A mining chip vulnerability

that could potentially be used to remotely shut off bitcoin mining machines was revealed yesterday – with a fix from the manufacturer following shortly after. Involving controversial mining chip manufacturer Bitmain, the issue is what some are calling a "backdoor" in the code that controls its hardware, offering the company a way to remotely shut off the miners. Since the code, released anonymously last evening, is vulnerable to attackers, the main concern is whether, in a worst-case scenario, it could be misused.

The fear is that bad actors could exploit the vulnerability to switch off bitcoin mining equipment in bulk, and with Bitmain supplying such a large number of machines to the market, the impact could have catastrophic implications for the bitcoin ecosystem. Known as Antbleed (a title bestowed by the website that dramatized its release), the vulnerability is open-source, making it easy to verify. Leading up to the reveal, a group was told about the code feature, with some developers, such as Satoshi Labs CEO Marek Palatinus independently verifying that the backdoor exists and that it can be used to stop Bitmain miners on trigger.

Bitmain quickly responded with a fix that erases this part of its mining firmware. Further, its team claimed that the feature was never finished and that it was intended to help customers recover stolen miners, a past problem for industry firms.

The statement reads:

"We never intended to use this feature on any Antminer without authorization from its owner. This is similar to the remote erase or shutdown feature provided by most famous smartphone manufacturers."

Much of the recent buzz in the community is around whether the so-described "backdoor" could have been used for malicious purposes, for example, to shut off a miner if it wasn’t complying with rules set by Bitmain.

Adding to the confusion is that bitcoin developments have been highly politicized lately, with Bitmain often sitting at the center of bitcoin’s long-standing scaling debate, opposing proposals authored by members of the Bitcoin Core community. For example, the vulnerability reveal follows allegations that the manufacturer was using a secret mining advantage to boost its profits.

In conversation with CoinDesk, Bitcoin Unlimited chief scientist Peter Rizun might have summed up the issue and surrounding atmosphere the best:

"The drama in social media today surrounds the question of whether there exists a security hole that would allow this remote-control feature to be exploited for nefarious purposes."

Code details

Still, it seems that there are other reasons to be concerned about the backdoor. Since it can be exploited by bad actors from outside the company, the mining chips are now viewed as a security risk to the network. Everyone to 11 minutes, according to the open-source patch introduced on July 12th, 2016, the machines send calls back to a Bitmain server.

The idea is that the mining manufacturer can scan for identifying information about the mining chip, including its serial number and IP address. But, arguably the biggest concern is that the code isn't limited to use by certain people or companies, so it can be exploited by any man-in-the-middle or attacks coming from the same DNS server. "Even without Bitmain being malicious, the API is unauthenticated and would allow any MITM, DNS or domain hijack to shut down Antminers globally," the Antbleed website reads, further outlining concerns about the potential for technical or political misuse.

Vulnerability or 'malicious' backdoor?

Whether or not it was intended to be malicious seems to make up the bulk of the surrounding debate, and so far, it seems that sentiment has broken along the lines of the scaling debate. Still, some broke away from so-called party lines. "This was reckless of them to leave the unfinished feature in the code since this represents a major security issue," said Henry Brade, CEO of bitcoin service provider Prasos, a past defender of Bitcoin Core’s scaling proposals.

"However, based on the statement it is not accurate to call 'Antbleed' malicious in nature. It's simply a serious security issue."

F2pool operator Wang Chun further noted that he isn’t particularly worried about miners within his pool falling victim to manipulation by Bitmain. He noted, in conversation with CoinDesk, that it doesn’t seem like the company ever used it to shut down miners. "They have been able to do that for a long time, but they didn't," he said. Guy Corem, former CEO of Israeli mining chip maker Spondoolies-Tech, chalked up the controversy to "incompetence” and "negligence", rather than malicious intent.

"It make sense they wanted to develop such feature and it also make sense they didn't complete it and abandon it," he added. Further, he cited Spondoolies-Tech’s own past issues with stolen mining equipment. Still, some in the community are skeptical of Bitmain’s response. "Denial of many people is unbelievable. 'Antbleed' is not bug or mistake. The purpose of the code is clear; shut down miner on remote flag," Palatinus tweeted.

Public info?

Others have raised concerns about this vulnerability being made public since outsiders can then take advantage of the attack vector. Bitcoin Core contributor Matt Corallo argued that owners of these bitcoin miners needed to know about the potential vulnerability in order to fix it. "The issue is, it's already integrated in a ton of deployed hardware," he said, adding:

"It was reported to Bitmain via that bug report months ago, and their customers need to know to protect their operations from potential [man-in-the-middle attacks]."

