Russian Airline Uses the Ethereum Blockchain for Flight Tickets

Russian airline S7 has revealed that it is now utilising the ethereum blockchain to sell flight tickets with backing from the country’s largest private bank.

Reported in regional newspaper Kommersant, Russian airline PJSC Siberia Airlines, known as S7, and Alfa-Bank started using the blockchain to sell flight tickets on Monday 24th July. The report states that one of the key benefits was faster settlements.

However, this is not the first time that S7 has experimented with the blockchain. In December, the airline undertook the first-of-its-kind payment service with the ethereum blockchain smart contracts through a letter of credit with Alfa-Bank.

Services giant Deloitte, who acted as the advisory consultant to the airline, said in a statement that:

“Legally, this transaction meets all the requirements for a letter of credit as a form of bank settlement, and demonstrates the potential of smart contract application in the framework of Russian legislation.”

Aeroflot, Russia’s largest airline, is also conducting research into the technology, namely digital currencies and how they can be used for flight ticket payments.

The experiments with S7 and Aeroflot are expected to end the 10th December, 2017.

Airlines Turn to Bitcoin

S7 is not the first airline carrier to embrace this innovative technology. There have been several airlines to do so before.

The most recent is low-cost Japanese airline Peach Aviation Ltd., which announced earlier in 2017 that it was to start accepting bitcoin as a form of payment for flight tickets. After the recent interest in the digital currency, which has seen rapid growth in Japan in recent months, it is hoped this will provide an attraction to tourists to visit the country.

Shinichi Inoue, chief executive officer of Peach, said:

“We want to encourage visitors from overseas and the revitalization of Japan’s regions. This is a real first step in partnerships for Japan and we are aiming for more company and service tie-ups.”

The heightened interest in bitcoin in Japan is due to the fact that in April regulations were changed which now see the digital currency as a legal form of payment for goods and services.

As a result, it’s expected that by the end of 2017 there will be as many as 300,000 stores in Japan accepting bitcoin for payments.

Aside from Peach other airlines have also embraced the most popular digital currency for their services too.

These include Latvian airline airBaltic, LOT, the Polish airline and Washington D.C.-based airline Universal Air Travel Plan (UATP).

Three years ago, airBaltic revealed that it was to begin accepting bitcoin payments in an attempt to focus more on the customer. By taking this step the airline became the world’s first to accept the digital currency for its tickets to 60 destinations in Europe, the Middle East, Russia and the Commonwealth of Independent States (CIS).

In 2015, LOT announced that it was going to start accepting bitcoin for its flights to over 60 destinations as well.

UATP also revealed in 2015 that it had joined up with Bitnet as a payment processing partner. As a result, the U.S. airline now has the opportunity of providing its network of over 260 airlines the option of accepting bitcoin for flight payments.

These are just a few of the airline carriers which are embracing the digital currency who see the benefits it can provide to customers. This is in contrast to Morgan Stanley’s claim that bitcoin acceptance among top merchants is in decline.

Russia and Bitcoin

While Russia appears to see many benefits with the blockchain – after all, ethereum’s founder, Vitalik Buterin, is reported to have met with Russian President Vladimir Putin – the country is still sitting on the fence when it comes to bitcoin.

However, its current stance is somewhat different from where it lay in 2016. Last year, a new amendment to the Criminal Code by the Ministry of Finance in Russia saw the regulator proposing a seven-year prison sentence for management and executives of banks and financial services firms for the use of bitcoin. The sentence was less for everyday people caught using it at four years.

Fast-forward to 2017 and the country has shifted gears after the central bank’s governor revealed that the authority is ‘analyzing’ the possibility of regulating the digital currency.

Yet, Elvira Nabiullina, governor of the Russian Central Bank, stated that she views bitcoin as a ‘digital asset’ instead of a currency.

She said:

“We don’t consider that bitcoin can be considered as a virtual currency. It’s more digital assets with the regulation of assets.”

She also claimed that there were some doubts as to what benefits the digital currency could bring to the economy.

While it’s not clear as to what Russia’s next move will be, in an April Bloomberg report Deputy Finance Minister Alexey Moiseev said that the Russian authorities hope to regulate digital currencies such as bitcoin by 2018 as they undertake steps to enforce rules against illegal transfers.

This will no doubt help bump the price of the digital currency up while also increasing its user base in the currency.

Bitcoin’s Price Slumps

As of the 26th July, the price of bitcoin has dropped to $2,490 with the total market cap of all currencies down to just under $85 billion, according to CoinMarketCap. In a 24-hour period, the price of bitcoin dropped by 2.14 percent while the market cap has yet to climb back up to $90 billion.

It’s thought that this recent slump is down to caution among investors in light of the potential Bitcoin Cash (BCC) hard fork that is expected on the 1st August.

With many people in the bitcoin community not happy with the SegWit2x solution to scaling issues, proponents are venturing to create their own coin, called Bitcoin Cash. Roger Ver, a self-described bitcoin evangelist and a supporter of Bitcoin Unlimited (BU), was reported as saying that a coin split would be ‘a good thing.’

Now supporting Bitcoin Cash, Ver claims that projects such as Omni and Counterparty would choose Bitcoin Cash.

