Cryptocurrency 'Wild West' must come to an end, UK lawmakers say

U.K. lawmakers have said they want to clamp down on the “Wild West” cryptocurrency market and prepare Britain as a legitimate home for the trading of digital currencies.

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The Treasury Committee released a report on Wednesday that called for the government to address the issues of poor security from hackers, volatile price swings, and anonymity that can aid crime.

A cryptocurrency is a digital record designed to work as a medium of value exchange. It uses cryptography to record and secure financial transactions. The virtual tokens that consumers buy can themselves be used to make payments.

The paper claimed that the British government currently has an ambiguous stance to the industry which is opening the door to criminal activity as well as high risk for consumers.

“As the Government and regulators decide whether the current Wild West situation is allowed to continue, or whether they are going to introduce regulation, consumers remain unprotected,” the report said.

The committee chair, Nicky Morgan MP, added that it was unsustainable for government and regulators to “bumble along, issuing feeble warnings to potential investors.”

The report noted that better regulation could reduce the volatility of a crypto-asset. The price of a Bitcoin increased from $6,472 in November 2017 to $17,629 in December 2017, and then fell back to $7,208 in February 2018.

The lawmakers also suggested that Britain could, as part of regulatory reforms, position itself as a global center for crypto trading.

The digital currency exchange Coinbase contributed to the report as part of its work with trade body CryptoUK. In an email to CNBC on Tuesday, Coinbase UK CEO Zeeshan Feroz said the U.K. would need to introduce reforms quickly or risk losing out.

“The UK is in a race with other financial hubs around the world who are also vying to become the world’s crypto capital, so it’s important that this regulation is implemented as quickly as possible,” he said.

Regulation surrounding cryptocurrencies is underdeveloped around the world. The United States has suggested that the digital assets should be subject to federal laws by considering them as securities.

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AutoNation CEO Mike Jackson to step aside after nearly 20 years

AutoNation CEO Mike Jackson will step aside in 2019 after 20 years running the nation’s largest chain of auto dealerships.

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Jackson will transition from his current role of chairman, CEO and president to executive chairman next year. In that role, he has extended his contract until 2021.

AutoNation’s board has hired executive search firm Spencer Stuart to find a replacement, and will consider both internal and external candidates.

Jackson is credited with being a transformative leader, who formed a single brand and strategy around a collection of dealerships around the country. He was hired by AutoNation founder Wayne Huizenga, while Jackson was head of Mercedes-Benz of America.

Since Jackson took over in October of 1999, AutoNation has generated about a 340 percent return for shareholders, the company said. In 2017, AutoNation’s revenue rose to $21.5 billion.

During his tenure, he focused the business on sales, service and finance, and expanded the dealership inventory beyond U.S. auto brands into a three-way split between domestics, luxury cars and imports.

He was a strong advocate for the automotive industry on issues around fuel and during the financial crisis, when large U.S. automakers like General Motors were struggling.

“The timing is right to transition the company to the next leader,” Jackson said in a statement.

AutoNation has been expanding its business to newer businesses, including services such as collision repair. It also is expanding its online presence.

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The Apple Watch Series 4 is a big, but expensive, upgrade

I tested the GPS and Cellular model, which can continue to stream music to headphones, place calls and send text messages even when you’re away from your iPhone. This worked well, and the watch seemed to transfer over to cellular faster than last year’s model, which had a delay.

The battery life is good, too. Apple advertises 18 hours of use. I took the Apple Watch Series 4 off of the charger on Friday morning. I drove to the beach that evening and realized I’d forgotten my charger. I turned it off Saturday night and still had 16 percent left on Sunday at 3 p.m. I’d worn the Apple Watch all day each day, and even used it to track workouts and make sure I closed all of my rings. That’s good enough for me.

I like the new digital crown on the side, which is used to navigate around apps. It provides haptic feedback — a little buzz — when you twist it, and you can press it to make a selection. Also, the button below it that brings up the app tray is now more flush with the rest of the body, which is just a tiny aesthetic enhancement.

At its launch event last week, Apple showed off a new electrocardiogram feature that exists inside the digital crown, but it’s not active right now. Apple will release a software update that will enable it later this year, but when it works it’ll let you take an EKG and send it off to your doctor via PDF.

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Blockchain is 'not ready yet' to fully support the global supply chain, CEO says

Blockchain technology is not yet mature enough to fully support the global supply chain, according to the CEO and co-founder of Tradeshift, a digital invoicing start-up.