The issue was first reported to Bitmain on Github in September 2016. One question is how prevalent the practice is in bitcoin. Secret backdoors seem to be par for the course in the technology world, often drawing security-minded critics as they're uncovered. Do other hardware manufacturers have the same vulnerability? Two mining manufacturers, at least, claim that they don’t.

"Our hardware doesn't [have] such issues, we [don’t] offer remote updates for firmware – it's the customer's decision update them or not,” said blockchain startup Bitfury Group CIO Alex Petrov. "My miner has no ASICBoost or backdoor," Jack Liao, CEO of mining LightningAsic, told CoinDesk. Along with the details about the backdoor, those who detected it released a patch that closes it up with a single line of code.

Mining centralization

Still, there are lingering worries that the vulnerability betrays a weakness in the bitcoin network – namely, it's lack of mining chip makers. No clear data is available about how many miners are running this software, but Bitmain is one the largest chip manufacturers in the space, with bolder estimates suggesting it produces 70% of all mining chips. That the backdoor could be used to impact any of those chips is unsurprisingly alarming to advocates that the network be "decentralized" and open to competition that enables different actors to engage it.

For now, the impact seems to be that Bitmain will take action to look at the rest of its codebase in order to spot other vulnerabilities. "The controversy around this code has brought our attention to improve the design in order to address vulnerabilities that were pointed out by the community recently," its statement reads. Still, others are lamenting the state of the drama and conversation around the issue, noting how quickly it became politicized.

Rizun concluded:

"All-in-all just another day in bitcoin."

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Ripple Signs Up Another 10 Banks As Blockchain-Based Payments Grow

  

Alan Zibluk – Markethive Founding Member

Americans Skeptical of Bitcoin, Asia Surpasses US, Europe in Fintech Investments

  

Alan Zibluk – Markethive Founding Member

SEC Approves Petition to
Review Bitcoin ETF Rejection

  

It looks like the bitcoin community can still hope

to see a Bitcoin ETF on a major exchange in the near future. Albeit the SEC rejected this proposal back in march of 2017, the Bats exchange filed a petition for review, which has been granted. This is an interesting development, to say the least, and one that may change the future of bitcoin altogether.

SEC Will Review Winklevoss Bitcoin ETF Proposal

It is safe to say a lot of people were disappointed when the SEC rejected the Winklevoss Bitcoin ETF proposal a few weeks ago. There was a lot of excitement surrounding the decision before it was made public, yet things did not work out in the end. However, the Bats exchange, which will list the Bitcoin ETF, is not ready to give up just yet. In fact, they filed a petition for review of the SEC’s initial decision. What this means is how everyone can weigh in on the concept of a Bitcoin ETF rule change proposal until May 15th. Written statements can be sent to either support or oppose the Bitcoin ETF proposal altogether. Do keep in mind the final decision still lies with the SEC. The proposal was initially rejected due to a lack of regulation for bitcoin, and very little has changed since that time.

At the same time, the SEC could have rejected the petition to review the initial verdict. For some reason, they did not do so, which may indicate there is still a chance of them overturning the initial ruling. If that were to happen, the SEC will effectively legitimise bitcoin as a product for institutional investors. Moreover, this could have a significant impact on the overall Bitcoin market cap, which currently sits around the US$20.8bn mark. That being said, everyone can appeal a decision by the SEC, regardless of whether it is positive or negative. What the Bats exchange is doing is not as unusual as some people may think. Having a review petition approved does not necessarily increase future approval chances either, though. Either way, it is an intriguing development for people who still have high hopes for a Bitcoin ETF, even though it won’t mean much if the final verdict remains the same in the end.

There have been a few incidents in which an initial SEC decision has been overturned, although they are far more of an exception than a rule. The only way to successfully achieve such a feat would come in the form of producing new facts to overcome initial objections. In the ETF industry, there has seemingly been no record of a rejection being overturned by the SEC to date. Trends are designed to be broken, but the Bitcoin ETF will have a very steep road ahead, to say the least.

