Coin News

Award-winning global podcast platform Castbox has announced the release of ContentBox, a blockchain-based infrastructure for decentralized digital content. The project is backed by Bo Shen — the founder of Fenbushi Capital and an early adopter of Ethereum — who will serve as both a cornerstone investor and strategic advisor to the team.

Shen said, “The nature of blockchain technology is to take a slice of the pie from vested interest groups, where you are bound to encounter resistance. To get your project off the ground, you must have vast industry and product resources. I invested in ContentBox because it has a strong technical team and a wealth of industry experience, and I believe it will become the first killer app for the digital content industry.”

Founded two years ago by former Google manager Renee Wang, Castbox allows listeners to find, access and create spoken audio content in multiple languages through virtually any device. The company’s proprietary technology includes in-audio deep search so listeners can customize their audio experiences, and curated podcast recommendations powered by natural language processing (NLP) and machine learning. With over 16 million users in 175 countries, the company has raised roughly $30 million in funding from top venture capital firms like ZhenFund, SIG China and IDG.

Since the days of Napster’s inception, audio content publishers and creators have fought over who should have control in how content is monetized and distributed. Speaking with Bitcoin Magazine, Castbox representative Mark Lee says that the creation of ContentBox was inspired by the ongoing fight against copyright infringement and piracy in the digital content arena.

“Independent creators and publishers are under attack from all sides,” he said. “Take YouTube as an example. There was once a time when the platform democratized the creation and distribution of user-generated videos. Creators that produced great content were rewarded accordingly, and YouTube quickly became a major player in the entertainment industry.”

More than a decade later, smaller, independent creators are struggling to make a living, he noted.

“They pour their hearts and souls into their work, but these big platforms have taken full control over the way content is handled, leaving the average creator with little to no income, and virtually no ownership over their content. This issue is rampant across all major content platforms. Publishers face the same challenge, as more and more of their content is shared and consumed on third-party channels like Facebook.”

Wang says that the digital media industry was originally built on principles of inclusivity, but that it has also become too top heavy to support independent publishers and creators. In addition, most advertising revenue winds up in the hands of major studios instead of the creators, where it belongs.

She says the blockchain can solve this problem by removing middlemen and high transaction fees, while also introducing new streams of revenue like activity-based income (i.e. creators are paid when someone listens to their content) and subscriptions.

“The digital content industry has remained relatively opaque over the years regarding paid media, and advertisers typically rely on vanity metrics like impressions to determine returns on investments (ROIs),” said Lee.

He suggested that the blockchain can allow advertisers to tap into shared statistics and pay via advertisement viewership automated by smart contracts.

“By decentralizing the podcast industry with a shared content pool, a shared user pool and a unified payout system, this new project creates an open source community that can’t be controlled by a few industry giants.”

This is where ContentBox comes in. The system provides listeners with an array of blockchain-based solutions that power a unified payout system for the digital content arena. Users can access content by paying with digital tokens through what’s known as BOX Payout, a secure and borderless payment transaction network.

“The base asset of ContentBox are BOX tokens which are Ethereum-based and are standard ERC20,” said Wang. “There won't be an ICO but there will be an airdrop. BOX tokens are the only way to transact within the app but they will be listed on a couple crypto exchanges by early July, so users will be able to cash out to Ether if desired.”

Users garner these tokens by sharing content with others, inviting friends and joining the company’s Telegram channel. They are also granted access to digital wallets that manage their rewards.

“Consumers engage in a wide variety of value-creating activities vital to the growth of the podcast community, like helping to share and create content, but are never financially rewarded,” said Lee. “Blockchain allows listeners to become stakeholders that get rewarded for their contributions. In turn, they can directly reward their favorite podcasters with the tokens they earn, or unlock premium content.”

Bitcoin mining uses as much electricity as Ireland, and by the end of 2018, the Bitcoin network will be using as much energy as Austria, according to a new report by Alex de Vries of the Experience Center of PwC in the Netherlands.

Billed as the first serious, peer-reviewed study of energy use in crypto mining, the report has set off alarm bells, adding to current concerns about the impact of future mining energy consumption on environmental issues like climate change.

At the first-ever conference for crypto mining, held on May 17, 2018, in New York City, an expert panel hashed out the implications of rapidly growing energy consumption among miners worldwide.

