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New fintech regulations give cryptocurrencies like Bitcoin an aura of respectability--and the market is responding

Japan Takes Lead in Legitimizing Digital Currencies

The financial industry is usually no cheerleader of new regulations imposed on it by government authorities. But when the Japanese government amended its Payment Service Act by promulgating the Virtual Currency Act this April, fintech (financial technology) service companies and institutional investors generally welcomed the move. 

“Normally, regulation is not a good thing,” says Mike Kayamori, CEO and co-founder of Quoine (pronounced “coin”), a Singapore-based B2B fintech startup that also has operations in Japan and Vietnam. “But for cryptocurrencies regulation is a blessing.” 

Until now, these virtual currencies have been operating in a gray market, a situation that has made long established companies in the financial industry hesitant to take them up. 

“We need to work within [financial] regulations,” says Kayamori. Quoine, which is funded with $20-million, provides a cryptocurrency exchange platform for other companies to trade off of or to use as a white label technology for their own customers. “We need to work in the financial eco-system. No financial services or institutions will work or partner with a company that’s in a gray zone.”

The Japanese bill currently recognizes only certain well-established cryptocurrencies, namely Bitcoin and Ethereum, as legal means of payment, and as products that can be bought and sold without Japan’s 8 percent consumption tax coming into play. 

Nevertheless, the new law falls short of declaring these volatile currencies to be legal tender. And though the amendment now sanctions the use of cryptocurrency exchanges, it also imposes regulations on the operators. These injunctions include mandatory registration with the government, minimum capital of 10 million yen ($90,000), a secure IT system to prevent theft, and mandatory annual auditing by a certified accountant. 

Despite the ultra-cautious reputation Japan’s conservative financial authorities and institutions have earned over the years, this move to legitimize cryptocurrencies through government registration and regulation makes Japan the first nation to take such bold steps, notes Kayamori. While registration is also being introduced in the United States, it is being conducted on a state-by-state basis, which makes obtaining all the proper paperwork a byzantine process. 

“It’s very difficult in the U.S., where there are a lot of government bodies you need to get approval from,” he adds. “Whereas in Japan, you just need the FSA (Financial Services Agency) approval. And that’s it.”

What changed the Japanese governent’s attitude toward virtual currency? The Mt. Gox calamity in 2014. The Bitcoin exchange company based in Japan folded after more than 800,000 Bitcoins went missing. The financial disaster led to the arrest of the company’s CEO Mark Karples on charges of embezzlement, and the news damaged the reputation of cryptocurrencies for a time. Notably, this occurred at a time when regulations were nonexistent in Japan. “So Japan, almost out of necessity, had to regulate the cryptocurrency market,” says Kayamori. 

To date, at least 16 companies including Quoine have registered with the FSA to set up cryptocurrency exchanges. They have a six-month grace period for their registrations to be accepted, or be forced to withdraw their services should registration be denied, Kayamori explained. 

Quoine’s current and only product is a B2B trading platform for the exchange of fiat and crypto currencies. According to Kayamori, it is the most advanced platform in the industry, and can conduct one million transactions a second, and boasts a 99.96 percent uptime.

In June, the two-and-a-half-year-old start-up will launch Qryptos, an exchange for trading between ten cryptocurrencies minus fiat currency involvement. However, Qryptos will not be available in Japan, given that the government is presently recognizing only Bitcoin and Ethereum as sound products.

In the January to March quarter, Quoine conducted transactions swapping ten cryptocurrencies for mostly Japanese yen and U.S. dollar fiat currencies to the value of $5.6 billion. That’s a tiny amount when compared to the financial industry’s overall volume of transactions. “But from a startup perspective, we are already operationally profitable, and growth is enormous,” says Kayamori.

On 11 May, Coindesk, an online news site focusing on digital currencies, tracked the price of Bitcoin passing the $1,800 mark for the first time, and the price of other cryptocurrencies also rose sharply. In January, the value of Bitcoin was less than $1,000. Financial analyst Brian Kelly told CNBC in the US that he believed the rally was a result of Japan legalizing Bitcoin, which encouraged institutional investors to buy the virtual currency.

