‘Bad things could happen’: Turning to tech to tame the crypto jungle

© Reuters. Joel Fruhman, right, and Dan Fruhman, directors of BCB Group pose for a photograph in London © Reuters. Joel Fruhman, right, and Dan Fruhman, directors of BCB Group pose for a photograph in London

By Tom Wilson

LONDON (Reuters) – “Hi guys, could you please show me a firm bid for 100 bitcoin?” a seller texts on Skype.

“One sec. $ 10270.”

Two minutes later: “Sorry guys, that was an old order from Friday when skype wasn’t working.” 

“I really think we should get off skype. Bad things could happen. Someone is going to make an expensive mistake.” 

*****

A messaging exchange over a potential $ 1 million deal, between a European asset manager looking to sell bitcoin and broker Joel Fruhman, illustrates the casual and often chaotic nature of cryptocurrency dealmaking.

Trades involving hundreds of thousands, or millions, of dollars are routinely struck via brief chats on apps like Skype, WhatsApp, WeChat or Zoom, often with scant certainty over the identities of participants or the legal basis of agreements.

“We’d end up in a Zoom call with about five ‘introducers’ – we didn’t really know who any of them were,” said Fruhman, a physicist by training who started a cryptocurrency brokerage business with his brother Dan in their British hometown of Manchester in 2018.

“And who were we? What was our credibility?”

Over-the-counter (OTC) trading – buying and selling through a broker – is now beginning to change, however.

It is moving toward electronic automation as the cryptocurrency sector matures from the province of online enthusiasts to emerging financial assets drawing increasing mainstream interest, Reuters interviews with more than a dozen industry players show.

This is a fundamental shift, as messaging apps have for years been the predominant platforms.

It is a key front in attempts by cryptocurrency enthusiasts with roots in the traditional finance industry to drag into the mainstream a singular, largely unregulated sector born on the web a decade ago as a symbol of rebellion against the establishment and offering users near-anonymity.

OTC trading is favored by big investors like hedge funds because cryptocurrency exchanges often suffer from thin liquidity, and large buy and sell orders can move the market.

But the opaqueness of the messaging process and its impracticality for use on a large scale, plus the glitches that could cause the “expensive mistake” warned of by Fruhman, have left it fraught with risk.

Now, as spreads – the differences between bid and ask prices for immediate orders – tighten as liquidity in crypto markets grows, OTC brokers and market makers are seeking to move away from unsophisticated chats and offer quotes electronically, with automated execution and settlement.

“Things have shifted quite rapidly toward electronic trading,” said George Zarya, CEO of London-based cryptocurrency exchange BeQuant, which also runs an OTC desk and is planning to switch toward automation.

“Anything that is liquid – bitcoin or ethereum – these markets are going to go electronic. That’s a natural path that traditional markets have gone through.”

The changes are likely to appeal to larger investors using algorithms and high-frequency trading for whom split-second timings are important, according to the interviews with cryptocurrency OTC brokers, market makers and investors.

Alameda Research, a crypto trader based in California and Hong Kong, launched an almost entirely automated OTC desk around six months ago that is already seeing flows of $ 20 million-$ 30 million a day, said Ryan Salame, its Asia-Pacific head of OTC.

For Salame, the future of OTC trading is electronic, with prices for all but the smallest coins to be quoted electronically.

“This is just the next step how you stay more competitive. Each desk is trying to be more competitive and making better systems,” he said. “It’s just a by-product of spreads coming in so much that I can’t update in the chat fast enough to give people the pricing they’re expecting.” 

‘CAN YOU SELL A FEW MILL?’

The Fruhman brothers, Joel aged 29 and Dan 28, built a contact book packed with bitcoin miners they met on internet forums and apps as they grew interested in the emerging technology.

Miners use computers to solve complex mathematical puzzles, competing against others and earning rewards in the form of new digital coins. As recently as a few years ago, individual crypto enthusiasts could mine bitcoin from their bedrooms.

But many had a problem, the Fruhmans found: They were producing bitcoin faster than they could convert them to the cash they needed to clear the hefty electricity bills run up by their high-powered computing gear working overtime. 

“We saw something very clear: A bunch of guys with a lot of bitcoin valued in USD, who had no idea how to turn that into money,” said Joel. “It started with one request, which was just one of these guys, our mate, who was like: ‘Can you sell a few mill?'”