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Using blockchain is a great idea when there are multiple stakeholders involved since the ledger records every transaction that takes place, Christian Lanng told CNBC at the World Economic Forum in Tianjin, China on Wednesday.

Supply chains “often have many different stakeholders touching goods, moving them around,” he said. “If you want to have authenticity, if you want to know where it is sourced, that it is done in a responsible way … (blockchain) is a great technology to manage that kind of flow and be sure of the integrity.”

“The problem is just it’s not a high-performance technology,” he said, adding that it is also expensive.

Tradeshift is a start-up in the supply chain payments and marketplaces space. The company helps other businesses send and pay invoices using software, instead of using traditional offline methods that are often costly and inefficient.

As of July, the company raised more than $400 million in funds and was valued at $1.1 billion.

One of the main problems is that existing supply chains were not built for change, according to Lanng. To solve the issue, companies need technologies that can digitize their supply chains so that they can respond to change quickly, he said.

Blockchain is one such technology that experts say could have the potential to shake up the global supply chain. But Lanng warned about the hype surrounding the technology.

“Whenever people say blockchain, I think what they’re really saying is they would like to connect things digitally,” he said. “I don’t think blockchain is a mature enough technology yet to carry that … I also want to be a little bit cautious for some of the hype.”

Blockchain is still very new and its tangible benefits are more theoretical than practical. Bitcoin was the first major application of blockchain technology with a focus on payments.

Some experts have predicted that the earliest viable applications of the technology will likely be seen in supply chain management instead of the financial services industry, where many major banks are already carrying out experiments. The idea is that the blockchain can eliminate the need for third-party intermediaries that are often present in the supply chain, in turn cutting costs and increasing business efficiency.

While companies and governments across industries are exploring blockchain and its potential uses, surveys indicate that widespread adoption of the technology is still about five to ten years away.

Lanng pointed to Ethereum — a major decentralized platform that runs smart contracts that are built on the blockchain. He said it can do around seven transactions a second, which is slower than dial-up connection.

“When you run a global supply chain, you have (thousands) of transactions per second. So, I think for identity, I think for certifications and stuff like that, blockchain is useful,” Lanng said, explaining that many of the potential use cases will take time to be proved.

“For the main transactional scenarios, it’s not ready yet. It’s too expensive and it’s very complicated to build and scale,” he added.

— CNBC’s Evelyn Cheng contributed to this report.

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Amazon is now the third largest digital ad platform in the US, closing in on Facebook and Google

Amazon is taking a larger chunk of the U.S. digital ad business than expected this year, according to market research firm eMarketer.

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EMarketer revised their annual U.S. digital advertising estimates, and now projects Amazon will rake in $4.61 billion in 2018. Previously, it thought the company was only going to make $2.89 billion.

More importantly, Amazon will take the third spot right behind Google and Facebook. While Amazon will still only make up 4.15 percent of the total U.S. digital ad revenue, it’s growing while the other two digital advertising giants are decreasing. Emarketer expects the two will make up 57.7 percent of U.S. digital ad revenues (37.1% and 20.6%, respectively), down from 59.1 percent in 2017.

The increase is partially due to more people starting their online product searches on Amazon, rather than Google. Amazon has also grown its mobile advertising business 242 percent since last year, the report said.

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High valuations not always the 'primary driver' for tech firms

Tech darlings such as Chinese mobile phone maker Xiaomi might have seen weak investor interest in Hong Kong lately, but they don’t appear be motivated by high stock valuations anyway, said Charles Li, the CEO of Hong Kong Exchanges and Clearing (HKEX).

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Many of these rising companies are cash rich and maintaining top positions in their respective industries is more important to them, Li told CNBC at the World Economic Forum on Wednesday.

“They do seem to have strong confidence in their underlying … businesses,” Li said. “A lot of these major competitive new economy spaces, you really need to be number one, number two, at worst number three, to survive. And so maintaining that leadership position is very important.”

Still, he sees such companies heading for public listing despite the market “not pricing them at the top.”

“So whether capital markets give you a great valuation or not, seems to be not necessarily the primary driver of a lot of those listings,” he added.

Hong Kong has seen a pickup in interest for listings following a market rally early this year and after the exchange introduced new rules designed to attract tech companies by allowing dual-class share structures.

But the benchmark Hang Seng index has fallen about 18 percent since its January peak amid U.S.-China trade tensions, and several recent listings — such as Xiaomi’s — have dropped below their IPO prices.

Xiaomi had a disappointing initial public offering in Hong Kong in July. Experts had said it could be a reflection of lackluster investor interest for “new economy” type of Chinese companies, as well as disappointing valuations in the East Asian finance hub.