At this point in time, it is highly unlikely the SEC will change its mind  Then again, we won’t know for sure until they publicly issue the new verdict after May 15th. Depending on what information is collected between now and then, things may turn around for the bitcoin ETF after all. For now, there is a reason for reserved optimism, but no one should get ahead of themselves until the new verdict is in.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Bitcoin marches towards all-time high as SEC gives potential second shot to Winklevoss ETF

Bitcoin has risen around 2 percent in the past day, pushing towards its all-time high on renewed hope that U.S. regulators could approve a key trading product for the cryptocurrency. The price of Bitcoin against the dollar stood at around $1281.17 during mid-morning trade in London, according to CoinDesk data, up from $1251.46 a day ago. Optimism in the market has come from an announcement in the U.S. that the Securities and Exchange Commission (SEC) is reviewing its decision to reject a bitcoin exchange-traded fund (ETF) proposed by Cameron and Tyler Winklevoss.

• Bitcoin is trading just over $40 off of its all-time high.
• The SEC said it would review its decision to reject the bitcoin exchange-traded fund (ETF) proposed by Cameron and Tyler Winklevoss.

 

What is Blockchain?  

Last month, the SEC denied an application by the Winklevoss twins to list the ETF, which would have made it the first product of its kind in the U.S. for bitcoin. The proposal involves listing the ETF on the Bats BZX exchange, one of the largest U.S. equities market operator. Bats filed a notice to petition to review the SEC decision which has now been accepted. It means the SEC will look into its initial decision to reject the ETF.

"The Commission hereby establishes that any party to the action or any other person may file a written statement in support of or in opposition to the Disapproval Order on or before May 15, 2017," the SEC said in a statement posted on its website on Tuesday. Traders are hoping that this at least opens the doors to the ETF getting a second shot at being approved. "The news of the review has definitely excited speculators, although it's unclear if this will alter the SEC's decision. So the gains in the last 24 hours may be temporary," Thomas Glucksmann, head of marketing at regulated cryptocurrency trading platform Gatecoin, told CNBC via email.

A stack of bitcoin stand on top of U.S. one dollar bills.

In the last 24 hours from the time of publication, nearly two-thirds of trades were to buy bitcoin while the rest were to sell, showing the current bullishness around the asset. Bitcoin has been on a steady rise for the past month, up around 23 percent. It is also closing in on its all-time high of $1,325.81 hit in March. The price movement has been supported by a number of factors including Japan beginning to accept bitcoin as legal currency as well as the Russian government making comments about looking to recognise cryptocurrencies as legal financial instruments in 2018.

But bitcoin has also had its recent problems. There is a debate among the community over the future of the underlying technology and how that plays out in the future. There were also problems this month with customers on some bitcoin exchanges struggling to withdraw fiat currency from their accounts.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Financial inclusion,

something as simple as possessing a basic chequing account is significantly lacking in the Middle East, especially when compared on a global scale. Digital innovation, coupled with high mobile penetration rates, especially those aged 25 and under, can, however, open the door to reshaping the fate of the region’s estimated 85 million unbanked adults. According to the 2014 World Bank Global Findex Database, a report that measures global financial inclusion, account penetration in the Middle East, that is, individuals without access to even the most basic financial services sat at just 14 percent.

Furthermore, account ownership is at near-universal levels in high-income Organisation for Economic Co-operation and Development (OECD) economies, with 94 percent of adults from OECD nations having reported owning an account. Financial inclusion is critical for employment creation, for raising income levels and to consequently reduce poverty. To achieve inclusive economic growth, of course, requires the easing of barriers to accessing the broader financial system. The key to easing the barrier to financial access in today’s online environment is digital innovation, more specifically, advancement in financial technology and mobile banking.

The United Arab Emirates, one of the richest Gulf nations, has an internal battle amongst its top two cities. “There is a rivalry between Abu Dhabi and Dubai to become the fintech hub in UAE,” said Omar Soudodi, managing director of Dubai-based payments processor PayFort, as reported by Kadhim Shubber of the Financial Times, in December. Companies in the financial technology sector, including within the rapidly emerging space of blockchain technology, see the critical opportunity that exists for banking innovation. “More and more of the Arab millennials are getting into the banked world before they even graduate,” said Soudodi. “Before the trend was, ‘I graduate, I get a job, I get my first paycheck and think, oh my God, I need a bank account’.” There is potential to capitalise on the shifting demographic trends.

Changing Demographics

The UAE was cited by Google amongst the highest in smartphone penetration rates per capita as of September 2015. The UAE was in fact listed among global leaders with an overall smartphone penetration rate of around 75 percent. The mobile phone user base in the Middle East and North Africa region was second only to that in Asia-Pacific. “Just over 606 million people in the Middle East and Africa [region] have at least one mobile phone this year, and the total will pass 789 million in 2019,” reported eMarketer, an independent market research firm, in tandem with Starcom Mediavest Group as part of their 2016 Global Media Intelligence report.