Late last year, in an attempt to tap bigger investors and offer more sophisticated back-office services, the brothers swapped their contact book for a stake in a startup run by ex-financiers well-versed in the infrastructure of the financial system, from escrow accounts to settlement systems.     

The startup, BCB Group, then based in London’s financial district, offered something the Fruhmans lacked: regular access to clients from mainstream finance willing and able to buy the regular supply of digital coin offered by their mining contacts.

“It’s not the stoned 22-year-old that we were dealing with a year and a half ago,” said Joel. “And it’s not the equity traders, the Goldman Sachs (NYSE:). They’re kind of in between – it’s growing from one into the other.”

    

TRADE BLOSSOMS IN BITCOIN BUBBLE

Global cryptocurrency trading volumes are highly erratic. Over the past year, bitcoin alone – by far the largest coin – has seen daily volumes of between $ 900 million and $ 3 billion, according to research firm Coin Metrics.

Brokers estimate the OTC market typically accounts for 10% to 30% of global volumes on any given day.  

The OTC market blossomed as bitcoin’s value soared during its 2017 bubble. That was when miners, wealthy individual investors, hedge funds and companies earning revenue in crypto grew active in the market.

Now, said the industry players who spoke to Reuters, the market is seeing a new shift as the predominance of messaging apps wanes and the more sophisticated tools used in traditional markets like equities and bonds become increasingly common. 

“Doing stuff over Skype and over these voice chats is not really scalable,” said Kevin Zhou, co-founder of San Francisco-based OTC desk Galois Capital.

The evolution is partly being driven by newer entrants to the sector, many of whom are tooled up with cutting-edge tech. Some, like Chicago-based Jump Trading, are from the traditional proprietary trading worlds. Others, such as Alameda Research, specialize in cryptocurrencies. 

And the changes are popular with big investors.

“I prefer to use electronic because all our algorithms are fully automated,” said Andrea Leccese, president of Bluesky Capital in New York, an investment firm that often runs orders of $ 5 million-$ 10 million through OTC desks. “If we can send our quote electronically to the OTC broker, it’s much better for us.” 

“It’s fair to say more or less half of OTC trading is going through technical innovation like making fully electronic platform, and that’s even better on our side.” 

Cryptocurrency regulation is patchy across the world, with curbs on the illegal use of digital coins the priority, and the implications of increasing automation in OTC trading are unclear. But, some market players say, because the changes are likely to attract more mainstream investment they could be a factor in speeding up the introduction of the kind of securities rules seen in traditional markets.

MACHINE VS MAN

While increasing automation may be inevitable, many OTC desks are in a bind. Some clients are loath to ditch the personal relationships they have established with their brokers and the apps they use to communicate.

New York-based Genesis Global Trading sees around $ 1 billion a month in volume, CEO Michael Moro said. While that’s down from the $ 2 billion-$ 2.5 billion a month during bitcoin’s 2017 boom, volumes are now rising between 10% and 20% a month.

Genesis uses TradeBlock, a New York firm that provides tools for trading cryptocurrencies, to execute its deals – but can’t completely abandon messaging apps.

“We will give market color over (Skype), but the actual transactions are over TradeBlock,” Moro said. “When your clients that are buying $ 5, $ 10 million say, ‘Hey, let’s just chat on Skype’, to get them to change their behavior and say, ‘No, we don’t do Skype’, you end up creating a friction.”

For the Fruhman brothers, personal relationships will remain key. 

“The plan is to go to an automated platform, where they’ll be able to request quotes on our front-end website,” said Dan. “But the interesting thing is that a lot of people actually like the human-to-human interaction.” 

“It’s not just ‘like’,” said Joel, quickly. “If you’re trading $ 20 million, you’re not clicking a button – you want to push on the price, you want to get a feel, you want to maybe break it up.”

“I think there’ll always be this human OTC component for institutional clients.”

Let’s block ads! (Why?)

Forex News

Data regulator probes King’s Cross facial recognition tech

The facial-recognition system at King’s Cross is to be investigated by the UK’s data-protection watchdog.

Media exposure of live facial recognition at the site prompted the Information Commissioner’s Office (ICO) to look into how it was being used.

The ICO will inspect the technology in place and how it is operated to ensure it does not break data protection laws.