Sentiment surrounding Chinese companies with global ambitions has also been hurt by the escalating U.S.-China trade tensions, they say.

Among the Chinese tech companies seeking to file (or that have already filed) IPOs in Hong Kong this year are: Meituan Dianping, an online platform with services from food delivery to ticketing; Bitmain, bitcoin mining equipment maker; and Maoyan Weying, Chinese movie ticketing platform.

But Li stressed that the up and coming companies are not that affected by “marginal” market movements. Rather, those who are not listing have other business considerations, such as regulatory concerns or other strategic factors.

“Those who do choose to come, deeper conversations with them give me strong confidence that the market seems to be secondary … in driving their decisions on timing,” he reiterated. “People don’t seem to be bothered by the fact that they are not raising as much money as they can.”

“These companies are really major rising stories. This incremental capital … the marginal up and down, does not really impact that much.”

— CNBC’s Kelly Olsen and Reuters contributed to this article.

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Peer-to-peer lender Funding Circle to be valued up to $2.4 billion after IPO

Peer-to-peer lending platform Funding Circle announced the pricing range for its initial public offering (IPO) on Wednesday that could value the company up to around £1.8 billion ($2.4 billion).

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The British fintech firm said the price range of the offer has been set at 420 pence to 530 pence per share. The flotation will comprise a maximum of 71.4 million new shares and a secondary component to be determined.

After the completion of the IPO, the issued share capital of the company is expected to comprise between 329.7 million and 345 million shares.

Funding Circle said it intends to raise processed of £300 million from the IPO which will take place on the London Stock Exchange. No date has been set for the IPO yet.

Heartland A/S, the private holding company of Danish billionaire Anders Holch Povlsen, has agreed to buy 10 percent of the issued share capital up to a maximum valuation of £1.65 billion. Povlsen is a major investor in online retailers Asos and Zalando.

Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley and Numis Securities have been signed up to act as bookrunners.

Funding Circle operates in the U.K., the U.S., Germany and the Netherlands.

In the six months ended June 30, Funding Circle raked in revenues of £63 million, up from £40.9 million in the same period the year before. Losses widened however to £27 million, up from £19.2 million in the first half of 2017. Funding Circle has facilitated £5 billion of loans to small and medium-sized businesses since it was founded in 2010.

Major investors include DST Global, Rocket Internet, Accel, Index Ventures, BlackRock, and Temasek.

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Everyone could learn from China's tech policies, World Economic Forum says

The World Economic Forum is looking to China for ideas on how governments can appropriately regulate the technologies of the future.

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The organization, which runs the annual conference of world leaders in Davos, Switzerland, announced Wednesday it is launching a hub in Beijing for government officials, businesses and academics to come up with suggestions for future policies on developments such as artificial intelligence.

The group in the communist country will mark the third location of the Center for the Fourth Industrial Revolution, which opened in San Francisco in March 2017. A location in Tokyo launched in July, and another is due to open in Mumbai, India, in October. Areas of focus include blockchain, internet of things technology, and artificial intelligence.

“We can’t use 20th century models for 21st century technology,” Murat Sonmez, head of the organization’s Center for the Fourth Industrial Revolution, said in an interview with CNBC.

“We have a lot to learn from China as well,” he said. “China represents a huge opportunity for the rest of the world to see what’s coming.”

While China is one of the most controlling states in the world, the national government has let some sectors such as internet companies thrive relatively unrestricted. In addition, under a “Made in China 2025” plan, Chinese authorities are investing heavily in technologies such as artificial intelligence in a bid to become a world leader in advanced tech.

A list of those who will participate in the Beijing hub was not immediately available because the group is still in early stages of development. Of 50 companies involved with the center globally, two are Chinese: telecom giant Huawei and drone maker DJI.

Sonmez said he hopes the hubs can complete several pilot programs within 18 months to help form guidelines for future policies, such as data privacy, liability for algorithm-generated actions and cross-border data flows.

“There’s a potential if you do not have flexible regulation, all these investments will not lead to [a] desired outcome,” he said.

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Technology used by NASA could end food shortages and save trillions of dollars

As organizations grapple to find solutions to the twin problem of resource shortages and food waste, technology used by NASA could provide a timely solution.

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Hyperspectral imaging — a form of technology which uses images to measure chemical information — has been used by the U.S. space agency for decades. But now, thanks to cost reductions, its applications have become more widespread and are impacting a variety of industries including the food sector.