Amber D. Scott, CEO of Outlier Solutions, moderated a panel of experts that spoke about the energy issue as part of a discussion on the topic of proof of work (PoW) vs. proof of stake (PoS).

Scott told Bitcoin Magazine that there was a lot of discussion at the conference about the new energy report in part due to the attention it’s currently receiving in the press.

“This is an area where there is a spectacular amount of FUD [fear, uncertainty and doubt],” she noted. “This is in part because it’s a nuanced issue that can’t be summed up in simple statements about net energy consumption.

“I think that part of the reason that Bitcoin has been a ‘target’ in this respect is that there are relatively straightforward calculations in terms of power consumption in conjunction with the underlying value not being well understood or widely accepted. For instance, few people question the utility costs of a bank or ATM, and the energy consumption cannot be calculated in a straightforward way,” she added.

Scott Howard, CEO and co-founder of Toronto-based ePIC Blockchain Technologies, told the conference audience what many there were already saying: that the energy consumption issue is “fake news” and has been oversimplified to suit Bitcoin opponents.

High Energy and Environmental Costs of Traditional Fiat and Banking

Traditional banking and fiat creation have their own high energy costs, noted a number of conference panelists, including Alex Petrov, CIO of Bitfury; Jan Čapek, CEO of Slush Pool; Samson Mow, CSO of Blockstream; and Howard.

They talked about the high infrastructure costs, in terms of both energy and the environment, associated with traditional banking systems, including ATMs, security and servers.

“There are 3.6 million ATMs deployed in the U.S. Each of them are using 7 to 800 watts just in standby mode,” said Petrov. “This alone generates huge numbers of electricity usage, slightly higher than the Bitcoin network.

“If you add … internal banking systems, CTVs, communicating with other banks, additional protection … you get higher costs than the cost of Bitcoin,” he added.

“Gold mining consumes enormous energy. Portions of the electricity crypto mining consumes come from power generation and distribution originally built to supply ore and precious metals extraction or processing,” said Howard.

“Where traditional energy consumers like gold mines really fall down is all the other negative externalities of the ‘wealth’ they create. Gold mining during and after is one of the most toxic and destructive operations on the planet.”

Howard talked about the use of abandoned industrial sites for Bitcoin mining, like pulp and paper mills that had been closed due to dwindling forestry supplies and increased concerns about energy use and toxic waste pollution.

“Lots of crypto mines are sitting in old industrial sites with a 100-megawatt transformer sitting next to them,” he said.

By way of example, in the Q&A session that followed the panel, one conference participant talked about his mining operation in British Columbia in a partly abandoned manufacturing site where water is pumped through his mine for cooling and then recycled into a warm-water fish farm.

Mining Doesn’t Create New Hydro Infrastructure: Power Is Produced Even If Unused

After the panel, Howard reiterated to Bitcoin Magazine what other conference panelists had said: that large energy mega-projects like hydro dams produce electricity whether they’re used or not.

“To my knowledge, no one has built out any net-new power generation to supply a crypto mine. Power generation stations are major pieces of infrastructure that take years to put in place and in the range of a decade to pay off. Most power generation is done, certainly in the western world, by publicly owned and/or regulated utilities. Those stations run 24/7, 365 for decades. The energy goes onto the grid no matter what and, until we figure out storage, is a perishable commodity.

“Crypto mining takes full advantage of this, typically sucking up energy at very low prices. The prices are low because the energy can’t find more productive use, often taking over abandoned industrial sites far away from urban centers,” he added.

Čapek told the conference that “China has been overinvesting in hydro power and has large amounts of power that is not being used” as a result of overbuilding hydro dams in anticipation of industrial needs (principally aluminum manufacturing) that never materialized.

“Cheap hydro power has helped China dominate the world’s Bitcoin mining business, and this power would be generated with or without Bitcoin mining,” said Čapek, who recommended a recently released study on the energy costs of mining in China.

Čapek said a rough estimate of global Bitcoin mining energy use is 25 terawatt hours per year, only a fraction of the amount of energy used in manufacturing aluminum globally.

PoW vs. PoS

The panelists mostly agreed that proof of work’s higher energy use is necessary for real security and that proof of stake is not likely to happen soon. They noted that PoS would not give the Bitcoin network the security it needs, even if it was more energy efficient.

“The more energy that’s expended, the more security you have,” noted Mow. “The system has to be nuclear-proof.”