The regulator said it was “deeply concerned” about the growing use of facial-recognition technology.

Fair and transparent

The Financial Times was the first to report a live face-scanning system was being used across the 67-acre (0.3-sq-km) site around King’s Cross station in London.

Developer Argent said it used the technology to “ensure public safety” and it was just one of “a number of detection and tracking methods” in place at the site.

But the use of cameras and databases to work out who is passing through and using the site has proved controversial.

So far, Argent has not said how long it has been using facial-recognition cameras, what is the legal basis for their use, or what systems it has in place to protect the data it collects.

In its statement, the ICO said: “Scanning people’s faces as they lawfully go about their daily lives, in order to identify them, is a potential threat to privacy that should concern us all.”

The regulator said it was keen to ensure that King’s Cross developer was using the technology in accordance with UK laws governing the use of data.

“Put simply, any organisations wanting to use facial recognition technology must comply with the law – and they must do so in a fair, transparent and accountable way,” said the ICO.

It must have documented how and why it believed its use of the technology was legal, proportionate and justified, it added.

Argent has not yet responded to a request for comment by BBC News.

The mayor of London is also quizzing developer Argent about its use of facial-recognition systems.

Sadiq Khan wrote to the company and said there was “serious and widespread concern” about the legality of facial recognition.

Let’s block ads! (Why?)

BBC News – Technology

BoE looks to throw open doors to tech companies ahead of Brexit

© Reuters. FILE PHOTO: A man walks past the Bank of England in the City of London © Reuters. FILE PHOTO: A man walks past the Bank of England in the City of London

By Huw Jones

LONDON (Reuters) – The Bank of England opening up its balance sheet to payment companies and tech firms such as Facebook (NASDAQ:) would bolster Britain’s 7 billion pound ($ 9 billion) fintech sector just as it faces tougher competition from Europe after Brexit.

BoE Governor Mark Carney has said the Bank will consult next year on providing an “appropriate” level of access to its 500 billion pound balance sheet to new payment providers, putting them more on a par with the big banks that dominate payments.

If the BoE approves the move, it would be the first major central bank anywhere in the world to let non-banks have direct access to its coffers, making it potentially attractive to large technology companies expanding into payments such as Amazon (NASDAQ:) and Apple (NASDAQ:).

“The Governor’s promise to go further by opening (the BoE)balance sheet and access to the payments system could further cement London’s role as a key international fintech hub,” said Margaret Doyle, partner and head of financial services insights at Deloitte.

Banking analyst John Cronin said the Bank could also be taking out insurance if the rapid advances of technology at payment companies dent the ability of commercial banks to make enough money as payment companies.

“Arguably over the much longer term it could be seen as a defensive move if banks’ business models were to come under threat from Facebook’s Libra and others,” Goodbody analyst Cronin said.

“You can see how winners and losers emerge.”

Earlier this week Facebook announced plans to introduce a cryptocurrency called Libra, part of an effort to expand into digital payments.

RAPID CHANGE

Payments make up a significant element of fintech activity but collectively they have yet to match the central role of banks in operating the financial system’s plumbing.

Carney’s comments coincided with British finance minister Philip Hammond announcing a review of the payments landscape to make sure that regulation and infrastructure keep pace with the “dizzying array of new payments models”.

Currently only systemically important firms that are regulated to the same level as UK banks and are exposed to overnight liquidity risk – typically banks, broker-dealers and clearing houses – can access the central bank’s balance sheet.

Facebook’s cryptocurrency plans would turn it into a systemically important financial firm, Carney said.

If a payments company were granted access, it could park cash at the BoE overnight, meaning it would be less risky and rely less on commercial banks.

“Users should benefit from the reduced costs and increased certainty that come with banking at the central bank,” Carney said.

Britain’s government and financial regulators have been encouraging the fintech sector for several years, seeing it as a growth sector that already employs around 60,000 people.

The authorities are anxious to keep Britain at the cutting edge in an increasingly digitalized economy where electronic payments have already overtaken cash.

But Britain is due to leave the European Union on Oct. 31 and fintech firms in London have already expressed concerns they could be locked out of the EU market in future and unable to keep recruiting from the bloc.

UK regulators have been lauded by fintech firms for their flexibility in allowing new business models to be tested on real customers early on, but Berlin, Luxembourg and Paris are vying to attract firms from London by offering them access to the EU’s vast single market.