California-based ImpactVision uses that technology to help producers conduct tests more accurately and manage their supply chains without wasting food, the company’s co-founder and CEO, Abi Ramanan, told CNBC at the World Economic Forum in Tianjin, China on Tuesday.

Using photographs, its software is able to assess a range of information about a food item ranging from its ripeness to the presence of contamination. All that is done without taking any physical samples or probing them, as most traditional methods require.

“What this technology, and other technologies, allows you to do is be a lot more predictive: How should this product be sorted, ripened, distributed best in accordance with its chemical composition or its shelf life?” Ramanan told CNBC’s Akiko Fujita and Martin Soong.

“It really infuses the supply chain with digital technology so you can make better decisions earlier on and reduce waste, but also reduce product recalls, prevent rejections, and deliver a better quality product to consumers,” she continued.

Not only will that mean huge cost-savings for food producers and higher quality products, it is also a viable solution to the prospect of growing global food shortages, Ramanan said.

It is estimated that as much as one third of all food is wasted, costing producers $1 trillion annually, according to ImpactVision. Meanwhile, millions of people go hungry every day — and that’s set to continue as the global population balloons.

“We have to feed a population of 10 billion in the near future and we have to do that with less resources,” Ramanan noted. “We need to decrease the amount of land, energy and water that is being put into the food system (and) really improve the way that food is distributed through the supply chain.”

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The biggest trend in Chinese social media is dying, and another has already taken its place

China’s live-streaming sensation fueled an unprecedented boom since 2016 for some Chinese social media platforms, turning young millennials into millionaires by broadcasting their daily lives, while helping companies like YY, Huya, Momo and Bilibili cash in billions of dollars.

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That party appears to be coming to an end.

“I used to spend one or two hours every day watching people live streaming,” said 33-year old Zeng Hu, a project manager for an asset management company based in Jinan, China. “But now, I rarely watch them anymore.”

The reason for his changing viewing habits: Short videos are taking China by storm.

“On a weekday, I would often spend two to three hours watching those 15-second short videos. Over the weekend, I can watch up to five hours a day,” Zeng told CNBC in a phone interview conducted in Mandarin.

He is not the only one who has been spending hours on short video apps. His viewing habits are shared by millions in China today.

Since last year, short videos — typically lasting between 15 seconds to a few minutes — have become one of the fastest-growing trends in China. Packed with music and special effects, they are usually fun and quirky for both their makers and viewers.

Douyin, one of the most popular Chinese short video apps, said its platform had more than 300 million domestic monthly active users and more than 150 million daily active users as of June. That’s about one in every 10 Chinese people.

The app is owned by Beijing-based tech company Bytedance, which also owns news aggregator app Jinri Toutiao.

Here’s an example of a short video originally made on the app by this reporter:

Known as TikTok in markets outside of China, Douyin has begun to gain international popularity: The app’s global monthly active user count reached 500 million across over 150 countries and regions, it said in June.

For comparison, Instagram announced in June that it had reached one billion monthly active users. The Facebook-owned platform also said its Instagram Stories feature, launched in August 2016, reached 400 million daily active users in the second quarter this year. Meanwhile, Snapchat reported 188 million daily active users for the second quarter this year, but did not release its monthly active user figures.

TikTok was downloaded more than 104 million times on Apple’s App store during the full first half of 2018, according to data provided to CNBC by Sensor Tower, a leading app analytics platform based in San Francisco. That means it surpassed Facebook, YouTube and Instagram to become the world’s most downloaded iOS app for that time period, Sensor Tower data indicate.

Meanwhile, Douyin rival Kuaishou — meaning “fast hand” in Mandarin — is backed by Chinese internet giant Tencent. The app has gained popularity among users from China’s less-developed areas, garnering more than 234 million monthly active users and about 130 million daily active users, according to the company.

According to app analytics and market data firm App Annie, since mid-March 2018, Kuaishou has beaten other apps and topped the rankings by number of downloads in eight countries and regions outside mainland China, including Russia, Vietnam, Indonesia, Turkey and Taiwan.

“Watching people live streaming is too time-consuming,” complained Zeng over the phone — although he acknowledged the fact that he now spends more time on short videos.

“Live streaming versus short videos is like TV series versus movies,” he explained. “Shorter ones are more compact and engaging, while live streaming could get relatively boring as you are watching the same person all the time.”

Some key factors contributing to the rise of short video apps include Chinese users’ growing demand for more accessible and easier entertainment content, according to a market analyst.

