Yesterday, I included a quick blurb about IBM’s Paul Brody and his discussion with Gigaomregarding his company’s new open source, blockchain-dependent internet of things infrastructure project, called “Adept.” Last night, I had the chance to listen to the full podcast. (His interview starts at 22:10.)

The topic deserves its own post.

I was surprised at the subdued response from the rest of the Bitcoin community on this one. Granted, this has been a huge news week so far. Apple Pay’s Tuesday announcement was seismic and the ensuing punditry from both the mainstream media and bitcoin community buried the IBM story initially. And Coinbase’s announcement yesterday that they were launching in 13 new European countries and today’s news from the Bank of England all but ensured that Adept would stay below the fold.

But I think Gigaom (and later CoinDesk) omitted a pretty significant detail from their written coverage of the podcast. Brody says (at the 34:15 mark):

“I’m really proud to be able to say that we’re going to work with Samsung to have a prototype physical network based on this technology — ready (we hope) in time for CES in January.”

So IBM, one of the top five technology companies in the world, and Samsung, literally the largest technology company in the world, are working on a block chain product in time for CES this January. And no one else thinks it’s a big deal?

Fortune’s Dan Primack (the go-to source of news in the PE/VC scene) seems to be the only person in the mainstream media to have caught the significance of this understated announcement, writing yesterday:

“Yesterday’s most consequential tech announcement had nothing to do with watches. Instead, it was IBM saying that it will use bitcoin’s block-chain technology to build a distribution platform for the Internet-of-Things. As I’ve previously written, the real promise of bitcoin is the underlying technology itself, rather than its various applications for stored value or payments. And this appears to be the first time that a large tech company is putting serious resources behind trying to achieve that promise.”

When I made similar suggestions last night on twitter, some folks immediately objected that this was not truly “Bitcoin” news because it wasn’t clear that IBM would immediately use the Bitcoin block chain. Shocking. This may be the biggest endorsement of Bitcoin’s underlying protocol yet — from not one, but two major global technology companies. Not to mention, Adept may use the Bitcoin block chain itself.

Whey I reached out to IBM’s Brody for clarification on this point, he told me that the company “hadn’t finalized the [Bitcoin] side chain / alternative chain decision yet.” He wouldn’t comment further (for now), so I reached out to a couple of experts from the bitcoin community to solicit their thoughts.

“Tagging something to an existing block chain is relatively easy to do from a technical standpoint,” says Anders Brownworth, a bitcoin technologist and founder of the Cambridge Bitcoin group. So even if IBM chose to create its own block chain for the Adept proof of concept, it could always opt to “attach” that chain to bitcoin’s at intermittent points in the future. According to Brownworth, “Inserting a SHA of the Adept block chain into the bitcoin block chain would be a stronger guarantee that you have the correct Adept chain, and that what you see in the Adept block chain is very likely accurate.”

The question then is whether Adept could be built a) on top of the Bitcoin protocol, much like Mastercoin or Counterparty; b) as a separate framework, much like NXT or Ethereum; or c) as a “side chain” which could have a two-way relationship with the block chain.

The most exciting outcome for bitcoin would clearly involve some type of close integration with the Bitcoin protocol — either as a new protocol built on top of Bitcoin, or as a new protocol which utilized side chains. Yet IBM seems to be shying away from touching the bitcoin currency in any way, and unfortunately, side chains don’t actually exist yet.

Chain co-founder Adam Ludwin explains, “Side chains remain a conceptual, unproven technology today, as there aren’t yet in any production that you can point to. This requires some changes to the core bitcoin protocol.” That leads Ludwin to believe that IBM could ultimately choose to go their own way, innovating “at the protocol level to release a new distributed consensus algorithm” rather than relying on a true block chain per se.

However, both Ludwin and Brownworth agreed that if IBM were to build a true block chain infrastructure, the company’s best bet would be to leverage Bitcoin. Brownworth speculates that Bitcoin’s block chain has a higher chance of survival in the long-term than IBM’s own fully maintained block chain given the infrastructure investments that both networks would require. Big Blue could, at any point now or in the future, rely on the longest publicly running block chain in history — bitcoin’s.

As Brownworth asks, “Why reinvent the wheel?”

[Important caveat: Adept hasn’t even released its white paper or source code yet, so keep that in mind. Anders and Adam were gracious enough to talk conceptually about the possibilities for Adept, not the likelihoods.]

***

An anonymous commenter on the Gigaom post argued that Adept is essentially a carbon copy of Ethereum, but I don’t know how to respond to that.