Charlotte Crosswell, chief executive of Innovate Finance, a fintech industry body, said opening access to new types of payment providers at the BoE shows a real coming of age moment for fintech.

“We are delighted that regulators are keeping in step with the times, as this approach has propelled the UK to the forefront of financial services innovation, and allowed us to consistently maintain that position,” Crosswell said.

Let’s block ads! (Why?)

Forex News

Texas Tech tops Michigan State, will now face Virginia in final

For those who thought Texas Tech only plays defense, it’s time to meet Matt Mooney. While the Red Raiders were locking down Michigan State on one end, the graduate transfer shooting guard was raining in 3s on the other, lifting Tech one win away from the title Saturday night with a 61-51 victory over the Spartans in the Final Four. 

It’s the first time Texas Tech will play in the natioanl championship. 

Mooney matched his season-high with 22 points, including three 3-pointers over the span of 3 minutes to give Texas Tech a 13-point lead midway through the second half that, under these circumstances, was too much to overcome.

Mooney’s first two shots in the stretch capped a 5-for-5 hot streak by Texas Tech that stood as the game’s only true blast of offense.

Texas Tech v Michigan State
Brandone Francis #1 of the Texas Tech Red Raiders drives to the basket against Xavier Tillman #23 of the Michigan State Spartans in the second half during the 2019 NCAA Final Four semifinal at U.S. Bank Stadium on April 6, 2019 in Minneapolis, Minnesota. Hannah Foslien / Getty Images

The rest of the game was a defensive slog, filled with air balls, blocked shots and clogged-up passing lanes. It was, to put it Texas Tech’s way, perfectly ugly. 

The Red Raiders (31-6) move onto Monday’s final to face Virginia, a 63-62 winner over Auburn in the earlier game.

Michigan State (32-7) leaves coach Tom Izzo’s eighth Final Four with its seventh loss – the 2000 title is still the only time the Spartans have taken it all the way under their veteran coach.

But they did not go away easily.

After Mooney put them down by a baker’s dozen midway through the half, the Spartans trimmed it to 3. Matt McQuaid had a wide-open look from the corner – one of the very few on this night – to tie with 1:50 left, but the ball rimmed out and the Red Raiders pulled away.

Jarrett Culver (10 points, five boards) made one free throw on the next trip down, then Norense Odiase swiped the ball from MSU’s Xavier Tillman – one of Tech’s four steals on the night – and the Red Raiders worked the ball to Culver, who made his only 3 to push the lead to 58-51 and start the celebration.

The defense that led the nation in efficiency and held teams to under 37% shooting – second best in the county – held Michigan State to 31.9% from the floor.

Most tellingly, it stymied Big Ten player of the year Cassius Winston. Yes, he led the Spartans with 16 points, but it came on 4-for-16 shooting, and he didn’t score his first second-half points until more than 10 minutes had elapsed – long after Mooney put this game out of reach.

Let’s block ads! (Why?)

U.S. – CBSNews.com

Tennessee Tech hires Pelphrey as coach

© Reuters. FILE PHOTO: University of South Alabama Jaguars head coach Pelphrey disagrees with official on call in his team's game in Jacksonville © Reuters. FILE PHOTO: University of South Alabama Jaguars head coach Pelphrey disagrees with official on call in his team’s game in Jacksonville

Tennessee Tech announced Saturday that it has hired John Pelphrey as its basketball coach.

Pelphrey served on Alabama’s coaching staff for the past three seasons. He was a former head coach at South Alabama (2002-07) and Arkansas (2007-11).

“It’s an honor and privilege to be at Tennessee Tech,” Pelphrey said in a school news release. “My family and I, and our staff, were looking for a place where we could go and learn, lead and take on challenges in college basketball. We’re very appreciative of (athletic director) Mark Wilson and his pursuit of us. We have complete confidence and trust in him.

“We love the alignment between him and President (Phil) Oldham and their vision for basketball at Tennessee Tech moving into the future, and we are very, very excited to be a part of that. We understand that there’s a lot of work to do, but we’re going to embrace that.”

Pelphrey, 50, replaces Steve Payne, who compiled a 118-134 in eight seasons. The Golden Eagles were just 8-23 this past season.