“Short video is rich in content while short in time, it’s very suitable to kill your fragmented spare time,” Jiang Yige, a Singapore-based analyst at FengHe Fund Management, wrote to CNBC in an email note.

“In the past few years, all Chinese app developers were doing their best to spoil the users. We have tens of examples, like food delivery services, like Weibo’s initial constraint of 140 words, like the audio apps summarizing a book so that users don’t spend one weeks’ time reading,” said Jiang. “Short video is just a new example of the app developers spoiling the internet users.”

According to a report published by California-based venture capital company Kleiner Perkins, Douyin has enjoyed an incredibly strong loyalty among users, with viewers on average spending about 52 minutes on the app each day. Part of the reason for that is the personalized content based on users’ browsing history and preferences, with the help of artificial intelligence technology and algorithms, according to Jiang.

In China, whenever businesses are gaining popularity, government regulation starts to kick in. The short video industry is no exception.

In late March, Chinese state broadcaster CCTV criticized Kuaishou for videos depicting adolescent pregnancies, which showed images of teenage girls with bare baby bumps. A few days later, China’s State Administration of Press, Publication, Radio, Film and Television ordered all short video platforms to shut down accounts that “deviated from social moralities.”

In the meantime, regulators have also warned that some attention-seeking and offensive videos can lead to social security concerns, such as those showing drunk people fighting, smashing cars, challenging police officers and lighting firecrackers under crotches.

Last month, two tourists aged 17 and 20 years old, turned themselves into the local police station after their videos on Douyin went viral and triggered widespread social media outrage. Douyin has deleted related video clips, which showed them damaging a historical landform, known as Zhangye National Geopark in China’s Gansu province, along with one of them bragging to the camera saying, “I damaged the landform which was formed 6,000 years ago. We sneaked into this area and it feels awesome.”

Chinese parents have also raised concerns about the social media trend. An increasing number of parents have complained to local media outlets that their children, mostly preteens, are picking up too-mature behaviors from short video apps.

While many are calling for stricter regulation, the short video market still has a lot of potential to grow, according to Jiang.

“We can’t precisely predict how long the short video cycle can last, but I think the peak is yet to come,” he said. “It is still quite difficult to shoot a good short video. This is the challenge but also the opportunity right now, not only for normal users, but also for advertisers.”

Unlike live-streaming platforms, which generate revenue by selling “virtual gifts” to viewers and sharing income with streamers, short video platforms are still trying to find ways to monetize the traffic to their apps. So far, advertising still accounts for most of all online video revenue, but not every advertiser is ready for the short video boom.

“Even professional advertisers are working hard to find out how to shoot a good commercial in 15 seconds, to reach the deep heart of the young and fashion generation,” Jiang wrote in a note.

Still, Jiang expressed little doubt about the industry’s future profitability.

“(Short video platforms’) advertisement potentials are much bigger than streaming apps, because of larger user base and longer time spent,” added Jiang. “We heard from ads agents that their clients are very interested in this type of ads and are actively exploring.”

According to IHS Markit, China’s short video market is expected to hit around 96.2 billion yuan (about $14.08 billion) by 2020, with Kuaishou valued at about $18 billion and Douyin between $8 billion and $10 billion.

Just as discussions about initial public offerings for Kuaishou and Douyin course through the market, live streaming companies are facing slowdowns in user growth and weak earnings guidance,

According to a report released by big data research institute QuestMobile, in June 2018, the number of monthly active users in the live streaming industry declined by 10.8 percent to 91.28 million from 104.1 million in January 2017.

Such a user decline has also hit stock valuations. YY, a leading live streaming company in China, enjoyed a 186.8 percent surge in the company’s share price last year, but its seen its stock decline by more than a third of its value so far this year.

However, the party might not be over yet, at least for e-sports streamers.

“The entertainment-driven live streaming platforms are indeed facing difficulties of growing because the total internet population in China almost stops growing and they face the direct competition from short video apps on user time,” said Jiang. “For them, the peak has already passed.”

“But we are more optimistic on gaming streaming because as China’s e-sports industry is growing rapidly, different genres of games can attract more players as well as audience, and more professional e-sports competitions or leagues are organized by game developers like Tencent as well as streaming platforms like Huya and Douyu,” he added.

Not everyone has given into the trend of short videos, however.

“One day, I found myself doing nothing for the entire morning but watching funny short videos. I decided to remove the app,” said 26-year-old Yang Yaru.

“But in China, many people need such entertainment apps because they are facing too much pressure from work. This is an era of civil entertaining carnival,” she added.

—CNBC’s Xiang Xue contributed to this report.

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