Yet, while SegWit2x is gathering support, one person said that if SegWit2x didn’t activate a lot of people would lose their faith in the currency:

“Not because I have any particular support for 2X or any particular problem for Segwit, but because it shows fickleness and underhand moves based on politics not sensible technical decisions.”

Featured image from Flickr via Takashi Nakajima.

Ethereum Co-Founder Hoskinson Claims ICOs Are ‘a Ticking Time-Bomb’

The popularity of initial coin offerings (ICOs) has taken off to such an extent that ethereum’s co-founder has said that there is now ‘an over-tokenisation of things.’

Speaking in an interview Charles Hoskinson, who helped to create the ethereum network, said:

“People say ICOs are great for ethereum because, look at the price, but it’s a ticking time-bomb. There’s an over-tokenisation of things as companies are issuing tokens when the same tasks can be achieved with existing blockchains. People are blinded by fast and easy money.”

According to a report from financial research firm Autonomous NEXT, in the first six months of 2017 more than $1.2 billion in digital currency was raised through ICOs, outpacing venture capital investment in blockchain and bitcoin companies. Furthermore, in the last 30 days around $600 million has been raised. Of the ICOs by category, media and social has raked in just under $150 million in 2017 while gaming and gambling has raised less than $80 million.

Since the start of the year, the digital currency ether has jumped in value from $8 to around $400 in June. As of the 19th July, ether has dropped in value and is currently trading at $224, according to CoinMarketCap. As a result, its total market value has seen a decline bringing it down to just under $21 billion.

Hoskinson, who was part of the ethereum network between 2013 and 2014 and now runs technology research firm IOHK, is adding his voice to a growing number of individuals who are concerned about the way ICOs are increasing at a rapid pace, which is delivering a surge in prices.

Taking to Twitter, UASF, said:

“This bubble is a much more about ICOs than cryptocurrencies. And ICOs definitely can (and many will, no doubt) go broke.”

However, the rise and fall in ether prices is not just down to the increasing number of ICOs on the market. Other factors have also contributed to the shift in market prices.

Parity Wallet Theft

In latest developments with ether, its price has dropped by 10 percent as of the 20th July to $211.

The reason this is is alleged to be due to a security breach at smart coding company Parity. According to news reports, the company reported the theft of 150,000 ether, worth $30 million. Listing the situation as critical on the organisation’s blog users have been urged to move ‘assets contained in the multi-sig wallet to a secure address.’

Gavin Wood, Parity founder and CTO, said on the Gitter web channel that there had been three accounts there were compromised:

“There is an effort by the foundation underway to secure funds in other wallets to prevent any further compromises; they will make an announcement in their own time.”

This is the latest setback that the digital currency has experienced in a matter of days.

On the 17th July, it was reported that around $7 million had been stolen by a hacker during the CoinDash ICO. The hacker was able to do this after altering the contract address of the ICO project.

Fast-forward a few days and that number has been bumped up to $10 million as unsuspecting potential investors willingly hand over their money with 43,500 ether believed to have been sent to the fake address.

Vitalik Buterin Death Hoax

In late June, it was reported that ethereum’s founder Vitalik Buterin had to employ the blockchain network in a bid to disprove his death.

In a report from CoinDesk, it’s alleged that the death hoax came from an internet forum site – clicking on the web page brings up a ‘404 not found page’ – stating that Buterin had died in a car crash. Following the rumours the founder of the second most popular digital currency no doubt wanted to quickly quash any further speculation.

He did this by announcing on social media that he was in fact alive including an ethereum block number and a hash that corresponded to it.

Vitalik Buterin

However, while Buterin may have put an end to the rumours that he had died, he wasn’t able to prevent the price of ether from dropping below $300.

Bitcoin Split?

Another factor that is creating price waves within the cryptocurrency market is the talk that there could be a bitcoin split if a solution isn’t finally agreed upon to solve its scaling issues.

On the 15th July, the digital market saw its total value drop below $70 billion for the first time while the price of bitcoin suffered a 49-day low when it dropped below $2,000. The following day, ether prices fell by 22 percent to $159, a 60 percent decline from its record high in June.

And yet while early signalling support has started for BIP91 which would prevent a coin split in the bitcoin blockchain network, and prices have risen, there is still some concern as to what will happen come the 1st August.

ICO Regulation?

Hoskinson thinks, though, that when it comes down to it regulation is the biggest challenge to the market and that the Securities and Exchange Commission (SEC) will, essentially, label digital currencies as securities. He says that because digital ICOs don’t come with the risk safeguards that traditional security sales provide, future lawsuits could present themselves with investors claiming that they weren’t aware of the risks involved.

Regardless of this, however, he still believes that ICOs will continue to be used:

“Regardless of regulation ICOs are here to stay. After it collapses they’re going to pick up the pieces and say how do we do things differently.”

The digital market is certainly going through an interesting readjustment phase. How long it will last remains to be seen. Yet, with more ICOs being reported on frequently it’s clear that they provide the ideal avenue to raise funds for many companies.

Just as bitcoin’s price has risen and fallen during its history, so too will ether’s price. Of course, while bitcoin has store value and can be utilised for goods and services, ether isn’t. With the 1st August looming ever closer, a resolution to bitcoin’s scaling issues may finally help its price, which in turn may help to bump the price of ether back up as well.

Featured image from Flickr via tiendientu vietnam.