No sooner did I write about companies realising they need to switch from private to public blockchains than one of accounting’s “big four” did just that.
Deloitte, which has a revenue of $43.2 billion and employs 286,200 people worldwide, announced it has moved its blockchain operations from Ethereum to VeChain.
At least that’s the headline news. But what really happened is far more intriguing. And far more encouraging…
The news came at the 2019 VeChain Summit.
Deloitte’s CTO of blockchain, Antonio Senatore, announced via video link that he was joining the VeChain advisory board.
He also explained a bit about Deloitte’s plans for the future:
“The strategy of the blockchain lobby is fairly simple. It is multi-industry… supply chain, business assurance, insurance, public sector, supply chain, consumer products… you name it. This has been our focus since day one.
“It’s not cool anymore to say we build great stuff, but nobody is using it. We’ve got to get out there and onboard organisations onto this platform.”
The main presenter, Michael Burke, elaborated and said Deloitte is working with a number of platforms, specifically “VeChain, Ethereum, bitcoin, Hyperledger and Corda.”
He said one of the first projects it did was to migrate all DN VGL’s (annual revenue $19.5 billion) business assurance certificates “on to the private Ethereum network.”
And that’s the keyword there, private.
He said more recently DN VGL migrated its management system certificates on to VeChian’s public blockchain.
So while many news outlets are spinning this as “Deloitte ditches Ethereum for VeChain”, that’s not the real story here.
Aside from the fact Deloitte hasn’t really ditched Ethereum – it has just migrated a lot of its operations from a private Ethereum blockchain to VeChain’s public blockchain – the real story here is that Deloitte is moving over from private blockchains to public ones, just as I wrote about yesterday.
Deloitte’s lead blockchain architect, Parminder Parmar, explained this in more detail:
“The thing is, in a private network, even though you can save transaction costs, its business scalability is limited. Once you move to a public blockchain you can onboard more technical as well as business users onto your platform and you create an ecosystem.”
The secondary news is that this is a massive win for VeChain, which now counts two of the big four accounting firms – Deloitte and PwC – among its partners. And it is fast becoming a favoured blockchain platform among major industry players.
And those major players aren’t just in finance.
At the same conference, Cihan Albay, group leader at BMW’s IT tech office in Singapore, announced its VerifyCar programme, built on VeChain.
He said he and his team have been working with VeChain for a little over a year and have built a vehicle digital passport called VerifyCar.
VerifyCar basically helps car owners to prove its mileage and service history when they come to sell it.
“We built a digital ledger using the VeChainThor blockchain, and every interaction of the car will have a stored hash key on the blockchain. That can be anything with changing a filter, changing a battery, having the annual service,” he said.
Both these pieces of news are fantastic for blockchain as a whole. There is a lot of tribalism in the crypto space.
People who support and buy into different projects like to attack projects they don’t own. But when a project makes progress with big industry players, it legitimises other key projects, too. It shows that crypto is more than just “magic internet money”. It shows its real potential.
Now, if you haven’t heard of VeChain before, you might be surprised it is doing so well right now. But it’s actually been around for a while.
If you’d like to see what I think about it, and read my detailed research and analysis into its prospects, you can take out a trial to Frontier Tech Investor here.
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Vitalik proposes doubling Ethereum staking rewards
As you may know, Ethereum is planning to switch from a proof of work (POW) consensus like bitcoin to a proof of stake (POS) one.
The main takeaway from this – unless you’re a blockchain developer yourself – is that when Ethereum switches to POS, you will be able to get rewarded for holding Ethereum.
You can think of these rewards as like interest in a savings account or dividends from a stock investment.
In a POW system, “miners” secure the network by solving difficult mathematical problems with their computers and they get rewarded for doing so.
In a POS system, “validators” perform the same role. But they don’t need to solve any difficult mathematical problems. This means the energy usage of the network drops to virtually zero.
There are other advantages to a POS system, but this is probably the main headline-grabbing one.
The more tokens you hold in a POS system, the more transactions you can validate and the bigger reward you will get.
Coinbase have been quick to call these “rewards” not interest because rewards are not taxed whereas interest is. At least that’s what Coinbase’s head of EMEA institutional sales and trading, Andrew Robinson, said at the Paris Blockchain Week summit last week.
Until now the rewards Ethereum will be offering validators will be less than other popular POS blockchains.
Tezos, for example offers around 7.2%. Ark offers around 9.9%. VeChain offers around 3% and Neo offers around 2.75%.
Ethereum’s rewards would most likely work out around 2.5%, which as you can see is not as high as a number of popular competitors.
It is also low compared to what you could make investing in dividend-paying blue chip stocks, which is arguably a far less risky endeavour.
If, as Vitalik has suggested, the staking rewards were doubled, Ethereum would be a far more enticing investment.
This all comes just weeks after Coinbase custody announced it will allow institutions to collect staking rewards through its platform. Coinbase will take the risk of staking, set everything up, and take a cut of the rewards.
The first crypto it announced for this programme was Tezos.
From Coinbase on 29 March:
Today, we’re announcing Tezos (XTZ) baking for Coinbase Custody clients. We’re proud to be the first full-service, regulated, comprehensively-insured, and 100% offline staking provider in crypto. In the coming weeks, we will add governance support for the Maker (MKR) protocol.
But you can be sure that when Ethereum finally switches to POS, it will support staking Ethereum, too.
Since that announcement, Tezos is up more than 82%. Of course, this isn’t the only factor at play in Tezos’ price rise, but it certainly must be having an effect.
And this also shows why many Ethereum investors are hugely excited about the switch to POS.
There is a strong possibility that the ability to accrue interest – sorry “rewards” – by investing in Ethereum will bring a lot more money into the system.
So not only will Ethereum holders be able to earn a passive income, but they could also make significant capital gains, too.
So good news for VeChain, Ethereum and Tezos.
2019 is shaping up to be a much better year for crypto than 2018.
It also doesn’t hurt that bitcoin has increased from $3,752 to $5,591 since the start of the year (at time of writing), bringing up the entire crypto market with it.
Until next time,
Editor, Exponential Investor