Pelphrey went 80-67 at South Alabama and made the NCAA Tournament in 2006 as his club finished 24-7. He went 20-12 the following season before departing for Arkansas.

The Razorbacks went 23-12 and made the NCAA Tournament in his first season (2007-08). But the team had losing campaigns the following two seasons and he went 69-59 in four seasons before being fired in March 2011.

Pelphrey played college basketball at Kentucky and averaged 11.0 points in 114 games (89 starts) over four seasons (1988-92).

–Field Level Media

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Let’s block ads! (Why?)

Sports and General News

Australia targets tech firms with ‘abhorrent material’ laws

Australia has passed controversial laws which could see tech companies face penalties – including jail for executives – if they host violent videos on their platforms.

The laws, billed as a probable world first, follow last month’s New Zealand mosque shootings which killed 50 people and were live-streamed by the gunman.

The Australian government said websites “should not be weaponised”.

Critics say the laws have been rushed through parliament without scrutiny.

The bill says tech firms could face penalties if they fail to remove “abhorrent violent material” quickly enough. Such content is defined to be terror attacks, murders, rapes, tortures and kidnappings.

The penalties include fines of up to A$ 10.5m (£5.6m; $ 7.5m), or 10% of annual turnover, according to the legislation. Company executives or those who “provide a content service” could face up to three years in jail.

The laws put the onus on firms to take down the content “expeditiously” – a term that is not further defined but would be ultimately determined by a jury, the government said.

Social media sites struggled to contain the video of the Christchurch attacks, which was copied onto the alt-right file-sharing site 8chan and then spawned 1.5 million copies.

Last week, Facebook said it would explore restrictions on live-streaming in the wake of that event.

Bill criticised

Prime Minister Scott Morrison proposed the laws for the first time last week.

The Labor opposition helped to pass the legislation on Thursday, despite describing it as “flawed”. It pledged to review the laws after Australia’s election, which is expected to take place next month.

Attorney-General Christian Porter said the crackdown was “most likely a world first”.

“There are platforms such as YouTube, Twitter and Facebook who do not seem to take their responsibility to not show the most abhorrently violent material seriously,” he said on Thursday.

Mr Morrison met last week with social media executives, who have since criticised the bill – as have legal experts.

The Digital Industry Group, which represents several tech companies in Australia, said firms were already committed to removing violent content quickly.

“With the vast volumes of content uploaded to the internet every second, this is highly complex problem,” a spokeswoman said.

Legal experts warned that the law in its current form could lead to media censorship or prevent whistleblowers from sharing information.

“Laws formulated as a knee-jerk reaction to a tragic event do not necessarily equate to good legislation and can have myriad unintended consequences,” said the Law Council of Australia.

Let’s block ads! (Why?)

BBC News – Technology

Tech Tent: Apple, Lyft and feel-good tech

I’ve got a proposition for you. Would you like to invest in my tech firm?

It’s never made a profit – oh, and there is the small matter of the $ 911m (£700m) it lost in 2018.

Come back….

Well, that sums up the fortunes of ride-share firm Lyft, a rival to Uber that isn’t yet in the UK.

And yet within minutes of its launch on the New York Stock Exchange (as Tech Tent went on-air) it had soared to a valuation of $ 30bn.

Annabelle Timsit, from the news website QZ, told me on the latest programme that investors “want to believe” that after a couple of years of investment Lyft will start to turn a profit – and early indications suggested that she was right as we watched the share price shoot up.

We also looked at Apple’s big announcements earlier this week – not a gadget in sight but a number of new or enhanced services, including a credit card with some pretty competitive offerings.

Are people sick of paying subscriptions, and why has Apple rushed out its TV streaming announcement without the details in place of how much it will cost?

Finally, from grandparents discovering Facetime to new mums finding new friends, we ended the programme on a positive note – looking at tech that’s genuinely served a good purpose.

The BBC’s Jane Wakefield highlighted the mapping start-up what3words which enabled the rescue of a mother and daughter in a car crash in a rural part of the UK.

Annabelle Timsit nominated a wearable device from the University of Switzerland that will help doctors monitor children with health conditions who live in remote areas.

As for me… I’m off to work on my investment proposition.

Rory Cellan-Jones returns next week.

Let’s block ads! (Why?)

