’ll see the most impact?

[One example] is in the realm of international payments. If you look at how an international wire transfer today occurs, what we have is a messaging system called SWIFT, which is essentially a fancy financial email between banks. So messages get sent, and those messages trigger the movement of money from bank to to bank on several hops, depending on where the receiver is and where the sender is. And that whole process can take several days and can eat up several percentage points of the payment amount.

If we can put currency into a native digital format, instead of sending an electronic message, we can send the assets themselves electronically. The difference is what these cryptographic databases known as blockchains bring to the world. If we can do that, if we can send the assets themselves as opposed to just sending messages, then I can pay a supplier in Vietnam as fast as I can send an email to Vietnam.

The second example is in the capital markets. In the United States, on one hand we have high frequency trading, but once those trades are filled, we have extremely low frequency clearing and settlement systems. In other words, we can match an order in nanoseconds, but it still takes three days for the securities and cash to eventually swap between the counter-parties.

Just like in the international payments arena, we have a messaging system for sending trade information between institutions, and then we have a separate system for how we hold on to and move the assets themselves. And the difference between those messages and the actual asset movement are all of the steps, like authorization, clearing, settlement, error handling and so on, which are essentially the agreement of the middle and back office of Wall Street.

When people say blockchain technology will change clearing and settlement, what that really means is that blockchain technology will make clearing and settlement redundant. It’s as if I gave you a 10 dollar bill, and then asked you how do we clear and settle that payment. You would look at me funny, because it doesn’t make sense.

There’s also been some talk about how blockchain systems could be applied to other industries. A note from Goldman Sachs, for example, outlined how blockchain databases could be used to manage the identities of Airbnb hosts. What are your thoughts on that?

We view a blockchain functionally as a next generation database for financial assets. We think for most non-financial use cases, traditional database technology is suitable. And the reason for that comes down to what the fundamental purpose of using a blockchain architecture is. The purpose is: when you need to stretch your database over an entire market, so that when you move your assets from point A to point B, it does not leave a copy at point A. In other words, where we can make a recorded electronic asset function like cash, where I just hand you cash and we’re done.

But take, for example, a use case that gets thrown around a lot, which is health records. If I send my health records to my doctor, I also want a copy of my health records. Or if my general practitioner sends a copy of my health records to a specialist, do I want them to disappear from the general practitioner’s office? No, I don’t.

Wall Street is starting to experiment with blockchain technology. What are the biggest challenges these firms are facing so far with blockchain adoption, and do you think our financial system will ever run entirely on digital assets alone?

We’re definitely moving toward this model. There’s no doubt in my mind, based on the projects we’re working on and what we’re seeing. The main challenge right now is that institutions by and large are still asking the wrong questions with respect to blockchain technology. They’re asking, how can we use blockchain to streamline our middle and back office? How can we use blockchain technology to make our operation more efficient?

The question you need to ask as an executive is, what role do we want to play in that new network model? This is not just about change within one organization, but is about change across the market, and who’s going to be leading that charge.

Think about the music industry. If I say music industry, what pops into your head is probably companies like Apple and Spotify, and probably not record labels or live music. And even though at every stage it’s just music, as the medium has changed, the fundamental nature of that music distribution has changed. The winners and losers who bring that music to the masses have also changed. It will take time, but it will be faster than people realize.

Source: http://time.com/

Here’s What to Expect From the iPhone 7

A new dual camera system, a redesigned home button, and no headphone jack

Apple’s next iPhones will have three big physical changes from the current iPhone 6s and iPhone 6s Plus, according to a new report from Bloomberg’s Mark Gurman.

Those changes include a dual camera for taking sharper photos, a redesigned home button, and a slightly tweaked design that ditches the headphone jack as well as the antenna lines located on the back of the phones. Gurman, a former blogger with 9to5Mac who has a long history of accurately reporting details about unreleased Apple products, attributes the information to unnamed sources, including one person who claims to have used a prototype of the new phone.

The new dual camera system will reportedly produce brighter photos with more detail in addition to better preserving image quality while zooming. Both sensors snap a photo at the same time and then merge their results to produce one photo. This dual system is also said to make it easier to take photos in low light environments.

Some observers speculated that Apple would release an iPhone with a dual camera last year when the company acquired LinX, an Israeli startup that specializes in making sensors that capture multiple images at once.