But Kayamori also injected a cautionary note when talking about such wild fluctuations. “People can say this an irrational market, but markets tend to be irrational. As I’ve said, it is difficult to know if this is a bubble or not.”

Simulations suggest old ICs should consume less power than they did in their youth

The Benefits of Old Age (for Transistors)

“What a drag it is getting old.”—Mick Jagger

“Old age hath yet his honour and his toil”—Alfred Lord Tennyson

In case you didn’t know, the transistors in your computer’s processor, your smartphone’s memory, and your car’s autobrake system get old. The systems are designed so that you’ll probably never notice, but it’s true. Just like we do, they accumulate defects, slow down, and even fail altogether. [For the why’s and hows see “Transistor Aging,” IEEE Spectrum, May 2011.]

But aging isn’t all bad—at least for us meat-brains. “People get older, but they also get wiser,” says Bashir Al-Hashimi, a professor of electrical engineering at the University of Southampton, in England. “As you age there are a lot of bad things, but there are also some good things.” He decided to see if the same was true of transistors, and found evidence that one aspect of their power consumption improves with age.

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3D printed metamaterial door lock mechanism

Mechanical Metamaterials and Other 3D Printing Tech from CHI 2017

The ACM CHI Conference on Human Factors in Computing Systems is taking place in Denver this week, and just like last year, it’s host to some amazing, incredible, and utterly bizarre technology demos. This year’s theme is “Explore, Innovate, Inspire,” which is just exactly the sort of theme you want when you really have no idea what the theme should be. We’ve gone through hundreds of 30-second video clips to find the most interesting, craziest stuff, and today, we're bringing you everything brand new and amazing in 3D printing, along with the project abstracts for all the details. Don’t forget to check out our earlier posts on Interesting Interfaces and Virtual Reality.

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Head-mounted display that lets everyone into your virtual world

FaceDisplay and Other Bizarre Virtual Reality Projects from CHI 2017

The ACM CHI Conference on Human Factors in Computing Systems is taking place in Denver this week, and just like last year, it’s host to some amazing, incredible, and utterly bizarre technology demos. This year’s theme is “Explore, Innovate, Inspire,” which offers enough room to encourage the weirdness that CHI is so well known for. We’ve gone through hundreds of 30-second video clips to find the most interesting and crazy stuff. Today, we're bringing you some unreal projects in virtual reality, along with the project abstracts for all of those extra little details. Don’t forget to check out yesterday’s post on Interesting Interfaces; tomorrow we’ll have some amazing 3D-printing-related stuff.

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All the weirdest computer interfaces from CHI 2017

Cheek Haptics and Other Weird Computer Interfaces from CHI 2017

The ACM CHI Conference on Human Factors in Computing Systems is taking place in Denver this week, and just like last year, it’s host to some amazing, incredible, and utterly bizarre technology demos. This year’s theme is “Explore, Innovate, Inspire,” which, as far as we can tell, has no specific meaning and therefore does not constrain the weirdness that CHI is so well known for. We’ve gone through hundreds of 30-second video clips to find the most interesting and craziest stuff, and we can promise you won't be disappointed. Today, we're bringing you some interesting ways of interfacing with technology. In addition to videos showing off these breakthroughs, the researchers behind them describe their brainchildren. We’ll have even more videos on virtual and augmented reality and 3D printing later this week.

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satellite in space

Scientists Figure Out Possible New Threat to Spacecraft

Given how hard it is to diagnose failures from thousands of kilometers away, perhaps it shouldn’t be much of a surprise that more than half of satellite electrical failures remain unexplained. According to scientists and engineers at Stanford University and Boston University one culprit could be dust-size particles streaking through space at tens of kilometers per second. These micrometeoroids don’t pack enough punch to get through a spacecraft’s hull. But according to new simulations reported this week in the journal Physics of Plasmas, when these micrometeoroids hit, they vaporize into a plasma that generates a potentially crippling pulse of radio-frequency radiation.

