To integrate new digital currencies, such as Bitcoin, into global financial systems requires that checks and balances be put in place to ensure adherence to local laws and regulations and protect consumers from fraud while maintaining privacy. This is where the Blockchain PISC project comes in.
Ensuring privacy, identity, security and compliance (PISC) issues in digital currency networks, such as Bitcoin, are fully compatible with global financial systems is key to the integration and expansion of these new forms of financial asset.
The goal of the Blockchain PISC project was to enable collaboration between Swiss firm SBEX and Canadian company Bitaccess to coordinate their research efforts, exchange development experience and to open access to their respective products and services in new global markets.
The project, that took place in 2015 and 2016, was very successful in developing technologies that have since seen commercial success as the market for virtual currencies has boomed from 2017.
Digital currencies using blockchain technologies started to emerge around 2008 as an attempt to construct a trust-based transaction asset outside conventional financial systems.
Estimating the number of virtual currency users globally is difficult due to their pseudo anonymous nature. There were approximately 1.3 million individual Bitcoin users at the start of 2014, up from a population of around 100 000 in 2011. Best estimates at the beginning of 2018 suggest a global bitcoin user base of between 13 and 28 million.
Originally the blockchain currencies were used only by niche industries, but started to gain significant interest from larger markets for use in payments, international transfer, asset management and banking applications.
“The key to integration of virtual currencies has been to develop technologies that allow companies to engage with customers in a compliant manner,” says Moe Adham, co-founder and Chief Technology officer of Bitaccess. “This needs a multi-faceted approach that builds trust while preserving the essential privacy and security characteristics of virtual currencies.”
“The EUREKA project allowed the two companies to partner in a non-competitive way”
The project developed intelligent software that is able to analyse big data on blockchain markets to ensure the correct identification of customers and end-users but enables the private nature of transactions themselves to be preserved.
In addition, the security of the digital currency networks needed to be validated and demonstrated as appropriate for normal business use. Bitaccess and SBEX were able to design their technologies to allow companies to engage securely on a large-scale with virtual currencies through approaches such as multi-signatures.
The technology developed through this short project acted as a foundation to products and services that were able to take on the huge rise in demand for virtual currencies that has been seen since 2017. “The technology acts as a backbone for many global systems,” comments Adham.
As virtual currencies have grown, regulation has also changed and the technology has been able to adapt, and in some ways enable, changing market governance.
Both Bitaccess and SBEX have commercialised products in their respective markets following the project. Bitaccess markets the industry-leading digital currency kiosk in 15 countries. SBEX SA has launched a digital currency brokerage service in Europe through the bity.com brand that is serving customers in over 35 countries.
“The EUREKA project allowed the two companies to partner in a non-competitive way and to understand and address issues in different markets that allowed both to design products and services with a more global reach,” says Adham.
Adham sees a great future for blockchain technologies not only for financial transaction but for all applications where transparency and validation are essential such as smart supply chain contracts, selective disclosure of sensitive information or auditing. “For example, the Canadian government is currently exploring the use of our blockchain software to enable the transparent administration of government grants,” he concludes.