The new home button, meanwhile, will be pressure sensitive and will produce haptic feedback rather than a clicking sensation, similar to the mousepad on Apple’s newer MacBook laptops, according to the report.

The two new phones, which Gurman says could debut as early as next month, will look very similar to the iPhone 6s and its larger sibling, save for two physical differences. Apple will reportedly remove the headphone jack from the newer models, as previous reports from The Wall Street Journaland others have indicated, allowing the company to build a second speaker into the new phones. Apple is also expected to get rid of the antenna lines that run across the back of the phones.

Apple typically revamps the design of its iPhones every two years. But its upcoming release will signal a shift from this schedule. Next year’s model, which will mark the iPhone’s 10-year anniversary, is expected to be a more significant change, according to Bloomberg.

This year’s iPhone launch will be especially important for Apple as investors look to see how the company will continue to innovate on its biggest moneymaker. Revenue from iPhone sales dropped by 23% in the company’s most recent quarter. The Cupertino, Calif.-based firm hasn’t spoken publicly about its upcoming products, but Apple CEO Tim Cook previously teased future iPhone devices when speaking with CNBC’s Jim Cramer.

“We’ve got great innovation in the pipeline from new iPhones that will incent you and other people that have iPhones today to upgrade to new iPhones,” said Cook. “We’re going to give you things that you can’t live without that you just don’t know that you need today.”

Source: http://time.com/

Scientists convert carbon dioxide, create electricity

While the human race will always leave its carbon footprint on the Earth, it must continue to find ways to lessen the impact of its fossil fuel consumption.

"Carbon capture" technologies -- chemically trapping carbon dioxide before it is released into the atmosphere -- is one approach. In a recent study, Cornell University researchers disclose a novel method for capturing the greenhouse gas and converting it to a useful product -- while producing electrical energy.

Lynden Archer, the James A. Friend Family Distinguished Professor of Engineering, and doctoral student Wajdi Al Sadat have developed an oxygen-assisted aluminum/carbon dioxide power cell that uses electrochemical reactions to both sequester the carbon dioxide and produce electricity.

Their paper, "The O2-assisted Al/CO2 electrochemical cell: A system for CO2capture/conversion and electric power generation," was published July 20 inScience Advances.

The group's proposed cell would use aluminum as the anode and mixed streams of carbon dioxide and oxygen as the active ingredients of the cathode. The electrochemical reactions between the anode and the cathode would sequester the carbon dioxide into carbon-rich compounds while also producing electricity and a valuable oxalate as a byproduct.

In most current carbon-capture models, the carbon is captured in fluids or solids, which are then heated or depressurized to release the carbon dioxide. The concentrated gas must then be compressed and transported to industries able to reuse it, or sequestered underground. The findings in the study represent a possible paradigm shift, Archer said.

"The fact that we've designed a carbon capture technology that also generates electricity is, in and of itself, important," he said. "One of the roadblocks to adopting current carbon dioxide capture technology in electric power plants is that the regeneration of the fluids used for capturing carbon dioxide utilize as much as 25 percent of the energy output of the plant. This seriously limits commercial viability of such technology. Additionally, the captured carbon dioxide must be transported to sites where it can be sequestered or reused, which requires new infrastructure."

The group reported that their electrochemical cell generated 13 ampere hours per gram of porous carbon (as the cathode) at a discharge potential of around 1.4 volts. The energy produced by the cell is comparable to that produced by the highest energy-density battery systems.

Another key aspect of their findings, Archer says, is in the generation of superoxide intermediates, which are formed when the dioxide is reduced at the cathode. The superoxide reacts with the normally inert carbon dioxide, forming a carbon-carbon oxalate that is widely used in many industries, including pharmaceutical, fiber and metal smelting.

"A process able to convert carbon dioxide into a more reactive molecule such as an oxalate that contains two carbons opens up a cascade of reaction processes that can be used to synthesize a variety of products," Archer said, noting that the configuration of the electrochemical cell will be dependent on the product one chooses to make from the oxalate.

Al Sadat, who worked on onboard carbon capture vehicles at Saudi Aramco, said this technology in not limited to power-plant applications. "It fits really well with onboard capture in vehicles," he said, "especially if you think of an internal combustion engine and an auxiliary system that relies on electrical power."