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Hyperledger Indy will incubate Sovrin, a permissioned open ledger built for identity management

Can a Bitcoin Blockchain–Inspired Ledger Give Individuals Control Over Their Online Identities?

The Sovrin Foundation, a non-profit organization building online identity management tools with blockchain-inspired technologies, announced today that it will be taken on for incubation by Hyperledger Indy, a project run by the the Linux Foundation.

The problem of identity has attracted a whole flock of developers in the blockchain and distributed ledger space who see these technologies as a way to scoop up all the scraps of an individual’s online identity, consolidate them and put them under the individual’s control.

Today, for the most part, we lack that control. We have surrendered ourselves to the likes of Facebook, Google, Twitter and Amazon, whose profiles on their customers are so extensive that they are now, themsleves, used as standard identity verifiers across most Internet domains. Want to leave a comment? Just sign in with Facebook. Trying to get into your Medium account? Just login with Twitter. 

And if those companies suddenly disappear, so too does your online identity.

Meanwhile, asserting more important things about yourself online is just as difficult as ever. You can efile your taxes, but first you’ll need that PIN from the IRS that you set up a bajillion years ago that somehow proves you are who you say you are. 

It’s a terrible mess. And according to Phil Windley, the chair of the Sovrin Foundation, the best way to fix it is to use distributed ledger technology to make something that looks more like what we have offline. 

“In the physical world I go to my pharmacy and they ask for my driver’s license to prove I’m over 18 and I supply it to them. They don’t have to have a direct connection to the Department of Motor Vehicles. They don’t have to have any kind of API integration to make that work. Because I am the conveyer of this verifiable claim called a driver’s license. That hasn’t been possible on the Internet and Sovrin makes that possible,” says Windley.

In this alternate view, it is the individual who possesses all the pieces of their identity, which ranges from mundane testimonials about what your favorite movie is, to critical information like age and date of birth. 

In Sovrin, these facts about you (or pointers for where to find these facts) would all reside on a distributed public ledger which you alone had the authority to access and share. Other entities, however, could modify your claim by signing off on them with a cryptographic key, thereby adding weight and credibility to the pieces of your identity. For example, you may have an identity on the Sovrin network which specifies your driver’s license number and that information might be signed by your state’s DMV. 

The technology has a slight whiff of blockchain, but doesn’t really have a blockchain. Rather, it is a ledger that is replicated over mulitple nodes that all coordinate to make updates and police the system and which together make up the Sovrin network. The nodes are invite-only, meaning that the ledger is public, but permissioned. As a result, Sovrin functions without the participation of miners, which makes it less expensive and less energy hungry than your typical open blockchain.

Windley says that he envisions the first applications coming from the financial sector. Banks could participate as node operators to maintain the ledger and provide it as the repository for their customers’ identities. If given permission by the customer, multiple banks could access this information in a single place in order to comply with Know-Your-Customer (KYC) regulations. 

In joining Hyperledger Indy, Sovrin is donating all of its code and getting back developer power in return.

There are currently many other groups working in the blockchain and distributed ledger space to build self-sovereign identity systems. Bitnation began using the blockchain to issue its own nation state-independent version of a passport in 2014. That project now resides on the Ethereum network which also supports another identity management tool called uPort. And Civic is building out a similar project on Bitcoin.

Windley doesn’t necessarily see them as competition. “I believe that there won’t be a single identity solution; there’s going to be multiples,” he says. “We’re going to live in a world with multiple identity systems because they have different properties and [meet] different needs.”

A digital seen of a plaza with with bubbles representing data shooting out from several black lamp posts toward people holding smartphones.

Intel, Nokia, Qualcomm Bet on MulteFire to Blend LTE and Wi‑Fi

A wireless industry consotium is developing a new technology called MulteFire that it says delivers the high performance of 4G LTE cellular networks while being as easy to deploy as Wi-Fi routers.

Rather than relying on the licensed spectrum purchased for today’s LTE service, MulteFire operates entirely in the unlicensed 5 gigahertz band. And to set it up, users would simply need to install MulteFire access points, similar to Wi-Fi access points, at any facility served by optical fiber or wireless backhaul.