The UAE has retained its regional standing as the highest per capita country for mobile phone penetration with an estimated 80.6 percent of the population reported to possess a mobile device. Further, this number is projected to inch up to 82.8 percent by 2019, as per the Global Media Intelligence report. From a usage perspective, the trend is similarly moving toward complete saturation. In 2012, only 54 percent of UAE users under the age of 25 went online using a smartphone at least as often as on a computer. This rocketed to 90 percent by 2015.

Fast-forward to data obtained in January 2017 and the trend upward continues, with the Internet and mobile use remaining high in the Middle East, according to We Are Social’s and Hootsuite’s Digital in 2017 Global Overview. Of an estimated total regional population of 246 million there are 147 million Internet users in the Middle East — a 60 percent penetration rate. Furthermore, there are 312 million mobile subscriptions, which amounts to a 127 percent rate against the overall population.

“You have a very young population, using modern technologies. Yet, the financial and banking side is lagging. Fintech therefore, can play a very important role in financial access and inclusion,” said Saidi. Top digital users are of course the youth segment, according to economist Saidi, who added, 60 percent of the population in the Middle East are aged under 30, which highlights the ripe opportunity to mobilise the current and upcoming generations.

Blockchain-Based Innovation

“The Arabian world is ripe for innovation,” said Mohammed Alsehli, chief executive officer at ArabianChain Technology, a Dubai-based software developer. “Blockchain technology is at the center of innovation in the region that is made possible by the direction and the vision of some of the countries here. In Saudi Arabia and the UAE it’s all about the digital revolution and how to digitally transform these countries in the future.” ArabianChain Technology, based in the Dubai Technology Entrepreneurship Center, recently launched its own public blockchain.

In addition to the blockchain, ArabianChain is developing a suite of blockchain-based features and products, including its own digital currency called DubaiCoin-DBIX (previously, DubaiCoin-DBIC), an exchange, and a regionally-focused marketplace. “DBIX is a secure and economical means to conduct payments and asset transfers,” Alsehli said. But ArabianChain is just a single player amidst a growing base of fintech ventures, blockchain-based and otherwise. Last September, the Dubai Future Foundation launched its inaugural Dubai Future Accelerators, a 12-week program connected international technology startups with government entities for the purpose of creating prototypes and pilots for the City of Dubai.

According to Bitcoin Magazine reporter Diana Ngo, The program “enlisted 30 companies with seven of Dubai’s public services: Health, Energy, Knowledge, Municipality, Police, Transport and the investment portfolio, Dubai Holding.” In fact, the United Arab Emirates is moving to adopt sweepingly adopt blockchain technology with aims “to become, by 2020, a leading centre for innovation and the first government in the world to execute all of its transactions on a blockchain.”

The power of this, from a financial inclusion and digital innovation standpoint, will be unmitigated access for a population that lives online, connected via a computer or mobile phone, with the latter’s penetration rate at a nearly universal level. Further, integration and adoption of a regionally-focused, feature-filled public blockchain has the capacity to heighten interaction and connectivity from business-to-business,  business-to-consumer, and peer-to-peer positions.

Daniel Diemers, a consultant with the strategy and consulting arm of PricewaterhouseCoopers, pointed to another reality in the region, that of disconnection, stating, “If you’re a payments fintech start-up in the UAE and you’ve gone through all the approvals, it [still] doesn’t give you passports in other Gulf countries.” ArabianChain and other public blockchains like Bitcoin have the potential to alter this dissociative relationship, allowing businesses and people to interact without thought of border, according to Alsehli.

Mobile banking and the advancement and adoption of financial technology applications can also shatter the often insurmountable barrier physical access predicates while alleviating costs to the account owner and the banking institution. In short, Blockchain-based innovation could mean significant progress by way of financial inclusion through digital. This guest article is authored by Brandon Kostinuk, communications lead at Vanbex Group, a Vancouver, Canada-based professional services firm and consultancy that specialises in the digital currency and blockchain technology sector.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

   Senators in the state of Nevada

have unanimously backed a proposal that would block local authorities from instituting taxes or fees on blockchain use. According to public records, after just over a month of deliberation, the Senate advanced the measure following a 21-0 vote, with zero abstentions. As CoinDesk reported last month, it’s the first measure of its kind that would prevent local officials from charging money to use a distributed ledger or a smart contract tied to one. Sen. Ben Kieckhefer initially submitted the measure on 20th March.