He said aluminum is the perfect anode for this cell, as it is plentiful, safer than other high-energy density metals and lower in cost than other potential materials (lithium, sodium) while having comparable energy density to lithium. He added that many aluminum plants are already incorporating some sort of power-generation facility into their operations, so this technology could assist in both power generation and reducing carbon emissions.

A current drawback of this technology is that the electrolyte -- the liquid connecting the anode to the cathode -- is extremely sensitive to water. Ongoing work is addressing the performance of electrochemical systems and the use of electrolytes that are less water-sensitive.

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Story Source:

The above post is reprinted from materials provided by Cornell University. The original item was written by Melissa Osgood. Note: Content may be edited for style and length.

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Journal Reference:

1. W. I. Al Sadat, L. A. Archer. The O2-assisted Al/CO2 electrochemical cell: A system for CO2 capture/conversion and electric power generation. Science Advances, 2016; 2 (7): e1600968 DOI:10.1126/sciadv.1600968

Do black holes have a back door?

One of the biggest problems when studying black holes is that the laws of physics as we know them cease to apply in their deepest regions. Large quantities of matter and energy concentrate in an infinitely small space, the gravitational singularity, where space-time curves towards infinity and all matter is destroyed. Or is it? A recent study by researchers at the Institute of of Corpuscular Physics (IFIC, CSIC-UV) in Valencia suggests that matter might in fact survive its foray into these space objects and come out the other side.

Published in the journal Classical and Quantum Gravity, the Valencian physicists propose considering the singularity as if it were an imperfection in the geometric structure of space-time. And by doing so they resolve the problem of the infinite, space-deforming gravitational pull.

"Black holes are a theoretical laboratory for trying out new ideas about gravity," says Gonzalo Olmo, a Ramón y Cajal grant researcher at the Universitat de València (University of Valencia, UV). Alongside Diego Rubiera, from the University of Lisbon, and Antonio Sánchez, PhD student also at the UV, Olmo's research sees him analysing black holes using theories besides general relativity (GR).

Specifically, in this work he has applied geometric structures similar to those of a crystal or graphene layer, not typically used to describe black holes, since these geometries better match what happens inside a black hole: "Just as crystals have imperfections in their microscopic structure, the central region of a black hole can be interpreted as an anomaly in space-time, which requires new geometric elements in order to be able to describe them more precisely. We explored all possible options, taking inspiration from facts observed in nature."

Using these new geometries, the researchers obtained a description of black holes whereby the centre point becomes a very small spherical surface. This surface is interpreted as the existence of a wormhole within the black hole. "Our theory naturally resolves several problems in the interpretation of electrically-charged black holes," Olmo explains. "In the first instance we resolve the problem of the singularity, since there is a door at the centre of the black hole, the wormhole, through which space and time can continue."

This study is based on one of the simplest known types of black hole, rotationless and electrically-charged. The wormhole predicted by the equations is smaller than an atomic nucleus, but gets bigger the bigger the charge stored in the black hole. So, a hypothetical traveller entering a black hole of this kind would be stretched to the extreme, or "spaghettified," and would be able to enter the wormhole. Upon exiting they would be compacted back to their normal size.

Seen from outside, these forces of stretching and compaction would seem infinite, but the traveller himself, living it first-hand, would experience only extremely intense, and not infinite, forces. It is unlikely that the star of Interstellar would survive a journey like this, but the model proposed by IFIC researchers posits that matter would not be lost inside the singularity, but rather would be expelled out the other side through the wormhole at its centre to another region of the universe.

Another problem that this interpretation resolves, according to Olmo, is the need to use exotic energy sources to generate wormholes. In Einstein's theory of gravity, these "doors" only appear in the presence of matter with unusual properties (a negative energy pressure or density), something which has never been observed. "In our theory, the wormhole appears out of ordinary matter and energy, such as an electric field" (Olmo).

The interest in wormholes for theoretical physics goes beyond generating tunnels or doors in spacetime to connect two points in the Universe. They would also help explain phenomena such as quantum entanglement or the nature of elementary particles. Thanks to this new interpretation, the existence of these objects could be closer to science than fiction.

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Story Source:

The above post is reprinted from materials provided by Asociación RUVID.Note: Content may be edited for style and length.