The raw combination of ideas does seem similar, though. Adept will use the block chain, BitTorrent and secure messaging tech Telehash, while Ethereum plans to use a block chain, Swarm (similar to BitTorrent?) and Whisper (secure messaging).

But Ethereum comes from the early Bitcoin crowd, so its obviously going to be better. :P

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Today’s Tid Bits

Coinbase Extends Bitcoin Access to International Customers

http://dealbook.nytimes.com/2014/09/10/coinbase-extends-bitcoin-access-to-international-customers/

Coinbase is extending its services to 13 European countries, by allowing users with authorized bank accounts to exchange Euros for bitcoin. The countries are France, Italy, Spain, Belgium, the Netherlands, Austria, Cyprus, Finland, Greece, Latvia, Malta, Portugal, and Slovakia. Anyone in the world can set up a wallet using Coinbase to store bitcoin, but previously only customers with United States bank accounts could exchange bitcoin on Coinbase. To date, Coinbase has 1.6 million wallet accounts, 36,000 merchant accounts, and $31 million in funding.

Here’s What the Bank of England Thinks of Bitcoin

http://blogs.wsj.com/moneybeat/2014/09/11/heres-what-the-bank-of-england-thinks-of-bitcoin/

The Bank of England (BOE) believes bitcoin poses no threat to the financial system, but that it one day could affect financial products, stocks, and even physical assets such as gold. The researchers for the BOE highlighted the potential usefulness of the “decentralized ledger,” also known as the blockchain, admitting that it could one day update the existing financial system’s infrastructure. The BOE estimated that 300 bitcoin transactions occur daily in the UK with about 20,000 people in the UK holding bitcoins at the moment.

Could PayPal’s Acceptance of Bitcoin Help With Its Image Problem?

http://www.washingtonpost.com/news/morning-mix/wp/2014/09/10/ebays-paypal-embraces-anarchic-virtual-currency-bitcoin/

Paypal, the world’s second biggest payment system, will support bitcoin on its Braintree payments platform. Now instead of associating bitcoin with Silk Road, the average user may know bitcoin as another payment option for one’s Uber ride or Airbnb trip. The Braintree acceptance of bitcoin will hopefully take bitcoin out of the shadow, and develop help itself as an accepted online-payment system.

Amagi Metals CEO: Bitcoin Will Replace the US Dollar in My Lifetime

http://www.coindesk.com/amagi-metals-ceo-bitcoin-replace-us-dollar/

Last Month, Amagi Metals announced it would stop accepting the US dollar as a payment method by 2017 dealing strictly with bitcoin instead. CEO Stephen Macaskill stood by his firm’s decision, and believes bitcoin is “going to replace the dollar in my lifetime.” Macaskill believes the dollars days are numbered, and that bitcoin will carry our economic system, along with his company, in the future.

Nearly 5M Gmail Credentials ‘Leaked’ on Russian Bitcoin Security Forum

http://cointelegraph.com/news/112494/nearly-5m-gmail-credentials-leaked-on-russian-bitcoin-security-forum

Tuesday, on a Russian Bitcoin security forum BTCSec.com 4.92 million Gmail accounts and passwords were leaked. A user titled “tvskit” leaked the file, and claims 60% of the credentials are valid. The leak also contained 1.25 million Yandex, Russia’s largest email service, accounts. Russian and Eastern Europe hackers have been suspected in many recent hacks, including the Target operation this past winter.

Virgin Founder Richard Branson Says Bitcoin is Working

http://www.cryptocoinsnews.com/virgin-founder-richard-branson-says-bitcoin-working/

When asked about Bitcoin in a Bloomberg News interview yesterday, Richard Branson responded by saying, “Bitcoin is working.” Branson is accepting bitcoin as a method of payment for Virgin Galactic’s commercial spaceflights. The Winklevoss twins took Branson up on the offer in May, by paying for their $250,000 space tickets in bitcoin. Branson discussed bitcoin’s volatility, but did mention, “There is a big industry around Bitcoin.”

Bitcoin Center NYC Meets with NYDFS to Talk BitLicense Proposal

http://newsbtc.com/2014/09/10/bitcoin-center-nyc-meets-nydfs-talk-bitlicense-proposal/

The Bitcoin Center NYC’s executive director, Raymond Cline, met with Dana Syracuse at the New York Department of Financial Services (NYDFS) headquarters to discuss the BitLicense. The Bitcoin Center NYC, which is one hundred feet from the New York Stock Exchange, continues to urge the bitcoin community to submit comments to the NYDFS. The comment period for the BitLicense, after receiving an extension, is set to expire on October 21st.

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