Once installed, MulteFire would provide greater capacity, range, and coverage than Wi-Fi, because it’s based on advanced LTE standards. But by operating in unlicensed spectrum, MulteFire could conserve resources for companies struggling to meet customers’ data demands.

Depending on how MulteFire is used, it could let cellular companies offload traffic to unlicensed spectrum, or allow factory owners to set up private MulteFire networks to serve equipment, robots, and Internet-0f-Things devices. The technology is being developed by the MulteFire Alliance founded by Nokia, Qualcomm, Ericsson, and Intel.

Marcus Weldon, president of Nokia Bell Labs and chief technology officer of Nokia, laid out his vision for MulteFire during a meeting at Nokia Bell Labs in New Jersey last week. As Weldon sees it, managers of industrial facilities will be the primary customers for MulteFire and will want to use it to connect millions of devices for oil and gas drilling, power transmission, and manufacturing.

“No consumers are saying, ‘Damnit, give me MulteFire!’” he says. “Or at least, I haven’t found one yet. But some industries are.”

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Will the reality of 5G live up to the hype?

5G Progress, Realities Set in at Brooklyn 5G Summit

5G technologies are early in their development, and the business cases for them are a bit fuzzy, but wireless researchers and executives still had plenty to celebrate this week at the annual Brooklyn 5G Summit. They’ve made steady progress on defining future 5G networks, and have sped up the schedule for the first phase of standards-based 5G deployments.

Now, the world is just three years away (or two, depending on who you ask) from its first 5G commercial service. Amid the jubilance, reality is also starting to set in.

While attendees can agree that 5G networks will incorporate many new technologies—including millimeter waves, massive MIMO, small cells, and beamforming—no one knows how all of it will work together, or what customers will do with the resulting flood of data. The video below provides a primer on these technologies, and a hint of what we can expect.

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Illustration: iStockphoto

Four Ways to Tackle H-1B Visa Reform

Update 19 April 2017: Yesterday, U.S. President Donald Trump signed an executive order instructing government agencies to suggest reforms to the H-1B Visa program. Analysts say that real reform will require Congressional action.  In February, IEEE Spectrum interviewed experts about what Congress could do. The original article follows:

U.S. tech companies love the H-1B visa program. The temporary visa is meant to allow them to bring high-skill foreign workers to fill jobs for which there aren’t enough skilled American workers.

But the program isn’t working. Originally intended to bring the best global talent to fill U.S. labor shortages, it has become a pipeline for a few big companies to hire cheap labor.

Giants like Amazon, Apple, Google, Intel, and Microsoft were all among the top 20 H-1B employers in 2014, according to Ron Hira, professor of political science at Howard University who has testified before Congress on high-skill immigration. The other fifteen—which include IBM but also consulting firms such as Tata Consultancy, Wipro, and Infosys—used the visa program mainly for outsourcing jobs.

Typically, U.S. companies like Disney, FedEx, and Cisco will contract with consulting firms. American workers end up training their foreign counterparts, only to have the U.S. firm replace the American trainers with the H-1B visa holding trainees—who’ll work for below-market wages.

Problems with this setup abound. First, talk of a tech labor shortage in the U.S. might be overblown. Then there’s the issue of quality: More than half of the H-1Bs at a vast majority of the top H-1B employers have bachelors degrees, but not advanced degrees. Hira argues that in many cases such as Disney and Northeast Utilities, the jettisoned American workers were obviously more skilled and knowledgeable than the people who filled those positions, considering the fact that they trained their H-1B replacements.

Plus, the H-1B is a guest-worker program where the employer holds the visa and isn’t required to sponsor the workers for legal permanent residency in the United States. So if the worker loses the job, he or she is legally bound to return to their country of origin. This gives the employer tremendous leverage, and can lead to abuse.

“It’s a lose-lose right now for the country and H-1B workers,” says Vivek Wadhwa, distinguished fellow and professor at Carnegie Mellon University Engineering at Silicon Valley.

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