The bill stipulates:

"A local governmental entity shall not: (a) Impose any tax or fee on the use of a blockchain or smart contract by any person or entity; (b) Require any person or entity to obtain from the local governmental entity any certificate, license or permit to use a blockchain or smart contract; or (c) Impose any other requirement relating to the use of a blockchain or smart contract by any person or entity."

Other elements of the bill would clear the way for smart contracts and blockchain signatures to become acceptable records under state law, similar to a measure that was signed into law last month in neighbouring Arizona. The bill now moves to the Assembly – the lower chamber of Nevada’s bicameral legislature – for further consideration.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Recently, I posted an article relating to a conference on Financial Technology (FinTech) held at MIT. In that post, I discussed the advancement of technology in the United States financial system and reported on how far behind many experts believe the American financial system is in introducing technology to the US economic system. An interesting thread running through many of the sessions at the conference was the mention of Dubai as a leader in the advancement of blockchain technology.

Blockchain technology uses a digital ledger system to efficiently share and track information related to contracts and transactions. The records of the system are permanent, verifiable, and secure. The Blockchain Technology is the technology used to support the digital currency bitcoin. It was surprising to me to see an article by Nikhil Lohade in the Wall Street Journal on the efforts being made to turn Dubai into a blockchain center.

Mr. Lohade quotes the group chief information officer at Emirates NBD, Dubai's largest bank, Ali Saywani:

"The aim is to replace paper-based contracts with smart contracts that will help reduce complex documentation for the tracking, shipping and movement of goods."

"We have a very clear objective to make Dubai the capital of the blockchain industry," says Aisha Bin Bishr, director general of Smart Dubai, a government office tasked with facilitating innovation in the emirate. "By 2020, we'll have 100 percent of applicable government services and transactions happen on blockchain."

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Ripple is adding 10 new banks

and financial services providers to what it's now calling its "blockchain network". Founded in 2012, Ripple has raised nearly $100m for its distributed ledger tech and related payments products, but it has been increasingly active of late in seeking to formalize enterprise partnerships amid a wave of high-profile consortium efforts.

The new partnerships find Ripple showcasing its reach and influence. New members include MUFG (Japan), BBVA (Spain), SEB (Sweden), Akbank, Yes Bank (India), Axis Bank (India), SBI Remit (Japan), Star One Credit Union (US), EZ Forex (US) and Cambridge FX (Canada). In an interview, Ripple VP of product, Asheesh Birla explained the company is beginning to define its offerings in more collaborative terms. While its product allows for faster cross-border payments, Ripple is also creating a set of standards for banks to follow while using its underlying tech, he said.

Birla told CoinDesk:

"You need a whole ruleset, and that's why we call it a blockchain network and when we say that partners are joining, they’re actually agreeing to the standards and rules that accompany the technology as well.”

The new partner banks and companies are a mix of inbound and outbound services. As Birla explained, Indian banks Yes Bank and Axis Bank are receiving more cross-border payments rather than issuing payments out. MUFG in Japan, on the other hand, manages both. "They would be processing payments for a lot of Japanese that want to send money to other destinations like Turkey and India but then there’s a lot of demand for sending payments into Japan as well," he said.

Faster payments are one advantage, but members also cited other advantages. Evan Shelan, chairman of EZ Forex said, "The benefits [of the blockchain] are about adding the most advanced level of security to each payment through the distributive ledger for our financial institutions."

Global reach

Of course, a global network is perhaps a natural fit given Ripple's recent focus on the cross-border DLT opportunity. According to Birla, many banks are feeling the need to process more international payments than ever before. As such, Birla framed DLT as an advance that could help financial institutions with a broader set of problems. For instance, without a standardized procedure, he argued things gets messy when operating payments to several different countries.

"[Banks are] looking at this as a new kind of service that they can offer that would compete with a lot of the startups in their space," he said. Still, work needs to be done to boost the Ripple ecosystem, and Birla said that banks were chosen, in part, due to their expertise with their local regulatory environment.

Birla concluded:

"The reason that we chose to work with banks is that they are experts in local regulation. A lot of them have that pull and understand the regulatory environment and we built our product in such a way that it fits within the different regulatory schemes around the world."

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Blockchain: The Next Mortgage Industry Shake-Up?