Petrov defended the possibility of a hybrid model of both PoW and PoS, saying, “Proof of stake may work for some specific purposes, not necessarily in the financial area but inside private blockchains.”

Mow responded that using both PoS and PoW “brings out the worst of both worlds,” while Howard noted that Dash is using a hybrid model with some success, though it’s very expensive to use.

Howard concluded: “It [Bitcoin mining] is a positive economic activity, typically in places where it is needed, as well as meaningful revenue to the utilities which are major employers and usually profit centers for governments. The ‘waste of energy’ argument, like most establishment arguments against blockchains, does not pass the test of science.”

The cryptocurrency industry has seen tremendous growth this year, with a 3,363 percent increase in market capitalization and a 216 percent increase in cryptocurrency and asset exchanges. While this is certainly promising, it foreshadows a unique scalability problem. At present, most crypto companies are almost entirely dependent on the charity of “nodes” to establish and enforce the rules of their platform — all with little or no incentive to do so.

For years, this has been the industry standard, and, so long as the system isn’t overwhelmed, it holds up. However, with the recent surge of activity surrounding cryptocurrency, the time and energy required to validate each transaction is becoming more and more time-consuming. With expanding size and scale, the question becomes, is it worthwhile to operate a node in today’s digital climate?

Traditional node operators harness the power of everyday computers to run an overlaying security protocol that polices the blockchain. If a transaction violates the consensus algorithm, it’s immediately flagged and removed. As more nodes enter the system, the more secure the governance layer becomes, increasing efficiencies and fortifying trust. However, as demand increases, so too does the pool of transactions that need to be verified, which ultimately raises the resource burden for node operators — discouraging participation.

Now, if these nodes were incentivized for their participation, crypto companies would be able to entice larger quantities of node operators. Such incentives can take a variety of forms. First and foremost, companies can implement a donation pool in the blockchain, where members are required to pay a small participation fee that will be distributed through a smart contract to node operators. Imagine this as a “price of entry” for blockchain exchanges, where participants in the community pay for the efficiencies and securities that would have been provided for free.

Another possibility is to incentivize nodes with a portion of the mining reward. Here, each node operator receives a predetermined cut of the overall mining return assuming that they meet specific criteria per pay period. This process carries a number of advantages. Unlike donation pools, which are largely contingent upon the number of paying participants in the space, mining incentives are more dependable, maintaining blockchain functionality regardless of how many actors are engaged with the system.

Cryptocurrencies like Dash and ZenCash that have put into place systems that incentivize node operators have seen their networks grow exponentially as a result. By providing a percentage of the mining reward to node operators, in the span of mere months, these cryptocurrencies have seen the number of operators grow in size by hundreds and even thousands. These operators, in turn, have worked to ensure consistency and improved usability in the end-user experience, opening the possibility for creating dApps, smart contracts and other services on top of the network.

In the pursuit of true decentralization, industry experts must start thinking critically about the role that node operators should — and will — play in the future of the industry. To transform short-term gains into long-term successes, it will be increasingly important for crypto companies to bring their platforms to scale, and step one will be to incentivize, instead of expect, node operators to keep the community afloat. Simply stated, with cryptocurrency, we are on the precipice of a new era of innovation, and as the industry grows, we must be prepared to grow with it.

Frankfurt Stock Exchange parent company, Deutsche Boerse AG, appears to have begun work on technology that will allow them to offer their clients bitcoin and cryptocurrency-related products.

In December 2017, regulators in the U.S. greenlit bitcoin futures trading for the CME Group and CBOE Futures Exchange, but since then, no major European exchange has jumped in. Speaking at an industry event in London on May 23, 2018, Jeffrey Tessler, head of clients, products and core markets for Deutsche Boerse, said they are considering offering cryptocurrency products: "We are deep at work with it."

Tessler is quoted in Bloomberg confirming that Deutsche Boerse is “not at the same stage” as CME and that they want to make sure that they understand the underlying transaction “which isn’t the easiest thing to do.”

Two months ago, Deutsche Boerse announced a plan to work with the financial management firm HQLAX and R3’s Corda blockchain platform to implement a system that can offer more efficient securities settlement via a blockchain. HQLAX and R3 already have a solution for securities lending with a number of large banks, such as ING and Credit Suisse.

Tessler added, “Before moving forwards with anything like bitcoin, we want to understand the volatility and make sure clients are in line and make sure regulators are in line.”