BBC News – Technology

Christchurch shootings: Sajid Javid warns tech giants over footage

Social media companies have been told to “clean up their platforms” or be prepared to face the “force of the law” by Home Secretary Sajid Javid.

The warning comes after a gunman who killed 49 people at two mosques in New Zealand filmed the attack and live-streamed it directly to Facebook.

Writing in the Daily Express, Mr Javid said: “Tech companies must do more to stop his messages being broadcast.”

The live-stream of the attack on Facebook lasted for 17 minutes.

Despite the original video being taken down, it was quickly replicated and shared widely on other platforms, including YouTube and Twitter.

Mr Javid urged people to stop viewing and sharing the “sick material” online, adding: “It is wrong and it is illegal.

“Online platforms have a responsibility not to do the terrorists’ work for them.

“This terrorist filmed his shooting with the intention of spreading his ideology.”

He added that the government was trying to address this type of “illegal” behaviour.

The government is due to publish a delayed White Paper on “online harms” in the coming weeks.

The gunman, who live-streamed the attacks on Friday from a head-mounted camera, identified himself as Brenton Tarrant in the footage, which showed him shooting at men, women and children.

All of the social media firms sent messages of sympathy to the victims of the mass shootings, reiterating that they act quickly to remove inappropriate content.

Facebook said: “New Zealand Police alerted us to a video on Facebook shortly after the live-stream commenced and we removed both the shooter’s Facebook account and the video.”

Mr Javid responded to a YouTube tweet which said it was “working vigilantly” to remove any violent footage by saying that the digital companies needed to “take some ownership”.

The attacks in Christchurch happened as people were attending the mosques for prayers.

Mr Javid said he had been left “sick to the stomach by the massacre of 49 innocent worshippers”.

He wrote: “They were simply targeted for being Muslims, as they paid respects to God.

“My own late father never missed Friday prayers. I often joined him, and I fondly look back on the peaceful moments we shared.”

Vigils for the victims took place in the UK on Friday, amid an outpouring of support for Britain’s Muslim community.

Media playback is unsupported on your device

Britain’s most senior Jewish faith leader Chief Rabbi Mirvis offered his condolences, and said the attacks were “terrorism of the most despicable kind, callously planned and motivated by the scourge of Islamophobia”.

Prime Minister Theresa May offered the UK’s “deepest condolences” after the “horrifying terrorist attack”.

Police have increased patrols at British mosques to provide reassurance.

Let’s block ads! (Why?)

BBC News – Technology

USDA official: Trade talks 'positive' but still no clarity on IP and tech transfers

Comments from a US trade official

Trade talks are “positive” but there is still no clarity from Beijing on intellectual property, technology transfers and structural changes, according to a USDA official cited by Reuters.

The IP thing is such a tough one. What’s Beijing going to say? We are stealing from you but will stop? That’s not exactly a promise even worth making. I’m not sure there is a solution there other than to warn that if it continues there will be punitive actions. That said, everyone is stealing from everyone.

ForexLive

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

Move aside, backseat driver! New tech at CES monitors you inside car

© Reuters. Occupants, inside a car, are seen on a monitor using technology by Silicon Valley company Eyeris, during an interview in San Jose © Reuters. Occupants, inside a car, are seen on a monitor using technology by Silicon Valley company Eyeris, during an interview in San Jose

By Alexandria Sage

LAS VEGAS (Reuters) – As vehicles get smarter, your car will be keeping eyes on you.

This week at CES, the international consumer electronics show in Las Vegas, a host of startup companies will demonstrate to global automakers how the sensor technology that watches and analyzes drivers, passengers and objects in cars will mean enhanced safety in the short-term, and revenue opportunities in the future.

Whether by generating alerts about drowsiness, unfastened seat belts or wallets left in the backseat, the emerging technology aims not only to cut back on distracted driving and other undesirable behavior, but eventually help automakers and ride-hailing companies make money from data generated inside the vehicle.

In-car sensor technology is deemed critical to the full deployment of self-driving cars, which analysts say is still likely years away in the United States. Right now, self-driving cars are still mainly at the testing stage.

The more sophisticated in-car monitoring also could respond to concerns that technology that automates some – but not all – driving tasks could lead motorists to stop paying attention and not be ready to retake control should the situation demand it.

When self-driving cars gain broad acceptance, the monitoring cameras and the artificial-intelligence software behind them will likely be used to help create a more customized ride for the passengers. Right now, however, such cameras are being used mainly to enhance safety, not unlike a helpful backseat driver.