It has been quite some time since a new technology came along that holds the promise of revolutionising the mortgage industry. E-signatures and e-mortgages still offer the promise of a major technology shift, but 17 years later, adoption of e-mortgage technology has been anaemic

Along comes a new technology: Blockchain.

Will blockchain finally be the game-changing technology for the industry? I believe blockchain will be the next big thing. Although there were high hopes that e-signatures would be the solution that finally improves the process, the industry has been slow to adopt e-signatures as the core game-changing technology – and for good reason. Switching to digital mortgages requires substantial process and technology changes. Also, digital mortgages require the mortgage ecosystem – from the originator to the title company, to a closing agent, to a county recorder, to investor – to support the “e” process. This has been an almost insurmountable hurdle to overcome.

Although it has been close to two decades since e-signatures became legitimate under the law, e-closings are still not commonplace for mortgages. It’s no fault of the technology, per se – clearly, using e-signatures can make life easier for borrowers. Yet, the mortgage industry is still a paper-and-ink industry that requires mortgage teams and customers alike to go to the title company’s office and sign stacks of documents by hand. This is where blockchain technology comes in. I believe that blockchain will ultimately become the tool that enables wider adoption of digital mortgages.

What is blockchain, and why should mortgage lenders care?

Most mortgage professionals have heard of blockchain, yet no one knows for sure how it will impact mortgage lending. Many in the industry believe that blockchain will be used for digital currency or high-frequency trading. But the fact is that blockchain-based technology holds the promise of creating a completely new basis for the digital mortgage without any of the previous hurdles.

Blockchain technology that is correctly applied to documents and data provides the same level of preservation of information, document integrity and tamper seal solutions as the original mortgage without requiring a completely reworked “e” process. Blockchain technology can work with digital signing or with a paper signing. Notary seals, recordation information, e-notes and paper notes, and video recording of closings can all be tamper-sealed and immutably recorded.

Why is that so revolutionary for the industry? Because if you use the right blockchain solution, it helps overcome the three previously mentioned hurdles that stopped e-signatures in their tracks: With blockchain, you don’t have to have everyone in the mortgage ecosystem agree to an e-mortgage document process, nor do you need everyone to support the e-signed documents. More importantly, blockchain solutions will not require lenders to retool processes, as blockchain technology sits as a thin layer on top of the existing document management system. Blockchain technology, when properly applied, has the ability to freeze a copy of signed documentation to prove that it has never been altered – and, further, that the original document is in its original location.

An enabler, not a replacement, of e-mortgages

Will blockchain replace digital signatures? It certainly has the potential to change the way digital signatures are utilized, but no, blockchain will not replace digital signatures. The goal is to help facilitate their use by making blockchain the fundamental enabling technology. As we’ve seen through their slow adoption, e-signatures are not the right tool to be the lead player, but they are still an important tool in the mortgage industry’s toolbox.

What blockchain technology will do is shift the way that the industry thinks about an e-mortgage. In the past, an e-mortgage was envisioned as a soup-to-nuts digital file that contained only digital documents and e-signatures – a configuration that was extremely tough to implement because of the hurdles described previously. Blockchain brings something new to the table by offering the mortgage team and customer the same benefits whether signing digitally or on paper. Again, e-signatures will become the technology that makes some parts of the mortgage process better for the consumer and the lender, but it won’t be the underpinning technology around a digital mortgage.

Building on the blockchain backbone

As we look back over the past 17 years of the industry’s anaemic attempt to get widespread adoption for e-signatures, it’s important to reiterate that this wasn’t a failing of the digital signature technology itself. Instead, the failure was because e-signatures required clearance of too many significant hurdles. Within this environment, blockchain has emerged as a problem-solving technology that doesn’t require the same level of clearance of the industry’s hurdles.

Blockchain offers a completely different baseline technology on which to build the digital mortgage. Although blockchain is poised to ultimately become bigger than e-signatures and replace them as the core driving technology, the ability to sign digitally will still be hugely important in the mortgage industry. Tools such as e-signatures, electronic closings and e-vaults are vital components of the overall e-mortgage solution.

What’s changing is that e-signatures will be replaced as the core technology behind e-mortgages. These components will need to plug into the blockchain backbone, which will become the linchpin that drives an electronic mortgage. Shifting the focus from e-sign tools to blockchain as the backbone for compliance and document management is a win-win, as it still allows for the option to insert e-signatures as needed along the way. In short, blockchain is the transformation in technology that the industry has needed for nearly two decades – one that will finally allow e-signatures to become incredibly powerful.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member