Interior-facing cameras inside the car are still a novelty, currently found only in the 2018 Cadillac (N:) CT6. Audi (DE:) and Tesla Inc (O:) have developed systems but they are not currently activated. Mazda (T:), Subaru (T:) and electric vehicle start-up Byton are introducing cars for 2019 whose cameras measure driver inattention. Startup Nauto’s camera and AI-based tech is used by commercial fleets.

Data from the cameras is analyzed with image recognition software to determine whether a driver is looking at his cellphone or the dashboard, turned away, or getting sleepy, to cite a few examples.

Companies such as Israel’s Guardian Optical Technologies and eyeSight Technologies, Silicon Valley’s Eyeris Technologies Inc, Sweden’s Smart Eye AB (ST:), Australia’s Seeing Machines Ltd (L:), and Vayyar Imaging Ltd, another Israeli company using radar instead of vision, are crowding the space. Many have already signed undisclosed deals for production year 2020 and beyond.

It is not yet clear how consumers in the age of Facebook Inc (O:) and virtual assistants like Amazon.com Inc’s (O:) Alexa will react to the potentially disconcerting idea of being watched – then warned – inside a vehicle, especially as cars become living rooms with the advent of self-driving.

"There’s no doubt this is a hot area," said Modar Alaoui, founder and CEO of Eyeris, in a recent interview. His company combines five 2D cameras with AI technology for "in-vehicle scene understanding," including car occupants’ height, weight, gender and posture.

Alaoui believes once automakers see the benefits of a camera tracking the driver, they will opt for more.

Automakers are paying attention for multiple reasons. As Guardian Optical CEO Gil Dotan said, "What automakers want is what either sells cars, or what regulators tell them to do."

Regulators like the technology at its most basic. Eye tracking can determine if a driver is not paying attention, or worse, is asleep. That will become essential as cars become more autonomous, for "Level 3" autonomy where the car handles most driving but returns control to the driver in trickier situations.

European car safety rating program Euro NCAP has proposed that cars with driver monitoring for 2020 should earn higher ratings. In the wake of a 2016 fatal Tesla crash, the U.S. National Transportation Safety Board recommended automakers develop means to better track driver engagement.

But automakers are more excited by the revenue possibilities when vehicle-generated data creates a more customized experience for riders, generating higher premiums, and lucrative tie-ins with third parties, such as retailers.

"The reason (the camera) is going to sweep across the cabin is not because of distraction … but because of all the side benefits," said Mike Ramsey, Gartner’s automotive research director. "I promise you that companies that are trying to monetize data from the connected car are investigating ways to use eye-tracking technology."

DATA BRINGS TIE-INS

Potential uses go way beyond mere tracking of a driver’s gaze. The future of the technology rests in deciphering what a vehicle occupant wants, then fusing that with other technologies in order to create a more personalized ride.

"The more you know about the user, the more you’re able to fulfill his or her needs," said Eric Montague, senior director of strategy for Nuance Automotive. Nuance’s connected car platform mixes eye-tracking technology, voice recognition and even emotion analysis, from a company called Affectiva.

Analysis from driver monitoring technology could help turn on the heat, lower the seat or play a certain kind of music when a particular occupant enters the car. If a passenger looks toward the dashboard, a certain control could light up to help anticipate a need.

Carmakers could gather anonymized data and sell it. A billboard advertiser might be eager to know how many commuters look at his sign, Ramsey said.

Tracking the gaze of a passenger toward a store or restaurant could, fused with mapping and other software, result in a discount offered to that person.

Companies say automakers will decide how the metadata is used, but consumers will be able to opt out.

Some still see interior cameras as a bad idea, however. Vayyar uses radar that tracks head movements without cameras. Cars are still considered private zones, said CEO and cofounder Raviv Melamed, who pointed to how many people perform personal tasks in their cars.

"They think they’re in their own living room, they behave like they’re not outside! It’s obvious no one wants a camera," Melamed said.

Tesla owners have speculated about the Model 3’s currently inoperational interior camera, with some asking in forums whether "Big Brother" was watching.

"Put a small piece of scotch tape on it … and you can nose pick again …" advised one post.

Let’s block ads! (Why?)

Technology News